-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GwLe3H3H7n/Gw2ThM1byRKAoJubm7Uwc9TWppEU/ZRpdzFMrMwREys8bu7XSlCNG YRuU3fMxtifOaQPQOi14+w== 0000950134-98-001094.txt : 19980218 0000950134-98-001094.hdr.sgml : 19980218 ACCESSION NUMBER: 0000950134-98-001094 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 53 FILED AS OF DATE: 19980212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PILLOWTEX CORP CENTRAL INDEX KEY: 0000896265 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390] IRS NUMBER: 752147728 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209 FILM NUMBER: 98535815 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 75237 BUSINESS PHONE: 2143333225 MAIL ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 75237 FORMER COMPANY: FORMER CONFORMED NAME: PILLOWTEX CORP DATE OF NAME CHANGE: 19930125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMOSKEAG CO CENTRAL INDEX KEY: 0000006161 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 041032485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-01 FILM NUMBER: 98535816 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 75237 BUSINESS PHONE: 2143333225 MAIL ADDRESS: STREET 1: 527 MAIN ST STREET 2: STE 12 CITY: MELROSE STATE: MA ZIP: 02176-3835 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON INC CENTRAL INDEX KEY: 0000035469 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 560586036 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-02 FILM NUMBER: 98535817 BUSINESS ADDRESS: STREET 1: ONE LAKE DRIVE CITY: KANNAPOLIS STATE: NC ZIP: 28081 BUSINESS PHONE: 9196273000 FORMER COMPANY: FORMER CONFORMED NAME: FIELDCREST MILLS INC DATE OF NAME CHANGE: 19860807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMOSKEAG MANAGEMENT CORP CENTRAL INDEX KEY: 0001054426 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 042846718 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-03 FILM NUMBER: 98535818 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANGOR INVESTMENT CO CENTRAL INDEX KEY: 0001054427 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 010200600 STATE OF INCORPORATION: ME FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-04 FILM NUMBER: 98535819 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEACON MANUFACTURING CO CENTRAL INDEX KEY: 0001054428 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752568775 STATE OF INCORPORATION: NC FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-05 FILM NUMBER: 98535820 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRESTFIELD COTTON CO CENTRAL INDEX KEY: 0001054429 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 620909424 STATE OF INCORPORATION: TN FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-06 FILM NUMBER: 98535821 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOWNEAST SECURITIES CORP CENTRAL INDEX KEY: 0001054430 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133105881 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-07 FILM NUMBER: 98535822 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENCEE INC CENTRAL INDEX KEY: 0001054431 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561675214 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-08 FILM NUMBER: 98535823 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FCC CANADA INC CENTRAL INDEX KEY: 0001054432 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561813430 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-09 FILM NUMBER: 98535824 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON FINANCING INC CENTRAL INDEX KEY: 0001054433 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561899877 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-10 FILM NUMBER: 98535825 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON INTERNATIONAL INC CENTRAL INDEX KEY: 0001054434 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 560844275 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-11 FILM NUMBER: 98535826 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON LICENSING INC CENTRAL INDEX KEY: 0001054435 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561899876 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-12 FILM NUMBER: 98535827 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON SURE FIT INC CENTRAL INDEX KEY: 0001054436 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561903913 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-13 FILM NUMBER: 98535828 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIELDCREST CANNON TRANSPORTATION INC CENTRAL INDEX KEY: 0001054437 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561899875 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-14 FILM NUMBER: 98535829 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MANETTA HOME FASHIONS INC CENTRAL INDEX KEY: 0001054438 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561835854 STATE OF INCORPORATION: NC FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-15 FILM NUMBER: 98535830 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOORES FALLS CORP CENTRAL INDEX KEY: 0001054439 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 04248569 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-16 FILM NUMBER: 98535831 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PILLOWTEX INC CENTRAL INDEX KEY: 0001054440 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 133876864 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-17 FILM NUMBER: 98535832 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PILLOWTEX MANAGEMENT SERVICSE CO CENTRAL INDEX KEY: 0001054441 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 752639144 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-18 FILM NUMBER: 98535833 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PTEX HOLDING CO CENTRAL INDEX KEY: 0001054442 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 510373367 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-19 FILM NUMBER: 98535834 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ST MARYS INC CENTRAL INDEX KEY: 0001054443 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 561968253 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-20 FILM NUMBER: 98535835 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENNESSEE WOOLEN MILLS INC CENTRAL INDEX KEY: 0001054444 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 621202303 STATE OF INCORPORATION: TN FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-46209-21 FILM NUMBER: 98535836 BUSINESS ADDRESS: STREET 1: 4111 MINT WAY CITY: DALLAS STATE: TX ZIP: 752377 BUSINESS PHONE: 2143333225 S-4 1 FORM S-4 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998. REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- PILLOWTEX CORPORATION (Exact Name of Registrant as Specified in Its Charter) TEXAS 2392 75-2147728 (State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer of Incorporation or Classification Control Number) Identification No.) Organization)
4111 MINT WAY DALLAS, TEXAS 75237 (214) 333-3225 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) --------------------- JEFFREY D. CORDES PRESIDENT AND CHIEF OPERATING OFFICER PILLOWTEX CORPORATION 4111 MINT WAY DALLAS, TEXAS 75237 (214) 333-3225 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) SEE TABLE OF ADDITIONAL REGISTRANTS ON THE FOLLOWING PAGE FOR INFORMATION RELATING TO THE GUARANTORS OF THE SECURITIES REGISTERED HEREBY. --------------------- Copies to: KATHLEEN R. MCLAURIN, ESQ. JONES, DAY, REAVIS & POGUE 2300 TRAMMELL CROW CENTER 2001 ROSS AVENUE DALLAS, TEXAS 75201 (214) 220-3939 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] - ------------. If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] - ------------. CALCULATION OF REGISTRATION FEE
================================================================================================================== PROPOSED PROPOSED TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------ 9% Senior Subordinated Notes due 2007................................ $185,000,000 100% $185,000,000 $54,575(2) - ------------------------------------------------------------------------------------------------------------------ Guarantees of the 9% Senior Subordinated Notes due 2007......... $185,000,000 (3) (3) (3) ==================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee under Rule 457 of the Securities Act of 1933, as amended (the "Securities Act"). (2) The registration fee for the securities offered hereby, $54,575, is calculated under Rule 457(f)(2) of the Securities Act. (3) Pursuant to Rule 457(n) under the Securities Act, no separate fee for the guarantees is payable. THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. ================================================================================ 2 TABLE OF ADDITIONAL REGISTRANTS The address of the principal executive offices of each of the additional registrants listed below, and the name and address of the agent for service therefor, is the same as is set forth for Pillowtex Corporation on the facing page of this Registration Statement.
JURISDICTION OF PRIMARY STANDARD I.R.S. EXACT NAME INCORPORATION INDUSTRIAL EMPLOYER AS SPECIFIED OR CLASSIFICATION IDENTIFICATION IN THEIR CHARTERS ORGANIZATION NUMBER NUMBER ----------------- --------------- ---------------- -------------- Amoskeag Company Delaware 6744 04-1032485 Amoskeag Management Corporation Delaware 8980 04-2846718 Bangor Investment Company Maine 6748 01-0200600 Beacon Manufacturing Company North Carolina 2281 75-2568775 Crestfield Cotton Company Tennessee 2298 62-0909424 Downeast Securities Corporation Delaware 6749 13-3105881 Encee, Inc. Delaware 5700 56-1675214 FCC Canada, Inc. Delaware 2298 56-1813430 Fieldcrest Cannon Financing, Inc. Delaware 8980 56-1899877 Fieldcrest Cannon, Inc. Delaware 2390 56-0586036 Fieldcrest Cannon International, Inc. Delaware 6749 56-0844275 Fieldcrest Cannon Licensing, Inc. Delaware 8980 56-1899876 Fieldcrest Cannon Sure Fit, Inc. Delaware 2390 56-1903913 Fieldcrest Cannon Transportation, Inc. Delaware 4200 56-1899875 Manetta Home Fashions, Inc. North Carolina 2211, 2297 56-1835854 Moore's Falls Corporation Delaware 6748 04-2485069 Pillowtex, Inc. Delaware 2392 13-3876864 Pillowtex Management Services Company Delaware 2211, 2221 75-2639144 PTEX Holding Company Delaware 6719 51-0373367 St. Mary's, Inc. Delaware 6749 56-1968253 Tennessee Woolen Mills, Inc. Tennessee 2231, 2297 62-1202303
3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998 PILLOWTEX CORP. LOGO PROSPECTUS OFFER TO EXCHANGE 9% SENIOR SUBORDINATED NOTES DUE 2007, FOR ANY AND ALL OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2007 --------------------- THE EXCHANGE OFFER WILL EXPIRE AT , NEW YORK CITY TIME, ON , UNLESS EXTENDED. --------------------- Pillowtex Corporation, a Texas corporation (the "Company"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange (the "Exchange Offer") its outstanding 9% Senior Subordinated Notes Due 2007 (the "Series A Notes"), of which $185,000,000 aggregate principal amount is outstanding as of the date hereof, for an equal aggregate principal amount of its newly issued 9% Senior Subordinated Notes Due 2007 (the "Series B Notes") which have been registered under the Securities Act of 1933, as amended (the "Securities Act"). The Series B Notes are being offered hereby in order to satisfy certain obligations of the Company and the Guarantors (as defined herein) under the Registration Rights Agreement, dated December 18, 1997, among the Company and certain other signatories thereto (the "Registration Rights Agreement"). The form and terms of the Series B Notes will be the same as those of the Series A Notes except that the Series B Notes will have been registered under the Securities Act, and consequently will not be subject to certain transfer restrictions, registration rights and related liquidated damages provisions applicable to the Series A Notes. The Series B Notes will evidence the same debt as the Series A Notes and will be entitled to the benefits of an indenture (the "Indenture"), dated as of December 18, 1997, by and among the Company, the Guarantors and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"). The Indenture provides for the issuance of both the Series A Notes and the Series B Notes. The Series A Notes and the Series B Notes are referred to herein collectively as the "Notes" and holders of the Notes are sometimes referred to herein as the "Holders." The Series A Notes were issued on December 18, 1997 pursuant to an offering (the "Offering") that was exempt from registration under the Securities Act. The Series A Notes were issued in connection with the merger (the "Merger") on December 19, 1997 of Fieldcrest Cannon, Inc. ("Fieldcrest") with and into a wholly owned subsidiary of the Company pursuant to the Merger Agreement (as defined herein). The Notes mature on December 15, 2007, unless previously redeemed. Interest on the Notes will be payable semiannually in arrears on June 15 and December 15 of each year commencing June 15, 1998. The Notes will be redeemable at the option of the Company, in whole or in part, on or after December 15, 2002, at the redemption prices set forth herein, plus accrued and unpaid interest thereon, and Liquidated Damages (as defined herein), if any, to the redemption date. Upon a Change of Control (as defined herein), the Company will be required to make an offer to repurchase all outstanding Notes at 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, and Liquidated Damages, if any, to the date of repurchase. The Series A Notes are, and the Series B Notes will be, general unsecured obligations of the Company, ranking senior in right of payment to all existing and future subordinated indebtedness of the Company, pari passu in right of payment with the Company's existing 10% Senior Subordinated Notes due 2006 (the "10% Senior Subordinated Notes"), and subordinated in right of payment to all existing and future Senior Indebtedness (as defined herein) of the Company, including indebtedness under the New Senior Credit (continued on next page) SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR SERIES A NOTES IN THE EXCHANGE OFFER. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- This Prospectus is dated , 1998. 4 (continued from cover page) Facilities (as defined herein). The Series A Notes are, and the Series B Notes will be, fully and unconditionally guaranteed on a senior basis (the "Subsidiary Guarantees") by each of the Company's current and future domestic Subsidiaries (as defined herein) (the "Guarantors"), including Fieldcrest. The Subsidiary Guarantees are senior unsecured obligations, ranking senior in right of payment to all existing and future subordinated indebtedness of the Guarantors, pari passu in right of payment to the Guarantor's guarantees of the 10% Senior Subordinated Notes, and subordinated in right of payment to all existing and future senior indebtedness of the Guarantors, including the guarantees of indebtedness under the New Senior Credit Facilities. As of September 27, 1997, on a pro forma basis after giving effect to the consummation of the Merger and the related Financing Transactions (as defined herein), including the Offering, and the application of the proceeds from the Financing Transactions as described under "Use of Proceeds," the Company and its subsidiaries on a consolidated basis would have had $420.0 million of indebtedness (excluding $37.8 million in letters of credit) effectively ranking senior to the Notes. See "Description of Notes." The Company will accept for exchange any and all Series A Notes that are properly tendered in the Exchange Offer and not withdrawn prior to 5:00 p.m., New York City time, on , 1998 (such date if and as it may be extended, the "Expiration Date"). Tenders of Series A Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. In the event the Exchange Offer is terminated, the Series A Notes not accepted for exchange will be returned without expense to the tendering holders as promptly as practicable. See "The Exchange Offer." Based on interpretations by the staff of the Securities and Exchange Commission (the "Commission") as set forth in no action letters issued to third parties, the Company believes that Series B Notes issued pursuant to the Exchange Offer in exchange for Series A Notes may be offered for resale, resold and otherwise transferred by Holders thereof (other than any such Holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Series B Notes are acquired in the ordinary course of such Holder's business and such Holder has no arrangement with any person to participate in the distribution of such Series B Notes. The Company does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Each Holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of such Series B Notes and has no arrangement or understanding to participate in a distribution of Series B Notes. Each broker-dealer that receives Series B Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Series B Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Series B Notes received in exchange for Series A Notes where such Series A Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of one year after the Registration Statement has been declared effective, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "The Exchange Offer" and "Plan of Distribution." There is no existing trading market for the Notes, and there can be no assurance regarding the future development of a market for the Notes, or the ability of Holders of the Notes to sell their Notes or the price at which such Holders may be able to sell their Notes. The Company does not intend to list the Notes on any securities exchange nor has the Company entered into any arrangement or understanding with any person to distribute the Notes to be received in the Exchange Offer. Holders of Series A Notes whose Series A Notes are not tendered and accepted in the Exchange Offer will continue to hold such Series A Notes and will be entitled to all the rights and preferences and subject to the limitations applicable thereto under the Indenture. Following consummation of the Exchange Offer, the Holders of Series A Notes will continue to be subject to the existing restrictions upon transfer thereof, and the Company will have no further obligation to such Holders to provide for the registration under the Securities Act of the Series A Notes. The Company will not receive any proceeds from, and has agreed to bear all registration expenses of, the Exchange Offer. No underwriter is being used in connection with the Exchange Offer. See "The Exchange Offer -- Fees and Expenses." 5 AVAILABLE INFORMATION The Company is subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files periodic reports, proxy statements, and other information with the Commission. Such reports, proxy statements, and other information may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission also maintains a Website, located at http://www.sec.gov, that contains reports, proxy statements, and other information regarding registrants that file electronically with the Commission. Copies of such reports, proxy statements, and other information also may be obtained by mail from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements, and other information relating to Pillowtex may also be inspected at the offices of the New York Stock Exchange ("NYSE") at 20 Broad Street, New York, New York 10005. The Common Stock, par value $0.01 per share, of the Company (the "Pillowtex Common Stock") is listed and traded on the NYSE under the symbol "PTX." The Company and the Guarantors have filed with the Commission a registration statement on Form S-4 (including the exhibits and amendments thereto, the "Registration Statement") under the Securities Act with respect to the Series B Notes offered hereby. As permitted under the Securities Act and the Exchange Act, this Prospectus does not contain all the information set forth in the Registration Statement. Such additional information can be inspected and copied or obtained from the Commission in the manner described above. Statements contained in this Prospectus as to the contents of any other document referred to herein are not necessarily complete, and each such statement is qualified in all respects by reference to the copy of such other document filed as an exhibit to the Registration Statement. The Company has agreed that, whether or not it is required to do so by the rules and regulations of the Commission, for so long as any of the Notes remain outstanding, it will furnish to the holders of the Notes and file with the Commission (unless the Commission will not accept such filing) (i) 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 pursuant to the Exchange Act including a "Management's Discussion and Analysis of Results of Operations and Financial Condition" and, with respect to the annual financial statements only, a report thereon by the Company's independent accountants and (ii) all reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE THIS PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST. REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO PILLOWTEX CORPORATION, 4111 MINT WAY, DALLAS, TEXAS 75237, ATTENTION: MARK KIRKPATRICK, TELEPHONE (214) 333-3225. IN ORDER TO ENSURE TIMELY DELIVERY OF DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1998. (ii) 6 The following documents which have been filed by the Company with the Commission are hereby incorporated by reference in this Prospectus: (i) Annual Report on Form 10-K for the year ended December 28, 1996; (ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended March 29, 1997, June 28, 1997, and September 27, 1997; (iii) Current Report on Form 8-K, dated September 10, 1997 (as amended by an amendment on Form 8-K/A); (iv) Proxy Statement on Schedule 14A for the Annual Meeting of Shareholders held May 8, 1997; (v) Registration Statement on Form 8-A, effective March 17, 1993 (Commission File No. 1-11756), and (vi) Current Report on Form 8-K, dated January 6, 1998 (as amended by an amendment on Form 8-K/A). The following documents which have been filed by Fieldcrest with the Commission are hereby incorporated by reference in this Prospectus: (i) Annual Report on Form 10-K for the year ended December 31, 1996; (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997, and September 30, 1997; (iii) Current Report on Form 8-K, dated September 15, 1997; and (iv) Current Report on Form 8-K dated December 29, 1997. The information relating to Pillowtex and Fieldcrest contained in this Prospectus should be read together with the information in the documents incorporated by reference. All documents and reports filed by the Company pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Exchange Offer are deemed to be incorporated by reference in this Prospectus and to be a part hereof from the dates of filing of such documents or reports. Any statement contained in a document incorporated or deemed to be incorporated by reference herein is deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed documents which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. NOTE REGARDING FORWARD-LOOKING INFORMATION THE INFORMATION CONTAINED IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WHICH ARE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "WILL," "COULD," "SHOULD," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREOF. SUCH FORWARD-LOOKING STATEMENTS ARE NECESSARILY BASED ON VARIOUS ASSUMPTIONS AND ESTIMATES AND ARE INHERENTLY SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES, INCLUDING RISKS AND UNCERTAINTIES RELATING TO THE POSSIBLE INVALIDITY OF THE UNDERLYING ASSUMPTIONS AND ESTIMATES AND POSSIBLE CHANGES OR DEVELOPMENTS IN SOCIAL, ECONOMIC, BUSINESS, INDUSTRY, MARKET, LEGAL, AND REGULATORY CIRCUMSTANCES AND CONDITIONS AND ACTIONS TAKEN OR OMITTED TO BE TAKEN BY THIRD PARTIES, INCLUDING CUSTOMERS, SUPPLIERS, BUSINESS PARTNERS, AND COMPETITORS AND LEGISLATIVE, REGULATORY, JUDICIAL, AND OTHER GOVERNMENTAL AUTHORITIES AND OFFICIALS. IN ADDITION TO ANY RISKS AND UNCERTAINTIES SPECIFICALLY IDENTIFIED IN THE TEXT SURROUNDING SUCH FORWARD-LOOKING STATEMENTS, THE STATEMENTS IN "RISK FACTORS" BEGINNING ON PAGE 16 OF THIS PROSPECTUS OR IN THE REPORTS, PROXY STATEMENTS, AND OTHER INFORMATION REFERRED TO IN "AVAILABLE INFORMATION" CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE ACTUAL AMOUNTS, RESULTS, EVENTS, AND CIRCUMSTANCES TO DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS. (iii) 7 TABLE OF CONTENTS
PAGE ---- Available Information....................................... ii Incorporation of Certain Information by Reference........... ii Note Regarding Forward-Looking Information.................. iii Summary..................................................... 1 Risk Factors................................................ 16 The Merger.................................................. 23 Use of Proceeds............................................. 25 Pro Forma Capitalization of Pillowtex....................... 26 Unaudited Pro Forma Combined Financial Information.......... 28 Selected Historical Financial Information of Pillowtex...... 36 Selected Historical Financial Information of Fieldcrest..... 37 The Exchange Offer.......................................... 38 Business.................................................... 46 Description of Notes........................................ 59 Post-Merger Indebtedness.................................... 87 Pillowtex Series A Redeemable Convertible Preferred Stock... 90 Certain United States Federal Income Tax Considerations..... 92 Plan of Distribution........................................ 93 Legal Matters............................................... 93 Experts..................................................... 93
(iv) 8 SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial data, including the financial statements and notes thereto included elsewhere in this Prospectus. On December 19, 1997, Fieldcrest merged with and into a wholly owned subsidiary of Pillowtex pursuant to an Agreement and Plan of Merger dated September 10, 1997 (as amended, the "Merger Agreement"). Upon consummation of the Merger, Fieldcrest became a wholly owned subsidiary of Pillowtex. Except as otherwise required by the context, references herein to periods prior to December 19, 1997 to (i) "Pillowtex" are to Pillowtex Corporation and its subsidiaries prior to giving effect to the Merger; (ii) "Fieldcrest" are to Fieldcrest Cannon, Inc. and its subsidiaries prior to giving effect to the Merger; and (iii) the "Company" are to Pillowtex Corporation and its subsidiaries, including Fieldcrest, following the Merger. References herein to periods after December 19, 1997 to "Pillowtex" or the "Company" include Fieldcrest and its subsidiaries. The unaudited pro forma condensed combined financial information contained herein gives effect to the consummation of the Merger and the Financing Transactions, as if such transactions had been consummated as of September 27, 1997, in the case of the balance sheet information of Pillowtex, and on December 31, 1995, the first day of Pillowtex's 1996 fiscal year, in the case of the statement of operations information. References herein to "fiscal" years are references to fiscal years of Pillowtex (which end on December 31 for years prior to 1995 and on the Saturday nearest December 31 for years after 1994) or to fiscal years of Fieldcrest (which end on December 31), as the case may be. THE COMPANY The Company is one of the largest, based on net sales, North American designers, manufacturers, and marketers of home textile products, offering a full line of bed pillows, sheets, blankets, mattress pads, down comforters, towels, bath rugs, and other home textile products. As a leading supplier across all distribution channels, the Company sells its products to most major mass merchants, department stores, and specialty retailers, providing its customers a centralized "one-stop" source for their home textile merchandise. The Company manufactures and markets products utilizing established and well recognized Company-owned trademarks and trade names, including Royal Velvet(R), Cannon(R), Charisma(R), Touch of Class(R), Fieldcrest(R), Nettle Creek(R), and Beacon(R). In addition, the Company has licensed, for certain products, highly recognizable brands such as Ralph Lauren, Disney's Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), Comforel(R), Adrienne Vittadini(R), Ellen Tracy(R), and Waverly(R) as well as such well-known copyrighted characters as Mickey Mouse and Winnie the Pooh. This diverse portfolio of premier brand names allows the Company to differentiate its products from those of its competitors and provides distinct brand names for different channels of retail distribution and for different price points. The Company believes that this portfolio of well-known brands and trade names provides it with a significant competitive advantage. On a pro forma combined basis, after giving effect to the Merger and the Financing Transactions, the Company would have had net sales and pro forma EBITDA (as defined herein) of approximately $1.6 billion and $158.5 million, respectively, for the last 12 months ended September 27, 1997. See "Business -- General." The Company's principal executive office is located at 4111 Mint Way, Dallas, Texas 75237, and its telephone number is (214) 333-3225. RECENT DEVELOPMENTS Since the consummation of the Merger on December 19, 1997, the Company has disposed of certain non-core business assets of Fieldcrest for approximately $24.0 million in cash. The Company plans to continue to evaluate certain Fieldcrest properties and lines of business unrelated to its core home textile business of towel, bath rugs, sheets and fashion bedding and expects to enter into additional agreements for the disposal of these properties and businesses. 1 9 On January 20, 1998, the Company announced that it was consolidating its four blanket production units into two facilities in Westminster, South Carolina and Swannanoa, North Carolina. In connection with this consolidation the Company has announced that it is closing certain facilities operated by its subsidiaries, Manetta Home Fashions, Inc. and Tennessee Woolen Mills, Inc. The consolidation is expected to be completed by the end of the second quarter of this year. As part of the consolidation, the Company will take a pre-tax charge to earnings of approximately $6.0 million for the period ended January 3, 1998, and approximately $1.5 million for the period ending April 4, 1998. Management expects these nonrecurring costs to be initially funded through cash flows and borrowings under the New Senior Credit Facilities. PILLOWTEX Pillowtex, founded in 1954, is a leading North American designer, manufacturer, and marketer of bed pillows, blankets, mattress pads, and down comforters. Other complementary bedroom textile furnishings offered by Pillowtex include comforter covers, featherbeds, pillow protectors, decorative pillows, bedspreads, synthetic comforters, pillow shams, dust ruffles, and window treatments. Pillowtex has positioned itself as a single-source supplier to retailers for top-of-the-bed home textile furnishings (other than sheets), offering a broad assortment of products across multiple price points. Pillowtex markets its products primarily to department stores, mass merchants, wholesale clubs, specialty retail stores, catalogs, and institutional distributors. Pillowtex believes it is one of the principal suppliers of bedroom textile products to several of the largest retailers in the United States, including Wal-Mart Stores, Inc. (including Wal-Mart and Sam's Club stores) ("Wal-Mart"), Dayton Hudson Corporation (including Mervyn's, Marshall Field's, and Target stores) ("Dayton Hudson") and Federated Department Stores, Inc. (including Macy's East and Macy's West, Bloomingdale's, and Burdine's stores) ("Federated"). Pillowtex manufactures and markets its products under numerous Company-owned trademarks, trade names, and customer-owned private labels, as well as certain licensed trademarks. Pillowtex uses trademarks, trade names, and private labels as merchandising tools to assist its customers in coordinating their product offerings and to differentiate their products from those of their competitors. Pillowtex has also entered into various license agreements under which it markets pillows, down comforters, blankets, and related products, using such well-known trademarks as Ralph Lauren, The Walt Disney Company's ("Disney") Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), and Comforel(R). In 1996, Pillowtex entered into exclusive license agreements with Fieldcrest for the manufacture and sale of various goods including bed pillows, mattress pads, and down comforters under a variety of Fieldcrest's trademarks, including Royal Velvet(R), Cannon(R), Charisma(R), Touch of Class(R), and Fieldcrest(R). In addition, Pillowtex manufactures pillows, blankets, throws, and mattress pads under the MARTHA STEWART EVERYDAY(TM) brand name for Kmart Corporation ("Kmart"). Pillowtex's net sales and EBITDA were $525.5 million and $59.0 million, respectively, for the 12 months ended September 27, 1997. See "Business." FIELDCREST Fieldcrest, founded in 1953, designs, manufactures, and markets a broad range of household textile products including towels, bath rugs, sheets, and comforters. Other complementary products include furniture coverings, ceramic accessories, and shower curtains. Fieldcrest is the leading supplier of towels in North America and has a significant market share in bath rugs, sheets, and fashion bedding items. Fieldcrest markets a broad range of household textile products through all major distribution channels, including department stores, mass merchants, wholesale clubs, specialty retail stores, catalogs, and institutional distributors. Fieldcrest is a leading supplier to department and specialty stores, including Federated, The May Department Stores Company, Dayton Hudson, and Bed Bath & Beyond Inc. In addition, Fieldcrest has achieved a significant market share in the mass merchant channel by developing relationships with the channel's leading retailers including Wal-Mart, Kmart, and Target. Fieldcrest also serves the institutional 2 10 segment of the industry, including Hilton Hotels Corporation; Marriott Hotels, Resorts, and Suites, a division of Marriott International, Inc.; and Hyatt Hotels Corporation. Fieldcrest's bed and bath products are sold under such brand names as Royal Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), Royal Family(R), Caldwell(R), and St. Mary's(R). Fieldcrest also has license agreements for the use of various trademarks, including Waverly(R), Adrienne Vittadini(R), Court of Versailles(R), Ellen Tracy(R), and others. In 1996, approximately 93% of Fieldcrest's sales were derived from products carrying Fieldcrest's brand names. The Company believes that Fieldcrest's principal brand names are widely recognized in the industry as representing excellence and value in product quality, fashion, and design. Fieldcrest's net sales and EBITDA were $1.1 billion and $77.9 million, respectively, for the 12 months ended September 30, 1997. COMPETITIVE STRENGTHS The Merger has created one of the largest firms, based on net sales, in the home textile industry with competitive strengths that are significantly greater than those of either Pillowtex or Fieldcrest on a stand-alone basis. The Company has the largest market share in North America in each of the towel, bed pillow, blanket, and down comforter product segments and a significant market share in sheets, mattress pads, fashion bedding, and bath rugs. Pillowtex's management team has successfully integrated eight acquisitions over the last five years while improving Pillowtex's overall efficiency and consistently producing a record of growth and profitability. From 1991 through 1996, Pillowtex's net sales have increased from $259.0 million to $490.7 million, representing a compound annual growth rate of 13.6%. Over this same period Pillowtex's EBITDA has improved from $22.0 million to $50.9 million, representing a compound annual growth rate of 18.3%. The combined company's management team will provide a breadth of expertise rivaling any in the industry. The Company's management team will use the following competitive strengths to enhance the Company's position in the marketplace: - Industry Leading Brands: As a result of the Merger, the Company owns some of the most recognizable brands in the industry, including Royal Velvet(R), Cannon(R), Charisma(R), and Touch of Class(R). Recent consumer research has shown that Cannon(R) and Fieldcrest(R) are the two most recognized home textile brands in the United States. In addition, Cannon(R) is the sixth most recognized domestic consumer brand. Furthermore, through licensing agreements, the Company currently has exclusive rights to manufacture and, in some instances, market certain bedding products under such well-known brands as Ralph Lauren, Disney's Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), Comforel(R), Adrienne Vittadini(R), Ellen Tracy(R), and Waverly(R). This diverse portfolio of premier brand names allows the Company to differentiate its products from those of its competitors and provides distinct brand names for different channels of retail distribution and for different price points. These brand names will also enable the Company to assist its customers in coordinating their product offerings and differentiating such offerings from those of their competitors. - Strong Customer Relationships: The Company has established relationships with 49 of the top 50 home textile retailers in the United States and Canada. The combination of the two companies enhances these relationships, providing customers the benefits of a true "one-stop" source for bed and bath products. These strong relationships will create a stable base from which the Company can pursue future business and new product introductions. - Creative Merchandising Strategies: Historically, both Pillowtex and Fieldcrest have maintained creative partnerships with their customers, including extensive merchandising programs, that have resulted in the creation of successful new products, product mix strategies, point-of-sale concepts, and advertising campaigns. Retail customers are increasingly demanding exclusive or specially designed product lines to differentiate their product offerings from those of other retailers and to implement price tiering in 3 11 order to achieve higher margins. The Company will continue this collaboration with its retail customers to design products and marketing programs responsive to individual customer needs. - Low Cost Operating Capabilities: As a result of its continued emphasis on cost-containment and capital expenditures to obtain greater plant efficiencies, the Company is a low cost producer of bed pillows, mattress pads, down comforters, and blankets in the home textile industry. The Merger provides the Company with efficient, low cost towel and bath rug production capabilities, including a new, state-of-the-art towel production facility. In addition, Pillowtex has emphasized a low cost of operations, creating a competitive advantage by operating with one of the lowest selling, general, and administrative ("SG&A") expenses, as a percentage of sales, in the industry. The Company believes that significant opportunities exist to improve this competitive position by lowering Fieldcrest's SG&A costs as a percentage of sales to Pillowtex's historic levels. BUSINESS STRATEGY The Company's strategic objectives are to capitalize on its industry leading position by leveraging the strength of its brand names, customer relationships, and operational capabilities across the most comprehensive array of product offerings in the home textile industry. The Company's strategic focus will be to: - Capitalize on Industry Leading Position: The Merger has created a powerhouse within the home textiles industry in terms of dollar sales volume and product offerings. The Company will focus on leveraging its market leadership by implementing sales and marketing programs designed to facilitate a customer-driven "pull" strategy. By cross-marketing both Pillowtex and Fieldcrest products using the Company's strong brand names, the Company will create enhanced product value and facilitate greater differentiation of its products from those of its competitors. - Develop the Premier "One-Stop Shop" for Home Textiles: The breadth of the Company's product lines provide it with a significant competitive advantage as it can offer its retailer customers a centralized "one-stop" purchasing source for all their home textile merchandise. The Company's extensive assortment of home textile products will include fashion and utility bedding, as well as a full line of bath products. The Company will exploit its position as a "one-stop" purchasing source by continuing its practice of offering broad product assortments across diverse product lines, thereby offering retailers a central source from which to efficiently and effectively purchase their home textile items. - Further Strengthen Customer Relationships: The Company has a long history of strong customer relationships with the top retailers in the United States and Canada. The Company has developed these relationships by providing value-added services, such as innovative marketing and cross- merchandising capabilities. The Company believes that the value of such services to retailers will be increased significantly by combining the traditional Pillowtex and Fieldcrest product lines in a centralized purchasing source and utilizing the Fieldcrest portfolio of brand names across all such product lines. The Company will also increase the use of marketing and cross-merchandising services in connection with the traditional Fieldcrest products, creating opportunities for added sales and providing retailers with more opportunities to differentiate their product offerings from those of their competitors. - Enhance Operational Efficiencies: The Company will continue to focus on reducing its manufacturing cost structure by rationalizing its current operations and investing in automation, equipment modernization, process improvements, and system controls throughout all aspects of its business. The Company's management believes that significant opportunities exist to improve production efficiency through capital investment, improved operational logistics, selective outsourcing, and increased utilization of information systems. The Company intends to make capital expenditures in excess of $240.0 million over the next several years, principally to modernize the acquired Fieldcrest sheet and certain of the towel manufacturing facilities through the addition of new machinery and equipment. The Company anticipates that approximately $80.0 million of such capital expenditures will be made in fiscal 1998. 4 12 - Realize Significant Cost Savings: The Company has identified approximately $21.6 million of annual cost savings that it expects to realize immediately as a result of the Merger. These cost savings are comprised of $20.3 million of savings from the elimination of duplicate staff salaries and $1.3 million of savings from the elimination of duplicative corporate expenses. The Company additionally expects to realize significant ongoing cost savings, including at least $8.4 million to be realized within the first 12 months after consummation of the Merger, as follows: (i) $0.9 million by eliminating other redundant cost functions; (ii) $2.0 million by improving procurement efficiencies by exploiting the combined company's purchasing power; (iii) $3.0 million by reducing trade advertising; (iv) $1.0 million by rationalizing and streamlining operations; and (v) $1.5 million by reducing the use of outside consultants. THE MERGER Pillowtex and Fieldcrest entered into the Merger Agreement, pursuant to which a wholly owned subsidiary of Pillowtex was merged on December 19, 1997 with and into Fieldcrest. Following consummation of the Merger, Fieldcrest became a wholly owned subsidiary of Pillowtex. At the effective time of the Merger (the "Effective Time"), (i) each then-outstanding share of common stock, par value $1.00 per share, of Fieldcrest (the "Fieldcrest Common Stock") was exchanged for the right to receive consideration valued at $34.00, consisting of $27.00 in cash and 0.269 Pillowtex Common Stock, and (ii) each then-outstanding share of preferred stock, par value $0.01 per share, of Fieldcrest (the "Fieldcrest Preferred Stock") was exchanged for the right to receive consideration valued at $58.12, consisting of $46.15 in cash and the remainder in shares of Pillowtex Common Stock. Each outstanding option (each, a "Fieldcrest Option") to purchase shares of Fieldcrest Common Stock entitled the holder thereof to receive, at the election of the holder, an amount in cash equal to the difference between $34.00 and the per share exercise price of such Fieldcrest Option; Fieldcrest Options in respect of which such election was not made were assumed by Pillowtex at the Effective Time and constitute an option to purchase a number of shares of Pillowtex Common Stock as set forth in the Merger Agreement. From and after the Effective Time, the 6% Convertible Subordinated Debentures due 2012 of Fieldcrest (the "Fieldcrest Convertible Debentures") are convertible into the same consideration that a holder of the number of shares of Fieldcrest Common Stock into which such Fieldcrest Convertible Debentures might have been converted immediately prior to the Merger would be entitled to receive in the Merger. See "The Merger." Pillowtex financed the Merger and refinanced certain indebtedness of Pillowtex and Fieldcrest, paid related fees and expenses, and provided for the ongoing working capital needs of the Company through a combination of (i) initial borrowings of $149.0 million under a new $350.0 million revolving credit facility (the "Revolver") and $250.0 million under a new term loan facility (the "Term Loan"), each with NationsBank of Texas, N.A. (collectively, the "New Senior Credit Facilities"), (ii) the issuance and sale of $185.0 million in aggregate principal amount of the Series A Notes, and (iii) the issuance and sale of $65.0 million in liquidation preference of Series A Redeemable Convertible Preferred Stock (the "Pillowtex Preferred Stock") to affiliates of Apollo Management, L.P. (collectively, "Apollo"). The issuance of the Series A Notes and the Pillowtex Preferred Stock, the initial borrowings under the New Senior Credit Facilities, the repayment of all amounts outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities, and the satisfaction and discharge of all indebtedness represented by the Fieldcrest 11.25% Senior Subordinated Debentures due 2004 (the "Fieldcrest 11.25% Senior Subordinated Debentures") pursuant to an irrevocable deposit of amounts sufficient to provide for the redemption thereof are hereinafter referred to collectively as the "Financing Transactions." See "The Merger," "Post-Merger Indebtedness," and "Pillowtex Series A Redeemable Convertible Preferred Stock." 5 13 THE EXCHANGE OFFER The Exchange Offer......... The Series B Notes are being offered, upon the terms and conditions set forth herein and in the Letter of Transmittal, in exchange for a like principal amount of Series A Notes. The issuance of the Series B Notes is intended to satisfy obligations of the Company contained in the Registration Rights Agreement. Tenders; Expiration Date; Withdrawal............... The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998, or such later date and time to which it is extended by the Company in its sole discretion, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. The tender of Series A Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date. Any Series A Note not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. See "The Exchange Offer -- Procedures for Tendering Series A Notes" and "The Exchange Offer -- Withdrawal Rights." Certain Conditions to Exchange Offer............. The Company shall not be required to accept for exchange, or to issue Series B Notes in exchange for, any Series A Notes and may terminate or amend the Exchange Offer if at any time before the acceptance of the Series A Notes for exchange or the exchange of the Series B Notes for such Series A Notes certain events have occurred, which in the reasonable judgment of the Company, make it inadvisable to proceed with the Exchange Offer and/or with such acceptance for exchange or with such exchange. Such events include (i) any threatened, instituted or pending action seeking to restrain or prohibit the Exchange Offer, (ii) a general suspension of trading in securities on any national securities exchange or in the over-the-counter market, (iii) a general banking moratorium, (iv) the commencement of a war or armed hostilities involving the United States, and (v) a material adverse change or development involving a prospective material adverse change in the Company's business, properties, assets, liabilities, financial condition, operations, results of operations or prospects that may affect the value of the Series A Notes or the Series B Notes. In addition, the Company will not accept for exchange any Series A Notes tendered, and no Series B Notes will be issued in exchange for any such Series A Notes, at any such time any stop order shall be threatened or in effect with respect to the Registration Statement of which the Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act of 1939 (the "Trust Indenture Act"). See "The Exchange Offer -- Certain Conditions to the Exchange Offer." Procedures for Tendering Series A Notes........... Each holder of Series A Notes wishing to accept the Exchange Offer must complete, sign, and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with such Series A Notes and any other required documentation to Norwest Bank Minnesota, National Association, as exchange agent (the "Exchange Agent"), at the address set forth herein. 6 14 By executing the Letter of Transmittal, the holder will represent to and agree with the Company that, among other things, (i) the Series B Notes to be acquired by such holder of Series A Notes in connection with the Exchange Offer are being acquired by such holder in the ordinary course of its business, (ii) such holder is not participating, does not intend to participate and has no arrangement or understanding with any person to participate in a distribution of the Series B Notes, and (iii) such holder is not an "affiliate," as defined in Rule 405 under the Securities Act, of the Company. If the holder is a broker-dealer that will receive Series B Notes for its own account in exchange for Series A Notes that were acquired as a result of market-making or other trading activities, such holder will be required to acknowledge in the Letter of Transmittal that such holder will deliver a prospectus in connection with any resale of such Series B Notes, however, by so acknowledging and by delivering a prospectus, such holder will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "The Exchange Offer -- Procedures for Tendering Series A Notes." Special Procedures for Beneficial Owners.......... Any beneficial owner whose Series A Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender such Series A Notes in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering such owner's Series A Notes, either make appropriate arrangements to registered ownership of the Series A Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the Expiration Date. See "The Exchange Offer -- Procedures for Tendering Series A Notes." Guaranteed Delivery Procedures................. Holders of Series A Notes who wish to tender their Series A Notes and whose Series A Notes are not immediately available or who cannot deliver their Series A Notes, the Letter of Transmittal or any other documentation required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date must tender their Series A Notes according to the guaranteed delivery procedures set forth under "The Exchange Offer -- Guaranteed Delivery Procedures." Effect of Not Tendering Series A Notes for Exchange................. Series A Notes that are not tendered or that are not properly tendered will, following the expiration of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof. The Company will have no further obligations to provide for the registration under the Securities Act of such Series A Notes and such Series A Notes will, following the expiration of the Exchange Offer, bear interest at the same rate and in the same manner as the Series B Notes. Federal Income Tax Consequences............. The exchange pursuant to the Exchange Offer should not result in gain or loss to the holders or the Company for federal income tax purposes. See "Certain United States Federal Income Tax Considerations." 7 15 Exchange Agent............. Norwest Bank Minnesota, National Association is serving as exchange agent in connection with the Exchange Offer. Norwest Bank Minnesota, National Association also serves as the Trustee under the Indenture. Use of Proceeds............ There will be no proceeds to the Company from the exchange pursuant to the Exchange Offer. See "Use of Proceeds." Resale of Series B Notes... Holders of Series A Notes who do not exchange their Series A Notes for Series B Notes pursuant to the Exchange Offer will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Series A Notes and the restrictions on transfer of such Series A Notes as set forth in the legend thereon as a consequence of the issuance of the Series A Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Series A Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register Series A Notes under the Securities Act. See "Description of Notes -- Registration Rights; Liquidated Damages." Based on interpretations by the staff of the Commission, as set forth in no-action letters issued to third parties, the Company believes that Series B Notes issued pursuant to the Exchange Offer in exchange for Series A Notes may be offered for resale, resold or otherwise transferred by holders thereof (other than any holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Series B Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement with any person to participate in the distribution of such Series B Notes. However, the Company does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Each holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Series B Notes and has no arrangement or understanding to participate in a distribution of Series B Notes. If any holder is an affiliate of the Company, is engaged or intends to engage in or has any arrangement or understanding with respect to the distribution of the Series B Notes to be acquired pursuant to the Exchange Offer, such holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives Series B Notes for its own account in exchange for Series A Notes must acknowledge that such Series A Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such Series B Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "under- 8 16 writer" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Series B Notes received in exchange for Series A Notes where such Series A Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of one year after the Registration Statement has been declared effective, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." In addition, to comply with the state securities laws, the Series B Notes may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. The Company currently does not intend to register or qualify the sale of the Series B Notes in any state where an exemption from registration or qualification is required and not available. See "The Exchange Offer -- Consequences of Exchanging Series A Notes" and "Description of Notes -- Registration Rights; Liquidated Damages." Termination of Certain Rights..................... All rights under the Registration Rights Agreement accorded to holders of Series A Notes will terminate upon the consummation of the Exchange Offer except with respect to the Company's duty to keep the Registration Statement effective until the closing of the Exchange Offer and, subject to certain conditions, for a period not to exceed one year after the registration of the Series B Notes has been declared effective, to provide copies of the latest version of the Prospectus to any broker-dealer that requests copies for use in connection with its own account as a result of market-making or other trading activities. See "The Exchange Offer -- Consequences of Exchanging Series A Notes." 9 17 SERIES B NOTES The form and terms of the Series B Notes will be the same as those of the Series A Notes except that the Series B Notes will have been registered under the Securities Act, and consequently will not be subject to certain transfer restrictions, registration rights and related liquidated damages provisions applicable to the Series A Notes. See "Description of Notes -- Registration Rights; Liquidated Damages." Securities Offered......... Up to $185,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2007 of the Company, which have been registered under the Securities Act. Maturity Date.............. December 15, 2007. Interest Payment Dates..... June 15 and December 15, commencing June 15, 1998. Optional Redemption........ The Notes may be redeemed at the option of the Company, in whole or in part, on or after December 15, 2002, at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages (as defined herein), if any, to the redemption date. See "Description of Notes -- Optional Redemption." Ranking.................... The Notes are general unsecured obligations of the Company, ranking senior to all existing and future subordinated indebtedness of the Company, pari passu in right of payment with the 10% Senior Subordinated Notes, and subordinated in right of payment to all existing and future Senior Indebtedness of the Company, including indebtedness under the New Senior Credit Facilities. As of September 27, 1997, on a pro forma basis after giving effect to the consummation of the Merger and the Financing Transactions, Pillowtex and its subsidiaries would have had $420.0 million of indebtedness (excluding $37.8 million in letters of credit) effectively ranking senior to the Notes. See "Description of Notes -- Ranking and Subordination." Guarantees................. The payment of principal, premium, if any, and interest on the Notes is fully and unconditionally guaranteed on a joint and several basis by each of the Company's existing domestic subsidiaries and any future domestic Restricted Subsidiaries (as defined herein) other than Receivables Subsidiaries (as defined herein) and each other subsidiary of the Company that guarantees the Company's obligations under the New Senior Credit Facilities. The Guarantees rank senior to all existing and future subordinated indebtedness of the Guarantors, pari passu in right of payment on the Guarantor's Guarantees with the 10% Senior Subordinated Notes, and are subordinated in right of payment to all existing and future Senior Indebtedness of the Guarantors, including the guarantees of indebtedness under the New Senior Credit Facilities. See "Description of Notes -- Subsidiary Guarantees." Change of Control.......... Upon a Change of Control (as defined herein), the Company will be required to make an offer to repurchase all outstanding Notes at 101% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of repurchase. See "Description of Notes -- Repurchase at the Option of Holders -- Change of Control." Covenants.................. The Indenture restricts, among other things, the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional indebtedness; pay dividends or make certain other restricted payments; incur liens; apply net proceeds from certain asset sales; merge or 10 18 consolidate with any other person; sell, assign, transfer, lease, convey, or otherwise dispose of substantially all of the assets of the Company and its Restricted Subsidiaries; enter into certain transactions with affiliates; or incur indebtedness that is subordinate in right of payment to any indebtedness and senior in right of payment to the Notes or a Guarantee. See "Description of Notes -- Certain Covenants." Use of Proceeds............ The Company will not receive any proceeds from the Exchange Offer. Book-Entry, Delivery and Form....................... It is expected that delivery of the Series B Notes will be made in book-entry form. The Company expects that Series B Notes exchanged for Series A Notes currently represented by a restricted global notes certificate deposited with, or on behalf of, The Depository Trust Company (the "DTC") and registered in the name of Cede & Co., its nominee, will be represented by global notes certificates and deposited upon issuance with the DTC and registered in its name or the name of its nominee. Beneficial interests in the global notes certificate representing the Series B Notes will be shown on, and transfers thereof will be effected through, records maintained by the DTC and its participants. For additional information regarding the Notes, see "The Exchange Offer," "Description of Notes," and "Certain United States Federal Income Tax Considerations." RISK FACTORS See "Risk Factors," which begins at page 16 for a discussion of certain factors that should be considered in evaluating an investment in the Notes. 11 19 SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION The following unaudited pro forma combined financial statements of Pillowtex give effect to the consummation of the Merger and the Financing Transactions, as if such transactions had been consummated: (i) on September 27, 1997, in the case of the Unaudited Pro Forma Combined Balance Sheet at September 27, 1997 and (ii) on December 31, 1995, the first day of Pillowtex's 1996 fiscal year, in the case of the Unaudited Pro Forma Combined Statement of Operations for the fiscal year ended December 28, 1996 and the nine months ended September 27, 1997. As used herein, the term "Financing Transactions" means (i) initial borrowings under the New Senior Credit Facilities of $149.0 million under the Revolver and $250.0 million under the Term Loan, (ii) the issuance and sale of $185.0 million aggregate principal amount of Notes, (iii) the issuance and sale of 65,000 shares of Pillowtex Preferred Stock, (iv) the repayment of all amounts outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities, and (v) the satisfaction and discharge of all indebtedness represented by Fieldcrest's 11.25% Senior Subordinated Debentures Due 2002 to 2004 pursuant to an irrevocable deposit of amounts sufficient to provide for the redemption thereof.
HISTORICAL -------------------------- PRO FORMA PILLOWTEX FIELDCREST COMBINED ----------- ----------- ----------- (IN THOUSANDS, EXCEPT FOR PER SHARE DATA) STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 28, 1996: Net sales........................................... $ 490,655 $ 1,092,496 $ 1,583,151 Cost of goods sold.................................. 411,048 956,522 1,364,368 ----------- ----------- ----------- Gross profit........................................ 79,607 135,974 218,783 Selling, general, and administrative expenses....... 41,445 105,405 136,434 Restructuring charge................................ -- 8,130 8,130 ----------- ----------- ----------- Earnings from operations............................ 38,162 22,439 74,219 Interest expense.................................... 13,971 26,869 63,446 Other income, net................................... -- (5,604) (5,604) ----------- ----------- ----------- Earnings before income taxes and extraordinary items............................................. 24,191 1,174 16,377 Income taxes........................................ 9,459 114 8,375 ----------- ----------- ----------- Earnings before extraordinary items................. 14,732 1,060 8,002 Preferred dividends................................. -- (4,500) (1,950) ----------- ----------- ----------- Earnings (loss) before extraordinary items applicable to common stock........................ $ 14,732 $ (3,440) $ 6,052 =========== =========== =========== OTHER DATA: Depreciation and amortization....................... $ 12,775 $ 36,678 $ 57,394 EBITDA(1)........................................... 50,937 59,117 131,613 Ratio of earnings to fixed charges(2)............... 2.4x 1.0x 1.2x BALANCE SHEET DATA AT SEPTEMBER 27, 1997: Total current assets................................ $ 261,320 $ 379,828 $ 660,148 Total assets........................................ 419,168 789,479 1,436,625 Long-term debt...................................... 218,806 308,820 821,596 Shareholders' equity................................ 110,777 229,321 199,555
- --------------- (1) EBITDA is income before income taxes plus depreciation expense, amortization expense, and net interest expense. EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness; however, EBITDA should not be considered as an alternative to net income (as a measure of operating results) or to cash flows (as a measure of liquidity) computed in accordance with generally accepted accounting principles. In addition, EBITDA as presented herein may not be directly comparable to EBITDA as reported by other companies. (2) In calculating the ratio of earnings to fixed charges, earnings consist of income taxes plus fixed charges (excluding capitalized interest). Fixed charges consist of interest expense (which includes amortization of deferred financing costs) whether expensed or capitalized and one-third of rental expense, deemed representative of that portion of rental expense estimated to be attributable to interest. 12 20 SUMMARY HISTORICAL FINANCIAL INFORMATION The following summary historical financial information of Pillowtex and Fieldcrest has been derived from the historical consolidated financial statements of Pillowtex and Fieldcrest filed with the Commission, and should be read in conjunction with such financial statements and the notes thereto and the other financial information appearing in Pillowtex's Annual Report on Form 10-K for the year ended December 28, 1996 and its Quarterly Report on Form 10-Q for the quarter ended September 27, 1997 and Fieldcrest's Annual Report on Form 10-K for the year ended December 31, 1996 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 1997, each as incorporated by reference herein. See "Available Information," "Selected Historical Financial Information of Pillowtex," and "Selected Historical Financial Information of Fieldcrest." The historical financial information at the end of and for each fiscal year in the five-year period ended December 28, 1996 with respect to Pillowtex and December 31, 1996 with respect to Fieldcrest has been extracted from audited financial statements filed with the Commission. Historical financial information at the end of and for the nine-month periods ended September 28, 1996 and September 27, 1997 with respect to Pillowtex and September 30, 1996 and 1997 with respect to Fieldcrest has been extracted from unaudited financial statements filed with the Commission and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation, in all material respects, of the results of operations and financial position at the end of and for each of the interim periods presented. Interim period results are not necessarily indicative of results to be expected for a complete fiscal year. See "Incorporation of Certain Information by Reference." 13 21 SUMMARY HISTORICAL FINANCIAL INFORMATION OF PILLOWTEX (IN THOUSANDS)
NINE MONTHS ENDED FISCAL YEAR ----------------------------- ---------------------------------------------------- SEPTEMBER 28, SEPTEMBER 27, 1992 1993(1) 1994(2) 1995 1996 1996 1997 -------- -------- -------- -------- -------- ------------- ------------- (UNAUDITED) STATEMENTS OF OPERATIONS DATA: Net sales....................... $273,462 $291,624 $349,520 $474,899 $490,655 $335,770 $370,633 Cost of goods sold.............. 222,611 238,155 294,714 395,922 411,048 280,272 305,674 -------- -------- -------- -------- -------- -------- -------- Gross profit.................... 50,851 53,469 54,806 78,977 79,607 55,498 64,959 Selling, general, and administrative expenses....... 33,376 29,227 36,399 42,508 41,445 31,170 33,728 -------- -------- -------- -------- -------- -------- -------- Earnings from operations........ 17,475 24,242 18,407 36,469 38,162 24,328 31,231 Interest expense................ 4,997 3,042 6,361 17,491 13,971 10,279 13,957 Other expense (income), net..... 1,049 -- (379) -- -- -- -- -------- -------- -------- -------- -------- -------- -------- Earnings before income taxes and extraordinary loss............ 11,429 21,200 12,425 18,978 24,191 14,049 17,274 Income taxes.................... 529 8,420 4,736 7,509 9,459 5,495 6,702 -------- -------- -------- -------- -------- -------- -------- Earnings before extraordinary loss.......................... 10,900 12,780 7,689 11,469 14,732 8,554 10,572 Extraordinary loss, net......... -- -- -- -- (609) -- -- -------- -------- -------- -------- -------- -------- -------- Net earnings(3)................. $ 10,900 $ 12,780 $ 7,689 $ 11,469 $ 14,123 $ 8,554 $ 10,572 ======== ======== ======== ======== ======== ======== ======== Net earnings available to common stock shareholders(3)......... $ 8,400 $ 12,780 $ 7,689 $ 11,469 $ 14,123 $ 8,554 $ 10,572 ======== ======== ======== ======== ======== ======== ======== OTHER DATA: Depreciation and amortization... $ 3,104 $ 3,868 $ 6,365 $ 11,994 $ 12,775 $ 9,440 $ 10,642 Capital expenditures(4)......... 5,869 7,135 10,538 12,448 6,960 2,981 13,891 EBITDA(5)....................... 19,530 28,110 25,151 48,463 50,937 33,768 41,873 EBITDA margin................... 7.1% 9.6% 7.2% 10.2% 10.4% 10.1% 11.3% Ratio of earnings to fixed charges(6).................... 3.0x 6.8x 2.8x 2.0x 2.4x 2.2x 2.0x BALANCE SHEET DATA: Working capital................. $ 65,567 $ 78,141 $122,738 $110,128 $150,506 $152,787 $181,234 Total assets.................... 131,542 180,967 319,544 324,710 375,714 370,670 419,168 Long-term debt.................. 63,599 63,735 177,149 153,472 194,851 180,200 218,806 Shareholders' equity............ 7,072 69,329 76,478 87,990 100,004 95,042 110,777
- --------------- (1) Results for fiscal 1993 reflect the operations of Manetta Home Fashions, Inc. from August 30, 1993, Tennessee Woolen Mills, Inc. from September 7, 1993 and Torfeaco Industries Limited from December 1, 1993. (2) Results for fiscal 1994 reflect the operations of Imperial Feather Company from August 19, 1994 and Beacon Manufacturing Company from December 1, 1994. (3) Pillowtex, under a 1990 stock repurchase agreement with its former majority shareholder, was committed to repurchase certain shares of common stock from the former majority shareholder which resulted in accretion of $2,500. This accretion was charged to retained earnings and deducted from earnings available for common stock shareholders in the computation of pro forma earnings per common share for fiscal 1992. Additionally, on a pro forma basis, giving effect to the termination of Pillowtex's status as an S corporation under subchapter S of the Internal Revenue Code (which termination resulted from the initial public offering of Pillowtex Common Stock), as if such termination had occurred on January 1, 1992, net earnings and net earnings available to common stock shareholders would have been $7,692 and $5,192 respectively, for fiscal 1992, and $12,877 and $12,877, respectively, for fiscal 1993. (4) Capital expenditures for fiscal year 1996 exclude $5,745 and $8,335 related to the purchase of the assets of the Fieldcrest blanket division and the purchase of the Mauldin, South Carolina distribution facility, respectively. (5) EBITDA is income before income taxes plus depreciation expense, amortization expense, and net interest expense. EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness; however, EBITDA should not be considered as an alternative to net income as a measure of operating results or to cash flows as a measure of liquidity in accordance with generally accepted accounting principles. (6) In calculating the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges (excluding capitalized interest). Fixed charges consist of interest expense (which includes amortization of deferred financing costs) whether expensed or capitalized and one-third of rental expense, deemed representative of that portion of rental expense estimated to be attributable to interest. 14 22 SUMMARY HISTORICAL FINANCIAL INFORMATION OF FIELDCREST (IN THOUSANDS)
NINE MONTHS ENDED FISCAL YEAR ------------------------------ ------------------------------------------------------------ SEPTEMBER 30, SEPTEMBER 30, 1992 1993 1994 1995 1996 1996 1997 -------- ---------- ---------- ---------- ---------- ------------- -------------- (UNAUDITED) STATEMENTS OF OPERATIONS DATA: Net sales......................... $981,773 $1,000,107 $1,063,731 $1,095,193 $1,092,496 $812,995 $820,635 Cost of sales..................... 818,729 834,701 898,437 966,642 956,522 706,482 695,615 -------- ---------- ---------- ---------- ---------- -------- -------- Gross profit...................... 163,044 165,406 165,294 128,551 135,974 106,513 125,020 Selling, general, and administrative expenses(1)...... 102,189 111,843 94,756 128,663 113,535 86,536 85,563 -------- ---------- ---------- ---------- ---------- -------- -------- Operating income (loss)........... 60,855 53,563 70,538 (112) 22,439 19,977 39,457 Interest expense(2)............... 34,149 27,659 23,268 27,630 26,869 21,496 18,708 Other expense (income), net....... 130 (975) 987 67 (5,604) 519 (2,021) -------- ---------- ---------- ---------- ---------- -------- -------- Income (loss) before income taxes........................... 26,576 26,879 46,283 (27,809) 1,174 (2,038) 22,770 Income taxes...................... 10,886 11,913 15,538 (12,084) 114 (764) 8,087 -------- ---------- ---------- ---------- ---------- -------- -------- Income (loss) from continuing operations before accounting changes......................... $ 15,690 $ 14,966 $ 30,745 $ (15,725) $ 1,060 $ (1,274) $ 14,683 ======== ========== ========== ========== ========== ======== ======== Net income (loss)(3).............. $ 15,250 $ (42,931) $ 30,745 $ (15,725) $ 1,060 $ (1,274) $ 14,683 Preferred dividends............... -- (463) (4,500) (4,500) (4,500) (3,375) (3,375) -------- ---------- ---------- ---------- ---------- -------- -------- Earnings (loss) on common......... $ 15,250 $ (43,394) $ 26,245 $ (20,225) $ (3,440) $ (4,649) $ 11,308 ======== ========== ========== ========== ========== ======== ======== OTHER DATA: Depreciation and amortization..... $ 31,370 $ 31,539 $ 29,828 $ 31,746 $ 36,678 $ 26,979 $ 26,241 Capital expenditures.............. 20,687 21,594 51,929 64,153 33,386 21,035 46,214 EBITDA(4)......................... 92,225 85,102 100,366 31,634 59,117 46,956 65,698 EBITDA margin..................... 9.4% 8.5% 9.4% 2.9% 5.4% 5.8% 8.0% Ratio of earnings to fixed charges(5)...................... 1.7x 1.8x 2.5x -- 1.0x -- 2.0x BALANCE SHEET DATA: Working capital................... $296,580 $ 262,326 $ 282,461 $ 268,477 $ 229,010 $288,103 $221,210 Total assets...................... 863,991 740,446 782,665 812,946 768,493 832,992 789,479 Long-term debt.................... 353,419 294,611 317,744 365,262 311,496 373,748 308,820 Stockholders' equity.............. 284,478 193,330 231,202 215,431 215,755 213,689 229,321
- --------------- (1) Includes restructuring charges of $10,000, $20,469 and $8,130 for fiscal years 1993, 1995 and 1996, respectively, and $8,130 for the nine months ended September 30, 1996. Such restructuring charges were incurred in connection with (i) a 1993 program to reduce overhead through a voluntary early retirement program and certain corporate reorganization costs, (ii) the 1995 reorganization of Fieldcrest's New York operations, and (iii) the 1996 sale of Fieldcrest's blanket division to Pillowtex and the closing of the blanket facilities in Eden, North Carolina. (2) Interest expense is net of interest income in the amount of $416, $613, $749, $1,859 and $4,161 for fiscal years 1992 through 1996, respectively, and $2,067 and $1,743 for the nine months ended September 30, 1996 and 1997, respectively. (3) Includes an extraordinary loss on early retirement of debt of $5,179 for fiscal 1992, income from discontinued operations of $4,739 and $3,201 for fiscal years 1992 and 1993, respectively, and a gain from disposition of discontinued operations and cumulative effect of accounting changes of $9,207 and ($70,305), respectively, for fiscal 1993. (4) EBITDA is income before income taxes plus depreciation expense, amortization expense and net interest expense. EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness; however, EBITDA should not be considered as an alternative to net income as a measure of operating results or to cash flows as a measure of liquidity in accordance with generally accepted accounting principles. (5) In calculating the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges (excluding capitalized interest). Fixed charges consist of interest expense (which includes amortization of deferred financing costs) whether expensed or capitalized and one-third of rental expense, deemed representative of that portion of rental expense estimated to be attributable to interest. For the year ended December 31, 1995, and the nine months ended September 30, 1996, earnings were insufficient to cover fixed charges by $27,809 and $2,038, respectively. 15 23 RISK FACTORS Prospective investors should carefully consider the following factors in addition to the other information set forth in this Prospectus before making an investment in the Notes offered hereby. See also "Note Regarding Forward-Looking Information." Any or all of the risk factors discussed below could have a material adverse effect on the business, financial condition, results of operations, and prospects of the Company. SIGNIFICANT LEVERAGE AND DEBT SERVICE The Company is highly leveraged. At September 27, 1997, on a pro forma basis, after giving effect to the consummation of the Merger and the Financing Transactions, Pillowtex would have had total outstanding long-term indebtedness (including the current portion of long-term indebtedness) of approximately $827.8 million and total shareholders' equity of approximately $199.6 million. See "Pro Forma Capitalization of Pillowtex." In addition, subject to restrictions contained in instruments governing its indebtedness, the Company and its subsidiaries may incur additional indebtedness from time to time to finance acquisitions or capital expenditures or for general corporate purposes. The level of the Company's indebtedness could have important consequences to the business activities of the Company, including: (i) a substantial portion of the Company's cash flow from operations must be dedicated to debt service and will not be available for other purposes; (ii) the Company's ability to obtain additional debt financing in the future for other acquisitions, working capital, capital expenditures, or research and development may be limited; and (iii) the Company's level of indebtedness could limit its flexibility in reacting to changes in its industry or economic conditions generally. The Company's ability to service its debt obligations will depend upon its future operating performance, which will be affected by prevailing economic conditions and financial, business, and other factors, certain of which are beyond its control, as well as the availability of borrowings under the New Senior Credit Facilities or any other credit arrangement. The Company will require substantial amounts of cash to fund scheduled payments of principal and interest on its outstanding indebtedness, as well as future capital expenditures and any increased working capital requirements. If the Company is unable to meet its cash requirements out of cash flow from operations and its available borrowings, there can be no assurance that it will be able to obtain alternative financing or that it will be permitted to do so under the terms of the New Senior Credit Facilities or its other indebtedness. In the absence of such financing, the Company's ability to respond to changing business and economic conditions, to make future acquisitions, to absorb adverse operating results, or to fund capital expenditures or research and development costs may be adversely affected. If the Company does not generate sufficient increases in cash flow from operations to repay its indebtedness at maturity, it could attempt to refinance such indebtedness; however, no assurance can be given that such refinancing would be available on terms acceptable to the Company, if at all. SUBORDINATION OF NOTES AND GUARANTEES The Notes are subordinated in right of payment to all existing and future Senior Indebtedness (as defined herein) of the Company, including borrowings under the New Senior Credit Facilities. In the event of bankruptcy, liquidation, or reorganization of the Company, the assets of the Company will be available to pay obligations on the Notes only after all Senior Indebtedness has been paid in full, and there may not be sufficient assets remaining to pay amounts due on any or all of the Notes then outstanding. Each Guarantee will be similarly subordinated in right of payment to all existing and future Guarantor Senior Indebtedness (as defined herein) of the relevant Guarantor, including such Guarantor's guaranty of the Company's indebtedness under the New Senior Credit Facilities. In addition, under certain circumstances the Company will not be permitted to pay its obligations under the Notes in the event of a default under certain Senior Indebtedness. Certain operations of the Company will be conducted by its foreign subsidiaries that are not Guarantors. Accordingly, these subsidiaries will have no obligations to pay amounts due under the Notes. As of September 27, 1997, on a pro forma basis after giving effect to the consummation of the Merger and the Financing Transactions, Pillowtex and its subsidiaries would have had $420.0 million of indebtedness (excluding $37.8 million in letters of credit) effectively ranking senior to the Notes. If it were assumed that 16 24 the holders of all of the outstanding Fieldcrest Convertible Debentures were converted into shares of Fieldcrest Common Stock immediately prior to the Merger (rather than remaining outstanding), then at September 27, 1997, on a pro forma combined basis, the revolving credit borrowings (which will be senior in right of payment to the Notes) would have increased $71.1 million. Additional Senior Indebtedness may be incurred by the Company from time-to-time, subject to certain restrictions. See "Description of Notes -- Ranking and Subordination." RISKS ASSOCIATED WITH ACQUISITIONS; ABILITY TO ACHIEVE COST SAVINGS The Company expects to continue a strategy of identifying and acquiring companies with complementary products or services that may be expected to enhance the Company's operations and profitability. There can be no assurances that the Company will be able to integrate the operations of Fieldcrest or any other acquired company successfully with existing operations or that any of such acquisitions will prove profitable. The Company has identified approximately $21.6 million of annual cost savings that it expects to realize immediately as a result of the Merger. These cost savings are comprised of $20.3 million of savings from the elimination of duplicate staff salaries and $1.3 million of savings from the elimination of duplicative corporate expenses. The Company additionally expects to realize significant ongoing cost savings, including at least $8.4 million to be realized within the first twelve months after consummation of the Merger, as follows: (i) $0.9 million by eliminating other redundant cost functions; (ii) $2.0 million by improving procurement efficiencies by exploiting the combined company's purchasing power; (iii) $3.0 million by reducing trade advertising; (iv) $1.0 million by rationalizing and streamlining operations; and (v) $1.5 million by reducing the use of outside consultants. There can be no assurance as to the timing or amount of any cost savings that may actually be realized, or that unforeseen costs and expenses, decreases in sales or revenues, or other factors will not offset any cost savings actually realized. DEPENDENCE ON RAW MATERIALS The raw materials on which the Company is primarily dependent include the raw feather and down that the Company uses to produce natural fill pillows and down comforters. The People's Republic of China ("China") is currently the primary source of raw feather and down for Pillowtex. See "-- Dependence on Supply Sources in China." The raw materials on which Fieldcrest is primarily dependent include the cotton and synthetic fibers that Fieldcrest uses to manufacture its home furnishing products. The raw materials used by the Company are generally available from a number of sources, and no significant shortage of such materials is currently anticipated. However, the Company uses significant quantities of such raw materials, which are subject to price fluctuations, and there can be no assurance that shortages of such materials will not occur in the future, which could increase the cost of or delay the shipment of products. Cotton is the primary raw material used in the Company's business. Cotton is an agricultural product and, consequently, its availability is subject to weather conditions and other factors affecting agricultural markets. There have been historical periods of rapid and significant movement in the price of cotton both upward and downward. There can be no assurance that the Company will be able to pass on any increase in the price of cotton or other raw materials to its customers. DEPENDENCE ON SUPPLY SOURCES IN CHINA In fiscal year 1996 and the nine months ended September 27, 1997, approximately 83% and 84%, respectively, of the raw feather and down that Pillowtex used to produce natural fill pillows and down comforters was imported from China. The Company's relationships with its suppliers in China could be disrupted or adversely affected due to a number of factors, including governmental regulation, fluctuation in exchange rates, and changes in economic and political conditions in China. If the Company's supply sources in China were disrupted for any reason, the 17 25 Company believes, based on existing market conditions, that it could establish alternative supply relationships. However, because establishing these relationships involves numerous uncertainties relating to delivery requirements, price, payment terms, quality control, and other matters, the Company is unable to predict whether such relationships would be on terms satisfactory to the Company. The Company's relationships with its suppliers in China are also subject to risks associated with changes in United States legislation and regulations relating to imports, including quotas, duties, and taxes, and other charges or restrictions on imports. Products that the Company imports from China currently receive preferential tariff treatment accorded goods from countries granted "most favored nation" status. Under the Trade Act of 1974, the President of the United States is authorized, upon making specified findings, to waive certain restrictions that would otherwise render China ineligible for most favored nation treatment. The President has waived these provisions each year since 1979. Most favored nation status was accordingly renewed in June 1997 despite legislation pursued by Congress demanding that China desist from certain trade and military activities. Congress will continue to monitor these activities and may encourage the President to reconsider the renewal of most favored nation status for China in June 1998 and no assurance can be given that China will continue to enjoy this status in the future. Raw materials and finished products entering the United States from China without the benefit of most favored nation treatment would be subject to significantly higher duty rates. ADVERSE RETAIL INDUSTRY CONDITIONS The Company sells its products to a number of department stores and other major retailers who have experienced financial difficulties during the past several years. Some of these retailers have recently emerged from the protection of federal bankruptcy laws and some current retail customers of the Company may seek protection under the federal bankruptcy laws or state insolvency laws in the future. As a result of these financial difficulties and bankruptcy and insolvency proceedings, the Company may be unable to collect some or all amounts owed by these retail customers. Additionally, all or part of the operations of a retail customer that seeks bankruptcy or other debtor protection may be discontinued or sales of the Company's products to such a customer may be curtailed or terminated as a result of bankruptcy or insolvency proceedings. DEPENDENCE ON KEY LICENSES The Company holds licenses with organizations such as Polo Ralph Lauren Corporation, Disney, and others, using such well-known trademarks and trade names as Ralph Lauren and Disney's Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R) Although the significance of specific licenses varies from year to year, a substantial portion of the Company's net sales for fiscal year 1996 and the nine-month period ended September 27, 1997 were attributable to products sold under licensed trademarks and trade names. These licenses generally require the payment of royalties based on net sales, including the payment of minimum annual royalties, and expire at various dates through 1998. No assurance can be given that the Company will be able to renew these licenses on acceptable terms upon their expiration or will be able to acquire new licenses to use other popular trademarks. The Company's license with Polo Ralph Lauren Corporation expires on June 30, 1998. The Company has had a longstanding relationship with Polo Ralph Lauren Corporation and has no reason to believe that its Ralph Lauren license will not be renewed, however, renewal of the license on terms acceptable to the Company cannot be assured and the loss of the license could have a material adverse effect on the Company. In addition, the Company's license with Polo Ralph Lauren Corporation provides that if Charles M. Hansen, Jr., Pillowtex's Chairman of the Board and Chief Executive Officer, and Mary R. Silverthorne, a director of Pillowtex, or their immediate families, in the aggregate, cease to beneficially own at least 25% of the outstanding Pillowtex Common Stock, such license will become subject to termination at the option of the licensor. The Company's licenses for the use of various Disney trademarks and trade names have tended to be of brief duration, usually two years or less. The market for new and renewal Disney licenses has become increasingly competitive, and there can be no assurance that the Company will be able to continue to receive 18 26 new Disney licenses as granted or to obtain renewals of its licenses on acceptable terms. The loss of one or more of the Company's existing Disney licenses is unlikely to have a material adverse effect on the business of the Company. Fieldcrest also holds licenses with third parties, including Waverly(R), Adrienne Vittadini(R), and Ellen Tracy(R). Fieldcrest, however, primarily manufactures and markets products bearing its own proprietary brand names. See "-- Dependence on Brand Names." DEPENDENCE ON BRAND NAMES In fiscal year 1996, approximately 93% of Fieldcrest's net sales were from sales of products bearing Fieldcrest's proprietary brand names of Royal Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), Royal Family(R), Caldwell(R), Monticello(R), SureFit(R), and St. Mary's(R). The remaining 7% of Fieldcrest's 1996 net sales were from sales of private label products. Accordingly, the Company's future success may depend in part upon the goodwill associated with Fieldcrest's brand names. Fieldcrest's principal brand names are registered in the United States and certain foreign countries. However, there can be no assurance that the steps taken by Fieldcrest to protect its proprietary rights in such brand names will be adequate to prevent the misappropriation thereof in the United States or abroad. In addition, the laws of some foreign countries do not protect proprietary rights in brand names to the same extent as do the laws of the United States. RISK OF LOSS OF MATERIAL CUSTOMERS In fiscal year 1996, sales to Wal-Mart and Dayton Hudson accounted for 14% and 13% of Pillowtex's total sales, respectively. For the nine months ended September 27, 1997, sales to Wal-Mart and Dayton Hudson accounted for 12% and 13%, respectively, of Pillowtex's total sales. No other single customer accounted for more than 10% of Pillowtex's total sales during such periods. In fiscal year 1996, sales to Wal-Mart and its affiliates accounted for 21% of Fieldcrest's total sales. For the nine months ended September 30, 1997, sales to Wal-Mart and its affiliates accounted for 25% of Fieldcrest's total sales. No other single customer accounted for more than 10% of Fieldcrest's net sales during such periods. On a pro forma basis, after giving effect to the consummation of the Merger as if it had been consummated December 31, 1995, sales to Wal-Mart would have accounted for 19% of the Company's total sales for fiscal 1996 and sales to the top ten customers would have accounted for 57% of total sales for such period. Consistent with industry practice, the Company does not operate under a long-term written supply contract with any of its customers. The business, financial condition, and results of operations of the Company could be materially adversely affected by the loss of Dayton Hudson or Wal-Mart as a customer. LABOR RELATIONS Pillowtex has approximately 3,800 employees, approximately 14% of which are subject to collective bargaining agreements. Fieldcrest has approximately 10,400 employees, approximately 27% of which are subject to collective bargaining agreements. Since 1991, the Union of Needletrades, Industrial and Textile Workers ("UNITE") has campaigned to organize approximately 5,500 additional hourly workers at five Fieldcrest plants, including Fieldcrest's main manufacturing facility in Kannapolis, North Carolina. Fieldcrest has opposed UNITE's organizing efforts. Although a majority of employees at these plants recently voted not to select UNITE as a bargaining representative, the results are subject to legal challenge. There can be no assurance as to whether or when the results of such election will be certified or a new election will be scheduled. It is impossible to predict what effect, if any, a lengthy continuation of another organizing campaign will have on the productivity of the Fieldcrest workforce. 19 27 INDUSTRY COMPETITION AND COMPETITIVE FACTORS The Company operates in a highly competitive industry. Each of Pillowtex and Fieldcrest has competed, and continues to compete, with a number of established manufacturers, importers, and distributors of home textile furnishings, some of which have greater financial, distribution, manufacturing, and marketing resources. SEASONALITY OF BUSINESS The Company business is subject to a pattern of seasonal fluctuation. During the past three years, sales and earnings from operations generated during the second half of the year averaged approximately 61% and 66%, respectively, of Pillowtex's total sales and earnings from operations. Pillowtex's needs for working capital increase in the second half of the year and, accordingly, total debt levels tend to peak in the third and fourth quarters, falling off again in the first quarter of the following year. The amount of Pillowtex's sales generated during the second half of the year generally depends upon a number of factors, including the level of retail sales for home textile furnishings during the fall and winter, weather conditions affecting the level of sales of down comforters and blankets (which are sold in greater quantities in cold weather), general economic conditions, and other factors beyond Pillowtex's control. Fieldcrest's business is subject to a similar pattern of seasonal fluctuation, having greater sales volume in the last three quarters of the calendar year than in the first calendar quarter. Accordingly, it is likely that Fieldcrest's operating performance in the first quarter of a given calendar year will be less favorable than operating performance in the last three quarters. INFLUENCE BY SIGNIFICANT SHAREHOLDERS As of January 26, 1998, Charles M. Hansen, Jr., Mary R. Silverthorne, certain trusts for which Ms. Silverthorne acts as trustee (i.e., the John H. Silverthorne Marital Trust B and the John H. Silverthorne Family Trust A), and adult children of Ms. Silverthorne owned, in the aggregate, approximately 39.6% of the outstanding shares of the Pillowtex Common Stock. Accordingly, such shareholders will continue to exert significant influence over the management and direction of Pillowtex. DEPENDENCE ON KEY PERSONNEL Pillowtex's business is managed by or under the direction of Charles M. Hansen, Jr., who serves as Chairman of the Board and Chief Executive Officer. The Company believes that its future success will be highly dependent upon its ability to attract and retain skilled managers and other personnel, including Mr. Hansen. The loss of Mr. Hansen's services could have a material adverse effect on the Company. RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS Certain instruments governing the Company's indebtedness, including the Indenture, restrict, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, pay dividends or make certain other restricted payments, incur liens to secure pari passu or subordinated indebtedness, sell stock of subsidiaries, apply net proceeds from certain asset sales, merge or consolidate with any other person, sell, assign, transfer, lease, convey, or otherwise dispose of substantially all of the assets of the Company, enter into certain transactions with affiliates, or incur indebtedness that is subordinate in right of payment to any Senior Indebtedness and senior in right of payment to the Notes. The New Senior Credit Facilities contain more extensive and restrictive covenants than the Indenture and require the Company to maintain specified financial ratios and satisfy certain financial condition tests. The Company's ability to meet those financial ratios and tests can be affected by events beyond its control, and there can be no assurance that the Company will meet those tests. The New Senior Credit Facilities also prohibit the Company from prepaying other indebtedness (including the Notes) before indebtedness under the New Senior Credit Facilities. A breach of any of these covenants or covenants contained in the New Senior Credit Facilities could result in a default thereunder. Upon the occurrence of an event of default under the New Senior Credit Facilities, the lenders thereunder could elect to declare all amounts outstanding under 20 28 the New Senior Credit Facilities, including accrued interest or other obligations, to be immediately due and payable or proceed against the collateral granted to them to secure that indebtedness. If any other Senior Indebtedness (as defined herein) were to be accelerated, there can be no assurance that the assets of the Company would be sufficient to repay in full that indebtedness and the other indebtedness of the Company, including the Notes. As a result of the covenants described above, the ability of the Company to respond to changing business and economic conditions and to secure additional financing, if needed, may be significantly restricted, and the Company may be prevented from engaging in transactions that might otherwise be considered beneficial to the Company. See "Description of Notes -- Certain Covenants." FRAUDULENT CONVEYANCE STATUTES Under applicable provisions of federal bankruptcy law or comparable provisions of state fraudulent transfer law, if, among other things, the Company or any Guarantor, at the time it incurred the indebtedness evidenced by the Notes or its Guarantee, as the case may be, (i)(a) was or is insolvent or rendered insolvent by reason of such occurrence, (b) was or is engaged in a business or transaction for which the assets remaining with the Company or such Guarantor constituted unreasonably small capital, or (c) intended or intends to incur, or believed or believes that it would incur, debts beyond its ability to pay such debts as they mature, and (ii) the Company or such Guarantor received or receives less than reasonably equivalent value or fair consideration for the incurrence of such indebtedness, the Notes or the applicable Guarantee could be voided, or claims in respect of the Notes or the Guarantee could be subordinated to all other debts of the Company or such Guarantor, as the case may be. The voiding or subordination of any of such pledges or other security interests or of any of such indebtedness could result in an Event of Default (as defined herein) with respect to such indebtedness, which could result in acceleration thereof. In addition, the payment of interest and principal by the Company pursuant to the Notes or the payment of amounts by a Guarantor pursuant to a Guarantee could be voided and required to be returned to the person making such payment, or to a fund for the benefit of the creditors of the Company or such Guarantor, as the case may be. The measures of insolvency for purposes of the foregoing considerations will vary depending upon the law applied in any proceeding with respect to the foregoing. Generally, however, the Company or a Guarantor would be considered insolvent if (i) the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets at a fair valuation or if the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature or (ii) it could not pay its debts as they become due. To the extent any Guarantees were voided as a fraudulent conveyance or held unenforceable for any other reason, holders of Notes would cease to have any claim in respect of such Guarantor and would-be creditors solely of the Company and any Guarantor whose Guarantee was not avoided or held unenforceable. In such event, the claims of the holders of Notes against the issuer of an invalid Guarantee would be subject to the prior payment of all liabilities and preferred stock claims of such Guarantor. There can be no assurance that, after providing for all prior claims and preferred stock interests, if any, there would be sufficient assets to satisfy the claims of the holders of Notes relating to any voided portions of any of the Guarantees. The Company is a holding company whose material assets consist primarily of the capital stock of the Guarantors and certain intellectual property assets. Consequently, the Company will be dependent upon dividends paid by the Guarantors to pay its operating expenses, service its debt obligations, including the Notes, and satisfy any mandatory repurchase obligations relating to the Notes, as a result of a Change of Control (as defined herein) or a sale or other disposition of certain assets. See "Description of Notes -- Repurchase at the Option of the Holders." POTENTIAL INABILITY TO FUND A CHANGE OF CONTROL OFFER Upon a Change of Control (as defined herein), the Company will be required to offer to repurchase all outstanding Notes and all 10% Senior Subordinated Notes at 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase and Liquidated Damages (as defined herein). There can 21 29 be no assurance, however, that sufficient funds will be available at the time of any Change of Control to make any required repurchases of Notes and 10% Senior Subordinated Notes tendered. Moreover, restrictions in the New Senior Credit Facilities prohibit the Company from making such required repurchases; consequently, any such repurchases would constitute an event of default under the New Senior Credit Facilities. There can be no assurance that the Company will be able to obtain appropriate consents under the New Senior Credit Facilities to enable it to fulfill such repurchase obligations. Notwithstanding these provisions, the Company could enter into certain transactions, including certain recapitalizations, that would not constitute a Change of Control but would increase the amount of debt outstanding at such time. See "Description of Notes -- Repurchase at the Option of Holders." CONSEQUENCES OF FAILURE TO EXCHANGE The Series B Notes will be issued in exchange for Series A Notes only after timely receipt by the Exchange Agent of such Series A Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of Series A Notes desiring to tender such Series A Notes in exchange for Series B Notes should allow sufficient time to ensure timely delivery. Neither the Exchange Agent nor the Company are under any duty to give notification of defects or irregularities with respect to tenders of Series A Notes for exchange. Series A Notes that are not tendered or that are tendered but not accepted will, following consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof and will not retain any rights to registration. See "The Exchange Offer -- Consequences of Exchanging Series A Notes." In addition, any holder of Series A Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the Series B Notes will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer who holds Series A Notes acquired for its own account as a result of market-making or other trading activities and who receives Series B Notes for its own account in exchange for such Series A Notes pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Series B Notes. To the extent that Series A Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted shares of Series A Notes could be adversely affected due to the limited number of shares of Series A Notes that are expected to remain outstanding following the Exchange Offer. See "Plan of Distribution" and "The Exchange Offer." ABSENCE OF PUBLIC MARKET The Series B Notes are being offered to the Holders of the Series A Notes. The Series A Notes were issued on December 18, 1997 pursuant to an exemption from registration under applicable securities laws and are subject to certain transfer restrictions; accordingly, no public market for the Series A Notes has developed. The Series B Notes are a new issue of securities for which there is currently no active trading market. If any such securities are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon the liquidity of such securities, the market for similar securities, and other factors, including general economic conditions and the financial condition, performance of, and prospects for the Company. 22 30 THE MERGER GENERAL Pillowtex and Fieldcrest entered into the Merger Agreement, pursuant to which a wholly owned subsidiary of Pillowtex was merged on December 19, 1997 with and into Fieldcrest. Following consummation of the Merger, Fieldcrest became a wholly owned subsidiary of Pillowtex. CONVERSION OF FIELDCREST SHARES At the Effective Time, each then-outstanding share of Fieldcrest Common Stock (other than any shares held in the treasury of Fieldcrest, by any of its subsidiaries, or directly or indirectly by Pillowtex, which shares will be canceled and shares held by stockholders, if any, who properly exercised their appraisal rights under Delaware law) was converted into the right to receive total consideration valued at $34.00, consisting of (i) a cash payment in an amount equal to $27.00 and (ii) 0.269 (the "Conversion Number") shares of Pillowtex Common Stock. At the Effective Time, each then-outstanding share of Fieldcrest Preferred Stock (other than shares converted into Fieldcrest Common Stock prior to the Closing Date and any shares held in the treasury of Fieldcrest, by any of its subsidiaries, or directly or indirectly by Pillowtex, which shares were cancelled and shares held by stockholders, if any, who properly exercised their appraisal rights under Delaware law) was converted into a right to receive total consideration valued at $58.12, consisting of (i) a cash payment of $46.15 and (ii) 0.4598286 shares of Pillowtex Common Stock. TREATMENT OF FIELDCREST OPTIONS Each holder of an outstanding Fieldcrest Option had the option to elect, prior to the Effective Time, to receive for each share of Fieldcrest Common Stock subject to such Fieldcrest Option an amount in cash equal to the difference between $34.00 and the per share exercise price of such Fieldcrest Option. At the Effective Time, each outstanding Fieldcrest Option, other than Fieldcrest Options in respect of which the above-described election was made, was assumed by the Company and now constitutes an option to purchase, in lieu of each share of Fieldcrest Common Stock previously subject thereto, a number of shares of Pillowtex Common Stock (increased to the nearest whole share) equal to the product of (i) the number of shares of Fieldcrest Common Stock subject to such Fieldcrest Option immediately prior to the Effective Time and (ii) 1.308 (the "Option Conversion Number") at an exercise price per share of Pillowtex Common Stock (increased to the nearest whole cent) equal to the exercise price per share of Fieldcrest Common Stock subject to such Fieldcrest Option immediately prior to the Effective Time divided by the Option Conversion Number. TREATMENT OF FIELDCREST CONVERTIBLE DEBENTURES Fieldcrest presently has outstanding $112.5 million ($118.5 million at September 30, 1997) in aggregate principal amount of its Fieldcrest Convertible Debentures. The Fieldcrest Convertible Debentures are convertible into the same consideration that a holder of the number of shares of Fieldcrest Common Stock into which such Fieldcrest Convertible Debentures might have been converted immediately prior to the Merger would be entitled to receive in the Merger. For example, a Fieldcrest Convertible Debenture having an aggregate principal amount of $1,000 is convertible into (i) a cash payment equal to the product of (a) the amount of the cash payment to be made on account of each share of Fieldcrest Common Stock converted in the Merger and (b) 22.60 and (ii) a number of shares of Pillowtex Common Stock equal to the product of (i) the Conversion Number and (ii) 22.60. It is anticipated that the Company will use funds available to it under the Revolver to fund any conversions after the consummation of the Merger. If it were assumed that all holders of Fieldcrest Convertible Debentures elected this option, then at September 27, 1997, on a pro forma combined basis, the revolving credit borrowings would have increased $71.1 million, total debt would have declined by $26.8 million and shareholder equity would have increased by $20.1 million. See "Unaudited Pro 23 31 Forma Combined Financial Information," and "Post-Merger Indebtedness -- Fieldcrest Convertible Debentures." MERGER FINANCING Pillowtex financed the Merger and refinanced certain indebtedness of Pillowtex and Fieldcrest, paid related fees and expenses, and provided for the ongoing working capital needs of the Company through a combination of (i) initial borrowings of $149.0 million under the Revolver and $250.0 million under the Term Loan, (ii) the issuance and sale of $185.0 million in aggregate principal amount of the Series A Notes, and (iii) the issuance and sale of $65.0 million in liquidation preference of the Pillowtex Preferred Stock to affiliates of Apollo. The Financing Transactions were effected concurrently with the consummation of the Merger. See "Post-Merger Indebtedness," and "Pillowtex Series A Redeemable Convertible Preferred Stock." 24 32 USE OF PROCEEDS The Company will not receive any proceeds from the Exchange Offer. The approximate net proceeds to the Company from the issuance of the Series A Notes of $179.9 million (after deducting certain discounts and commissions) together with proceeds from the New Senior Credit Facilities, and the Pillowtex Preferred Stock purchased by Apollo, were used to pay the merger consideration, repay certain outstanding indebtedness of both Fieldcrest and Pillowtex, pay related fees and expenses, and provide for the ongoing working capital needs of the Company. See "The Merger -- Merger Financing." The following table sets forth the sources and uses of funds required to effect the Merger on a pro forma basis, assuming the Merger was consummated on September 27, 1997. The actual amounts of sources and uses of funds differed at the closing (dollars in thousands). Sources of Funds: New Senior Credit Facilities(1)........................... $398,956 Notes..................................................... 185,000 Pillowtex Preferred Stock................................. 65,000 -------- $648,956 ======== Uses of Funds: Cash to be paid to Fieldcrest stockholders(1)(2).......... $318,802 Repayment of indebtedness(3).............................. 186,350 Redemption of Fieldcrest 11.25% Senior Subordinated Debentures............................................. 85,000 Settlement of Fieldcrest options and stock appreciation rights................................................. 6,774 Fees and expenses(4)...................................... 52,030 -------- $648,956 ========
- --------------- (1) The New Senior Credit Facilities include the Term Loan and the Revolver. The amount shown excludes letters of credit totaling $37,809 outstanding at the Effective Time. After giving effect to the Merger the Company had $163,235 available under the Revolver. At the consummation of the Merger, the initial borrowings under the New Senior Credit Facilities were approximately $379,900. The borrowings are expected to increase as additional expenses incurred in connection with the Merger are paid. From and after the Effective Time, the Fieldcrest Convertible Debentures are convertible into the same consideration that a holder of the number of shares of Fieldcrest Common Stock into which such Fieldcrest Convertible Debentures might have been converted immediately prior to the Merger would be entitled to receive in the Merger. If it were assumed that all holders of Fieldcrest Convertible Debentures elected this option, then at September 27, 1997, on a pro forma combined basis, the revolving credit borrowings would have increased $71,071, total debt would have declined by $26,770, and shareholders' equity would have increased by $20,081. See "Unaudited Pro Forma Combined Financial Information of Pillowtex," "The Merger -- Fieldcrest Convertible Debentures," and "Post-Merger Indebtedness -- Fieldcrest Convertible Debentures." (2) Assumes that cash to be paid to holders of Fieldcrest Common Stock will be $249,577 (9,243,602 shares at $27.00 per share) and the cash to be paid to holders of Fieldcrest Preferred Stock will be $69,225 (1,500,000 shares at $46.15 per share). At the consummation of the Merger, actual cash paid to holders of Fieldcrest Common Stock was $249,559 (9,242,935 shares at $27.00 per share), cash paid to holders of Fieldcrest Preferred Stock was $69,225 (1,500,000 shares at $46.15 per share) and cash paid for fractional shares was $38. (3) Assumes repayment of $86,350 of the existing Pillowtex senior credit facility and $100,000 of the Fieldcrest revolving credit facility. At the consummation of the Merger, repayment of the existing Pillowtex senior credit facility and the Fieldcrest revolving credit facility was $85,964 and $114,085, respectively. (4) Includes premium of $4,782 associated with the redemption of the Fieldcrest 11.25% Senior Subordinated Debentures, $13,606 of severance payments, estimated discounts to NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (the "Initial Purchasers"), bank fees, financial advisory fees, and legal, accounting and other expenses payable or reimbursable by the Company in connection with the Merger and the Financing Transactions. 25 33 PRO FORMA CAPITALIZATION OF PILLOWTEX The following table sets forth the historical capitalization of each of Pillowtex and Fieldcrest as of September 27, 1997 and September 30, 1997, respectively, and the pro forma capitalization of Pillowtex as of September 27, 1997, adjusted to give effect to the consummation of the Merger and the Financing Transactions, as if such transactions had been consummated on September 27, 1997. "Financing Transactions" means (i) initial borrowings under the New Senior Credit Facilities of $149.0 million under the Revolver and $250.0 million under the Term Loan, (ii) the issuance and sale of $185.0 million aggregate principal amount of Notes, (iii) the issuance and sale of 65,000 shares of Pillowtex Preferred Stock, (iv) the repayment of all amounts outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities, and (v) the satisfaction and discharge of all indebtedness represented by Fieldcrest's 11.25% Senior Subordinated Debentures pursuant to an irrevocable deposit of amounts sufficient to provide for the redemption thereof. The pro forma information set forth below is presented for illustrative purposes only and is not necessarily indicative of what Pillowtex's actual consolidated capitalization would have been had the foregoing transactions been consummated on September 27, 1997, nor does it give effect to (i) any transactions other than the foregoing transactions and those discussed in the Notes to Unaudited Pro Forma Combined Financial Information of Pillowtex contained elsewhere herein or (ii) Pillowtex's or Fieldcrest's respective results of operations since September 27, 1997 and September 30, 1997, respectively. Accordingly, the pro forma information set forth below does not purport to be indicative of Pillowtex's consolidated capitalization as of the Effective Time, the date hereof, or any future date. The following table should be read in conjunction with the historical financial statements of Pillowtex and Fieldcrest and the unaudited pro forma combined financial information and the related notes contained elsewhere herein or incorporated herein by reference to documents previously filed with the Commission. 26 34 CAPITALIZATION SEPTEMBER 27, 1997 (IN THOUSANDS, EXCEPT SHARE DATA)
HISTORICAL ----------------------- PRO FORMA PILLOWTEX FIELDCREST COMBINED --------- ---------- ---------- Short-term debt: Current portion of long-term debt......................... $ 1,553 $ 4,697 $ 6,250 -------- -------- ---------- Total short-term debt................................... 1,553 4,697 6,250 Long-term debt: Revolving credit borrowings............................... 86,350 100,000 148,956 Senior bank term A........................................ -- -- 125,000 Senior bank term B........................................ -- -- 125,000 Notes..................................................... -- -- 185,000 10% Senior Subordinated Notes............................. 125,000 -- 125,000 Fieldcrest 6% Convertible Subordinated Debentures......... -- 112,500 93,864(a) Fieldcrest 11.25% Senior Subordinated Debentures.......... -- 85,000 -- Deed of Trust Note........................................ 2,199 -- 2,199 PEDFA Industrial Revenue Bonds............................ 2,310 -- 2,310 MBFC Industrial Revenue Bonds............................. 2,760 -- 2,760 Industrial Development Bonds due 2021..................... -- 10,000 10,000 Industrial Revenue Installment Bonds due 2002............. -- 1,320 1,320 Other long-term debt...................................... 187 -- 187 -------- -------- ---------- Total long-term debt.................................... 218,806 308,820 821,596 -------- -------- ---------- Total debt.......................................... 220,359 313,517 827,846 Pillowtex Series A Redeemable Convertible Preferred Stock, $0.01 par value, 200,000 shares authorized, 65,000 shares issued and outstanding (as adjusted)...................... -- -- 62,882 Shareholders' equity: Preferred Stock, $0.01 par value, 20,000,000 shares authorized, none issued and outstanding (Pillowtex historical); $0.01 par value, 10,000,000 shares authorized, 1,500,000 shares issued and outstanding (Fieldcrest historical); $0.01 par value, 20,000,000 shares authorized, none issued and outstanding (as adjusted)................................................. -- 15 -- Common Stock, $0.01 par value, 30,000,000 shares authorized, 10,786,819 shares issued and outstanding (Pillowtex historical); $0.01 par value, 25,000,000 shares authorized, 12,850,002 shares issued and outstanding (Fieldcrest historical); $0.01 par value, 30,000,000 shares authorized, 13,963,348 shares issued and outstanding (as adjusted)................................. 108 12,850 140 Additional paid-in capital.................................. 60,825 226,758 150,539 Retained earnings........................................... 50,316 106,923 49,348(b) Treasury stock, 3,606,400 shares (Fieldcrest historical); .. 0 shares (as adjusted).................................... -- (117,225) -- Currency translation adjustment............................. (472) -- (472) -------- -------- ---------- Total shareholders' equity................................ 110,777 229,321 199,555 -------- -------- ---------- Total capitalization................................ $331,136 $542,838 $1,090,283 ======== ======== ========== Ratio of total debt to total capitalization......... 66.55% 57.76% 75.93%(c) ======== ======== ==========
- --------------- (a) Reflects an adjustment to record the Fieldcrest 6% Convertible Debentures due 2012 at fair market value. (b) Reflects a charge of $968, net of income tax benefit, for the write off of Pillowtex unamortized debt issuance costs. (c) Including the Pillowtex Preferred Stock together with total debt, the ratio would be 81.70%. See accompanying Notes to Unaudited Pro Forma Combined Financial Information. 27 35 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF PILLOWTEX The following unaudited pro forma combined financial statements of Pillowtex give effect to the consummation of the Merger and the Financing Transactions, as if such transactions had been consummated: (i) on September 27, 1997, in the case of the Unaudited Pro Forma Combined Balance Sheet at September 27, 1997 and (ii) on December 31, 1995, the first day of Pillowtex's 1996 fiscal year, in the case of the Unaudited Pro Forma Combined Statement of Operations for the fiscal year ended December 28, 1996 and the nine months ended September 27, 1997. As used herein, the term "Financing Transactions" means (i) initial borrowings under the New Senior Credit Facilities of $149.0 million under the Revolver and $250.0 million under the Term Loan, (ii) the issuance and sale of $185.0 million aggregate principal amount of Notes, (iii) the issuance and sale of 65,000 shares of Pillowtex Preferred Stock, (iv) the repayment of all amounts outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities, and (v) the satisfaction and discharge of all indebtedness represented by Fieldcrest's 11.25% Senior Subordinated Debentures Due 2002 to 2004 pursuant to an irrevocable deposit of amounts sufficient to provide for the redemption thereof. The following unaudited pro forma combined financial information is presented for illustrative purposes only and is not necessarily indicative of what Pillowtex's actual financial position or results of operations would have been had the foregoing transactions been consummated on such dates, nor does it give effect to (i) any transactions other than the foregoing transactions and those described in the accompanying Notes to Unaudited Pro Forma Combined Financial Information, (ii) Pillowtex's or Fieldcrest's results of operations since September 27, 1997 and September 30, 1997, respectively, or (iii) one-time charges of approximately $7.5 million, including approximately $2.0 million of cash charges, expected to result from the Merger and the integration of the operations of Pillowtex. Although the following unaudited pro forma combined financial information gives effect to assumed annual cost savings of $21.6 million, it does not give effect to certain additional annual cost savings expected to be achieved following consummation of the Merger. The pro forma combined financial information does not purport to be indicative of the Company's financial position or results of operations as of the date of the closing of the Merger or for any period ended on the date of the closing of the Merger, as of the date hereof or for any period ending on the date hereof, or as of or for any future date or period. The following unaudited pro forma combined financial information is based upon the historical financial statements of Pillowtex and Fieldcrest and should be read in conjunction with such historical financial statements and the related notes. See "Available Information," "Incorporation of Certain Information by Reference," "Selected Historical Information of Pillowtex," and "Selected Historical Information of Fieldcrest." In the preparation of the following unaudited pro forma combined financial information, it has been generally assumed that the historical value of Fieldcrest's assets and liabilities approximates the fair value thereof (except as described in the accompanying Notes to Unaudited Pro Forma Combined Financial Information), as an independent valuation has not been completed. The Company will be required to determine the fair value of the assets and liabilities of Fieldcrest (including intangible assets) as of the Effective Time. Although such determination of fair value is not presently expected to result in values that are materially greater or less than the values assumed in the preparation of the following unaudited pro forma combined financial information, there can be no assurance with respect thereto. The Unaudited Pro Forma Combined Balance Sheet at September 27, 1997 is based upon Pillowtex's financial position at September 27, 1997 and upon Fieldcrest's financial position at September 30, 1997. The Unaudited Pro Forma Combined Statement of Operations for the fiscal year ended December 28, 1996 is based upon Pillowtex's results of operations for its fiscal year ended December 28, 1996 and upon Fieldcrest's results of operations for its fiscal year ended December 31, 1996. The Unaudited Pro Forma Combined Statement of Operations for the nine months ended September 27, 1997 is based upon Pillowtex's results of operations for the nine months ended September 27, 1997 and upon Fieldcrest's results of operations for the nine months ended September 30, 1997. The home textiles and furnishings industry is seasonal in nature, with a higher proportion of sales and earnings usually being generated in the third and fourth quarters of the fiscal year than in other periods. Because of this seasonality and other factors, results of operations for interim periods are not necessarily indicative of results of operations for an entire fiscal year. 28 36 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION BALANCE SHEET SEPTEMBER 27, 1997 (IN THOUSANDS) ASSETS
HISTORICAL PRO FORMA --------------------------- ---------------------------- PILLOWTEX FIELDCREST ADJUSTMENTS COMBINED --------- -------------- ----------- ---------- Current assets: Cash................................. $ 34 $ 5,475 $ --(2) $ 5,509 Accounts receivable.................. 104,353 170,071 -- 274,424 Inventories.......................... 150,084 202,064 19,000(1) 371,148 Prepaid expenses and other current assets............................ 6,849 2,218 -- 9,067 -------- -------- -------- ---------- Total current assets.............. 261,320 379,828 19,000 660,148 Property, plant, and equipment, net.... 98,916 342,392 50,000(1) 491,308 Goodwill, net.......................... 45,683 6,495 186,544(1) 238,722 Other assets, net...................... 13,249 60,764 (44,129)(1) 46,447 (1,600)(3) 18,163(4) -------- -------- -------- ---------- Total assets................. $419,168 $789,479 $227,978 $1,436,625 ======== ======== ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable..................... $ 50,699 $ 63,893 $ -- $ 114,592 Accrued expenses..................... 25,253 69,435 5,318(1) 99,374 (632)(3) Current portion of long-term debt.... 1,553 4,697 -- 6,250 Deferred income taxes................ 2,581 20,593 1,266(1) 24,440 -------- -------- -------- ---------- Total current liabilities......... 80,086 158,618 5,952 244,656 Long-term debt......................... 218,806 308,820 293,970(2)(4) 821,596 Deferred income taxes.................. 9,499 39,758 4,984(1) 54,241 Other non-current liabilities.......... -- 52,962 733(1) 53,695 -------- -------- -------- ---------- Total liabilities................. 308,391 560,158 305,639 1,174,188 Redeemable convertible preferred stock................................ -- -- 62,882(5) 62,882 Shareholders' equity: Preferred stock...................... -- 15 (15)(6) -- Common stock......................... 108 12,850 (12,818)(6) 140 Additional paid-in capital........... 60,825 226,758 (137,044)(6) 150,539 Retained earnings.................... 50,316 106,923 (106,923)(6) 49,348 (968)(3) Treasury stock....................... -- (117,225) 117,225(6) -- Currency translation adjustment...... (472) -- -- (472) -------- -------- -------- ---------- Total shareholders' equity... 110,777 229,321 (140,543) 199,555 -------- -------- -------- ---------- Total liabilities and shareholders' equity....... $419,168 $789,479 $227,978 $1,436,625 ======== ======== ======== ==========
See accompanying Notes to Unaudited Pro Forma Combined Financial Information. 29 37 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 28, 1996 (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
HISTORICAL PRO FORMA ------------------------- -------------------------- PILLOWTEX FIELDCREST ADJUSTMENTS COMBINED ----------- ----------- ----------- ----------- Net sales.............................. $ 490,655 $ 1,092,496 $ -- $ 1,583,151 Cost of goods sold..................... 411,048 956,522 3,713(7) 1,364,368 (6,915)(8) ----------- ----------- --------- ----------- Gross profit......................... 79,607 135,974 3,202 218,783 Selling, general, and administrative expenses............................. 41,445 105,405 (530)(1) 136,434 412(7) (14,644)(8) 4,825(7) (479)(9) Restructuring charges.................. -- 8,130 -- 8,130 ----------- ----------- --------- ----------- Earnings from operations............. 38,162 22,439 13,618 74,219 Nonoperating (income) expense: Interest expense..................... 13,971 26,869 22,606(10) 63,446 Other income, net.................... -- (5,604) -- (5,604) ----------- ----------- --------- ----------- Total nonoperating expense... 13,971 21,265 22,606 57,842 ----------- ----------- --------- ----------- Earnings before income taxes and extraordinary items............... 24,191 1,174 (8,988) 16,377 Income taxes........................... 9,459 114 (1,198)(11) 8,375 ----------- ----------- --------- ----------- Earnings before extraordinary items............................. 14,732 1,060 (7,790) 8,002 Preferred dividends.................... -- (4,500) 2,550(12) (1,950) ----------- ----------- --------- ----------- Earnings (loss) before extraordinary items applicable to common stock............................. $ 14,732 $ (3,440) $ (5,240) $ 6,052 =========== =========== ========= =========== PRIMARY EARNINGS PER SHARE: Earnings (loss) before extraordinary items............................. $ 1.39 $ (0.38) $ 0.44 =========== =========== =========== Weighted average common shares outstanding....................... 10,617,722 9,023,958 13,794,251(13) =========== =========== =========== FULLY DILUTED EARNINGS PER SHARE: Earnings (loss) before extraordinary items............................. $ -- $ 0.44 =========== =========== Weighted average common shares outstanding....................... 14,413,901 13,794,251(13) =========== =========== OTHER OPERATING DATA: Depreciation and amortization........ $ 12,775 $ 36,678 $ 57,394 EBITDA(14)........................... 50,937 59,117 131,613 Ratio of earnings to fixed charges(15)....................... 2.4x 1.0x 1.2x
See accompanying Notes to Unaudited Pro Forma Combined Financial Information. 30 38 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 27, 1997 (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
HISTORICAL PRO FORMA ------------------------ --------------------------- PILLOWTEX FIELDCREST ADJUSTMENTS COMBINED ----------- ---------- ----------- ----------- Net sales............................... $ 370,633 $ 820,635 $ -- $ 1,191,268 Cost of goods sold...................... 305,674 695,615 2,784(7) 998,887 (5,186)(8) ----------- ---------- --------- ----------- Gross profit.......................... 64,959 125,020 2,402 192,381 Selling, general, and administrative expenses.............................. 33,728 85,563 (398)(1) 111,520 310(7) (10,983)(8) 3,619(7) (319)(9) ----------- ---------- --------- ----------- Earnings from operations.............. 31,231 39,457 10,173 80,861 Nonoperating (income) expense: Interest expense...................... 13,957 18,708 19,970(10) 52,635 Other income, net..................... -- (2,021) -- (2,021) ----------- ---------- --------- ----------- Total nonoperating expense.... 13,957 16,687 19,970 50,614 ----------- ---------- --------- ----------- Earnings before income taxes and extraordinary items................ 17,274 22,770 (9,797) 30,247 Income taxes............................ 6,702 8,087 (1,412)(11) 13,377 ----------- ---------- --------- ----------- Earnings before extraordinary items... 10,572 14,683 (8,385) 16,870 Preferred dividends..................... -- (3,375) 1,912(12) (1,463) ----------- ---------- --------- ----------- Earnings before extraordinary items applicable to common stock......... $ 10,572 $ 11,308 $ (6,473) $ 15,407 =========== ========== ========= =========== PRIMARY EARNINGS PER SHARE: Earnings before extraordinary items... $ 0.99 $ 1.23 $ 1.11(13) =========== ========== =========== Weighted average common shares outstanding........................ 10,669,225 9,204,171 16,554,087 =========== ========== =========== FULLY DILUTED EARNINGS PER SHARE: Earnings before extraordinary items... $ 1.23 $ 1.11(13) ========== =========== Weighted average common shares outstanding........................ 9,247,477 16,554,087 ========== =========== OTHER OPERATING DATA: Depreciation and amortization......... $ 10,642 $ 26,241 $ 42,879 EBITDA(14)............................ 41,873 65,698 123,740 Ratio of earnings to fixed charges(15)........................ 2.0x 2.0x 1.5x
See accompanying Notes to Unaudited Pro Forma Combined Financial Information. 31 39 NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION (1) In connection with the Merger, at the Effective Time each then-outstanding share of Fieldcrest Common Stock was converted into the right to receive total consideration consisting of $27.00 in cash and 0.269 shares of Pillowtex Common Stock and each then-outstanding share of Fieldcrest Preferred Stock was converted into a right to receive total consideration consisting of $46.15 in cash and 0.4598286 shares of Pillowtex Common Stock. For purposes of the unaudited pro forma combined financial information contained herein, the fair market value of Pillowtex Common Stock is assumed to be $28.36 per share, which is the average closing market price of the Pillowtex Common Stock for the four consecutive trading days immediately preceding December 19, 1997 (i.e., the closing date of the Merger). The aggregate purchase price assumed to be paid by Pillowtex in connection with the acquisition of Fieldcrest pursuant to the Merger is summarized below. ISSUANCE OF PILLOWTEX COMMON STOCK: Number of shares of Fieldcrest Common Stock outstanding at the Effective Time........................................ 9,243,602 Conversion ratio............................................ 0.269 ------------ Number of shares of Pillowtex Common Stock assumed to be issued to holders of Fieldcrest Common Stock in connection with the Merger........................................... 2,486,529 ------------ Number of shares of Fieldcrest Preferred Stock outstanding at the Effective Time..................................... 1,500,000 Conversion ratio (rounded to the nearest one-hundredth)..... 0.46 ------------ Number of shares of Pillowtex Common Stock assumed to be issued to holders of Fieldcrest Preferred Stock in connection with the Merger................................ 690,000 ------------ Total shares of Pillowtex Common Stock assumed to be issued in connection with the Merger............................. 3,176,529 ============
AGGREGATE PURCHASE PRICE: Cash assumed to be paid to holders of Fieldcrest Common Stock (9,243,602 shares at $27.00 per share).............. $249,577,000 Cash assumed to be paid to holders of Fieldcrest Preferred Stock (1,500,000 shares at $46.15 per share).............. 69,225,000 Assumed fair value of Pillowtex Common Stock assumed to be issued in connection with the Merger (3,176,529 shares at $28.36 per share)......................................... 90,086,000 Severance costs assumed to be incurred in connection with the Merger................................................ 13,021,000(a) Settlement of Fieldcrest Options and Fieldcrest SARs........ 6,774,000(b) Early call premium on Fieldcrest 11.25% Senior Subordinated Debentures................................................ 4,782,000 Financial advisors, legal, accounting, and other professional fees......................................... 13,606,000 ------------ Aggregate purchase price.................................... $447,071,000 ============
32 40 ALLOCATION OF PURCHASE PRICE: Aggregate purchase price........................... $447,071,000 Less net book value of assets acquired............. 229,321,000 ------------ Excess of cost over net book value of assets acquired......................................... 217,750,000 Less adjustments to record assets and liabilities acquired at fair market value: Inventory........................................ 19,000,000(c) Property, plant, and equipment................... 50,000,000(d) Goodwill......................................... (6,495,000)(e) Other assets..................................... (44,129,000)(f) Accrued expenses................................. (5,318,000)(g) Deferred income taxes -- current................. (1,266,000)(h) Long-term debt................................... 18,636,000(i) Deferred income taxes -- noncurrent.............. (4,984,000)(h) Noncurrent liabilities........................... (733,000)(j) 24,711,000 ----------- ------------ Excess of cost over fair market value of net assets acquired (k)..................................... $193,039,000 ============
- --------------- (a) Reflects severance costs to be incurred in connection with the Merger in accordance with EITF 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination." (b) Reflects the settlement of the outstanding options to purchase shares of Fieldcrest Common Stock (the "Fieldcrest Options") and outstanding stock appreciation rights issued by Fieldcrest (the "Fieldcrest SARs") in connection with the Merger. (c) Reflects principally the elimination of Fieldcrest's last-in, first-out reserve, together with certain offsetting adjustments necessary to state inventory at fair market value. (d) Reflects a preliminary adjustment to fair value of Fieldcrest's property, plant, and equipment. The preliminary adjustment is based upon internal estimates and is allocated as follows: Land.................................... $ 5,000,000 Buildings............................... 20,000,000 Machinery and Equipment................. 25,000,000 ----------- $50,000,000 ===========
(e) Reflects the elimination of Fieldcrest's existing goodwill of $6,495,000. The reversal of the related amortization was $530,000 for the year ended December 28, 1996 and $398,000 for the nine months ended September 27, 1997. (f) Reflects an adjustment to record the (i) preliminary fair value remeasurement of Fieldcrest's pension asset resulting in a reduction of $27,087,000, (ii) elimination of the asset related to the Fieldcrest licensing agreement with Pillowtex of $10,393,000, (iii) write-off of the unamortized balance of debt issuance costs related to Fieldcrest's bank credit facility, Fieldcrest's 11.25% Senior Subordinated Debentures Due 2002 (the "11.25% Senior Subordinated Debentures"), and Fieldcrest's 6% Convertible Debentures due 2012 (the "Fieldcrest Convertible Debentures") of $4,649,000 and (iv) preliminary fair value adjustment related to notes receivable of $2,000,000. (g) Reflects the adjustment to record miscellaneous reserves of $5,318,000 charged to pre-Merger earnings. (h) To record a $6,250,000 deferred tax liability related to the temporary difference between the financial statement carrying amount and the tax basis of the Fieldcrest acquired assets as adjusted at an assumed income tax rate of 35.0% for the years in which those differences are expected to be recovered or settled. (i) Reflects the adjustment to record the Fieldcrest Convertible Debentures at an amount that approximates the market value of the Fieldcrest Convertible Debentures on December 19, 1997, (i.e., the closing date of the Merger). The discount of $18,636,000 will be amortized to interest expense using the interest method over the remaining life of the Fieldcrest Convertible Debentures. 33 41 (j) Reflects the preliminary fair value remeasurement of Fieldcrest's liability for post-retirement benefits other than pension ("OPEB") of $733,000. (k) Upon completion of its determination of fair values, Pillowtex may identify intangible assets (such as trade names) to which a portion of the purchase price should be allocated. Pillowtex believes that the amortization period for such identifiable intangible assets will also be 40 years. (2) Reflects the adjustment to record the following: Initial borrowings under the New Senior Credit Facilities... $ 398,956,000 Gross proceeds from the issuance and sale of the Notes...... 185,000,000 Gross proceeds from the issuance and sale of Pillowtex Preferred Stock........................................... 65,000,000 Cash assumed to be paid to holders of Fieldcrest Common Stock (9,243,602 shares at $27.00 per share).............. (249,577,000) Cash assumed to be paid to holders of Fieldcrest Preferred Stock (1,500,000 shares at $46.15 per share).............. (69,225,000) Repayment of Pillowtex's revolving credit facility.......... (86,350,000) Repayment of Fieldcrest's revolving credit facility......... (100,000,000) Satisfaction and discharge of Fieldcrest's 11.25% Senior Subordinated Debentures................................... (85,000,000) Severance costs assumed to be incurred in connection with the Merger (see note 1(a))................................ (13,021,000) Settlement of Fieldcrest Options and Fieldcrest SARs (see note 1(b))................................................ (6,774,000) Early call premium on Fieldcrest 11.25% Senior Subordinated Debentures................................................ (4,782,000) Financial advisors, legal, accounting, and other professional fees......................................... (34,227,000) ------------- $ -- =============
(3) Reflects the adjustment to (a) write off the unamortized balance of debt issuance costs related to the existing Pillowtex bank credit facility of $1,600,000, (b) record the related tax benefit of $632,000 and (c) record a net reduction in retained earnings of $968,000. (4) Reflects the adjustment to record the following: Bank borrowings required to finance the Merger.............. $ 398,956,000 Issuance and sale of the Notes.............................. 185,000,000 Repayment of Pillowtex's revolving credit facility.......... (86,350,000) Repayment of Fieldcrest's revolving credit facility......... (100,000,000) Satisfaction and discharge of Fieldcrest's 11.25% Senior Subordinated Debentures................................... (85,000,000) Discount of the Fieldcrest Convertible Debentures at fair market value (see note 1(i)).............................. (18,636,000) ------------- $ 293,970,000 =============
Additionally, debt issuance costs of $18,163,000 were incurred in connection with the Merger. (5) Reflects the issuance and sale of 65,000 shares of Pillowtex Preferred Stock at an offering price of $1,000 per share, net of offering costs of $2,118,000. (6) Reflects the (i) elimination of Fieldcrest's equity which will be canceled upon consummation of the Merger, (ii) issuance of 3,176,529 shares of Pillowtex Common Stock at a par value of $0.01 in connection with the Merger, and (iii) the related additional paid-in capital of $90,054,000, net of equity issuance costs of $340,000. (7) Reflects incremental depreciation and amortization expense as a result of the preliminary adjustment to fair value of Fieldcrest's property, plant, and equipment and the excess of cost over fair market value of the net assets acquired (see note 1) as follows: 34 42
NINE MONTHS YEAR ENDED ENDED ESTIMATED DECEMBER 28, SEPTEMBER 27, USEFUL LIFE 1996 1997 ------------- ------------ ------------- Additional depreciation of Fieldcrest Merger property, plant, and equipment.... 8 to 20 years $4,125,000 $3,094,000 ========== ========== Amortization of excess of cost over fair value of net assets acquired............. 40 years $4,825,000 $3,619,000 ========== ==========
(8) Reflects the elimination of duplicate corporate expenses of $21,559,000 for the year ended December 28, 1996 and $16,169,000 for the nine months ended September 27, 1997. (9) Reflects the reversal of the amortization related to Pillowtex's debt issuance costs which have been written off in connection with the Merger (see note 3) of $479,000 for the year ended December 28, 1996 and $319,000 for the nine months ended September 27, 1997. (10) Reflects an adjustment to record additional interest expense, amortization of debt issuance costs, and the amortization of the discount on the Fieldcrest Convertible Debentures incurred in connection with the Merger. For each 1/8% change in the assumed effective interest rate on Pillowtex's floating-rate debt, interest expense would change by $672,000 and $481,000 for the year ended December 28, 1996 and the nine months ended September 27, 1997, respectively. (11) Reflects the income tax benefit related to the effects of the pro forma adjustments based upon an assumed composite income tax rate of 39.5%. (12) Reflects an adjustment to (i) reverse Fieldcrest's historical preferred stock dividends and (ii) record the dividends on the Pillowtex Preferred Stock assuming a 3% dividend rate as follows:
NINE MONTHS YEAR ENDED ENDED DECEMBER 28, SEPTEMBER 27, 1996 1997 ------------ ------------- Reversal of historical Fieldcrest Preferred Stock dividends.............................................. $(4,500,000) $(3,375,000) Addition of Pillowtex Preferred Stock dividends.......... 1,950,000 1,463,000 ----------- ----------- $(2,550,000) $(1,912,000) =========== ===========
If Pillowtex were to fail to attain specified earnings per share targets in 1999, dividends for fiscal years after 1999 would increase from the initial 3.0% rate to 7.0% or 10.0% and Pillowtex would be required to pay an additional dividend consisting of shares of Pillowtex Preferred Stock, in each case as described above. (13) The assumed conversion of the Fieldcrest Convertible Debentures and the Pillowtex Preferred Stock would have an anti-dilutive effect on earnings per share for the year ended December 28, 1996, and therefore has been excluded from the computation thereof. The assumed conversion of the Fieldcrest Convertible Debentures would have an anti-dilutive effect on earnings per share for the nine months ended September 27, 1997, and therefore has been excluded from the computation thereof. (14) EBITDA is income before income taxes plus depreciation expense, amortization expense, and net interest expense. EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness; however, EBITDA should not be considered as an alternative to net income (as a measure of operating results) or to cash flows (as a measure of liquidity) computed in accordance with generally accepted accounting principles. In addition, EBITDA as presented herein may not be directly comparable to EBITDA as reported by other companies. (15) In calculating the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges (excluding capitalized interest). Fixed charges consist of interest expense (which includes amortization of deferred financing costs) whether expensed or capitalized and one-third of rental expense, deemed representative of that portion of rental expense estimated to be attributable to interest. 35 43 SELECTED HISTORICAL FINANCIAL INFORMATION OF PILLOWTEX The following summary historical financial information of Pillowtex has been derived from the historical consolidated financial statements of Pillowtex filed with the Commission, and should be read in conjunction with such financial statements and the notes thereto and the other financial information appearing in Pillowtex's Annual Report on Form 10-K for the year ended December 28, 1996 and the Quarterly Report on Form 10-Q of Pillowtex for the quarter ended September 27, 1997, and incorporated herein by reference. See "Available Information" and "Incorporation of Certain Information by Reference." The historical financial information at the end of and for each fiscal year in the five-year period ended December 28, 1996 has been extracted from audited financial statements filed with the Commission. Historical financial information at the end of and for the nine-month periods ended September 28, 1996 and September 27, 1997 has been extracted from unaudited financial statements filed with the Commission and incorporated herein by reference and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation, in all material respects, of the results of operations and financial position at the end of and for each of the interim periods presented. Interim period results are not necessarily indicative of results to be expected for a complete fiscal year.
NINE MONTHS ENDED FISCAL YEAR ----------------------------- ---------------------------------------------------- SEPTEMBER 28, SEPTEMBER 27, 1992 1993(1) 1994(2) 1995 1996 1996 1997 -------- -------- -------- -------- -------- ------------- ------------- (DOLLARS IN THOUSANDS) (UNAUDITED) STATEMENT OF OPERATIONS DATA: Net sales.................................. $273,462 $291,624 $349,520 $474,899 $490,655 $335,770 $370,633 Cost of goods sold......................... 222,611 238,155 294,714 395,922 411,048 280,272 305,674 -------- -------- -------- -------- -------- -------- -------- Gross profit............................... 50,851 53,469 54,806 78,977 79,607 55,498 64,959 Selling, general, and administrative expenses ................................ 33,376 29,227 36,399 42,508 41,445 31,170 33,728 -------- -------- -------- -------- -------- -------- -------- Earnings from operations................... 17,475 24,242 18,407 36,469 38,162 24,328 31,231 Interest expense........................... 4,997 3,042 6,361 17,491 13,971 10,279 13,957 Other expense (income), net................ 1,049 -- (379) -- -- -- -- -------- -------- -------- -------- -------- -------- -------- Earnings before income taxes and extraordinary loss....................... 11,429 21,200 12,425 18,978 24,191 14,049 17,274 Income taxes............................... 529 8,420 4,736 7,509 9,459 5,495 6,702 -------- -------- -------- -------- -------- -------- -------- Earnings before extraordinary loss......... 10,900 12,780 7,689 11,469 14,732 8,554 10,572 Extraordinary loss, net.................... -- -- -- -- (609) -- -- -------- -------- -------- -------- -------- -------- -------- Net earnings(3)............................ $ 10,900 $ 12,780 $ 7,689 $ 11,469 $ 14,123 $ 8,554 $ 10,572 ======== ======== ======== ======== ======== ======== ======== Net earnings available to common stock shareholders(3).......................... $ 8,400 $ 12,780 $ 7,689 $ 11,469 $ 14,123 $ 8,554 $ 10,572 ======== ======== ======== ======== ======== ======== ======== OTHER DATA: Depreciation and amortization.............. $ 3,104 $ 3,868 $ 6,365 $ 11,994 $ 12,775 $ 9,440 $ 10,642 Capital expenditures(4).................... 5,869 7,135 10,538 12,448 6,960 2,981 13,891 EBITDA(5).................................. 19,530 28,110 25,151 48,463 50,937 33,768 41,873 EBITDA margin.............................. 7.1% 9.6% 7.2% 10.2% 10.4% 10.1% 11.3% Ratio of earnings to fixed charges(6)...... 3.0x 6.8x 2.8x 2.0x 2.4x 2.2x 2.0x BALANCE SHEET DATA: Working capital............................ $ 65,567 $ 78,141 $122,738 $110,128 $150,506 $152,787 $181,234 Total assets............................... 131,542 180,967 319,544 324,710 375,714 370,670 419,168 Long-term debt............................. 63,599 63,735 177,149 153,472 194,851 180,200 218,806 Shareholders' equity....................... 7,072 69,329 76,478 87,990 100,004 95,042 110,777
- --------------- (1) Results for fiscal 1993 reflect the operations of Manetta Home Fashions, Inc. from August 30, 1993, Tennessee Woolen Mills, Inc. from September 7, 1993 and Torfeaco Industries Limited from December 1, 1993. (2) Results for fiscal 1994 reflect the operations of Imperial Feather Company from August 19, 1994 and Beacon Manufacturing Company from December 1, 1994. (3) Pillowtex, under a 1990 stock repurchase agreement with its former majority shareholder, was committed to repurchase certain shares of common stock from the former majority shareholder which resulted in accretion of $2,500. This accretion was charged to retained earnings and deducted from earnings available for common stock shareholders in the computation of pro forma earnings per common share for fiscal 1992. Additionally, on a pro forma basis, giving effect to the termination of Pillowtex's status as an S corporation under subchapter S of the Internal Revenue Code (which termination resulted from the initial public offering of Pillowtex Common Stock), as if such termination had occurred on January 1, 1992, net earnings and net earnings available to common stock shareholders would have been $7,692 and $5,192, respectively, for fiscal 1992 and $12,877 and $12,877, respectively, for fiscal 1993. (4) Capital expenditures for fiscal year 1996 exclude $5,745 and $8,335 related to the purchase of the assets of the Fieldcrest blanket division and the purchase of the Mauldin, South Carolina distribution facility, respectively. (5) EBITDA is income before income taxes plus depreciation expense, amortization expense, and net interest expense. EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness; however, EBITDA should not be considered as an alternative to net income as a measure of operating results or to cash flows as a measure of liquidity in accordance with generally accepted accounting principles. (6) In calculating the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges (excluding capitalized interest). Fixed charges consist of interest expense (which includes amortization of deferred financing costs) whether expensed or capitalized and one-third of rental expense, deemed representative of that portion of rental expense estimated to be attributable to interest. 36 44 SELECTED HISTORICAL FINANCIAL INFORMATION OF FIELDCREST The following summary historical financial information of Fieldcrest has been derived from the historical consolidated financial statements of Fieldcrest filed with the Commission, and should be read in conjunction with such financial statements and the notes thereto and the other financial information appearing in Fieldcrest's Annual Report on Form 10-K for the year ended December 31, 1996 and the Quarterly Report on Form 10-Q of Fieldcrest for the quarter ended September 30, 1997, and incorporated herein by reference. See "Available Information" and "Incorporation of Certain Information by Reference." The historical financial information at the end of and for each fiscal year in the five-year period ended December 31, 1996 has been extracted from audited financial statements filed with the Commission. Historical financial information at the end of and for the nine-month periods ended September 30, 1996 and 1997 has been extracted from unaudited financial statements filed with the Commission and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation, in all material respects, of the results of operations and financial position at the end of and for each of the interim periods presented. Interim period results are not necessarily indicative of results to be expected for a complete fiscal year.
NINE MONTHS ENDED FISCAL YEAR SEPTEMBER 30, ------------------------------------------------------------ ------------------- 1992 1993 1994 1995 1996 1996 1997 -------- ---------- ---------- ---------- ---------- -------- -------- (DOLLARS IN THOUSANDS) (UNAUDITED) STATEMENT OF OPERATIONS DATA: Net sales.................................... $981,773 $1,000,107 $1,063,731 $1,095,193 $1,092,496 $812,995 $820,635 Cost of sales................................ 818,729 834,701 898,437 966,642 956,522 706,482 695,615 -------- ---------- ---------- ---------- ---------- -------- -------- Gross profit................................. 163,044 165,406 165,294 128,551 135,974 106,513 125,020 Selling, general and administrative expenses(1)................................ 102,189 111,843 94,756 128,663 113,535 86,536 85,563 -------- ---------- ---------- ---------- ---------- -------- -------- Operating income (loss)...................... 60,855 53,563 70,538 (112) 22,439 19,977 39,457 Interest expense............................. 34,149 27,659 23,268 27,630 26,869 21,496 18,708 Other expense (income), net.................. 130 (975) 987 67 (5,604) 519 (2,021) -------- ---------- ---------- ---------- ---------- -------- -------- Income (loss) before income taxes............ 26,576 26,879 46,283 (27,809) 1,174 (2,038) 22,770 Income taxes................................. 10,886 11,913 15,538 (12,084) 114 (764) 8,087 -------- ---------- ---------- ---------- ---------- -------- -------- Income (loss) from continuing operations before accounting charges.................. $ 15,690 $ 14,966 $ 30,745 $ (15,725) $ 1,060 $ (1,274) $ 14,683 ======== ========== ========== ========== ========== ======== ======== Net income (loss)(3)......................... $ 15,250 $ (42,931) $ 30,745 $ (15,725) $ 1,060 $ (1,274) $ 14,683 Preferred dividends.......................... -- (463) (4,500) (4,500) (4,500) (3,375) (3,375) -------- ---------- ---------- ---------- ---------- -------- -------- Earnings (loss) on common.................... $ 15,250 $ (43,394) $ 26,245 $ (20,225) $ (3,440) $ (4,649) $ 11,308 ======== ========== ========== ========== ========== ======== ======== OTHER DATA: Depreciation and amortization................ $ 31,370 $ 31,539 $ 29,828 $ 31,746 $ 36,678 $ 26,979 $ 26,241 Capital expenditures......................... 20,687 21,594 51,929 64,153 33,386 21,035 46,214 EBITDA(4).................................... 92,225 85,102 100,366 31,634 59,117 46,956 65,698 EBITDA margin................................ 9.4% 8.5% 9.4% 2.9% 5.4% 5.8% 8.0% Ratio of earnings to fixed charges(5)........ 1.7x 1.8x 2.5x -- 1.0x -- 2.0x BALANCE SHEET DATA: Working capital.............................. $296,580 $ 262,326 $ 282,461 $ 268,477 $ 229,010 $288,103 $221,210 Total assets................................. 863,991 740,446 782,665 812,946 768,493 832,992 789,479 Long-term debt............................... 353,419 294,611 317,744 365,262 311,496 373,748 308,820 Stockholders' equity......................... 284,478 193,330 231,202 215,431 215,755 213,689 229,321
- --------------- (1) Includes restructuring charges of $10,000, $20,469 and $8,130 for fiscal years 1993, 1995 and 1996, respectively, and $8,130 for the nine months ended September 30, 1996. Such restructuring charges were incurred in connection with (i) a 1993 program to reduce overhead through a voluntary early retirement program and certain corporate reorganization costs, (ii) the 1995 reorganization of Fieldcrest's New York operations, and (iii) the 1996 sale of Fieldcrest's blanket division to Pillowtex and the closing of the blanket facilities in Eden, North Carolina. (2) Interest expense is net of interest income in the amount of $416, $613, $749, $1,859 and $4,161 for fiscal years 1992 through 1996, respectively, and $2,067 and $1,743 for the nine months ended September 30, 1996 and 1997, respectively. (3) Includes extraordinary loss on early retirement of debt of $5,179 for fiscal 1992, income from discontinued operations of $4,739 and $3,201 for fiscal years 1992 and 1993, respectively, and a gain from disposition of discontinued operations and cumulative effect of accounting changes of $9,207 and ($70,305), respectively, for fiscal 1993. (4) EBITDA is income before income taxes plus depreciation expense, amortization expense, and net interest expense. EBITDA is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur indebtedness; however, EBITDA should not be considered as an alternative to net income as a measure of operating results or to cash flows as a measure of liquidity in accordance with generally accepted accounting principles. (5) In calculating the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges (excluding capitalized interest). Fixed charges consist of interest expense (which includes amortization of deferred financing costs) whether expended or capitalized and one-third of rental expense, deemed representative of that portion of rental expense estimated to be attributable to interest. For the year ended December 31, 1995, and the nine months ended September 30, 1996, earnings were insufficient to cover fixed charges by $27,809 and $2,038, respectively. 37 45 THE EXCHANGE OFFER On December 18, 1997, the Company sold $185,000,000 in aggregate principal amount of the Series A Notes in a transaction exempt from the registration requirements of the Securities Act. In connection with the sale of the Series A Notes, the Company entered into the Registration Rights Agreement that requires the Company, among other things, to use its best efforts to file with the Commission a registration statement under the Securities Act covering the offer by the Company to exchange all of the Series A Notes for the Series B Notes and to cause such registration statement to become effective under the Securities Act. The Company is further obligated, upon the effectiveness of that registration statement, to offer each Holder of the Series B Notes the opportunity to exchange such Series A Notes for an equal principal amount at maturity of Series B Notes. A copy of the Registration Rights Agreement has been filed previously with the Commission. The Exchange Offer is being made pursuant to the Registration Rights Agreement to satisfy the Company's obligations thereunder. The term "Holder" with respect to the Exchange Offer means any person in whose name Series A Notes are registered on the Company's books or any other person who has obtained a properly completed assignment from the registered holder. Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (which together constitute the Exchange Offer), the Company will accept for exchange Series A Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City Time, on , 1998; provided, however, that if the Company, in its sole discretion, has extended the period of time for which the Exchange Offer is open, the term "Expiration Date" means the latest time and date to which the Exchange Offer is extended. As of the date of this Prospectus, $185,000,000 aggregate principal amount of the Series A Notes were outstanding. This Prospectus, together with the Letter of Transmittal, is first being sent on or about , 1998, to all holders of Series A Notes known to the Company. The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which the Exchange Offer is open, and thereby delay acceptance for exchange of any Series A Notes, by giving oral or written notice of such extension to the holders thereof as described below. During any such extension, all Series A Notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by the Company. Any Series A Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the Exchange Offer. Series A Notes tendered in the Exchange Offer must be in denominations of principal amount of $1,000 and any integral multiple thereof. The Company will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the Series A Notes as promptly as practicable, such notice in the case of any extension to be issued by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. PROCEDURES FOR TENDERING SERIES A NOTES The tender to the company of Series A Notes by a Holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering Holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal. Except as set forth below, a Holder who wishes to tender Series A Notes for exchange pursuant to the Exchange Offer must transmit either (i) a properly completed and duly executed Letter of Transmittal, including all other documents required by such Letter of Transmittal, to the Exchange Agent, at the address set forth below under "-- Exchange Agent" on or prior to the Expiration Date, or (ii) if such Series A Notes are tendered pursuant to the procedures for book-entry transfer set forth below, a holder tendering Series A Notes may transmit an Agent's Message (as defined herein) to the Exchange Agent in lieu of the Letter of Transmittal, in either case on or prior to the Expiration Date. In addition, either (i) certificates for such Series A Notes must be received by the Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Series A Notes, if such 38 46 procedure is available, into the Exchange Agent's account at the DTC (the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, along with the Letter of Transmittal or an Agent's Message, as the case may be, must be received by the Exchange Agent prior to the Expiration Date, or (iii) the holder must comply with the guaranteed delivery procedures described below. The term "Agent's Message" means a message, transmitted to the Book-Entry Transfer Facility and received by the Exchange Agent and forming a part of the Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from the tendering Participant (as defined herein) that such Participant has received and agrees to be bound by the Letter of Transmittal and the Company may enforce the Letter of Transmittal against such Participant. THE METHOD OF DELIVERY OF SERIES A NOTES, LETTERS OF TRANSMITTAL OR AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO THE COMPANY. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Series A Notes surrendered for exchange pursuant thereto are tendered (i) by a registered holder of the Series A Notes who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution (as defined herein). In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States (collectively, "Eligible Institutions"). If Series A Notes are registered in the name of a person other than a signatory of the Letter of Transmittal, the Series A Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company in its sole discretion, duly executed by, the registered Holder with the signature thereon guaranteed by an Eligible Institution. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Series A Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Series A Notes not properly tendered or to refuse to accept any particular Series A Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Series A Notes either before or after the Expiration Date (including the right to waive the ineligibility of any holder who seeks to tender Series A Notes in the Exchange Offer). The interpretation of the terms and conditions of the Exchange Offer as to any particular Series A Notes either before or after the Expiration Date (including the Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Series A Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Series A Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If the Letter of Transmittal is signed by a person or persons other than the registered holder or holders of Series A Notes, such Series A Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the Series A Notes. If the Letter of Transmittal or any Series A Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. 39 47 By tendering, each Holder will represent to the Company that, among other things, the Series B Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Series B Notes, whether or not such person is the holder, and that neither the holder nor such other person has any arrangement or understanding with any person to participate in the distribution of the Series B Notes. In the case of a Holder that is not a broker-dealer, each such holder, by tendering, will also represent to the Company that such holder is not engaged in, or does not intend to engage in, a distribution of the Series B Notes. If any Holder or any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company, or is engaged in or intends to engage in or has an arrangement or understanding with any person to participate in a distribution of such Series B Notes to be acquired pursuant to the Exchange Offer, such Holder or any such other person (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives Series B Notes for its own account in exchange for Series A Notes, where such Series A Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Series B Notes. See "Plan of Distribution." The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. ACCEPTANCE OF SERIES A NOTES FOR EXCHANGE; DELIVERY OF SERIES B NOTES Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will accept, promptly after the Expiration Date, all Series A Notes properly tendered and will issue the Series B Notes promptly after acceptance of the Series A Notes. For purposes of the Exchange Offer, the Company shall be deemed to have accepted properly tendered Series A Notes for exchange when, as and if the Company has given oral or written notice thereof to the Exchange Agent, with written confirmation of any oral notice to be given promptly thereafter. For each Series A Note accepted for exchange, the holder of such Series A Note will receive a Series B Note having a principal amount equal to that of the surrendered Series A Note. The Series B Note will bear interest from the date which the Series A Note bears interest. Series A Notes accepted for exchange will cease to accrue interest from and after the date of consummation of the Exchange Offer. Holders of Series A Notes whose Series A Notes are accepted for exchange will not receive any payment in respect of interest on such Series A Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. If the Exchange Offer is not consummated within the time period set forth herein under the heading "Description of Notes -- Registration Rights; Liquidation Rights," special interest in the form of Liquidated Damages will accrue and be payable on the Series A Notes until the Exchange Offer is consummated. In all cases, issuance of Series B Notes for Series A Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Series A Notes or a timely Book-Entry Confirmation of such Series A Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal and all other required documents or, in the case of a Book-Entry Confirmation, an Agent's Message in lieu thereof. If any tendered Series A Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer of if Series A Notes are submitted for a greater principal amount than the holder desired to exchange, such unaccepted or non-exchanged Series A Notes will be resumed without expense to the tendering holder thereof (or, in the case of Series A Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry procedures described below, such non-exchanged Series A Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the Exchange Offer. 40 48 CERTAIN CONDITIONS TO THE EXCHANGE OFFER Notwithstanding any other provision of the Exchange Offer, the Company shall not be required to accept for exchange, or to issue Series B Notes in exchange for, any Series A Notes and may terminate or amend the Exchange Offer, if at any time before the acceptance of such Series A Notes for exchange or the exchange of the Series B Notes for exchange or the exchange of the Series B Notes for such Series A Notes, any of the following shall occur: (a) there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order of decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission, (i) seeking to restrain or prohibit the making or consummation of the Exchange Offer or any other transaction contemplated by the Exchange Offer, or assessing or seeking any damages as a result thereof, or (ii) resulting in a material delay in the ability of the Company to accept for exchange or exchange some or all of the Series A Notes pursuant to the Exchange Offer; or any statute, rule, regulation, order or injunction shall be sought, proposed, introduced, enacted, promulgated or deemed applicable to the Exchange Offer or any of the transactions contemplated by the Exchange Offer by any government or governmental authority, domestic or foreign, or any action shall have been taken, proposed or threatened, by any government, governmental authority, agency or court, domestic or foreign, that in the reasonable judgment of the Company might directly or indirectly result in any of the consequences referred to in clauses (i) or (ii) above or, in the reasonable judgment of the Company, might result in the holders of Series B Notes having obligations with respect to resales and transfers of Series B Notes which are greater than those described in the interpretation of the Commission referred to on the cover page of this Prospectus, or would otherwise make it inadvisable to proceed with the Exchange Offer; or (b) there shall have occurred (i) any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market, (ii) any limitation by any governmental agency or authority which may adversely affect the ability of the Company to complete the transactions contemplated by the Exchange Offer, (iii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit, or (iv) a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the Exchange Offer, a material acceleration or worsening thereof; or (c) any change (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Company and its subsidiaries taken as a whole that, in the reasonable judgment of the company, is or may be adverse to the Company, or the Company shall have become aware of facts that, in the reasonable judgment of the Company, have or may have adverse significance with respect to the value of the Series A Notes or the Series B Notes; which in the reasonable judgment of the company in any case, and regardless of the circumstances (including any action by the Company) giving rise to any event described above, makes it inadvisable to proceed with the Exchange Offer and/or with such acceptance for exchange or with such exchange. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Series A Notes tendered, and no Series B Notes will be issued in exchange for any such Series A Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement of which this Prospectus constitutes a part or the qualification of the Indenture under the Trust Indenture Act. 41 49 BOOK ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Series A Notes at the Book-Entry Transfer Facility for purposes of the Exchange Offer within two business days after the date of this Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's systems may make book-entry delivery of Series A Notes by causing the Book-Entry Transfer Facility to transfer such Series A Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Series A Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof, with any required signature guarantees, or an Agent's Message in lieu of a Letter of Transmittal, and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at one of the addresses set forth below under "-- Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. GUARANTEED DELIVERY PROCEDURES If a registered holder of the Series A Notes desires to tender Series A Notes held by such Holder and such Series A Notes are not immediately available, or time will not permit such Holder's Series A Notes or other required documents to reach the Exchange Agent before the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form provided by the Company (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the Holder of Series A Notes and the amount of Series A Notes tendered, stating that the tender is being made thereby and guaranteeing that within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Series A Notes, in proper form for transfer, or a Book- Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent, and (iii) the certificates for all physically tendered Series A Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of Series A Notes may be withdrawn at any time prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at the addresses set forth below under "-- Exchange Agent." Any such notice of withdrawal must specify the name of the person having tendered the Series A Notes to be withdrawn, identify the Series A Notes to be withdrawn (including the principal amount of such Series A Notes), and (where certificates for Series A Notes have been transmitted) specify the name in which such Series A Notes are registered, if different from that of the withdrawing holder. If certificates for Series A Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Series A Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Series A Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Series A Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Series A Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Series A Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry 42 50 transfer procedures described above, such Series A Notes will be credited to an account maintained with such Book-Entry Transfer Facility for the Series A Notes) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Series A Notes may be retendered by following one of the procedures described under "-- Procedures for Tendering Series A Notes" above at any time on or prior to the Expiration Date. EXCHANGE AGENT Norwest Bank Minnesota, National Association has been appointed as the Exchange Agent for the Exchange Offer. All executed Letters of Transmittal should be directed to the Exchange Agent at one of the addresses set forth below. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: By Mail or Overnight Courier: Norwest Bank Minnesota, National Association 6th Street and Marquette Avenue M.S. 0069 Minneapolis, MN 55479 Attn: Jane Schweiger By Facsimile (for Eligible Institutions only): (612) 667-9825 By Telephone (to confirm receipt of facsimile): (612) 667-2344 DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL. FEES AND EXPENSES The Company will not make any payment to brokers, dealers, or others soliciting acceptances of the Exchange Offer. The estimated cash expenses to be incurred in connection with the Exchange Offer will be paid by the Company and are estimated in the aggregate to be $225,000. TRANSFER TAXES Holders who tender their Series A Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that holders who instruct the Company to register Series B Notes in the name of, or request that Series A Notes not tendered or not accepted in the Exchange Offer be returned to, a person other than the registered tendering holder will be responsible for the payment of any applicable transfer tax thereon. ACCOUNTING TREATMENT The Series B Notes will be recorded at the same carrying value as the Series A Notes, which is face value, as reflected in the Company's accounting records on the date of the exchange. Accordingly, no gain or loss for accounting purposes will be recognized. The expenses of the Exchange Offer and the unamortized expenses related to the issuance of the Series A Notes will be amortized over the term of the Series B Notes. CONSEQUENCES OF EXCHANGING SERIES A NOTES Holders of Series A Notes who do not exchange their Series A Notes for Series B Notes pursuant to the Exchange Offer will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Series A Notes and the restrictions on transfer of such Series A Notes as set forth in the legend thereon 43 51 as a consequence of the issuance of the Series A Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Series A Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register Series A Notes under the Securities Act. See "Description of Notes." Based on interpretations by the staff of the Commission, as set forth in no-action letters issued to third parties, the Company believes that Series B Notes issued pursuant to the Exchange Offer in exchange for Series A Notes may be offered for resale, resold or otherwise transferred by holders thereof (other than any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Series B Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement or understanding with any person to participate in the distribution of such Series B Notes. However, the Company does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offer in the context of a no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. Each Holder, other than a broker-dealer, must acknowledge that it is not engaged in, and does not intend to engage in, a distribution of Series B Notes and has no arrangement or understanding to participate in a distribution of Series B Notes. If any Holder is an affiliate of the Company, is engaged in or intends to engage in or has any arrangement or understanding with respect to the distribution of the Series B Notes to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable interpretations of the staff of the Commission and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. In addition, to comply with state securities laws, the Series B Notes may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. The offer and sale of the Series B Notes to "qualified institutional buyers" (as such term is defined under Rule 144A of the Securities Act) is generally exempt from registration or qualification under the state securities laws. The Company currently does not intend to register or qualify the sale of the Series B Notes in any state where an exemption from registration or qualification is required and not available. All rights under the Registration Rights Agreement accorded to Holders of Series A Notes will terminate upon the consummation of the Exchange Offer except with respect to the Company's duty to keep the Registration Statement effective until the closing of the Exchange Offer and, for a period not to exceed one year after the Registration Statement has been declared effective, to provide copies of the latest version of this Prospectus to any broker-dealer that requests copies of such Prospectus in the Letter of Transmittal for use in connection with any resale by such broker-dealer of Exchange Senior Notes received for its own account pursuant to the Exchange Offer in exchange for Private Notes acquired for its own account as a result of market-making or other trading activities, subject to the conditions described above. PRO FORMA LIQUIDITY AND CAPITAL RESOURCES Approximately $649.0 million of financing was required in connection with the Merger and related transactions. The Company obtained the necessary funds from (i) the sale of the Pillowtex Preferred Stock, (ii) the issuance and sale of the Series A Notes, and (iii) borrowings under the New Senior Credit Facilities. See "The Merger," "Use of Proceeds," and "Post-Merger Indebtedness." The Merger had a significant impact on the capitalization of the Company. At September 27, 1997, the pro forma combined indebtedness of Pillowtex would have been $827.8 million compared to $220.4 million on a Pillowtex stand-alone basis at that date. The Company intends to use cash flows from operations and funds available under the Revolver to meet its working capital requirements, debt service obligations, capital expenditure requirements, and, if permitted, to make preferred and common stock dividend payments. Financing available under the New Senior Credit Facilities includes $350.0 million under the Revolver, approximately $163.2 million of which currently 44 52 remains available. In addition, the New Senior Credit Facilities include $250.0 million under the Term Loan, all of which was drawn upon closing of the Merger. See "Unaudited Pro Forma Combined Financial Information" and "Post-Merger Indebtedness." The Fieldcrest Convertible Debentures are convertible into the same consideration that a holder of the number of shares of Fieldcrest Common Stock into which such Fieldcrest Convertible Debentures might have been converted immediately prior to the Merger would be entitled to receive in the Merger. If all of the outstanding Fieldcrest Convertible Debentures were so converted following the consummation of the Merger, the resulting cash component required to be paid by the Company to the holders of such debentures would be approximately $71.1 million. The Company expects to utilize funds available from the Revolver to pay the cash portion of the conversion value of the Fieldcrest Convertible Debentures to the extent these securities are converted. The Revolver matures on the sixth anniversary of the Merger. The Term Loan consists of a $125.0 million Tranche A Term Loan and a $125.0 million Tranche B Term Loan. The Tranche A Term Loan and the Tranche B Term Loan will begin scheduled quarterly amortization of principal in arrears commencing in 1999 and 1998, respectively, with final maturities on December 31, 2003 and December 31, 2004, respectively. Interest on loans under the New Senior Credit Facilities bears interest at rates based upon federal or Eurodollar rates plus an applicable margin. Loans under the New Senior Credit Facilities are guaranteed by any and all existing or future domestic subsidiaries of the Company and will be secured by substantially all of the assets of the Company and its domestic subsidiaries. See "Risk Factors -- Significant Leverage and Debt Service" and "Post-Merger Indebtedness -- New Senior Credit Facilities." The Company enters into interest-rate swap agreements to modify the interest characteristics of portions of its outstanding debt. Swap agreements are designated with all or a portion of the principal balance and term of a specific debt obligation. These agreements involve the exchange of amounts based on a fixed or variable rate for the opposite type of rate over the life of the agreement without an exchange of the notional amount upon which the payments are based. The differential to be paid or received as interest rates change is accrued and recognized as an adjustment of interest expense related to the debt (the accrual accounting method). The fair value of the swap agreements and changes in fair value as a result of changes in market interest rates are not recognized in the financial statements. Subsequent to January 3, 1998, the Company terminated a swap agreement in place covering approximately $125.0 million of indebtedness for a cash gain of approximately $1.0 million. The gain has been deferred and will be amortized as an adjustment to interest expense over the remaining three-year term of the terminated swap agreement. On January 9, 1998, the Company entered into an interest rate swap agreement covering $250.0 million of indebtedness expiring February 19, 1999 at a fixed rate of 5.56%. As a result of recent discussions with the Pension Benefit Guaranty Corporation, the Company has a $15.0 million letter of credit in support of certain funding obligations it may have after the Merger in connection with certain of the Fieldcrest pension plans. The Company intends to make capital expenditures in excess of $240.0 million over the next several years, principally to modernize the acquired Fieldcrest sheet and certain of the towel manufacturing facilities through the addition of new machinery and equipment. The Company anticipates that approximately $80.0 million of such capital expenditures will be made in fiscal 1998. See "Business -- Business Strategy." Subsequent to the Merger, the Company will implement measures intended to maximize economies of scale and operating efficiencies, and to achieve cost savings, in the operation of the businesses of Pillowtex and Fieldcrest on a combined basis. On January 20, 1998, the Company announced that it was consolidating its four blanket production units into two facilities in Westminster, South Carolina and Swannanoa, North Carolina. In connection with this consolidation the Company has announced that it is closing certain facilities operated by its subsidiaries, Manetta Home Fashions, Inc. and Tennessee Woolen Mills, Inc. The consolidation is expected to be completed by the end of the second quarter of this year. As part of the consolidation, the Company will take a pre-tax charge to earnings of approximately $6.0 million for the period ended January 3, 1998, and approximately $1.5 million for the period ending April 4, 1998. Management expects these 45 53 nonrecurring costs to be initially funded through cash flows and borrowings under the New Senior Credit Facilities. The Company anticipates that it will continue to pay a quarterly dividend of $0.06 per share on its common stock. Through December 31, 1999 and subject to obligations under its various debt instruments, the Company will pay dividends on the Pillowtex Preferred Stock at a rate per annum equal to 3%, or approximately $2.0 million per year. Thereafter, the Pillowtex Preferred Stock will accrue dividends based upon the Company's earnings per share for the fiscal year. See "Pillowtex Series A Redeemable Convertible Preferred Stock." The payment of such dividends is restricted under the New Senior Credit Facilities and the Indenture. The Company anticipates that its principal use of cash following the Merger will be working capital requirements, debt service requirements, payment of dividends (if permitted), and capital expenditures as well as expenditures relating to acquisitions and integrating acquired businesses. Based upon current and anticipated levels of operations, the Company believes that its cash flow from operations, together with amounts available under the New Senior Credit Facilities, will be adequate to meet its anticipated requirements through December 31, 1998 for working capital, capital expenditures, and interest payments. There can be no assurance, however, that the Company's business will continue to generate sufficient cash flow from operations in the future to service its debt, and the Company may be required to refinance all or a portion of its existing debt or to obtain additional financing. These increased borrowings may result in higher interest payments. There can be no assurance that any such refinancing would be possible or that any additional financing could be obtained. The inability to obtain additional financing could have a material adverse effect on the Company. See "Risk Factors -- Significant Leverage and Debt Service." BUSINESS GENERAL The Company is one of the largest, based on net sales, North American designers, manufacturers, and marketers of home textile products, offering a full line of bed pillows, sheets, blankets, mattress pads, down comforters, towels, bath rugs, and other home textile products. As a leading supplier across all distribution channels, the Company markets to virtually all major mass merchants, department stores, and specialty retail stores, providing its customers a centralized "one-stop" source for their home textile merchandise. The Company manufactures and markets products utilizing established and well recognized Company-owned trademarks and trade names, including Royal Velvet(R), Cannon(R), Charisma(R), Touch of Class(R), Fieldcrest(R), Beacon(R), and Nettle Creek(R). Recent consumer research has shown that Cannon(R) and Fieldcrest(R) are the two most recognized home textile brands in the United States. In addition, Cannon(R) is the sixth most recognized domestic consumer brand in the United States. Furthermore, the Company has licensed, for certain products, highly recognizable brands such as Ralph Lauren, Disney's Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), Comforel(R), Adrienne Vittadini(R), Ellen Tracy(R), Court of Versailles(R), and Waverly(R) as well as such well-known copyrighted characters as Mickey Mouse and Winnie the Pooh. On a pro forma combined basis, after giving effect to the Merger and the Financing Transactions, the Company would have had net sales and pro forma EBITDA of approximately $1.6 billion and $131.6 million, respectively, for the fiscal year ended December 28, 1996, and $1.2 billion and $123.7 million, respectively, for the nine months ended September 27, 1997. RECENT DEVELOPMENTS Since the consummation of the Merger on December 19, 1997, the Company has disposed of certain non-core business assets of Fieldcrest for approximately $24.0 million in cash. The Company plans to continue to evaluate certain Fieldcrest properties and lines of business unrelated to its core home textile business of towel, 46 54 bath rugs, sheets and fashion bedding and expects to enter into more additional agreements for the disposal of these properties and businesses. On January 20, 1998, the Company announced that it was consolidating its four blanket production units into two facilities in Westminster, South Carolina and Swannanoa, North Carolina. In connection with this consolidation the Company has announced that it is closing certain facilities operated by its subsidiaries, Manetta Home Fashions, Inc. and Tennessee Woolen Mills, Inc. The consolidation is expected to be completed by the end of the second quarter of this year. As part of the consolidation, the Company will take a pre-tax charge to earnings of approximately $6.0 million for the period ended January 3, 1998, and approximately $1.5 million for the period ending April 4, 1998. Management expects these nonrecurring costs to be initially funded through cash flows and borrowings under the New Senior Credit Facilities. COMPETITIVE STRENGTHS The Merger has created one of the largest firms, based on net sales, in the home textile industry with competitive strengths that are significantly greater than those of either Pillowtex or Fieldcrest on a stand-alone basis. The Company has the largest market share in North America in each of the towel, bed pillow, blanket, and down comforter product segments and a significant market share in sheets, mattress pads, fashion bedding, and bath rugs. Pillowtex's management team has successfully integrated eight acquisitions over the last five years while improving Pillowtex's overall efficiency and consistently producing a record of growth and profitability. From 1991 through 1996, Pillowtex's net sales have increased from $259.0 million to $490.7 million, representing a compound annual growth rate of 13.6%. Over this same period Pillowtex's EBITDA has improved from $22.0 million to $50.9 million, representing a compound annual growth rate of 18.3%. The combined company's management team will provide a breadth of expertise rivaling any in the industry. The Company's management team will use the following competitive strengths to enhance the Company's position in the marketplace: - Industry Leading Brands: As a result of the Merger, the Company owns some of the most recognizable brands in the industry, including Royal Velvet(R), Cannon(R), Charisma(R), and Touch of Class(R). Recent consumer research has shown that Cannon(R) and Fieldcrest(R) are the two most recognized home textile brands in the United States. In addition, Cannon(R) is the sixth most recognized domestic consumer brand. Furthermore, through licensing agreements, the Company currently has exclusive rights to manufacture and, in some instances, market certain bedding products under such well-known brands as Ralph Lauren, Disney's Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), Comforel(R), Adrienne Vittadini(R), Ellen Tracy(R), and Waverly(R). This diverse portfolio of premier brand names allows the Company to differentiate its products from those of its competitors and provides distinct brand names for different channels of retail distribution and for different price points. These brand names will also enable the Company to assist its customers in coordinating their product offerings and differentiating such offerings from those of their competitors. - Strong Customer Relationships: The Company has established relationships with 49 of the top 50 home textile retailers in the United States and Canada. The combination of the two companies enhances these relationships, providing customers the benefits of a true "one-stop" source for bed and bath products. These strong relationships will create a stable base from which the Company can pursue future business and new product introductions. - Creative Merchandising Strategies: Historically, both Pillowtex and Fieldcrest have maintained creative partnerships with their customers, including extensive merchandising programs, that have resulted in the creation of successful new products, product mix strategies, point-of-sale concepts, and advertising campaigns. Retail customers are increasingly demanding exclusive or specially designed product lines to differentiate their product offerings from those of other retailers and to implement price tiering in order to achieve higher margins. The Company will continue this collaboration with its retail customers to design products and marketing programs responsive to individual customer's needs. 47 55 - Low Cost Operating Capabilities: As a result of its continued emphasis on cost-containment and capital expenditures to obtain greater plant efficiencies, Pillowtex is a low cost producer of bed pillows, mattress pads, down comforters, and blankets in the home textile industry. The Merger provides the Company with efficient, low cost towel and bath rug production capabilities, including a new, state-of-the-art towel production facility. In addition, Pillowtex has emphasized a low cost of operations, creating a competitive advantage by operating with one of the lowest SG&A expenses, as a percentage of sales, in the industry. The Company believes that significant opportunities exist to improve this competitive position by lowering Fieldcrest's SG&A costs as a percentage of sales to Pillowtex's historic levels. BUSINESS STRATEGY The Company's strategic objectives are to capitalize on its industry leading position by leveraging the strength of its brand names, customer relationships, and operational capabilities across the most comprehensive array of product offerings in the home textile industry. The Company's strategic focus will be to: - Capitalize on Industry Leading Position: The Merger has created a powerhouse within the home textiles industry in terms of dollar sales volume and product offerings. The Company will focus on leveraging its market leadership by implementing sales and marketing programs designed to facilitate a customer-driven "pull" strategy. By cross-marketing both Pillowtex and Fieldcrest products using the Company's strong brand names, the Company will create enhanced product value and facilitate greater differentiation of its products from those of its competitors. - Develop the Premier "One-Stop Shop" for Home Textiles: The breadth of the Company's product lines provide it with a significant competitive advantage as it can offer its retailer customers a centralized "one-stop" purchasing source for all their home textile merchandise. The Company's extensive assortment of home textile products will include fashion and utility bedding, as well as a full line of bath products. The Company will exploit its position as a "one-stop" purchasing source by continuing its practice of offering broad product assortments across diverse product lines, thereby offering retailers a central source from which to efficiently and effectively purchase their home textile items. - Further Strengthen Customer Relationships: The Company has a long history of strong customer relationships with the top retailers in the United States and Canada. The Company has developed these relationships by providing value-added services, such as innovative marketing and cross- merchandising capabilities. The Company believes that the value of such services to retailers will be increased significantly by combining the traditional Pillowtex and Fieldcrest product lines in a centralized purchasing source and utilizing the Fieldcrest portfolio of brand names across all such product lines. The Company will also increase the use of marketing and cross-merchandising services in connection with the traditional Fieldcrest products, creating opportunities for added sales and providing retailers with more opportunities to differentiate their product offerings from those of their competitors. - Enhance Operational Efficiencies: The Company will continue to focus on reducing its manufacturing cost structure by rationalizing its current operations and investing in automation, equipment modernization, process improvements, and system controls throughout all aspects of its business. The Company's management believes that significant opportunities exist to improve production efficiency through capital investment, improved operational logistics, selective outsourcing, and increased utilization of information systems. The Company intends to make capital expenditures in excess of $240.0 million over the next several years, principally to modernize the acquired Fieldcrest sheet and certain of the towel manufacturing facilities through the addition of new machinery and equipment. The Company anticipates that approximately $80.0 million in capital expenditures will be made in fiscal 1998. 48 56 - Realize Significant Cost Savings: Currently, the Company has identified approximately $21.6 million of annual cost savings that it expects to realize immediately as a result of the Merger. These cost savings are comprised of $20.3 million of savings from the elimination of duplicate staff salaries and $1.3 million of savings from the elimination of duplicative corporate expenses. The Company additionally expects to realize significant ongoing cost savings, including at least $8.4 million to be realized within the first 12 months after consummation of the Merger, as follows: (i) $0.9 million by eliminating other redundant cost functions; (ii) $2.0 million by improving procurement efficiencies by exploiting the combined company's purchasing power; (iii) $3.0 million by reducing trade advertising; (iv) $1.0 million by rationalizing and streamlining operations; and (v) $1.5 million by reducing the use of outside consultants. PRODUCTS Pillowtex Pillowtex, originally founded in 1954 as a pillow manufacturer, expanded its product lines through acquisitions into other categories of top-of-the-bed home textiles including mattress pads, comforters and blankets. Pillowtex has been successful in integrating these acquisitions into its existing operations, resulting in increased sales, more efficient distribution, and a broader product line. Pillowtex originally expanded its product line to include blankets through the acquisition of Manetta Mills, Inc. in August 1993 and Tennessee Woolen Mills, Inc. in September 1993. However, see "-- Recent Developments." In addition, in December 1994, Pillowtex acquired substantially all of the assets of Beacon Manufacturing Company ("Beacon"), a manufacturer of cotton and synthetic blankets and throws. Pillowtex expanded its manufacturing operations into Canada through the acquisition of Torfeaco Industries, Ltd. ("Torfeaco"), a manufacturer of fashion and synthetic bedding products, in December 1993, and Imperial Feather Company ("Imperial"), a manufacturer of bedding products, including natural fill and synthetic bed pillows, down comforters, and comforter covers, in August 1994. In 1996, Pillowtex acquired certain assets from Fieldcrest's blanket operations, including a large number of newer, more efficient looms that have been installed at Pillowtex's other blanket facilities. The combination of its historic pillow operations with the acquired top-of-the-bed product lines has enabled Pillowtex to build its core business around four utility bedding product lines that have a low risk of obsolescence. These include bed pillows (including natural fill, synthetic fiber fill, and latex), blankets (including cotton, wool blends, acrylic and polyester blankets, and throws), down comforters, and mattress pads (including thread quilt, sonic quilt and convoluted foam). Pillowtex also sells other bedroom textile furnishings, including comforter covers, featherbeds, pillow protectors, decorative pillows, bedspreads, synthetic comforters, pillow shams, dust ruffles, and window treatments. Bed Pillows. Pillowtex believes that it is a leading manufacturer and marketer of bed pillows in the United States and Canada. Pillowtex produces and markets a broad line of traditional bed pillows, as well as specially designed bed pillows such as the BedMate(R) body pillow and Great Shapes(R) pillows, including Euro Square, U-Neck and Neck Roll. Pillowtex offers products at various levels of quality and price, from synthetic pillows sold at retail prices as low as $4 to fine white goose down pillows sold at a retail price of up to approximately $185. Pillowtex believes that it is a leading feather and down pillow manufacturer in the United States and Canada, offering products filled with quality goose and duck down, or blends of feather and down, in a range of grades. These materials, known as "natural fill," are noted for their loft and resiliency. Pillowtex also manufactures and markets a full line of bed pillows featuring staple (cut and crimped), tow (continuous filament), and cluster (individual ball) synthetic fiber fills. Pillowtex believes that it is a leading supplier of premium synthetic and latex bed pillows in the United States and Canada. Blankets. Pillowtex believes that it is a leading producer of blankets in the United States and Canada, manufacturing woven and nonwoven conventional and thermal weave blankets and throws in a wide assortment of fibers, including cotton, wool blend, acrylic, and polyester. Pillowtex is the exclusive supplier in 49 57 the United States and Canada of blankets for Ralph Lauren. Pillowtex has a strong presence in the infant blanket market with products ranging from nonwoven receiving blankets, to jacquard throws, to the finest Supima(R) cotton crib blanket. Pillowtex also designs and manufactures a full line of decorative cotton and acrylic jacquard throws. Down Comforters. Pillowtex was a pioneer in marketing down comforters in the United States, and Pillowtex believes that it is a leading manufacturer and marketer of down comforters in the United States and Canada. Down comforters have become increasingly popular for both their insulation and fashion qualities, selling well in both warm and cool climates. They sell at department stores at prices ranging from $70 to approximately $400. Increasingly popular higher end comforters typically offer more down fill, sport higher thread count shells and feature more appealing "surface interest," such as damask dots, stripes and checks. Mattress Pads. Pillowtex believes that it is a leading manufacturer and marketer of mattress pads in the United States and Canada, producing and marketing a complete line of mattress pads, including sizes for adults and children, natural and synthetic filled, flat, and fitted as well as its skirted Adjust-A-Fit(R) mattress pad, an adjustable fit mattress pad made with Lycra(R), a multidirectional stretch material produced by E.I. DuPont de Nemours & Co. ("DuPont"). The Adjust-A-Fit(R) mattress pad correctly fits a broad range of mattress thicknesses, including pillow top mattresses. Other Bedroom Textiles. Pillowtex offers a variety of other complementary bedroom textile products including comforter covers, featherbeds, pillow protectors, synthetic fill comforters, decorative pillows, pillow shams, dust ruffles, and window treatments. These products represent a source of additional profitability as "add-on" sales for retailers. Fieldcrest Fieldcrest manufactures and markets quality bed and bath products, including towels, sheets, comforters, and bath rugs, which are sold under such brand names as Royal Velvet(R), Cannon(R), Fieldcrest(R), Charisma(R), St. Mary's(R), and Royal Family(R). Towels. Fieldcrest's bathroom textile products include bath, hand and fingertip towels, washcloths, and bath mats. Royal Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), and St. Mary's(R) are well-known, high quality towel brand names, providing Fieldcrest with a strong market position in key sectors of the United States market. Fieldcrest is also recognized as the color leader in the towel industry as it markets 40 colors in its Royal Velvet(R) franchise. In the marketplace, Fieldcrest differentiates its towels by using fine ring spun cotton yarns to produce Royal Velvet(R) towels and pima cotton yarns for Charisma(R). The towel line includes solid color cam and dobby towels, woven stripes and fancy jacquards as well as printed towels. Retail prices of Fieldcrest's towels range from $1.84 for a 25 inch by 42 inch solid color towel to $25.00 for a 30 inch by 52 inch Charisma(R) towel made of Supima(R) cotton. Bath Rugs. Fieldcrest markets a variety of bath and accent rugs in conjunction with its towel offering. Sizes range from 18 inches by 30 inches to 50 inches by 30 inches. Products are marketed under the Royal Velvet(R), Charisma(R), Fieldcrest(R) Cannon(R), and Cannon Royal Family(R) brands, as well as private labels. Retail prices for bath rugs range from $4.99 to $35.00. Other Bath Products. Fieldcrest had marketed shower curtains and ceramic bath accessories as complementary bath products for its towel and bath mat product lines. In January 1998, the Company entered into a license agreement with Ex-Cell Home Fashions, Inc. ("Ex-Cell"), pursuant to which the Company granted Ex-Cell an exclusive, world-wide license to manufacture, sell and distribute shower curtains and bath accessories under the highly recognized family of Fieldcrest brands, including Charisma(R), Touch of Class(R), Royal Velvet(R), Fieldcrest(R) and Cannon(R). The license agreement requires royalty payments based upon product sales, including payments of minimum annual royalties, and is for an initial term of five years with up to two optional renewal terms of five years each. Sheets and Fashion Bedding. Fieldcrest produces a wide variety of sheets, ranging from a 128-thread count sheet of blended cotton and polyester to top-of-the-line 310-thread count 100% pima cotton sheets. Its principal brand names for this product line include Cannon(R), Fieldcrest(R), Royal Velvet(R), and Charisma(R), all 50 58 of which are widely recognized by consumers. Among Fieldcrest's sheeting strengths are solid color sheets with coordinating decorative bedding accessories. In addition to sheets, Fieldcrest's fashion bedding products consist of matching comforters, duvet covers, and pillow shams along with coordinated ruffled or pleated bed skirts. Retail prices of Fieldcrest's sheets start at approximately $6.99 for a twin size, 128-thread count sheet set and extend to $150.00 for a king size, 310-thread count Charisma(R) sheet. Comforters are sold at retail prices as low as $19.99 for a solid color twin size to approximately $449.00 for a king size Charisma(R) comforter. Furniture Covering Products. Fieldcrest also manufactures and markets a full line of ready-made furniture coverings through its SureFit(R) operations. Product sizes include chair, love-seat, sofa, and large sofa. These products sell at retail prices ranging from $16.99 for lower-end solid and polyester-cotton prints to $199.99 for novelty upholstery weight sofa covers. MARKETING, SALES AND DISTRIBUTION Pillowtex Pillowtex markets its products to virtually all major retailers through channels of distribution that include department and specialty stores, mass merchants, discounters and catalogs, as well as institutional suppliers. Pillowtex believes that it is one of the principal suppliers of bedroom textile products to several of the largest retailers in the United States. Pillowtex's top ten customers accounted for approximately 65% of total sales in 1996. Wal-Mart and Dayton Hudson accounted for 14% and 13% of Pillowtex's total sales in 1996, respectively. No other customer accounted for more than 10% of total sales in 1996. For the nine months ended September 27, 1997, sales to Wal-Mart and Dayton Hudson accounted for 12% and 13%, respectively, of Pillowtex's total sales. Consistent with industry practice, Pillowtex does not generally operate under long-term written supply contracts with its customers. Pillowtex does not anticipate a reduction in customer orders after the Effective Time solely as a result of the overlap of customers of both Pillowtex and Fieldcrest, though there can be no assurance in this regard. See "Risk Factors -- Risk of Loss of Material Customers." Pillowtex's current international business is concentrated in Canada, although it also sells in Mexico, Latin America, and overseas. Pillowtex's acquisition of Torfeaco in 1993, and of Imperial and Beacon in 1994, greatly enhanced Pillowtex's market position in Canada and its relationships with important Canadian retailers. Pillowtex's relationship with the Polo Ralph Lauren Corporation began in 1987 and Ralph Lauren is among Pillowtex's most important licensed trademarks. Pillowtex holds an exclusive license for pillows, down comforters, mattress pads, and blankets in the United States and Canada, and a non-exclusive license to manufacture, and in certain cases to sell, a variety of fashion bedding products in the territory. Ralph Lauren products are sold worldwide to fine department and specialty stores. In an effort to maximize Pillowtex's product exposure and increase sales, Pillowtex works closely with its major customers to assist them in merchandising and promoting Pillowtex's products to the consumer. In addition to frequent personal consultation with the employees of these customers, Pillowtex meets with its customers' senior management periodically to jointly develop merchandise assortments and plan promotional events specifically tailored to that customer. Pillowtex provides merchandising assistance with store layouts, fixture designs, advertising and point of sale displays and also provides customers with preprinted, customized advertising materials designed to increase sales. Pillowtex's electronic data interchange system allows customers to place, and allows Pillowtex to fill, track and bill, orders by computer. This system enables Pillowtex to ship products on a "quick response" basis. Pillowtex generally employs salespeople who have many years of industry experience. Most sales people are compensated with a combination of salary and discretionary bonus. Certain Ralph Lauren products are sold by the Ralph Lauren sales force. 51 59 Fieldcrest Fieldcrest offers its customers a broad selection of home textile items, from affordably priced cotton-polyester blend products to the finest pima and Supima(R) cotton products. Design leadership is a key element of Fieldcrest's marketing strategy. Fieldcrest employs in-house design staff as well as licensing designer names such as Waverly(R), Adrienne Vittadini(R), Court of Versailles(R), and Ellen Tracy(R). Fieldcrest's products are marketed by its sales and marketing staff consisting of approximately 71 professionals and distributed nationally to customers for ultimate retail sale. Fieldcrest generally introduces new products to the retail trade during the April and October industry home textile markets while private label products manufactured by Fieldcrest are introduced throughout the year. Fieldcrest's top ten customers accounted for approximately 53% of total sales for fiscal 1996. In 1996, Wal-Mart was Fieldcrest's largest customer, representing approximately 21% of total sales. No other customer accounted for more than 10% of total sales in 1996. See "Risk Factors -- Risk of Loss of Material Customers." As a supplement to its primary distribution channels, Fieldcrest operates retail outlet stores which sell Fieldcrest's products directly to customers. These stores sell both first quality merchandise and seconds or "off-goods." Fieldcrest's strategy is to locate its outlet stores in regions which are not served by its primary customers and to sell its products at competitive retail prices. Fieldcrest believes that its retail outlet stores provide an effective channel for the distribution of its inventory of second quality merchandise and enhances its distribution of first quality products in regions where consumers would not otherwise have access to Fieldcrest's products. In 1996, retail outlet stores sales were $46.3 million or 4.2% of total sales. Fieldcrest segments its use of brand names by distribution channel to solidify the perceived value of such brands and maintain their integrity. Royal Velvet(R), Fieldcrest(R), and Cannon Royal Family(R) brand name bed and bath products are distributed primarily to leading department stores, specialty home furnishing stores, and catalog merchants. St. Mary's(R) and Cannon(R) brand name bed and bath products are distributed through mass merchants. Fieldcrest supports its brands with national consumer advertising. In addition, Fieldcrest utilizes private brands through large chain stores and also sells a smaller amount of unbranded products to institutional and government customers. In 1996, approximately 93% of Fieldcrest's sales were derived from products carrying Fieldcrest's brand names. The Fieldcrest sales organization works closely with its customers in the development of new product, production planning, and forecasting of the business. Fieldcrest is currently working with several mass retailers on vendor managed and co-managed inventory replenishment. Fieldcrest also develops in-store collateral signing for its retail customers on the Royal Velvet(R) bed and bath events. Fieldcrest sales and marketing personnel generally are experienced industry professionals with diverse backgrounds in the home textiles business and compensated with a salary and a performance oriented bonus. TRADEMARKS AND LICENSE AGREEMENTS Pillowtex Pillowtex markets its products under its own proprietary trademarks, trade names, and customer-owned private labels, as well as certain licensed trademarks and trade names. Pillowtex uses trademarks, trade names, and private labels as merchandising tools to assist its customers in coordinating their product offerings and differentiating their products from those of their competitors. Pillowtex owns various trademarks and trade names, including Beacon(R), Nettle Creek(R), Softie(R), Globe(R), and BedMate(R). Pillowtex regards its trademarks and trade names as valuable assets and vigorously protects them against infringement. Pillowtex holds the exclusive license for the highly regarded Ralph Lauren trademark for pillows, down comforters, mattress pads, and blankets in the United States and Canada. In addition, Pillowtex holds a non-exclusive license to manufacture, and in certain cases sell, a variety of fashion bedding products under the Ralph Lauren trademark in North America. Pillowtex's licenses with Polo Ralph Lauren Corporation expire on June 30, 1998. Pillowtex has had a long-standing relationship with Polo Ralph Lauren Corporation and has 52 60 no reason to believe that such licenses will not be renewed. However, there can be no assurance that Pillowtex will be able to renew these licenses on acceptable terms upon their expiration. See "Risk Factors -- Dependence on Key Licenses." In addition, Pillowtex manufactures and sells various goods, including pillows, blankets, and throws under non-exclusive license agreements with Disney for the Disney standard characters including Mickey Mouse, Minnie Mouse, and Donald Duck, as well as other characters and film properties such as Winnie the Pooh and the Lion King. In 1996, Pillowtex entered into exclusive license agreements with Fieldcrest for the manufacture and sale of various goods including bed pillows, mattress pads, and down comforters under the Royal Velvet(R), Cannon(R), Charisma(R), and Touch of Class(R) trademarks. These license agreements generally require royalty payments based upon product sales, including payments of minimum annual royalties, and generally expire at various future dates in 1998. See "Risk Factors -- Dependence on Key Licenses." Fieldcrest Fieldcrest owns various trademarks and trade names including Royal Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), Royal Family(R), Caldwell(R), and St. Mary's(R). Recent consumer research has shown that Cannon(R) is not only the most recognized towel brand in the United States, but is also the sixth most recognized domestic consumer brand. Fieldcrest's other principal brand names are widely recognized in the industry and along with Cannon(R), represent excellence and value in product quality, fashion, and design. Fieldcrest regards its trademarks and trade names as valuable assets and vigorously protects them against infringement. See "Risk Factors -- Dependence on Brand Names." Fieldcrest utilizes license agreements with Waverly(R), Adrienne Vittadini(R), Court of Versailles(R), Ellen Tracy(R), and others. Fieldcrest is only partially dependent upon such licenses in certain product lines and the loss of any exclusivity in these areas would not materially adversely affect overall profitability. PRODUCT DEVELOPMENT Pillowtex Pillowtex's product development staff creates and develops products with new or superior performance characteristics in cooperation with various outside sources, including its suppliers and customers. Pillowtex believes that this ability is an important competitive advantage. As a result, Pillowtex commits time and resources to identifying new materials, designs and products from a variety of domestic and international vendors. In addition to internal product development, Pillowtex's acquisitions have expanded its product lines and enhanced its manufacturing and other resources available for developing existing and new product lines. Fieldcrest Fieldcrest works closely with its customers to develop new products that would provide value to its customers and stimulate sales. In 1996, Fieldcrest and Wal-Mart associates worked together to develop Sahara(R), a new towel that features the patented Cannon DryFast(R) System for quicker drying. DryFast(R) is a special combination of spinning, weaving, and finishing processes that results in super-absorbency. In 1997, Fieldcrest extended its offering of DryFast(R) products to kitchen towels, tub mats, and bath sheets. MANUFACTURING, RAW MATERIALS AND IMPORTS Pillowtex Pillowtex operates an extensive network of manufacturing and distribution facilities in Texas, North Carolina, South Carolina, Tennessee, California, Pennsylvania, Mississippi, Illinois, and Toronto, Canada. Pillowtex's nationwide manufacturing and distribution network enables Pillowtex to ship pillows, mattress pads, and comforters cost effectively to all major cities in the United States and Canada. The hub of the network for pillows and comforters is located in Dallas, Texas, where Pillowtex operates what it believes to be the largest feather and down processing facility in North America, producing significant economies of scale. 53 61 Feather and down are processed by state-of-the-art computerized washing and sorting equipment and are sorted into a variety of mixtures and grades used in manufacturing natural fill pillows and comforters. The raw materials are shipped along with imported products to Pillowtex's regional facilities for final assembly and distribution to customers. Pillowtex also operates an automated sewing facility in Dallas, Texas, where high speed, computerized machines cut and sew fabric into pillow shells. Many of Pillowtex's regional manufacturing facilities produce natural fill and synthetic fill pillows. Natural fill pillows are assembled by blowing processed feather and down into the pillow shell and sewing the open seam closed. Synthetic fill pillows are produced on machines known as garnets that pull, comb, and expand compressed polyester fibers. Once expanded, the fibers are inserted into a pillow shell and the open seam is sewn shut. Mattress pads are manufactured at the California, Mississippi, Pennsylvania, and Toronto, Canada facilities by two automated methods. The traditional quilt sewing method uses high speed equipment that sews the top, bottom and fill material together. The sonic method fuses the top, bottom, and fill material together. Pillowtex's line of natural fill comforters are manufactured by Pillowtex at its California, Illinois, Pennsylvania, Mississippi, and Toronto, Canada locations using processed down from the Dallas facility. Pillowtex imports the majority of its comforter shells from China, Hong Kong, and India. Pillowtex produces blankets and spins yarn at manufacturing facilities in North Carolina, South Carolina, and Tennessee. These plants provide full vertical production capability, including spinning, weaving, dyeing, and finishing. During 1996, Pillowtex acquired a 746,600 square foot warehouse in Mauldin, South Carolina to consolidate the operations of four smaller warehouses in a more central distribution facility. In late 1996, Pillowtex acquired certain assets from Fieldcrest's blanket operations, including newer and faster equipment which has been installed at Pillowtex's existing blanket facilities. As with its other lines of business, Pillowtex plans the continuation of equipment and plant upgrades over the next several years in order to increase production efficiency and add capacity. Pillowtex's quality control program is designed to assure that its products meet predetermined quality standards established both internally and by its customers. Pillowtex has devoted significant resources to support its quality improvement efforts. Each manufacturing facility is staffed with a quality control team that identifies and resolves quality issues. Pillowtex attempts to maintain close contact with customer quality control or other appropriate personnel to assure that Pillowtex understands the customer's requirements. Pillowtex analyzes feather and down and other raw materials, as well as finished products of both Pillowtex and its competitors, at its facilities in Dallas, Texas. Pillowtex maintains a computerized tracking system to monitor feather and down processing from the receipt of raw materials through the delivery of finished products. At the blanket production plants, numerous distinct quality check points are monitored throughout the manufacturing process. Pillowtex also has a program with its major suppliers to assure the consistency of purchased raw materials by imposing strict standards and materials inspection, and requiring rapid response to Pillowtex's complaints. The principal raw materials that Pillowtex uses in manufacturing its products are: feather and down; synthetic (polyester and acrylic), cotton and wool fibers; and cotton and polyester-cotton blend fabrics. Pillowtex imports feather and down from several sources outside the United States. A majority of such purchases are from China, where feather and down are by-products of ducks and geese raised for food. Pillowtex believes that it is currently the largest United States importer of feather and down from China, the world's largest producing country. Pillowtex is generally able to purchase feather and down from its suppliers in China on open credit terms without letters of credit. See "Risk Factors -- Dependence on Supply Sources in China." As of July 1, 1996, quota restrictions on down comforter shells from China were eliminated, allowing Pillowtex to import shells on an unlimited and as-needed basis. Pillowtex purchases its Adjust-A-Fit(R) mattress pad Lycra(R) skirting from DuPont. Because of DuPont's patent on Lycra(R), it is the exclusive supplier for this material. Pillowtex believes that the risk that DuPont will 54 62 cease to manufacture and sell Lycra(R) to Pillowtex is minimal. Pillowtex purchases synthetic fiber from, among others, DuPont, Wellman, Inc., Monsanto Company, Cytec Industries Inc., Hoechst Celanese Textile Fibers, and Kanematsu U.S.A. Inc. To reduce the effect of potential price fluctuations, Pillowtex makes commitments from time to time for future purchases of synthetic and natural fibers. In 1996, Pillowtex experienced some decreases in costs of cotton and synthetic raw materials, however, cotton in particular is subject to price volatility. See "Risk Factors -- Dependence on Raw Materials." Pillowtex uses fabric purchased from third parties in the production of pillow shells, comforter covers, and various other products. Although Pillowtex believes that fabric is a commodity-type product that is available from numerous sources, Pillowtex currently purchases large quantities of pillow ticking fabric from a single supplier, Santee Print Works, to control costs and quality. Consistent with industry practice, Pillowtex and Santee Print Works have not entered into a long-term supply contract. However, to reduce the effect of potential price fluctuations Pillowtex makes commitments from time to time for future purchases from Santee Print Works. Management of Pillowtex believes that its relationships with its suppliers are good. Fieldcrest Fieldcrest is principally vertically integrated in that it purchases raw materials, principally cotton and synthetic fibers, and converts these materials into finished consumer products. Fieldcrest operates 15 principal facilities in the United States; nine in North Carolina, one in Georgia, two in Alabama, one in Pennsylvania, one in New York, and one in Virginia. Generally, each facility ships its finished products directly to the customer. Fieldcrest has and will continue to implement electronic data interchange and vendor-managed inventory programs with major customers in order to minimize the lead time for customer orders and permit a more efficient, targeted manufacturing schedule. Fieldcrest produces bath towels at its facilities in Virginia, North Carolina, Georgia, and Alabama. Cotton and synthetic fibers are spun into yarn utilizing Fieldcrest's spinning capacity and, then, woven into fabric or greige cloth. The greige cloth is finished, dyed, cut, and sewn into finished towel products. Fieldcrest's Fieldale, Virginia facility generally produces the higher quality, department and specialty stores' products. The Columbus, Georgia and Phenix City, Alabama facilities generally support Fieldcrest's mass merchant business segment. The Kannapolis, North Carolina facility is capable of producing both types of products and, as a result, is used to support both segments. Bed sheet products are produced in Fieldcrest's facilities in the Kannapolis, North Carolina area. As with Fieldcrest's towel operations, these facilities provide the full range of Fieldcrest's sheet products for substantially all channels of distribution. Cotton and synthetic fibers are spun into yarn and woven into greige cloth for finishing, dyeing, cutting, and sewing. In late 1995, however, Fieldcrest outsourced certain yarn production and closed two operations to take advantage of certain cost savings made available by a supplier of yarn. In an effort to maximize cost savings, Pillowtex intends to review Fieldcrest's trend toward outsourcing certain manufacturing and corporate functions on a case by case basis. Pillowtex initially intends to continue Fieldcrest's outsourcing practices in areas that appear to result in reduced operating costs, such as in sheeting yarn spinning, and may increase or curtail the use of outsourcing in spinning and other areas based on future cost and other considerations, although the potential impact of any future outsourcing decisions on the combined companies' operating results cannot be determined at this time. Fieldcrest produces comforters and other decorative bedding products such as pillow shams and decorative pillows at its Eden and Laurel Hill, North Carolina facilities. Finished cloth generally is supplied by Fieldcrest's bed sheet operations. The cloth is cut, polyester fiber-fill is inserted, and the product is sewn and packaged for shipment to retail customers. Bath rugs are produced in Fieldcrest's Scottsboro, Alabama facility. Tufted yarn is punched into fabric and cut into a uniform height. A latex coating is applied to the underside of the fabric to hold the fibers. The product is dyed, cut and finished. Furniture coverings are produced at Fieldcrest's SureFit(R) operations in 55 63 Allentown, Pennsylvania. Finished cloth is purchased from third-party vendors, cut and sewn into generally four sizes to match standard furniture sizes. Fieldcrest's quality control program is designed to assure that its products meet predetermined quality standards established both internally and by its customers. Fieldcrest has devoted significant resources to support its quality improvement efforts. Each manufacturing facility is staffed with a quality control team that identifies and resolves quality control issues. Fieldcrest attempts to maintain close contact with customer quality control or other appropriate personnel to assure that Fieldcrest understands the customer's requirements. Over the past years, Fieldcrest has initiated a number of modernization programs. For example, Fieldcrest replaced a substantial portion of its Fieldale, Virginia weaving capacity with modern rapier looms, reducing unit cost and the proportion of off-goods produced. In 1996, Fieldcrest completed its $86.0 million Phenix City, Alabama weaving facility. This program included the installation of 172 Tsudakoma air-jet looms, automatic cutting and sewing stations and new warehouse sortation operations, making Phenix City one of the world's most state-of-the-art towel facilities. Fieldcrest's basic raw materials are cotton and synthetic fibers. These materials are generally available from a wide variety of sources, and no significant shortage of such materials is currently anticipated. Domestic cotton merchants are Fieldcrest's primary source of cotton, and domestic fiber producers are Fieldcrest's primary source of synthetic fibers. Fieldcrest uses significant quantities of cotton which is subject to ongoing price fluctuations. Fieldcrest in the ordinary course of business may arrange for purchase commitments with vendors for future cotton requirements. BACKLOG The amount of both Pillowtex's and Fieldcrest's backlog orders at any particular time is affected by a number of factors, including seasonality and scheduling of the manufacturing and shipment of products. In general, both Pillowtex's and Fieldcrest's electronic data interchange and "quick response" capabilities have resulted in shortened lead times between submission of purchase orders and delivery and lowered the level of backlog orders. Consequently, the Company believes that the amount of its backlog is not an appropriate indicator of levels of future production. EMPLOYEES Pillowtex As of February 2, 1998, Pillowtex had approximately 3,800 employees. Pillowtex is subject to four collective bargaining agreements covering approximately 550 employees. These agreements are between Pillowtex and each of United Auto Workers; Warehouse, Mail Order, Office, Technical and Professional Employees (Teamsters); and UNITE. One of these agreements expires August 1, 1999; the remainder expire in the first quarter of 2000. To date, none of these unions have engaged in strikes or work stoppages against Pillowtex. Pillowtex believes that its relationships with both its union and non-union employees are good. See "Risk Factors -- Labor Relations." Fieldcrest As of February 2, 1998, Fieldcrest had approximately 10,400 employees. Fieldcrest is subject to three collective bargaining agreements covering approximately 2,800 employees. These agreements are between Fieldcrest and each of UNITE, United Textile Workers of America and United Food and Commercial Workers International Union. The agreements expire January 6, 2000, March 28, 1998 and June 28, 1998, respectively. Since 1991, UNITE has campaigned to organize approximately 5,500 additional hourly workers at five Fieldcrest plants, including Fieldcrest's main manufacturing facility in Kannapolis, North Carolina. Fieldcrest 56 64 has opposed UNITE's organizing efforts. Although a majority of employees at these plants recently voted not to select UNITE as a bargaining representative, the results are subject to legal challenge. There can be no assurances as to whether or when the results of such election will be certified or a new election will be scheduled. It is impossible to predict the effect, if any, a lengthy continuation of another organizing campaign will have on the productivity of the Fieldcrest workforce. Fieldcrest believes that its relationships with both its union and nonunion employees are good. See "Risk Factors -- Labor Relations." FACILITIES Pillowtex The following table summarizes certain information concerning certain of Pillowtex's facilities:
APPROX. OWNED/ LOCATION PRINCIPAL USE SQUARE FEET LEASED -------- ------------- ----------- ------ Dallas, Texas Headquarters and feather and down processing 104,000 Owned Dallas, Texas General administration, manufacturing and distribution 150,000 Owned Los Angeles, California Manufacturing and distribution 320,000 Leased Tunica, Mississippi Manufacturing and distribution 288,000 Owned Hanover, Pennsylvania Manufacturing and distribution 291,000 Owned Rocky Mount, North Carolina Manufacturing and distribution 139,000 Owned Rocky Mount, North Carolina Manufacturing and distribution 78,000 Leased Chicago, Illinois Manufacturing and distribution 121,000 Owned New York, New York Principal sales office and showroom 12,500 Leased Monroe, North Carolina Manufacturing and distribution 288,000 Leased Goodlettsville, Tennessee Warehouse and distribution 158,000 Leased Lebanon, Tennessee Warehouse and distribution 53,000 Leased Lebanon, Tennessee Manufacturing 175,000 Owned Toronto, Ontario, Canada Manufacturing and distribution 99,000 Leased Toronto, Ontario, Canada Manufacturing and distribution 60,000 Leased Swannanoa, North Carolina Manufacturing, distribution, warehouse, and office 1,425,000 Owned Swannanoa, North Carolina Outlet Store 5,000 Owned Asheville, North Carolina Warehouse 177,000 Leased Asheville, North Carolina Warehouse 254,000 Leased Asheville, North Carolina Warehouse 185,000 Leased Westminster, South Carolina Manufacturing, distribution, warehouse, and office 652,000 Owned Westminster, South Carolina Warehouse 29,000 Leased Newton, North Carolina Manufacturing and distribution 297,000 Leased Mauldin, South Carolina Warehouse and distribution 746,600 Owned
Pillowtex also maintains small sales offices for its sales staff in Arkansas, California, Massachusetts, Minnesota, North Carolina, and Washington. Pillowtex believes that its facilities are generally well maintained, in good operating condition and adequate for its current needs. Pillowtex will continue to emphasize improvements at these plants, upgrading the physical plant and purchasing additional and newer machinery and equipment. 57 65 Fieldcrest The following table summarizes certain information concerning certain of Fieldcrest's principal facilities:
APPROX. OWNED/ LOCATION PRINCIPAL USE SQUARE FEET LEASED -------- ------------- ----------- ------ Kannapolis, North Carolina Offices, manufacturing and warehouse 5,863,041 Owned Kannapolis, North Carolina Manufacturing 760,939 Owned Concord, North Carolina Manufacturing 696,963 Owned Eden, North Carolina Manufacturing and warehouse 529,273 Owned Eden, North Carolina Warehouse 185,214 Owned Rockwell, North Carolina Manufacturing 98,240 Owned Salisbury, North Carolina Manufacturing 229,361 Owned Salisbury, North Carolina Manufacturing and warehouse 567,000 Owned Laurel Hill, North Carolina Manufacturing and warehouse 238,072 Owned Scottsboro, Alabama Manufacturing and warehouse 272,800 Owned Phenix City, Alabama Manufacturing and warehouse 678,681 Owned Columbus, Georgia Manufacturing and warehouse 727,246 Owned New York, New York Sales office and showroom 64,490 Leased Allentown, Pennsylvania Manufacturing and warehouse 315,000 Leased Fieldale, Virginia Manufacturing and warehouse 973,253 Owned
In addition to the foregoing, Fieldcrest maintains certain warehousing and distribution centers in the states where its manufacturing facilities are located and maintains small sales and marketing offices in seven additional states. Fieldcrest also owns various other properties, both developed and undeveloped, which are unrelated to its manufacturing operations. Certain of these properties were acquired throughout the years for investment or ancillary to specific acquisitions. Some of such properties are currently held for investment by Fieldcrest, some are listed for sale, and some are leased by Fieldcrest to third parties. The facilities of Fieldcrest are considered to be generally well maintained, in good operating condition, and adequate for its current needs. Significant capital expenditures for new plants, modernization and improvements have been made in recent years. The plants generally operate on either a three shift basis for a five-day week or a four shift basis for a seven-day week during 50 weeks a year except during periods of curtailment. LEGAL PROCEEDINGS Pillowtex Louisville Bedding Company ("Louisville") filed a complaint for patent infringement against Pillowtex in the United States District Court for the Western District of Kentucky, Louisville Division, in 1994. Louisville's complaint alleges that certain of Pillowtex's Adjust-A-Fit(R) mattress pad product lines infringe on certain of Louisville's patents. Louisville's allegations relate both to Pillowtex's current mattress pad product line as well as to certain discontinued product lines sold from 1991 through 1995. Louisville's complaint seeks an injunction against Pillowtex's sale of its current stretch-to-fit mattress pad line, as well as an accounting of profits and unspecified damages relating to both Pillowtex's current and discontinued product lines. In addition, Louisville's complaint seeks trebled damages, interest, costs, and attorneys' fees. During April of 1997, Louisville voluntarily dismissed its infringement claims against Pillowtex's current opening price point mattress pad line and, during October of 1997, the district court granted summary judgment for Pillowtex on the issue of infringement with respect to Pillowtex's current premium product. On January 30, 1998, the district court entered an additional order confirming that Pillowtex's current premium price point product did not infringe Louisville's patents as alleged. The Company does not expect the Louisville suit to have any effect on the Company's continued right to market its current line of stretch-to-fit mattress pads. Notwithstanding the foregoing, Louisville continues to allege that the Company's discontinued product lines infringed upon the Louisville patents at the time of their sale and continues to seek an accounting of profits, trebled damages, interest, costs and attorneys' fees with respect to the Company's discontinued mattress pad line. The Company continues to deny Louisville's allegations and is vigorously defending the suit. 58 66 Fieldcrest Fieldcrest is involved in various claims and lawsuits incidental to its business; however, the outcome of these suits is not expected to have a material effect on the Company's financial position or results of operations. COMPETITION The home textile industry consists of 15 product categories including area rugs, bath rugs, bath towels, blankets, comforters/bedspreads, curtains/draperies, decorative pillows, down comforters, kitchen textiles, mattress pads, sheets/pillowcases, shower curtains, sleep pillows, table linen, and throws. This industry is highly competitive. The Company competes with a number of established manufacturers, importers, and distributors of home textile furnishings, some of which have greater financial, distribution, and marketing resources. The Company's current competitors consist primarily of domestic suppliers of bed pillows, blankets, mattress pads, down comforters, other bedroom textile furnishings, towels, sheets, and bath rugs. The Company competes on the basis of price, quality, brand names, and service. The Company believes that the principal competitive factors affecting its business and the business of the combined operations of Pillowtex and Fieldcrest include its sales and marketing expertise, its ability to create and develop products offering superior performance characteristics, its relationships with customers, and its manufacturing and distribution capabilities. GOVERNMENT REGULATION The Company is subject to various federal, state and local environmental laws and regulations governing the discharge, storage, handling and disposal of various substances, including provisions of the California Health and Safety Code pertaining to air quality management. The Company is also subject to federal and state laws and regulations that require products such as bed pillows and comforters to bear product content labels containing specified information, including their place of origin and fiber content. In addition, the Company's operations are governed by a variety of federal, state, local and foreign laws and regulations relating to worker safety and health, advertising, importing and exporting, and other matters applicable to businesses in general. All laws and regulations are subject to change and the Company cannot predict what effect, if any, changes in laws and regulations might have on its business. DESCRIPTION OF NOTES GENERAL The Series B Notes will be issued pursuant to the Indenture, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and the Holders are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. The form and terms of the Series B Notes will be the same as the form and terms of the Series A Notes except that the Series B Notes will be registered under the Securities Act and hence will not bear legends restricting the transfer thereof. Following consummation of the Exchange Offer, all rights under the Registration Rights Agreement accorded to holders of Series A Notes, including the right to receive Liquidated Damages, to the extent and in the circumstances specified therein, will terminate. As of the date of the Indenture, all of the Company's domestic Subsidiaries will be Restricted Subsidiaries. However, under certain circumstances, the Company will be able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Indenture. The definitions of certain terms used in the following summary are set forth below under "-- Certain Definitions." All references to the "Company" in this "Description of Notes" are to Pillowtex and not to any of its subsidiaries. 59 67 PRINCIPAL, MATURITY AND INTEREST The Notes are limited in aggregate principal amount to $185.0 million and will mature on December 15, 2007. Interest on the Notes will accrue at the rate of 9% per annum and will be payable semiannually in arrears on June 15 and December 15, commencing on June 15, 1998, to Holders of record on the immediately preceding June 1 and December 1. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium, if any, and interest and Liquidated Damages (as defined below) on the Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders of Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments with respect to Notes that the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The Notes will be issued in denominations of $1,000 and integral multiples thereof. RANKING AND SUBORDINATION The Series A Notes are, and the Series B Notes will be, general unsecured obligations of the Company, ranking senior to all existing and future subordinated indebtedness of the Company, pari passu in right of payment with the 10% Senior Subordinated Notes; and subordinated in right of payment to all existing and future Senior Indebtedness of the Company. The payment of principal of, premium, if any, and interest and Liquidated Damages, if any, on the Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full of all Senior Indebtedness, whether outstanding on the date of the Indenture or thereafter incurred. Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshaling of the Company's assets and liabilities, the holders of Senior Indebtedness will be entitled to receive payment in full of all obligations due in respect of such Senior Indebtedness (including, in the case of Senior Indebtedness under the New Senior Credit Facilities, interest after the commencement of any such proceeding at the rate specified in the applicable Senior Indebtedness) before the Holders of Notes will be entitled to receive any payment with respect to the Notes, and until all Obligations with respect to Senior Indebtedness are paid in full, any distribution to which the Holders of Notes would be entitled shall be made to the holders of Senior Indebtedness (except that Holders of Notes may receive common equity securities or debt securities that are subordinated at least to the same extent as the Notes to Senior Indebtedness and any securities issued in exchange for Senior Indebtedness (collectively, "Permitted Junior Securities") and payments made from the trust described under "-- Legal Defeasance and Covenant Defeasance"). The Company also may not make any payment upon or in respect of the Notes (except in Permitted Junior Securities or from the trust described under "-- Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace or (ii) any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Company or the holders of any Designated Senior Indebtedness. Payments on the Notes may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived and (b) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced unless and until (i) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled 60 68 payments of principal, premium, if any, and interest on the Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. The Indenture further requires that the Company promptly notify holders of Senior Indebtedness if payment of the Notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a liquidation or insolvency, Holders of Notes may recover less ratably than creditors of the Company who are holders of Senior Indebtedness. On a pro forma basis, after giving effect to the Merger and the Financing Transactions, including the offering of the Series A Notes and the application of the proceeds therefrom, the principal amount of Senior Indebtedness outstanding at September 27, 1997 would have been approximately $420.0 million (excluding $37.8 million in letters of credit). The Indenture limits, subject to certain financial tests, the amount of additional Indebtedness, including Senior Indebtedness, that the Company and its Restricted Subsidiaries may incur. See "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." SUBSIDIARY GUARANTEES The Company's payment obligations under the Notes are jointly and severally guaranteed by all Restricted Subsidiaries of the Company (collectively, the "Guarantors") other than (x) Receivables Subsidiaries and (y) Restricted Subsidiaries organized outside the United States and which do not guarantee any Indebtedness or other obligations of the Company and its Restricted Subsidiaries. The Guarantees are senior obligations of the Guarantors, pari passu with all other unsubordinated Indebtedness of the Guarantors and senior to all subordinated Indebtedness of the Guarantors. The Guarantee of each Guarantor is subordinated to the prior payment in full of all Guarantor Senior Indebtedness of such Guarantor, which includes the guarantees issued by the Guarantors of the Company's obligations under the New Senior Credit Facilities. The obligations of each Guarantor under its Guarantee are limited so as not to constitute a fraudulent conveyance under applicable law. See "Risk Factors -- Fraudulent Conveyance Statutes." The Indenture provides that no Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Guarantor unless (i) subject to the provisions of the following paragraph, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor under the Notes and the Indenture pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. The Indenture provides that (i) upon the release by all holders of Senior Indebtedness and Guarantor Senior Indebtedness of all guarantees issued by a Guarantor relating to such Senior Indebtedness and Guarantor Senior Indebtedness and all Liens on the property and assets of such Guarantor relating to Senior Indebtedness and Guarantor Senior Indebtedness or (ii) in the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of clause (i) above or a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Guarantee; provided that the Net Proceeds of any such sale or other disposition described in clause (ii) above are applied in accordance with the applicable provisions of the Indenture. See "-- Repurchase at the Option of Holders -- Asset Sales." In addition, the Indenture provides that, in the event the Company (i) designates a Restricted Subsidiary to be an Unrestricted Subsidiary in accordance with the Indenture or (ii) designates a Subsidiary as a Receivables Subsidiary in accordance with the Indenture, then such newly designated Unrestricted Subsidiary or Receivables Subsidiary, as the case may be, shall be released from its obligations under its Subsidiary Guarantee. 61 69 OPTIONAL REDEMPTION The Notes will not be redeemable at the Company's option prior to December 15, 2002. Thereafter, the Notes will be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon to the applicable redemption date, if redeemed during the 12-month period, beginning on December 15 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2002....................................... 104.500% 2003....................................... 103.000% 2004....................................... 101.500% 2005....................................... 100.000%
SELECTION AND NOTICE If less than all of the Notes are to be redeemed at any time, selection of Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, interest ceases to accrue on Notes or portions thereof called for redemption if the Company has deposited with the Paying Agent funds in satisfaction of the redemption price pursuant to the Indenture. MANDATORY REDEMPTION Except as set forth below under "-- Repurchase at the Option of Holders," the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes. REPURCHASE AT THE OPTION OF HOLDERS Change of Control Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the date of repurchase (the "Change of Control Payment"). Within ten days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-l under the Exchange Act, and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of 62 70 Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Indenture will provide that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Indebtedness or obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit Holders of Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction. The New Senior Credit Facilities provide that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Indebtedness to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from repurchasing Notes, the Company could seek the consent of its lenders to the repurchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from repurchasing Notes. In such case, the Company's failure to repurchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the New Senior Credit Facilities. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to Holders of Notes. The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the assets of the Company and its Subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase "substantially all," the phrase varies according to the facts and circumstances of the subject transaction and there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Asset Sales The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors or a committee of the Board of Directors, having at least one Independent director, set forth in an officers' certificate delivered to the Trustee, or by an independent appraisal by an accounting, appraisal or investment banking firm of national standing or, in the case of Investment Assets, an officer's certificate) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor (or 50%, in the case of any Investment Assets) received by the Company or such Restricted Subsidiary is in the form of cash; provided that (a) the amount of any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than contingent liabilities and liabilities that by their terms are subordinated to the Notes or any guarantee thereof) that are assumed by the transferee of any such assets (pursuant to a customary novation agreement that releases the Company and its Restricted Subsidiaries from all obligations 63 71 in respect thereof) shall be deemed to be cash for purposes of this provision and (b) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee in exchange for any such assets that are promptly converted into cash (to the extent of cash received) shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply all such Net Proceeds, at its option, (i) to permanently reduce Senior Indebtedness (and correspondingly reduce commitments with respect thereto in the case of any reduction of borrowings under the New Senior Credit Facilities, (ii) to the acquisition of a controlling interest in another business, the making of a capital expenditure or the acquisition of other long-term assets ("Productive Assets"), in each case, in the same or a similar line of business as the Company was engaged in on the date of the Indenture, or (iii) to reimburse the Company or its Subsidiaries for expenditures made, and costs incurred, to repair, rebuild, replace or restore property subject to loss, damage or taking to the extent that the net proceeds consist of insurance proceeds received on account of such loss, damage or taking. Pending the final application of any such Net Proceeds, the Company may temporarily reduce Senior Indebtedness or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be required to make an offer to all Holders of Notes and, to the extent required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness (an "Asset Sale Offer") to repurchase the maximum principal amount of Notes and any such Pari Passu Indebtedness that may be repurchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture or such Pari Passu Indebtedness, as applicable. To the extent that the aggregate amount of Notes and any such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to an Asset Sale Offer. Notwithstanding the foregoing, the Company and its Subsidiaries will be permitted to consummate one or more Asset Sales with respect to assets or properties with an aggregate fair market value not in excess of $10.0 million in the aggregate subsequent to the date of the Indenture without complying with clause (ii) of the first paragraph of this covenant; provided that (x) at least 75% of the consideration for such Asset Sale constitutes either Productive Assets or cash, and (y) any Net Proceeds received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall be subject to the provisions of the second paragraph of this covenant. CERTAIN COVENANTS Restricted Payments The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Equity Interests of the Company or any of its Restricted Subsidiaries (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) to the direct or indirect holders of the Equity Interests of the Company or any of its Restricted Subsidiaries in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company, dividends or distributions payable to the Company or any Restricted Subsidiary of the Company (other than a Receivables Subsidiary) or dividends or distributions made by a Restricted Subsidiary of the Company (other than a Receivables Subsidiary) to all holders of its 64 72 common stock on a pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company, any Restricted Subsidiary of the Company or any direct or indirect parent of the Company, (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company (other than a Receivables Subsidiary)); (iii) make any payment on or in respect of, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is pari passu with or subordinated to the Notes, except at Stated Maturity or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; and (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (u) and (x) of the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) commencing on the effective date of the Merger to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company from the issue or sale subsequent to the date of the Indenture of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (iii) to the extent that any Restricted Investment that was made after the date of the Indenture is sold for cash or otherwise liquidated or paid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) $20.0 million. The foregoing provisions will not prohibit (v) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; (w) the making of any Restricted Investment, or the redemption; repurchase, retirement or other acquisition of any Equity Interests of the Company, in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such Restricted Investment, redemption, repurchase, retirement or other acquisition shall be excluded from clause (c)(ii) of the preceding paragraph; (x) the defeasance, redemption or repurchase of pari passu or subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness or the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (y) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company's (or any of its Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of the Indenture; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any 12-month period plus the aggregate cash proceeds received by the Company during such 12-month period from any reissuance of Equity Interests by the Company to members of management of the Company and its Restricted Subsidiaries, and (B) no 65 73 Default or Event of Default shall have occurred and be continuing immediately after such transaction; and (z) so long as no Default or Event of Default shall have occurred and be continuing, ordinary dividends paid by the Company in respect of its Common Stock in an aggregate amount not to exceed $6.0 million since the date of the Indenture. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be Restricted Payments at the time of such designations and will reduce the amount available for Restricted Payments under the first paragraph of this covenant. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value (evidenced by a resolution of the Board of Directors or a committee of the Board of Directors having at least one Independent director set forth in an Officers' Certificate delivered to the Trustee) on the date of the Restricted Payment of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "-- Restricted Payments" were computed, which calculations may be based upon the Company's latest available financial statements. The Indenture provides that the Merger (including the payment of the Merger consideration) does not constitute a Restricted Payment under the Indenture. Incurrence of Indebtedness and Issuance of Preferred Stock The Indenture provides that the Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Indebtedness) and that the Company will not issue any Disqualified Stock, and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that (x) the Company and the Guarantors may incur Indebtedness (including Acquired Indebtedness) and (y) the Company may issue shares of Disqualified Stock, in each case if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The foregoing provisions will not apply to: (i) the incurrence by the Company of Indebtedness under the New Senior Credit Facilities (and guarantees thereof by the Guarantors) in an aggregate principal amount at any time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Subsidiaries thereunder) not to exceed the greater of (x) $600.0 million and (y) the sum of 80% of Eligible Receivable and 65% of Eligible Inventory, less, in the case of each of clause (x) and clause (y), the aggregate amount of all Net Proceeds of Asset Sales applied to permanently reduce the commitments with respect to such Indebtedness pursuant to the covenant described above under the caption "-- Repurchase at the Option of Holders -- Asset Sales"; (ii) the incurrence by the Company of Indebtedness represented by the Notes and the incurrence by the Guarantors of Indebtedness represented by the Guarantees; 66 74 (iii) the incurrence by the Company or any of its Subsidiaries of Indebtedness represented by Capital Lease Obligations (whether or not incurred pursuant to sale and leaseback transactions), mortgage financing or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $15.0 million at any time outstanding; (iv) the incurrence by the Company or any of its Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Existing Indebtedness or Indebtedness that was permitted by the Indenture to be incurred (other than any such Indebtedness incurred pursuant to clause (i), (iii), (v), (vi), (vii) (viii) or (xiii) of this paragraph); (v) the incurrence by the Company or any of its Wholly Owned Subsidiaries (other than a Receivables Subsidiary) of intercompany Indebtedness between or among the Company and any of its Wholly Owned Subsidiaries (other than a Receivables Subsidiary); provided, however, that (i) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinate to the payment in full of all Obligations with respect to the Notes and (ii)(A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Subsidiary (other than a Receivables Subsidiary) and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Subsidiary (other than a Receivables Subsidiary) shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be; (vi) the incurrence by the Company or any Subsidiary of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk that is permitted by the terms of the Indenture to be incurred; (vii) the incurrence by the Company of Hedging Obligations under commodity hedging and currency exchange agreements; provided that, such agreements were entered into in the ordinary course of business for the purpose of limiting risks that arise in the ordinary course of business; (viii) the incurrence of Indebtedness of a Guarantor represented by guarantees of Indebtedness of the Company that has been incurred in accordance with the terms of the Indenture; (ix) the incurrence of Indebtedness by the Company and its Subsidiaries solely in respect of performance bonds, workers' compensation claims, payment obligations in connection with self-insurance and other similar requirements (to the extent that such incurrence does not result in the incurrence of any obligation to repay any obligation relating to borrowed money of others) in the ordinary course of business in accordance with customary industry practices, in amounts and for the purpose customary in the Company's industry; (x) Existing Indebtedness; (xi) the incurrence of Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any such obligations of the Company or any such Subsidiary pursuant to such agreements, in each case incurred in connection with the disposition of any business, assets or Subsidiary of the Company, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition, provided that none of the foregoing results in Indebtedness required to be reflected as indebtedness on the balance sheet of the Company or any such Subsidiary in accordance with GAAP and the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed 100% of the gross proceeds actually received by the Company and its Subsidiaries in connection with such disposition; 67 75 (xii) the incurrence of Indebtedness by a Receivables Subsidiary that is not recourse to the Company or to any other Subsidiary of the Company (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction; (xiii) the incurrence by the Company of Indebtedness (in addition to Indebtedness permitted by any other clause of this paragraph) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $20.0 million; and (xiv) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xiv). Liens The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens, unless all payments due under the Indenture and the Notes are secured on an equal and ratable basis with the Indebtedness so secured until such time as such is no longer secured by a Lien; provided that if such Indebtedness is by its terms expressly subordinated to the Notes or any Guarantee, the Lien securing such Indebtedness shall be subordinate and junior to the Lien securing the Notes and the Guarantees with the same relative priority as such subordinate or junior Indebtedness shall have with respect to the Notes and the Guarantees. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. The foregoing shall not apply to encumbrances or restrictions existing under or by reason of (a) applicable law, (b) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (c) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (d) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, or (e) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced or (f) any Purchase Money Note, or other Indebtedness or contractual requirements of a Receivables Subsidiary, in each case, incurred in connection with a Qualified Receivables Transaction, provided that such restrictions apply only to such Receivables Subsidiary. Merger, Consolidation, or Sale of Assets The Indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving 68 76 any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) 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 shall have been made assumes all the obligations of the Company under the Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Subsidiary of the Company (other than a Receivables Subsidiary), 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 shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than 95% of the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock." Transactions with Affiliates The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or 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 or amend any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) 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, (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million the Company delivers to the Trustee, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (iii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, the Company delivers to the Trustee, an opinion as to the fairness to the Holders of Notes of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing; provided that (v) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors or the payment of fees and indemnities to directors of the Company and its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (w) loans or advances to employees in the ordinary course of business, (x) transactions between or among the Company and/or its Restricted Subsidiaries (other than a Receivables Subsidiary) or between Restricted Subsidiaries (other than Receivables Subsidiaries), (y) Restricted Payments (other than Investments) that are permitted by the provisions of the Indenture described above under the caption "-- Restricted Payments," and (z) sales or other transfers or dispositions of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary in a Qualified Receivables Transaction, in each case, shall not be deemed Affiliate Transactions. Guarantees of Certain Indebtedness The Indenture provides that (i) the Company will not permit any of its Subsidiaries that is not a Guarantor to incur, guarantee or secure through the granting of Liens the payment of any Senior Indebtedness and (ii) the Company will not and will not permit any of its Subsidiaries to pledge any intercompany notes representing obligations of any of its Subsidiaries, to secure the payment of any Senior Indebtedness, in each case unless such Subsidiary, the Company and the Trustee execute and deliver a supplemental indenture 69 77 evidencing such Subsidiary's Guarantee (providing for the unconditional guarantee by such Subsidiary, on a senior subordinated basis, of the Notes). Limitation on Layering The Indenture provides that (i) the Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness of the Company and senior in any respect in right of payment to the Notes, and (ii) no Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness of such Guarantor that is subordinate or junior in right of payment to any Indebtedness of such Guarantor and senior in any respect in right of payment to the Guarantee of such Guarantor. Payments for Consent The Indenture provides that neither the Company nor any of its Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Reports The Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any Notes are outstanding, the Company will furnish to Holders of Notes (i) 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 under the Exchange Act if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operation of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were 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 and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Guarantors have agreed that, for so long as any Notes remain outstanding, they 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. Events of Default and Remedies The Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the provisions described under the captions "Repurchase at the Option of Holders -- Change of Control," "-- Repurchase at the Option of Holders -- Asset Sales," "--Restricted Payments," "-- Incurrence of Indebtedness and Issuance of Preferred Stock" or "Special Redemption"; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the 70 78 Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness at its final stated maturity or (b) results in the acceleration of such Indebtedness prior to its maturity and, in each case, the principal amount of which Indebtedness, together with the principal amount of any other such Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; or (viii) the Guarantee of any Guarantor is held in judicial proceedings to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of the Indenture) or any Guarantor or any Person acting on behalf of any Guarantor denies or disaffirms such Guarantor's obligations under its Guarantee (other than by reason of a release of such Guarantor from its Guarantee in accordance with the terms of the Indenture. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, however, that if any Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon a declaration of acceleration, the Notes shall be payable upon the earlier of (x) the day which is five Business Days after the provision to the Company and the agent under the New Credit Senior Facilities of written notice of such declaration and (y) the date of acceleration of any Indebtedness under the New Senior Credit Facilities. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to December 15, 2002, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to December 15, 2002, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS No director, officer, employee, incorporator or shareholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or any Guarantor under the Notes, the Guarantees, the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of 71 79 the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws, and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of the obligations of the Company and the Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and accrued and unpaid interest and Liquidated Damages on such Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of Notes, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and accrued and unpaid interest and Liquidated Damages on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming "that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the, Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company or any Guarantor with the intent of defeating, hindering, delaying or defrauding creditors, any Guarantor of the Company or others; and (viii) the Company must deliver to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. 72 80 SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder when (i) either (a) all such Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for which payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or (b) all such Notes not theretofore delivered to such Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Company has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust solely for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (ii) no Default or Event of Default with respect to the Indenture or the Notes shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company is a party or by which the Company is bound; (iii) the Company has paid or caused to be paid all sums payable by it under such Indenture; and (iv) the Company has delivered irrevocable instructions to the Trustee under such Indenture to apply the deposited money toward the payment of such Notes at maturity or the redemption date, as the case may be. In addition, the Company must deliver an Officers' Certificate and an opinion of counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next succeeding paragraphs, the Indenture, the Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture, the Guarantees or the Notes may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a purchase of, or a tender offer or exchange offer for, Notes). Without the consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder): (i) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption or repurchase of the Notes (other than provisions relating to the covenant described above under the caption -- Repurchase at the Option of Holders"), (iii) reduce the rate of or change the time for payment of interest on any Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration), (v) make any Note payable in money other than that stated in the Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes, (vii) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the caption "-- Repurchase at the Option of Holders" (viii) release any Guarantor from any of its obligations under its Guarantee or the Indenture, except in accordance with the terms of the Indenture, (ix) make any change to the provisions of the Indenture described under "Special Redemption" above, or (x) make any change in the foregoing amendment and waiver provisions. In addition, any amendment to the provisions of Article 10 of the Indenture (which relate to subordination) or the related definitions will require the consent of the Holders of at least 75% in aggregate principal amount of the Notes then outstanding if such amendment would adversely affect the rights of Holders of Notes. Notwithstanding the foregoing, without the consent of any Holder of Notes, the Company, the Guarantors and the Trustee may amend or supplement the Indenture, the Guarantees or the Notes to cure any 73 81 ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or a Guarantor's obligations to Holders of Notes in the case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the location of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in aggregate principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee), subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. BOOK-ENTRY, DELIVERY AND FORM The Series A Notes were offered and sold (i) to qualified institutional buyers in reliance on Rule 144A under the Securities Act ("Rule 144A Notes"), (ii) to institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("Accredited Investor Notes") and (iii) in offshore transactions in reliance on Regulation S under the Securities Act ("Regulation S Notes") and in each case are represented by a separate note in registered, global form (collectively, the "Series A Global Notes"). The Series B Notes will initially be issued in the form of one global certificate (the "Series B Global Note" and collectively with the Series A Global Notes, the "Global Notes"). The Series B Global Note will be deposited on the date of the consummation of the Exchange Offer (the "Exchange Offer Closing Date") with or on behalf of DTC and registered in the name of DTC or its nominee. The Company understands that DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code, and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies, and clearing corporations and may include certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). So long as DTC, or its nominee, is the registered owner or holder of the Series B Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Series B Global Note for all purposes under the Indenture. The Company understands that pursuant to procedures established by DTC (i) upon deposit of the Series B Global Note in amounts proportionate to the respective beneficial interests in the principal amount of the Series B Global Note and (ii) ownership of the Series B Notes evidenced by the Series B Global Note will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of DTC's 74 82 participants), DTC's participants and DTC's indirect participants. No beneficial owner of an interest in the Series B Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided for under the Indenture. Payments made with respect to the Series B Global Note will be made to DTC or its nominee, as the case may be, as the registered owner thereof. The Company will have no responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Series B Global Note or for maintaining, supervising, or reviewing any records relating to such beneficial ownership interests. The Company expects that DTC or its nominee, upon receipt of any payments made with respect to the Series B Global Note, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the amount of such Series B Global Note as shown on the records of DTC or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Series B Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. Although DTC is expected to follow the foregoing procedures in order to facilitate transfers of interests in the Series B Global Note among participants of DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. The Company will have no responsibility for the performance by DTC or its respective participants or indirect participants of its respective obligations under the rules and procedures governing their operations. CERTIFICATED NOTES Subject to certain conditions contained in the Indenture, any person having a beneficial interest in the Global Notes may, upon request to the Trustee, exchange such beneficial interest for Series B Notes in registered certificated form ("Certificated Notes"). Upon any such issuance, the Trustee is required to register such Certificated Notes in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof). In addition, if (i) the Company notifies the Trustee in writing that DTC is no longer willing or able to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Series B Notes in the form of Certificated Notes under the Indenture, then, upon surrender by the Global Note Holder of the Global Notes, Series B Notes in such form will be issued to each person that the Global Note Holder and the DTC identify as being the beneficial owner of the related Series A Notes. Neither the Company nor the Trustee will be liable for any delay by the Global Note Holder or the DTC in identifying the beneficial owners of the Notes and the Company and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Note Holder or the DTC for all purposes. SAME DAY SETTLEMENT AND PAYMENT The Indenture requires that payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, interest and Liquidated Damages, if any) be made by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. With respect to Notes in certificated form, the Company will make all payments of principal, premium, if any, interest and Liquidated Damages, if any, by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such holder's registered address. The Notes represented by the Global Notes are expected to trade in the DTC's Same-Day Funds Settlement System and any permitted secondary market trading activity in such Notes will, therefore, be required by the DTC to be settled in immediately available funds. The Company expects that secondary trading in any certificated Notes will also be settled in immediately available funds. 75 83 Because of time zone differences, the securities account of a Euroclear System ("Euroclear") or Cedel Bank societe anonyme ("Cedel") participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day (which must be a business day for Euroclear and Cedel) immediately following the settlement date of DTC. DTC has advised the Company that cash received in Euroclear or Cedel as a result of sales of interests in a Global Note by or through a Euroclear or Cedel participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel following DTC's settlement date. REGISTRATION RIGHTS; LIQUIDATED DAMAGES The Holders of the Series B Notes are not entitled to any registration rights with respect to the Series B Notes. The Company, the Guarantors, and the Initial Purchasers have entered into the Registration Rights Agreement dated as of December 18, 1997. Pursuant to the Registration Rights Agreement, the Company agreed to file with the Commission the Exchange Offer Registration Statement on the appropriate form under the Securities Act with respect to the Series B Notes. The Registration Statement of which this Prospectus forms a part constitutes the Exchange Offer Registration Statement. Upon the effectiveness of the Exchange Offer Registration Statement, the Company will offer to the Holders of Transfer Restricted Securities pursuant to the Exchange Offer who are able to make certain representations the opportunity to exchange their Transfer Restricted Securities for Series B Notes. If (i) the Company and the Guarantors are not required to file the Exchange Offer Registration Statement or permitted to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy or (ii) any Holder of Transfer Restricted Securities notifies the Company within the specified time period that (a) it is prohibited by law or Commission policy from participating in the Exchange Offer, or (b) that it may not resell the Series B Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales, or (c) that it is a broker-dealer and owns Series A Notes acquired directly from the Company or an affiliate of the Company, the Company and the Guarantors will file with the Commission a Shelf Registration Statement to cover resales of the Series A Notes by the Holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. The Company will use its best efforts (x) to cause the applicable registration statement to be declared effective as promptly as possible by the Commission and (y) to keep such Shelf Registration Statement effective for up to one year after the Closing Date or such shorter period ending when all of the Notes have been sold thereunder. For purposes of the foregoing, "Transfer Restricted Securities" means each Series A Note until (i) the date on which such Note has been exchanged by a person other than a broker-dealer for a Series A Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a Series A Note for a Series B Note, the date on which such Series B Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Series A Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Series A Note is distributed to the public pursuant to Rule 144 under the Securities Act. The Registration Rights Agreement provides that (i) the Company will file an Exchange Offer Registration Statement with the Commission on or prior to 60 days after December 18, 1997, (ii) the Company will use its best efforts to have the Exchange Offer Registration Statement declared effective by the Commission on or prior to 105 days after December 18, 1997, (iii) unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Company will commence the Exchange Offer and use its best efforts to issue on or prior to 30 business days after the date on which the Exchange Offer Registration Statement was declared effective by the Commission, Series B Notes in exchange for all Series A Notes tendered prior thereto in the Exchange Offer, and (iv) if obligated to file the Shelf Registration Statement, the Company will use its best efforts to file the Shelf Registration Statement with the Commission on or prior to 45 days after such filing obligation arises and to cause the Shelf Registration Statement to be declared effective by the Commission on or prior to 105 days after such obligation arises. If (a) the Company fails to 76 84 file any of the Registration Statements required by the Registration Rights Agreement on or before the date specified for such filing, (b) any of such Registration Statements is not declared effective by the Commission on or prior to the date specified for such effectiveness (the "Effectiveness Date"), or (c) the Company fails to Consummate the Exchange Offer within 30 business days of the Effectiveness Target Date with respect to the Exchange Offer Registration Statement, or (d) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Company will pay Liquidated Damages to each Holder of Notes, with respect to the first 90-day period immediately following the occurrence of such Registration Default in an amount equal to $.05 per week per $1,000 principal amount of Notes held by such Holder. The amount of the Liquidated Damages will increase by an additional $.05 per week per $1,000 principal amount of Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.30 per week per $1,000 principal amount of Notes. All accrued Liquidated Damages will be paid by the Company on each Damages Payment Date to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Notes by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease. Holders of Series A Notes will be required to make certain representations to the Company (as described in the Registration Rights Agreement) in order to participate in the Exchange Offer and will be required to deliver information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their Series A Notes included in the Shelf Registration Statement and benefit from the provisions regarding Liquidated Damages set forth above. The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, reference to all the provisions of the Registration Rights Agreement, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus constitutes a part. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Indebtedness" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person that was not incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "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, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that, beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control, except with respect to the definition of "Related Party" below. "Asset Sale" means the sale, lease, conveyance or other disposition of any assets (including; without limitation, by way of a sale and leaseback) whether in a single transaction or a series of related transactions that (a) have a fair market value in excess of $1,000,000 or (b) net proceeds in excess of $1,000,000; provided that, the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and 77 85 its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption "-- Repurchase at the Option of Holders -- Change of Control" and/or the provisions described above under the caption "-- Certain Covenants -- Merger, Consolidation or Sale of Assets" and shall not be deemed to be "Asset Sales." Notwithstanding the foregoing, the following transactions shall not constitute Asset Sales: (i) the conveyance, sale, transfer, assignment or other disposition of inventory and other property in the ordinary course of business; (ii) the sale or disposition of damaged, worn out or other obsolete personal property in the ordinary course of business so long as such property is no longer necessary for the proper conduct of the business of the Company or such Restricted Subsidiary, as applicable; (iii) the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; (iv) the granting of Liens not prohibited by the Indenture; (v) sales of accounts receivable and related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary or by a Receivables Subsidiary in connection with a Qualified Receivables Transaction; (vi) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary) or by a Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary) to the Company or to another Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary); (vii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary) to the Company or to another Wholly Owned Subsidiary (other than a Receivables Subsidiary); (viii) a Restricted Payment that is permitted by the covenant described above under the caption "-- Restricted Payments;" and (ix) the execution of contracts to provide manufacturing consideration and other services, including in connection with Asset Sales. "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. "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 (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than 12 months from the date of acquisition, (iii) United States dollar or Canadian dollar denominated (or foreign currency fully hedged) time deposits, certificates of deposit, Eurodollar time deposits or Eurodollar certificates of deposit of (a) any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million or (b) any bank whose short term commercial paper rating from Standard & Poor's 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 12 months from the date of acquisition; and (iv) commercial paper 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 Standard & Poor's or P-2 (or the equivalent thereof) or better by Moody's and maturing within 12 months of the date of acquisition. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Principals or their Related Parties, (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. The Indenture provides that the Merger shall not constitute a Change of Control. 78 86 "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations' the interest component of all payments associated with Capital Lease Obligations commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash charges were deducted in computing such Consolidated Net Income minus (v) non-cash items of such Person and its Restricted Subsidiaries increasing Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Restricted Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividend to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its shareholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its shareholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, and (v) the Net Income of any Unrestricted Subsidiary shall be excluded. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common shareholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of the Indenture in the book value of any asset owned by such Person or a consolidated Restricted Subsidiary of such Person, (y) all investments as of such date in unconsolidated 79 87 Restricted Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the Issue Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Designated Senior Indebtedness" means (i) so long as Senior Indebtedness is outstanding under the New Senior Credit Facilities, all Senior Indebtedness outstanding under the New Senior Credit Facilities and (ii) thereafter, any other Senior Indebtedness permitted under the Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as "Designated Senior Indebtedness." "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 that is 91 days after the date on which the Notes mature. "Eligible Inventory" means, as of any date, all inventory of the Company and any of its Subsidiaries, wherever located, valued in accordance with GAAP and shown on the balance sheet of the Company for the quarterly period most recently ended prior to such date for which financial statements of the Company are available. "Eligible Receivables" means, as of any date, all accounts receivable of the Company and any of its Restricted Subsidiaries arising out of the sale of inventory in the ordinary course of business, valued in accordance with GAAP and shown on the balance sheet of the Company for the quarterly period most recently ended prior to such date for which financial statements of the Company are available. "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). "Existing Indebtedness" means (i) Indebtedness of the Company and its Restricted Subsidiaries in existence on the Issue Date and (ii) Indebtedness of Fieldcrest and its Subsidiaries outstanding on the effective date of the Merger; provided that immediately following the consummation of the Merger all Indebtedness of Fieldcrest outstanding under its existing credit facilities shall be refinanced with the proceeds of borrowings under the New Senior Credit Facility and Fieldcrest's obligations under its 11.25% Senior Subordinated Debentures shall have been satisfied and discharged in accordance with the terms of the Indenture governing such securities. "Fixed Charges" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period calculated in conformity with GAAP, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations but excluding amortization of debt, issuance costs and deferred financing fees, incurred in connection with the Merger on or before the Issue Date) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such guarantee or Lien is called upon) and (iv) the product of (a) all cash dividend payments (and non-cash dividend payments in the case of a Person that is a Restricted Subsidiary) on any series of preferred stock of 80 88 such Person and its Restricted Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "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 Issue Date. "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. "Guarantor Senior Indebtedness" means, with respect to any Guarantor, (i) the guarantee of such Guarantor of the Company's Obligations under the New Senior Credit Facilities and (ii) any other Indebtedness permitted to be incurred by such Guarantor under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Guarantee of such Guarantor. Notwithstanding anything to the contrary in the foregoing, Guarantor Senior Indebtedness will not include (u) any Indebtedness of such Guarantor representing a guarantee of Indebtedness of the Company or any other Guarantor which Indebtedness is subordinate or junior to, or pari passu with, the Notes or the Guarantee of such other Guarantor, as the case may be, (v) any Indebtedness that is expressly subordinate or junior in right of payment to any other Indebtedness of such Guarantor, (w) any liability for federal, state, local or other taxes owed or owing by such Guarantor, (x) any Indebtedness of such Guarantor to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of any Indebtedness that is incurred in violation of the Indenture. "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, the value of foreign currencies and the value of commodities purchased by the Company or any of its Restricted Subsidiaries in the ordinary course of business. 81 89 "Indebtedness" means, with respect to any Person, (a) any indebtedness of such Person, whether or not contingent, (i) in respect of borrowed money; (ii) evidenced by bonds, notes, debentures or similar instruments; (iii) evidenced by letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances; (iv) representing Capital Lease Obligations; (v) representing the balance deferred and unpaid of the purchase price of any property; or (vi) representing any net obligations under Hedging Obligations, if and only 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, and excluding therefrom any portion of any indebtedness constituting an accrued expense or trade payable; (b) all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, (c) to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person. "Independent" means, with respect to the Company and its Subsidiaries, any person who (i) is in fact independent, (ii) does not have any direct financial interest or any material indirect financial interest in the Company or any of its Subsidiaries, or in any Affiliate of the Company or any of its Subsidiaries (other than as a result of holding securities of the Company) and (iii) is not an officer, employee, promoter, underwriter, trustee, partner or person performing similar functions for the Company or any of its Subsidiaries. "Investment Assets" means assets and property of the Company and its Restricted Subsidiaries held for investment on the effective date of the Merger with an aggregate fair market value not exceeding $25.0 million. "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 or capital contributions (excluding commission, travel 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, together with all 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 shall not be deemed to be an Investment. "Issue Date" means the date of the original issuance of Notes under the Indenture. "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 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, any capital lease and any other preferential arrangement that has substantially the same practical effect as a security interest in an asset). "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss). "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting, and investment banking fees, and sales commissions), any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts 82 90 required to be applied to the repayment of Indebtedness (other than Indebtedness under the New Senior Credit Facilities) secured by a Lien on the asset or assets that were the subject of such Asset Sale, and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Senior Credit Facilities" means the credit agreements entered into by and among the Company, NationsBanc Montgomery Securities, Inc., as arranger and syndication agent, certain lending parties thereto and NationsBank of Texas, N.A., as agent, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreements and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "New Senior Credit Facilities" shall include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any New Senior Credit Facilities and all refundings, refinancings and replacements of any New Senior Credit Facilities, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Company and its Subsidiaries and their respective successors and assigns, or (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder. "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 (other than the Notes being offered hereby) 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 the documents governing such Indebtedness 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. "Pari Passu Indebtedness" means Indebtedness ranking pari passu in right of payment with the Notes. "Permitted Investment" means (i) Investments by the Company or any Guarantor in any person that is or immediately after such Investment becomes a Guarantor, or immediately after such Investment merges or consolidates into the Company or any Guarantor in compliance with the terms of the Indenture, provided that such Person is engaged in all material respects in Related Business; (ii) Investments in the Company by any Guarantor; provided that in the case of Indebtedness constituting any such Investment, such Indebtedness shall be unsecured and subordinated in all respects to the Company's obligations under the Notes; (iii) Hedging Obligations entered into in the ordinary course of the Company's or its Subsidiaries' businesses and otherwise in compliance with the Indenture; (iv) Investments in securities of trade creditors or customers received in settlement of obligations that arose in the ordinary course of business or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (v) Investments made by the Company or any of its Subsidiaries as a result of non-cash consideration received in connection with an Asset Sale made in compliance with the covenant described above under the caption "-- Repurchase at the Option of Holders -- Asset Sales;" (vi) any Investment by the Company or a Subsidiary of the Company in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other person or assets in connection with a Qualified Receivables Transaction; provided, that the foregoing Investment in any such person is in the form of a Purchase Money Note, an equity interest or interests in accounts receivable generated by the Company or a Subsidiary of the Company and transferred to any person in connection with a Qualified Receivables Transaction or any such person owning such accounts receivable; (vii) Investments by the Company outstanding on the Issue Date; (viii) acquisitions by the Company of 83 91 assets, Equity Interests or other securities for consideration consisting solely of Capital Stock (other than Disqualified Stock) of the Company; and (ix) Investments in Cash Equivalents or money market funds which invest solely in Cash Equivalents. "Permitted Lien" means (i) Liens existing on the Issue Date; (ii) Liens securing Senior Indebtedness and Liens on assets of Restricted Subsidiaries securing Guarantor Senior Indebtedness permitted to be incurred under the Indenture; (iii) Liens securing Permitted Refinancing Indebtedness which is incurred to refinance any Indebtedness which has been secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture, provided, however, that such Liens (a) are not materially less favorable to the Holders and are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being refinanced and (b) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so refinanced; (iv) Liens securing the Notes; (v) Liens securing Indebtedness of a Person existing at the time such Person becomes a Subsidiary, provided that such liens were in existence prior to the contemplation of such acquisition, merger or consolidation, were not incurred in anticipation thereof, and do not extend to any other assets; (vi) Liens arising from Indebtedness permitted to be incurred under clause (iii) of the covenant "Limitation on Incurrence of Additional Indebtedness and Issuance of Preferred Stock," provided such Liens relate solely to the property, plant or equipment which is purchased, constructed or improved pursuant to such financing; (vii) Liens imposed by governmental authorities for taxes, assessments or other charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or any of its Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (viii) statutory Liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other like Liens arising by operation of law in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof; (ix) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or similar obligations, including any Lien securing letters of credit issued in the ordinary course of business in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) incurred in the ordinary course of business; (x) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (xi) easements, rights-of-way, zoning restrictions, minor defects or irregularities with title and other similar charges or encumbrances in respect of real property not materially detracting from the value of the property subject thereto and not interfering in any material respect with the ordinary conduct of business of the Company or any of its Subsidiaries; (xii) Liens upon specific items of inventory or other goods and proceeds of any person securing such person's obligations in respect of banker's acceptances issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (xiii) Liens in favor of the Company or a Guarantor; (xiv) leases or subleases granted to others not interfering in any material respect with the business of the Company or its Subsidiaries; (xv) Liens arising out of consignment or similar arrangements for the sale of goods entered into by the Company or any of its Subsidiaries in the ordinary course of business; and (xvi) Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in connection with a Qualified Receivables Transaction. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the aggregate principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the aggregate principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or 84 92 greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary that is the obliger on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Principals" means Charles M. Hansen, Jr., his spouse and any of his lineal descendants. "Purchase Money Note" means a promissory note evidencing a line of credit, which may be irrevocable, from, or evidencing other Indebtedness owed to, the Company or any Subsidiary of the Company in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, 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 paid in connection with the purchase of newly generated receivables. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Subsidiary pursuant to which the Company or any Subsidiary may sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a transfer by the Company or any Subsidiary) and (ii) any other person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any Subsidiary of the Company, and any assets related thereto, including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of the Company (other than a Subsidiary Guarantor) which engages in no activities other than in connection with the financing or sale of accounts receivable and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary (i) no portion of any Indebtedness or any other Obligations (contingent or otherwise) of which (a) is guaranteed by the Company or any other Restricted Subsidiary of the Company (excluding guarantees of obligations (other than the principal of and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (b) is recourse to or obligates the Company or any other Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (c) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (ii) with which neither the Company nor any other Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Company or such other Restricted Subsidiary of the Company 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 accounts receivable; and (iii) to which neither the Company nor any of its other Restricted Subsidiaries 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 the 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. "Related Business" means the business conducted (or proposed to be conducted) by the Company and its Subsidiaries as of the Issue Date and any and all businesses that in the good faith judgment of the Board of Directors of the Company are materially related businesses. 85 93 "Related Party" with respect to any Principal means any trust, corporation, partnership or other entity, the beneficiaries, shareholders, partners, owners, or Persons beneficially holding a 50% or more controlling interest of which consist of such Principal. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" means each Subsidiary of the Company that is not designated as an Unrestricted Subsidiary in accordance with the provisions of the Indenture. "Senior Indebtedness" means (i) Indebtedness under the New Senior Credit Facilities (including interest in respect thereof accruing after the commencement of any bankruptcy or similar proceeding to the extent that such interest is allowable as a bankruptcy claim in such proceeding) and (ii) any other Indebtedness permitted to be incurred by the Company under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include (v) any Indebtedness that is expressly subordinate or junior in right of payment to any other Indebtedness of the Company, (w) any liability for federal, state, local or other taxes owed or owing by the Company (x) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of Indebtedness that is incurred in violation of the Indenture. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the date hereof. "Standard Securitization Undertaking" means representations, warranties, covenants, and indemnities entered into by the Company or any Subsidiary of the Company that are reasonably customary in an accounts receivable transaction. "Stated Maturity" means, with respect to any payment of interest on or principal of any Indebtedness, the date on which such payment was scheduled to be made in the documentation governing such Indebtedness, without regard to the occurrence of any subsequent event or contingency. "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 of one or more Subsidiaries of such Person (or any combination thereof). "Unrestricted Subsidiary" means any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) 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; (iii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligations (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (iv) 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 described above under the caption "Certain Covenants -- Restricted Payments." 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 86 94 purposes of the 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 described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," 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 described under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" means, with respect to any Person as of any date, the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a 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 and one or more Wholly Owned Subsidiaries of such Person. POST-MERGER INDEBTEDNESS INTRODUCTION Principal indebtedness of the Company currently outstanding following the Merger is described briefly below. NEW SENIOR CREDIT FACILITIES The agreement with respect to the New Senior Credit Facilities (the "New Senior Credit Facilities Agreement") provides for, on the terms and subject to the conditions set forth therein, (i) the Revolver (including $55.0 million for standby and commercial letters of credit and up to $25.0 million for swing line loans) and (ii) the Term Loan. The Term Loan consists of a $125.0 million Tranche A Term Loan and a $125.0 million Tranche B Term Loan. The Revolver will terminate on December 31, 2003. The Tranche A Term Loan and the Tranche B Term Loan will begin scheduled quarterly amortization of principal in arrears commencing in 1999 and 1998, respectively, with final maturities on December 31, 2003 and December 31, 2004, respectively. Pillowtex drew fully on the Term Loan at the closing of the New Senior Credit Facilities and drew a portion of the Revolver contemporaneously with the consummation of the Merger. The Company will initially pay quarterly a commitment fee of 50 basis points per annum calculated on the unused portion of the Revolver. The commitment fee could, however, be reduced during future periods depending upon the ratio of the Company's consolidated indebtedness to EBITDA (as defined in the definitive documents with respect to the New Senior Credit Facilities). The Revolver and the Tranche A Term Loan bear interest, at the option of the Company, at a rate per annum equal to either (i) the LIBOR interbank rate, adjusted for reserves, plus a margin of up to 225 basis points or (ii) the "Base Rate" (which is the higher of (a) the prime rate then in effect and published by NationsBank of Texas, N.A. and (b) the Federal Funds rate plus 0.5%), plus a margin of up to 75 basis points, subject to adjustments in accordance with the terms of the New Senior Credit Facilities Commitment. 87 95 The specific margin in any particular case will depend upon the ratio of the Company's consolidated indebtedness to EBITDA, as calculated based upon the Company's quarterly financial statements. The Tranche B Term Loan bears interest on a similar basis, plus an additional margin of 50 basis points, but will not bear interest at a rate less than LIBOR plus 200 basis points or the Base Rate plus 50 basis points. The initial interest rates will not be less than (i) the LIBOR interbank rate plus 200 basis points or the Base Rate plus 50 basis points for the Revolver and the Tranche A Term Loan and (ii) the LIBOR interbank rate plus 250 basis points or the Base Rate plus 100 basis points for the Tranche B Term Loan, and will not be subject to any change until the receipt of the Company's March 31, 1998 financial statements. The Revolver and the Term Loan are guaranteed by each of the domestic subsidiaries of the Company, including Fieldcrest and its domestic subsidiaries, and are secured by first priority liens on all of the capital stock of each domestic subsidiary of the Company, including Fieldcrest and its domestic subsidiaries, and by 65% of the capital stock of each foreign subsidiary of the Company and Fieldcrest. The Company also granted a first priority security interest in all of its presently unencumbered and future domestic assets and properties and all presently unencumbered and future domestic assets and properties of each of its subsidiaries, including Fieldcrest and its subsidiaries. The Term Loan is subject to mandatory prepayment from all net cash proceeds of asset sales and debt issuances by the Company or any of its subsidiaries, 50% of the net cash proceeds of equity issuances by the Company or any of its subsidiaries, and 75% of Excess Cash Flow (as defined). All mandatory prepayments will be applied pro rata between the Tranche A Term Loan and the Tranche B Term Loan (and within each tranche pro rata) to reduce the remaining installments of principal. The New Senior Credit Facilities Agreement includes representations, warranties, and covenants (including financial covenants) usual and customary for credit facilities such as the New Senior Credit Facilities, and provides for usual and customary events of default, including without limitation nonpayment of principal, interest, or fees, violation of any covenant, inaccurate representations and warranties, bankruptcy, actual or asserted invalidity of any loan documents or security interests, change of control, and cross-default with other material agreements and indebtedness of the Company. 10% SENIOR SUBORDINATED NOTES The Company presently has outstanding $125.0 million aggregate principal amount of the 10% Senior Subordinated Notes. The 10% Senior Subordinated Notes bear interest at a rate of 10% per annum, payable semiannually in arrears on May 15 and November 15 of each year. The 10% Senior Subordinated Notes are scheduled to mature in their entirety on November 15, 2006. The Company has the option to redeem the 10% Senior Subordinated Notes, in whole or in part, at any time on or after November 15, 2001, at redemption prices starting at 105% of stated principal on November 15, 2001 and decreasing at a rate of 1.667% per year to 100% on and after November 15, 2004, plus all accrued and unpaid interest to the redemption date. There is no mandatory redemption of the 10% Senior Subordinated Notes except upon a Change of Control (as defined in the Indenture with respect to the 10% Senior Subordinated Notes). Upon the occurrence of a Change of Control, each holder of 10% Senior Subordinated Notes will have the right to require the Company to repurchase all or any part of such holder's 10% Senior Subordinated Notes pursuant to a Change of Control Offer (as defined in the Indenture with respect to the 10% Senior Subordinated Notes) at a price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages (as defined in the Indenture with respect to the 10% Senior Subordinated Notes) thereon to the date of purchase. The 10% Senior Subordinated Notes are subject to certain covenants which restrict, among other things, the Company's ability to incur additional indebtedness and issue preferred stock, incur liens to secure subordinated indebtedness, pay dividends or make certain other restricted payments, apply net proceeds from certain asset sales, enter into certain transactions with affiliates, incur indebtedness that is subordinate in right of payment to any senior indebtedness and senior in right of payment to the 10% Senior Subordinated Notes, merge or consolidate with any other person, sell stock of subsidiaries, or sell, assign, transfer, lease, convey, or otherwise dispose of substantially all of the assets of the Company. 88 96 FIELDCREST CONVERTIBLE DEBENTURES Fieldcrest presently has outstanding $112.5 million ($118.5 million at September 30, 1997) in aggregate principal amount of its Convertible Debentures, of which $4.0 million is current maturities. The Fieldcrest Convertible Debentures currently remain outstanding as debt obligations of the Company. The Fieldcrest Convertible Debentures bear interest at the rate of 6.0% per annum, payable on March 15 and September 15 of each year. The Fieldcrest Convertible Debentures are convertible into the same consideration that a holder of the number of shares of Fieldcrest Common Stock into which such Fieldcrest Convertible Debentures might have been converted immediately prior to the Merger would be entitled to receive in the Merger. For example, a Fieldcrest Convertible Debenture having an aggregate principal amount of $1,000 is convertible into (i) a cash payment equal to the product of (a) the amount of the cash payment to be made on account of each share of Fieldcrest Common Stock converted in the Merger and (b) 22.60 and (ii) a number of shares of Pillowtex Common Stock equal to the product of (a) the Conversion Number and (b) 22.60. The Fieldcrest Convertible Debentures are presently redeemable at their stated principal amount, in whole or in part, at the option of Fieldcrest, plus any accrued and unpaid interest to the date of redemption. The Fieldcrest Convertible Debentures are subject to mandatory redemption at their stated principal amount plus any accrued and unpaid interest pursuant to a sinking fund provision whereby Fieldcrest is required on March 15 of the years 1997 to 2011 inclusive, to deposit with the indenture trustee an amount equal to 5.0% of the original $125.0 million aggregate principal amount of Fieldcrest Convertible Debentures. The sinking fund provision is designed to cause the redemption of 75% of the Fieldcrest Convertible Debentures as of their maturity date. PILLOWTEX DEED OF TRUST NOTE Pillowtex presently has outstanding a $2.4 million deed of trust note collateralized by land and buildings (the "Pillowtex Trust Note"). The Pillowtex Trust Note bears interest at 10.5% per annum, payable monthly in arrears, and matures on July 1, 1998. PILLOWTEX INDUSTRIAL REVENUE BONDS Pillowtex has certain obligations in respect of certain industrial revenue bonds issued by the Pennsylvania Economic Development Financing Authority (the "PEDFA Bonds"). The PEDFA Bonds bear interest, payable semiannually, at a variable rate (7.0% to 7.85% per annum), and mature serially in annual amounts ranging from $285,000 to $640,000 through April 1, 2002. Approximately $2.8 million in aggregate principal amount of PEDFA Bonds is presently outstanding. Pillowtex also has certain obligations in respect of certain industrial revenue bonds issued by the Mississippi Business Finance Corporation (the "MBFC Bonds"). The MBFC Bonds bear interest, payable monthly (or, in certain circumstances, quarterly), at a variable rate (2.75% to 4.5% per annum), provide for annual principal payments of $460,000 beginning July 1, 1995, and mature on July 1, 2004. Approximately $3.2 million in aggregate principal amount of MBFC Bonds is presently outstanding. FIELDCREST INDUSTRIAL REVENUE BONDS Fieldcrest has additional obligations in respect of certain industrial revenue bonds issued by the Industrial Development Board of the City of Scottsboro, Alabama (the "Scottsboro Bonds"). The Scottsboro Bonds bear interest, payable semiannually, at a rate equal to 6.75% per annum, provide for annual principal payments of $200,000 beginning September 1, 1998, and mature on September 1, 2002. Approximately $1.0 million in aggregate principal amount of the Scottsboro Bonds is presently outstanding. Fieldcrest has further obligations in respect of certain industrial revenue bonds issued by the State Industrial Development Authority of the State of Alabama (the "Alabama Bonds"). The Alabama Bonds bear interest at a variable rate (approximating LIBOR), and mature on July 1, 2021. Approximately $10,000,000 in aggregate principal amount of the Alabama Bonds is presently outstanding. 89 97 PILLOWTEX SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK General. Pursuant to the terms of Pillowtex Preferred Stock Purchase Agreement, as amended (the "Preferred Stock Purchase Agreement"), Apollo purchased of 65,000 shares of Pillowtex Preferred Stock at an offering price of $1,000 per share, which resulted in net proceeds to Pillowtex of approximately $62.9 million. Liquidation Preference; Ranking. Each share of Pillowtex Preferred Stock has a liquidation preference of $1,000, plus accrued and unpaid dividends (the "Liquidation Preference"). The Pillowtex Preferred Stock ranks senior in right of payment to all common equity stock and all other classes of preferred stock of the Company (other than parity securities), but ranks junior in right of payment to all indebtedness of the Company. The terms of the Pillowtex Preferred Stock restrict, among other things, the Company's ability to pay dividends or make certain other restricted payments on the Pillowtex Common Stock. Dividends. Subject to the provisions described below, dividends will accrue on the Pillowtex Preferred Stock from the issue date through and including December 31, 1999, at a rate per annum equal to 3.0%. However, the Company may at its option pay dividends in cash during each quarterly period during calendar years 1998 and 1999 at a rate in excess of 3.0%. Beginning January 1, 2000, dividends will accrue on the Pillowtex Preferred Stock at the Applicable Dividend Rate, which is defined as 3.0%, 7.0%, or 10.0% depending upon the Company's 1999 Pro Forma EPS (as defined herein) as set forth in the following table:
APPLICABLE DIVIDEND 1999 RATE AT PRO FORMA EPS JANUARY 1, 2000 ------------- ------------------- $2.70 or greater................................. 3.0% per annum $2.35 to $2.69................................... 7.0% per annum $2.34 or less.................................... 10.0% per annum
The term "1999 Pro Forma EPS" is defined as the Company's diluted earnings per share as included in its audited financial statements for the fiscal year ending January 1, 2000, as adjusted to exclude the after-tax effect of (i) any change in generally accepted accounting principles from September 5, 1997, other than the effects of Financial Accounting Standards Board Statement No. 128; (ii) extraordinary gains or losses, and (iii) gain on sale of assets having a fair market value in excess of $1.0 million ("1999 EPS"), calculated on a pro forma basis assuming (a) the dividend rate on the Pillowtex Preferred Stock for calendar 1997 (if applicable) and calendar 1998 was (1) 3.0% per annum if 1999 EPS is equal to or greater than $2.35 or (2) 10.0% per annum if 1999 EPS is less than $2.35; (b) the dividend rate on the Pillowtex Preferred Stock for calendar 1999 was (1) 3.0% per annum if 1999 EPS is greater than or equal to $2.70, (2) 7.0% per annum if 1999 EPS is greater than or equal to $2.35 but less than $2.70, and (3) 10.0% per annum if 1999 EPS is less than $2.35; and (c) any incremental dividends included pursuant to clauses (a) and (b) which were not paid when due (either in cash or in shares of Pillowtex Preferred Stock) were paid in additional shares of Pillowtex Preferred Stock (including the effect of all dividends earned on unpaid dividends). In addition to paying dividends from and after January 1, 2000 at the Applicable Dividend Rate, the Company is required to pay a one-time Catch Up Dividend in shares of Pillowtex Preferred Stock in 1999 equal to the difference between the aggregate amount of dividends paid (whether in cash or additional shares of Pillowtex Preferred Stock)(the "Aggregate Dividends Paid") and the aggregate amount of dividends that would have been paid on the Pillowtex Preferred Stock from the issue date through and including the last Dividend Payment Date prior to the date on which the Company finally determines the amount of 1999 Pro Forma EPS ("Aggregate Dividends Owed") assuming (i) the dividend rate for calendar 1997 (if applicable) and calendar 1998 was (a) 3.0% per annum if 1999 Pro Forma EPS is equal to or greater than $2.35 or (b) 10.0% per annum if 1999 Pro Forma EPS is less than $2.35, (ii) the dividend rate for calendar 1999 was the Applicable Dividend Rate, and (iii) any incremental dividends included in calculating dividends described in clauses (i) and (ii) which were not paid when due (either in cash or in shares of Pillowtex Preferred Stock) were paid in additional shares of Pillowtex Preferred Stock (including the effect of all dividends earned on unpaid dividends). If the Aggregate Dividends Paid is more than the Aggregate Dividends Owed, then no Catch Up Dividend will be payable and an amount equal to the difference between Aggregate Dividends Paid 90 98 and Aggregate Dividends Owed will be offset against dividends payable on the next succeeding Dividend Payment Date or Dividend Payment Dates, as the case may be. The following table sets forth for each of the three categories of 1999 Pro Forma EPS indicated the number of shares to be issued as a Catch Up Dividend (assuming that the Pillowtex Preferred Stock were to be initially issued on December 31, 1997, that dividends due prior to January 1, 2000 are paid in cash when due at a rate per annum of 3.0%, and that the Determination Price is $24.00 per share):
1999 APPLICABLE CATCH PRO FORMA EPS UP DIVIDEND ------------- ------------------- $2.70 or greater................................. N/A $2.35 to $2.69................................... 2,669.05 shares $2.34 or less.................................... 9,952.15 shares
If the Determination Price is less than $23.00, each of the $2.35 and $2.70 targets for 1999 Pro Forma EPS will be reduced by an amount equal to the product of (i) 0.065 and (ii)(a) $23.00 minus (b) the Determination Price. All dividends will be cumulative, whether or not declared, on a daily basis from the date of issuance and will be payable quarterly, in arrears, on March 31, June 30, September 30, and December 31 (each a "Dividend Payment Date"). Dividends (in the form of additional dividends due) will compound quarterly on all unpaid dividends from the Dividend Payment Date with respect thereto until the date of payment. At the option of the Company, dividends other than the Catch Up Dividend will be payable either in cash or in kind (through the issuance of additional shares of Pillowtex Preferred Stock) for the first five years after issuance and will be payable only in cash thereafter. In the event that after the fifth anniversary of the initial issuance of the Pillowtex Preferred Stock, Pillowtex fails to pay dividends in cash on the Dividend Payment Date when due, the dividend rate applicable to any period in which any such dividends remain unpaid will be increased by 0.5% per quarter for each quarter in which any such dividends remain unpaid (such rate increase, the "Dividend Increase"). The applicable dividend rate plus the Dividend Increase applicable to any period will not exceed the lesser of (i) 18.0% per annum and (ii) the maximum rate permitted by applicable law. After a Dividend Increase, when the Company pays all accrued and unpaid dividends, and upon the payment of dividends on the next Dividend Payment Date at the rate in effect prior to giving effect to any Dividend Increase, the annual dividend rate will be decreased to the otherwise applicable dividend rate. Conversion. At the option of the holders thereof, at any time or from time to time, each share of the Pillowtex Preferred Stock will be convertible into the number of shares of Pillowtex Common Stock as is determined by dividing (i) the sum of (a) $1,000 and (b) any unpaid dividends on such share by (ii) an initial conversion price equal to $24.00 per share, except that if the Determination Price is less than $23.00, then the conversion price will be equal to the Determination Price plus $1.00, subject to subsequent adjustment in certain circumstances to prevent dilution. Mandatory Redemption. Each share of Pillowtex Preferred Stock is subject to mandatory redemption on the date ten and one-half years after the initial issuance of the Pillowtex Preferred Stock (the "Mandatory Redemption Date"), at a redemption price equal to $1,000, plus accrued and unpaid dividends. Optional Redemption. The Company has the right to, at any time and from time to time after the fourth anniversary of the initial issuance of the Pillowtex Preferred Stock, call all or any portion of the Pillowtex Preferred Stock for redemption at a redemption price equal to (i) the Liquidation Preference plus (ii) the product of (a) a premium, which declines ratably from the percentage equal to the applicable dividend rate on such fourth anniversary to zero on the Mandatory Redemption Date, and (b) the Liquidation Preference (minus any accrued and unpaid dividends from the Dividend Payment Date prior to the date fixed for redemption). Voting Rights. Except as described below and as otherwise required by law, holders of Pillowtex Preferred Stock are not entitled to any vote on matters presented to shareholders of the Company. 91 99 So long as any shares of the Pillowtex Preferred Stock are outstanding, the Company may not (i) amend its Articles of Incorporation (the "Pillowtex Articles") so as to (a) affect adversely the specified rights, preferences, privileges, or voting rights of holders of shares of Pillowtex Preferred Stock or (b) authorize the issuance of additional shares of any class of senior securities or (ii) merge, consolidate, or enter into any other reclassification that would (a) materially affect adversely the special or relative rights, preferences, privileges, or voting rights of the Pillowtex Preferred Stock or (b) result in a breach of the terms of the Pillowtex Preferred Stock without, in any such case, the affirmative vote or consent of holders of more than 50% of the outstanding shares of the Pillowtex Preferred Stock. In addition, any amendment to the Pillowtex Articles that would alter in any material respect the dividend rates, liquidation preference, redemption rights, or conversion rights of the Pillowtex Preferred Stock will require the affirmative vote or consent of each holder of Pillowtex Preferred Stock. In the event of the Company's failure to pay dividends or the occurrence of certain breaches that shall have continued for a period of 60 days after notice thereof from any holder of Pillowtex Preferred Stock, within ten business days of such events, the number of members on the Board of Directors of Pillowtex would be automatically increased by 25% and the holders of the Pillowtex Preferred Stock would be entitled to elect directors to fill the new positions created by such expansion, so long as such nonpayment of dividends and breaches were not cured after notice thereof, except that if the event of default related to (i) the failure to redeem the Pillowtex Preferred Stock, (ii) a breach of certain restrictions on the Company's activities, or (iii) a bankruptcy event with respect to the Company or any of its subsidiaries, there would be no 60-day grace period or right to cure and the holders' right to so elect directors would continue for as long as the Pillowtex Preferred Stock were outstanding. Registration Rights. Upon the occurrence of certain conditions, holders of Pillowtex Preferred Stock will have the right to require the Company to file a registration statement with the Commission to register shares of Pillowtex Common Stock receivable by such holders upon conversion of Pillowtex Preferred Stock. Holders will also have so-called "piggyback" registration rights with respect to shares of Pillowtex Common Stock receivable upon conversion of Pillowtex Preferred Stock. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The exchange of Series A Notes for Series B Notes pursuant to the Exchange Offer will not be considered a taxable exchange for federal income tax purposes because the Series B Notes will not differ materially in kind or extent from the Series A Notes and because the exchange will occur by operation of the terms of the Series B Notes. Accordingly, such exchange will have no federal income tax consequences to Holders of Series A Notes. A Holder's adjusted tax basis and holding period in a Series B Note will be the same as such Holder's adjusted tax basis and holding period, respectively, in the Series A Note exchanged therefor. Holders considering the exchange of Series A Notes for Series B Notes should consult their own tax advisors concerning the United States federal income tax consequences in light of their particular situations as well as any consequences arising under state, local, and foreign income tax and other tax law. 92 100 PLAN OF DISTRIBUTION The Series B Notes will be offered by the Company to the holders of the Series A Notes in exchange for the Series A Notes pursuant to the Exchange Offer. Except as described below, a broker-dealer may not participate in the Exchange Offer in connection with a distribution of the Series B Notes. Each broker-dealer that receives Series B Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Series B Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Series B Notes received in exchange for Series A Notes where such Series A Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that for a period of one year after the Registration Statement has been declared effective, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale subject to the conditions described under "The Exchange Offer -- Consequences of Exchanging Series A Notes." The Company will not receive any proceeds from any sale of Series B Notes by broker-dealers. Series B Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Series B Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices, or negotiated prices. Any such resale may be made directly to purchasers or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Series B Notes. Any broker or dealer that participates in a distribution of such Series B Notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any such resale of Series B Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Company has agreed to pay all expenses incident to the Exchange Offer other than commissions or concessions of any brokers or dealers and expenses of counsel for the holders of the Series B Notes and will indemnify the holders of the Series B Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain legal matters with respect to the validity of the Series B Notes offered hereby will be passed upon for the Company by Jones, Day, Reavis & Pogue, Dallas, Texas. EXPERTS The consolidated financial statements of Pillowtex as of December 30, 1995 and December 28, 1996, and for each of the years in the three-year period ended December 28, 1996 have been incorporated by reference herein and in the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The consolidated financial statements of Fieldcrest incorporated by reference in and included in an exhibit to Fieldcrest's Annual Report (Form 10-K) for the year ended December 31, 1996 and incorporated herein by reference, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report incorporated by reference therein and included in an exhibit thereto and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 93 101 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS Set forth below is a description of certain provisions of the articles of incorporation and bylaws of the Company and the Guarantors. These descriptions are intended as a summary only and are qualified in their entirety by reference to the appropriate articles, bylaws and state law. (a) Pillowtex Corporation (a Texas corporation). Under the Texas Business Corporation Act (the "TBCA"), a corporation may indemnify a person who was, is, or is threatened to be made a named defendant or respondent in any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative, any appeal in such an action, suit, or proceeding, or any inquiry or investigation that could lead to such an action, suit, or proceeding (a "proceeding"), because the person is or was a director of the corporation or, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, but only if it is determined in the manner described below that the person: (i) conducted himself in good faith; (ii) reasonably believed (a) in the case of conduct in his official capacity as a director of the corporation, that his conduct was in the corporation's best interests, and (b) in all other cases, that his conduct was at least not opposed to the corporation's best interests; and (iii) in the case of any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. Except to the extent described in the next following sentence, a director may not be indemnified under the TBCA in respect of a proceeding in which the person is found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the person's official capacity, or in which the person is found liable to the corporation. A person may be indemnified as described in the second preceding sentence against judgments, penalties (including excise and similar taxes), fines, settlements, and reasonable expenses (including court costs and attorneys' fees) actually incurred by the person in connection with a proceeding, except that if the person is found liable to the corporation or is found liable on the basis that personal benefit was improperly received by the person, the indemnification (i) is limited to reasonable expenses (including court costs and attorneys' fees) actually incurred by the person in connection with the proceeding and (ii) will not be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his duty to the corporation. Under the TBCA, a corporation must indemnify a director against reasonable expenses (including court costs and attorneys' fees) incurred by him in connection with a proceeding in which he is a named defendant or respondent because he is or was a director of the corporation or, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, if he has been wholly successful, on the merits or otherwise, in the defense of the proceeding. Under the TBCA, if, in a suit for the indemnification required as described in the immediately preceding sentence, a court of competent jurisdiction determines that the director is entitled to such indemnification, the court will order indemnification and will award to the director the expenses (including court costs and attorneys' fees) incurred in securing the indemnification. Under the TBCA, if, upon application of a director, a court of competent jurisdiction determines, after giving any notice the court considers necessary, that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he has met the requirements for indemnification described in the first sentence of the immediately preceding paragraph or has been found liable in the circumstances described in the second sentence of such paragraph, the court may order the indemnification that the court determines is proper and equitable, except that if the person is found liable to the corporation or is found liable on the basis that personal benefit was improperly received by the person, the indemnification will be limited to reasonable expenses (including court costs and attorneys' fees) actually incurred by the person in connection with the proceeding. II-1 102 A determination that indemnification as described in the first sentence of the second preceding paragraph is permissible must be made: (i) by a majority vote of a quorum consisting of directors who at the time of the vote are not named defendants or respondents in the proceeding; (ii) if such a quorum cannot be obtained, by a majority vote of a committee of the board of directors, designated to act in the matter by a majority vote of all directors, consisting solely of two or more directors who at the time of the vote are not named defendants or respondents in the proceeding; (iii) by special legal counsel selected by the board of directors or a committee of the board by vote as described in clauses (i) and (ii) above, or, if such a quorum cannot be obtained and such a committee cannot be established, by a majority vote of all directors; or (iv) by the shareholders in a vote that excludes the shares held by directors who are named defendants or respondents in the proceeding. Under the TBCA, authorization of indemnification and determination as to reasonableness of expenses must be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses must be made in the manner described in clause (iii) of the immediately preceding sentence for the selection of special legal counsel; a provision contained in the articles of incorporation, the bylaws, a resolution of shareholders or directors, or an agreement that makes mandatory the indemnification permitted under the TBCA will be deemed to constitute authorization of indemnification in the manner required by the TBCA even though such provision may not have been adopted or authorized in the same manner as the determination that indemnification is permissible. The TBCA provides that reasonable expenses (including court costs and attorneys' fees) incurred by a director who was, is, or is threatened to be made a named defendant or respondent in a proceeding may be paid or reimbursed by the corporation, in advance of the final disposition of the proceeding and without the determination, authorization, or determination described above, after the corporation receives a written affirmation by the director of his good faith belief that he has met the standard of conduct necessary for indemnification and a written undertaking by or on behalf of the director to repay the amount paid or reimbursed if it is ultimately determined that he has not met the standard or if it is ultimately determined that indemnification of the director against expenses incurred by him in connection with that proceeding is prohibited by the TBCA; a provision contained in the articles of incorporation, the bylaws, a resolution of shareholders or directors, or an agreement that makes mandatory the payment or reimbursement permitted under the TBCA will be deemed to constitute authorization of that payment or reimbursement. Under the TBCA, an officer of the corporation must be indemnified as, and to the same extent described in the second preceding paragraph, for a director. A corporation may indemnify and advance expenses to an officer, employee, or agent of the corporation to the same extent that it may indemnify and advance expenses to directors as described above. In addition, under the TBCA, a corporation may indemnify and advance expenses to persons who are not or were not officers, employees, or agents of the corporation but who are or were serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise to the same extent that it may indemnify and advance expenses to directors. Under the TBCA, a corporation may purchase and maintain insurance or another arrangement on behalf of any person who is or was a director, officer, employee, or agent of the corporation or who is or was serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person, whether or not the corporation would have the power to indemnify him against that liability under the TBCA. Pillowtex has purchased liability insurance policies covering its directors and officers to insure against losses incurred in their capacities, including liabilities under the Securities Act. The Pillowtex Articles do not address indemnification of directors, officers, or other persons. The Bylaws of Pillowtex (the "Pillowtex Bylaws"), however, provide that: (i) Pillowtex will indemnify persons who are or were directors or officers (both in their capacities as directors and officers and, if serving at the request of Pillowtex as a director, officer, trustee, employee, agent, or similar functionary of another foreign or domestic II-2 103 corporation, trust, partnership, joint venture, sole proprietorship, employee benefit plan, or other enterprise, in each of those capacities) to the full extent permitted by the TBCA; (ii) Pillowtex will pay or reimburse, in advance of the final disposition of any proceeding, to all persons who are or were directors or officers of Pillowtex all reasonable expenses incurred by such persons to the full extent permitted by the TBCA; and (iii) Pillowtex will indemnify persons who are or were employees or agents (other than directors or officers), or persons who are not or were not employees or agents but who are or were serving at the request of Pillowtex as directors, officers, trustees, employees, agents, or similar functionaries of another foreign or domestic corporation, trust, partnership, joint venture, sole proprietorship, employee benefit plan or other enterprise (collectively, together with the directors and officers, "Corporate Functionaries"), to the full extent permitted by the TBCA. The Pillowtex Bylaws also provide that Pillowtex may purchase or maintain insurance on behalf of any Corporate Functionary against any liability asserted against him and incurred by him in such a capacity or arising out of his status as a Corporate Functionary, whether or not Pillowtex would have the power to indemnify him against the liability under the TBCA or the Pillowtex Bylaws. Pillowtex has entered into Indemnification Agreements with each of its directors pursuant to which Pillowtex has agreed to indemnify the directors to the full extent authorized or permitted by the TBCA. Pillowtex Corporation maintains directors' and officers' liability insurance on behalf of the directors and officers of Pillowtex Corporation and each of its subsidiaries (including Fieldcrest) against liability arising from actions taken in their capacity as directors or officers. Additionally, pursuant to the Merger Agreement, the Company has purchased and will maintain directors' and officers' liability insurance on behalf of former directors and officers of Fieldcrest for a period of four years after consummation of the Merger. (b) Guarantors. Under the Delaware General Corporation Law (the "DGCL"), directors and officers as well as other employees and individuals may be indemnified against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits, or proceedings, whether civil or criminal, administrative, or investigative (other than an action by or in the right of the corporation as a derivative action) if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. However, the DGCL does not permit a corporation to eliminate or limit a director's personal liability for monetary damages to the corporation or its stockholders (i) for any branch of the director's duty of loyalty to such corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) for paying a dividend or approving a stock repurchase in violation of Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. Amoskeag Company (a Delaware corporation). The Amended and Restated Certificate of Incorporation provides that, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of Amoskeag Company shall be personally liable to Amoskeag Company or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. The Amended and Restated Certificate of Incorporation provides that Amoskeag Company shall, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of Amoskeag Company, or is or was serving, or has agreed to serve, at the request of Amoskeag Company, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom. II-3 104 With respect to any action, suit, proceeding or investigation for which indemnity will or could be sought, Amoskeag Company will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the person seeking indemnification. In the event that Amoskeag Company does not assume the defense of any action, suit, proceeding or investigation for which indemnity will or could be sought, any expenses (including attorneys' fees) incurred by the person seeking indemnification in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by Amoskeag Company in advance of the final deposition of such matter upon receipt of any undertaking by the person indemnified to repay such payment if it is ultimately determined that such person is not entitled to indemnification under the Amended and Restated Certificate of Incorporation, which undertaking may be accepted without reference to the financial ability of such person to make such repayment. Amoskeag Company will not indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person unless the initiation thereof was approved by the Board of Directors. The indemnification rights provided in the Amended and Restated Certificate of Incorporation (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of such persons. Amoskeag Company may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of Amoskeag Company or other persons serving Amoskeag Company and such rights may be equivalent to, or greater or less than, those set forth in the Amended and Restated Certificate of Incorporation. The Bylaws of Amoskeag Company do not contain any indemnification provisions. Amoskeag Management Corporation (a Delaware corporation). The Certificate of Incorporation provides that Amoskeag Management Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of Amoskeag Management Corporation), or a stockholder purporting to act on behalf of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments and fines actually imposed or reasonably incurred by him in connection with such action, suit or proceeding unless in any proceeding he shall be finally adjudged not to have acted in good faith and in a manner reasonably believed to be in or not opposed to the best interest of Amoskeag Management Corporation; provided, however, that such indemnification shall not cover liabilities in connection with any manner which shall be disposed of through a compromise payment by such person, pursuant to a consent decree or otherwise, unless such compromise shall be approved as in the best interests of Amoskeag Management Corporation, after notice that it involves such indemnification, (i) by a vote of the directors in which no interested director participates, or (ii) by a vote or the written approval of the holders of a majority of the outstanding stock at the time having the right to vote for directors, not counting as outstanding any stock owned by any interested director or officer. Such indemnification may include payment by Amoskeag Management Corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under these provisions. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create any presumption that the person did not act in good faith and in a manner in which he reasonably believed to be in the best interests of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The rights of indemnification hereby provided shall not be exclusive of or affect other rights to which any director, officer, employee, agent or stockholder may be entitled. As used in this paragraph, the terms "director", "officer", "employee", "agent", or "stockholder" include their respective heirs, executors and II-4 105 administrators, and an "interested" director or officer is one against whom as such the proceeding in question or another proceeding on the same or similar grounds is then pending. Any indemnification to which a person is entitled under the Certificate of Incorporation shall be provided although the person to be indemnified is no longer such a director, officer, employee, agent or stockholder. The Bylaws of Amoskeag Management Corporation do not contain any indemnification provisions. Downeast Securities Corporation (a Delaware corporation). The Certificate of Incorporation, as amended, provides that Downeast Securities Corporation shall indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or a stockholder purporting to act on behalf of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments and fines actually imposed or reasonably incurred by him in connection with such action, suit or proceeding unless in any proceeding he shall be finally adjudged not to have acted in good faith in reasonable belief that his action was in the best interest of the corporation; provided, however, that such indemnification shall not cover liabilities in connection with any matter which shall be disposed of through a compromise payment by such person, pursuant to a consent decree or otherwise, unless such compromise shall be approved as in the best interests of the corporation, after notice that it involves such indemnification, (i) by vote of the directors in which no interested director participates, or (ii) by a vote or the written approval of the holders of a majority of the outstanding stock at the time having the right to vote for directors, not counting as outstanding any stock owned by any interested director or officer. Such indemnification may include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under these provisions. The rights of indemnification provided shall not be exclusive of or affect other rights to which any director, officer, employee, agent or stockholder may be entitled. As used in this paragraph, the terms "director", "officer", "employee", "agent" or "stockholder" include their respective heirs, executors and administrators, and an "interested" director or officer is one against whom as such the proceeding in question or another proceeding on the same or similar grounds is then pending. Any indemnification to which a person is entitled under this paragraph shall be provided although the person to be indemnified is no longer such a director, officer, employee, agent or stockholder. The Bylaws of Downeast Securities Corporation do not contain any indemnification provisions. Encee, Inc. (a Delaware corporation). The Certificate of Incorporation provides that Encee, Inc. shall, to the full extent permitted by Section 145 of the DGCL, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto. The Bylaws of Encee, Inc. do not contain any indemnification provisions. FCC Canada, Inc. (a Delaware corporation). The Certificate of Incorporation eliminates the personal liability of the directors of FCC Canada, Inc. to the fullest extent permitted by the DGCL, as the same may be amended and supplemented. The Certificate of Incorporation also, to the fullest extent permitted by the DGCL, indemnifies any and all persons whom it shall have power to indemnify from and against any and all of the expenses, liabilities or other matters. The indemnification provided for in the Certificate of Incorporation is not exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The Bylaws of FCC Canada, Inc. do not contain any indemnification provisions. II-5 106 Fieldcrest Cannon Financing, Inc., Fieldcrest Cannon Licensing, Inc., Fieldcrest Cannon Sure Fit, Inc., Fieldcrest Cannon Transportation, Inc. (each, a Delaware corporation). These four entities have identical indemnification provisions in their Certificates of Incorporation and Bylaws. The Certificates of Incorporation provide that no person who is serving or has served as a director shall be liable to the corporation or to any stockholder for monetary damages for breach of any fiduciary duty of such person as a director by reason of any act or omission occurring on or after the date this article becomes effective. Nothing within such Certificate of Incorporation shall be deemed to limit or eliminate the liability of any person (i) for any breach of such person's duty of loyalty as a director to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) for the unlawful payment of a dividend by the corporation or the unlawful purchase or redemption of the corporation's capital stock by the corporation; (iv) for any transaction from which such person derived an improper personal benefit; or (v) to any extent that such liability may not be limited or eliminated by virtue of the provisions of Section 102(b)(7) of the DGCL or any successor statute. The indemnification provisions of the Bylaws provide that each person who was or is made a party to or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer or employee of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the DGCL. Indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators. The corporation shall indemnify and any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred is a contract right and shall include the right to be paid by the corporation and the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the DGCL requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under the Bylaws. If a claim for indemnification is not paid in a timely manner, the indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If successful in whole or in part in any suit or in a suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In any suit brought by the indemnitee to enforce a right hereunder, or by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified or to such advancement of expenses under the Bylaws shall be on the corporation. The rights to indemnification and to the advancement of expenses shall not be exclusive of any other right which any person may have or acquire. In addition, the corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss under the DGCL. The corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses, to any agent of the corporation to the fullest extent allowed under these bylaws with respect to the indemnification and advancement of expenses of directors, officers and employees of the corporation. II-6 107 Fieldcrest Cannon, Inc. (a Delaware corporation). The Restated Certificate of Incorporation, as amended, provides that the corporation will indemnify each person (and his heirs, executors, administrators, or other legal representatives) who is, or shall have been, a director, officer or employee of the corporation or any person who is serving, or shall have served, at the request of this corporation as a director or officer of another corporation, against all liabilities and expenses (including judgments, fines, penalties and attorneys' fees) reasonably incurred by any such director, officer, employee or person in connection with, or arising out of, any action, suit or proceeding in which any such director, officer, employee or person may be a party defendant or with which he may be threatened or otherwise involved, directly or indirectly, by reason of his being or having been a director, officer or employee of this corporation or such other corporation, except in relation to matters as to which any such director, officer, employee or person shall be finally adjudged in such action, suit or proceeding to have been liable for misconduct or negligence in the performance of his duty as such director, officer or employee. Where a director, officer, employee or person has not been finally adjudged to have been liable for negligence or misconduct in the performance of his duty as such director, officer or employee, indemnity will not be made unless the corporation has received an opinion of independent counsel to the effect that such director, officer, employee or person acted in good faith, for a purpose which he reasonably believed would be in the best interests of the corporation and had no reasonable cause to believe that his conduct was unlawful. The indemnification provision also applies to all amounts paid in compromise or settlement (other than amounts paid to the corporation or such other corporation), and all expenses (including attorneys' fees) reasonably incurred, provided that prior to such indemnification the corporation shall have received an opinion of independent counsel to the effect that the director, officer, employee or person making such compromise or settlement was not liable for misconduct or negligence in the performance of his duty in connection with the matter or matters out of which such compromise or settlement arose. The corporation may from time to time, if authorized by the directors, prior to final adjudication or compromise or settlement of the matter or matters as to which indemnification is claimed, advance to such director, officer, employee or person all expenses imposed upon or incurred by him if the corporation shall have received an opinion of independent counsel to the effect that it is probable that upon the termination of the action, suit or proceeding or threatened action, suit or proceeding as to which such reimbursement is sought, such director, officer, employee or person will be entitled to indemnity under the Restated Certificate of Incorporation, as amended, in respect of such advances and that such advances may properly be made by the corporation. The rights of indemnification shall not be exclusive of other rights to which any director, officer, employee or person is entitled. The Amended and Restated Bylaws of Fieldcrest Cannon, Inc. provide that the corporation will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer or employee of the corporation, or is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, will not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Further, the corporation will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer or employee of the corporation, or is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and II-7 108 reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation. To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding he shall be indemnified against expenses actually and reasonably incurred. Indemnification will not be made, however if such person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery or such other court shall deem proper. Whether indemnification is available will be decided (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of such director or officer to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as authorized. Such expenses incurred by other employees may be paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. The indemnification provided shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of the heirs, executors and administrators of such a person. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity. Fieldcrest Cannon International, Inc. (a Delaware corporation). The Certificate of Incorporation, as amended, provides that any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of the corporation or of any corporation which he served as such at the request of the corporation, shall be indemnified by the corporation against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties. Such right of indemnification shall not be deemed exclusive of any other rights to which such director, officer or employee may be entitled by law. The Bylaws of Fieldcrest Cannon International, Inc., as amended, do not contain any indemnification provisions. Moore's Falls Corporation (a Delaware corporation). The Certificate of Incorporation, as amended, provides that the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, II-8 109 and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in conjunction with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification will not be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. Any indemnification will be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion or (iii) by the stockholders. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the directors, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation. The indemnification provided shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity. The Bylaws of Moore's Falls Corporation do not contain any indemnification provisions. Pillowtex, Inc. and PTEX Holding Company (each, a Delaware corporation). The Certificates of Incorporation of both Pillowtex, Inc. and PTEX Holding Company provide that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. The limitation on personal liability shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by II-9 110 the stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification. Bylaws of both entities provide that the corporation will indemnify (i) any person who is or was a director, officer, agent, or employee of the corporation, and (ii) any person who serves or served at the corporation's request as a director, officer, partner, venturer, proprietor, trustee, agent, employee, or similar functionary of another corporation or of a partnership, joint venture, sole proprietorship, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise (collectively "indemnitees"). In case of a suit, action, or proceeding (whether civil, criminal, administrative, or investigative), other than a suit by or on behalf of the corporation against an indemnitee, collectively hereinafter referred to as a nonderivative suit, the corporation may indemnify such person for amounts actually and reasonably incurred by such person in connection with the defense or settlement of the nonderivative suit for judgments, penalties, including excise and similar taxes, fines, settlements, and reasonable expenses actually incurred (including attorneys' fees). In case of a derivative suit, an indemnitee may be indemnified if such person acted in good faith in the transaction that is the subject of the suit, and in a manner reasonably believed to be in or not opposed to the corporation's best interest; provided that no indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation unless, and only to the extent that, the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or other such court shall deem proper. In the case of nonderivative suit, indemnification will be provided if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the corporation's best interest. With respect to any criminal action or proceeding, the person must have had no reasonable cause to believe that the conduct that is the subject of such action was unlawful. The termination of a nonderivative proceeding by judgment, order, settlement, conviction, or on a plea of nolo contendere or its equivalent, does not of itself create a presumption that the person does not meet the standards set forth in this paragraph. The corporation will indemnify against expenses (including attorneys' fees) actually and reasonably incurred in connection with a proceeding in which such person is a party by reason of such person holding their position to the extent such person has been successful, on the merits or otherwise, in the defense of the proceeding. A determination that the standard has been satisfied shall be made by (i) majority vote of the directors of the corporation who at the time of the vote are not parties to the action, suit, or proceeding even though less than a quorum, or (ii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (iii) the shareholders of the corporation. The corporation may pay in advance any expense (including attorneys' fees) that may become subject to indemnification under the bylaws if the person receiving the payment affirms in writing that in good faith the person believes the standards set forth in the bylaws have been met, and undertakes to repay any advance payments if it is ultimately determined that such person has not yet met those standards. The corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in the bylaws, against any liability asserted against or incurred by such person in any such position, or arising out of such person's status. The rights of indemnification provided in the bylaws shall be in addition to any other rights to which any person named may otherwise be entitled by contract, under the DGCL or as a matter of law; and if any such person dies, then such rights shall extend to such person's heirs and legal representatives. St. Marys, Inc. (a Delaware corporation). The Certificate of Incorporation provides that the corporation shall indemnify all persons to the full extent permitted by Section 145 of the DGCL. The Bylaws of St. Mary's, Inc. do not contain any indemnification provisions. II-10 111 Under Section 3817 of the Delaware Business Trust Act, a business trust may indemnify and hold harmless any trustee or beneficial owner or other person from and against any and all claims and demands subject to any standards and restrictions, if any, set forth in the governing instrument. The absence of a provision for indemnity in the governing instrument shall not be construed to deprive any trustee or beneficial owner or other person of any right to indemnity which is otherwise available to such person under Delaware law. Pillowtex Management Services Company (a Delaware business trust). The Certificate of Trust of Pillowtex Management Services Company does not contain any indemnification provisions, however, the Declaration of Trust provides that no Beneficial Interest Holder will be liable for any debt, claim, demand, judgment or obligation of any kind of, against or with respect to the Trust by reason of being a Beneficial Interest Holder, nor shall any Beneficial Interest Holder, by reason of such status, be subject to any personal liability whatsoever, in tort, contract or otherwise, to any person in connection with the Trust Estate or the affairs of the Trust. A Trustee, when acting in such capacity, will be personally liable to any person other than the Trust or a Beneficial Interest Holder for any act, omission or obligation of the Trust or any Trustee. To the maximum extent that Delaware law in effect from time to time permits limitation of the liability of trustees of a business trust, no Trustee will be liable to the Trust or to any Beneficial Interest Holder for monetary damages for breach of any duty (including, without limitation, fiduciary duty) as a Trustee, except (i) for acts or omissions which involve actual fraud or willful misconduct or (ii) for any transaction from which the Trustee derived improper personal benefit. Neither the Beneficial Interest Holders nor the Trustees, officers, employees or agents of the Trust will be liable under any written instrument creating an obligation of the Trust, and all persons shall look solely to the Trust Estate for the payment of any claim under or for the performance of that instrument. All such written instruments may contain an express exculpatory clause to the foregoing effect. The omission of the foregoing exculpatory language from any instrument shall not affect the validity or enforceability of such instrument and shall not render any Beneficial Interest Holder, Trustee, officer, employee or agent liable thereunder to any third party, nor shall the Trustee or any officer, employee or agent of the Trust be liable to anyone for such omission. The Trust shall indemnify and hold harmless each Trustee and officer of the Trust (including any persons who, while a Trustee or officer of the Trust, is or was serving at the request of the Trust as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan) to the maximum extent permitted by law, except to the extent that the indemnitee is found liable for (i) an act or omission involving actual fraud or willful misconduct or (ii) a transaction in which the indemnitee received an improper personal benefit. The Trust shall, upon request by the concerned Trustee or officer assume the defense of any claim made against such Trustee or officer and (i) whether or not such request is made, pay in advance of any final disposition of such claims all costs of defense upon an undertaking by or on behalf of such Trustee or officer to repay such amount if it shall be ultimately determined that such Trustee or officer is not entitled to indemnification by the Trust, and (ii) satisfy any judgment thereon from the assets of the Trust. In the event any Beneficial Interest Holder or former Beneficial Interest Holder shall be held to be personally liable for any obligation of the Trust solely by reason of his or its being or having been a Beneficial Interest Holder and not because of his or its acts or omissions or some other reason, the Beneficial Interest Holder or former Beneficial Interest Holder (or his or its legal representatives or successors) shall be entitled to be indemnified and held harmless out of the Trust Estate against all loss and expenses arising from such liability. The Trust shall, upon request by the concerned Beneficial Interest Holder, assume the defense of any claim made against the Beneficial Interest Holder and (i) whether or not such request is made, pay in advance of any final disposition of such claims all costs of defense upon an undertaking by or on behalf of such Beneficial Interest Holder to repay such amount if it is ultimately determined that such Beneficial Interest Holder is not entitled to indemnification by the Trust, and (ii) satisfy any judgment thereon from the assets of the Trust. II-11 112 Subject to any express restrictions in the Declaration of Trust or adopted by the Managing Trustees, the Trust may enter into any contract or transaction of any kind (including without limitation, for the purchase or sale of property or for any type of services, including those in connection with underwriting or the offer of sale of securities of the Trust) with any person, including any Trustee, officer, employee or agent of the Trust or any person affiliated with a Trustee, officer, employee or agent of the Trust, whether or not any of them has a financial interest in such transaction. The Maine Business Corporation Act generally provides that a corporation must indemnify, if so provided in the bylaws of the corporation, any person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, if that person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, trustee, partner, fiduciary, employee or agent of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by that person in connection with such action, suit or proceeding; provided that no indemnification may be provided for any person with respect to any matter as to which that person shall have been fully adjudicated. A corporation may not indemnify any person with respect to any claim, issue or matter asserted by or in the right of the corporation as to which that person is finally adjudicated to be liable to the corporation unless the court in which the action, suit or proceeding was brought shall determine that, in view of all the circumstances of the case, that person is fairly and reasonably entitled to indemnity for such amounts as the court shall deem reasonable. Bangor Investment Company (a Maine corporation). The Articles of Incorporation of Bangor Investment Company, as amended, do not contain any indemnification provisions, however, the Bylaws provide that the company shall indemnify each present and future director and officer of the company (and his heirs, executors and administrators) against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a director or officer of the company, except in relation to matters as to which he shall be adjudged in such action, suit or proceeding to have been liable for negligence or misconduct in the performance of his duties as such director or officer. The North Carolina Business Corporation Act ("NCBCA") grants corporations the power to indemnify an individual made a party to a proceeding because he or she is or was a director against liability incurred in the proceeding if: (i) the director conducted himself or herself in good faith, (ii) he or she reasonably believed (a) if in the case of conduct in official capacity, the conduct was in the best interests of the corporation and (b) in all other cases, that the conduct was at the least not opposed to the best interests of the corporation, and (iii) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. A corporation may not indemnify a director (i) if the director was adjudged liable to the corporation, or (ii) if the director was adjudged liable on the basis that personal benefit was improperly received. The NCBCA mandates that unless limited by its articles of incorporation, a corporation must indemnity a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she is or was a director of the corporation against reasonable expenses incurred by the director in connection with the proceeding. In addition, the NCBCA generally provides that a corporation indemnify an officer to the same extent as a director. Beacon Manufacturing Company, Manetta Home Fashions, Inc. (each, a North Carolina corporation). The Articles of Incorporation, as amended, of both corporations provide that to the fullest extent permitted by law, no person who is serving or who has served as a director of the corporation shall be personally liable in any action for monetary damages for breach of his or her duty as a director, whether such action is brought by or in the right of the corporation or otherwise. The Bylaws for both corporations provide that any person who at any time serves or has served as a director or officer of the corporation or of any wholly owned subsidiary of the corporation, or in such capacity at the request of the corporation for any other foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or as a trustee or administrator under any employee benefit plan of the corporation or of II-12 113 any wholly owned subsidiary thereof (a "Claimant"), shall have the right to be indemnified and held harmless by the corporation to the fullest extent permitted by law against all liabilities and litigation expenses in the event a claim shall be made or threatened against that person in, or that person is made or threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by or on behalf of the corporation, including all appeals therefrom (a "proceeding"), arising out of such service; provided, that such indemnification shall not be effective with respect to (i) that portion of any liabilities or litigation expenses with respect to which the Claimant is entitled to receive payment under any insurance policy or (ii) any liabilities or litigation expenses incurred on account of any of the Claimant's activities which were at the time taken known or believed by the Claimant to be clearly in conflict with the best interests of the corporation. The corporation shall not be liable to indemnify the Claimant for any amounts paid in settlement of any proceeding effected without the corporation's written consent. The corporation will not unreasonably withhold its consent to any proposed settlement. Except as provided below, any litigation expenses shall be advanced to any Claimant within 30 days of receipt by the secretary of the corporation of a demand therefor, together with an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that the Claimant is entitled to be indemnified by the corporation against such expenses. The secretary shall promptly forward notice of the demand and undertaking immediately to all directors of the corporation. Within 10 days after mailing of notice to the directors, any disinterested director may, if desired, call a meeting of all disinterested directors to review the reasonableness of the expenses so requested. No advance shall be made if a majority of the disinterested directors affirmatively determines that the item of expense is unreasonable in amount; but if the disinterested directors determine that a portion of the expense item is reasonable, the corporation shall advance such portion. The board of directors may take action to advance any litigation expenses to a Claimant upon receipt of an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that the Claimant is entitled to be indemnified by the corporation against such expenses. No Claimant shall be entitled to bring suit against the corporation to enforce his rights under this Article until sixty days after a written claim has been received by the corporation, together with any undertaking to repay. Neither the failure of the corporation to determine that indemnification of the Claimant is proper, nor determination by the corporation that indemnification is not due shall be a defense to the action or create a presumption that the Claimant has not met the applicable standard or conduct. The right of indemnification provided herein or therein shall inure to the benefit of the legal representatives of any Claimant, and the right shall not be exclusive of any other rights to which the Claimant or legal representative may be entitled. The rights granted shall not be limited by the provisions of the NCBCA or any successor statute. The Tennessee Business Corporation Act grants corporations the power to indemnify an individual made a party to a proceeding because he or she is or was a director against liability incurred in the proceeding if: (i) the director conducted himself or herself in good faith, (ii) he or she reasonably believed (a) if in the case of conduct in official capacity, the conduct was in the best interests of the corporation and (b) in all other cases, that the conduct was at the least not opposed to the best interests of the corporation, and (iii) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. A corporation may not indemnify a director (i) if the director was adjudged liable to the corporation, or (ii) if the director was adjudged liable on the basis that personal benefit was improperly received. The Tennessee Business Corporation Act mandates that unless limited by its articles of incorporation, a corporation must indemnity a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she is or was a director of the corporation against reasonable expenses incurred by the director in connection with the proceeding. The Tennessee Business Corporation Act generally provides that a corporation indemnify an officer to the same extent as a director. Crestfield Cotton Company (a Tennessee corporation). The Charter of Crestfield Cotton Company, as amended, does not contain any indemnification provisions, however, the Bylaws, as amended, provide that the II-13 114 corporation shall indemnify each present and future director and officer of the corporation against, and each director or officer shall be entitled without further act to indemnity from the corporation for, all expenses (including counsel fees and the amount of judgments and the amount of reasonable settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the corporation itself) reasonably incurred in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of being or having been a director or officer. Provided, however, that the director or officer (i) conducted himself in good faith; and (ii) reasonably believed: (a) in the case of conduct in his official capacity with the corporation that his conduct was in its best interest; and (b) in all other cases, that his conduct was at least not opposed to the corporation's best interest; and (iii) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. However, the corporation shall not indemnify a director or officer in connection with: (i) a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (ii) in connection with any other proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. In addition, the corporation may pay for or reimburse the reasonable expenses incurred by an officer or director who is a party to a proceeding in advance of the final disposition of the proceeding if: (i) the director or officer furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct hereinbefore described; (ii) the director or officer furnishes the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he is not entitled to indemnification; and (iii) a determination is made that the facts then known to those making the determination would not preclude indemnification. The determination whether indemnification is permissible shall be made by (i) a majority vote of a quorum of the Board of Directors not parties to the proceeding; (ii) by majority vote of a committee duly designated by the Board of Directors consisting of two or more directors not parties to the proceeding; (iii) by independent special legal counsel selected by the Board of Directors, or its committee; or by the shareholders, except the shares owned or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination. In no event shall indemnification be made to, or on behalf of any director or officer if a judgment or final adjudication adverse to the director or officer establishes his liability (i) for any breach of the duty of loyalty to the corporation or its shareholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; or (iii) for any unlawful distributions from the corporation. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each director or officer and shall be in addition to all other rights to which the director or officer may be entitled as a matter of law. Tennessee Woolen Mills, Inc. (a Tennessee corporation). The Restated Charter of Tennessee Woolen Mills, Inc., as amended, provides that to the fullest extent permitted by the Tennessee Business Corporation Act, a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. If the Tennessee Business Corporation Act or any successor statute is amended after adoption of this provision to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Tennessee Business Corporation Act, as so amended from time to time. Any repeal or modification of this indemnification by the shareholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification or with respect to events occurring prior to such time. The Bylaws provide that any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action suit or proceeding, whether civil, criminal, administrative or investigative (including any action by or in the right of the corporation) by reason of the fact that he is or was serving as an officer or director of the corporation or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the corporation against expenses (including reasonable attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith for a purpose which he reasonably believed to be in the best interest of the II-14 115 corporation, and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful, to the maximum extent permitted by, and in the manner provided by, the Tennessee General Corporation Act. ITEM 21. EXHIBITS Pursuant to Item 601 of Regulation S-K, 17 C.F.R. sec. 229.601 (b) (4) (iii) (A), the Company has excluded from Exhibit No. 4 instruments defining the rights of holders of long-term debt with respect to debt that does not exceed 10% of the total assets of the Company. The Company agrees to furnish copies of such instruments to the Commission upon request.
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 2.1 -- Agreement and Plan of Merger, dated as of September 10, 1997, by and among Pillowtex Corporation, Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 2.1 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 2.2 -- Amendment to Agreement and Plan of Merger, dated as of September 23, 1997, by and among Pillowtex Corporation, Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 2.2 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 3.1 -- Restated Articles of Incorporation of Pillowtex Corporation, as amended (incorporated by reference to Exhibit 3.1 to Pillowtex Corporation's Current Report on Form 8-K No. 001-11756) filed on January 6, 1998) 3.2 -- Amended and Restated Bylaws of Pillowtex Corporation, as amended (incorporated by reference to Exhibit 3.2 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1994) 3.3 -- Restated Certificate of Incorporation of Fieldcrest Cannon, Inc., as amended (incorporated by reference to Exhibit 3.1 to Fieldcrest Cannon, Inc.'s Registration Statement on Form S-3 (No. 33-52325) filed on February 18, 1994) 3.4 -- Amended and Restated Bylaws of Fieldcrest Cannon, Inc., as amended (incorporated by reference to Exhibit 3.1 of Fieldcrest Cannon, Inc.'s Current Report on Form 8-K dated November 24, 1993) *3.5 -- Amended and Restated Certificate of Incorporation of Amoskeag Company *3.6 -- Bylaws of Amoskeag Company, as amended *3.7 -- Certificate of Incorporation of Amoskeag Management Corporation *3.8 -- Bylaws of Amoskeag Management Corporation *3.9 -- Articles of Incorporation of Bangor Investment Company, as amended *3.10 -- Bylaws of Bangor Investment Company *3.11 -- Articles of Amendment of Beacon Manufacturing Company *3.12 -- Amended and Restated Bylaws of Beacon Manufacturing Company *3.13 -- Charter of Crestfield Cotton Company, as amended *3.14 -- Bylaws of Crestfield Cotton Company, as amended *3.15 -- Certificate of Incorporation of Downeast Securities Corporation, as amended *3.16 -- Bylaws of Downeast Securities Corporation *3.17 -- Certificate of Incorporation of Encee, Inc. *3.18 -- Bylaws of Encee, Inc. *3.19 -- Certificate of Incorporation of FCC Canada, Inc. *3.20 -- Bylaws of FCC Canada, Inc.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS - --------- -------------------------------------------------------------------------------------------------------- *3.21 -- Certificate of Incorporation of Fieldcrest Cannon Financing, Inc. *3.22 -- Bylaws of Fieldcrest Cannon Financing, Inc. *3.23 -- Certificate of Incorporation Fieldcrest Cannon International, Inc., as amended *3.24 -- Bylaws of Fieldcrest Cannon International, Inc., as amended *3.25 -- Certificate of Incorporation of Fieldcrest Cannon Licensing, Inc. *3.26 -- Bylaws of Fieldcrest Cannon Licensing, Inc. *3.27 -- Certificate of Incorporation of Fieldcrest Cannon Sure Fit, Inc. *3.28 -- Bylaws of Fieldcrest Cannon Sure Fit, Inc. *3.29 -- Certificate of Incorporation of Fieldcrest Cannon Transportation, Inc. *3.30 -- Bylaws of Fieldcrest Cannon Transportation, Inc. *3.31 -- Articles of Incorporation of Manetta Home Fashions, Inc., as amended *3.32 -- Bylaws of Manetta Home Fashions, Inc. *3.33 -- Certificate of Incorporation of Moore's Falls Corporation, as amended *3.34 -- Bylaws of Moore's Falls Corporation *3.35 -- Certificate of Incorporation of Pillowtex, Inc. *3.36 -- Bylaws of Pillowtex, Inc. *3.37 -- Certificate of Trust of Pillowtex Management Services Company *3.38 -- Declaration of Trust of Pillowtex Management Services Company *3.39 -- Certificate of Trust of PTEX Holding Company *3.40 -- Bylaws of PTEX Holding Company *3.41 -- Certificate of Incorporation of St. Mary's, Inc. *3.42 -- Bylaws of St. Mary's, Inc. *3.43 -- Articles of Amendment to the Restated Charter of Tennessee Woolen Mills, Inc. *3.44 -- Bylaws of Tennessee Woolen Mills, Inc. *4.1 -- Indenture, dated as of December 18, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and Norwest Bank Minnesota, National Association, as Trustee *4.2 -- Supplemental Indenture, dated as of December 19, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and Norwest Bank Minnesota, National Association, as Trustee 4.3 -- Registration Rights Agreement, dated as of December 18, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.7 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 4.4 -- Registration Rights Agreement Supplement, dated as of December 19, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.8 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) *4.5 -- Form of 9% Senior Subordinated Note *4.6 -- Form of Guarantee **5.1 -- Opinion of Jones, Day, Reavis & Pogue regarding the legality of securities to be issued 9.1 -- Voting Agreement, dated as of October 2, 1997, by and between Pillowtex Corporation and Charles M. Hansen, Jr. (incorporated by reference to Exhibit 9.1 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 9.2 -- Voting Agreement, dated as of October 2, 1997, by and between Pillowtex Corporation, on the one hand, and Mary R. Silverthorne, the John H. Silverthorne Marital Trust B, and the John H. Silverthorne Family Trust A, on the other hand (incorporated by reference to Exhibit 9.2 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 10.1 -- Commitment Letter, dated September 10, 1997, by and between NationsBank of Texas, N.A. and Pillowtex Corporation (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K dated September 10, 1997, as amended by a Form 8-K/A (Amendment No. 1) dated September 10, 1997) 10.2 -- Registration Rights Agreement, dated as of November 12, 1996, by and among Pillowtex Corporation, each domestic subsidiary of Pillowtex Corporation, and NationsBanc Capital Markets, Inc., and Merrill Lynch, Pierce, Fenner & Smith, Incorporated (incorporated by reference to Exhibit 10.59 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.3 -- Restated Credit Agreement, dated as of November 12, 1996, by and among Pillowtex Corporation and NationsBank of Texas, N.A., as Agent for the Lenders specified therein (excludes Schedules) (incorporated by reference to Exhibit 10.60 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.4 -- Form of Swing-Line Note, dated as of November 12, 1996, by and among Pillowtex Corporation and NationsBank of Texas, N.A. (incorporated by reference to Exhibit 10.61 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.5 -- Form of Revolving Note, by and among Pillowtex Corporation and NationsBank of Texas, N.A. (incorporated by reference to Exhibit 10.62 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.6 -- Form of Restated Guaranty, by and among Beacon Manufacturing Company, Manetta Home Fashions, Inc., Tennessee Woolen Mills, Inc., Pillowtex, Inc., PTEX Holding Company, and Pillowtex Management Services Company as guarantors, NationsBank of Texas, N.A. as Agent, and Pillowtex Corporation as Borrower (incorporated by reference to Exhibit 10.63 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.7 -- Form of Restated Security Agreement, by and among Pillowtex Corporation as Debtor/Borrower, NationsBank of Texas, N.A. as Secured Party, and Beacon Manufacturing Company, Manetta Home Fashions, Inc., Tennessee Woolen Mills, Inc., Pillowtex, Inc., PTEX Holding Company, and Pillowtex Management Services Company as Subsidiary Debtors (incorporated by reference to Exhibit 10.64 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.8 -- Asset Purchase Agreement, dated as of October 3, 1996, by and among Pillowtex Corporation and Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 10.65 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.9 -- Mississippi Business Finance Corporation Industrial Development Variable Rate Demand Notes (Pillowtex Corporation Project) Series 1992 Loan Agreement, Indenture of Trust, Promissory Note, Remarketing and Interest Services Agreement, Placement Agreement, Deed of Trust and Security Agreement, Bond Fund Trustee Agreement, Reimbursement Agreement, and Lease Agreement (including First Amendment) (incorporated by reference to Exhibit 10.3 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.10 -- Second through Fourth Amendment to Mississippi Business Finance Corporation Industrial Development Variable Rate Demand Notes (Pillowtex Corporation Project) Loan Agreement (incorporated by reference to Exhibit 10.4 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 10.11 -- Deed of Trust (with Security Agreement and Assignment of Rents and Leases), dated as of July 15, 1988, between Pillowtex Corporation and Principal Mutual Life Insurance Company, as amended, Deed of Trust Note, and Loan Modification and Amendment Agreement (incorporated by reference to Exhibit 10.5 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.12 -- Second Loan Agreement Modification and Amendment Agreement dated as of January 19, 1993, between Pillowtex Corporation and Principal Mutual Life Insurance Company (incorporated by reference to Exhibit 10.6 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.13 -- Deed of Trust Note dated as of July 15, 1988, from Pillowtex Corporation to Principal Mutual Life Insurance Company (incorporated by reference to Exhibit 10.7 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.14 -- Loan and Security Agreement dated April 6, 1992, between MetLife Capital Corporation and Pillowtex Corporation, as amended, and including Term Note dated June 5, 1992 (incorporated by reference to Exhibit 10.8 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.15 -- Pennsylvania Economic Development Financing Authority ("PEDFA") Economic Development Revenue Bonds 1990 Series C (Silversen-Hanover Corporation Project), dated April 1, 1990, Indenture of Trust between PEDFA and First Pennsylvania Bank; Financing Agreement between PEDFA and Silversen-Hanover Corporation; Bond Placement Agreement among PEDFA, NCNB National Bank of North Carolina, and Silversen-Hanover Corporation; Reimbursement Agreement between Silversen-Hanover Corporation and NCNB National Bank of North Carolina; and Form of Bond (incorporated by reference to Exhibit 10.44 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.16 -- Distribution Agreement, dated February 1, 1995 by and among Beacon Manufacturing Company, Manetta Home Fashions, Inc.,Tennessee Woolen Mills, Inc., NEMCOR, Inc., Norm McIntyre, Tim McIntyre, and Don McIntyre (incorporated by reference to Exhibit 10.35 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.17 -- The Priorities Agreement, dated February 27, 1995, between Toronto Dominion Bank, Manetta Home Fashions, Inc., Tennessee Woolen Mills, Beacon Manufacturing Company, and NEMCOR, Inc. (incorporated by reference to Exhibit 10.36 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.18 -- A Guarantee, dated February 27, 1995, between Beacon Manufacturing Company, Manetta Home Fashions, Inc., Tennessee Woolen Mills, Inc., and NEMCOR, Inc. (incorporated by reference to Exhibit 10.37 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1994) 10.19 -- Security Agreement, dated February 16, 1995, between NEMCOR, Inc. and Manetta Home Fashions, Inc. (incorporated by reference to Exhibit 10.38 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.20 -- Security Agreement, dated February 16, 1995, between NEMCOR, Inc. and Tennessee Woolen Mills, Inc. (incorporated by reference to Exhibit 10.39 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.21 -- Security Agreement, dated February 16, 1995, between NEMCOR, Inc. and Beacon Manufacturing Company (incorporated by reference to Exhibit 10.40 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 10.22 -- Amended and Restated Acquisition Agreement, dated as of November 30, 1994, by and among David H. Murdock, Beacon Manufacturing Company, Wiscassett Mills Company, Pillowtex Corporation, Be-Ac, Inc., Realmac, Inc., and Wiscat, Inc. (incorporated by reference to Exhibit 10.41 to Pillowtex Corporation's Current Report on Form 8-K dated December 14, 1994) 10.23 -- Purchase agreement between Coopers & Lybrand and Torfeaco Industries Limited for certain assets, dated August 19, 1994 (incorporated by reference to Exhibit 10.42 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.24 -- Indenture dated as of February 1, 1994, by and among Torfeaco Industries Limited and Lodestone Investments Limited, Lese Holdings Limited, Golden Elms Limited, M. Swadron Limited, and Helsinor Investments Limited (incorporated by reference to Exhibit 10.29 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.25 -- Sublicense Agreement, dated as of July 1, 1995, between Pillowtex Corporation and the Ralph Lauren Home Collection (incorporated by reference to Exhibit 10 to Pillowtex Corporation's Quarterly on Form 10-Q for the quarter ended July 1, 1995) 10.26 -- Lease Agreement, dated as of September 18, 1995, between Pillowtex Corporation and Sanwa Business Credit Corp. (incorporated by reference to Exhibit 10.4 to Pillowtex Corporation's Quarterly Report on Form 10-Q, as amended for the quarter ended September 30, 1995) 10.27 -- Agreement of Lease, dated May 23, 1995, between Ten Seventy One Joint Venture and Pillowtex Corporation (incorporated by reference to Exhibit 10.66 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1995) 10.28 -- Lease, dated as of March 1, 1977, by and among Torfeaco Industries Limited and Standa Investment Limited, and Sharon Construction Limited (incorporated by reference to Exhibit 10.43 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.29 -- Industrial Lease, dated as of November 23, 1992, between Angel and Jean Echevarria and Pillowtex Corporation (incorporated by reference to Exhibit 10.21 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.30 -- Form of Lease, dated as of October 12, 1988, between Jimmie D. Smith, Jr. and Pillowtex Corporation (incorporated by reference to Exhibit 10.23 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.31 -- Form of Equipment Leasing Agreement between BTM Financial & Leasing Corporation B-4 and Beacon Manufacturing Company, Manetta Home Fashions, Inc., and Tennessee Woolen Mills, Inc., dated as of June 14, 1996 (without Exhibits) (incorporated by reference to Exhibit 10 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996) 10.32 -- Employment Agreement dated as of January 1, 1993, between Pillowtex Corporation and Charles M. Hansen, Jr. (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.33 -- Amendment to Employment Agreement, dated as of July 26, 1993, between Pillowtex Corporation and Charles M. Hansen, Jr. (incorporated by reference to Exhibit 10.26 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.34 -- Forms of Employment Agreement dated as of September 1, 1995, between Pillowtex Corporation and each of Christopher N. Baker, Jeffrey D. Cordes, and Scott E. Shimizu (incorporated by reference to Exhibits 10.1, 10.2, and 10.3 to Pillowtex Corporation's Quarterly Report on Form 10-Q, as amended, for the quarter ended September 30, 1995)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 10.35 -- Forms of Change of Control Agreement, dated as of September 1, 1995, between Pillowtex Corporation and each of Christopher N. Baker, Jeffrey D. Cordes, and Scott E. Shimizu (incorporated by reference to Exhibits 10.5, 10.6, and 10.7 to Pillowtex Corporation's Quarterly Report on Form 10-Q, as amended, for the quarter ended September 30, 1995) 10.36 -- Form of Confidentiality and Noncompetition Agreement (incorporated by reference to Exhibit 10.27 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.37 -- Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.36 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.38 -- Split Dollar Life Insurance Agreement between Pillowtex Corporation and Charles M. Hansen, Jr. dated July 26, 1993 (incorporated by reference to Exhibit 10.32 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.39 -- Pillowtex Corporation 1993 Stock Option Plan (incorporated by reference to Appendix A to Pillowtex Corporation's Proxy Statement relating to its Annual Meeting of Shareholders held on May 8, 1997) 10.40 -- Form of Employment Agreement entered into between Pillowtex Management Services Company and each of Christopher N. Baker, Jeffrey D. Cordes, Scott E. Shimizu, and John H. Karnes (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997) 10.41 -- Form of Guaranty Agreement dated as of April 22, 1997, between Pillowtex Corporation and each of Christopher N. Baker, Jeffrey D. Cordes, Scott E. Shimizu, Kevin M. Finlay, and John H. Karnes (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997) 10.42 -- Form of Employment Agreement dated as of April 11, 1997, between Pillowtex Management Services Company and Kevin M. Finlay (incorporated by reference to Exhibit 10.3 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997) 10.43 -- Pillowtex Corporation Supplemental Executive Retirement Plan, effective as of January 1, 1997 (incorporated by reference to Exhibit 10.1.44 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 33-36663) filed on September 29, 1997) 10.44 -- Pillowtex Corporation Management Incentive Plan (incorporated by reference to Appendix B to Pillowtex Corporation's Proxy Statement relating to its Annual Meeting of Shareholders held on May 8, 1997) 10.45 -- Amended and Restated Director Stock Option Plan of the Registrant approved by the stockholders of the Corporation on April 28, 1992 (incorporated by reference to Exhibit A to Fieldcrest Cannon, Inc.'s Proxy Statement relating to its Annual Meeting of Stockholders held on April 28, 1992) 10.46 -- Stock Option Agreement between Fieldcrest Cannon, Inc. and James M. Fitzgibbons, dated as of September 11, 1991 (incorporated by reference to Exhibit 4.1 to Fieldcrest Cannon, Inc.'s Registration Statement on Form S-8 (No. 33-44703) filed on December 23, 1991) 10.47 -- Employee Retention Agreement between Fieldcrest Cannon, Inc. and James M. Fitzgibbons, effective as of July 9, 1993 (incorporated by reference to Exhibit 10.2 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) 10.48 -- Instrument of Amendment, dated July 15, 1996 between Fieldcrest Cannon, Inc. and James M. Fitzgibbons (incorporated by reference to Exhibit 10.4 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.49 -- Employee Retention Agreement between Fieldcrest Cannon, Inc. and Robert E. Dellinger, effective as of July 9, 1993 (incorporated by reference to Exhibit 10.9 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1993)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 10.50 -- Instrument of Amendment, dated July 29, 1993 between Fieldcrest Cannon, Inc. and Robert E. Dellinger (incorporated by reference to Exhibit 10.10 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1993) 10.51 -- Instrument of Amendment, dated July 15, 1996 between Fieldcrest Cannon, Inc. and Robert E. Dellinger (incorporated by reference to Exhibit 10.7 Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.52 -- Employee Retention Agreement between Fieldcrest Cannon, Inc. and Thomas R. Staab, effective as of July 9, 1993 (incorporated by reference to Exhibit 10.8 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1995) 10.53 -- Instrument of Amendment, dated July 29, 1993 between Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated by reference to Exhibit 10.9 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1995) 10.54 -- Instrument of Amendment, dated July 15, 1996 between Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated by reference to Exhibit 10.10 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.55 -- Employee Retention Agreement between Fieldcrest Cannon, Inc. and John Nevin, effective as of October 3, 1996 (incorporated by reference to Exhibit 10.11 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.56 -- Form of Employee Retention Agreement between Fieldcrest Cannon, Inc. and other executive officers of Fieldcrest Cannon, Inc., effective as of July 9, 1993 (incorporated by reference to Exhibit 10.6 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) 10.57 -- Form of Instrument of Amendment, dated July 29, 1993 between Fieldcrest Cannon, Inc. and other executive officers of Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 10.7 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) 10.58 -- Form of Instrument of Amendment, dated July 15, 1996 between Fieldcrest Cannon, Inc. and other executive officers of Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 10.14 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.59 -- 1995 Employee Stock Option Plan of Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 4.1 of Fieldcrest Cannon, Inc.'s Registration Statement of Form S-8 (No. 33-59145) filed on May 8, 1995) 10.60 -- Yarn Purchase Agreement between Parkdale Mills, Incorporated and Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 10 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1996) 10.61 -- Amended and Restated Credit Agreement, dated as of December 19, 1997, among Pillowtex Corporation, certain Lenders named therein, and NationsBank of Texas, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 10.62 -- Term Credit Agreement, dated as of December 19, 1997, among Pillowtex Corporation, certain Lenders named herein, and NationsBank of Texas, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 10.63 -- Preferred Stock Purchase Agreement, dated as of September 10, 1997, by and among Pillowtex Corporation, Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo (UK) Partners III, L.P. (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Current Report on Form 8-K dated September 10, 1997, as amended by a Form 8-K/A (Amendment No. 1) dated September 10, 1997)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------- ----------------------- 10.64 -- Amendment No. 1 to the Preferred Stock Purchase Agreement, dated as of November 21, 1997, by and among Pillowtex Corporation, Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo (UK) Partners III, L.P. (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K dated November 21, 1997) 10.65 -- Purchase Agreement, dated December 15, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.5 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 10.66 -- Purchase Agreement Supplement, dated December 19, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and NationsBank Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.6 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 11.1 -- Fieldcrest Cannon, Inc.'s Computation of Primary and Fully Diluted Net Income Per Share (incorporated by reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 11.2 -- Fieldcrest Cannon, Inc.'s Computation of Primary and Fully Diluted Net Income Per Share (incorporated by reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997) *12.1 -- Statement regarding computation of ratios 16.1 -- Letter from Ernst & Young LLP (incorporated by reference to Exhibit 16.1 to Fieldcrest Cannon, Inc.'s Current Report on Form 8-K (No. 002-79328) filed on December 29, 1997) 21.1 -- List of Pillowtex Corporation's Principal Operating Subsidiaries (incorporated by reference to Exhibit 21.1 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 21.2 -- List of Fieldcrest Cannon, Inc.'s Principal Operating Subsidiaries (incorporated by reference to Exhibit 21 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 23.1 -- Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1) *23.2 -- Consent of KPMG Peat Marwick LLP *23.3 -- Consent of Ernst & Young LLP *24.1 -- Powers of Attorney *25.1 -- Statement of eligibility under the Trust Indenture Act of 1939 on Form T-1 *99.1 -- Form of Letter of Transmittal *99.2 -- Form of Notice of Guaranteed Delivery
- --------------- * Filed herewith + To be filed by amendment II-22 123 ITEM 22. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnifica- II-23 124 tion by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. (e) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (f) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-24 125 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Pillowtex Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. PILLOWTEX CORPORATION By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Chief Operating Officer, Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chairman of the Board and Chief Executive Officer; - --------------------------------------------- Director (Principal Executive Officer) Charles M. Hansen, Jr. * Director - --------------------------------------------- Christopher N. Baker * Director - --------------------------------------------- Kevin M. Finlay * Director - --------------------------------------------- Scott E. Shimizu * Director - --------------------------------------------- Mary R. Silverthorne * Director - --------------------------------------------- William B. Madden * Director - --------------------------------------------- M. Joseph McHugh * Director - --------------------------------------------- Paul G. Gillease * Director - --------------------------------------------- Ralph La Rovere
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-25 126 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Amoskeag Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. AMOSKEAG COMPANY By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-26 127 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Amoskeag Management Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. AMOSKEAG MANAGEMENT CORPORATION By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-27 128 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Bangor Investment Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. BANGOR INVESTMENT COMPANY By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Director - --------------------------------------------- Charles M. Hansen, Jr. * Vice President and Controller; Director - --------------------------------------------- Ronald M. Wehtje
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-28 129 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Beacon Manufacturing Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. BEACON MANUFACTURING COMPANY By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Chief Operating Officer, Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chairman of the Board and Chief Executive Officer; - --------------------------------------------- Director (Principal Executive Officer) Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-29 130 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Crestfield Cotton Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. CRESTFIELD COTTON COMPANY By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-30 131 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Downeast Securities Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. DOWNEAST SECURITIES CORPORATION By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-31 132 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Encee, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. ENCEE, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-32 133 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, FCC Canada, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FCC CANADA, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-33 134 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Fieldcrest Cannon, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FIELDCREST CANNON, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-34 135 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Fieldcrest Cannon Financing, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FIELDCREST CANNON FINANCING, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-35 136 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Fieldcrest Cannon International, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FIELDCREST CANNON INTERNATIONAL, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr. * Vice President and Controller; Director - --------------------------------------------- Ronald M. Wehtje
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-36 137 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Fieldcrest Cannon Licensing, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FIELDCREST CANNON LICENSING, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-37 138 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Fieldcrest Cannon Sure Fit, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FIELDCREST CANNON SURE FIT, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-38 139 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Fieldcrest Cannon Transportation, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. FIELDCREST CANNON TRANSPORTATION, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-39 140 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Manetta Home Fashions, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. MANETTA HOME FASHIONS, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Chief Operating Officer, Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chairman of the Board and Chief Executive Officer; - --------------------------------------------- Director (Principal Executive Officer) Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-40 141 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Moore's Falls Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. MOORE'S FALLS CORPORATION By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr. * Vice President and Controller; Director - --------------------------------------------- Ronald M. Wehtje
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-41 142 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Pillowtex, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. PILLOWTEX, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Chief Operating Officer, Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chairman of the Board and Chief Executive Officer; - --------------------------------------------- Director (Principal Executive Officer) Charles M. Hansen, Jr. * Resident Director - --------------------------------------------- Charles H. Slaybaugh
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-42 143 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Pillowtex Management Services Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. PILLOWTEX MANAGEMENT SERVICES COMPANY By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Managing Trustee Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Managing Trustee and President -- Manufacturing - --------------------------------------------- Division Christopher N. Baker * Managing Trustee - --------------------------------------------- Scott E. Shimizu
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-43 144 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, PTEX Holding Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. PTEX HOLDING COMPANY By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Chief Operating Officer, Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chairman of the Board and Chief Executive Officer; - --------------------------------------------- Director (Principal Executive Officer) Charles M. Hansen, Jr. * Resident Director - --------------------------------------------- Charles H. Slaybaugh
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-44 145 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, St. Marys, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. ST. MARYS, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chief Executive Officer and Director - --------------------------------------------- Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-45 146 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Tennessee Woolen Mills, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on February 11, 1998. TENNESSEE WOOLEN MILLS, INC. By /s/ JEFFREY D. CORDES ------------------------------------ Jeffrey D. Cordes President and Chief Operating Officer, Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on February 11, 1998.
SIGNATURES TITLE ---------- ----- * Chairman of the Board and Chief Executive Officer; - --------------------------------------------- Director (Principal Executive Officer) Charles M. Hansen, Jr.
The undersigned, by signing his name hereto, does sign and execute this Registration Statement pursuant to the Powers of Attorney executed on behalf of the above-named officers and directors and filed herewith. /s/ JEFFREY D. CORDES -------------------------------------- Jeffrey D. Cordes Attorney-in-Fact II-46 147 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 2.1 -- Agreement and Plan of Merger, dated as of September 10, NOT 1997, by and among Pillowtex Corporation, Pegasus Merger APPLICABLE Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 2.1 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 2.2 -- Amendment to Agreement and Plan of Merger, dated as of NOT September 23, 1997, by and among Pillowtex Corporation, APPLICABLE Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 2.2 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 3.1 -- Restated Articles of Incorporation of Pillowtex NOT Corporation, as amended (incorporated by reference to APPLICABLE Exhibit 3.1 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 3.2 -- Amended and Restated Bylaws of Pillowtex Corporation, as NOT amended (incorporated by reference to Exhibit 3.2 to APPLICABLE Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1994) 3.3 -- Restated Certificate of Incorporation of Fieldcrest NOT Cannon, Inc., as amended (incorporated by reference to APPLICABLE Exhibit 3.1 to Fieldcrest Cannon, Inc.'s Registration Statement on Form S-3 (No. 33-52325) filed on February 18, 1994) 3.4 -- Amended and Restated Bylaws of Fieldcrest Cannon, Inc., NOT as amended (incorporated by reference to Exhibit 3.1 of APPLICABLE Fieldcrest Cannon, Inc.'s Current Report on Form 8-K dated November 24, 1993) *3.5 -- Amended and Restated Certificate of Incorporation of Amoskeag Company *3.6 -- Bylaws of Amoskeag Company, as amended *3.7 -- Certificate of Incorporation of Amoskeag Management Corporation *3.8 -- Bylaws of Amoskeag Management Corporation *3.9 -- Articles of Incorporation of Bangor Investment Company, as amended *3.10 -- Bylaws of Bangor Investment Company *3.11 -- Articles of Amendment of Beacon Manufacturing Company *3.12 -- Amended and Restated Bylaws of Beacon Manufacturing Company *3.13 -- Charter of Crestfield Cotton Company, as amended *3.14 -- Bylaws of Crestfield Cotton Company, as amended *3.15 -- Certificate of Incorporation of Downeast Securities Corporation, as amended *3.16 -- Bylaws of Downeast Securities Corporation *3.17 -- Certificate of Incorporation of Encee, Inc. *3.18 -- Bylaws of Encee, Inc. *3.19 -- Certificate of Incorporation of FCC Canada, Inc. *3.20 -- Bylaws of FCC Canada, Inc. *3.21 -- Certificate of Incorporation of Fieldcrest Cannon Financing, Inc. *3.22 -- Bylaws of Fieldcrest Cannon Financing, Inc.
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER - --------- ------------------------------------------------------------------------------------- ----------------- *3.23 -- Certificate of Incorporation Fieldcrest Cannon International, Inc., as amended *3.24 -- Bylaws of Fieldcrest Cannon International, Inc., as amended *3.25 -- Certificate of Incorporation of Fieldcrest Cannon Licensing, Inc. *3.26 -- Bylaws of Fieldcrest Cannon Licensing, Inc. *3.27 -- Certificate of Incorporation of Fieldcrest Cannon Sure Fit, Inc. *3.28 -- Bylaws of Fieldcrest Cannon Sure Fit, Inc. *3.29 -- Certificate of Incorporation of Fieldcrest Cannon Transportation, Inc. *3.30 -- Bylaws of Fieldcrest Cannon Transportation, Inc. *3.31 -- Articles of Incorporation of Manetta Home Fashions, Inc., as amended *3.32 -- Bylaws of Manetta Home Fashions, Inc. *3.33 -- Certificate of Incorporation of Moore's Falls Corporation, as amended *3.34 -- Bylaws of Moore's Falls Corporation *3.35 -- Certificate of Incorporation of Pillowtex, Inc. *3.36 -- Bylaws of Pillowtex, Inc. *3.37 -- Certificate of Trust of Pillowtex Management Services Company *3.38 -- Declaration of Trust of Pillowtex Management Services Company *3.39 -- Certificate of Incorporation of PTEX Holding Company *3.40 -- Bylaws of PTEX Holding Company *3.41 -- Certificate of Incorporation of St. Mary's, Inc. *3.42 -- Bylaws of St. Mary's, Inc. *3.43 -- Articles of Amendment to the Restated Charter of Tennessee Woolen Mills, Inc. *3.44 -- Bylaws of Tennessee Woolen Mills, Inc. *4.1 -- Indenture, dated as of December 18, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and Norwest Bank Minnesota, National Association, as Trustee *4.2 -- Supplemental Indenture, dated as of December 19, 1997, among Pillowtex Corporation, the guarantors listed on the signature page thereto, and Norwest Bank Minnesota, National Association, as Trustee 4.3 -- Registration Rights Agreement, dated as of December 18, 1997, among Pillowtex NOT APPLICABLE Corporation, the guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.7 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 4.4 -- Registration Rights Agreement Supplement, dated as of December 19, 1997, among NOT APPLICABLE Pillowtex Corporation, the guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.8 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) *4.5 -- Form of 9% Senior Subordinated Note *4.6 -- Form of Guarantee **5.1 -- Opinion of Jones, Day, Reavis & Pogue regarding the legality of securities to be issued
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 9.1 -- Voting Agreement, dated as of October 2, 1997, by and NOT between Pillowtex Corporation and Charles M. Hansen, Jr. APPLICABLE (incorporated by reference to Exhibit 9.1 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 9.2 -- Voting Agreement, dated as of October 2, 1997, by and NOT between Pillowtex Corporation, on the one hand, and Mary APPLICABLE R. Silverthorne, the John H. Silverthorne Marital Trust B, and the John H. Silverthorne Family Trust A, on the other hand (incorporated by reference to Exhibit 9.2 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) filed on September 29, 1997) 10.1 -- Commitment Letter, dated September 10, 1997, by and NOT between NationsBank of Texas, N.A. and Pillowtex APPLICABLE Corporation (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K dated September 10, 1997, as amended by a Form 8-K/A (Amendment No. 1) dated September 10, 1997) 10.2 -- Registration Rights Agreement, dated as of November 12, NOT 1996, by and among Pillowtex Corporation, each domestic APPLICABLE subsidiary of Pillowtex Corporation, and NationsBanc Capital Markets, Inc., and Merrill Lynch, Pierce, Fenner & Smith, Incorporated (incorporated by reference to Exhibit 10.59 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.3 -- Restated Credit Agreement, dated as of November 12, 1996, NOT by and among Pillowtex Corporation and NationsBank of APPLICABLE Texas, N.A., as Agent for the Lenders specified therein (excludes Schedules) (incorporated by reference to Exhibit 10.60 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.4 -- Form of Swing-Line Note, dated as of November 12, 1996, NOT by and among Pillowtex Corporation and NationsBank of APPLICABLE Texas, N.A. (incorporated by reference to Exhibit 10.61 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.5 -- Form of Revolving Note, by and among Pillowtex NOT Corporation and NationsBank of Texas, N.A. (incorporated APPLICABLE by reference to Exhibit 10.62 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.6 -- Form of Restated Guaranty, by and among Beacon NOT Manufacturing Company, Manetta Home Fashions, Inc., APPLICABLE Tennessee Woolen Mills, Inc., Pillowtex, Inc., PTEX Holding Company, and Pillowtex Management Services Company as guarantors, NationsBank of Texas, N.A. as Agent, and Pillowtex Corporation as Borrower (incorporated by reference to Exhibit 10.63 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.7 -- Form of Restated Security Agreement, by and among NOT Pillowtex Corporation as Debtor/Borrower, NationsBank of APPLICABLE Texas, N.A. as Secured Party, and Beacon Manufacturing Company, Manetta Home Fashions, Inc., Tennessee Woolen Mills, Inc., Pillowtex, Inc., PTEX Holding Company, and Pillowtex Management Services Company as Subsidiary Debtors (incorporated by reference to Exhibit 10.64 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 10.8 -- Asset Purchase Agreement, dated as of October 3, 1996, by NOT and among Pillowtex Corporation and Fieldcrest Cannon, APPLICABLE Inc. (incorporated by reference to Exhibit 10.65 to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996) 10.9 -- Mississippi Business Finance Corporation Industrial NOT Development Variable Rate Demand Notes (Pillowtex APPLICABLE Corporation Project) Series 1992 Loan Agreement, Indenture of Trust, Promissory Note, Remarketing and Interest Services Agreement, Placement Agreement, Deed of Trust and Security Agreement, Bond Fund Trustee Agreement, Reimbursement Agreement, and Lease Agreement (including First Amendment) (incorporated by reference to Exhibit 10.3 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.10 -- Second through Fourth Amendment to Mississippi Business NOT Finance Corporation Industrial Development Variable Rate APPLICABLE Demand Notes (Pillowtex Corporation Project) Loan Agreement (incorporated by reference to Exhibit 10.4 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.11 -- Deed of Trust (with Security Agreement and Assignment of NOT Rents and Leases), dated as of July 15, 1988, between APPLICABLE Pillowtex Corporation and Principal Mutual Life Insurance Company, as amended, Deed of Trust Note, and Loan Modification and Amendment Agreement (incorporated by reference to Exhibit 10.5 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.12 -- Second Loan Agreement Modification and Amendment NOT Agreement dated as of January 19, 1993, between Pillowtex APPLICABLE Corporation and Principal Mutual Life Insurance Company (incorporated by reference to Exhibit 10.6 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.13 -- Deed of Trust Note dated as of July 15, 1988, from NOT Pillowtex Corporation to Principal Mutual Life Insurance APPLICABLE Company (incorporated by reference to Exhibit 10.7 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.14 -- Loan and Security Agreement dated April 6, 1992, between NOT MetLife Capital Corporation and Pillowtex Corporation, as APPLICABLE amended, and including Term Note dated June 5, 1992 (incorporated by reference to Exhibit 10.8 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.15 -- Pennsylvania Economic Development Financing Authority NOT ("PEDFA") Economic Development Revenue Bonds 1990 Series APPLICABLE C (Silversen-Hanover Corporation Project), dated April 1, 1990, Indenture of Trust between PEDFA and First Pennsylvania Bank; Financing Agreement between PEDFA and Silversen-Hanover Corporation; Bond Placement Agreement among PEDFA, NCNB National Bank of North Carolina, and Silversen-Hanover Corporation; Reimbursement Agreement between Silversen-Hanover Corporation and NCNB National Bank of North Carolina; and Form of Bond (incorporated by reference to Exhibit 10.44 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 10.16 -- Distribution Agreement, dated February 1, 1995 by and NOT among Beacon Manufacturing Company, Manetta Home APPLICABLE Fashions, Inc.,Tennessee Woolen Mills, Inc., NEMCOR, Inc., Norm McIntyre, Tim McIntyre, and Don McIntyre (incorporated by reference to Exhibit 10.35 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.17 -- The Priorities Agreement, dated February 27, 1995, NOT between Toronto Dominion Bank, Manetta Home Fashions, APPLICABLE Inc., Tennessee Woolen Mills, Beacon Manufacturing Company, and NEMCOR, Inc. (incorporated by reference to Exhibit 10.36 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.18 -- A Guarantee, dated February 27, 1995, between Beacon NOT Manufacturing Company, Manetta Home Fashions, Inc., APPLICABLE Tennessee Woolen Mills, Inc., and NEMCOR, Inc. (incorporated by reference to Exhibit 10.37 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1994) 10.19 -- Security Agreement, dated February 16, 1995, between NOT NEMCOR, Inc. and Manetta Home Fashions, Inc. APPLICABLE (incorporated by reference to Exhibit 10.38 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.20 -- Security Agreement, dated February 16, 1995, between NOT NEMCOR, Inc. and Tennessee Woolen Mills, Inc. APPLICABLE (incorporated by reference to Exhibit 10.39 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.21 -- Security Agreement, dated February 16, 1995, between NOT NEMCOR, Inc. and Beacon Manufacturing Company APPLICABLE (incorporated by reference to Exhibit 10.40 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.22 -- Amended and Restated Acquisition Agreement, dated as of NOT November 30, 1994, by and among David H. Murdock, Beacon APPLICABLE Manufacturing Company, Wiscassett Mills Company, Pillowtex Corporation, Be-Ac, Inc., Realmac, Inc., and Wiscat, Inc. (incorporated by reference to Exhibit 10.41 to Pillowtex Corporation's Current Report on Form 8-K dated December 14, 1994) 10.23 -- Purchase agreement between Coopers & Lybrand and Torfeaco NOT Industries Limited for certain assets, dated August 19, APPLICABLE 1994 (incorporated by reference to Exhibit 10.42 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994) 10.24 -- Indenture dated as of February 1, 1994, by and among NOT Torfeaco Industries Limited and Lodestone Investments APPLICABLE Limited, Lese Holdings Limited, Golden Elms Limited, M. Swadron Limited, and Helsinor Investments Limited (incorporated by reference to Exhibit 10.29 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.25 -- Sublicense Agreement, dated as of July 1, 1995, between NOT Pillowtex Corporation and the Ralph Lauren Home APPLICABLE Collection (incorporated by reference to Exhibit 10 to Pillowtex Corporation's Quarterly on Form 10-Q for the quarter ended July 1, 1995)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 10.26 -- Lease Agreement, dated as of September 18, 1995, between NOT Pillowtex Corporation and Sanwa Business Credit Corp. APPLICABLE (incorporated by reference to Exhibit 10.4 to Pillowtex Corporation's Quarterly Report on Form 10-Q, as amended for the quarter ended September 30, 1995) 10.27 -- Agreement of Lease, dated May 23, 1995, between Ten NOT Seventy One Joint Venture and Pillowtex Corporation APPLICABLE (incorporated by reference to Exhibit 10.66 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 30, 1995) 10.28 -- Lease, dated as of March 1, 1977, by and among Torfeaco NOT Industries Limited and Standa Investment Limited, and APPLICABLE Sharon Construction Limited (incorporated by reference to Exhibit 10.43 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.29 -- Industrial Lease, dated as of November 23, 1992, between NOT Angel and Jean Echevarria and Pillowtex Corporation APPLICABLE (incorporated by reference to Exhibit 10.21 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.30 -- Form of Lease, dated as of October 12, 1988, between NOT Jimmie D. Smith, Jr. and Pillowtex Corporation APPLICABLE (incorporated by reference to Exhibit 10.23 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.31 -- Form of Equipment Leasing Agreement between BTM Financial NOT & Leasing Corporation B-4 and Beacon Manufacturing APPLICABLE Company, Manetta Home Fashions, Inc., and Tennessee Woolen Mills, Inc., dated as of June 14, 1996 (without Exhibits) (incorporated by reference to Exhibit 10 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996) 10.32 -- Employment Agreement dated as of January 1, 1993, between NOT Pillowtex Corporation and Charles M. Hansen, Jr. APPLICABLE (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.33 -- Amendment to Employment Agreement, dated as of July 26, NOT 1993, between Pillowtex Corporation and Charles M. APPLICABLE Hansen, Jr. (incorporated by reference to Exhibit 10.26 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.34 -- Forms of Employment Agreement dated as of September 1, NOT 1995, between Pillowtex Corporation and each of APPLICABLE Christopher N. Baker, Jeffrey D. Cordes, and Scott E. Shimizu (incorporated by reference to Exhibits 10.1, 10.2, and 10.3 to Pillowtex Corporation's Quarterly Report on Form 10-Q, as amended, for the quarter ended September 30, 1995) 10.35 -- Forms of Change of Control Agreement, dated as of NOT September 1, 1995, between Pillowtex Corporation and each APPLICABLE of Christopher N. Baker, Jeffrey D. Cordes, and Scott E. Shimizu (incorporated by reference to Exhibits 10.5, 10.6, and 10.7 to Pillowtex Corporation's Quarterly Report on Form 10-Q, as amended, for the quarter ended September 30, 1995) 10.36 -- Form of Confidentiality and Noncompetition Agreement NOT (incorporated by reference to Exhibit 10.27 to Pillowtex APPLICABLE Corporation's Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 10.37 -- Form of Director Indemnification Agreement (incorporated NOT by reference to Exhibit 10.36 to Pillowtex Corporation's APPLICABLE Registration Statement on Form S-1 (No. 33-57314) filed on January 22, 1993) 10.38 -- Split Dollar Life Insurance Agreement between Pillowtex NOT Corporation and Charles M. Hansen, Jr. dated July 26, APPLICABLE 1993 (incorporated by reference to Exhibit 10.32 to Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993) 10.39 -- Pillowtex Corporation 1993 Stock Option Plan NOT (incorporated by reference to Appendix A to Pillowtex APPLICABLE Corporation's Proxy Statement relating to its Annual Meeting of Shareholders held on May 8, 1997) 10.40 -- Form of Employment Agreement entered into between NOT Pillowtex Management Services Company and each of APPLICABLE Christopher N. Baker, Jeffrey D. Cordes, Scott E. Shimizu, and John H. Karnes (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997) 10.41 -- Form of Guaranty Agreement dated as of April 22, 1997, NOT between Pillowtex Corporation and each of Christopher N. APPLICABLE Baker, Jeffrey D. Cordes, Scott E. Shimizu, Kevin M. Finlay, and John H. Karnes (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997) 10.42 -- Form of Employment Agreement dated as of April 11, 1997, NOT between Pillowtex Management Services Company and Kevin APPLICABLE M. Finlay (incorporated by reference to Exhibit 10.3 to Pillowtex Corporation's Quarterly Report on Form 10-Q for the quarter ended June 28, 1997) 10.43 -- Pillowtex Corporation Supplemental Executive Retirement NOT Plan, effective as of January 1, 1997 (incorporated by APPLICABLE reference to Exhibit 10.1.44 to Pillowtex Corporation's Registration Statement on Form S-4 (No. 33-36663) filed on September 29, 1997) 10.44 -- Pillowtex Corporation Management Incentive Plan NOT (incorporated by reference to Appendix B to Pillowtex APPLICABLE Corporation's Proxy Statement relating to its Annual Meeting of Shareholders held on May 8, 1997) 10.45 -- Amended and Restated Director Stock Option Plan of the NOT Registrant approved by the stockholders of the APPLICABLE Corporation on April 28, 1992 (incorporated by reference to Exhibit A to Fieldcrest Cannon, Inc.'s Proxy Statement relating to its Annual Meeting of Stockholders held on April 28, 1992) 10.46 -- Stock Option Agreement between Fieldcrest Cannon, Inc. NOT and James M. Fitzgibbons, dated as of September 11, 1991 APPLICABLE (incorporated by reference to Exhibit 4.1 to Fieldcrest Cannon, Inc.'s Registration Statement on Form S-8 (No. 33-44703) filed on December 23, 1991) 10.47 -- Employee Retention Agreement between Fieldcrest Cannon, NOT Inc. and James M. Fitzgibbons, effective as of July 9, APPLICABLE 1993 (incorporated by reference to Exhibit 10.2 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) 10.48 -- Instrument of Amendment, dated July 15, 1996 between NOT Fieldcrest Cannon, Inc. and James M. Fitzgibbons APPLICABLE (incorporated by reference to Exhibit 10.4 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 10.49 -- Employee Retention Agreement between Fieldcrest Cannon, NOT Inc. and Robert E. Dellinger, effective as of July 9, APPLICABLE 1993 (incorporated by reference to Exhibit 10.9 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1993) 10.50 -- Instrument of Amendment, dated July 29, 1993 between NOT Fieldcrest Cannon, Inc. and Robert E. Dellinger APPLICABLE (incorporated by reference to Exhibit 10.10 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1993) 10.51 -- Instrument of Amendment, dated July 15, 1996 between NOT Fieldcrest Cannon, Inc. and Robert E. Dellinger APPLICABLE (incorporated by reference to Exhibit 10.7 Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.52 -- Employee Retention Agreement between Fieldcrest Cannon, NOT Inc. and Thomas R. Staab, effective as of July 9, 1993 APPLICABLE (incorporated by reference to Exhibit 10.8 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1995) 10.53 -- Instrument of Amendment, dated July 29, 1993 between NOT Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated APPLICABLE by reference to Exhibit 10.9 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ending December 31, 1995) 10.54 -- Instrument of Amendment, dated July 15, 1996 between NOT Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated APPLICABLE by reference to Exhibit 10.10 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.55 -- Employee Retention Agreement between Fieldcrest Cannon, NOT Inc. and John Nevin, effective as of October 3, 1996 APPLICABLE (incorporated by reference to Exhibit 10.11 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.56 -- Form of Employee Retention Agreement between Fieldcrest NOT Cannon, Inc. and other executive officers of Fieldcrest APPLICABLE Cannon, Inc., effective as of July 9, 1993 (incorporated by reference to Exhibit 10.6 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) 10.57 -- Form of Instrument of Amendment, dated July 29, 1993 NOT between Fieldcrest Cannon, Inc. and other executive APPLICABLE officers of Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 10.7 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) 10.58 -- Form of Instrument of Amendment, dated July 15, 1996 NOT between Fieldcrest Cannon, Inc. and other executive APPLICABLE officers of Fieldcrest Cannon, Inc. (incorporated by reference to Exhibit 10.14 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 10.59 -- 1995 Employee Stock Option Plan of Fieldcrest Cannon, NOT Inc. (incorporated by reference to Exhibit 4.1 of APPLICABLE Fieldcrest Cannon, Inc.'s Registration Statement of Form S-8 (No. 33-59145) filed on May 8, 1995) 10.60 -- Yarn Purchase Agreement between Parkdale Mills, NOT Incorporated and Fieldcrest Cannon, Inc. (incorporated by APPLICABLE reference to Exhibit 10 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1996)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 10.61 -- Amended and Restated Credit Agreement, dated as of NOT December 19, 1997, among Pillowtex Corporation, certain APPLICABLE Lenders named therein, and NationsBank of Texas, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 10.62 -- Term Credit Agreement, dated as of December 19, 1997, NOT among Pillowtex Corporation, certain Lenders named APPLICABLE herein, and NationsBank of Texas, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 10.63 -- Preferred Stock Purchase Agreement, dated as of September NOT 10, 1997, by and among Pillowtex Corporation, Apollo APPLICABLE Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo (UK) Partners III, L.P. (incorporated by reference to Exhibit 10.2 to Pillowtex Corporation's Current Report on Form 8-K dated September 10, 1997, as amended by a Form 8-K/A (Amendment No. 1) dated September 10, 1997) 10.64 -- Amendment No. 1 to the Preferred Stock Purchase NOT Agreement, dated as of November 21, 1997, by and among APPLICABLE Pillowtex Corporation, Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo (UK) Partners III, L.P. (incorporated by reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K dated November 21, 1997) 10.65 -- Purchase Agreement, dated December 15, 1997, among NOT Pillowtex Corporation, the guarantors listed on the APPLICABLE signature page thereto, and NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.5 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 10.66 -- Purchase Agreement Supplement, dated December 19, 1997, NOT among Pillowtex Corporation, the guarantors listed on the APPLICABLE signature page thereto, and NationsBank Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.6 to Pillowtex Corporation's Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998) 11.1 -- Fieldcrest Cannon, Inc.'s Computation of Primary and NOT Fully Diluted Net Income Per Share (incorporated by APPLICABLE reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 11.2 -- Fieldcrest Cannon, Inc.'s Computation of Primary and NOT Fully Diluted Net Income Per Share (incorporated by APPLICABLE reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997) *12.1 -- Statement regarding computation of ratios earnings to fixed charges 16.1 -- Letter from Ernst & Young LLP (incorporated by reference NOT to Exhibit 16.1 to Fieldcrest Cannon, Inc.'s Current APPLICABLE Report on Form 8-K (No. 002-79328) filed on December 29, 1997) 21.1 -- List of Pillowtex Corporation's Principal Operating NOT Subsidiaries (incorporated by reference to Exhibit 21.1 APPLICABLE to Pillowtex Corporation's Form S-4 (No. 333-17731) filed on December 12, 1996)
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EXHIBIT NUMBER DESCRIPTION OF EXHIBITS PAGE NUMBER ------- ----------------------- ----------- 21.2 -- List of Fieldcrest Cannon, Inc.'s Principal Operating NOT Subsidiaries (incorporated by reference to Exhibit 21 to APPLICABLE Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1996) 23.1 -- Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1) *23.2 -- Consent of KPMG Peat Marwick LLP *23.3 -- Consent of Ernst & Young LLP *24.1 -- Powers of Attorney *25.1 -- Statement of eligibility under the Trust Indenture Act of 1939 on Form T-1 *99.1 -- Form of Letter of Transmittal *99.2 -- Form of Notice of Guaranteed Delivery
- --------------- * Filed herewith + To be filed by amendment II-56 EX-3.5 2 AMENDED & RESTATED CERT OF INCORP. OF AMOSKEAG CO. 1 EXHIBIT 3.5 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF AMOSKEAG COMPANY, a Delaware corporation Incorporated January 5, 1965 Pursuant to Section 242 and 245 of the General Corporation Law of the State of Delaware The undersigned, W. Randle Mitchell, Jr. and Samuel B. Bartlett, President and Secretary respectively, of AMOSKEAG COMPANY, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), do hereby certify as follows: FIRST. The name of the Corporation is Amoskeag Company which is the name under which the Corporation was originally incorporated. SECOND. The Corporation's original Certificate of Incorporation was initially filed with the Secretary of State of the State of Delaware on January 5, 1965. Certificates of Amendment thereto were filed with the Secretary of State of the State of Delaware on May 9, 1980, December 2, 1980 and July 27, 1984. A Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 27, 1987. THIRD. The text of the Certificate of Incorporation of the Corporation, as heretofore restated and amended, is hereby further amended pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware to read in its entirety as follows: 1. The name of the Corporation is: AMOSKEAG COMPANY. 2. The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business or purposes to be conducted or promoted by the Corporation is as follows: -1- 2 To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. 4. The total number of shares of stock which the Corporation shall have authority to issue is 1,000 shares of Common Stock, $.01 par value per share. 5. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware. 6. In furtherance of and not in limitation of powers conferred by statute, it is further provided: A. Election of directors need not be by written ballot. B. The Board of Directors is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation. 7. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of -2- 3 stockholders, of this Corporation, as the case may be, and also on this Corporation. 8. Except to the extent that the General Corporation Law of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment. 9. The Corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom. With respect to any action, suit, proceeding or investigation for which indemnity will or could be sought, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the person seeking indemnification. In the event that the Corporation does not assume the defense of any action, suit, proceeding or investigation for which indemnity will or could be sought, any expenses (including attorneys' fees) incurred by the person seeking indemnification in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter upon receipt of an undertaking by the person indemnified to repay such payment if it is ultimately determined that such person is not entitled to indemnification under this Article, which -3- 4 undertaking may be accepted without reference to the financial ability of such person to make such repayment. The Corporation shall not indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person unless the initiation thereof was approved by the Board of Directors of the Corporation. The indemnification rights provided in this Article (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of such persons. The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than those set forth in this Article. 10. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. EXECUTED at Boston, Massachusetts on November 28th, 1993. /s/ W. RANDLE MITCHELL, JR. ------------------------------------- W. Randle Mitchell, Jr. President and Chief Executive Officer ATTEST: /s/ SAMUEL B. BARTLETT - --------------------------- Samuel B. Bartlett Secretary -4- EX-3.6 3 BY-LAWS OF AMOSKEAG COMPANY AS AMENDED 1 EXHIBIT 3.6 AMOSKEAG COMPANY (a Delaware Corporation) BY-LAWS As Adopted January 7, 1965 As Amended May 13, 1966 As Amended January 13, 1971 As Amended November 29, 1972 As Amended March 9, 1977 As Amended January 5, 1978 As Amended February 26, 1980 As Amended July 8, 1986 As Amended April 27, 1987 2 BY-LAWS OF AMOSKEAG COMPANY TABLE OF CONTENTS Page ---- ARTICLE I Certificate of Incorporation 1 ARTICLE II Annual Meeting 1 ARTICLE III Special Meetings of Stockholders 2 ARTICLE IV Notice of Stockholders' Meetings 2 ARTICLE V Quorum of Stockholders 2 ARTICLE VI Proxies and Voting 3 ARTICLE VII Board of Directors 4 ARTICLE VIII Powers of Directors 5 ARTICLE IX Executive Committee 6 ARTICLE X Meetings of the Board of Directors 7 ARTICLE XI Quorum of the Board of Directors 8 ARTICLE XII Officers and Agents 8 ARTICLE XIII President and Chairman and Vice Chairman of the Board 9 ARTICLE XIV Vice Presidents 9 ARTICLE XV Secretary 10 ARTICLE XVI Treasurer 10 ARTICLE XVII Removals 11 ARTICLE XVIII Vacancies 11 ARTICLE XIX Capital Stock 11 ARTICLE XX Certificate of Stock 12 ARTICLE XXI Transfer of Shares of Stock 12 ARTICLE XXII Record Date 13 ARTICLE XXIII Loss of Certificate 14 ARTICLE XXIV Seal 14 ARTICLE XXV Execution of Papers 14 ARTICLE XXVI Fiscal Year 14 ARTICLE XXVII Amendments 15 3 BY-LAWS OF AMOSKEAG COMPANY ARTICLE I Certificate of Incorporation The name, location of principal office and purposes of the Corporation shall be as set forth in its Certificate of Incorporation. These By-laws, the powers of the Corporation and of its Directors and stockholders, and all matters concerning the conduct and regulation of the business of the Corporation shall be subject to such provisions in regard thereto, if any, as are set forth in said Certificate of Incorporation. The Certificate of Incorporation is hereby made a part of these By-laws. All references in these By-laws to the Certificate of Incorporation shall be construed to mean the Certificate of Incorporation of the Corporation as from time to time amended and restated, including (unless the context shall otherwise require) all certificates and any agreement of consolidation or merger filed pursuant to the Delaware General Corporation Law, as amended. ARTICLE II Annual Meeting The annual meeting of stockholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held at twelve o'clock noon on such day not a legal holiday in April each year and in Boston, Massachusetts, at such place within said municipality as such day and place may from time to time be fixed by the Board of Directors and stated in the notice of the meeting. Purposes for which the annual meeting is to be held additional to those prescribed by law, by the Certificate of Incorporation and by these By-laws may be specified, prior to the giving of notice of said meeting, by resolution of the Board of Directors or by a writing filed with the Secretary signed by the President or by a majority of the Directors. If the election for Directors shall not be held on the day designated for the annual meeting, the Directors shall cause the election to be held as soon thereafter as convenient, at a special meeting of stockholders called for the purpose of holding such election. 4 ARTICLE III Special Meetings of Stockholders Special meetings of stockholders may be held either within or without the State of Delaware,at such time and place and for such purposes as shall be specified in a call for such meeting made by resolution of the Board of Directors or by a writing filed with the Secretary signed by the President or a majority of the Directors. ARTICLE IV Notice of Stockholders' Meetings Except as otherwise required by law or by other provisions of these By-laws, a written or printed notice of each meeting of stockholders, stating the place, day and hour thereof and the purposes for which the meeting is called, shall be given by or under the direction of the Secretary, at least ten days and not more than sixty days before the date fixed for such meeting, to each stockholder entitled to vote at such meeting, by leaving such notice with him or at his residence or usual place of business or by mailing it, postage prepaid and addressed to him at his post office address as it appears on the books of the Corporation. In the case of the death, absence, incapacity or refusal of the Secretary, such notice may be given by a person designated either by the Secretary or by the person or persons calling the meeting or by the Board of Directors. A waiver of such notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice, and no notice need be given to any person who may become a stockholder of record after such mailing of such notice and prior to such meeting or to any person with whom communication is made unlawful by any law of the United States of America, or any rule, regulation, proclamation or executive order issued under any such law. Except as required by law, notice of any adjourned meeting of the stockholders shall not be required. An affidavit of the Secretary or an Assistant Secretary or the transfer agent of the Corporation that notice of a stockholders' meeting has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. ARTICLE V Quorum of Stockholders At any meeting of stockholders a majority of the holders of all classes of common stock then issued and outstanding shall constitute a quorum when represented at such meeting by the holders thereof in person or by their duly constituted and -2- 5 authorized attorneys, but a lesser interest may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice when a quorum is present at any meeting, a majority of the stock so represented thereat and entitled to vote shall, except where a larger vote is required by law, by the Certificate of Incorporation, or by these By-laws, decide any question brought before such meeting. ARTICLE VI Proxies and Voting Except as otherwise provided in the Certificate of Incorporation, each stockholder when entitled to vote shall have one vote in person or by proxy for each share of Common Stock held by such stockholder and ten votes in person or by proxy for each share of Class B Common Stock held by such stockholder, but no proxy shall be voted after three years from its date, unless the proxy provides for a longer period, and, except where the transfer books of the Corporation shall have been closed or a date shall have been fixed as a record date for the determination of the stockholders entitled to vote, as provided by Article XXII of these By-laws, no share of stock shall be voted at any election for Directors which shall have been transferred on the books of the Corporation within twenty days next preceding such election of Directors. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee or his proxy may represent said stock and vote thereon. Shares of the capital stock of the Corporation belonging to the Corporation shall not be voted, directly or indirectly. The Secretary or other officer who has charge of the stock ledger shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders of each class entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of least ten days prior to the meeting, either at place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine such list or the books of -3- 6 the Corporation, or to vote in person or by proxy at any meeting of stockholders. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting of less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE VII Board of Directors The Board of Directors for each corporate year shall consist of such number, not fewer than nine nor more than fifteen, of members as may be fixed by the stockholders at the annual meeting held in such year and shall be divided into three classes as nearly equal in number as may be. The Directors elected at the meetings of stockholders held in 1970, 1971 and 1972 for the purpose of electing Directors shall be Directors of the first class, the second class and the third class, respectively. The term of office of each class of Directors shall expire at the annual meeting held in the third corporate year following that in which the members, other than members elected to fill an enlarged number of Directors, of such class were elected, provided that the term of office of Directors in office on the effective date of this Article shall continue until the original expiration date. During any year the Board of Directors may be enlarged and additional Directors elected to complete the enlarged number, to not more than the maximum number above specified, by the stockholders at any meeting, and the stockholders may, at any meeting held for the purpose during such year, decrease, to not fewer than the minimum number above specified, the number of Directors as thus fixed or enlarged and remove Directors to the decreased number, provided, that any such enlargement or decrease shall maintain as nearly equal number of Directors of each class as may be. The class to which each person elected a Director shall belong shall be specified by the vote by which he shall be elected. Directors shall be chosen by stockholders entitled to vote for the election of Directors; such choice need not be made by ballot. Directors need not be stockholders. Each Director shall hold office, subject to the provisions of Article XVII of these By-laws and to any power of removal otherwise conferred -4- 7 by law upon the stockholders, for the term of the class to which he belongs and until his successor shall have been elected and qualified. ARTICLE VIII Powers of Directors The business of the Corporation shall be managed under the direction of the Board of Directors which shall have and may exercise all the powers of the Corporation except as otherwise provided in the Certificate of Incorporation or the By-laws. The Board of Directors may, by resolution passed by a majority of all the Directors then in office, designate one or more committees. In addition to the Executive Committee provided for in Article IX of these By-laws, each committee to consist of two or more of the Directors of the Corporation, which, to the extent provided in the said resolution or in other provisions of the By-laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. In the absence or disqualification of any member of any such committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as shall be determined from time to time by resolution adopted by the Board of Directors. Each committee shall appoint a secretary, who need not be a member and who shall keep regular minutes of the actions of said committee, and report the same to the Board of Directors. The Board of Directors may determine the place or places, within or without the State of Delaware, at which the Corporation shall have an office or offices, in addition to its principal office. Each Director and each member of any committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or reports made to the Corporation by any of its officers, or by an independent certified public accountant, or by an appraiser selected with reasonable care by the Board of Directors or by any such committee, or in relying in good faith upon other records of the Corporation. -5- 8 ARTICLE IX Executive Committee The Board of Directors may, by resolution or resolutions passed by a majority of all the Directors then in office, designate not fewer than three nor more than nine of their number, of whom the Chairman of the Board, if any, and the President shall be members, to constitute an Executive Committee. The Board of Directors, by like resolution or resolutions, may appoint alternate members of the Executive Committee to serve in the temporary absence or disability of any member, may at any time, without notice and with or without cause, dissolve the Executive Committee, remove any member (except the Chairman and the President) or alternate member of the Executive Committee, and may elect another member or appoint another alternate in place of the member or alternate so removed. In all cases in which specific directions shall not have been given by the Board of Directors, the Executive Committee shall have and may exercise all of the Powers of the Board of Directors, so far as may be permitted by law, in the management of the business and affairs of the Corporation whenever the Board of Directors is not in session and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it; but the Executive Committee shall not have power to fill vacancies in the Board of Directors or to change or fill vacancies in its membership or to make or amend the By-laws, nor shall it have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the By-laws. The Executive Committee may declare a dividend. The Executive Committee shall not have the power to authorize the issuance of stock. The fact that the Executive Committee has acted shall be conclusive evidence that the Board of Directors was not in session at the time of such action and had not theretofore given specific directions with respect to the matters concerning which the Executive Committee took action, unless actual notice to the contrary shall have been given. To the extent permitted by law and the By-laws, the Board of Directors may delegate to the Executive Committee any or all of the powers of the Board of Directors in the management of the business and affairs of the Corporation and may from time to time expand, modify, curtail or restrict the powers so delegated. The Executive Committee shall report its acts and proceedings to the Board of Directors at the next succeeding meeting of the Board and at such other time or times as the Board of Directors shall request. - 6 - 9 The Executive Committee may meet at stated times, or upon not less than twenty-four hours notice given to all by any one of its members in person or in the manner provided for notice to Directors in Article X of the By-laws. Attendance of a member at a meeting shall constitute a waiver of notice of such meeting, except when such member attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. The Executive Committee shall choose its own chairman and shall fix its own rules of procedure and shall meet at such times and at such place or places as may be provided by such rules or by resolution of the Executive Committee or of the Board of Directors. The Executive Committee shall appoint a secretary, who shall keep regular minutes of the actions of the committee, and report the same to the Board of Directors. At every meeting of the Executive Committee, the presence of a majority of all members shall be necessary to constitute a quorum and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolutions. ARTICLE X Meetings of the Board of Directors Regular meetings of the Board of Directors may be held, without call or formal notice, at the principal place of business of the Corporation or at such other offices or places, within or without the State of Delaware, as the Board may by vote from time to time determine. A regular meeting of the Board of Directors may be held without call or formal notice immediately after and at the same place as the annual meeting of the stockholders, or the special meeting of the stockholders held in place of such annual meeting. If a meeting day falls on a legal holiday, the meeting shall be held the next following business day. Special meetings of the Board of Directors may be held at any place either within or without the State of Delaware at any time when called by the Chairman of the Board, the President, or two or more Directors, reasonable notice of the time and place thereof being given to each Director. A waiver of such notice in writing, signed by the Director or Directors entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice and no notice need be given to any person with whom communication is made unlawful by any law of the United States of America, or, by any rule, regulation, proclamation or executive order issued under any such law. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except when such Director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or - 7 - 10 convened. No notice of any adjourned meeting of the Directors shall be required. In any case, it shall be deemed sufficient notice to a Director to send notice by mail at least forty-eight hours, or to deliver personally or to send notice by written wire communication at least twenty-four hours, before the meeting, addressed to him at his usual or last known business or residence address. Unless otherwise restricted by the Certificate of Incorporation or By-laws, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at such meeting. Unless otherwise restricted by the Certificate of Incorporation or by other provisions of these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or committees. ARTICLE XI Quorum of the Board of Directors A majority of all the Directors at the time in office shall constitute a quorum for the transaction of business at any meeting, but a lesser number may adjourn any meeting, from time to time. When a quorum is present at any meeting, a majority of the Directors present thereat shall, except where a larger vote is required by law, the Certificate of Incorporation, or the By-laws, decide any question brought before such meeting. ARTICLE XII Officers and Agents The Corporation shall have a President, a Secretary and a Treasurer and have a Chairman and Vice Chairman of the Board or Directors, all of whom shall be chosen by the Directors and shall hold their offices, subject to these By-laws, until their respective successors are chosen and qualify. The President, any Chairman and any Vice Chairman of the Board of Directors shall be chosen from among the Directors. No other officer need be a Director and no officer need be a stockholder. The Corporation may have such other officers and agents, including but not limited to one or more Vice Presidents, as are necessary, who shall be chosen by the Board of Directors upon - 8 - 11 nomination by the President, which nomination shall determine the necessity of such office. Each of such other officer and agent shall hold his office for such term and shall have such authority and duties as may be determined by the Board of Directors upon recommendation of the President. The Board of Directors may secure the fidelity of any or all of such officers by bond or otherwise. Any two or more offices may be held by the same person, provided, however, that neither the Chairman nor the President may be the Secretary or the Treasurer. ARTICLE XIII President and Chairman and Vice Chairman of the Board The President shall be the Chief Executive Officer of the Corporation and shall have general supervision and control of it's affairs and business and over its agents and employees, unless the Board of Directors designates the Chairman of the Board as Chief Executive Officer, in which event the president shall have such duties as the Board of Directors prescribes. In case of the death, incapacity or absence of the officer having the responsibilities of Chief Executive Officer, that is the President or the Chairman of the Board, as the case may be, the other such officer shall assume the responsibilities of the Chief Executive Officer until action of the Board of Directors. In case of the death, incapacity or absence of both the President and Chairman of the Board, the Vice Chairman of the Board shall assume their duties and responsibilities until action of the Board of Directors. If there shall be no Chairman or Vice Chairman of the Board, or in their absence, the President shall preside at all meetings of the Directors and stockholders. The President shall have custody of the Treasurer's bond, if any. If there shall be a Chairman of the Board, he shall make his counsel available to the officers of the Corporation and shall have such other duties and powers as may from time to time be conferred upon him by the Directors, and he shall preside at all meetings of the stockholders and of the Directors at which he is present. Except as herein provided, the Vice Chairman of the Board of Directors, if any, shall assume the duties of the Chairman in his absence or incapacity and shall have such other duties and powers as may from time to time be conferred upon him by the Board of Directors. ARTICLE XIV Vice Presidents The Vice Presidents, if any, shall perform such duties as may be assigned by the officer acting as Chief Executive Officer or the Board of Directors. - 9 - 12 ARTICLE XV Secretary The Secretary shall have charge of the seal of the Corporation and of the stock ledger (which nay, however, be kept by any transfer agent or agents of the Corporation under the direction of the Secretary). The Secretary shall attend to the giving of notices required by the By-laws, except as otherwise provided in the By-laws, and shall have the duty to record all proceedings of the meetings of the stockholders and Directors in a book or books, which shall be the property of the Corporation to be kept for that purpose at one of the offices of the Corporation, and shall have such further powers and perform such other duties as may be from time to time prescribed by the Board of Directors or the officer acting as Chief Executive Officer. If the Secretary is absent or unavailable, any Assistant Secretary shall have the duties and powers of the Secretary and shall have such further duties and powers as the Board of Directors or the officer acting as Chief Executive-Officer shall from time to time determine. ARTICLE XVI Treasurer The Treasurer shall, unless the Board of Directors makes a different designation, be the Chief Financial Officer of the Corporation and shall have the care and custody of all funds, securities, evidences of indebtedness and other personal property of the Corporation and shall deposit the same in accordance with the instructions of the Board of Directors. He shall receive and give receipts and discharges for moneys paid in on account of the Corporation and shall pay out of the funds on hand all bills, payrolls and other just debts of the Corporation of whatever nature upon maturity of the same. He shall perform all other duties incident to the office of the Treasurer and shall make such reports to the Board of Directors and to the officer acting as Chief Executive Officer as may be required by the Board or such officer at any time. The Treasurer shall have such further powers and perform such other duties as may be from time to time prescribed by the Board of Directors or the officer acting as Chief Executive Officer. If the Treasurer is absent or unavailable, any Assistant Treasurer shall have the duties and powers as the Board of Directors or the officer acting as Chief Executive officer shall from time to time determine. - 10 - 13 ARTICLE XVII Removals The stockholders may, at any meeting called for the purpose, by vote of a majority of the capital stock issued and outstanding and entitled to vote thereon, remove any Director from office. The Board of Directors may at any meeting called for the purpose, by vote of a majority of their entire number, remove from office any officer, agent or factor of the Corporation or any member of any committee appointed by the Board of Directors or by any committee appointed by the Board of Directors or by any officer, agent or factor of the Corporation. ARTICLE XVIII Vacancies Except as otherwise provided by law, vacancies occurring in the office of Director shall be filled by a majority of Directors then in office, though less than a quorum, and the Directors so chosen shall hold office until the next annual election of the class for which each such Director has been chosen and until his successor is duly elected and qualified, unless sooner displaced, provided that immediately after filling any such vacancy at least two-thirds of the Directors then holding office shall have been elected to such office by the stockholders of the Corporation at an annual or special meeting of the stockholders called for that purpose. In the event that, at any time, less than a majority of the Directors holding office at that time were so elected by the stockholders' the Board of Directors shall forthwith cause to be held as promptly as possible, and in any event within sixty days, a meeting of stockholders for the purpose of electing Directors to fill any existing vacancies in the Board of Directors. Any vacancy occurring in the office of President, Secretary or Treasurer or in any other office by death, resignation, removal or otherwise, shall be filled by the Board of Directors and the officers so chosen shall hold office for the unexpired term in respect of which the vacancy occurred and until their successors shall be duly elected and qualified. ARTICLE XIX Capital Stock The amount of the capital stock and the par value, if any, of the shares shall be fixed in the Certificate of incorporation. At all times, when there are two or more classes of stock or one or more series within any class - 11 - 14 thereof, the several classes and series shall have the respective voting powers, if any, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations and restrictions thereof, stated and expressed in the Certificate of Incorporation or in the resolution or resolutions providing for the issue of such stock or series adopted by the Board of Directors pursuant to authority expressly vested in it by the provisions of the Certificate of Incorporation. Except as otherwise provided in the Certificate of Incorporation, the Directors may, at any time and from time to time, if all of the shares of capital stock which the Corporation is authorized by its Certificate of Incorporation to issue have not been issued, subscribed for, or otherwise committed to be issued, issue or take subscriptions for additional shares of its capital stock up to the amount authorized in its Certificate of Incorporation. Such stock shall be issued and the consideration paid therefor in the manner prescribed by law. ARTICLE XX Certificate of Stock Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer, transfer agent or registrar of the Corporation, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered by the Corporation with the same effect as if he were such officer, transfer agent, or registrar on the date of issue. Certificates of stock shall be in such form as shall, in conformity to law, be prescribed from time to time by the Board of Directors. ARTICLE XXI Transfer of Shares of Stock Subject to the restrictions, if any, imposed by the Certificate of Incorporation, and to the provisions of the General Corporation Law of the State of Delaware and cognate acts in amendment thereof, supplemental thereto or in - 12 - 15 substitution therefor, title to a certificate of shares of stock of the Corporation and shares represented thereby shall be transferable only (a) by delivery of the certificate endorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby or (b) by delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign or transfer the same or the shares represented thereby, signed by the person appearing by the certificate to be the owner of the shares represented thereby. Such assignment or power of attorney may be either in blank or to a specific person. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. The Corporation and its transfer agent and registrars, if any, shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes except as otherwise expressly provided by the Certificate of Incorporation and the laws of the State of Delaware. ARTICLE XXII Record Date In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. If no record date is fixed by the Board of Directors: (a) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (b) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of - 13 - 16 Directors is necessary, shall be the day on which the first written consent is expressed. (c) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. ARTICLE XXIII Loss of Certificates In case of the alleged loss or destruction or the mutilation of a certificate of stock, a new certificate of stock may be issued in the place thereof, upon such terms in conformity with law as the Board of Directors may prescribe. ARTICLE XXIV Seal The corporate seal of the Corporation shall, subject to alteration by the Board of Directors, consist of a flat-faced circular die with the word "Delaware, together with the name of the Corporation and the year of its organization, cut or engraved thereon. The corporate seal of the Corporation may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE XXV Execution of Papers Except as otherwise provided in these By-Laws or as the Board of Directors may generally or in particular cases otherwise determine, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations authorized to be executed on behalf of the Corporation, shall be signed by the President or by the Treasurer. ARTICLE XXVI Fiscal Year Except as from time to time otherwise provided by the Board of Directors, the fiscal year of the Corporation shall be the calendar year. - 14 - 17 ARTICLE XXVII Amendments Except as in the Certificate of Incorporation or in these By-laws or otherwise expressly provided by law, these By-laws, as from time to time altered and amended, may be altered, amended or repealed at any annual or special meeting of the stockholders called for the purpose, of which the notice shall specify the subject matter of the proposed alteration, amendment or repeal, or the articles to be affected thereby, or at any meeting of the Board of Directors, provided, however, that, except as from time to time otherwise provided by law, neither the time nor the place for the election of Directors shall be changed within sixty days next before the day on which any election of Directors is to be held, and provided, further, that a notice of any such change shall be given to each stockholder twenty days before the election is held, in person or by letter mailed to his last known post office address and provided, further, that the power of the Board of Directors to amend these By-laws shall not extend to Article VII or to Article XVII. - 15 - EX-3.7 4 CERT OF INCORP. OF AMOSKEAG MANAGEMENT CORPORATION 1 EXHIBIT 3.7 CERTIFICATE OF INCORPORATION OF AMOSKEAG MANAGEMENT CORPORATION FIRST. The name of the corporation is AMOSKEAG MANAGEMENT CORPORATION. SECOND. The address of its registered office in the State of Delaware is Corporation Trust Center No. 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The total number of shares of stock which the corporation shall have authority to issue is two thousand (2,000) shares of common stock without par value. The following restrictions are imposed upon the transfer of shares of the capital stock of the corporation: The corporation shall have the right to purchase, or to direct the transfer of, the shares of its capital stock in the events and subject to the conditions and at a price fixed as provided below; each holder of shares of such 2 capital stock holds his shares subject to this right and by accepting the same upon original issue or subsequent transfer thereof, the stockholder agrees for himself, his legal representatives and assigns as follows: In the event of any change in the ownership of any share or shares of such capital stock (made or proposed) or in the right to vote thereon (whether by the holder's act or by death, legal disability, operation of law, legal processes, order of court, or otherwise, except by ordinary proxies or powers of attorney) the corporation has the right to purchase such share or all or any part of such shares or to require the same to be sold to a purchaser or purchasers designated by the corporation or to follow each such method in part at a price per share equal to the fair value thereof at the close of business on the last day next preceding such event as determined by mutual agreement or, failing such agreement, by arbitration as provided below. In any such event the owner of the share or shares concerned therein (being for the purposes of these provisions, all persons having any property interest therein) shall give notice thereof in detail satisfactory to the corporation. Within ten days after receipt of said owner's notice, the corporation shall elect whether or not to -2- 3 exercise its said rights in respect to said shares and, if it elects to exercise them, shall give notice of its election. Failing agreement between the owner and the corporation as to the price per share to be paid, such price shall be the fair value of such shares as determined by three arbitrators, one designated within five days after the termination of said ten-day period by the registered holder of said share or shares or his legal representatives, one within said period of five days by the corporation and the third within five days after said appointment last occurring by the two so chosen. Successor arbitrators, if any shall be required, shall be appointed, within reasonable time, as nearly as may be in the manner provided as to the related original appointment. No appointment shall be deemed as having been accomplished unless such arbitrator shall have accepted in writing his appointment as such within the time limited for his appointment. Notice of each appointment of an arbitrator shall be given promptly to the other parties in interest. Said arbitrators shall proceed promptly to determine said fair value. The determination of the fair value of said share or shares by agreement of any two of the arbitrators shall be conclusive upon all parties interested in such -3- 4 shares. Forthwith upon such determination the arbitrators shall mail or deliver notice of such determination to the owner (as above defined) and to the corporation. Within ten days after agreement upon said price or mailing of notice of determination of said price by arbitrators as provided below (whichever shall last occur), the shares specified therein for purchase shall be transferred to the corporation or to the purchaser or purchasers designated therein or in part to each as indicated in such notice of election against payment of said price at the principal office of the corporation. If in any of the said events, notice therefor having been given as provided above, the corporation elects in respect of any such shares or any part thereof not to exercise its said rights, or fails to exercise them or to give notice or make payment all as provided above, or waives said rights by vote or in authorized writing, then such contemplated transfer or such change may become effective as to those shares with respect to which the corporation elects not to exercise them or to give notice or to make payment, if consummated within thirty days after such election, failure or waiver by the corporation, or within such longer period as the corporation may authorize. -4- 5 If the owner's notice in respect of any of such shares of capital stock is not received by the corporation as provided above, or if the owner fails to comply with these provisions in respect of any such shares in any other regard, the corporation, at its option and in addition to its other remedies, may suspend the rights to vote or to receive dividends on said shares, or may refuse to register on its books any transfer of said shares or otherwise to recognize any transfer or change in the ownership thereof or in the right to vote thereon, one or more, until these provisions are complied with to the satisfaction of the corporation; and if the required owner's notice is not received by the corporation after written demand by the corporation it may also or independently proceed as though a proper owner's notice had been received at the expiration of ten days after mailing such demand, and, if it exercises its rights with respect to said shares or any of them, the shares specified shall be transferred accordingly. In respect of these provisions with respect to the transfer of shares of capital stock, the corporation may act by its board of directors. Any notice or demand under said provisions shall be deemed to have been sufficiently given if in writing delivered by hand or addressed by mail -5- 6 postpaid, to the corporation at its principal office or to the owner (as above defined) or to the holder registered on the books of the corporation (or his legal representative) of the share or shares in question at the address stated in his notice or at his address appearing on the books of the corporation. Nothing herein contained shall prevent the pledging of shares, if there is neither a transfer of the legal title thereto nor a transfer on the books of the corporation into the name of the pledgee, but no pledgee or person claiming thereunder shall be entitled to make or cause to be made any transfer of pledged shares by sale thereof or otherwise (including in this prohibition transfer on the books of the corporation into the name of the pledgee) except upon compliance herewith any such pledge shall be subject to those conditions and restrictions. FIFTH. The name and mailing address of the sole incorporator is as follows: NAME MAILING ADDRESS ---- --------------- Alan L. Lefkowitz Gaston Snow & Ely Barlett One Federal Street Boston, MA 02110 SIXTH. The corporation is to have perpetual existence. -6- 7 SEVENTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: To make, alter, amend, or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or -7- 8 disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agrement of merger or consolidation, recommending to the stockholder the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless resolution or by-laws expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and it corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of -8- 9 money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interest of the corporation. EIGHT. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs if a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement -9- 10 and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. NINTH. Meetings of stockholders may be held at such place, either within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. TENTH. The powers of the incorporator are to terminate upon the filing of this certificate of incorporation with the Secretary of State of the State of Delaware. The name and mailing address of the persons who are to serve as the directors of the corporation, subject to the by-laws, until the first annual meeting of stockholders or until their successors are elected and qualify are: -10- 11 NAME MAILING ADDRESS ---- --------------- Joseph B. Ely, II 5 Webster Lane Wayland, MA 01778 F. C. Dumaine 201 Newton Street Weston, MA 02193 W. Randle Mitchell, Jr. 5 Webster Lane Wayland, MA 01778 ELEVENTH. The corporation shall indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or a stockholder purporting to act on behalf of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments and fines actually imposed or reasonably incurred by him in connection with such action, suit or proceeding unless in any proceeding he shall be finally adjudged not to have acted in good faith and in a manner reasonably believed to be in or not opposed to the best interest of the corporation; provided, however, that such indemnification shall not cover liabilities in connection -11- 12 with any matter which shall be disposed of through a compromise payment by such person, pursuant to a consent decree or otherwise, unless such compromise shall be approved as in the best interests of the corporation, after notice that it involves such indemnification, (a) by a vote of the directors in which no interested director participates, or (by) a vote or the written approval of the holders of a majority of the outstanding stock at the time having the right to vote for directors, not counting as outstanding any stock owned by any interested director or officer. Such indemnification may include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under these provisions. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create any presumption that the person did not act in good faith and in a manner in which he reasonably believed to be in the best interests of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to -12- 13 believe that his conduct was unlawful. The rights of indemnification hereby provided shall not be exclusive of or affect other rights to which any director, officer, employee, agent or stockholder may be entitled. As used in this paragraph, the terms "director", "officer", "employee", "agent" or "stockholder" include their respective heirs, executors and administrators, and an "interested" director or officer is one against whom as such the proceeding in question or another proceeding on the same or similar grounds is then pending. Any indemnification to which a person is entitled under this paragraph shall be provided although the person to be indemnified is no longer such a director, officer, employee, agent or stockholder. TWELFTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or thereafter prescribed by statute, and all rights conferred upon a stockholder herein are granted subject to this reservation. I, THE UNDERSIGNED, being the sole incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and -13- 14 certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 14th day of December, 1984. /s/ALAN L. LEFKOWITZ -------------------------- Alan L. Lefkowitz -14- EX-3.8 5 BYLAWS OF AMOSKEAG MANAGEMENT CORPORATION 1 EXHIBIT 3.8 Effective: 12/27/84 BY-LAWS OF AMOSKEAG MANAGEMENT CORPORATION ARTICLE I. Certificate of Incorporation These by-laws, the powers of the corporation and of its directors and stockholders, and all matters concerning the conduct and regulation of the business of the corporation shall be subject to such provisions in regard thereto as are set forth in the certificate of incorporation filed pursuant to the General Corporation Law of Delaware which is hereby made a part of these by-laws. The term "certificate of incorporation" in these by-laws, unless the context requires otherwise, includes not only the original certificate of incorporation filed to create the corporation but also all other certificates, agreements of merger or consolidation, plans of reorganization, or other instruments, howsoever designated, filed pursuant to the General Corporation Law of Delaware which have the effect of amending or supplementing in some respect the corporation's original certificate of incorporation. ARTICLE II. Annual Meeting An annual meeting of stockholders shall be held for the election of directors and for the transaction of any other business for the transaction of which the meeting shall have been properly convened during the month of April in each year, on such date and at such place, within or without the State of Delaware, and at such time as shall be fixed by the board of directors and specified in the notice of the meeting. Any other proper business may be transacted at the annual meeting. If the annual meeting for election of directors shall not be held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient. 2 ARTICLE III. Special Meetings of Stockholders Special meetings of the stockholders may be held either within or without the State of Delaware, at such time and place and for such purposes as shall be specified in a call for such meeting made by the board of directors or by a writing filed with the secretary signed by the president or by a majority of the directors. ARTICLE IV. Notice of Stockholders' Meetings Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, which notice shall be given not less than ten nor more than fifty days before the date of the meeting, except where longer notice is required by law, to each stockholder entitled to vote at such meeting, by leaving such notice with him or by mailing it, postage prepaid, directed to him at his address as it appears upon the records of the corporation. In case of the death, absence, incapacity or refusal of the secretary, such notice may be given by a person designated either by the secretary or by the person or persons calling the meeting or by the board of directors. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. -2- 3 ARTICLE V. Quorum of Stockholders; Stockholder List At any meeting of the stockholders, a majority of all shares issued and outstanding and entitled to vote upon a question to be considered at the meeting shall constitute a quorum for the consideration of such question when represented at such meeting by the holders thereof in person or by their duly constituted and authorized attorney or attorneys, but a less interest may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting a majority of the stock so represented thereat and entitled to vote shall, except where a larger vote is required by law, by the certificate of incorporation or by these by-laws, decide any question brought before such meeting. The secretary or other officer having charge of the stock ledger shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city or town where the meeting is to be held, which place shall have been specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Said list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders required by this Article or the books of the corporation, or the stockholders entitled to vote in person or by proxy at any meeting of stockholders. ARTICLE VI. Stockholder's Meeting, Proxies and Voting Except as otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock held by such stockholder. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy but (except as otherwise expressly permitted by law) no proxy shall -3- 4 be voted or acted upon after three years from its date, unless the proxy provides for a longer period or so long as it is coupled with an interest sufficient in law to support an irrevocable power. Unless otherwise provided in the certificate of incorporation, any action required by law to, or which may, be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote therein were present and voted. Prompt notice of the taking of such action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE VII. Stockholders's Record Date In order that the corporation my determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed: (1) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (2) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed. -4- 5 (3) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating hereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the board of directors may fix a new record date for the adjourned meeting. ARTICLE VIII. Board of Directors Except as otherwise provided by law or by the certificate of incorporation or by these by-laws, the business and affairs of the corporation shall be managed by its board of directors. The number of directors shall be such number, not fewer than one nor more than three, as may be fixed for any corporate year and elected by the stockholders at the annual meeting. During any year the board of directors may be enlarged and additional directors elected to complete the enlarged number, to not more than the maximum number above specified, by the stockholders at any meeting or by a vote of a majority of the directors then in office. The stockholders may, at any meeting held for the purpose during such year, decrease, to not fewer than the minimum number above specified, the number of directors as thus fixed or enlarged and remove directors to the decreased number. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. No director need be a stockholder. ARTICLE IX. Committees The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee and may define the number and qualifications which shall constitute a quorum of such committee. Except as otherwise limited by law, any such committee, to the extent provided in the resolu- -5- 6 tion appointing such committee, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. In the absence or disqualification of a member of committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE X. Meetings of the Board of Directors and of Committees Regular meetings of the board of directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the board may by vote from time to time determine. Special meetings of the board of directors may be held at any place either within or without the State of Delaware at any time when called by the president, treasurer, secretary or two or more directors, reasonable notice of the time and place thereof being given to each director. A waiver of such notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. In any case it shall be deemed sufficient notice to a director to send notice by mail at least forty-eight hours, or to deliver personally or to send notice by telegram at least twenty-four hours, before the meeting, addressed to him at his usual or last known business or residence address. Unless otherwise restricted by the certificate of incorporation or by other provisions of these by-laws, (a) any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board or of such committee, as the case may be, consent thereto in writing and such writing or writings are filed with the minutes of proceedings of the board or committee, and (b) members of the board of directors or of any committee designated by the board may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. -6- 7 ARTICLE XI. Quorum of the Board of Directors Except as otherwise expressly provided in the certificate of incorporation or in these by-laws, a majority of the total number of directors at the time in office shall constitute a quorum for the transaction of business, but a lesser number may adjourn any meeting from time to time. Except as otherwise so expressly provided, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, provided, that the affirmative vote in good faith of a majority of the disinterested directors, even though the disinterested directors shall be fewer than a quorum, shall be sufficient to authorize a contract or transaction in which one or more directors have interest if the material facts as to such interest and the relation of the interested directors to the contract or transaction have been disclosed or are known to the directors. ARTICLE XII. Waiver of Notice of Meetings Whenever notice is required to be given under any provision of law or the certificate of incorporation or by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or the by-laws. ARTICLE XIII. Officers and Agents The corporation shall have a president, secretary and treasurer, who shall be chosen by the directors, each of whom shall hold his office until his successor has been chosen and qualified or until his earlier resignation or removal. The corporation may have such other officers and agents as are desired, each of whom shall be chosen by the board of directors and shall hold his office for such term and have such authority -7- 8 and duties as shall be determined by the board of directors. The board of directors may secure the fidelity of any or all of such officers or agents by bond or otherwise. Any number of offices may be held by the same person. Each officer shall, subject to these by-laws, have in addition to the duties and powers herein set forth, such duties and powers as the board of directors shall from time to time designate. In all cases where the duties of any officer, agent or employee are not specifically prescribed by the by-laws, or by the board of directors, such officer, agent or employee shall obey the orders and instructions of the president. Any officer may resign at any time upon written notice to the corporation. ARTICLE XIV. President The president shall, subject to the direction and under the supervision of the board of directors, be the chief executive officer of the corporation and shall have general and active control of its affairs and business and general supervision over its officers, agents and employees. Except as otherwise voted by the board he shall preside at all meetings of the stockholders and of the board of directors at which he is president. The president shall have custody of the treasurer's bond, if any. ARTICLE XX. Secretary The secretary shall record all the proceedings of the meetings of the stockholders and directors in a book, which shall be the property of the corporation, to be kept for that purpose; and perform such other duties as shall be assigned to him by the board of directors. In the absence of the secretary from any such meeting, a temporary secretary shall be chosen, who shall record the proceedings of such meeting in the aforesaid book. ARTICLE XXI. Treasurer The treasurer shall, subject to the direction and under the supervision of the board of directors, have the care and custody of the funds and valuable papers of the corporation, except his own bond, and he shall, except as the board of directors shall generally or in particular cases authorize the endorsement thereof in some other manner, have power to endorse -8- 9 for deposit or collection all notes, checks, drafts and other obligations for the payment of money to the corporation or its order. He shall keep, or cause to be kept, accurate books of account, which shall be the property of the corporation. ARTICLE XVII. Voting of Securities As long as all of the issued and outstanding capital stock of the corporation is owned beneficially and of record by a single entity, the corporation shall act in respect of any securities which it owns in accordance with the instructions of such entity. Such instructions need not be in writing. ARTICLE XVIII. Removals The stockholders may, at any meeting called for the purpose, by vote of a majority of the capital stock issued and outstanding and entitled to vote thereon, remove any director from office. The board of directors may, at any meeting called for the purpose, by vote of a majority of their entire number remove from office any officer or agent of the corporation or any member of any committee appointed by the board of directors or by any committee appointed by the board of directors or by any officer or agent of the corporation. ARTICLE XIX. Vacancies Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise and newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office (though less than a quorum) or by a sole remaining director and each of the incumbents so chosen shall hold office for the unexpired term in respect of which the vacancy occurred and until his successor shall have been duly elected and qualified or for such shorter period as shall be specified in the filling of such vacancy or, if such vacancy shall have occurred in the office of director, until such a successor shall have been chosen by the stockholders. -9- 10 ARTICLE XX. Certificates of Stock Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors (if one shall be incumbent) or the president or a vice-president and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary, certifying the number of shares owned by him in the corporation. If such certificate is countersigned (1) by a transfer agent other than the corporation of its employee, or (2) by a registrar other than the corporation of its employee, any other signatures on the certificate may be a facsimile. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue to represent such class or series of stock or there shall be set forth on the face or back of the certificates which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish, without charge to each stockholder who so requests, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Any restrictions imposed upon the transfer of shares or registration of transfer of shares shall be noted conspicuously on the certificate representing the shares subject to such restriction. ARTICLE XXI. Loss of Certificate The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made -10- 11 against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate in its place and upon such other terms or without any such bond which the board of directors shall prescribe. ARTICLE XXII. Seal The corporate seal shall, subject to alteration by the board of directors, consist of a flat-faced circular die with the word "Delaware" together with the name of the corporation and the year of its organization cut or engraved thereon. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE XXIII. Execution of Papers Except as otherwise provided in these by-laws or as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the corporation, shall be signed by the president, or by the vice president, if any, or by the treasurer. ARTICLE XXIV. Fiscal Year Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the last day of December of each year. ARTICLE XXV. Amendments. Except as otherwise provided by the law or by the certificate of incorporation, these by-laws, as from time to time altered or amended, may be made, altered or amended at any annual or special meeting of the stockholders called for the purpose, of which the notice shall specify the subject matter of the proposed alteration or amendment or new by-law or the article or articles to be affected thereby. If the certificate of incorporation so provides, these by-laws may also be made, -11- 12 altered or amended by a majority of the whole number of directors. Such action may be taken at any meeting of the board of directors, of which notice shall have been given as for a meeting of stockholders. -12- EX-3.9 6 ARTICLES OF INCORP OF BANGOR INVEST CO AS AMENDED 1 EXHIBIT 3.9 STATE Of MAINE. ------------------ Certificate of Organization of a Corporation under the General Law. ------------------ The undersigned, officers of a corporation organized at Bangor, Maine, at a meeting of the signers of the articles of agreement therefor, duly called and held at the Director's Room of B. & A. R. R. Co., in the city of Bangor on Saturday the 29th day of October A.D. 1904, hereby certify as follows: The name of said corporation is Bangor Investment Company. The purposes of said corporation are purchasing, acquiring, owning and selling real estate and the stock, and bonds of other corporations, and of improving real estate, leasing its real estate, and acquiring by lease real estate, from other persons or corporations, and of doing all things necessary, useful or convenient in carrying on any of its aforesaid business. 2 The amount of capital stock is one hundred and fifty thousand dollars, ($150,000) The amount of common stock is one hundred and fifty thousand dollars, ($150,000) The amount of capital stock already paid in is nothing The par value of the shares is one dollar ($1) The names and residences of the owners of said shares are as follows: NAMES. RESIDENCES. NO. OF SHARES. COMMON Franklin W. Cram Bangor, Maine, 1 Frederick H. Appleton Bangor, Maine, 1 Charles H. Wood Bangor, Maine, 1 Remaining in treasury 149,997 3 Said corporation is located at Bangor in the County of Penobscot The number of directors is three and their names are Franklin W. Cram, Frederick H. Appleton and Charles H. Wood, The name of the clerk is Frederick H. Appleton and his residence is Bangor, Maine. The undersigned, Franklin W. Cram, is president; the undersigned, Frederick H. Appleton is treasurer; and the undersigned, Franklin W. Cram, Frederick H. Appleton, and Charles H. Wood are a majority of the directors of said corporation. Witness our hands this 29th day of October A.D. 1904. Franklin W. Cram, President. ----------------------- Frederick H. Appleton, Treasurer. ----------------------- Franklin W. Cram.) ----------------------- Frederick H. Appleton) ----------------------- Directors. Charles H. Wood) ----------------------- Penobscot ss. October 29th, A.D. 1904. Then personally appeared Franklin W. Cram, Frederick H. Appleton and Charles H. Wood and severally made oath to the foregoing certificate, that the same is true. Before me, Hugh R. Chaplin ---------------------------- Justice of the Peace. ------------------------ STATE OF MAINE ------------------------ Attorney General's Office, October 31, A.D. 1904. I hereby certify that I have examined the foregoing certificate, and the same is properly drawn and signed, and is conformable to the constitution and laws of the State. Geo. M. Seiders, ---------------------------- Attorney General 4 To the Honorable Secretary of the State of Maine: I, Frederick H. Appleton of Bangor, County of Penobscot and State of Maine, hereby certify that I am Clerk of the Bangor Investment Company, a corporation duly organized under the laws of the State of Maine, having its principal office at said Bangor, Maine; that at a special meeting of the Stockholders of said Corporation held at the principal office thereof on the Fifth day of November, 1907, at which meeting a majority of the capital stock of said corporation issued and outstanding was represented in person or by proxy, it was unanimously voted as follows, to wit, WHEREAS it appears that the amount of capital stock of this corporation is insufficient for the purposes for which said corporation is organized, therefore Resolved, that the capital stock of this corporation be increased from the sum of $150,000 consisting of 150,000 shares of the par value of one dollar each to the sum of $250,000 consisting of 250,000 shares of the par value of one dollar each; that the By-Laws be amended in accordance herewith; that the Clerk file with the Secretary of State a certificate of the action of this meeting and obtain his certificate therefor within ten days thereof that the Treasurer pay to the Treasurer of State the necessary fee required for such increase. I further certify that said meeting was duly and legally called and notified in accordance with the provisions of the By-Laws of the corporation, and that the action proposed to be taken at said meeting was specified in said notice. Dated Bangor, Maine, November 6, 1907. /s/ FREDERICK H. APPLETON Clerk. 5 AGREEMENT for merger and consolidation of Katahdin Warehouse Company and Aroostook Construction Company with and into Bangor Investment Company. - - - - AGREEMENT dated this twenty-third day of May, 1925, by and between Katahdin Warehouse Company, Aroostook Construction Company, and Bangor Investment Company, all corporations organized and existing under the laws of the State of Maine, having offices and principal places of business at Bangor, County of Penobscot in said State. WHEREAS Bangor Investment Company is the owner of the entire outstanding capital stock of Katahdin Warehouse Company, consisting of Five Thousand (5000) shares of par value One (1) Dollar per share, and WHEREAS the owners of the shares of capital stock of Bangor Investment Company and the owners of the shares of capital stock of Aroostook Construction Company are identical and, in percentage to the total outstanding shares of each of said Companies, the number of shares held by each of said owners in each of said Companies is identical, and WHEREAS Aroostook Construction Company has liquidated its assets and has paid, or has provided for payment, of all known liabilities, and has made distribution in cash of substantially the entire amount received in liquidation of its assets, and now holds no property of any kind, name or nature, either real or personal, except a small cash balance in the bank, and WHEREAS the affairs of Bangor Investment Company, Katahdin Warehouse Company, and Aroostook Construction Company, can be more efficiently and economically managed if said affairs are under one sole management and control, and WHEREAS it is for the best interests of the stockholders and in the interests of better conduct of business, that the affairs of said three Companies be placed under one sole management and control 6 - 2 - to be effected by merging and consolidating said Katahdin Warehouse Company and said Aroostook Construction Company with and into Bangor Investment Company, so that thereafter Bangor Investment Company shall have, exercise and own all the property, rights, privileges and powers of Katahdin Warehouse Company and of Aroostook Construction Company, in addition to the property, rights, privileges and powers by it now held, and shall be subject to all the duties, obligations and liabilities of said Katahdin Warehouse Company and of said Aroostook Construction Company, in addition to its own present duties, obligations and liabilities, NOW THEREFORE, Bangor Investment Company, Katahdin Warehouse Company, and Aroostook Construction Company, all corporations of the State of Maine, and all having offices and principal places of business at Bangor, in the County of Penobscot in said State, pursuant to legal authority given by their stockholders at meetings for that purpose duly called and legally held, do hereby enter into this agreement of merger and consolidation: 1. Katahdin Warehouse Company will execute an instrument conveying to Bangor Investment Company all its right, title and interest in and to any property, whether real or personal, which it may have or shall be entitled to, and also conveying all its rights, title, privileges and powers; recordation of said instrument shall be conclusive evidence of the assumption by Bangor Investment Company of all the duties, obligations and liabilities of Katahdin Warehouse Company. 2. Aroostook Construction Company will executive an instrument conveying to Bangor Investment Company all its right, title and interest in and to any property, whether real or personal, which it may have or shall be entitled to, and also conveying all its right, title, privileges and powers; recordation of said instrument shall be conclusive evidence of the assumption by Bangor Investment Company of all the duties, obligations and liabilities of Aroostook Construction Company. 3. The shares of capital stock of Katahdin Warehouse Company owned by Bangor Investment Company, to-wit: Five Thousand (5000) shares of par value One (1) Dollar per share, and constituting the entire capital stock of said Katahdin Warehouse Company, are to be cancelled and destroyed. 4. The shares of capital stock of Aroostook Construction Company, consisting of Five Thousand (5000) shares of par value One Hundred (100) Dollars per share, are to be 7 -3- surrendered to Bangor Investment Company, and by it cancelled and destroyed. 5. There shall be no change in the capitalization of Bangor Investment Company, and the present outstanding capital stock of Bangor Investment Company, to-wit: One Hundred Fifty-Eight Thousand Five Hundred and Seventy (158,570) shares of par value One (1) Dollar per share, shall be the capital stock of Bangor Investment Company as said Company shall exist when the merger and consolidation of Katahdin Warehouse Company and Aroostook Construction Company with and into Bangor Investment Company shall have been completed and shall have become effective. 6. All cash and miscellaneous property of Katahdin Warehouse Company shall be turned over and delivered to Bangor Investment Company. 7. All cash and miscellaneous property of Aroostook Construction Company shall be turned over and delivered to Bangor Investment Company. 8. Upon completion of the merger and consolidation of Katahdin Warehouse Company and Aroostook Construction Company with and into Bangor Investment Company, the consolidated corporation, under the name of Bangor Investment Company, shall enjoy all the property, rights, privileges and powers previously by it held, and also shall have and enjoy all the property, rights, privileges and powers of Katahdin Warehouse Company and of Aroostook Construction Company; the corporate franchises, entity and existence of Katahdin Warehouse Company and of Aroostook Construction Company shall be continued in, merged into, and consolidated with, the Bangor Investment Company, and the Bangor Investment Company shall be fully vested therewith; and upon the taking effect of this agreement the corporate existence of Katahdin Warehouse Company and of Aroostook Construction Company shall cease except as so continued in, merged into, and consolidated with Bangor Investment Company. 9. Upon completion of the merger and consolidation Bangor Investment Company will assume, and from the effective date of such merger and consolidation shall be responsible for, all the duties, obligations and liabilities of Katahdin Warehouse Company and of Aroostook Construction Company; all and singular the rights, privileges, powers and franchises, and all the property, real, personal and mixed, belonging either to Katahdin Warehouse Company or to Aroostook Construction Company, and all debts due to either of said Companies on whatever account, shall forthwith be vested in Bangor Investment Company, and the title to any real estate or other property vested in either Katahdin Warehouse Company or Aroostook Construction Company, whether by deed or otherwise, shall not revert or be in any way impaired by reason of such merger and consolidation; provided, however, that all rights of creditors and all liens upon the property of Katahdin Warehouse Company and of Aroostook Construction Company shall be preserved and remain unimpaired, 8 -4- and all debts, liabilities and duties of Katahdin Warehouse Company and of Aroostook Construction Company shall thenceforth and thereafter attach to Bangor Investment Company and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it, it being expressly provided that the merger and consolidation herein provided for shall not in any manner impair the rights of any creditor of Katahdin Warehouse Company or of Aroostook Construction Company. 10. From and after the completion of the merger and consolidation the corporate existence of said Katahdin Warehouse Company and of said Aroostook Construction Company will be continued in and become a part of the corporate existence of Bangor Investment Company, but under the name of said latter Company; the officers and directors of Bangor Investment Company as at present elected, or appointed, and serving, shall continue as the officers and directors of the consolidated corporation to be known as Bangor Investment Company, and the By-laws of Bangor Investment Company as at present in effect shall continue as the By-laws of the consolidated corporation to be known as Bangor Investment Company, and all business shall be done in the name of Bangor Investment Company, and the present corporate seal of the Bangor Investment Company shall be the corporate seal of the consolidated corporation; and said consolidated corporation, under the name of Bangor Investment Company, shall have full power to sell, convey, transfer, lease or otherwise dispose of, in the ordinary course of business, any and all property formerly standing in the name of either Katahdin Warehouse Company or Aroostook Construction Company. 11. When the agreement of merger and consolidation duly has been executed by the proper officers of the respective corporations, the same shall be submitted to the Attorney General of the State of Maine for his approval, and when said agreement has had the approval of said Attorney General it shall be recorded in the Registry Deeds for Penobscot County, the County in which all of the corporations involved are located, and after said agreement has been endorsed with respect to filing and recordation in said County, the same shall be filed in the office of the Secretary of State of the State of Maine. 12. The merger and consolidation of said Katahdin Warehouse Company and said Aroostook Construction Company with and into Bangor Investment Company shall be and become complete and effective when duly executed counterpart of this agreement shall have been filed in the office of the Secretary of the State of Maine, and note of such filing duly made thereon; immediately upon the merger and consolidation becoming effective, the agreement therefor, bearing notation of filing with the Secretary of State of the State of Maine, shall be filed in the Counties of Aroostook, Piscataquis and Waldo, in which said Counties one or more of said corporation is the owner of property, real or personal. 13. When the duly executed counterpart of this agreement shall be filed with the Secretary of State of the State of Maine, there shall be filed therewith - 9 -5- (a) Affidavit by the Clerk of the Corporation, Katahdin Warehouse Company, that at a meeting duly called for the purpose, legal authority was given by the stockholders authorizing the merger and consolidation, said affidavit to state the number of shares of stock represented, the number voting in favor, and the number voting against, and attached thereto a certified copy of the call for the meeting. (b) Affidavit by the Clerk of the Corporation, Aroostook Construction Company, that at a meeting duly called for the purpose, legal authority was given by the stockholders authorizing the merger and consolidation, said affidavit to state the number of shares of stock represented, the number voting in favor, and the number voting against, and attached thereto a certified copy of the call for the meeting. (c) Affidavit by the Clerk of the Corporation, Bangor Investment Company, that at a meeting duly called for the purpose, legal authority was given by the stockholders authorizing the merger and consolidation, said affidavit to state the number of shares of stock represented, the number voting in favor, and the number voting against, and attached thereto a certified copy of the call for the meeting. 14. The consolidated corporation to be known as Bangor Investment Company shall pay all expenses of merger and consolidation, including all fees required by the statutes of the State of Maine, and all proper legal expenses. IN WITNESS WHEREOF Bangor Investment Company, acting by its President thereunto duly authorized, Katahdin Warehouse Company, acting by its President thereunto duly authorized, and Aroostook Construction Company, acting by its President thereunto duly authorized, have caused this agreement of merger and consolidation to be signed in six counterparts and the respective corporate seals hereto affixed and attested by the Clerk of the Corporation, this twenty-third day May, 1925. Attest: BANGOR INVESTMENT COMPANY By /s/ [ILLEGIBLE] /s/ [ILLEGIBLE] - --------------------------- ----------------------------- Clerk of the Corporation President Attest: KATAHDIN WAREHOUSE COMPANY By /s/ [ILLEGIBLE] /s/ [ILLEGIBLE] - --------------------------- ----------------------------- Clerk of the Corporation President Attest: AROOSTOOK CONSTRUCTION COMPANY By /s/ [ILLEGIBLE] /s/ [ILLEGIBLE] - --------------------------- ----------------------------- Clerk of the Corporation President 10 STATE OF MAINE Penobscot ss: On the 23rd day of May, 1925, Percy R. Todd, to me personally known, who, being by me duly sworn, did depose and say that he resides in Bangor, County of Penobscot, State of Maine; that he is President of Bangor Investment Company, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and attestation thereof was made in his presence by Wingate F. Cram, Clerk of the Corporation, by similar order of the Board of Directors thereof; and that he, the said Percy R. Todd, signed his name thereto as President of Bangor Investment Company, for and in behalf of said Company, by like order, and he acknowledged the foregoing instrument to be his free act and deed in his said capacity as President of said corporation, and the free act and deed of said corporation. Before me, /s/HENRY J. HART ---------------------- Henry J. Hart Notary Public [SEAL] (My commission expires May 21, 1931) 11 STATE OF MAINE Penobscot ss: On the 23rd day of May, 1925, I.K. Stetson, to me personally known, who, being by me duly sworn, did depose and say that he resides in Bangor, County of Penobscot, State of Maine; that he is President of Katahdin Warehouse Company, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and attestation thereof was made in his presence by P.A. Hubbard, Clerk of the Corporation, by similar order of the Board of Directors thereof; and that he, the said I.K. Stetson, signed his name thereto as President of Katahdin Warehouse Company, for and in behalf of the said Company, by like order, and he acknowledged the foregoing instrument to be his free act and deed in his said capacity as President of said corporation, and the free act and deed of said corporation. Before me, /s/HENRY J. HART ---------------------- Henry J. Hart Notary Public [SEAL] (My commission expires May 21, 1931) 12 STATE OF MAINE Penobscot ss: On the 23rd day of May, 1925, I.K. Stetson, to me personally known, who, being by me duly sworn, did depose and say that he resides in Bangor, County of Penobscot, State of Maine; that he is President of Aroostook Construction Company, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and attestation thereof was made in his presence by P.A. Hubbard, Clerk of the Corporation, by similar order of the Board of Directors thereof; and that he, the said I. K. Stetson, signed his name thereto as President of Aroostock Construction Company, for and in behalf of the said Company, by like order, and he acknowledged the foregoing instrument to be his free act and deed in his said capacity as President of said corporation, and the free act and deed of said corporation. Before me, /s/HENRY J. HART ---------------------- Henry J. Hart Notary Public [SEAL] (My commission expires May 21, 1931) 13 State of Maine ) ) ss: County of Penobscot ) On the twenty-third day of May, A.D. 1925, Wingate F. Cram, to me personally known, signed the foregoing in my presence and made oath that the statements contained therein are true in all respects. [SEAL] Before me, /s/ HENRY J. HART ---------------------------------- Henry J. Hart Notary Public (my commission expires May 21, 1931). 14 I, Percival A. Hubbard, Clerk of the Corporation, Katahdin Warehouse Company, do hereby certify that the foregoing agreement was submitted to the stockholders of said Corporation at a special meeting thereof duly called for the purpose of considering the same, notice of the time, place and purpose of such meeting having been sent to each stockholder in the manner required by the By-laws of the Corporation; that said meeting was held in the Directors' Room of the First National Bank of Bangor, Bangor, Maine, on the 14th day of March, 1925; that at said meeting the President of the Corporation explained to the stockholders the full content and purport of the proposed agreement for merger and consolidation; that a vote of the stockholders was taken for the adoption or rejection of said agreement, each share of issued and outstanding stock entitling the holder thereof to one vote thereon; that out of a total of Five Thousand (5000) shares of capital stock issued and outstanding and entitled to one vote per share there were represented at the meeting in person or by proxy Four Thousand Nine Hundred and Ninety-Nine (4999) shares, the same constituting almost the entire number of shares entitled to vote at said meeting; That Four Thousand Nine Hundred and Ninety-Nine (4999) votes were cast in favor of the adoption of the agreement for merger and consolidation and none were cast in opposition thereto; that the proposed agreement for merger and consolidation was spread upon the records of said meeting of the stockholders, and the terms and conditions of said agreement specifically approved, and the President of the Company, for and in behalf of the Company, was authorized to sign and execute said agreement, and the Clerk of the Corporation was authorized and directed to affix thereto the corporate seal. Witness my hand and the seal of the Corporation this twenty third day of May, A.D.1925. /s/ PERCIVAL A. HUBBARD ---------------------------------- Clerk of the Corporation [SEAL] 15 I, Wingate F. Cram, Clerk of the corporation, Bangor Investment company, do hereby certify that the foregoing agreement was submitted to the stockholders of said corporation at a special meeting thereof duly called for the purpose of considering the same, notice of the time, place and purpose of such meeting having been sent to each stockholder in the manner required by the By-laws of the Corporation; that said meeting was held in the Graham Building, Bangor, Maine, on the 21st day of April, 1925; that at said meeting the President of the corporation explained to the stockholders the full content and purport of the proposed agreement for merger and consolidation: that a vote of the stockholders was taken for the adoption or rejection of said agreement, each share of issued and outstanding stock entitling the holder thereof to one vote thereon; that out of a total of One hundred Fifty-Eight Thousand Five Hundred and Seventy (158,570) shares of capital stock issued and outstanding and entitled to one vote per share there were represented at the meeting in person or by proxy One Hundred Twenty-One Thousand Five Hundred and Forty-One (121,541) shares, the same constituting more than seventy-six per cent of the total number of shares entitled to vote at said meeting; that One Hundred Twenty- One Thousand Five Hundred and Forty-One (121,541) votes were cast in favor of the adoption of the agreement for merger and consolidation and none were cast in opposition thereto; that the proposed agreement for merger and consolidation was spread upon the records of said meeting of the stockholders, and the terms and conditions of said agreement specifically approved, and the President of the Company, for and in behalf of the Company was authorized to sign and execute said agreement, and the clerk of the corporation was authorized and directed to affix thereto the corporate seal. Witness my hand and the seal of the corporation this twenty-third day of May, A.D. 1925. [SEAL] /s/ WINGATE F. CRAM ------------------------------- Clerk of the Corporation 16 State of Maine ) ) ss: County of Penobscot ) On the twenty-third day of May, A.D. 1925, Percival A. Hubbard, to me personally known, signed the foregoing in my presence and made oath that the statements contained therein are true in all respects. Before me, /s/HENRY J. HART ---------------------------- Henry J. Hart (My commission expires May 21, 1931). 17 I, Percival A. Hubbard, Clerk of the Corporation, Aroostook Construction Company, do hereby certify that the foregoing agreement was submitted to the stockholders of said Corporation at a special meeting thereof duly called for the purpose of considering the same, notice of the time, place and purpose of such meeting having been sent to each stockholder in the manner required by the By-laws of the Corporation; that said meeting was held in the Directors' Room of the First National Bank of Bangor, Bangor, Maine, on the 14th day of March, 1925; that at said meeting the President of the Corporation explained to the stockholders the full content and purport of the proposed agreement for merger and consolidation; that a vote of the stockholders was taken for the adoption or rejection of said agreement, each share of issued and outstanding stock entitling the holder thereof to one vote thereon; that out of a total of Five Thousand (5000) shares of capital stock issued and outstanding and entitled to one vote per share there were represented at the meeting in person or by proxy Three Thousand Five Hundred and Thirty (3530) shares, the same constituting more than seventy per cent of the total number of shares entitled to vote at said meeting; that Three Thousand Five Hundred and Thirty (3530) votes were cast in favor of the adoption of the agreement for merger and consolidation and none were cast in opposition thereto; that the proposed agreement for merger and consolidation was spread upon the records of said meeting of the stockholders, and the terms and conditions of said agreement specifically approved, and the President of the Company, for and in behalf of the company, was authorized to sign and execute said agreement, and the Clerk of the Corporation was authorized and directed to affix thereto the corporate seal. Witness my hand and the seal of the Corporation this twenty-third day of may, A.D. 1925. /s/ PERCIVAL A. HUBBARD ------------------------------- Clerk of the Corporation [SEAL] 18 State of Maine ) ) ss: County of Penobscot ) On the twenty-third day of May, A.D. 1925, Percival A. Hubbard, to me personally known, signed the foregoing in my presence and made oath that the statements contained therein are true in all respects. [SEAL] Before me, /s/ HENRY J. HART ------------------------------- Notary Public (My commission expires May 21, 1931). 19 STATE OF MAINE ATTORNEY GENERAL'S OFFICE ---------- May 26, A.D., 1925. I hereby certify that I have examined the foregoing agreement, and the same is properly drawn and signed, and is conformable to the constitution and laws of the State, and I am satisfied that such agreement is made in good faith and not for the purpose of avoiding payment of fees or taxes to the State. /s/ SANFORD L. FOGG ----------------------- Deputy Attorney General - - - - - - - - - - - - - - - Penobscot ss. Registry of Deeds Received May 28, 1925. at 10h. 40m. A.M. and Recorded in Corporation Book 4, Page 472. /s/ WARREN E. CRAIG Register. - ------------------- 20 July 2, 1925. Hon. Frank W. Ball Secretary of State Augusta, Maine. Dear Sir: MERGER OF KATAHDIN WAREHOUSE COMPANY AND AROOSTOOK CONSTRUCTION COMPANY WITH AND INTO BANGOR INVESTMENT COMPANY. In order that the records of your office may be complete I beg to advise that the capital stock of the two former companies has been cancelled and destroyed in accordance with the terms of the merger and that the agreement of merger (recorded with you in Vol. 6, Page 235) has been recorded in all of the Registries representing the places where any of the companies have done business, namely: Penobscot County Registry of Deeds, Corporation Book No. 4, Page 472. Waldo County " " " Vol. 361, Page 29. Piscataquis Cy. " " " Vol. 223, Page 147. Aroostook Cy. " " " Vol. 360, Page 198. " " (Northern Dist.) " Vol. 110, Page 484. Yours truly, /s/ WINGATE F. CRAM Clerk. 21 TO THE SECRETARY OF STATE STATE OF MAINE You are hereby notified, pursuant to Section 48 of Chapter 51 of the Revised Laws of the State of Maine, that Bangor Investment Company has made a change in its Charter, Certificate of Organization and/or Articles of Association for the more convenient transaction of its business. Such change was adopted by unanimous vote of the entire outstanding capital stock of the Corporation at a meeting of the stockholders, duly called and held on April 20, 1926. The vote relative to said change in respect of the purposes of the Corporation is as follows: By changing the period (.) at the end of first paragraph to a semi-colon (;) and adding:- "further purposes of the Corporation shall be the operation of motor vehicles, directly by the Corporation or through agents, on the highways of the State of Maine for the transportation of passengers, freight, mail and express, and to do all such other things permitted by law, as may be necessary and convenient to effect such operation, including the making of contracts with persons, firms and corporations.". BANGOR INVESTMENT COMPANY By /s/ WINGATE F. CRAM ----------------------------- Clerk of Corporation Dated at Bangor, Maine April 21, 1926. [SEAL] STATE OF MAINE. Attorney General's Office April 24, 1926. I hereby certify that I have examined the foregoing certificate, and the same is properly drawn and signed, and is conformable to the constitution and laws of the state, and I am satisfied that such changes are made in good faith and not for the purpose of avoiding payment of fees or taxes to the State. /s/ SANFORD L. FOGG Deputy Attorney General. - -------------------------- 22 WHEREAS, at a meeting held on October 29, 1904 to effect the corporate organization of Bangor Investment Company it was voted that the capital stock of the Company be fixed at One Hundred Fifty Thousand Dollars ($150,000), to be divided into one hundred fifty thousand (150,000) shares of par value of One Dollar ($1.00) per share, and WHEREAS, at the annual meeting of the stockholders of said Company held on November 5, 1907 it was voted to increase the authorized amount of capital stock from One Hundred Fifty Thousand Dollars ($150,000), divided into one hundred fifty thousand (150,000) shares, to Two Hundred Fifty Thousand Dollars ($250,000), to be divided into two hundred fifty thousand (250,000) shares of par value of One Dollar ($1.00) per share, and WHEREAS, a total of but one hundred fifty-eight thousand five hundred seventy (158,570) share, of par value of One Dollar ($1.00) per share, have been issued, and WHEREAS, the value of the assets of the Company materially have decreased during recent years and the business activities of the Company now have become substantially restricted, and WHEREAS, the financial needs of the Company no longer require an authorized amount of capital stock in excess of One Hundred Sixty Thousand Dollars ($160,000), to be divided into one hundred sixty thousand (160,000) shares of par value of One Dollar ($1.00) per share: NOW, THEREFORE, it is voted unanimously by the stockholders That the authorized amount of capital stock of Bangor Investment Company be and it hereby is reduced from Two Hundred Fifty Thousand Dollars ($250,000), divided into 23 -2- two hundred fifty thousand (250,000) shares of par value of one Dollar ($1.00) per share, to One Hundred Sixty Thousand Dollars ($160,000), divided into one hundred sixty thousand (160,000) shares of par value of One Dollar ($1.00) per share; and the proper officers of the Company be and they hereby are authorized to prepare and to file with the Secretary of State of the State of Maine all papers, certificates and documents which may be requisite and necessary to effect and to record, in accordance with the laws of the State of Maine, such reduction and decrease in the authorized capital stock of the Company. ---------------------------- Bangor, Maine, (August 24, 1939) I, Henry J. Hart, Clerk of the Corporation of Bangor Investment Company, hereby certify that the foregoing is a true copy of the preambles and vote unanimously adopted by the stockholders of Bangor Investment Company at a meeting of said stockholders legally held at Bangor, Maine, on August 24, 1939. /s/ HENRY J. HART ------------------------ Subscribed and sworn to before me this 24th day of August, 1939. /s/ MAURICE K. BAKER ------------------------ Notary Public My commission expires December 21, 1945 [NOTARY PUBLIC'S SEAL] 24 I, Henry J. Hart, Clerk of Corporation of Bangor Investment Company hereby certify that at a special meeting of the stockholders of Bangor Investment Company, legally held on December 21, 1944, the stockholders of said Corporation unanimously voted to increase the authorized capital stock of the Company from 160,000 shares, of par value of $1.00 per share, to 250,000 shares, of par value of $1.00 per share; and I further certify that the following is a true transcript from the record of said stockholder's meeting: "VOTED that the authorized capital stock of this Company be and it hereby is increased from 160,000 shares of par value of $1.00 per share to 250,000 shares of par value of $1.00 per share; and further VOTED that the outstanding capital stock of the Company be increased from 158,570 shares to 250,000 shares, and the Board of Directors of the Company hereby is authorized to sell, at $1.00 per share, 91,430 shares of capital stock of this Company, said stock first to be offered to the present stockholders of this Company; the date of issuance of said shares shall be determined by the Board of Directors." /s/ HENRY J. HART Henry J. Hart ---------------------------- Clerk of Corporation of Bangor Investment Company. Dated at Bangor, Maine, December 21, 1944. STATE OF MAINE Penobscot, ss. December 21, 1944. Subscribed and sworn to before me this twenty-first day of December, 1944. /s/ MAURICE S. C. BAKER Maurice S. C. Baker, ----------------------------- Notary Public. My commission expires December 21, 1945. 25 TO THE SECRETARY OF STATE STATE OF MAINE You are hereby notified, pursuant to Section 71 of Chapter 49 of the Revised Statutes of the State of Maine, 1944, that Bangor Investment Company has made a change in its Charter, Certificate of Organization and/or Articles of Association for the more convenient transaction of its business. Such change was adopted by unanimous vote of the entire outstanding capital stock of the Corporation at a meeting of the stockholders, duly called and held on April 17, 1951. The vote relative to said change in respect of the purposes of the Corporation is as follows: VOTED that the corporate purposes of Bangor Investment Company shall be enlarged to include the following: to undertake, do, engage in, transact and carry on any and all kinds of manufacturing, mechanical, mercantile, trading, contracting, commercial, building, agricultural, logging, lumbering, mining, quarrying, real estate, pipeline transportation, and general highway transportation business; also to carry passengers or freight, or both, upon the high seas, or from port or ports in the State of Maine to a foreign port or ports, or to a port or ports in other states, or to carry freight or passengers, or both, upon any waters where the corporation may navigate; and any and all other kinds of business incidental, ancillary, related, pertaining, necessary, desirable or proper to or connected with any one or all of the purposes and kinds of business mentioned in this paragraph. Provided, however, that nothing in this paragraph contained shall be construed as authorizing the corporation to transact business in any state, territory or foreign country contrary to the laws thereof, or shall be construed to give the corporation any rights, powers, or privileges not permitted by the laws of Maine to corporations organized under Section 8, Chapter 49, of the Revised Statutes of Maine, 1944; and provided further, however, that nothing in this paragraph contained shall be construed as abridging or limiting in any manner any of the other authorized corporate purposes of the corporation. BANGOR INVESTMENT COMPANY By /s/ GORDON D. BRIGGS --------------------------- Dated at Bangor, Maine Clerk April 27, 1951 [SEAL] 26 S T A T E O F M A I N E Attorney General's Office, April 30, 1951 I hereby certify that I have examined the foregoing certificate, and the same is properly drawn and signed, and is conformable to the constitution and laws of the State, and I am satisfied that such changes are made in good faith and not for the purpose of avoiding payment of fees or taxes to the State. /s/ [ILLEGIBLE] ------------------------------ Deputy Attorney General 27 CERTIFICATE I, William M. Houston, Clerk of Bangor Investment Company, hereby certify that the following is that portion of the Company's Bylaws that refers to the number of Directors, and that said Bylaws were in effect on December 31, 1971: The officers of the corporation shall be a President, a Clerk, a Treasurer, six Directors and such other officers as from time to time may be appointed by the President or by the Board of Directors. Any person whether or not he is a director may hold more than one office. /s/ WILLIAM M. HOUSTON ------------------------- William M. Houston Clerk BANGOR INVESTMENT COMPANY Hermon, Maine May 11, 1984 28 STATE OF MAINE ARTICLES OF AMENDMENT (Amendment of Shareholders) Voting as One Class Pursuant to 13-A MRSA Sections 805 and 807, the undersigned corporation adopts these Articles of Amendment: FIRST: All outstanding shares were entitled to vote on the following amendment as ONE class. SECOND: The amendment set out in Exhibit A attached was adopted by the shareholders A. at a meeting legally called and held on MARCH 7, 1984. ------------- THIRD: Shares outstanding and entitled to vote and shares voted for and against said amendment were:
Number of Shares Outstanding NUMBER NUMBER and Entitled to Vote Voted For Voted Against --------------------------- --------- ------------- 250,000 250,000 0
FOURTH: If such amendment provides for exchange, reclassification or cancellation of issued shares, the manner in which this shall be effected is contained in Exhibit B attached if it is not set forth in the amendment itself. FIFTH: (Complete if Exhibits do not give this information.) If the amendment changes the number or par values of authorized shares, the number of shares the corporation has authority to issue thereafter, is as follows:
Class Series (If Any) Number of Shares Par Value (If Any) ----- --------------- ---------------- ------------------
The aggregate par value of all such shares (of all classes and series) HAVING PAR VALUE is $__________________________. The total number of all such shares (of all classes and series) WITHOUT PAR VALUE is __________________ shares. SIXTH: Address of the registered office in Maine: Rt. #2 Bangor, Me 04401 --------------------------- (street, city and zip code) Bangor Investment Company ------------------------------------ --------------------------- MUST BE COMPLETED FOR VOTE OF (Name of Corporation - SHAREHOLDERS Typed or Printed) ------------------------------------ I certify that I have custody of the By*: /s/ WILLIAM M. HOUSTON minutes showing the above ----------------------- action by the shareholders. (Signature) WILLIAM M. HOUSTON William M. Houston, Clerk --------------------------- --------------------------- (signature of clerk) (type or print name ------------------------------------ and capacity) By*: /s/ RICHARD B. GRAY --------------------------- (Signature) Richard B. Gray, Dated: May 17, 1985 Assistant Clerk -------------- --------------------------- (type or print name and capacity) EX-3.10 7 BYLAWS OF BANGOR INVESTMENT COMPANY 1 EXHIBIT 3.10 BANGOR INVESTMENT COMPANY BYLAWS CORRECTED AT MEETING OF STOCKHOLDERS MARCH 7, 1984 I. This corporation shall be known by the name of Bangor Investment Company and shall have a common seal bearing the words "Bangor Investment Company incorporated 1904." II. The officers of the corporation shall be a President, a Clerk, a Treasurer, three Directors and such other officers as from time to time may be appointed by the President or by the Board of Directors. Any person, whether or not he is a Director, may hold more than one office. III. The Directors shall be elected annually by the stockholders and shall continue in office until their successors are elected, but in case of any vacancy caused by death, resignation or otherwise, a person shall be elected by the Board of Directors to fill such vacancy. IV. Meetings of the Board of Directors shall be called by the Clerk upon direction of the President or two or more of the Directors, and two members shall constitute a quorum for the transaction of business at such meetings. At least one day's notice by mail, telephone or telegraph, of meetings of the Board of Directors shall be given, except that such notice may be waived by a majority of the Directors if they shall sign a statement to that 2 effect in the minutes of such meeting. The President shall preside at meetings of the Board of Directors, except that in the event of his absence those present shall elect a presiding officer. V. The Annual Meeting of Stockholders shall be held on the same date as the Annual Meeting of Stockholders of Bangor and Aroostook Railroad Company, at a time and place determined by the Directors. Special meetings of the Stockholders may be called at the direction of a majority of the Board of Directors, or at the written request of the holders of a majority in voting power of the capital stock outstanding. At meetings of Stockholders a representation in person or by proxy of one-fifth in voting power of the capital stock legally outstanding shall constitute a quorum for the transaction of business. Notice of annual or special meetings, which notice shall include a general statement of the business to be considered at such meeting, shall be given by the Clerk in writing by mailing, to each stockholder of record on a day designated by the Board of Directors, such notice by first-class mail, postage prepaid, at least ten days in advance of the date set for such meeting; except that all requirements as to notice may be waived if at the meeting unanimous consent of the Stockholders is given by endorsement into the minutes, such consent to be given in person or by proxy. The President shall preside at meetings of the Stockholders, except that in the event of his absence those present shall elect a presiding officer. 3 VI. The Board of Directors shall have the following powers in addition to powers granted elsewhere herein: (a) To call special meetings of the Stockholders. (b) To fill vacancies in their number. (c) To exercise general control over the business of the corporation. (d) To declare dividends out of the profits of the corporation. (e) To audit all accounts or cause them to be audited. (f) To do all things which in their judgment will promote the interests of the corporation, not inconsistent with these Bylaws and of the laws of the State and of the United States. VII. (1) The President shall have general control and management of the corporation and shall perform duties designated by the Board of Directors. He shall be empowered to delegate his duties to other officers as he may designate to an extent not inconsistent with the directions and powers of the Board of Directors. (2) The Clerk shall be elected by the Stockholders and shall hold office until his successor is elected. Either in person or through competent assistants, he shall keep the minutes of the meetings of the Stockholders and of the Board of Directors, shall have the custody and use of the seal of the corporation for corporate purposes, shall maintain a list of stockholders, shall notify Stockholders and Directors of meetings, shall receive and have custody of proxies submitted by Stockholders, and 4 shall perform such other duties as may be required by law and such other duties, not inconsistent with the duties herein specified, as may be required by the President and the Board of Directors. In the event of death of the Clerk or his inability to serve, a successor shall be named by the Board of Directors, which successor shall hold office until a further successor shall be elected by the Stockholders. (3) The Treasurer shall be elected by the Board of Directors and, either in person or through competent assistants, shall have custody of all moneys of the corporation and shall disburse same under the general direction of the Board of Directors. He shall keep regular and detailed accounts of all receipts and disbursements and make reports of same to the Board of Directors and to the President when required. He shall perform such other duties in connection with the financial affairs of the corporation as may be required by the President and the Board of Directors. When required by the Board of Directors, the Treasurer shall furnish a bond for the faithful discharge of his duties, in such sum as the Directors shall determine. VIII. The Board of Directors shall provide for the issue, transfer and registration of the shares of capital stock of the Company and may appoint the necessary Transfer Agents and Registrars for that purpose. The Directors shall determine the form and denominations of stock certificates and may designate what officer or officers may sign said certificates in the name of the Company. 5 Additional capital stock of the Company may be authorized by the Stockholders in accordance with law, which capital stock shall be non-assessable and shall be issued by the Board of Directors, without regard to pre-emptive rights, upon such terms and conditions and in such amounts as the Directors from time to time deem to be in the best interests of the Company. IX. The Company shall indemnify each present and future Director and Officer of the Company (and his heirs, executors and administrators) against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a Director or Officer of the Company, except in relation to matters as to which he shall be adjudged in such action, suit or proceeding to have been liable for negligence or misconduct in the performance of his duties as such Director or Officer. X. The Bylaws may be altered or amended to an extent not inconsistent with law, by the Board of Directors at any meeting legally held and attended by a majority of said Board, or by the Stockholders at any meeting legally held and attended either in person or by proxy by the holders of a majority of the voting power of capital stock outstanding. 6 STATE OF MAINE NOTICE OF RESIGNATION OF CLERK Pursuant to 13-A MRSA Section 304(4) you are hereby notified that the undersigned has resigned as the Clerk of Bangor Investment Company, a Maine ------------------------- corporation, whose address is c/o Bangor and Aroostook Railroad Company, RFD #2, Bangor, Maine 04401 . - ------------------------------------------------------------------------------- (street, city, state and zip code) *A copy of the notice of resignation has been mailed to Walter E. Travis, at ----------------- (insert name) Bangor Investment Company c/o Bangor and Aroostook Railroad Company RFD #2, Bangor, Maine 04401 - -------------------------------------------------------------------------------- (mailing address) (zip code) the President of the corporation. ------------------------- (corporate officer) Dated: September 2, 1987 ------------------ /s/ WILLIAM M. HOUSTON ------------------------------ (signature of clerk) WILLIAM M. HOUSTON ------------------------------ (type or print name) 7 STATE OF MAINE CHANGE OF CLERK OR REGISTERED OFFICE OR BOTH Pursuant to 13-A MRSA Section 304 the undersigned corporation advises you of the following change(s): FIRST: The name and registered office of the clerk appearing on the record in Secretary of State's office William M. Houston - ------------------------------------------------------------------------------- RFD #2, Bangor, Maine 04401 - ------------------------------------------------------------------------------- (street, city, state and zip code) SECOND: The name and registered office of its successor (new) clerk who must be a Maine resident Shirley R. Strout, c/o Bangor and Aroostook Railroad Company - ------------------------------------------------------------------------------- Northern Maine Junction Park, RFD #2, Bangor, Maine 04401 - ------------------------------------------------------------------------------- (street, city, state and zip code) THIRD: Upon a change in clerk this must be completed: ( ) Such change was authorized by the board of directors and the power to make such change is not reserved to the shareholders by the articles or the bylaws. (XX) Such change was authorized by the shareholders. (Complete the following) I certify that I have custody of the minutes showing the above action by the shareholders. /s/ SHIRLEY R. STROUT --------------------------- (signature of new clerk, secretary or assistant secretary) Shirley R. Strout, Clerk Dated: September 2, 1987 --------------------------------- BANGOR INVESTMENT COMPANY --------------------------- (name of corporation) By /s/ SHIRLEY R. STROUT ------------------------- (signature) Shirley R. Strout, Clerk --------------------------- (type or print name and capacity) By ------------------------ (signature) --------------------------- (type or print name and capacity) 8 STATE OF MAINE ARTICLES OF AMENDMENT (AMENDMENT BY SHAREHOLDERS VOTING AS ONE CLASS) Pursuant to 13-A MRSA Sections 805 and 807, the undersigned corporation adopts these Articles of Amendment: FIRST: All outstanding shares were entitled to vote on the following amendment as one class. SECOND: The amendment set out in Exhibit A attached was adopted by the shareholders (Circle one) A. at a meeting legally called and held on, OR June 14, 1988. [B.] by unanimous written consent on THIRD: Shares outstanding and entitled to vote and shares voted for and against said amendment were: Number of Shares Outstanding NUMBER NUMBER and Entitled to Vote Voted For Voted Against ---------------------------- --------- ------------- 250,000 250,000 0 FOURTH: If such amendment provides for exchange, reclassification or cancellation of issued shares, the manner in which this shall be effected is contained in Exhibit B attached if it is not set forth in the amendment itself. See Exhibit A FIFTH: (Complete if Exhibits do not give this information.) If the amendment changes the number or par values of authorized shares, the number of shares the corporation has authority to issue thereafter, is as follows: Class Series (If any) Number of Shares Par Value (If any) ----- --------------- ---------------- ------------------ Common Stock none 179,810 none The aggregate par value of all shares (of all classes and series) having par value is $ 0. The total number of all such shares (of all classes and series) without par value is 179,810 shares. c/o Bangor and Aroostook Railroad Company, RFD#2 SIXTH: Address of the registered office in Maine: Northern Maine Junction Park, Bangor, ME 04401 ------------------------------------------------ (street, city and zip code) ---------------------------------------------------- MUST BE COMPLETED FOR VOTE OF BANGOR INVESTMENT COMPANY SHAREHOLDERS ------------------------------------------------ -------------------------------------------------- (Name of Corporation -- Typed or Printed) I certify that I have custody of the minutes showing the above action by the shareholders. By* /s/ SHIRLEY R. STROUT --------------------------------------------- /s/ SHIRLEY R. STROUT (signature) -------------------------------------------------- (signature of clerk, secretary or asst. secretary) Shirley R. Strout, Clerk ---------------------------------------------------- ------------------------------------------------ (type or print name and capacity) Dated: June 15, 1988 ----------------------------------------------
9 EXHIBIT A BANGOR AND AROOSTOOK RAILROAD COMPANY Written Consent of Shareholder Pursuant to Section 620, Sub-Section 2 and Section 803, Sub-Section 5 of the Maine Business Corporation Act The undersigned being the owner of all of the issued and outstanding common stock of Bangor Investment Company, a Maine Corporation, hereby consents to the following action being taken for and in behalf of said Bangor Investment Company: VOTED: That pursuant to 13-A, Maine Revised Statutes, Sections 801 and 802, Sub-Section 2G, the following amendment to the Composite Certificate of Organization of Bangor Investment Company, a Maine corporation, all of whose issued and outstanding common stock is owned by this Company, be and hereby is adopted: (i) to change the 250,000 shares of common stock of $1.00 per share par value, which have been previously issued and are presently outstanding, into 179,810 shares of common stock without par value; (ii) to change the amount of capital stock previously authorized from $250,000 (consisting of 250,000 shares of common stock of $1.00 per share par value) to 179,810 shares without par value; and (iii) to change the par value of the shares of common stock from $1.00 par value to no par value. BANGOR AND AROOSTOOK RAILROAD COMPANY BY [ILLEGIBLE] ----------------------------------- President June 14, 1988 10 STATE OF MAINE ARTICLES OF MERGER OF BIC MERGER CORPORATION --------------------------- A MAINE CORPORATION INTO BANGOR INVESTMENT COMPANY --------------------------- A MAINE CORPORATION Pursuant to 13 -- A MRSA Section 903, the board of directors of each participating corporation approve and the undersigned corporations, adopt the following Articles of Merger: FIRST: The plan of merger is set forth in Exhibit A attached hereto and made a part hereof. SECOND: As to each participating corporation, the shareholders of which voted on such plan of merger, the number of shares outstanding and the number of shares entitled to vote on such plan, and the number of such shares voted for and against the plan, are as follows:
Number of Name of Shares Number of Shares Corporation Outstanding Entitled to Vote Voted For Voted Against - ----------------------- ----------- ---------------- --------- ------------- BIC Merger Corporation 100 100 100 0 Bangor Investment Company 179,296 179,296 178,547 307
THIRD: If the shares of any class were entitled to vote as a class, the designation and number of the outstanding shares of each such class, and the number of shares of each such class voted for and against the plan, are as follows:
Name of Designation Number of Corporation of Class Shares Voted For Voted Against - ----------------------- ----------- ---------------- --------- ------------- Not Applicable.
(Include the following paragraph if the merger was authorized without the vote of the shareholders of the surviving corporation. Omit if not applicable.) FOURTH: The plan of merger was adopted by the participating corporation which is to become the surviving corporation in the merger without any vote of its shareholders, pursuant to section 902, subsection 5. The number of shares of each class outstanding immediately prior to the effective date of the merger, and the number of shares of each class to be issued or delivered pursuant to the plan of merger of the surviving corporation are set forth as follows: Not Applicable.
Number of Shares Outstanding Number of Shares to Be Issued Designation Immediately Prior to Effective Or Delivered Pursuant To The Of Class Date of Merger Merger - ------------ ------------------------------ -----------------------------
11 FIFTH: The address of the registered office of the surviving corporation is c/o Bangor & Aroostook Railroad Company, Northern Maine Junction Park, ---------------------------------------------------------------------- RFD #2, Bangor, ME 04401. ---------------------------------------------------------------------- (street, city, state and zip code) The address of the registered office of the merged corporation is One Portland Square, P.O. Box 586, Portland, ME 04112. ---------------------------------------------------------------------- (street, city, state and zip code) SIXTH: Effective date of the merger (if other than date of filing of Article) is ______________, 19 _____. See Section 2 of attached Plan of Merger and Reorganization. (Not to exceed 60 days from date of filing of the Articles.) Dated: January 24, 1989 BANGOR INVESTMENT COMPANY -------------------------- -------------------------------- (surviving corporation) =================================================== MUST BE COMPLETED FOR VOTE OF SHAREHOLDERS =================================================== I certify that I have custody of the minutes showing the above action by the shareholders of Bangor Investment Company - --------------------------------------------------- (name of corporation) /s/ SHIRLEY R. STROUT - --------------------------------------------------- (signature of clerk, secretary or asst. secretary.) =================================================== Dated: January 24, 1989 -------------------------------------------- =================================================== MUST BE COMPLETED FOR VOTE OF SHAREHOLDERS =================================================== I certify that I have custody of the minutes showing the above action by the shareholders of BIC Merger Corporation - --------------------------------------------------- (name of corporation) /s/ GREGORY S. FRYER - --------------------------------------------------- (signature of clerk, secretary or asst. secretary) =================================================== By* /s/ SHIRLEY R. STROUT ------------------------------------------------ (Signature) Shirley R. Strout, Clerk - --------------------------------------------------- (type or print name and capacity) BIC MERGER CORPORATION - --------------------------------------------------- (merged corporation) By* /s/ GREGORY S. FRYER ------------------------------------------------ (Signature) Gregory S. Fryer, Clerk - --------------------------------------------------- (type or print name and capacity) 12 EXHIBIT A PLAN OF MERGER AND REORGANIZATION PLAN OF MERGER AND REORGANIZATION dated as of December 7, 1988 by and among Downeast Securities Corporation, a Delaware corporation ("Downeast"); Deer Isle Corporation, a Delaware corporation ("Deer Isle"); Bangor & Aroostook Railroad Company, a Maine corporation ("BAR"); Bangor Investment Company, a Maine corporation ("BIC"); BAR Merger Corporation, a Maine corporation ("Newco BAR"); and BIC Merger Corporation, a Maine corporation ("Newco BIC") (all of such corporations, collectively, being herein referred to as the "Corporations"). W I T N E S S E T H: WHEREAS, the Board of Directors of each Corporation has determined that it is in the best interests of such Corporation to participate in the reorganization contemplated by this Plan of Merger and Reorganization; WHEREAS, Downeast owns approximately 99.325% of the outstanding shares of Common Stock of BAR, approximately 99.325% of the outstanding shares of Common Stock of BIC, 100% of the outstanding shares of Common Stock of Deer Isle, 100% of the outstanding Common Stock of Newco BAR, and 100% of the outstanding shares of Common Stock of Newco BIC; NOW, THEREFORE, the contemplated reorganization shall be effected as follows: 1. Pursuant to this Plan of Merger and Reorganization, as of the Effective Date (as defined below), (a) Newco BAR shall merge into BAR (the "BAR Merger", with BAR being the surviving corporation of such merger, and (b) Newco BIC shall merge into BIC (the "BIC Merger"), with BIC being the surviving corporation of such merger. Upon the Effective Date, the separate existence of Newco BAR and Newco BIC shall be merged with and into BAR and BIC, respectively. 2. The BAR Merger and the BIC Merger shall become effective as of the time and date of filing, with the office of the Secretary of State of Maine, of Articles of Merger for the BAR Merger and the BIC Merger, whichever filing occurs later (the "Effective Date"). 3. The articles of incorporation and bylaws of BAR and BIC in effect immediately prior to the Effective Date shall remain the articles of incorporation and bylaws of BAR and BIC, respectively, upon and after the Effective Date, until subsequently altered, amended, or repealed as provided by law. 4. The directors and officers of BAR and BIC immediately prior to the Effective Date shall remain the directors and 13 officers Of BAR and BIC, respectively, upon and after the Effective Date, until their respective successors are duly elected or appointed and have been qualified in the manner provided in the articles of incorporation and bylaws of BAR and BIC, respectively, or as otherwise provided by law. 5. By virtue of the BAR Merger, (a) each share of Common Stock of Newco BAR outstanding immediately prior to the Effective Date shall, upon the Effective Date, be converted into 1/10th new share of Common Stock, no par value, of BAR; (b) each share of Common Stock of BAR owned of record immediately prior to the Effective Date by Downeast shall remain outstanding in the name of Downeast upon the Effective Date; and (c) all other shares of Common Stock of BAR outstanding immediately prior to the Effective Date shall, upon the Effective Date, be cancelled and each stock certificate for such cancelled shares shall thereupon represent solely the right to be paid $150.00 per share in cash upon surrender of the certificate to BAR. 6. By virtue of the BIC Merger, (a) each share of Common Stock of Newco BIC outstanding immediately prior to the Effective Date shall, upon the Effective Date, be converted into 1/10th new share of Common Stock, no par value, of BIC; (b) each share of Common Stock of BIC owned of record immediately prior to the Effective Date by Downeast shall remain outstanding in the name of Downeast upon the Effective Date; and (c) all other shares of Common Stock of BIC outstanding immediately prior to the Effective Date shall, upon the Effective Date, be cancelled and each stock certificate for such cancelled shares shall thereupon represent solely the right to be paid $60.00 per share in cash upon surrender of the certificate to BIC. 7. Following consummation of the BAR Merger, Downeast shall make a capital contribution to Deer Isle in the form of all capital stock owned by Downeast in BAR. Through such capital contribution, BAR shall become the wholly-owned subsidiary of Deer Isle, which shall remain the wholly-owned subsidiary of Downeast. 8. Following consummation of the BAR Merger and the BIC Merger, BIC shall pay a dividend to its sole shareholder (Downeast) in the form of all capital stock owned by BIC in the following wholly-owned subsidiaries: Bangor & Aroostook Transportation Company, Machine Accounting, Inc., Maine Rent-a-Car System, Maine Rent-a-Truck System, and McKay Rock Products, Inc. (collectively, the "BIC Subsidiaries"). Downeast shall then make a capital contribution to Deer Isle in the form of all capital stock owned by Downeast in the BIC Subsidiaries. Through such dividend and such capital contribution, the BIC Subsidiaries shall become wholly-owned subsidiaries of Deer Isle. 9. Consummation of the BAR Merger and BIC Merger and all other transactions contemplated by this Plan of Merger and Reorganization shall be conditioned upon prior approval of this -2- 14 Plan of Merger and Reorganization by (i) the Boards of Directors of each of the Corporations (by vote or by written consent in the manner provided by law), (ii) the affirmative vote of the holders of a majority of the outstanding shares of each of BAR and BIC and (iii) the written consent of Downeast as sole shareholder of Newco BAR, Newco BIC, and Deer Isle Corporation. 10. The Board of Directors of any of the Corporations may by resolution at any time prior to the Effective Date cause this Plan of Merger and Reorganization to be abandoned. Any such action shall not require a further vote of the shareholders of any of the Corporations. 11. The provisions set forth in this Plan of Merger and Reorganization shall not be deemed to be exclusive of or otherwise to limit the statutory dissenters' rights provided under the Maine Business Corporation Act, Title 13-A Maine Revised Statutes Annotated. -3- 15 STATE OF MAINE CHANGE OF CLERK or REGISTERED OFFICE or BOTH Pursuant to 13-A MRSA Section 304 the undersigned corporation advises you of the following change(s): FIRST: The name and registered office of the clerk appearing on the record in Secretary of State's office Shirley R. Strout -------------------------------------------------------------------- c/o Bangor & Aroostook Railroad, Northern Main Junction Park; RFD 2; Bangor, Maine 04401 -------------------------------------------------------------------- (street, city, state and zip code) SECOND: The name and registered office of its successor (new) clerk who must be a Maine resident: Roberta H. Toothaker -------------------------------------------------------------------- (name) One Portland Square, P.O. Box 586, Portland, ME 04112-0586 -------------------------------------------------------------------- (street, city, state and zip code) THIRD: Upon a change in clerk this must be completed: (x ) Such change was authorized by the board of directors and the power to make such change is not reserved to the shareholders by the articles or the bylaws. ( ) Such change was authorized by the shareholders. (Complete the following) I certify that I have custody of the minutes showing the above action by the shareholders. -------------------------------- (signature of new clerk, secretary or assistant secretary) Dated: November 17, 1993 BANGOR INVESTMENT COMPANY ------------------ -------------------------------- (name of Corporation) By /s/ ROBERTA H. TOOTHAKER -------------------------------- (signature) Roberta H. Toothaker, Clerk -------------------------------- (type or print name and capacity) 16 STATE OF MAINE CHANGE OF CLERK or REGISTERED OFFICE or BOTH Pursuant to 13-A MRSA Section 304 the undersigned corporation advises you of the following change(s): FIRST: The name and registered office of the clerk appearing on the record in Secretary of State's office Roberta H. Toothaker -------------------------------------------------------------------- One Portland Square, P.O. Box 586, Portland, ME 04112-0586 -------------------------------------------------------------------- (street, city, state and zip code) SECOND: The name and physical location of the registered office of the successor (new) clerk, who must be a Maine resident, are: Mark K. Googins -------------------------------------------------------------------- (name) One Portland Square, P.O. Box 586, Portland, ME 04112-0586 -------------------------------------------------------------------- (street address (not P.O. Box), city, state and zip code) -------------------------------------------------------------------- (mailing address if different from above) THIRD: Upon a change in clerk this must be completed: ( ) Such change was authorized by the board of directors and the power to make such change is not reserved to the shareholders by the articles or the bylaws. (X ) Such change was authorized by the shareholders. (Complete the following) I certify that I have custody of the minutes showing the above action by the shareholders. /s/ MARK K. GOOGINS -------------------------------- (signature of new clerk) Dated: December 13, 1995 BANGOR INVESTMENT COMPANY ------------------ -------------------------------- (name of Corporation) By /s/ MARK K. GOOGINS -------------------------------- (signature) Mark K. Googins, Clerk -------------------------------- (type or print name and capacity) 17 BANGOR INVESTMENT COMPANY BYLAWS CORRECTED AT MEETING OF STOCKHOLDERS MARCH 7, 1984 I. This corporation shall be known by the name of Bangor Investment Company and shall have a common seal bearing the words "Bangor Investment Company incorporated 1904." II. The officers of the corporation shall be a President, a Clerk, a Treasurer, three Directors and such other officer as from time to time may be appointed by the President or by the Board of Directors. Any person, whether or not he is a Director, may hold more than one office. III. The Directors shall be elected annually by the stockholders and shall continue in office until their successors are elected, but in case of any vacancy caused by death, resignation or otherwise, a person shall be elected by the Board of Directors to fill such vacancy. IV. Meetings of the Board of Directors shall be called by the Clerk upon direction of the President or two or more of the Directors, and two members shall constitute a quorum for the transaction of business at such meetings. At least one day's notice by mail, telephone or telegraph, of meetings of the Board of Directors shall be given, except that such notice may be waived by a majority of the Directors if they shall sign a statement to that 18 effect in the minutes of such meeting. The President shall preside at meetings of the Board of Directors, except that in the event of his absence those present shall elect a presiding officer. V. The Annual Meeting of Stockholders shall be held on the same date as the Annual Meeting of Stockholders of Bangor and Aroostook Railroad Company, at a time and place determined by the Directors. Special meetings of the Stockholders may be called at the direction of a majority of the Board of Directors, or at the written request of the holders of a majority in voting power of the capital stock outstanding. At meetings of Stockholders a representation in person or by proxy of one-fifth in voting power of the capital stock legally outstanding shall constitute a quorum for the transaction of business. Notice of annual or special meetings, which notice shall include a general statement of the business to be considered at such meeting, shall be given by the Clerk in writing by mailing, to each stockholder of record on a day designated by the Board of Directors, such notice by first-class mail, postage prepaid, at least ten days in advance of the date set for such meeting; except that all requirements as to notice may be waived if at the meeting unanimous consent of the Stockholders is given by endorsement into the minutes, such consent to be given in person or by proxy. The President shall preside at meetings of the Stockholders, except that in the event of his absence those present shall elect a presiding officer. 19 VI. The Board of Directors shall have the following powers in addition to powers granted elsewhere herein: (a) To call special meetings of the Stockholders. (b) To fill vacancies in their number. (c) To exercise general control over the business of the corporation. (d) To declare dividends out of the profits of the corporation. (e) To audit all accounts or cause them to be audited. (f) To do all things which in their judgment will promote the interests of the corporation, not inconsistent with these Bylaws and of the laws of the State and of the United States. VII. (1) The President shall have general control and management of the corporation and shall perform duties designated by the Board of Directors. He shall be empowered to delegate his duties to other officers as he may designate to an extent not inconsistent with the directions and powers of the Board of Directors. (2) The Clerk shall be elected by the Stockholders and shall hold office until his successor is elected. Either in person or through competent assistants, he shall keep the minutes of the meetings of the Stockholders and of the Board of Directors, shall have the custody and use of the seal of the corporation for corporate purposes, shall maintain a list of stockholders, shall notify Stockholders and Directors of meetings, shall receive and have custody of proxies submitted by Stockholders, and 20 shall perform such other duties as may be required by law and such other duties, not inconsistent with the duties herein specified, as may be required by the President and the Board of Directors. In the event of death of the Clerk or his inability to serve, a successor shall be named by the Board of Directors, which successor shall hold office until a further successor shall be elected by the Stockholders. (3) The Treasurer shall be elected by the Board of Directors and, either in person or through competent assistants, shall have custody of all moneys of the corporation and shall disburse same under the general direction of the Board of Directors. He shall keep regular and detailed accounts of all receipts and disbursements and make reports of same to the Board of Directors and to the President when required. He shall perform such other duties in connection with the financial affairs of the corporation as may be required by the President and the Board of Directors. When required by the Board of Directors, the Treasurer shall furnish a bond for the faithful discharge of his duties, in such sum as the Directors shall determine. VIII. The Board of Directors shall provide for the issue, transfer and registration of the shares of capital stock of the Company and may appoint the necessary Transfer Agents and Registrars for that purpose. The Directors shall determine the form and denominations of stock certificates and may designate what officer or officers may sign said certificates in the name of the Company. 21 Additional capital stock of the Company may be authorized by the Stockholders in accordance with law, which capital stock shall be non-assessable and shall be issued by the Board of Directors, without regard to pre-emptive rights, upon such terms and conditions and in such amounts as the Directors from time to time deem to be in the best interests of the Company. IX. The Company shall indemnify each present and future Director and Officer of the Company (and his heirs, executors and administrators) against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a Director or Officer of the Company, except in relation to matters as to which he shall be adjudged in such action, suit or proceeding to have been liable for negligence or misconduct in the performance of his duties as such Director or Officer. X. The Bylaws may be altered or amended to an extent not inconsistent with law, by the Board of Directors at any meeting legally held and attended by a majority of said Board, or by the Stockholders at any meeting legally held and attended either in person or by proxy by the holders of a majority of the voting power of capital stock outstanding. 22 EXHIBIT A BYLAWS OF COMMUNICATIONS RESOURCE ASSOCIATES, INC. (formerly B & A Communications, Inc.) ARTICLE I DEFINITIONS When used in these Bylaws, the terms defined below shall have the meanings specified. The "Articles" shall mean the Articles of Incorporation of the Corporation, including any and all amendments thereto, as then in effect. The "Board" shall mean the Board of Directors of the Corporation. The "Corporation" shall mean Communications Resource Associates, Inc., a Maine Corporation. The "Corporation Act" shall mean the Maine Business Corporation Act, Title 13-A of the Revised Maine Statutes Annotated, as then in effect. The "State" shall mean the State of Maine. ARTICLE II CORPORATE OFFICES SECTION 2.1 Principal Office. The principal office of the Corporation shall at Northern Maine Junction Park, R.R. 2, Bangor, Maine 04401, or such other location as the Board may from time to time designate. SECTION 2.2 Registered office. The Clerk of the Corporation shall maintain the registered office of the Corporation at some fixed place within the State, which may be, but need not be, the Corporation's principal office. SECTION 2.3 Other Offices. The Corporation may also have offices at such other places either within or without the State as the Board may from time to time determine or as the business may require. ARTICLE III MEETINGS OF SHAREHOLDERS SECTION 3.1 Annual Meetings. The annual meeting of shareholders of the Corporation for the election of directors 23 and the transaction of other business shall be held (i) on the third Thursday of March of each year, if not a legal holiday, and if a legal holiday then on the next succeeding weekday not a legal holiday, or (ii) at such other date and time as the Board shall specify by resolution. SECTION 3.2 Special Meetings. Special meetings of the shareholders may be called only by the President, the Board, the holders of not less than ten (10) percent of the shares entitled to vote at the meeting, or such other persons as are specifically entitled by the Corporation Act to call special meetings of shareholders. SECTION 3.3 Place of Meetings. All meetings of shareholders shall be held at the principal office of the Corporation or at such other place within or without the State as may be determined by the Board. SECTION 3.4 Notice of Meetings. Written notice of each meeting of shareholders, stating the place, date, and hour of the meeting, shall be delivered, either personally or by mail, to each shareholder of record entitled to vote at such meeting, not less than three (3) nor more than sixty (60) days before the meeting. In the case of a special meeting, or to the extent otherwise required by the Corporation Act, the Articles, or these Bylaws, such notice shall also state the purpose or purposes for which the meeting is called. If mailed, such notice shall be deemed delivered when deposited with postage prepaid in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation. Notwithstanding any provision of these Bylaws, defects in the calling or notice of a meeting of shareholders shall be deemed waived to the extent provided by the Corporation Act. SECTION 3.5 Record Date. For the purpose of determining shareholders entitled to notice of and to vote at any meeting of shareholders, the Board may fix in advance a record date, which date shall not be more than sixty (60) days, nor less than three (3) full days, prior to the date of the meeting of shareholders. If the Board does not fix a record date for a meeting of shareholders, the record date shall be the date next preceding the date on which notice of the meeting is mailed. SECTION 3.6 Quorum. At each meeting of shareholders, the holders of a majority of the shares entitled to vote thereat, present in person or by proxy, shall constitute a quorum for the transaction of business. SECTION 3.7 Adjournments. In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by vote of a majority of the shares present, or if no shares are present, by the Clerk. -2- 24 SECTION 3.8 Organization. Each meeting of shareholders shall be presided over by the President or by a person designated by the President to act as chairman of the meeting. If the President is not present and no person is so designated by him, the chairman of the meeting shall be chosen by plurality vote of the shares present or represented at the meeting and entitled to vote. The order of business at all meetings of shareholders shall be as determined by the chairman of the meeting. The secretary of the meeting shall keep a record of all actions taken by the shareholders at the meeting. SECTION 3.9 Voting. Except as otherwise provided by the Articles, each share of stock shall be entitled to one vote on each matter submitted to the shareholders. Except as otherwise provided by statute, the Articles, these Bylaws, or resolution of the Board of Directors, any corporate action shall be authorized by a majority of the votes cast at the meeting by the holders of shares entitled to vote on the subject matter. SECTION 3.10 Voting Inspectors. At each meeting of shareholders, the Clerk shall act as voting inspector unless the Board or the chairman of the meeting shall have designated one or more voting inspectors for such meeting. No director or candidate for the office of director shall act as an inspector for the election of directors. SECTION 3.11 List of Shareholders. The officer or agent having charge of stock transfer books for shares of the Corporation shall, in advance of each meeting of shareholders, prepare a complete list of the shareholders entitled to vote at that meeting. SECTION 3.12 Consent of Shareholders. Any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting if written consents, setting forth the action so taken, are signed by the holders of all outstanding shares entitled to vote on such action and are filed with the Clerk. Such written consents shall have the same force and effect as a unanimous vote of shareholders. ARTICLE IV DIRECTORS SECTION 4.1 General Powers. The Board shall manage and direct the management of the business and affairs of the Corporation and may exercise all powers of the Corporation and do or cause to be done on behalf of the Corporation all lawful acts as are not expressly reserved to the shareholders by the Corporation Act, the Articles, or these Bylaws. SECTION 4.2 Number. The number of directors constituting the Board shall be not less than one (1) nor more than nine (9), and shall be fixed in the manner provided by the Articles. -3- 25 SECTION 4.3 Qualifications. Directors must have attained the age of twenty-one (21) years. SECTION 4.4 Election and Term. Unless otherwise provided by the Articles and except as hereinafter provided, the directors shall be elected each year at the annual meeting of shareholders. Each director shall hold office until the expiration of the term for which he is elected and until his successor has been elected and qualified, or until his earlier resignation, removal from office, death, or incapacity. SECTION 4.5 Vacancies. Vacancies in the Board, including Vacancies created by an increase in the number of directors, may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill any vacancy shall be elected for the unexpired term of his predecessor. SECTION 4.6 Meetings and Notice. Regular meetings of the Board may be held without notice at such place, date, and hour as shall be fixed from time to time by resolution of the Board. Special meetings of the Board may be called only by the President, any director, or such other persons as are specifically permitted by the Corporation Act to call special meetings of directors. Notice of the place, date, and hour of each special meeting (i) shall be mailed to each director, addressed to him at his residence or usual place of business, at least three (3) business days before the meeting or (ii) shall have been sent to him at such place by telegram or cable, or received by him in person by telephone, at least twenty-four (24) hours before the meeting. Notwithstanding any provision of these Bylaws, defects in the calling or notice of a meeting of directors shall be deemed waived to the extent provided by the Corporation Act. SECTION 4.7 Quorum; Voting. At each meeting of the Board, a majority of the directors then in office shall constitute a quorum for the transaction of business. Except as otherwise provided by the Corporation Act, the Articles, or these Bylaws, the vote of a majority of the directors present at any meeting of directors at which a quorum is or was once present shall constitute the act of the Board. In the absence of a quorum, any meeting of directors may be adjourned from time to time by vote of a majority of the directors present. SECTION 4.8 Committees. By resolution adopted by a majority of the directors then in office, the Board may designate from among its members an executive committee and other committees, each consisting of two (2) or more directors. The Board may delegate to any such committee all or any portion of the authority of the Board, except to the extent prohibited by the Corporation Act. SECTION 4.9 Telephonic Meetings. Members of the Board or any committee thereof may participate in a meeting of the Board -4- 26 or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this section shall constitute presence in person at such meeting. SECTION 4.10 Consent of Directors. Any action required or permitted to be taken at a meeting of the Board or of any committee thereof may be taken without a meeting if written consents, setting forth the action taken, are signed by all members of the Board or committee, as the case may be. Such consents shall be filed with the minutes of the Board meetings or committee meetings (as the case may be) and shall have the same effect as a unanimous vote. ARTICLE V OFFICERS SECTION 5.1 Principal Officers. The principal officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary, a Treasurer, a Clerk, and any other officers designated by the Board as principal officers. Any two or more offices may be held by the same person. SECTION 5.2 Appointive Officers. The Board or the President may from time to time appoint or delegate the appointment of such other officers and assistant officers as are deemed necessary, including one or more Assistant Secretaries or Treasurers. SECTION 5.3 Term of Office; Removal. Officers shall hold their offices until their successors are chosen and have qualified, or until their earlier resignation or removal from office. Any officer may be removed at any time, with or without cause, by the Board. Any officer appointed by the President pursuant to these Bylaws may be removed at any time, with or without cause, by the President. SECTION 5.4 Resignations. Any officer may resign at any time by giving written notice to the President or the Clerk. Unless otherwise specified therein, a resignation shall take effect upon receipt of such notice, and the acceptance of such resignation shall not be necessary to make it effective. SECTION 5.5 Vacancies. A vacancy in any office, however occurring, shall be filled for the unexpired portion of the term in the manner prescribed by these Bylaws for regular election or appointment to such office. SECTION 5.6 Powers and Duties. Except as hereinafter provided and subject to the control of the Board, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such -5- 27 powers and duties as from time to time may be conferred by the Board or, in the case of appointive offices, by the President. (a) President. The President shall be the chief executive officer of the Corporation, shall preside at all meetings of shareholders and (unless the Board shall have appointed a chairman of the board) all meetings of the Board, and shall see that all orders and resolutions of the Board are carried into effect. The President shall have authority to appoint and remove agents and employees and to prescribe their powers and duties and may authorize any other officer or officers to do so. He shall have authority to institute or defend legal proceedings whenever the directors or shareholders are deadlocked. (b) Vice President. The Board may elect one or more Vice Presidents, who shall have such powers and duties as the Board shall designate. In the absence or disability of the President, the Vice President (or, in case there shall be more than one, the Vice Presidents in such order as the Board shall designate) shall perform the duties and exercise the powers of the President. (c) Secretary. The Secretary shall attend all meetings of the Board and record its proceedings. He may give, or cause to be given, notice of all meetings of shareholders and directors of the Corporation. The Secretary may certify all votes, resolutions, and actions of the shareholders, the Board, and committees of the Board. (d) Treasurer. The Treasurer shall have charge and custody of, and be responsible for, all funds and securities of the Corporation and shall exercise the powers and shall perform the duties incident to the office of Treasurer. (e) Assistant Secretaries and Assistant Treasurers. Assistant Secretaries and Assistant Treasurers shall perform such duties as from time to time may be assigned to them by the Board, the President, or the Secretary or Treasurer (respectively). At the request of the Secretary or the Treasurer, or in case of his absence or inability to act, any Assistant Secretary or Assistant Treasurer (respectively) may act in his place. (f) Clerk. The Clerk shall be a resident of the State and keep, at the registered office of the corporation, records of all meetings of shareholders. The Clerk may certify all votes, resolutions, and actions of the shareholders, the Board, and committees of the Board. ARTICLE VI INDEMNIFICATION SECTION 6.1 Indemnification of Directors and Officers. The Corporation shall in all cases indemnify any existing or -6- 28 former director or officer of the Corporation who was or is a party or is threatened to be made a party to any Action (as defined below) by reason of the fact that he is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, partner, fiduciary, employee, or agent of another Entity (as defined below), or by reason of his conduct in any such capacity, against Expenses (as defined below) actually and reasonably incurred by him in connection with such Action. SECTION 6.2 Indemnification of Employees and Agents. The Corporation may, but except as provided in Section 6.1 above shall not be required to, indemnify any other person who was or is a party or is threatened to be made a party to any Action by reason of the fact that he is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, employee, partner, fiduciary, or agent of another Entity, or by reason of his conduct in any such capacity, against Expenses actually and reasonably incurred by him in connection with such Action. Such indemnification shall be subject to any restrictions imposed by applicable law or by the Board in its discretion. Unless ordered by a court or required by Section 6.1, indemnification permitted by this Section 6.2 shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of such person is proper in the circumstances and that he has met the applicable standard of conduct set forth in clauses (i) and (ii) of Section 6.3 below. Such determination shall be made by the Board by a majority vote of a quorum consisting of directors who were not parties to such Action, or if such a quorum is not obtainable (or even if obtainable, if a quorum of disinterested directors so directs) by independent legal counsel in a written opinion, or by the shareholders. SECTION 6.3 Standards for Indemnification. Notwithstanding the foregoing, no indemnification pursuant to Section 6.1 or 6.2 above shall be provided for any person with respect to any matter as to which he shall have been finally adjudicated in any Action not to have met the following standard of conduct: (i) That such person acted honestly and in the reasonable belief that his action was in or not opposed to the best interests of the Corporation or its shareholders or, in the case of a person serving as a fiduciary of an employee benefit plan or trust, in or not opposed to the best interests of that plan or trust or its participants or beneficiaries; and (ii) With respect to any criminal action or proceeding, that such person did not have reasonable cause to believe that his conduct was unlawful. -7- 29 Moreover, except to the extent otherwise permitted by law, no indemnification shall be provided for any person with respect to any matter as to which he shall have been finally adjudicated to be liable to the Corporation. The termination of any Action by judgment, order, or conviction adverse to such person, or by settlement or plea of nolo contendere or its equivalent, shall not of itself create a presumption that such person did not satisfy the foregoing standard of conduct. Satisfaction of the foregoing standard of conduct shall not of itself make mandatory any indemnification that is otherwise permitted but not required by this Article VI. SECTION 6.4 Expenses. (a) All Expenses reasonably incurred by any existing or former director or officer in connection with any Action referred to in Section 6.1 above shall promptly be paid by the Corporation, even in advance of the final disposition of that Action. (b) Any Expenses reasonably incurred by any other existing or former employee or agent in connection with any Action referred to in Section 6.2 above may be paid by the Corporation, if so authorized by the Board, in advance of the final disposition of that Action; provided, however, that Expenses may be paid to an employee or agent only upon a determination (made in accordance with Section 6.2 above) that, based solely on the facts then known to those making the determination and without further investigation, the employee or agent seeking indemnification satisfied the standard of conduct set forth in clauses (i) and (ii) of Section 6.3 above. The Board, in its sole discretion, may impose such conditions as it deems appropriate on any advance payment of Expenses to an employee or agent under this paragraph (b). (c) Notwithstanding paragraphs (a) and (b) of this Section 6.4, no advance payment of Expenses shall be made hereunder unless the Company shall be in receipt of: (i) A written undertaking by or on behalf of the indemnified person to repay that amount if such person is finally adjudicated not to be entitled to indemnification by the Corporation; and (ii) A written affirmation by the indemnified person that he has met the standard of conduct set forth in clauses (i) and (ii) of Section 6.3 above. The undertaking required by clause (i) of this paragraph (c) shall be an unlimited general obligation of the person seeking the advance, but (except to the extent otherwise provided by the Board pursuant to paragraph (b) of this Section 6.4) shall not be secured and shall be accepted without reference to financial ability to make the repayment. SECTION 6.5 Enforceability. Once any right to indemnification against or payment of Expenses arises -8- 30 hereunder, it shall be deemed a contract right and may not be modified or revoked, whether by amendment of these Bylaws or otherwise, without the express written consent of the indemnitee. Indemnification and payment rights hereunder shall inure to the benefit of the indemnitee's heirs, devisees, executors, and administrators. Any right to indemnification or payment of Expenses arising under these Bylaws may be enforced by a separate action against the Corporation, if and to the extent an order for such indemnification or payment has not been entered by a court in any Action in respect of which indemnification or payment of Expenses is sought. SECTION 6.6 Nonexclusive Remedy. The rights provided by this Article VI shall not be deemed exclusive of any other right of indemnification or reimbursement provided by contract, the Articles, vote of shareholders or directors, or otherwise. SECTION 6.7 Insurance. The Corporation may purchase and maintain insurance on behalf of itself and any person who is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, partner, fiduciary, employee, or agent of another Entity, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the Corporation Act. SECTION 6.8 Definitions. For purposes hereof, the term "Action" shall include any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative; the term "Entity" shall include any corporation, partnership, joint venture, trust, pension or other employee benefit plan, or other enterprise; and the term "Expenses" shall include expenses (including, without limitation, costs of investigation and attorneys, fees), judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement. A person who serves as a director, officer, trustee, employee, partner, fiduciary, or agent of an Entity controlled by the Corporation, or a pension or employee benefit plan operated for the benefit of employees of the Corporation, shall be deemed to be doing so at the request of the Corporation. ARTICLE VII CONTRACTS, CHECKS, BANK ACCOUNTS, ETC. SECTION 7.1 Execution of Contracts. The President, and any other officer, employee, or agent authorized by the Board or the President shall have authority, in the name and on behalf of the corporation, to enter into any contract. Such authority may be general, or may be confined to specific instances or otherwise limited. -9- 31 SECTION 7.2 Loans. The President or any other officer, employee, or agent authorized by the Board or the President may obtain loans and advances for the Corporation from any person or entity; execute and deliver promissory notes or other evidences of indebtedness of the Corporation for such loans or advances; and when authorized to do so by the Board may pledge, hypothecate, or transfer any property of the Corporation as security for any such loans or advances. Such authority may be general, or may be confined to specific instances or otherwise limited. SECTION 7.3 Checks, Drafts, Etc. The Board or the President shall establish from time to time the manner in which checks, drafts, and other orders for the payment of money from the funds of the Corporation and all other instruments evidencing indebtedness of the Corporation are to be executed on behalf of the Corporation. SECTION 7.4 Bank Accounts. The Board, the President, or any other officer designated by the Board may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies, or other depositories as may be selected by the President or any such other officer or officers. The Board may make such special rules and regulations with respect to bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient. ARTICLE VIII CAPITAL STOCK SECTION 8.1 Share Certificates. Each shareholder, upon payment in full for his shares, shall be entitled to a certificate certifying the number of shares owned by him in the Corporation. No certificate shall be issued for any share until such share is fully paid. Each such certificate shall be signed in the name of the Corporation by any two officers of the Corporation. Share certificates of the Corporation shall conform to all requirements imposed thereon by the Corporation Act or these Bylaws and shall bear such additional legends, if any, as the Clerk shall consider appropriate. SECTION 8.2 Lost Certificates. The Board may direct that a new certificate be issued in place of any certificate previously issued by the Corporation and alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The Board may, in its discretion, require the owner of the lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond, in such sum and with such sureties as the Board may direct, to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. -10- 32 SECTION 8.3 Transfer of Shares. Each transfer of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his duly authorized attorney-in-fact, or with a transfer agent appointed in accordance with this Article VIII, upon surrender of the certificate or certificates of such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law; provided that whenever any transfer of shares shall be made for collateral security and not absolutely, such fact, if known to the Corporation or to its transfer agent, shall be so expressed in the entry of transfer if requested in writing by both the transferor and transferee. The Board may, from time to time, make such additional rules and regulations as it may deem expedient, not inconsistent with these Bylaws or the Articles, concerning the issue, transfer, and registration of certificates for shares of the capital stock of the Corporation. ARTICLE IX GENERAL PROVISIONS SECTION 9.1 Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year, except as otherwise fixed by resolution of the Board. SECTION 9.2 Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation and its state of incorporation and may be in any form approved by the Board or the Clerk from time to time. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. In the event it is inconvenient to use such a seal, the signature of the Corporation followed by the word "seal" enclosed in parentheses shall be deemed the seal of the Corporation. SECTION 9.3 Interpretation. Headings and captions used herein are inserted for convenience only and in no way describe or define the scope or content of any provision. Whenever used herein, the masculine gender shall include the feminine and neuter genders, as the context requires. In the case of any conflict between the provisions of the Articles and these Bylaws, the Articles shall control. -11- EX-3.11 8 ARTICLES OF AMENDMENT OF BEACON MANUFACTURING CO. 1 EXHIBIT 3.11 State of North Carolina Department of the Secretary of State ARTICLES OF INCORPORATION Pursuant to Section 55-2-02 of the General Statutes of North Carolina, the undersigned does hereby submit these Articles of Incorporation for the purpose of forming a business corporation. 1. The name of the corporation is Be-Ac, Inc. (the "Corporation"). 2. The Corporation is authorized to issue 100,000 shares, all of one class, designated as common stock. 3. The street address, mailing address, and county of the initial registered office of the Corporation is 225 Hillsborough Street; Raleigh, County of Wake, North Carolina 27603. 4. The name of the initial registered agent is CT Corporation System. 5. The name and addresses of the persons who are to serve as the initial Board of Directors of the Corporation until the first meeting of shareholders or until their successors be elected and qualified are as follows: Charles M. Hansen, Jr. 4111 Mint Way Dallas, Texas 75237 Jeffrey D. Cordes 4111 Mint Way Dallas, Texas 75237 John C. Macauley 4111 Mint Way Dallas, Texas 75237 6. To the fullest extent from time to time permitted by law, no person who is serving or who has served as a director of the Corporation shall be personally liable in any action for monetary damages for breach of his or her duty as a director, whether such action is brought by or in the right of the Corporation or otherwise. Neither the amendment or repeal of this Article, nor the adoption of any provision of these Articles of Incorporation inconsistent with this Article, shall eliminate or reduce the protection afforded by this Article to a director of the Corporation with respect to any matter which occurred, or any cause of action, suit or claim which but for this Article would have accrued or arisen, prior to such amendment, repeal or adoption. 2 7. The name and address of the incorporator are as follows: NAME ADDRESS Richard L. Waggoner 1601 Elm Street 3000 Thanksgiving Tower Dallas, TX 75201 8. These articles will be effective upon filing. IN WITNESS WHEREOF, the undersigned has set hereunto his hand this 24th day of August, 1994. /s/ RICHARD L. WAGGONER ------------------------------ Richard L. Waggoner Incorporator -2- 3 State of North Carolina Department of the Secretary of State ARTICLES OF AMENDMENT Pursuant to Section 55-10-06 of the General Statutes of North Carolina, the undersigned corporation hereby submits the following Articles of Amendment for the purposes of amending its Articles of Incorporation. 1. The name of the corporation is Be-Ac, Inc., a North Carolina corporation (the "Corporation"). 2. The following amendment to the Articles of Incorporation was adopted by the Corporation as of Dec 1, 1994: Article 1 of the Articles of Incorporation is hereby deleted in its entirety. A new Article 1 is hereby added to the Articles of Incorporation of the Corporation, to read in its entirety as follows: "1. The name of the corporation is Beacon Manufacturing Company (the "Corporation")." 3. The amendment was approved by shareholder action. Shareholder approval of the Articles of Amendment was obtained as required by Chapter 55 of the North Carolina General Statutes. 4. The Articles of Amendment will be effective upon filing with the Secretary of State of North Carolina. This the 29th day of November, 1994. BE-AC, INC. By: /s/ JEFFREY D. CORDES --------------------------------- Jeffrey D. Cordes, Executive Vice President 4 State of North Carolina Department of the Secretary of State ARTICLES OF MERGER Pursuant to Section 55-11-05 of the General Statutes of North Carolina, the undersigned corporation as the surviving corporation in a merger hereby submits the following Articles of Merger. 1. The name of the surviving corporation is Beacon Manufacturing Company, a corporation organized under the laws of North Carolina; the name of the merged corporation is Realmac, Inc., a corporation organized under the laws of North Carolina. 2. Attached is a copy of the Agreement and Plan of Merger that was adopted in the manner prescribed by law by the board of directors of each of the corporations participating in the merger. 3. Shareholder approval of both corporations was required for the merger and the merger was approved by the shareholders as required by Chapter 55 of the North Carolina General Statutes. 4. These articles will be effective at 11:59 p.m. on June 30, 1995. This the 28 day of June, 1995. BEACON MANUFACTURING COMPANY By: /s/ JEFFREY D. CORDES ------------------------------ Jeffrey D. Cordes Executive Vice President 5 AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger is executed as of June 28, 1995, by and between Realmac, Inc., a North Carolina corporation ("Realmac"), and Beacon Manufacturing Company, a North Carolina corporation ("Beacon"). WITNESSETH: WHEREAS, the authorized capital stock of Beacon consists of 100,000 shares of Common Stock, no par value ("Beacon Common Stock"), of which 1,000 shares are issued and outstanding; and WHEREAS, the authorized capital stock of Realmac consists of 100,000 shares of Common Stock, no par value ("Realmac Common Stock"), of which 1,000 shares are issued and outstanding; and WHEREAS, the boards of directors and sole shareholder of each of Realmac and Beacon deem it to be desirable and in the best interest of the respective corporations that the two corporations merge into a single corporation (the "Merger") , and, pursuant to resolutions duly adopted, each board of directors and sole shareholder have approved and adopted this Agreement; NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements and covenants contained herein, the parties hereto agree as follows: ARTICLE I Section 1.1. In accordance with the provisions of the North Carolina General Statutes, at the Effective Time (defined below) of the Merger, Realmac shall be merged into Beacon, which shall be the surviving corporation (in its capacity as such surviving corporation Beacon is hereinafter sometimes referred to as the "Surviving Corporation", and Realmac and Beacon are hereinafter sometimes referred to collectively as the "Constituent Corporations") , and as such Beacon shall continue to be governed by the laws of the State of North Carolina. Section 1.2. The Merger shall become effective at 11:59 p.m. on June 30, 1995. The time when the Merger shall become effective is herein called the "Effective Time." Section 1.3. Except as may otherwise be set forth herein, at the Effective Time, the corporate existence and identity of Beacon, with all its purposes, powers, franchises, privileges, rights and immunities shall continue under the laws of the State of North Carolina, unaffected and unimpaired by the Merger, and the corporate existence and identity of Realmac, with all its purposes, powers, franchises, privileges, rights and immunities, shall be 6 merged with and into Beacon and the Surviving Corporation shall be vested fully therewith, and the separate corporate existence and identity of Realmac shall thereafter cease, except to the extent continued by applicable law. At the Effective Time, the Surviving Corporation shall have the following rights and obligations: (a) The Surviving Corporation shall have all the rights, privileges, immunities and powers, and shall be subject to all of the duties and liabilities, of a corporation organized under the laws of the State of North Carolina. (b) The Surviving Corporation shall succeed to, without other transfer, and shall possess and enjoy, all of the rights, privileges, immunities, powers, purposes and franchises, of both a public and private nature, of the Constituent Corporations and all property, real, personal and mixed, and all debts due to either of the Constituent Corporations on whatever account and all other choices in action, and every other interest of or belonging to either of the Constituent Corporations shall be deemed to be transferred to and vested in the Surviving Corporation without further act or deed, and shall thereafter be the property of the Surviving Corporation as they were of the respective Constituent Corporations, and the title to any real estate vested by deed or otherwise in either of said Constituent Corporations shall not revert or be in any way impaired by reason of the Merger. (c) The Surviving Corporation shall thenceforth be responsible and liable for all debts, liabilities, obligations and duties of either of the Constituent Corporations, and any claim existing or action or proceeding pending by or against either Constituent Corporation may be prosecuted as if the Merger had not occurred, or the Surviving Corporation may be substituted in its place. Neither the rights of creditors nor any liens upon the property of either Constituent Corporation shall be impaired by the Merger. Section 1.4. If at any time the Surviving Corporation shall deem or be advised that any further transfers, assignments, conveyances, assurances in law or other acts or things are necessary or desirable to vest or confirm in the Surviving Corporation the title to any property or assets of either of the Constituent Corporations, each Constituent Corporation and its proper officers and directors shall execute and deliver any and all such proper transfers, assignments, conveyances and assurances in law, and shall do all other acts and things as are necessary or proper to vest or confirm title to such property and assets in the Surviving Corporation and to otherwise carry out the purposes and intent of this Agreement. 7 ARTICLE II Section 2.1. The Articles of Incorporation of Beacon in effect at the Effective Time shall constitute the Articles of Incorporation of the Surviving Corporation, until amended, altered or repealed in the manner provided by law. Section 2.2. The Bylaws of Beacon in effect at the Effective Time shall be the Bylaws of the Surviving Corporation, until amended, altered or repealed. Section 2.3. The directors of Beacon at the Effective Time shall be the directors of the Surviving Corporation and shall hold office in accordance with the Bylaws of the Surviving Corporation until the next annual meeting of shareholders of the Surviving Corporation or until their respective successors are elected and qualified. Section 2.4. The officers of Beacon at the Effective Time shall be the officers of the Surviving Corporation and shall hold office subject to the Bylaws of the Surviving Corporation. ARTICLE III Section 3.1. At the Effective Time, all of the outstanding shares of Realmac Common Stock shall by virtue of the Merger and without any further action be cancelled and retired and shall cease to exist, all certificates representing such shares shall be cancelled and no cash or securities or other property shall be issued in respect of such shares. ARTICLE IV Section 4.1. This Agreement may be executed by the parties hereto in counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one instrument. Section 4.2. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of Realmac and Beacon at any time prior to the Effective Time. Section 4.3. This Agreement may be terminated at any time prior to the Effective Time by mutual agreement of the parties hereto. 3 8 IN WITNESS WHEREOF, each of the Constituent Corporations has caused this Agreement to be executed on its behalf by its respective officers hereunto duly authorized as of the date first above written. BEACON MANUFACTURING COMPANY By: /s/ JEFFREY D. CORDES ---------------------------------- Jeffrey D. Cordes, Executive Vice President REALMAC, INC. By: /s/ JEFFREY D. CORDES ---------------------------------- Jeffrey D. Cordes, Executive Vice President 4 EX-3.12 9 AMEND & RESTATED BYLAWS OF BEACON MANUFACTURING CO 1 EXHIBIT 3.12 AMENDED AND RESTATED BYLAWS OF BEACON MANUFACTURING COMPANY (a North Carolina corporation) Effective December 1, 1994 2 TABLE OF CONTENTS TO AMENDED AND RESTATED BYLAWS OF BEACON MANUFACTURING COMPANY ARTICLE 1 - OFFICES 1 Section 1. Principal and Registered Office 1 Section 2. Other Offices 1 ARTICLE 2 - MEETINGS OF SHAREHOLDERS 1 Section 1. Place of Meeting 1 Section 2. Annual Meeting 1 Section 3. Substitute Annual Meeting 1 Section 4. Special Meetings 1 Section 5. Notice of Meetings 1 Section 6. Quorum 2 Section 7. Shareholders' List 2 Section 8. Voting of Shares 3 Section 9. Action Without Meeting 3 ARTICLE 3 - BOARD OF DIRECTORS 3 Section 1. General Powers 3 Section 2. Number, Term and Qualification 3 Section 3. Removal 4 Section 4. Vacancies 4 Section 5. Compensation 4 ARTICLE 4 - MEETINGS OF DIRECTORS 4 Section 1. Annual and Regular Meetings 4 Section 2. Special Meetings 5 Section 3. Notice of Meetings 5 Section 4. Quorum 5 Section 5. Manner of Acting 5 Section 6. Presumption of Assent 5 Section 7. Action Without Meeting 6 Section 8. Meeting by Communications Device 6 ARTICLE 5 - COMMITTEES 6 Section 1. Election and Powers 6 Section 2. Removal; Vacancies 7 Section 3. Meetings 7 Section 4. Minutes 7
3 ARTICLE 6 - OFFICERS 7 Section 1. Titles 7 Section 2. Election; Appointment 7 Section 3. Removal 7 Section 4. Vacancies 8 Section 5. Compensation 8 Section 6. Chairman and Vice Chairman of the Board of Directors 8 Section 7. Chief Executive Office 8 Section 8. President 8 Section 9. Vice Presidents 9 Section 10. Secretary 9 Section 11. Assistant Secretaries 9 Section 12. Treasurer 9 Section 13. Assistant Treasurers 10 Section 14. Controller and Assistant Controllers 10 Section 15. Voting Upon Stocks 10 ARTICLE 7 - CAPITAL STOCK 10 Section 1. Certificates 10 Section 2. Transfer of Shares 11 Section 3. Transfer Agent and Registrar 11 Section 4. Regulations 11 Section 5. Fixing Record Date 11 Section 6. Lost Certificates 11 ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS 12 Section 1. Indemnification Provisions 12 Section 2. Definitions 12 Section 3. Settlements 13 Section 4. Litigation Expense Advances 13 Section 5. Approval of Indemnification Payments 13 Section 6. Suits by Claimant 13 Section 7. Consideration; Personal Representatives and Other Remedies 14 Section 8. Scope of Indemnification Rights 14 ARTICLE 9 - GENERAL PROVISIONS 14 Section 1. Dividends and other Distributions 14 Section 2. Seal 14 Section 3. Waiver of Notice 14 Section 4. Checks 14 Section 5. Fiscal Year 15 Section 6. Amendments 15 Section 7. Shareholders' Agreement 15
-2- 4 AMENDED AND RESTATED BYLAWS OF BEACON MANUFACTURING COMPANY ARTICLE 1 - OFFICES Section 1. Principal and Registered Office. The principal office of the corporation shall be located at 4111 Mint Way, Dallas, Texas 75237. The registered office of the corporation shall be located at 225 Hillsborough Street, Raleigh, North Carolina 27603. Section 2. Other Offices. The corporation may have offices at such other places, either within or without the State of North Carolina, as the board of directors may from time to time determine. ARTICLE 2 - MEETINGS OF SHAREHOLDERS Section 1. Place of Meeting. Meetings of shareholders shall be held at the principal office of the corporation, or at such other place, either within or without the State of North Carolina, as shall be designated in the notice of the meeting. Section 2. Annual Meeting. The annual meeting of shareholders shall be held at 9 o'clock a.m. on the second Wednesday of April of each year, if not a legal holiday, but if a legal holiday, then on the next business day which is not a legal holiday, for the purpose of electing directors of the corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meeting. If the annual meeting is not held in accordance with these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article. A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the shareholders may be called at any time by the president or the board of directors. Section 5. Notice of Meetings. At least 10 and no more than 60 days prior to any annual or special meeting of shareholders, the corporation shall notify shareholders of the date, time and place of the meeting and, in the case of a special or substitute annual meeting or where otherwise required by law, shall briefly describe the purpose or purposes of the meeting. Only business within the purpose or purposes described in the notice may be conducted at a special meeting. Unless otherwise required by the articles of incorporation or by law (for example, 5 in the event of a meeting to consider the adoption of a plan of merger or share exchange, a sale of assets other than in the ordinary course of business or a voluntary dissolution), the corporation shall be required to give notice only to shareholders entitled to vote at the meeting. If an annual or special shareholders' meeting is adjourned to a different date, time or place, notice thereof need not be given if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date. It shall be the primary responsibility of the secretary to give the notice, but notice may be given by or at the direction of the president or other person or persons calling the meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail with postage thereon prepaid, correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. Section 6. Quorum. A majority of the votes entitled to be cast by a voting group on a matter, represented in person or by proxy at a meeting of shareholders, shall constitute a quorum for that voting group for any action on that matter, unless quorum requirements are otherwise fixed by a court of competent jurisdiction acting pursuant to Section 55-7-03 of the General Statutes of North Carolina. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof, unless a new record date is or must be set for the adjournment. Action may be taken by a voting group at any meeting at which a quorum of that voting group is represented, regardless of whether action is taken at that meeting by any other voting group. In the absence of a quorum at the opening of any meeting of shareholders, such meeting may be adjourned from time to time by a vote of the majority of the shares voting on the motion to adjourn. Section 7. Shareholders' List. After a record date is fixed for a meeting, the secretary of the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the shareholders' meeting. Such list shall be arranged by voting group (and within each voting group by class or series of shares) and shall show the address of and number of shares held by each shareholder. The shareholders' list shall be made available for inspection by any shareholder beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or at such other place identified in the meeting notice in the city where the meeting will be held. The corporation shall make the shareholders' list available at the meeting, and any shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment. -2- 6 Section 8. Voting of Shares. Except as otherwise provided by the articles of incorporation or by law, each outstanding share of voting capital stock of the corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the shareholders. Unless otherwise provided in the articles of incorporation or by law, cumulative voting for directors shall not be allowed. Action on a matter by a voting group for which a quorum is present is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the vote of a greater number is required by law or by the articles of incorporation. Voting on all matters shall be by voice vote or by a show of hands, unless the holders of one-tenth of the shares represented at the meeting shall demand a ballot vote on a particular matter. Absent special circumstances, the shares of the corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, except that this provision shall not limit the power of the corporation to vote shares held by it in a fiduciary capacity. Section 9. Action Without Meeting. Any action which the shareholders could take at a meeting may be taken without a meeting if one or more written consents, setting forth the action taken, shall be signed, before or after such action, by all the shareholders who would be entitled to vote upon the action at a meeting. The consent shall be delivered to the corporation for inclusion in the minutes or filing with the corporate records. If by law, the corporation is required to give its nonvoting shareholders written notice of the proposed action, it shall do so at least 10 days before the action is taken, and such notice must contain or be accompanied by the same material that would have been required by law to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action. ARTICLE 3 - BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the corporation shall be managed under the direction of the board of directors except as otherwise provided by the articles of incorporation or by a valid shareholders' agreement. Section 2. Number, Term and Qualification. The number of directors of the corporation shall consist of one or more individuals. The shareholders at any annual meeting may by resolution fix the number of directors to be elected at the meeting; but in the absence of such resolution, the number of directors elected at the meeting shall constitute the number of directors of the corporation until the next annual meeting of -3- 7 shareholders, unless the number is changed prior to such meeting by action of the shareholders. The board of directors shall have the authority to increase or decrease by thirty percent within any twelve-month period the number of directors. Each director's term shall expire at the annual meeting next following the director's election as a director, provided, that notwithstanding the expiration of the term of the director, the director shall continue to hold office until a successor is elected and qualifies or until his death, resignation, removal or disqualification or until there is a decrease in the number of directors. Directors need not be residents of the State of North Carolina or shareholders of the corporation unless the articles of incorporation so provide. Section 3. Removal. Directors may be removed from office with or without cause (unless the articles of incorporation provide that directors may be removed only for cause) provided the notice of the shareholders' meeting at which such action is to be taken states that a purpose of the meeting is removal of the director and the number of votes cast to remove the director exceeds the number of votes cast not to remove him. Section 4. Vacancies. Except as otherwise provided in the articles of incorporation, a vacancy occurring in the board of directors, including, without limitation, a vacancy resulting from an increase in the number of directors or from the failure by the shareholders to elect the full authorized number of directors, may be filled by a majority of the remaining directors or by the sole director remaining in office. The shareholders may elect a director at any time to fill a vacancy not filled by the directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 5. Compensation The directors shall not receive compensation for their services as such, except that by resolution of the board of directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the board or of a committee, and they may be reimbursed for expenses of attendance. Any director may serve the corporation in any other capacity and receive compensation therefor. ARTICLE 4 - MEETING OF DIRECTORS Section 1. Annual and Regular Meetings. The annual meeting of the board of directors shall be held immediately following the annual meeting of the shareholders. The board of directors may by resolution provide for the holding of regular meetings of the board on specified dates and at specified times. Notice of regular meetings held at the principal office of the corporation and at the usual scheduled time shall not be required. If any date for which a regular meeting is scheduled shall be a -4- 8 legal holiday, the meeting shall be held on a date designated in the notice of the meeting, if any, during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the board shall be held at the principal office of the corporation or at such other place as may be designated in the notice of the meeting. Section 2. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president or any two directors. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. Unless the articles of incorporation provide otherwise, the annual and regular meetings of the board of directors may be held without notice of the date, time, place or purpose of the meeting. The secretary or other person of persons calling a special meeting shall give notice by any usual means of communication to be sent at least two days before the meeting if notice is sent by means of telephone, telecopy or personal delivery and at least five days before the meeting if notice is sent by mail. A director's attendance at, or participation in, a meeting for which notice is required shall constitute a waiver of notice, unless the director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. Section 4. Quorum. Except as otherwise provided in the articles of incorporation, a majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the board of directors. Section 5. Manner of Acting. Except as otherwise provided in the articles of incorporation, the affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. Section 6. Presumption of Assent. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken is deemed to have assented to the action taken unless he objects at the beginning of the meeting (or promptly upon arrival) to holding, or transacting business at, the meeting, or unless his dissent or abstention is entered in the minutes of the meeting or unless he shall file written notice of his dissent or abstention to such action with the presiding officer of the meeting before its adjournment or with the corporation immediately after adjournment of the meeting. The right of dissent or abstention shall not apply to a director who voted in favor of such action. -5- 9 Section 7. Action Without Meeting. Unless otherwise provided in the articles of incorporation, action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents signed by each director before or after such action, describing the action taken, and included in the minutes or filed with the corporate records. Action taken without a meeting is effective when the last director signs the consent, unless the consent specifies a different effective date. Section 8. Meeting by Communications Device. Unless otherwise provided in the articles of incorporation, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. ARTICLE 5 - COMMITTEES Section 1. Election and Powers. Unless otherwise provided by the articles of incorporation or the bylaws, a majority of the board of directors may create one or more committees and appoint two or more directors to serve at the pleasure of the board on each such committee. To the extent specified by the board of directors or in the articles of incorporation, each committee shall have and may exercise the powers of the board in the management of the business and affairs of the corporation, except that no committee shall have authority to do the following: (a) Authorize distributions. (b) Approve or propose to shareholders action required to be approved by shareholders. (c) Fill vacancies on the board of directors or on any of its committees. (d) Amend the articles of incorporation. (e) Adopt, amend or repeal the bylaws. (f) Approve a plan of merger not requiring shareholder approval. (g) Authorize or approve the reacquisition of shares, except according to a formula or method prescribed by the board of directors. -6- 10 (h) Authorize or approve the issuance, sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors. Section 2. Removal; Vacancies. Any member of a committee may be removed at any time with or without cause, and vacancies in the membership of a committee by means of death, resignation, disqualification or removal shall be filled by a majority of the whole board of directors. Section 3. Meetings. The provisions of Article 4 governing meetings of the board of directors, action without meeting, notice, waiver of notice and quorum and voting requirements shall apply to the committees of the board and its members. Section 4. Minutes. Each committee shall keep minutes of its proceedings and shall report thereon to the board of directors at or before the next meeting of the board. ARTICLE 6 - OFFICERS Section 1. Titles. The officers of the corporation shall be a president and a secretary and may include a chairman and vice chairman of the board of directors, an executive vice president, a treasurer, one or more additional vice presidents, a controller, one or more assistant secretaries, one or more assistant treasurers, one or more assistant controllers, and such other officers as shall be deemed necessary. The officers shall have the authority and perform the duties as set forth herein or as from time to time may be prescribed by the board of directors or by the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of officers). Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election; Appointment. The officers of the corporation shall be elected from time to time by the board of directors or appointed from time to time by the president (to the extent that the president is authorized by the board to appoint officers). Section 3. Removal. Any officer may be removed by the board at any time with or without cause whenever in its judgment the best interests of the corporation will be served, but removal shall not itself affect the officer's contract rights, if any, with the corporation. -7- 11 Section 4. Vacancies. Vacancies among the officers may be filled and new offices may be created and filled by the board of directors, or by the president (to the extent authorized by the board). Section 5. Compensation. The compensation of the officers shall be fixed by, or under the direction of, the board of directors. Section 6. Chairman and Vice Chairman of the Board of Directors. The chairman of the board of directors, if such officer is elected, shall preside at meetings of the board of directors and shall have such other authority and perform such other duties as the board of directors shall designate. The vice chairman, if elected, shall preside at meetings of the board in the absence of the chairman and shall have such other authority and perform such other duties as the board of directors shall designate. Section 7. Chief Executive Officer. The chief executive officer of the corporation shall have, subject to the provisions of these bylaws, general supervision of the affairs of the corporation and general and active control of all its business. He shall preside, in the absence of the chairman of the board, at all meetings of shareholders and at all meetings of the board of directors. He shall see that all orders and resolutions of the board of directors and the shareholders are carried into effect. He shall have general authority to execute bonds, deeds and contracts in the name of the corporation and affix the corporate seal thereto; to sign stock certificates; to cause the employment or appointment of such employees and agents of the corporation as the proper conduct of operations may require, and to fix their compensation, subject to the provisions of these bylaws; to remove or suspend any employee or agent who shall have been employed or appointed under his authority or under authority of an officer subordinate to him; to suspend for cause, pending final action by the authority which shall have elected or appointed him, any officer subordinate to the chairman of the board; and, in general, to exercise all the powers and authority usually appertaining to the chief executive officer of a corporation, except as otherwise provided in these bylaws. Section 8. President. The president shall be the chief operating officer of the corporation, shall in the absence or disability of the chief executive officer perform the duties and exercise the powers of the chief executive officer, and shall have, subject to review and approval of the chief executive officer, responsibility for the general day-to-day operations of the corporation's properties and facilities and such other duties and responsibilities as (i) are customarily possessed by a chief operating officer of a corporation similar in size and line of business as the corporation and (ii) may be delegated to him from time to time by the board of directors of the corporation. -8- 12 Section 9. Vice Presidents. The executive vice president, if such officer is elected or appointed, shall exercise the powers of the president during that officer's absence or inability to act. In default of both the president and the executive vice president, any other vice president may exercise the powers of the president. Any action taken by a vice president in the performance of the duties of the president shall be presumptive evidence of the absence or inability to act of the president at the time the action was taken. The vice presidents shall have such other powers and perform such other duties as may be assigned by the board of directors or by the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers). Section 10. Secretary. The secretary shall keep accurate records of the acts and proceedings of all meetings of shareholders and of the board of directors and shall give all notices required by law and by these bylaws. The secretary shall have general charge of the corporate books and records and shall have the responsibility and authority to maintain and authenticate such books and records. The secretary shall have general charge of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The secretary shall have general charge of the stock transfer books of the corporation and shall keep at the principal office of the corporation a record of shareholders, showing the name and address of each shareholder and the number and class of the shares held by each. The secretary shall sign such instruments as may require the signature of the secretary, and in general shall perform the duties incident to the office of secretary and such other duties as may be assigned from time to time by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers). Section 11. Assistant Secretaries. Each assistant secretary, if such officer is elected, shall have such powers and perform such duties as may be assigned by the board of directors or the president (if authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant secretaries shall exercise the powers of the secretary during that officer's absence or inability to act. Section 12. Treasurer. The treasurer shall have custody of all funds and securities belonging to the corporation and shall receive, deposit or disburse the same under the direction of the board of directors. The treasurer shall keep full and accurate accounts of the finances of the corporation, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for the year unless that information appears elsewhere in the financial statements. If -9- 13 financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. The treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers). Section 13. Assistant Treasurers. Each assistant treasurer, if such officer is elected, shall have such powers and perform such duties as may be assigned by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant treasurers shall exercise the powers of the treasurer during that officer's absence or inability to act. Section 14. Controller and Assistant Controllers. The controller, if such officer is elected, shall have charge of the accounting affairs of the corporation and shall have such other powers and perform such other duties as the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers) shall designate. Each assistant controller shall have such powers and perform such duties as may be assigned by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant controllers shall exercise the powers of the controller during that officer's absence or inability to act. Section 15. Voting Upon Stocks. Unless otherwise ordered by the board of directors, the president shall have full power and authority on behalf of the corporation to attend, act and vote at meetings of the shareholders of any corporation in which this corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the corporation might have possessed and exercised if present. The board of directors may by resolution from time to time confer such power and authority upon any other person or persons. ARTICLE 7 - CAPITAL STOCK Section 1. Certificates. Shares of the capital stock of the corporation shall be represented by certificates. The name and address of the persons to whom shares of capital stock of the corporation are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the corporation. Certificates for shares of the capital stock of the -10- 14 corporation shall be in such form not inconsistent with the articles of incorporation of the corporation as shall be approved by the board of directors. Each certificate shall be signed (either manually or by facsimile) by (a) the president or any vice president and by the secretary, assistant secretary, treasurer or assistant treasurer or (b) any two officers designated by the board of directors. Each certificate may be sealed with the seal of the corporation or a facsimile thereof. Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer records of the corporation, and transfers shall be made only upon surrender of the certificate for the shares sought to be transferred by the recordholder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer or reissue shall be cancelled before new certificates for the shares shall be issued. Section 3. Transfer Agent and Registrar. The board of directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The board of directors may make rules and regulations as it deems expedient concerning the issue, transfer and registration of shares of capital stock of the corporation. Section 5. Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the board of directors may fix in advance a date as the record date for the determination of shareholders. The record date shall be not more than 70 days before the meeting or action requiring a determination of shareholders. A determination of shareholders entitled to notice of or to vote at a shareholders' meeting shall be effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is fixed for the determination of shareholders, the record date shall be the day the notice of the meeting is mailed or the day the action requiring a determination of shareholders is taken. If no record date is fixed for action without a meeting, the record date for determining shareholders entitled to take action without a meeting shall be the date the first shareholder signs a consent to the action taken. Section 6. Lost Certificates. The board of directors must authorize the issuance of a new certificate in place of a certificate claimed to have been lost, destroyed or wrongfully -11- 15 taken, upon receipt of (a) an affidavit from the person explaining the loss, destruction or wrongful taking, and (b) a bond from the claimant in a sum as the corporation may reasonably direct to indemnify the corporation against loss from any claim with respect to the certificate claimed to have been lost, destroyed or wrongfully taken. The board of directors may, in its discretion, waive the affidavit and bond and authorize the issuance of a new certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken. ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 1. Indemnification Provisions. Any person who at any time serves or has served as a director or officer of the corporation or of any wholly owned subsidiary of the corporation, or in such capacity at the request of the corporation for any other foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or as a trustee or administrator under any employee benefit plan of the corporation or of any wholly owned subsidiary thereof (a "Claimant"), shall have the right to be indemnified and held harmless by the corporation to the fullest extent from time to time permitted by law against all liabilities and litigation expenses (as hereinafter defined) in the event a claim shall be made or threatened against that person in, or that person is made or threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by or on behalf of the corporation, including all appeals therefrom (a "proceeding"), arising out of such service; provided, that such indemnification shall not be effective with respect to (a) that portion of any liabilities or litigation expenses with respect to which the Claimant is entitled to receive payment under any insurance policy or (b) any liabilities or litigation expenses incurred on account of any of the Claimant's activities which were at the time taken known or believed by the Claimant to be clearly in conflict with the best interests of the corporation. Section 2. Definitions. As used in this Article, (a)"liabilities" shall include, without limitation, (1) payments in satisfaction of any judgment, money decree, excise tax, fine or penalty for which Claimant had become liable in any proceeding and (2) payments in settlement of any such proceeding subject, however, to Section 3 of this Article 8; (b)"litigation expenses" shall include, without limitation, (1) reasonable costs and expenses and attorneys' fees and expenses actually incurred by the Claimant in connection with any proceeding and (2) reasonable costs and expenses and attorneys' fees and expenses in connection with the enforcement of rights to the indemnification granted hereby or by applicable law, if such enforcement is successful in whole or in part; and (c) "disinterested directors" shall mean directors who are not a party to the proceeding in question. -12- 16 Section 3. Settlements. The corporation shall not be liable to indemnify the Claimant for any amounts paid in settlement of any proceeding effected without the corporation's written consent. The corporation will not unreasonably withhold its consent to any proposed settlement. Section 4. Litigation Expense Advances. (a) Except as provided in subsection (b) below, any litigation expenses shall be advanced to any Claimant within 30 days of receipt by the secretary of the corporation of a demand therefor, together with an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that the Claimant is entitled to be indemnified by the corporation against such expenses. The secretary shall promptly forward notice of the demand and undertaking immediately to all directors of the corporation. (b) Within 10 days after mailing of notice to the directors pursuant to subsection (a) above, any disinterested director may, if desired, call a meeting of all disinterested directors to review the reasonableness of the expenses so requested. No advance shall be made if a majority of the disinterested directors affirmatively determines that the item of expense is unreasonable in amount; but if the disinterested directors determine that a portion of the expense item is reasonable, the corporation shall advance such portion. (c) Without limiting the rights contained in subsection (a) above, the board of directors may take action to advance any litigation expenses to a Claimant upon receipt of an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that the Claimant is entitled to be indemnified by the corporation against such expenses. Section 5. Approval of Indemnification Payments. Except as provided in Section 4 of this Article, the board of directors of the corporation shall take all such action as may be necessary and appropriate to authorize the corporation to pay the indemnification required by Section 1 of this Article, including, without limitation, making a good faith evaluation of the manner in which the Claimant acted and of the reasonable amount of indemnity due the Claimant. In taking any such action, any Claimant who is a director of the corporation shall not be entitled to vote on any matter concerning such Claimant's right to indemnification. Section 6. Suits by Claimant. No Claimant shall be entitled to bring suit against the corporation to enforce his rights under this Article until sixty days after a written claim has been received by the corporation, together with any undertaking to repay as required by Section 4 of this Article. It shall be a -13- 17 defense to any such action that the Claimant's liabilities or litigation expenses were incurred on account of activities described in clause (b) of Section 1 of this Article, but the burden of proving this defense shall be on the corporation. Neither the failure of the corporation to determine that indemnification of the Claimant is proper, nor determination by the corporation that indemnification is not due because of application of clause (b) of Section 1 of this Article shall be a defense to the action or create a presumption that the Claimant has not met the applicable standard of conduct. Section 7. Consideration; Personal Representatives and Other Remedies. Any Claimant who during such time as this Article or corresponding provisions of predecessor bylaws is or has been in effect serves or has served in any of the capacities described in Section 1 of this Article shall be deemed to be doing so or to have done so in reliance upon, and as consideration for, the right of indemnification provided herein or therein. The right of indemnification provided herein or therein shall inure to the benefit of the legal representatives of any Claimant hereunder, and the right shall not be exclusive of any other rights to which the Claimant or legal representative may be entitled apart from this Article. Section 8. Scope of Indemnification Rights. The rights granted herein shall not be limited by the provisions of Section 55-8-51 of the General Statutes of North Carolina or any successor statute. ARTICLE 9 - GENERAL PROVISIONS Section 1. Dividends and other Distributions. The board of directors may from time to time declare and the corporation may pay dividends or make other distributions with respect to its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the corporation shall be any form approved from time to time or at any time by the board of directors. Section 3. Waiver of Notice. Whenever notice is required to be given to a shareholder, director or other person under the provisions of these bylaws, the articles of incorporation or applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the date and time stated in the notice, and delivered to the corporation shall be equivalent to giving the notice. Section 4. Checks. All checks, drafts or orders for the payment of money shall be signed by the officer or officers or -14- 18 other individuals that the board of directors may from time to time designate. Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed by the board of directors. Section 6. Amendments. Unless otherwise provided in the articles of incorporation or a bylaw adopted by the shareholders or by law, these bylaws may be amended or repealed by the board of directors, except that a bylaw adopted, amended or repealed by the shareholders may not be readopted, amended or repealed by the board of directors if neither the articles of incorporation nor a bylaw adopted by the shareholders authorizes the board of directors to adopt, amend or repeal that particular bylaw or the bylaws generally. These bylaws may be amended or repealed by the shareholders even though the bylaws may also be amended or repealed by the board of directors. A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended or repealed (a) if originally adopted by the shareholders, only by the shareholders, unless such bylaw as originally adopted by the shareholders provides that such bylaw may be amended or repealed by the board of directors or (b) if originally adopted by the board of directors, either by the shareholders or by the board of directors. A bylaw that fixes a greater quorum or voting requirement may not be adopted by the board of directors by a vote less than a majority of the directors then in office and may not itself be amended by a quorum or vote of the directors less than the quorum or vote prescribed in such bylaw or prescribed by the shareholders. Section 7. Shareholders' Agreement. In the event of a conflict between these bylaws and a valid shareholders' agreement, the shareholders' agreement shall control. ***** -15- 19 CERTIFICATION THIS IS TO CERTIFY that the above amended and restated bylaws of Beacon Manufacturing Company, a North Carolina corporation (the "Corporation"), were adopted by the board of directors of the Corporation by action taken without a meeting effective as of December 1, 1994 This 1st day of December, 1994. /s/ JEFFREY D. CORDES ----------------------------------- JEFFREY D. CORDES, Secretary -16- EX-3.13 10 CHARTER OF CRESTFIELD COTTON COMPANY AS AMENDED 1 EXHIBIT 3.13 NOVEMBER 30, 1973 CHARTER OF EUGENIA COTTON CO., INC. ---------------- THE UNDERSIGNED natural person, having capacity to contract and acting as the incorporator of a corporation under the Tennessee General Corporation Act, adopts the following Charter for such corporation: I. The name of the corporation is Eugenia Cotton Co., Inc. II. The duration of the corporation is perpetual. III. The address of the principal office of the corporation in the State of Tennessee shall be Cotton Exchange Building, 65 Union Avenue, Memphis, Shelby County, Tennessee 38103. IV. The corporation is for profit. V. The purpose for which the corporation is organized is to engage in, carry out and conduct a business for the general merchandizing of cotton and other fibers; to buy, sell and generally deal in cotton and other fibers, both as principal and as agent for others; to deal in or with any materials, articles or things and to generally transact such business as is or may be incidental to or required in connection with any such business activities and generally to carry on any other business which can or may be advantageously pursued in conjunction with or incidental to any of the above purposes and to transact any lawful business for which corporations may be incorporated and to have and possess all powers vested in corporations for profit under the Tennessee General Corporation Act. 2 NOVEMBER 30, 1973 -2- VI. The maximum number of shares which the corporation shall have the authority to issue is ONE THOUSAND (1,000) with no par value. VII. The corporation will not commence business until consideration of ONE THOUSAND DOLLARS ($1,000.00) has been received for the issuance of the shares. DATED this 28th day of November, 1973. /s/ ROY W. HENDRIX, JR. -------------------------- Roy W. Hendrix, Jr. Incorporator 3 I, JOE C. CARR, Secretary of State, do certify that this Charter, with certificate attached, the foregoing of which is a true copy, was this day registered and certified to by me. This the 30th day of November, 1973 JOE C. CARR, SECRETARY OF STATE FEE: $20.00 4 ARTICLES OF AMENDMENT TO THE CHARTER OF EUGENIA COTTON CO., INC. - -------------------------------------------------------------------------------- CHANGING THE PRINCIPAL OFFICE Pursuant to the provisions of Section 48-303 of the Tennessee General Corporation Act, the undersigned corporation adopts the following articles of amendment to its charter: 1. The name of the corporation is: Eugenia Cotton Co., Inc. 2. The amendment adopted is: The address of the principal office of the corporation in the State of Tennessee shall be: Street: 99 S. Second Street, Suite A City: Memphis, Tennessee Zip Code: 38103 County: Shelby 3. The amendment was duly adopted (at a meeting) of the directors on December 26, 1984. 4. The amendment is to be effective when filed by the Secretary of State. Dated: December 26, 1984 EUGENIA COTTON CO., INC. ---------------------------- Name of Corporation By: /s/ ---------------------------- Signature PRESIDENT ---------------------------- Title 5 ARTICLES OF AMENDMENT TO THE CHARTER PURSUANT TO THE PROVISIONS OF SECTION 48-20-106 OF THE TENNESSEE BUSINESS CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF AMENDMENT TO ITS CHARTER: PLEASE MARK THE BLOCK THAT APPLIES: [ ] AMENDMENT IS TO BE EFFECTIVE WHEN FILED BY THE SECRETARY OF STATE. [ ] AMENDMENT IS TO BE EFFECTIVE, JULY 31, 1992 ----------------------------------- MONTH DAY YEAR (NOT TO BE LATER THAN THE 90TH DAY AFTER THE DATE THIS DOCUMENT IS FILED.) IF NEITHER BLOCK IS CHECKED, THE AMENDMENT WILL BE EFFECTIVE AT THE TIME OF FILING. 1. PLEASE INSERT THE NAME OF THE CORPORATION AS IT APPEARS ON RECORD: EUGENIA COTTON CO., INC. ------------------------------------------------------------------ IF CHANGING THE NAME, INSERT THE NEW NAME ON THE LINE BELOW: CRESTFIELD COTTON COMPANY ------------------------------------------------------------------ 2. PLEASE INSERT ANY CHANGES THAT APPLY: A. PRINCIPAL ADDRESS: ------------------------------------------ STREET ADDRESS -------------------------------------------------------------- CITY STATE ZIP CODE B. REGISTERED AGENT: UNITED STATES CORPORATION COMPANY ------------------------------------------ MaClellan Building, 3rd Floor C. REGISTERED ADDRESS: 722 Chestnut Street ------------------------------------------ STREET ADDRESS Chattanooga TN 37402 -------------------------------------------------------------- CITY STATE ZIP CODE COUNTY D. OTHER CHANGES: 3. THE CORPORATION IS FOR PROFIT. 4. THE MANNER (IF NOT SET FORTH IN THE AMENDMENT) FOR IMPLEMENTATION OF ANY EXCHANGE, RECLASSIFICATION, OR CANCELLATION OF ISSUED SHARES IS AS FOLLOWS: 5. THE AMENDMENT WAS DULY ADOPTED ON JULY 31, 1992 BY: ------------------ MONTH DAY YEAR (NOTE: PLEASE MARK THE BLOCK THAT APPLIES) [ ] - THE INCORPORATORS [X] - THE BOARD OF DIRECTORS WITHOUT SHAREHOLDER APPROVAL, AS SUCH IS NOT REQUIRED. [ ] - THE SHAREHOLDERS. Secretary /s/ M. KENNETH DOSS - ------------------------- ------------------------- SIGNER'S CAPACITY SIGNATURE M. Kenneth Doss ------------------------- NAME OF SIGNER (TYPED OR PRINTED) EX-3.14 11 BYLAWS OF CRESTFIELD COTTON COMPANY AS AMENDED 1 EXHIBIT 3.14 TABLE OF CONTENTS OF BY LAWS OF EUGENIA COTTON CO., INC.
I. OFFICES AND REGISTERED AGENTS Section 1. Principal office Page 1 Section 1. Registered agent Page 1 II. MEETINGS OF SHAREHOLDERS Section 1. Meetings Page 1 Section 2. Annual meetings Page 2 Section 3. Special meetings Page 2 Section 4. Quorum Page 3 Section 5. Meeting chairman Page 4 Section 6. Shareholders entitled to vote Page 4 Section 7. Proxies Page 5 III. BOARD OF DIRECTORS Section 1. Number of directors Page 5 Section 2. Removal of directors Page 6 Section 3. Filling of vacancies Page 6 Section 4. First meeting Page 6 Section 5. Special meetings Page 7 Section 6. Notice of meetings Page 7 Section 7. Quorum Page 8 Section 8. Action without meeting Page 8 Section 9. Dissent to action Page 8 IV. OFFICERS Section 1. Appointment Page 9 Section 2. Term of office Page 9 Section 3. Removal Page 9 Section 4. Duties Page 9 V. CAPITAL STOCK Section 1. Certificates Page 10 Section 2. Required signature Page 10 Section 3. Notice of restrictions Page 10 Section 4. Re-issuance of certificates Page 11
2 Section 5. Transfer of shares Page 11 Section 6. Endorsements Page 12 VI. DIVIDENDS, SURPLUS AND RESERVE Section 1. Dividends Page 12 Section 2. Capital distributions Page 13 Section 3. Increases of capital surplus Page 14 VII. MISCELLANEOUS Section 1. Corporate seal Page 14 Section 2. Fiscal year Page 14 Section 3. Financial statements Page 15 VIII. AMENDMENTS Section 1. Shareholders required Page 15 Section 2. Restrictions on directors Page 15
3 BY-LAWS OF EUGENIA COTTON CO., INC. ----------------- I. OFFICES AND REGISTERED AGENTS Section 1. The principal office of this corporation is at Suite 2518, 100 North Main Building, Memphis, Tennessee, as provided in the Charter. The Board of Directors may, by Resolution, amend the Charter to change the address of the principal office in the State of Tennessee. Section 2. The corporation has designated and shall continue to have a registered agent in the State of Tennessee. If the registered agent resigns or is for any reason unable to perform his duties, the corporation shall promptly designate another registered agent. The corporation may, by Resolution of the Board of Directors, appoint such other agents for the service of process in such other jurisdictions as the Board of Directors may determine. II. MEETINGS OF SHAREHOLDERS Section 1. Meetings of the shareholders shall be held at such place, either within or without the State of Tennessee, as may be set by Resolution of the Board of Directors. Except as the Board may otherwise determine, meetings shall be held at the principal office of the corporation. 4 - 2 - Section 2. Annual meetings of the shareholders, beginning with the year 1974, shall be held on the third Monday in September of each year; if said date is not a legal holiday, and if a legal holiday, then on the next day not a legal holiday, for the purpose of electing directors of the corporation and for the transacting of such other business as may properly come before the meeting. The Board of Directors may, however, by Resolution, fix the date of the annual meeting on any day within the period of sixty (60) days next succeeding the foregoing date. The time of the annual meeting shall be, in any event, fixed by the Board of Directors. Section 3. Special meetings of the shareholders may be called by the Board of Directors or by the Chairman of the Board, or by the President, and shall be called by the Chairman, the President, the Secretary, or an assistant Secretary at the request in writing of three or more members of the Board of Directors, or at the request in writing of the holders of record of at least ten percent (10%) of the outstanding shares of the corporation entitled to vote at the meeting. Each special meeting shall be held at such time as the Board of Directors shall determine, or in the absence of such determination by the Board of Directors, such time as the person or persons calling or requesting the call of the meeting shall specify in the notice or in the written request. All notices of shareholders meetings shall be made in writing, stating the place, day and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called 5 - 3 - and the person or persons calling the meeting, or otherwise giving notice as provided in Section 48-703 Tennessee Code Annotated, provided, however, that the stockholders may waive the requirement of notice by written waiver duly executed and filed with the Minutes of the meeting to which it pertains. Notices of meetings shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting and shall be deemed to be delivered when deposited in the United States Mail, addressed to the shareholder at his address as it appears on the Stock Transfer Books of the corporation. A certificate of the Secretary or the person giving the notice, or of a transfer agent of the corporation, that the notice required by this Section has been given, in the absence of fraud, shall be prima facie evidence of the facts therein stated. Section 4. At any meeting of the shareholders, as a prerequisite for the transaction of any business, a quorum shall be present. A quorum shall consist of the holders of record of not less than a majority of the outstanding shares of the corporation entitled to vote at such meeting, present either in person or by proxy. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any of those present. A meeting may be adjourned, despite the absence of a quorum, by the Chairman of the meeting, or a majority of the shareholders, present in person or by proxy, until holders of the requisite amount of shares shall attend. 6 - 4 - Section 5. The Chairman of the Board, or in his absence or inability to serve, the President, or in his absence or inability to serve, the Senior Vice President, shall call meetings of the shareholders to order and act as Chairman of such meetings. The shareholders my elect anyone of their number to act as Chairman of any meeting in the absence of the aforenamed individuals. Section 6. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or an order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the Stock Transfer Books shall be closed for a stated period, but not to exceed forty (40) days. If the Stock Transfer Books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the Stock Transfer Books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If the Stock Transfer Books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or entitled to vote at a meeting of shareholders or shareholders 7 - 5 - entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the Resolution of the Board declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. Section 7. Every shareholder entitled to vote at a shareholders' meeting, or to express consent or dissent without a meeting, may authorize another person or persons to act for him by proxy. Each proxy must be in writing and signed by the shareholder or by his attorney in fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Each proxy shall be revocable at the pleasure of the shareholder executing it, unless it conforms to the requirements of an irrevocable proxy, as provided in Section 48-706(4) Tennessee Code Annotated. All proxies must be delivered to the Secretary of the corporation prior to the opening of the meeting, except for proxies granted after the meeting has opened, which proxies shall be delivered to the Secretary as soon as practicable after execution. III. BOARD OF DIRECTORS Section 1. Any affairs of this corporation shall be managed by a Board of three (3) directors who shall be elected by the shareholders at the regular meeting for a term of one year until their successors are elected and qualified. The number may be changed by the shareholders or by the Board by amending these By-Laws; provided, that the adoption of such an amendment by the Board of Directors shall 8 - 6 - require the vote of a majority of the entire Board. No decrease in the number of directors shall shorten the term of any incumbent director. Section 2. Any or all directors may be removed with or without cause by a vote of a majority of the shareholders entitled to vote; such vote may be held at any meeting of the shareholders, notice of which shall have referred to the proposed action. Any directors may be removed for cause as defined in Section 48-807(1), Tennessee Code Annotated, at any meeting of the directors, notice of which shall have referred to the proposed action, by vote of a majority of the entire Board. Section 3. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board of Directors for any reason, except the removal of directors, without cause, may be filled by a vote of the majority of the directors then in office, although less than a quorum exists, or any such newly created directorships and vacancies occurring in the Board of Directors, for any reason, may be filled by vote of the shareholders at any meeting of the shareholders, notice of which shall have referred to the proposed election. Any director elected to fill a vacancy shall be elected to hold office for the unexpired term of his predecessor, of, if there is no predecessor, until the next annual meeting of shareholders. Section 4. The first meeting of the newly elected Board of Directors may be held immediately after the annual meeting of shareholders, and at the same place as such annual meeting of 9 - 7 - shareholders, provided a quorum be present, and no notice of such meeting shall be necessary. In the event such first meeting of the newly elected Board of Directors is not held at such time and place, the same shall be held as provided otherwise in this Section. Section 5. Special meetings of the Board of Directors may be called by the Chairman of the Board, or the President, or in the absence or disability of the Chairman of the Board and the President, by any Vice President, or by any two directors. Section 6. Notice of each regular or special meeting of the Board of Directors, except as provided in Section 5, shall be given by the Secretary, or an assistant Secretary, or in the absence or disability of the Secretary or any assistant Secretary, by the person or persons calling the meeting. Such notice shall be given to each member of the Board, not less than three (3) days before the meeting by depositing the notice in the United States Mail directed to each member of the Board at the address designated by him for such purpose, or, not less than one (1) day before the meeting by either delivering the same to each member of the Board of Directors personally, or, delivering it to the address designated by him for that purpose. Notice of the meeting need not be given to any director who submits a signed waiver of notice, whether before, at or after the meeting. The notice of any meeting of the Board of Directors need not specify the purpose or purposes for which the meeting is called, except as otherwise provided in these By-Laws. 10 - 8 - Section 7. At all meetings of the Board of Directors, except as otherwise provided by law, the Charter, or by these By-Laws, a quorum shall consist of a majority of the total number of directors then in office. Section 8. Directors may take any action which they are required or permitted to take under the law, the Charter, or these By-Laws, without a meeting, on written consent, setting forth the actions so taken signed by all of the persons entitled to vote thereon. Section 9. A director who is present at a meeting of the Board, at which any action is taken, shall be presumed to have concurred in the action, unless his dissent thereto shall be entered in the Minutes of the meeting, or, unless he shall submit his written dissent to the person acting as the Secretary of the meeting before the adjournment thereof, or shall deliver or send such dissent to the Secretary of the corporation promptly after the adjournment of the meeting. Such rights to dissent shall not apply to a director who voted in favor of any such action. A director who is absent from a meeting at which such action is taken, shall be presumed to have concurred in the action unless he shall deliver or send by registered or certified mail his dissent thereto to the Secretary of the corporation and shall cause such dissent to be filed with the Minutes of the proceedings of the Board within a reasonable time after learning of such action. 11 - 9 - IV. OFFICERS Section 1. The Board of Directors shall annually, at the first meeting of the Board after the annual meeting of shareholders, appoint or elect a Chairman of the Board, a President, one or more Vice Presidents, a Secretary, and a Treasurer. The Board of Directors may, from time to time, elect or appoint such additional officers as it may determine are necessary. Such additional officers shall have such authority and perform such duties as the Board of Directors prescribes. Any two of the aforementioned officers, except those of President and Secretary, may be filled by the same person, but no person shall purport to execute or attest any document or instrument on behalf of the corporation in more than one capacity. Section 2. The officers of the corporation shall hold office for one year, or, until their successors are chosen and qualified, subject, however, to the removal of any officer pursuant to these By-Laws. Section 3. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of the majority of the entire Board. Section 4. All officers shall have such authority to perform such duties in the management of the corporation as are normally incident to their offices and as the Board of Directors may from time to time provide. 12 - 10 - V. CAPITAL STOCK Section 1. The certificates of stock of the corporation shall be numbered consecutively and shall be entered on the books of the corporation as they are issued. Every shareholder shall be entitled to a certificate or certificates of capital stock of the corporation. Section 2. Certificates of stock shall be signed by the President, and countersigned by the Secretary. If the certificate is countersigned by a transfer agent or registered by a register, other than an officer or employee of the corporation, the signature and countersignature of the corporate officers may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed upon such certificates shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issuance. Section 3. Each certificate of stock which is restricted or limited as to its transferability or voting rights, or which is callable under the Charter, which is preferred or limited as to dividends or rights upon voluntary or involuntary dissolution, shall have a notice of such restriction, limitation, or preference conspicuously stated on the face or back of the certificate. Upon the removal or expiration of any such restriction or limitation, the holder of such certificate shall be entitled to receive a new certificate upon the surrender of the old restricted or limited certificates; and the payment of the reasonable expenses of the corporation incurred in connection therewith. 13 Section 4. The corporation shall issue a new stock certificate in the place of any certificate previously issued where the holder of record of the certificate: A. Makes proof in affidavit form that it has been lost, destroyed, or wrongfully taken; B. Satisfies any other reasonable requirements imposed by the corporation. Section 5. The corporation shall register a transfer of a stock certificate presented to it for transfer if: A. The certificate is endorsed by the appropriate person or persons; B. The signature of the appropriate person or persons has been guaranteed by a national banking association, a bank organized and operating under the statutes of the State of Tennessee, or a member of the National Association of Security Dealers, and reasonable assurance is given that the endorsements are effective, unless the Secretary of the corporation waives such requirements; C. The corporation has no duty to inquire into adverse claims or has discharged any such duties; D. There has been compliance with any applicable law relating to the collection of taxes; and E. The transfer is in fact rightful or is to a bonafide purchaser. 14 - 12 - Section 6. An endorsement of the stock certificate in registered form is made when an appropriate person signs on it or on a separate document an assignment or transfer of it, or a power to assign or transfer it, or when the signature of this person is written without more upon the back of the certificate. An endorsement may be in blank, which includes an endorsement to bearer, or special, which specifies the person whom the stock is to be transferred, or who has the power to transfer it. The corporation may elect to require reasonable assurance beyond that specified in this Section, but if it both requires and obtains a copy of a controlling instrument for a purpose other than showing appropriate evidence of appointment or incumbency of a fiduciary, it is charged with notice of all matters contained in effect in the transfer. VI. DIVIDENDS, SURPLUS AND RESERVE Section 1. The Board of Directors may, from time to time, declare, and the corporation may pay, dividends on its outstanding shares in cash, property, or its own shares, except where the corporation is insolvent, as that term is defined in Section 48-102(n) Tennessee Code Annotated, or when the payment thereof would render the corporation insolvent, or when the declaration of payment thereof would be contrary to any restrictions contained in the Charter, these By-Laws, or in any applicable valid contract. The declaration and payment of any such dividend shall be in accordance with Section 48-511, Tennessee Code Annotated. 15 - 13 - Section 2. The Board of Directors may distribute to the shareholders of the corporation out of capital surplus, a portion of its assets, in cash or property, subject to the following provisions: A. No such distribution shall be made at a time when the corporation is insolvent or when such distribution would render the corporation insolvent; B. No such distribution shall be made unless such distribution is authorized by the affirmative vote of the holders of the majority of all of the outstanding shares of stock entitled to vote thereon; C. No such distribution shall be made to the holders of any class of shares unless all cumulative dividends accrued an all preferred or special classes of shares entitled to preferential dividends shall have been fully paid; D. No such distribution shall be made to the holders of any class of shares which would reduce the remaining net assets of the corporation below the aggregate preferential amount payable in the event of voluntary liquidation to the holders of shares having preferential rights to the assets of the corporation in the event of liquidation; E. Each such distribution, when made, shall be identified as a distribution from capital surplus in the amount per share shall be disclosed to the shareholders receiving the same, concurrently with the distribution thereof. 16 - 14 - Section 3. The capital surplus of the corporation may be increased from time to time by Resolution of the Board, directing that all or part of the earned surplus of the corporation be transferred to capital surplus. The Board of Directors may, by Resolution, apply any part or all of the capital surplus of the corporation to the reduction or elimination of any deficit arising from losses during surplus, and then only to the extent that such losses exceed the earned surplus. Each such application of capital surplus shall, to the extent thereof, effect a reduction of capital surplus. VII. MISCELLANEOUS PROVISIONS Section 1. The corporation shall have a corporate seal which shall have inscribed thereon the name of the corporation, the year of incorporation, and the word "Tennessee" and "Seal" and shall be circular in form. The presence or absence of such seal on any instrument, or its addition thereto, shall not effect the character, or validity, or legal effect thereof in any respect. The affixing of the seal shall not be necessary for the execution of any instrument or document by the corporation, and such seal shall be used only where deemed expedient in the judgment of the officer executing documents or instruments on behalf of the corporation. Section 2. The fiscal year of the corporation shall be fixed by Resolution of the Board of Directors. 17 - 15 - Section 3. The Board of Directors shall cause a true statement of the assets and liabilities of this corporation as of the close of each fiscal year and of the results of its operations and of the changes in surplus for such fiscal year, all in reasonable detail, to be made and filed at the principal office of the corporation in this state, within four (4) months after the end of such fiscal year, and there, kept available for period of at least two (2) years for inspection on request by any shareholder. The officers of the corporation shall mail or otherwise deliver a copy of the latest of such statement to any such shareholder upon his written request therefor. VIII. AMENDMENTS Section 1. These By-Laws may be amended by a vote of a majority of all of the stock issued and outstanding entitled to vote at any regular or special meeting of the shareholders, provided notice of intention to amend shall have been contained in the notice of any special meeting for that purpose. Section 2. The Board of Directors may, by a majority vote of the entire Board, at any regular meeting, or at any duly called special meeting, amend these By-Laws, including By-Laws adopted by the shareholders, provided, that the shareholders may from time to time specify particular provision of these By-Laws which shall not be amended by the Board of Directors. I, Roy W. Hendrix, Jr., incorporator of Eugenia Cotton Co., Inc., do hereby certify that the above By-Laws of Eugenia Cotton Co., Inc. were adopted by me, as sole incorporator of said 18 - 16 - corporation at a special meeting of the sole incorporator on December 12, 1973. /s/ ROY W. HENDRIX, JR. -------------------------------- Roy W. Hendrix, Jr. Incorporator 19 AMENDMENT TO THE BYLAWS OF EUGENIA COTTON CO., INC. ADOPTED NOVEMBER 22, 1991 Article VII of the bylaws of the corporation shall be amended by the addition of the following Section 4: Section 4. Indemnification of Officers and Directors. The corporation shall indemnify each present and future director and officer of the corporation against, and each director or officer shall be entitled without further act to indemnity from the corporation for, all expenses (including counsel fees and the amount of judgments and the amount of reasonable settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the corporation itself) reasonably incurred in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of being or having been a director or officer. Provided, however, that the director or officer 1) conducted himself in good faith; and 2) reasonably believed: (a) in the case of conduct in his official capacity with the corporation that his conduct was in its best interest; and (b) in all other cases, that his conduct was at least not opposed to the corporation's best interest; and, 3) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. However, the corporation shall not indemnify a director or officer in connection with: 1) a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or 2) in connection with any other proceeding charging improper 20 personal benefit to him, whether or not involving action in his official capacity, in which he was adjudged liable on the basis that personal benefit was improperly received by him. In addition, the corporation may pay for or reimburse the reasonable expenses incurred by an officer or director who is a party to a proceeding in advance of the final disposition of the proceeding if: 1) the director or officer furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct hereinbefore described; 2) the director or officer furnishes the corporation a written undertaking, executed personally or on his behalf, to repay the advance if it is ultimately determined that he is not entitled to indemnification; and (3) a determination is made that the facts then known to those making the determination would not preclude indemnification. The determination whether indemnification is permissible shall be made by 1) a majority vote of a quorum of the Board of Directors not parties to the proceeding; 2) by majority vote of a committee duly designated by the Board of Directors consisting of two or more directors not parties to the proceeding; 3) by independent special legal counsel selected by the Board of Directors, or its committee; or by the shareholders, except the shares owned or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination. In no event shall indemnification be made to, or on behalf of any director 2 21 or officer if a judgment or final adjudication adverse to the director or officer establishes his liability 1) for any breach of the duty of loyalty to the corporation or its shareholders; 2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; or 3) for any unlawful distributions from the corporation. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each director or officer and shall be in addition to all other rights to which the director or officer may be entitled as a matter of law. 3 EX-3.15 12 CERT OF INCORP OF DOWNEAST SECURITIES CORP-AMENDED 1 EXHIBIT 3.15 CERTIFICATE OF INCORPORATION OF 4500 SERVICE CORPORATION, INC. FIRST. The name of the corporation is 4500 SERVICE CORPORATION, INC. SECOND. The address of its registered office in the State of Delaware is No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The total number of shares of stock which the corporation shall have authority to issue is two thousand (2,000) shares of common stock without par value. The following restrictions are imposed upon the transfer of shares of the capital stock of the corporation: The corporation shall have the right to purchase, or to direct the transfer of, the shares of its capital stock in the events and subject to the conditions and at a price fixed as provided below; each holder of shares of such capital stock holds his shares subject to this right and by accepting the same upon original issue or subsequent transfer thereof, the stockholder agrees for himself, his legal representatives and assigns as follows: 2 In the event of any change in the ownership of any share or shares of such capital stock (made or proposed) or in the right to vote thereon (whether by the holder's act or by death, legal disability, operation of law, legal processes, order of court, or otherwise, except by ordinary proxies or powers of attorney) the corporation has the right to purchase such share of all or any part of such shares or to require the same to be sold to a purchaser or purchasers designated by the corporation or to follow each such method in part at a price per share equal to the fair value thereof at the close of business on the last day next preceding such event as determined by mutual agreement or, failing such agreement, by arbitration as provided below. In any such event the owner of the share or shares concerned therein (being for the purposes of these provisions, all persons having any property interest therein) shall give notice thereof in detail satisfactory to the corporation. Within ten days after receipt of said owner's notice, the corporation shall elect whether or not to exercise its said rights in respect to said shares and, if it elects to exercise them, shall give notice of its election. Failing agreement between the owner and the corporation as to the price per share to be paid, such price shall be the fair value of such shares as determined by three arbitrators, one designated within five days after the termination of said ten-day period by the registered holder of said share or shares or his legal representatives, one within said period of five days by the corporation and the third within five days after said appointment -2- 3 last occurring by the two so chosen. Successor arbitrators, if any shall be required, shall be appointed, within reasonable time, as nearly as may be in the manner provided as to the related original appointment. No appointment shall be deemed as having been accomplished unless such arbitrator shall have accepted in writing his appointment as such within the time limited for his appointment. Notice of each appointment of an arbitrator shall be given promptly to the other parties in interest. Said arbitrators shall proceed promptly to determine said fair value. The determination of the fair value of said share or shares by agreement of any two of the arbitrators shall be conclusive upon all parties interested in such shares. Forthwith upon such determination the arbitrators shall mail or deliver notice of such determination to the owner (as above defined) and to the corporation. Within ten days after agreement upon said price or mailing of notice of determination of said price by arbitrators as provided below (whichever shall last occur), the shares specified therein for purchase shall be transferred to the corporation or to the purchaser or purchasers designated therein or in part to each as indicated in such notice of election against payment of said price at the principal office of the corporation. If in any of the said events, notice therefor having been given as provided above, the corporation elects in respect of any such shares or any part thereof not to exercise its said rights, or fails to exercise them or to give notice or make payment all as provided above, or waives said rights by vote or in authorized -3- 4 writing, then such contemplated transfer or such change may become effective as to those shares with respect to which the corporation elects not to exercise them or to give notice or to make payment, if consummated within thirty days after such election, failure or waiver by the corporation, or within such longer period as the corporation may authorize. If the owner's notice in respect of any of such shares of capital stock is not received by the corporation as provided above, or if the owner fails to comply with these provisions in respect of any such shares in any other regard, the corporation, at its option and in addition to its other remedies, may suspend the rights to vote or to receive dividends on said shares, or may refuse to register on its books any transfer of said shares or otherwise to recognize any transfer or change in the ownership thereof or in the right to vote thereon, one or more, until these provisions are complied with to the satisfaction of the corporation; and if the required owner's notice is not received by the corporation after written demand by the corporation it may also or independently proceed as though a proper owner's notice had been received at the expiration of ten days after mailing such demand, and, if it exercises its rights with respect to said shares or any of them, the shares specified shall be transferred accordingly. In respect of these provisions with respect to the transfer of shares of capital stock, the corporation may act by its board of directors. Any notice or demand under said provisions shall -4- 5 be deemed to have been sufficiently given if in writing delivered by hand or addressed by mail postpaid, to the corporation at its principal office or to the owner (as above defined) or to the holder registered on the books of the corporation (or his legal representative) of the share or shares in question at the address stated in his notice or at his address appearing on the books of the corporation. Nothing herein contained shall prevent the pledging of shares, if there is neither a transfer of the legal title thereto nor a transfer on the books of the corporation into the name of the pledgee, but no pledgee or person claiming thereunder shall be entitled to make or cause to be made any transfer of pledged shares by sale thereof or otherwise (including in this prohibition transfer on the books of the corporation into the name of the pledgee) except upon compliance herewith and any such pledge shall be subject to those conditions and restrictions. FIFTH. The name and mailing address of the sole incorporator is as follows: NAME MAILING ADDRESS ---- --------------- Alan L. Lefkowitz Gaston Snow & Ely Bartlett One Federal Street Boston, Massachusetts 02110 SIXTH. The corporation is to have perpetual existence. SEVENTH. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: -5- 6 To make, alter, amend, or repeal the by-laws of the corporation. To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. By a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence of disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certifi- -6- 7 cate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholder the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution or by-laws expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. When and as authorized by the stockholders in accordance with statute to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation. EIGHT. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, in the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware -7- 8 Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders of class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs if a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. NINTH. Meetings of stockholders may be held at such place, either within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by written ballot unless the by-laws of the corporation shall so provide. -8- 9 TENTH. The powers of the incorporation are to terminate upon the filing of this certificate of incorporation with the Secretary of State of the State of Delaware. The name and mailing address of the person who is to serve as the director of the corporation, subject to the by-laws, until the first annual meeting of stockholders or until his successor is elected and qualifies is: NAME MAILING ADDRESS ---- --------------- Joseph B. Ely, II 5 Webster Lane Wayland, MA 01778 ELEVENTH. The corporation shall indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or a stockholder purporting to act on behalf of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments and fines actually imposed or reasonably incurred by him in connection with such action, suit or proceeding unless in any proceeding he shall be finally adjudged not to have acted in good faith in the reasonable belief that his action was in the best interest of the corporation; provided, however, that such indemnification shall not cover liabilities in connection with -9- 10 any matter which shall be disposed of through a compromise payment by such person, pursuant to a consent decree or otherwise, unless such compromise shall be approved as in the best interests of the corporation, after notice that it involves such indemnification, (a) by a vote of the directors in which no interested director participates, or (b) by a vote or the written approval of the holders of a majority of the outstanding stock at the time having the right to vote for directors, not counting as outstanding any stock owned by any interested director or officer. Such indemnification may include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under these provisions. The rights of indemnification hereby provided shall not be exclusive of or affect other rights to which any director, officer, employee, agent or stockholder may be entitled. As used in this paragraph, the terms "director", "officer", "employee", "agent" or "stockholder" include their respective heirs, executors and administrators, and an "interested" director or officer is one against whom as such the proceeding in question or another proceeding on the same or similar grounds is then pending. Any indemnification to which a person is entitled under this paragraph shall be provided although the person to be indemnified is no longer such a director, officer, employee, agent or stockholder. -10- 11 TWELFTH. The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or thereafter prescribed by statute, and all rights conferred upon a stockholder herein are granted subject to this reservation. I, THE UNDERSIGNED, being the sole incorporator hereinabove named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 29th day of December, 1981. /s/ ALAN L. LEFKOWITZ ------------------------------- Alan L. Lefkowitz -11- 12 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * 4500 SERVICE CORPORATION, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the written consent of its sole member, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of this corporation is hereby amended by changing the FIRST Article thereof so that, as amended, said Article shall be and read as follows: "The name of the corporation is DOWNEAST SECURITIES CORPORATION." SECOND: That since the corporation at the time of the adoption of the aforesaid resolution had not received any payment for any of its stock, the aforesaid amendment was duly adopted in accordance with the applicable provisions of section 241 of the General Corporation law of the State of Delaware. 13 IN WITNESS WHEREOF, said 4500 SERVICE CORPORATION, INC. has caused this certificate to be signed by Joseph B. Ely, II, its president, and attested by Frederic P. Melzar, its secretary, this 15th day of January, 1982. 4500 SERVICE CORPORATION, INC. By /s/ JOSEPH B. ELY, II ------------------------- President ATTESTED: By /s/ FREDERIC P. MELZAR ------------------------ Secretary 14 CERTIFICATE OF MERGER OF DOWNEAST MANAGEMENT CORPORATION INTO DOWNEAST SECURITIES CORPORATION The undersigned corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the name and state of incorporation of each of the constituent corporations of the merger is as follows:
Name State of Incorporation Downeast Securities Corporation Delaware Downeast Management Corporation Maine
SECOND: That an Agreement and Plan of Merger by and between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of subsection (c) of Section 252 of the General Corporation Law of the State of Delaware. THIRD: That the name of the surviving corporation of the merger is Downeast Securities Corporation. FOURTH: That the certificate of incorporation of Downeast Securities Corporation, a Delaware corporation, shall be the certificate of incorporation of the surviving corporation. FIFTH: That the executed Agreement and Plan of Merger is on file at the principal place of business of the surviving corporation. The address of the principal place of business of the surviving corporation is c/o Gaston Snow Beekman & Bogue (ATTN: Daniel A. Demarest, Esq.), 14 Wall Street, New York, NY 10005. SIXTH: That a copy of the Agreement and Plan of Merger will be furnished by the surviving corporation, on request and without cost to any stockholder of any constituent corporation. SEVENTH: That the authorized capital stock of Downeast Management Corporation; a Maine corporation, is 250 shares, $100 par value. Downeast Securities Corporation By: /s/ JOSEPH B. ELY, II --------------------------- President ATTEST: By: /s/ FREDERIC P. MELZAR --------------------------- Secretary EX-3.16 13 BYLAWS OF DOWNEAST SECURITIES CORPORATION 1 EXHIBIT 3.16 BY-LAWS OF 4500 SERVICE CORPORATION, INC. ARTICLE I. Certificate of Incorporation These by-laws, the powers of the corporation and of its directors and stockholders, and all matters concerning the conduct and regulation of the business of the corporation shall be subject to such provisions in regard thereto as are set forth in the certificate of incorporation filed pursuant to the General Corporation Law of Delaware which is hereby made a part of these by-laws. The term "certificate of incorporation" in these by-laws, unless the context requires otherwise, includes not only the original certificate of incorporation filed to create the corporation but also all other certificates, agreements of merger or consolidation, plans of reorganization, or other instruments, howsoever designated, filed pursuant to the General Corporation Law of Delaware which have the effect of amending or supplementing in some respect the corporation's original certificate of incorporation. ARTICLE II. Annual Meeting An annual meeting of stockholders shall be held for the election of directors and for the transaction of any other business for the transaction of which the meeting shall have been properly convened during the month of April in each year, on such date and at such place, within or without the State of Delaware, and at such time as shall be fixed by the board of directors and specified in the notice of the meeting. Any other proper business may be transacted at the annual meeting. If the annual meeting for election of directors shall not be held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient. ARTICLE III. Special Meetings of Stockholders Special meetings of the stockholders may be held either within or without the State of Delaware, at such time and place 2 and for such purposes as shall be specified in a call for such meeting made by the board of directors or by a writing filed with the secretary signed by the president or by a majority of the directors. ARTICLE IV. Notice of Stockholders' Meetings Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, which notice shall be given not less than ten nor more than fifty days before the date of the meeting, except where longer notice is required by law, to each stockholder entitled to vote at such meeting, by leaving such notice with him or by mailing it, postage prepaid, directed to him at his address as it appears upon the records of the corporation. In case of the death, absence, incapacity or refusal of the secretary, such notice may be given by a person designated either by the secretary or by the person or persons calling the meeting or by the board of directors. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. ARTICLE V. Quorum of Stockholders; Stockholder List At any meeting of the stockholders, a majority of all shares issued and outstanding and entitled to vote upon a question to be considered at the meeting shall constitute a quorum for the consideration of such question when represented at such meeting by the holders thereof in person or by their duly constituted and authorized attorney or attorneys, but a less interest may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice. When a quorum is present at any -2- 3 meeting a majority of the stock so represented thereat and entitled to vote shall, except where a larger vote is required by law, by the certificate of incorporation or by these by-laws, decide any question brought before such meeting. The secretary or other officer having charge of the stock ledger shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city or town where the meeting is to be held, which place shall have been specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Said list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders required by this Article or the books of the corporation, or the stockholders entitled to vote in person or by proxy at any meeting of stockholders. ARTICLE VI. Stockholder's Meetings, Proxies and Voting Except as otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock held by such stockholder. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy but (except as otherwise expressly permitted by law) no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or so long as it is coupled with an interest sufficient in law to support an irrevocable power. Unless otherwise provided in the certificate of incorporation, any action required by law to, or which may be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote therein were present and voted. Prompt notice of the taking -3- 4 of such action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE VII. Stockholders' Record Date In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed: (1) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (2) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed. (3) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the board of directors may fix a new record date for the adjourned meeting. ARTICLE VIII. Board of Directors Except as otherwise provided by law or by the certificate of incorporation or by these by-laws, the business and affairs of the corporation shall be managed by its board of directors. -4- 5 The number of directors shall be such number, not fewer than one nor more than three, as may be fixed for any corporate year and elected by the stockholders at the annual meeting. During any year the board of directors may be enlarged and additional directors elected to complete the enlarged number, to not more than the maximum number above specified, by the stockholders at any meeting or by a vote of a majority of the directors then in office. The stockholders may, at any meeting held for the purpose during such year, decrease, to not fewer than the minimum number above specified, the number of directors as thus fixed or enlarged and remove directors to the decreased number. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. No director need be a stockholder. ARTICLE IX. Committees The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee and may define the number and qualifications which shall constitute a quorum of such committee. Except as otherwise limited by law, any such committee, to the extent provided in the resolution appointing such committee, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. In the absence or disqualification of a member of committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE X. Meetings of the Board of Directors and of Committees Regular meetings of the board of directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the board may by vote from time to time determine. Special meetings of the board of directors may be held at any place either within or without the State of Delaware at any time when called by the president, treasurer, secretary or -5- 6 two or more directors, reasonable notice of the time and place thereof being given to each director. A waiver of such notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. In any case it shall be deemed sufficient notice to a director to send notice by mail at least forty-eight hours, or to deliver personally or to send notice by telegram at least twenty-four hours, before the meeting, addressed to him at his usual or last known business or residence address. Unless otherwise restricted by the certificate of incorporation or by other provisions of these by-laws, (a) any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board or of such committee, as the case may be, consent thereto in writing and such writing or writings are filed with the minutes of proceedings of the board or committee, and (b) members of the board of directors or of any committee designated by the board may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. ARTICLE XI. Quorum of The Board of Directors Except as otherwise expressly provided in the certificate of incorporation or in these by-laws, a majority of the total number of directors at the time in office shall constitute a quorum for the transaction of business, but a lesser number may adjourn any meeting from time to time. Except as otherwise so expressly provided, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, provided, that the affirmative vote in good faith of a majority of the disinterested directors, even though the disinterested directors shall be fewer than a quorum, shall be sufficient to authorize a contract or transaction in which one or more directors have interest if the material facts as to such interest and the relation of the interested directors to the contract or transaction have been disclosed or are known to the directors. ARTICLE XII. Waiver of Notice of Meetings Whenever notice is required to be given under any provision of law or the certificate of incorporation or by-laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed -6- 7 equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or the by-laws. ARTICLE XIII. Officers and Agents The corporation shall have a president, secretary and treasurer, who shall be chosen by the directors, each of whom shall hold his office until his successor has been chosen and qualified or until his earlier resignation or removal. The corporation may have such other officers and agents as are desired, each of whom shall be chosen by the board of directors and shall hold his office for such term and have such authority and duties as shall be determined by the board of directors. The board of directors may secure the fidelity of any or all of such officers or agents by bond or otherwise. Any number of offices may be held by the same person. Each officer shall, subject to these by-laws, have in addition to the duties and powers herein set forth, such duties and powers as the board of directors shall from time to time designate. In all cases where the duties of any officer, agent or employee are not specifically prescribed by the by-laws, or by the board of directors, such officer, agent or employee shall obey the orders and instructions of the president. Any officer may resign at any time upon written notice to the corporation. ARTICLE XIV. President The president shall, subject to the direction and under the supervision of the board of directors, be the chief executive officer of the corporation and shall have general and active control of its affairs and business and general supervision over its officers, agents and employees. Except as otherwise voted by the board he shall preside at all meetings of the stockholders and of the board of directors at which he is present. The president shall have custody of the treasurer's bond, if any. ARTICLE XX. Secretary The secretary shall record all the proceedings of the meetings of the stockholders and directors in a book, which shall -7- 8 be the property of the corporation, to be kept for that purpose; and perform such other duties as shall be assigned to him by the board of directors. In the absence of the secretary from any such meeting, a temporary secretary shall be chosen, who shall record the proceedings of such meeting in the aforesaid book. ARTICLE XXI. Treasurer The treasurer shall, subject to the direction and under the supervision of the board of directors, have the care and custody of the funds and valuable papers of the corporation, except his own bond, and he shall, except as the board of directors shall generally or in particular cases authorize the endorsement thereof in some other manner, have power to endorse for deposit or collection all notes, checks, drafts and other obligations for the payment of money to the corporation or its order. He shall keep, or cause to be kept, accurate books of account, which shall be the property of the corporation. ARTICLE XVII. Voting of Securities As long as all of the issued and outstanding capital stock of the corporation is owned beneficially and of record by a single entity, the corporation shall act in respect of any securities which it owns only upon the written instructions of such entity. ARTICLE XVIII. Removals The stockholders may, at any meeting called for the purpose, by vote of a majority of the capital stock issued and outstanding and entitled to vote thereon, remove any director from office. The board of directors may, at any meeting called for the purpose, by vote of a majority of their entire number remove from office any officer or agent of the corporation or any member of any committee appointed by the board of directors or by any committee appointed by the board of directors or by any officer or agent of the corporation. ARTICLE XIX. Vacancies Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise and newly created -8- 9 directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office (though less than a quorum) or by a sole remaining director and each of the incumbents so chosen shall hold office for the unexpired term in respect of which the vacancy occurred and until his successor shall have been duly elected and qualified or for such shorter period as shall be specified in the filling of such vacancy or, if such vacancy shall have occurred in the office of director, until such a successor shall have been chosen by the stockholders. ARTICLE XX. Certificates of Stock Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors (if one shall be incumbent) or the president or a vice-president and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary, certifying the number of shares owned by him in the corporation. If such certificate is countersigned (1) by a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation of its employee, any other signatures on the certificate may be facsimile. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue to represent such class or series of stock or there shall be set forth on the face or back of the certificates which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish, without charge to each stockholder who so requests, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Any restriction imposed upon the transfer of shares or registration of transfer of shares shall be noted conspicuously on the certificate representing the shares subject to such restriction. -9- 10 ARTICLE XXI. Loss of Certificate The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate in its place and upon such other terms or without any such bond which the board of directors shall prescribe. ARTICLE XXII. Seal The corporate seal shall, subject to alteration by the board of directors, consist of a flat-faced circular die with the word "Delaware" together with the name of the corporation and the year of its organization cut or engraved thereon. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE XXIII. Execution of Papers Except as otherwise provided in these by-laws or as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the corporation, shall be signed by the president or by the treasurer. ARTICLE XXIV. Fiscal Year Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the last day of December of each year. ARTICLE XXV. Amendments Except as otherwise provided by law or by the certificate of incorporation, these by-laws, as from time to time altered or amended, may be made, altered or amended at any annual or special -10- 11 meeting of the stockholders called for the purpose, of which the notice shall specify the subject matter of the proposed alteration or amendment or new by- law or the article or articles to be affected thereby. If the certificate of incorporation so provides, these by-laws may also be made, altered or amended by a majority of the whole number of directors. Such action may be taken at any meeting of the board of directors, of which notice shall have been given as for a meeting of stockholders. 12 DOWNEAST SECURITIES CORPORATION Action by Unanimous Written Consent of Stockholders in Lieu of a Meeting of Stockholders The undersigned, being the sole stockholder of Downeast Securities Corporation, a Delaware corporation (the "Corporation"), hereby consents to the following actions and adopts the following votes in lieu of a meeting of stockholders: VOTED: That Article VIII of the By-laws of the Corporation be amended to read in its entirety in the form submitted to the stockholders of this corporation and attached to this consent as Exhibit A. VOTED: That the number of directors of this Corporation, until changed in accordance with the By-laws, as amended, is fixed at four; and that the following persons are elected directors to serve in accordance with the By-laws: James M. Fitzgibbons M. Kenneth Doss Thomas R. Staab Clifford D. Paulsen VOTED: That all previous actions taken by or on behalf of this Corporation by its officers or directors in fulfillment of their duties as officers or directors, or purported to be taken by or on behalf of this Corporation by a person purporting to be an officer of this Corporation in fulfillment of their duties as officer, including without limitation all actions described in the minutes of meetings of directors of this Corporation, the minutes of meetings of stockholders of this Corporation and the stock records of this Corporation, hereby are ratified, approved and confirmed in all respects; and that all issuances by this Corporation of shares of its capital stock as reflected in this Corporation's stock records hereby are ratified, approved and confirmed in all respects. This consent has been executed in more or more counterparts and shall be filed with the minutes of meetings of the 13 stockholders of the Corporation and shall be treated for all purposes as votes taken at a meeting. AMOSKEAG COMPANY By: /s/ JAMES M. FITZGIBBONS -------------------------- Name: James M. Fitzgibbons Title: President and Chief Executive Officer Dated: August 15, 1994 -2- 14 EXHIBIT A ARTICLE VIII Board of Directors Except as otherwise provided by law or by the certificate of incorporation or by these by-laws, the business and affairs of the corporation shall be managed by its board of directors. The number of directors shall be such number, not fewer than one nor more than five, as may be fixed for any corporate year and elected by the stockholders at the annual meeting. During any year the board of directors may be enlarged and additional directors elected to complete the enlarged number, to not more than the maximum number above specified, by the stockholders at any meeting or by a vote of a majority of the directors then in office. The stockholders may, at any meeting held for the purpose during such year, decrease, to not fewer than the minimum number above specified, the number of directors as thus fixed or enlarged and remove directors to the decreased number. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. No director need by a stockholder. EX-3.17 14 CERT OF INCORP - ENCEE, INC. 1 EXHIBIT 3.17 CERTIFICATE OF INCORPORATION -of- ENCEE, INC. - - - - - - - - - - - I, THE UNDERSIGNED, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certifies as follows: FIRST: The name of the corporation is ENCEE, INC. SECOND: The registered office of the corporation is to be located at 306 South State Street, in the City of Dover, in the County of Kent, in the State of Delaware. The name of its registered agent at that address is the United States Corporation Company. THIRD: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware. Without limiting in any manner the scope and generality of the foregoing, it is hereby provided that the corporation shall have the following purposes, objects and powers: To purchase, manufacture, produce, assemble, receive, lease or in any manner acquire, hold, own, use, operate, install, maintain, service, repair, process, alter, improve, import, export, sell, lease, assign, transfer and generally 2 to trade and deal in and with raw materials, natural or manufactured articles or products, machinery, equipment, devices, systems, parts, supplies, apparatus, goods, wares, merchandise and personal property of every kind, nature or description, tangible or intangible, used or capable of being used for any purpose whatsoever; and to engage and participate in any mercantile, manufacturing or trading business of any kind or character. To improve, manage, develop, sell, assign, transfer, lease, mortgage, pledge or otherwise dispose of or turn to account or deal with all or any part of the property of the corporation and from time to time to vary any investment or employment of capital of the corporation. To borrow money, and to make and issue notes, bonds, debentures, obligations and evidences of indebtedness of all kinds, whether secured by mortgage, pledge or otherwise, without limit as to amount, and to secure the same by mortgage, pledge or otherwise; and generally to make and perform agreements and contracts of every kind and description, including contracts of guaranty and suretyship. To lend money for its corporate purposes, invest and reinvest its funds, and take, hold and deal with real and personal property as security for the payment of funds so loaned or invested. To the same extent as natural persons might or could do, to purchase or otherwise acquire, and to hold, own, maintain, work, develop, sell, lease, exchange, hire, convey, mortgage or otherwise dispose of and deal in lands and leaseholds, and any interest, estate and rights in real property, and any personal or mixed property, and any franchises, rights, licenses or privileges necessary, convenient or appropriate for any of the purposes herein expressed. To apply for, obtain, register, purchase, lease or otherwise to acquire and to hold, own, use, develop, operate and introduce and to sell, assign, grant licenses or territorial rights in respect to, or otherwise to turn to account or dispose of, any copyrights, trade marks, trade names, brands, labels, patent rights, letters patent of the United States or of any other country or government, inventions, improvements and processes, whether used in connection with or secured under letters patent or otherwise. 3 To participate with others in any corporation, partnership, limited partnership, joint venture, or other association of any kind, or in any transaction, undertaking or arrangement which the participating corporation would have power to conduct by itself, whether or not such participation involves sharing or delegation of control with or to others; and to be an incorporator, promoter or manager of other corporations of any type or kind. To pay pensions and establish and carry out pension, profit sharing, stock option, stock purchase, stock bonus, retirement, benefit, incentive and commission plans, trusts and provisions for any or all of its directors, officers and employees, and for any or all of the directors, officers, and employees of its subsidiaries; and to provide insurance for its benefit on the life of any of its directors, officers or employees, or on the life of any stockholder for the purpose of acquiring at his death shares of its stock owned by such stockholders. To acquire by purchase, subscription or otherwise, and to hold for investment or otherwise and to use, sell, assign, transfer, mortgage, pledge or otherwise deal with or dispose of stocks, bonds or any other obligations or securities of any corporation or corporations; to merge or consolidate with any corporation in such manner as may be permitted by law; to aid in any manner any corporation whose stocks, bonds or other obligations are held or in any manner guaranteed by this corporation, or in which this corporation is in any way interested; and to do any other acts or things for the preservation, protection, improvement or enhancement of the value of any such stock, bonds or other obligations; and while owner of any such stock, bonds or other obligations to exercise all the rights, powers and privileges of ownership thereof, and to exercise any and all voting powers thereon; and to guarantee the payment of dividends upon any stock, the principal or interest or both, of any bonds or other obligations, and the performance of any contracts. To do all and everything necessary, suitable and proper for the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers hereinbefore set 4 forth, either alone or in association with other corporations, firms or individuals, and to do every other act or acts, thing or things incidental or appurtenant to or growing out of or connected with the aforesaid business or powers or any part or parts thereof, provided the same be not inconsistent with the laws under which this corporation is organized. The business or purpose of the corporation is from time to time to do any one or more of the acts and things hereinabove set forth, and it shall have power to conduct and carry on its said business, or any part thereof, and to have one or more offices, and to exercise any or all of its corporate powers and rights, in the State of Delaware, and in the various other states, territories, colonies and dependencies of the United States, in the District of Columbia, and in all or any foreign countries. The enumeration herein of the objects and purposes of the corporation shall be construed as powers as well as objects and purposes and shall not be deemed to exclude by inference any powers, objects or purposes which the corporation is empowered to exercise, whether expressly by force of the laws of the State of Delaware now or hereafter in effect, or impliedly by the reasonable construction of the said laws. FOURTH: The total number of shares of stock which the corporation is authorized to issue is one thousand (1,000) shares, all of which are without par value. FIFTH: The name and address of the incorporator are as follows: NAME ADDRESS Leif A. Tonnessen 60 Wall Street, New York, N.Y. 10005 SIXTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the corporation, and for further definition, limitation and regulation of the powers of the corporation and of its directors and stockholders: 5 (1) The number of directors of the corporation shall be such as from time to time shall be fixed by, or in the manner provided in the by-laws. Election of directors need not be by ballot unless the by-laws so provide. (2) The Board of Directors shall have power without the assent or vote of the stockholders (a) To make, alter, amend, change, add to or repeal the By-Laws of the corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the corporation; to determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends. (b) To determine from time to time whether, and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the corporation (other than the stock ledger) or any of them, shall be open to the inspection of the stockholders. (3) The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the corporation and upon all the stockholders as though it had been approved or ratified by every 6 stockholder of the corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interest, or for any other reason. (4) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this certificate, and to any by-law from time to time made by the stockholders; provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made. SEVENTH: The corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto. EIGHTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the 7 Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions or Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. NINTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. 8 IN WITNESS WHEREOF, I have hereunto set my hand and seals, the 3rd day of January, 1973. /s/ LEIF A. TONNESSEN (L.S.) -------------------------- Leif A. Tonnessen EX-3.18 15 BYLAWS OF ENCEE, INC. 1 EXHIBIT 3.18 B Y - L A W S OF ENCEE, INC. ----------- ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE.--The registered office shall be established and maintained at the office of the United States Corporation Company, in the City of Dover, in the County of Kent, in the State of Delaware, and said corporation shall be the registered agent of this corporation in charge thereof. SECTION 2. OTHER OFFICES.--The corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Delaware on the second Wednesday of September. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. OTHER MEETINGS.--Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting. 2 SECTION 3. VOTING.--Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 4. QUORUM.--Except as otherwise required by Law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to times, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 5. SPECIAL MEETINGS.--Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, or by resolution of the directors. SECTION 6. NOTICE OF MEETINGS.--Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than sixty days before the date of the meetings. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat. 3 SECTION 7. ACTION WITHOUT MEETING.--Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM.--The number of directors shall be four (4). The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify. Directors need not be stockholders. SECTION 2. RESIGNATIONS.--Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3. VACANCIES.--If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL.--Any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote. SECTION 5. INCREASE OF NUMBER.--The number of directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. 4 SECTION 6. POWERS.--The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders. SECTION 7. COMMITTEES.--The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws of the corporation; and, unless the resolution, these By-Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. SECTION 8. MEETINGS.--The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of all the directors. Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the board may be called by the President or by the Secretary on the written request of any two directors 5 on at least two days' notice to each director and shall be held at such place or places as may be determined by the directors, or as shall be stated in the call of the meeting. SECTION 9. QUORUM.--A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 10. COMPENSATION.--Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. SECTION 11. ACTION WITHOUT MEETING.--Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee. ARTICLE IV OFFICERS SECTION 1. OFFICERS.--The officers of the corporation shall be a President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS.--The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN.-- The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the 6 Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT.--The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. SECTION 5. VICE-PRESIDENT.--Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the directors. SECTION 6. TREASURER.-- The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe. SECTION 7. SECRETARY.--The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose, and shall perform 7 such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors. ARTICLE V MISCELLANEOUS SECTION 1. CERTIFICATES OF STOCK.--Certificate of stock, signed by the Chairman or Vice Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. Any of or all the signatures may be facsimiles. SECTION 2. LOST CERTIFICATES.--A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. SECTION 3. TRANSFER OF SHARES.--The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. STOCKHOLDERS RECORD DATE.--In order that the corporation may determine the stockholders entitled to notice of or 8 to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting; or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS.--Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. SECTION 6. SEAL.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. SECTION 7. FISCAL YEAR.--The fiscal year of the corporation shall be the calendar year. SECTION 8. CHECKS.--All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 9. NOTICE AND WAIVER OF NOTICE.--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute. 9 Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VI AMENDMENTS These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal or By-Law or By-Laws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws to be made, be contained in the notice of such special meeting. EX-3.19 16 CERTIFICATE OF INCORPORATION OF FCC CANADA, INC. 1 EXHIBIT 3.19 CERTIFICATE OF INCORPORATION OF FCC CANADA, INC. --------------- The undersigned, a natural person, for the purpose of organizing a corporation for conducting the business and promoting the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the acts amendatory thereof and supplemental thereto, and known, identified and referred to as the "General Corporation Law of the State of Delaware"), hereby certifies that: FIRST: The name of the corporation (hereinafter called the "corporation") is FCC CANADA, INC. SECOND: The address, including street, number, city, and county, of the registered office of the corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, County of Kent; and the name of the registered agent of the corporation in the State of Delaware is The Prentice-Hall Corporation System, Inc. THIRD: The purpose of the corporation is to engage in any awful act or activity for which corporations may be organized under the General Corporation Law of the state of Delaware. FOURTH: The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000). The par value of each of such shares in One Dollar ($1.00). All such shares are of one class and are shares of Common Stock. No holder of any of the shares of the stock of the corporation, whether now or hereafter authorized and issued, shall be entitled as of right to purchase or subscribe for any unissued stock of any class, or any additional shares of any class to be issued by reason of any increase of the authorized capital stock of any class of the corporation, or bonds, certificates of indebtedness, debentures, or other securities convertible into stock of any class of the 2 corporation, or carrying any right to purchase stock of any class of the corporation, but any such unissued stock or any such additional authorized issue of any stock or of other securities convertible into stock, or carrying any right to purchase stock, may be issued and disposed of pursuant to resolution of the Board of Directors to such persons, firms, corporations, or associations, and upon such terms, as may be deemed advisable by the Board of Directors in the exercise of its discretion. FIFTH: The name and the mailing address of the incorporator are as follows: NAME MAILING ADDRESS N. S. Truax 32 Loockerman Square, Suite L-100 Dover, Delaware 19901 SIXTH: The corporation is to have perpetual existence. SEVENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. -2- 3 EIGHTH: For the management of the business and for the conduct of the affairs of the corporation, and in further definition, limitation and regulation of the powers of the corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the By-Laws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other By-Laws of the corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the General Corporation Law of the State of Delaware, and, after the corporation has received any payment for any of its stock, the power to adopt, amend, or repeal the By-Laws of the corporation may be exercised by the Board of Directors of the corporation; provided, however, that any provision for the classification of directors of the corporation for staggered terms pursuant to the provisions of subsection (d) of Section 141 of the General Corporation Law of the State of Delaware shall be set forth in an initial By-Law or in a By-Law adopted by the stockholders entitled to vote of the corporation unless provisions for such classification shall be set forth in this certificate of incorporation. 3. Whenever the corporation shall be authorized to issue only one class of stock, each outstanding share shall entitle the holder thereof to notice of, and the right to vote at, any meeting of stockholders. Whenever the corporation shall be authorized to issue more than one class of stock, no outstanding share of any class of stock which is denied voting power under the provisions of the certificate of incorporation shall entitle the holder thereof to the right to vote at any meeting of stockholders except as the provisions of paragraph (2) of subsection (b) of section 242 of the General Corporation Law of the State of Delaware -3- 4 shall otherwise require; provided, that no share of any such class which is otherwise denied voting power shall entitle the holder thereof to vote upon the increase or decrease in the number of authorized shares of said class. NINTH: The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by the provisions of paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented. TENTH: The corporation shall, to the fullest extent permitted by the provisions of Section 145 of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. ELEVENTH: From time to time any of the provisions of this certificate of incorporation may be amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the time prescribed by said laws, and all rights at any time conferred upon the stockholders of the corporation by this certificate of incorporation are granted subject to the provisions of this Article ELEVENTH. Signed on February 16, 1993. By: /s/ N. S. TRUAX ------------------------ N. S. Truax Incorporator -4- EX-3.20 17 BYLAWS OF FCC CANADA, INC. 1 EXHIBIT 3.20 BYLAWS OF FCC CANADA, INC. (a Delaware corporation) ARTICLE I STOCKHOLDERS 1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the corporation shall be signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation. Any or all the signatures on any such certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Whenever the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The corporation may issue a new certificate of stock or uncertificated shares in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of the lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares. 2 2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General Corporation Law, the Board of Directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the corporation shall send to the registered owner thereof any written notice prescribed by the General Corporation Law. 3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be required to, issue fractions of a share. If the corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or bearer form (represented by a certificate) which shall entitle the holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share or an uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for certificates representing the full shares or uncertificated full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose. 4. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the corporation shall be made only on the stock ledger of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 3 5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any -3- 4 other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the certificate of incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the certificate of incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the certificate of incorporation, except as any provision of law may otherwise require. 7. STOCKHOLDER MEETINGS. - TIME. The annual meeting shall be held on. the date and at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors. - PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the corporation in the State of Delaware. -4- 5 - CALL. Annual meetings and special meetings may be called by the directors or by any officer instructed by the directors to call the meeting. - NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes. The notice of a special meeting shall in all instances state the purpose or purposes for which the meeting is called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited, with postage thereon prepaid, in the United States Mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice. - STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the -5- 6 number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote at any meeting of stockholders. - CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only, as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. - INSPECTORS. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may -6- 7 be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots, or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by him or them and execute a certificate of any fact found by him or them. Except as otherwise required by subsection (e) of Section 231 of the General Corporation Law, the provisions of that Section shall not apply to the corporation. - QUORUM. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders for the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. - VOTING. Each share of stock shall entitle the holders thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by the provisions of the certificate of incorporation and these Bylaws. In the election of directors, and for any other action, voting need not be by ballot. 8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the -7- 8 minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Action taken pursuant to this paragraph shall be subject to the provisions of Section 228 of the General Corporation Law. Article II DIRECTORS 1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors of the corporation. The Board of Directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The initial Board of Directors shall consist of one person. Thereafter the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be one. The number of directors may be increased or decreased by action of the stockholders or of the directors. 3. ELECTION AND TERM. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Except as the General Corporation Law may otherwise require, in the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors -8- 9 and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. - CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, or the President, or of a majority of the directors in office. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice. - QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise -9- 10 provided, and except as otherwise provided by the General Corporation Law, the vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors. Any member or members of the Board of Directors or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. - CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside. 5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General Corporation Law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. 6. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the corporation with the exception of any authority the delegation of which is prohibited by Section 141 of the General Corporation Law, and may authorize the seal of the corporation to be affixed to all papers which may require it. -10- 11 7. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee. ARTICLE III OFFICERS The officers of the corporation shall consist of a President, a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive Vice-President, one or more other Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolution of the Board of Directors choosing them shall designate. Except as may otherwise be provided in the resolution of the Board of Directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person, as the directors may determine. Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. All officers of the corporation shall have such authority and perform such duties in the management and operation of the corporation as shall be prescribed in the resolutions of the Board of Directors designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. The Secretary or an Assistant Secretary of the corporation shall record all of the proceedings of all meetings and actions in writing of stockholders, directors, and committees of directors, and shall exercise such additional authority and perform such additional duties as the Board shall assign to him. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy in any office may be filled by the Board of Directors. -11- 12 ARTICLE IV CORPORATE SEAL The corporate seal shall be in such form as the Board of Directors shall prescribe. ARTICLE V FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VI CONTROL OVER BYLAWS Subject to the provisions of the certificate of incorporation and the provisions of the General Corporation Law, the power to amend, alter, or repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors or by the stockholders. I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the Bylaws of FCC CANADA, INC., a Delaware corporation, as in effect on the date hereof. Dated: ------------------------- Secretary of FCC CANADA, INC. (SEAL) -12- 13 City of Dover County of Kent February 22, 1993 ORGANIZATION ACTION IN WRITING OF INCORPORATOR OF FCC CANADA, INC --------------- (organized February 22, 1993) The following action is taken this day through this instrument by the incorporator of the above corporation: 1. The adoption of the initial By-Laws of the corporation. 2. The election of the following person to serve as the director of the corporation until the first annual meeting of stockholders and until his successors are elected and qualified or until his earlier resignation or removal: Charles G. Horn /s/ N. S. TRUAX ------------------------- N. S. Truax Incorporator -13- EX-3.21 18 CERT OF INCORP OF FIELDCREST CANNON FINANCING INC. 1 EXHIBIT 3.21 CERTIFICATE OF INCORPORATION OF FIELDCREST CANNON FINANCING, INC. The undersigned, being of the age of eighteen years or more, does hereby make and acknowledge this Certificate of Incorporation for the purpose of forming a business corporation under and by virtue of the laws of the State of Delaware. I. The name of the corporation is Fieldcrest Cannon Financing, Inc. II. The address of the initial registered office of the corporation in the State of Delaware is 32 LOOCKERMAN Square, Suite L-100, City of Dover, Delaware 19904, County of Kent, and the name of the initial registered agent at such address is The Prentice-Hall Corporation System, Inc. III. The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General corporation Law of Delaware. IV. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000) shares of Common Stock, no par value per share. V. The name and address of the sole incorporator are Joyce Kotzker, 200 West Second Street, 1600 Southern National Financial Center, Winston-Salem, NC 27101. VI. No person who is serving or has served as director of the corporation shall be liable to the corporation or to any stockholder for monetary damages for breach of any fiduciary 2 this article becomes effective. Nothing herein shall be deemed to limit or eliminate the liability of any person (i) for any breach of such person's duty of loyalty as a director to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) for the unlawful payment of a dividend by the corporation or the unlawful purchase or redemption of the corporation's capital stock by the corporation; (iv) for any transaction from which such person derived an improper personal benefit; or (v) to any extent that such liability may not be limited or eliminated by virtue of the provisions of Section 102(b)(7) of the General Corporation Law of the State of Delaware or any successor statute. The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is her act and deed and that the facts stated therein are true. IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation has hereunto set her hand this 8th day of December, 1994. /s/ JOYCE KOTZKER -------------------------------------- Joyce Kotzker, Incorporator EX-3.22 19 BYLAWS OF FIELDCREST CANNON FINANCING, INC. 1 EXHIBIT 3.22 BYLAWS OF FIELDCREST CANNON FINANCING, INC. Effective December 8, 1994 2 BYLAWS OF FIELDCREST CANNON FINANCING, INC. ARTICLE I Offices Section 1. Principal and Registered Offices. The principal office of the Corporation shall be located at such place as the Board of Directors may specify from time to time. The registered office of the Corporation shall be located at 306 South State Street, Kent County, Dover, Delaware. Section 2. Other Offices. The Corporation may have offices at such other places, either within or without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II Meetings of Stockholders Section 1. Place of Meeting. Meetings of stockholders shall be held at the principal office of the Corporation or at such other place or places, either within or without the State of Delaware, as shall either (i) be designated in the notice of the meeting or (ii) be agreed upon at or before the meeting by a majority of the stockholders entitled to vote at the meeting. Section 2. Annual Meetings. The annual meeting of stockholders shall be at such time as determined by the Board of Directors for the purpose of electing directors of the Corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meeting. If the annual meeting is not held on the day designated by these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article II. A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the President or by order of the Board of Directors, and shall be called by the President or by order of the Board of Directors upon the written request of any member of the Board of Directors or the holder or holders of at least 10% of all the shares of capital stock entitled to vote at the meeting. 3 Section 5. Notice of Meetings. Written or printed notice, stating the time and place of the meeting and, in the case of a special meeting, briefly describing the purpose or purposes of the meeting, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder of record entitled to vote at the meeting, by delivering a written notice thereof to him personally, or by mailing such notice in a postage prepaid envelope directed to him at his last address as it appears on the stock records of the Corporation. It shall be the primary responsibility of the Secretary to give the notice, but notice may be given by or at the direction of the President or other person or persons calling the meeting. If a matter (other than the election of directors) is to be considered at an annual meeting on which a vote of stockholders is required by law or otherwise, notice shall be given as if the meeting were a special meeting. If any stockholder shall, in person or by attorney thereunto authorized, waive in writing notice of any meeting of the stockholders, whether prior to or after such meeting, notice thereof need not be given to him. Notice of any adjourned meeting of the stockholders shall not be required to be given, except where expressly required by law. Section 6. Proxies. A stockholder may attend, represent, and vote his shares at any meeting in person, or be represented and have his shares voted for by a proxy which such stockholder has duly executed in writing. No proxy shall be valid after eleven (11) months from the date of its execution unless a longer period is expressly provided in the proxy. Each proxy shall be revocable unless otherwise expressly provided therein or unless otherwise made irrevocable by law. Section 7. Quorum Except as otherwise provided by law, the holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. In the absence of a quorum, any officer entitled to preside at, or act as Secretary of, such meeting, shall have the power to adjourn the meeting from time to time until a quorum shall be constituted. At any such adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called. When a quorum is once present to organize a meeting, the stockholders present may continue to do business at the meeting or at any adjournment thereof notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 8. Voting of Shares. Each outstanding share of voting capital stock of the Corporation shall be entitled to one vote, on each matter submitted to a vote at a meeting of the stockholders, except as otherwise provided in the certificate of incorporation. The vote by the holders of a majority of the shares voted on any matter at a meeting of stockholders at which a quorum is present shall be the act of the stockholders on that matter, unless the vote of a greater number is required by law, by the certificate of incorporation, or by these bylaws of the Corporation. Voting on all matters shall be by voice vote or by a show of hands, unless the holders of 10% of the shares represented at the meeting shall demand a vote by written ballot on a particular matter. Section 9. Action Without Meeting. Any action which the stockholders could take at a meeting may be taken without a meeting if a consent in writing, setting forth the action taken, shall be signed by the holders of outstanding stock having not less than the minimum -2- 4 number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. The consent shall be filed with the Secretary of the Corporation as part of the corporate records. Such written consent shall have the same force and effect as a vote of stockholders, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the Corporation may do business. Section 10. Meeting by Use of Conference Telephone. Subject to the requirement for notice of meetings and if permitted by applicable law, stockholders may participate in and hold a meeting of such stockholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 11. Record Date. The Board of Directors may fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall be not more than sixty days, and in case of a meeting of stockholders not less ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting. If the stock transfer books are not closed, and no record date is fixed for the determination of stockholders, or of stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the resolution of the Board of Directors declaring the dividend is adopted, as the case may be, shall be the record date for the determination of stockholders. Section 12. List of Stockholders. It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of the stock records, either directly or through a transfer agent appointed by the Board of Directors, to prepare and make, at least ten days before every stockholders meeting, a complete list of stockholders entitled to vote at such meeting arranged in alphabetical order. Such list shall be open to the examination of any stockholder at the principal office of the Corporation for said ten days before such meeting, and shall be produced and kept at the time and place of the meeting during the whole time thereof and shall be subject to the inspection of any stockholder who may be present. The stock records of the Corporation shall be the only evidence of who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such meeting. -3- 5 ARTICLE III Board of Directors Section 1. General Powers. The business and affairs of the Corporation shall be managed by the Board of Directors except as otherwise provided by law, by the certificate of incorporation of the Corporation or by these bylaws. Section 2. Number, Term and Qualification. The Board of Directors of the Corporation shall consist of one or more members, the number of which shall be set each year by the stockholders of the Corporation. The initial number of directors shall be four. Each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until his death, resignation or removal pursuant to these bylaws. Directors need not be residents of the State of Delaware or stockholders of the Corporation. Section 3. Removal. Directors may be removed from office with or without cause by a vote of stockholders who hold shares entitled to vote at an election of directors that constitute a majority of the aggregate voting power of the outstanding capital stock of the Corporation. If any directors are so removed, new directors may be elected at the same meeting. Section 4. Resignation. Any director of the Corporation may resign at any time by giving written notice to the President or the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified therein. The acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. Any vacancy in the Corporation's Board of Directors may be filled by a majority of the remaining directors (or the sole remaining director). Any vacancy created by an increase in the authorized number of directors shall be filled only by election at an annual meeting or at a special meeting of stockholders called for that purpose. The stockholders may elect a director at any time to fill a vacancy not filled by the directors. Section 6. Compensation. The directors shall not receive compensation for their services as such, except that the directors shall be entitled to be reimbursed for any reasonable expenses paid by them by reason of their attendance at any regular or special meeting of the Board of Directors or any of its committees, and by resolution of the Board of Directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the Board or any of its committees. Any director may serve the Corporation in any other capacity and receive compensation therefor. -4- 6 ARTICLE IV Meetings of Directors Section 1. Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held immediately following the annual meeting of the stockholders. The Board of Directors may by resolution provide for the holding of regular meetings of the Board on specified dates and at specified times. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on the next business day that is not a legal holiday or on a date designated in the notice of the meeting during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the Board shall be held at the principal office of the Corporation or at such other place as may be designated in the notice of the meeting. Notice of annual meetings or any regular meetings held at the principal office of the Corporation and at the usual scheduled time shall not be required. Section 2. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or any one director. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. The Secretary or other person or persons calling a meeting for which notice is required shall give notice by mail or telegram at least five days before the meeting, or by telephone at least twenty-four hours before the meeting. Oral notice may be substituted for such written notice if given not less than five days before the meeting. Notice of the time, place and purpose of such meeting may be waived in writing before or after such meeting, and shall be equivalent to the giving of the notice. Attendance by a director at a meeting for which notice is required shall constitute a waiver of notice, except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called. Except as otherwise herein provided, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in this notice of such meeting. Section 4. Quorum. A majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the Board of Directors, but a smaller number may adjourn the meeting from time to time until a quorum shall be present. Any regular or special directors' meeting may be adjourned from time to time by those present, whether a quorum is present or not. Section 5. Manner of Acting. Except as otherwise provided by law, these bylaws or the certificate of incorporation of the Corporation or otherwise, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 6. Action Without Meeting. Action taken by a majority of the directors or of a committee of directors without a meeting is nevertheless board or committee -5- 7 action, if written consent to the action is signed by all the director or members of the committee, as the case may be, and filed with the minutes of the proceedings of the Board or committee, whether done before or after the action is taken. Such unanimous written consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the corporation may do business. Section 7. Meeting by Use of Conference Telephone. Any one or more directors or members of a committee may participate in a meeting of the Board or any of its committees by means of a conference telephone or similar communications device which allows all persons participating in the meeting to hear each other, and such participation in a meeting shall be deemed presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE V Committees Section 1. Designation of Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in these bylaws or in the resolution of the Board of Directors establishing the same, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Such committees or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. Executive Committee. There may be an Executive Committee of not more than three directors designated by resolution passed by a majority of the whole Board of Directors. Such committee may meet at stated times, or on notice to all by any of their own number. During intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, except that the Executive Committee shall not have authority to authorize or approve the following matters: (a) The dissolution, merger or consolidation of the Corporation or the sale, lease or exchange of all or substantially all the property or assets of the Corporation. (b) The designation of an Executive Committee or any other committee of directors having power to exercise any of the authority of the Board of Directors in the management of the Corporation or the filling of vacancies in the Board of Directors or in such committee. -6- 8 (c) The fixing of compensation of the directors for serving on the Board or on such committee. (d) The amendment or repeal of the bylaws, or the adoption of new bylaws. (e) The amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable. Vacancies in the membership of the Executive Committee shall be filled by a majority of the whole Board of Directors at a regular meeting or at a special meeting called for that purpose. Section 3. Minutes. Each committee shall keep minutes of its proceedings and shall report thereon to the Board of Directors at or before the next meeting of the Board. Section 4. Action Without Meeting: Telephonic Meeting. Action may be taken by each committee in the manner allowed by the Board of Directors pursuant to Sections 6 and 7 of Article IV. ARTICLE VI Officers Section 1. Titles. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a President, a Secretary and a Treasurer. The Board of Directors may also elect a Chairman of the Board of Directors, an Executive Vice President, one or more additional Vice Presidents, a Controller, one or more Assistant Secretaries, one or more, Assistant Treasurers, one or more Assistant Controllers, and such other officers as it shall deem necessary. Except as otherwise provided in these bylaws, the additional officers shall have the authority and perform the duties as from time to time may be prescribed by the Board of Directors. Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election and Term. The officers of the Corporation shall be elected by the Board of Directors at the regular meeting of the Board held each year immediately following the annual meeting of the stockholders. Each officer shall hold office until the next regular meeting at which officers are to be elected and until a successor is elected and qualifies or until his death, resignation, or removal pursuant to these bylaws. Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interests of the Corporation will be served, but removal shall be without prejudice to any contract rights of the individual removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. Vacancies among the officers may be created and filled by the Board of Directors. -7- 9 Section 5. Compensation. The compensation and all other terms of employment of the officers shall be fixed by the disinterested members of the Board of Directors. No officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director of the Corporation. Section 6. Chairman of the Board of Directors. The Chairman of the Board of Directors, if such officer is elected, shall preside at meetings of the Board of Directors and shall have such other authority and perform such other duties as the Board of Directors shall designate. Section 7. President. The President shall be in general charge of the affairs of the Corporation in the ordinary course of its business, and shall preside at meetings of the stockholders. The President may perform such acts, not inconsistent with the applicable law or the provisions of these bylaws, as may be performed by the president of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the Corporation. The President shall have such other powers and perform such other duties as the Board of Directors shall designate or as may be provided by applicable law or elsewhere in these bylaws. Section 8. Vice Presidents. The Executive Vice President, if such, officer is elected, shall exercise the powers of the President during that officer's absence or inability to act. In default of both the President and the Executive Vice President, any other Vice President may exercise the powers of the President. Any action taken by a Vice President in the performance of the duties of the President shall be presumptive evidence of the absence or inability to act of the President at the time the action was taken. The Vice Presidents shall have such other powers and perform such other duties as may be assigned by the Board of Directors. Section 9. Treasurer. The Treasurer shall have custody of all funds and securities belonging to the Corporation and shall receive, deposit or disburse the same under the direction of the Board of Directors. The treasurer shall keep full and accurate accounts of the finances of the Corporation and shall cause a true statement of the assets and liabilities of the Corporation as of the close of each fiscal year and of the results of its operations and of changes in surplus, all in reasonable detail, to be made and filed at the principal office of the Corporation within four months after the end of the fiscal year. The statement shall be available for inspection by any stockholder for a period of ten years, and the Treasurer shall mail or otherwise deliver a copy of the latest statement to any stockholder upon written request. The Treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the President or by the Board of Directors. Section 10. Assistant Treasurers. Each Assistant Treasurer shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Treasurers shall exercise the powers of the Treasurer during that officer's absence or inability to act. Section 11. Controller and Assistant Controllers. The Controller shall have charge of the accounting affairs of the corporation and shall have such other powers and -8- 10 perform such other duties as the Board of Directors shall designate. Each Assistant Controller shall have such Powers and perform such duties as may be assigned by the Board of Directors and the Assistant Controllers shall exercise the powers of the Controller during that officer's absence or inability to act. Section 12. Secretary. The Secretary shall keep accurate records of the acts and proceedings of all meetings of stockholders and of the Board of Directors and shall give all notices required by law and by these bylaws. The Secretary shall have general charge of the corporate books and records and of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The Secretary shall have general charge of the stock transfer books of the Corporation and shall keep at the principal office of the Corporation a record of stockholders, showing the name and address of each stockholder and the number and class of the shares held by each. The Secretary shall sign such instruments as may require the signature of the Secretary, and in general shall perform the duties incident to the office of Secretary and such other duties as may be assigned from time to time by the President or by the Board of Directors. Section 13. Assistant Secretaries. Each Assistant Secretary shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Secretaries shall exercise the powers of the Secretary during that officer's absence or inability to act. Section 14. Voting Upon Stocks. Unless otherwise ordered by the Board of Directors; the President shall have full power and authority in behalf of the Corporation to attend, act and vote at meetings of the stockholders of any Corporation in which this Corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the Corporation might have possessed and exercised if present. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons. ARTICLE VII Capital Stock Section 1. Certificates. Certificates for shares of the capital stock of the Corporation shall be in such form not inconsistent with the certificate of incorporation of the Corporation as shall be approved by the Board of Directors. The certificates shall be consecutively numbered or otherwise identified. The name and address of the persons to whom they are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the Corporation. Each certificate shall be signed by the President or any Vice President and by the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer; provided, that where a certificate is signed by a transfer agent or assistant transfer agent of the Corporation, the signatures of such officers of the Corporation upon the certificate may be by facsimile, engraved or printed. Each certificate shall be sealed with the seal of the Corporation or a facsimile thereof. -9- 11 Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer books of the Corporation only upon surrender of the certificate for the shares sought to be transferred by the record holder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer shall be cancelled before new certificates for the transferred shares shall be issued. Section 3. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The Board of Directors shall have power and authority to make rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of capital stock of the Corporation. Section 5. Lost Certificates. The Board of Directors may authorize the issuance of a new certificate in place of a certificate claimed to have been lost or destroyed, upon receipt of an affidavit from the person explaining the loss or destruction. When authorizing issuance of a new certificate, the Board may require the claimant to give the Corporation a bond in a sum as it may direct to indemnify the Corporation against loss from any claim with respect to the certificate claimed to have been lost or destroyed; or the Board may, by resolution reciting that the circumstances justify such action, authorize the issuance of the new certificate without requiring a bond. ARTICLE VIII General Provisions Section 1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends out of its earned surplus on its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation and "Delaware" around the perimeter, and the words "Corporate Seal" in the center. Section 3. Waiver of Notice. Whenever notice is required to be given to a stockholder, director or other person under the provisions of these bylaws, the certificate of incorporation of the Corporation or by applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the time stated in the notice, shall be equivalent to giving the notice. Section 4. Depositories and Checks. All funds of the Corporation shall be deposited in the name of the Corporation in such bank, banks, or other financial institutions as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts -10- 12 or other orders signed on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate. Section 5. Bond. The Board of Directors may by resolution require any or all officers, agents and employees of the Corporation to give bond to the Corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the Board. Section 6. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 7. Taxable Year. The taxable year of the Corporation shall be the period ending on December 31 of each year or such other period as the Board of Directors shall from time to time determine. Section 8. Indemnification of Directors and Officers. (a) Right to Indemnification. Each person who was or is made a party to or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, finds, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the Delaware General Corporation Law requires, an advancement of expenses -11- 13 incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise (hereinafter an "undertaking'). (b) Right of Indemnitee to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified or to such advancement of expenses under this Section or otherwise shall be on the Corporation. (c) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this certificate of incorporation, these bylaws, by agreement, by vote of stockholders or disinterested directors or otherwise. (d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another -12- 14 corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss under the Delaware General Corporation Law. (e) Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses, to any agent of the Corporation to the fullest extent of the provisions of the Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation. Section 9. Amendments. Except as otherwise provided herein, these bylaws may be amended or repealed and new bylaws may be adopted by the affirmative vote of the holders of shares of the Corporation then issued and entitled to vote at any annual meeting or at any special meeting of stockholders called for the purpose of considering such action that constitute at least a majority of the aggregate voting power of the outstanding capital stock of the Corporation. Section 10. Stockholders Agreement. To the extent that the provisions of these bylaws are inconsistent with any stockholders agreement subsequently entered into by the holders of the Corporation's capital stock, the stockholders agreement shall control. * * * * THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon Financing, Inc. were duly adopted by the Board of Directors of the Corporation by action taken by unanimous written consent effective the 8th day of December, 1994. This 8th day of December, 1994. /s/ [ILLEGIBLE] --------------------------------- Secretary [Corporate Seal] -13- 15 RESTATED CERTIFICATE OF INCORPORATION FIELDCREST MILLS INTERNATIONAL, INC., a corporation organized and existing under and by virtue of the General Corporation law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors on July 29, 1991, a resolution was duly adopted setting forth a proposed Restated Certificate of Incorporation of said Corporation, declaring said Restated Certificate of Incorporation to be advisable and calling a meeting of the stockholders of said Corporation for consideration thereof. The resolution setting forth the proposed Restated Certificate of Incorporation is as follows: RESOLVED: That the proposal to restate the Certificate of Incorporation to change the corporate name from Fieldcrest Mills International, Inc. to Fieldcrest Cannon International, Inc., be and hereby is approved and that the same be submitted by the Corporation to its stockholders at a special meeting of stockholders to be held July 29, 1991 at the offices of Amoskeag Company, located at Boston, Massachusetts. SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said Corporation was duly called and held, upon notice, in accordance with Section 222 of the General Corporation law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the Restated Certificate of Incorporation. THIRD: That said Restated Certificate of Incorporation 16 was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Fieldcrest Mills International, Inc. has caused this Certificate to be signed by Johnstone H.R. Walker, its President, and M. Kenneth Doss, its Secretary, this 31st day of July, 1991. By: /s/ JOHNSTONE H.R. WALKER --------------------------- Johnstone H.R. Walker ATTEST: /s/ M. KENNETH DOSS --------------------------- M. Kenneth Doss Secretary (CORPORATE SEAL) 2 EX-3.23 20 CERT OF INC. FIELDCREST CANNON INT'L AS AMENDED 1 EXHIBIT 3.23 RESTATED CERTIFICATE OF INCORPORATION of FIELDCREST MILLS INTERNATIONAL, INC. ----------------------------------------- Adopted in accordance with the provisions of Section 242 and 245 of the Delaware General Corporation Law ----------------------------------------- The original Certificate of Incorporation of FIELDCREST MILLS INTERNATIONAL, INC. (hereafter known as the "Corporation") was filed with the Secretary of State of Delaware on February 24, 1964. This Restated Certificate of Incorporation was proposed to the Stockholders of the Corporation by the Board of Directors on July 29, 1991, and duly adopted in accordance with the provisions of Sections 242 and 245 of the Delaware General Corporation Law, as amended, by an affirmative vote of the holder of all outstanding stock entitled to vote at a Meeting of Stockholders of the Corporation held at the offices of Amoskeag Company, Boston, Massachusetts, on July 29, 1991. The Restated Certificate of Incorporation as herewith amended is hereby restated to read in its entirety as follows: FIRST: The name of the corporation is FIELDCREST CANNON INTERNATIONAL, INC. SECOND: The principal office of the Corporation is to be located in the City of Dover, in the County of Kent, in the State of Delaware. The name of its resident agent is the UNITED STATES CORPORATION COMPANY, whose address is 32 Loockerman Square, Suite L-100, Dover, DE 19901. 2 THIRD: The nature of the business of the Corporation and the objects or purposes proposed to be transacted, promoted or carried on by it are: To design, develop, experiment with, manufacture, produce, buy, lease or otherwise acquire, hold, own, use, store, process, convert, treat, finish, import, export, sell, lease or otherwise dispose of and generally to deal in and with (as principal, agent or otherwise) any and all kinds of textiles, cloth and fabrics whether made from natural or synthetic fibers or other material and all raw materials which may be used in the manufacturing, converting, treating, processing, or finishing of such textiles, cloth and fabrics. To build, erect, construct, purchase, hold or otherwise acquire, own, provide, manage, maintain, establish, lease and operate, and to buy, sell, exchange or otherwise dispose of, mills, factories, laboratories, warehouses, agencies, buildings, structures, stores and offices, with suitable machinery and equipment, and all things of whatsoever kind and nature suitable, necessary, useful, advisable or convenient in connection with the pursuit of any or all of the objects herein set forth. To manufacture, buy, sell, deal in, and to engage in, conduct and carry on the business of manufacturing, buying, selling and dealing in goods, wares and merchandise of every class and description necessary or useful for the operations of this corporation. To improve, manage, develop, sell, assign, transfer, lease, mortgage, pledge, or otherwise dispose of or turn to account or deal with all or any part of the property of the corporation and from time to time to vary any investment or employment of capital of the corporation. To borrow money, and to make and issue notes, bonds, debentures, obligations and evidences of indebtedness of all kinds, whether secured by mortgage, pledge or otherwise, without limit as to amount, and to secure the same by mortgage, pledge or otherwise; and generally to make and perform agreements and contracts of every kind and description. 2 3 To the same extent as natural persons might or could do, to purchase or otherwise acquire, and to hold, own, maintain, work, develop, sell, lease, exchange, hire, convey, mortgage or otherwise dispose of and deal in, lands and leaseholds, and any interest, estate and rights in real property, and any personal or mixed property, and any franchises, rights, licenses or privileges necessary, convenient or appropriate for any of the purposes herein expressed. To apply for, obtain, register, purchase, lease or otherwise to acquire and to hold, own, use, develop, operate and introduce, and to sell, assign, grant licenses or territorial rights in respect to, or otherwise to turn to account or dispose of, any copyrights, trade marks, trade names, brands, labels, patent rights, letters patent of the United States or of any other country or government, inventions, improvements and processes, whether used in connection with or secured under letters patent or otherwise. To do all and everything necessary, suitable and proper for the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers hereinbefore set forth, either alone or in association with other corporations, firms or individuals, and to do every other act or acts, thing or things incidental or appurtenant to or growing out of or connected with the aforesaid business or powers or any part or parts thereof, provided the same be not inconsistent with the laws under which this corporation is organized. To acquire by purchase, subscription or otherwise, and to hold for investment or otherwise and to use, sell, assign, transfer, mortgage, pledge or otherwise deal with or dispose of stocks, bonds or any other obligations or securities of any corporation or corporations; to merge or consolidate with any corporations; to merge or consolidate with any corporation in such manner as may be permitted by law; to aid in any manner any corporation whose stocks, bonds or other obligations are held or in any manner guaranteed by this corporation, or in which this corporation is in any way interested; and to do any other acts or things for the preservation, protection, improvement or enhancement of the value of any such stock, bonds or other obligations; and while owner of any such stock, bonds or other obligations to exercise all 3 4 the rights, powers and privileges of ownership thereof, and to exercise any and all voting powers thereon; to guarantee the payment of dividends upon any stock, or the principal or interest or both, of any bonds or other obligations, and the performance of any contracts. The business or purpose of the corporation is from time to time to do any one or more of the acts and things hereinabove set forth, and its shall have power to conduct and carry on its said business, or any part thereof, and to have one or more offices, and to exercise any or all of its corporate powers and rights, in the State of Delaware, and in the various other states, territories, colonies and dependencies of the United States, in the District of Columbia, and in all or any foreign countries. The enumeration herein of the objects and purposes of this corporation shall be construed as powers as well as objects and purposes and shall not be deemed to exclude by inference any powers, objects or purposes which this corporation is empowered to exercise, whether expressly by force of the laws of the State of Delaware now or hereafter in effect or implied by the reasonable construction of the said laws. FOURTH: The total number of shares of stock which the corporation shall have authority to issue is two hundred (200), and the par value of each of such shares is One Hundred Dollars ($100.00). FIFTH: The corporation is to have perpetual existence. SIXTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. SEVENTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of this corporation, and for further definition, limitation and regulation of the powers of this corporation and of its 4 5 directors and stockholders: (1) The number of directors of the corporation shall be such as from time to time shall be fixed by, or in the manner provided in the Bylaws, but shall not be less than three. Election of directors need not be by ballot unless the Bylaws so provide. (2) The Board of Directors shall have power (a) Without the assent or vote of the stockholders, to make, alter, amend, change, add to, or repeal the Bylaws of this corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon any part of the property of the corporation provided it be less than substantially all; to determine the use and disposition of any surplus or net profits and to fix the times for the declaration and payment of dividends. (b) To determine from time to time whether, and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the corporation (other than the stock ledger) or any of them, shall be open to the inspection of the stockholders. (3) The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and 5 6 as binding upon the corporation and upon all the stockholders, as though it had been approved or ratified by every stockholder of the corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interest or for any other reason. (4) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this certificate, and to any Bylaws from time to time made by the stockholders; provided, however, that no Bylaw so made shall invalidate any prior act of the directors which would have been valid if such Bylaw had not been made. EIGHTH: No contract or other transaction between the corporation and any other corporation and no other act of the corporation shall, in the absence of fraud, in any way be affected or invalidated by the fact that any of the directors of the corporation are pecuniarily or otherwise interested in, or are directors or officers of, such other corporation. Any director of the corporation individually or any firm or association of which any director may be a member, may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the corporation, provided that the fact that he individually or such firm or association is 6 7 so interested shall be disclosed or shall have been known to the Board of Directors or a majority of such members thereof as shall be present at any meeting of the Board of Directors at which action upon any such contract or transaction shall be taken. Any director of the corporation who is also a director or officer of such other corporation or who is so interested may be counted in determining the existence of a quorum at any meeting of the Board of Directors which shall authorize any such contract or transaction and may vote thereat to authorize any such contract or transaction, with like force and effect as if he were not such director or officer of such other corporation or not so interested. Any director of the corporation may vote upon any contract or other transaction between the corporation and any subsidiary or affiliated corporation without regard to the fact that he is also a director of such subsidiary or affiliated corporation. NINTH: Any person made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was a director, officer or employee of this corporation or of any corporation which he served as such at the request of this corporation, shall be indemnified by the corporation against the reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceeding, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in 7 8 such action, suit or proceeding that such officer, director or employee is liable for negligence or misconduct in the performance of his duties. Such right of indemnification shall not be deemed exclusive of any other rights to which such director, officer or employee may be entitled by law. TENTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. IN WITNESS WHEREOF, Fieldcrest Mills International, Inc. has caused this Restated Certificate of Incorporation to be executed by Johnstone H.R. Walker, its President, and M. Kenneth Doss, its Secretary, this 31st day of July, 1991. By: /s/ JOHNSTONE H.R. WALKER --------------------------- Johnstone H.R. Walker ATTEST: /s/ M. KENNETH DOSS --------------------------- M. Kenneth Doss Secretary (CORPORATE SEAL) 8 9 STATE OF NORTH CAROLINA ) ) SS.: COUNTY OF GUILFORD ) BE IT REMEMBERED that on this 31st day of July, A.D., 1991, personally came before me, Janice W. Robertson, a Notary Public in and for the County and State aforesaid, Johnstone H.R. Walker and M. Kenneth Doss, parties to the foregoing Restated Certificate of Incorporation, known to me personally to be such, and severally acknowledged the said Certificate to be the act and deed of the signers respectively, and that the facts therein stated are truly set forth. GIVEN under my hand and seal of office the day and year aforesaid. /s/ JANICE W. ROBERTSON -------------------------- Notary Public My Commission Expires: 2-22-1995 -------------------------- EX-3.24 21 BYLAWS OF FIELDCREST CANNON INT'L INC. AS AMENDED 1 EXHIBIT 3.24 BYLAWS OF FIELDCREST CANNON INTERNATIONAL, INC. (As Amended to July 29, 1991) ---------- ARTICLE I OFFICES SECTION 1. PRINCIPAL OFFICE -- The principal office shall be established and maintained at the office of the United States Corporation Company, in the City of Dover, in the County of Kent, in the State of Delaware, and said corporation shall be the resident agent of this corporation in charge thereof. SECTION 2. OTHER OFFICES -- The corporation may have other offices, either within or outside of the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. Article II MEETINGS OF STOCKHOLDERS SECTION 1. PLACE OF MEETINGS -- The annual meeting of stockholders shall be held in the City of New York, New York, at the place therein determined by the directors and set forth in the notice thereof, but other meetings of the stockholders may be held at such place or places as shall be fixed by the directors and stated in the notice of the meeting. SECTION 2. ANNUAL ELECTION OF DIRECTORS -- The annual meeting of stockholders for the election of directors and the transaction of other business shall be held, in each year, commencing in 1965, on the last Tuesday in April. If this date shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting. No change of the time or place of a meeting for the election of directors, as fixed by the Bylaws, shall be made 2 within sixty (60) days next before the day on which such election is to be held. in case of any change in such time or place for such election of directors, notice thereof shall be given to each stockholder entitled to vote, in person, or by letter mailed to his last known post office address, twenty days before the election is held. SECTION 3. VOTING -- Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these Bylaws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. After the first election of directors, except where the transfer books of the corporation shall have been closed or a date shall have been fixed as the record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on at any election for directors which shall have been transferred on the books of the corporation within twenty days next preceding such election. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the residence of each, and the number of voting shares held by each, shall be prepared by the Secretary and filed in the office where the election is to be held, at least ten days before every election, and shall at all times during the usual hours for business, and during the whole time of said election, be open to examination of any stockholder. SECTION 4. QUORUM -- Except as otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to 2 3 vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 5. SPECIAL MEETINGS -- Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, and shall be called upon a requisition in writing therefor, stating the purpose or purposes thereof, delivered to the President or Secretary, signed by a majority of the directors, or by twenty-five per cent in interest of the stockholders entitled to vote, or by resolution of the directors. SECTION 6. NOTICE OF MEETINGS -- Written or printed notice, stating the place and time of the meeting, and the general nature of the business to be considered, shall be given by the Secretary to each stockholder entitled to vote thereat at his last known post office address, at least ten days before the meeting in the case of an annual meeting and five days before the meeting in the case of a special meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat. SECTION 7. ACTION WITHOUT MEETING -- Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, the meeting and vote of stockholders may be dispensed with if all the stockholders, who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM -- The number of directors shall be three (3). The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify. Directors need not be stockholders. SECTION 2. RESIGNATIONS -- Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. 3 4 SECTION 3. VACANCIES -- If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL -- Any director or directors may be removed, either for or without cause, at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for that purpose. SECTION 5. INCREASE OF NUMBER -- The number of directors may be increased by amendment of these Bylaws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. SECTION 6. POWERS -- The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation, or by these Bylaws conferred upon or reserved to the stockholders. SECTION 7. COMMITTEES -- The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, to the extent provided in said resolution or resolutions or in these Bylaws, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in these Bylaws or as may be determined from time to time by resolution adopted by the Board of Directors. The committees shall keep regular minutes of their proceedings and report the same to the Board when required. SECTION 8. MEETINGS -- The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of all the directors. 4 5 Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the Board may be called by the President or by the Secretary on the written request of any two directors on at least two days' notice to each director and shall be held at such place or places as may be determined by the directors, or as shall be stated in the call of the meeting. SECTION 9. QUORUM -- A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 10. COMPENSATION -- Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the Board, a fixed fee and expense of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity, as an officer, agent or otherwise, and receiving compensation therefor. ARTICLE IV OFFICERS SECTION 1. OFFICERS -- The officers of the corporation shall be a President, one or more Vice-Presidents, a Treasurer, and a Secretary, and such Assistant Treasurers and Assistant Secretaries as the Board of Directors may deem proper. In addition, the Board of Directors may elect a Chairman of the Board of Directors. All of such officers shall be elected by the Board of Directors. None of the officers, except the Chairman of the Board of Directors and the President, need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. Any two offices, other than those of President and Vice-President, may be held by the same person. More than two offices, other than those of President and Secretary, may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS -- The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms 5 6 and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN -- The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors or the Executive Committee. SECTION 4. PRESIDENT -- The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed, the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. SECTION 5. VICE-PRESIDENT -- Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the Directors. SECTION 6. TREASURER -- The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe. SECTION 7. SECRETARY -- The Secretary shall give, or cause to be given, notice of all meetings of stockholders and 6 7 directors, and all other notices required by law or by these Bylaws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the meeting is called as provided in these Bylaws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors. ARTICLE V MISCELLANEOUS SECTION 1. CERTIFICATES OF STOCK -- Certificates of stock, numbered and with the seal of the corporation affixed, signed by the President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the corporation and a registrar, the signatures of such officers may be facsimiles. SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. SECTION 3. TRANSFER OF SHARES -- The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by 7 8 the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer, and a duplicate thereof mailed to the Delaware office, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. CLOSING OF TRANSFER BOOKS -- The Board of Directors shall have power to close the stock transfer books of the corporation for a period not exceeding fifty days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding fifty days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividends or to any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case such stockholders only as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend or to receive such allotment of rights or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. SECTION 6. SEAL -- The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a facsimile thereof to 8 9 be impressed or affixed or reproduced or otherwise. SECTION 7. FISCAL YEAR -- The fiscal year of the corporation shall be the calendar year. SECTION 8. CHECKS -- All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is required by these Bylaws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed post-paid wrapper, addressed to the person entitled thereto at his last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute. Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VI AMENDMENTS These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal or Bylaw or Bylaws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting. 9 EX-3.25 22 CERT OF INCORP. - FIELDCREST CANNON LICENSING, INC 1 EXHIBIT 3.25 CERTIFICATE OF INCORPORATION OF FIELDCREST CANNON LICENSING, INC. The undersigned, being of the age of eighteen years or more, does hereby make and acknowledge this Certificate of Incorporation for the purpose of forming a business corporation under and by virtue of the State of Delaware. I. The name of the corporation is Fieldcrest Cannon Licensing, Inc. II. The address of the initial registered office of the corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, Delaware 19904, County of Kent, and the name of the initial registered agent at such address is The Prentice-Hall Corporation System, Inc. III. The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware. IV. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000) shares of Common Stock, no par value per share. V. The name and address of the sole incorporator are Joyce Kotzker, 200 West Second Street, 1600 Southern National Financial Center, Winston-Salem, NC 27101. VI. No person who is serving or has served as director of the corporation shall be liable to the corporation or to any stockholder for monetary damages for breach of any fiduciary 2 this article becomes effective. Nothing herein shall be deemed to limit or eliminate the liability of any person (i) for any breach of such person's duty of loyalty as a director to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) for the unlawful payment of a dividend by the corporation or the unlawful purchase or redemption of the corporation's capital stock by the corporation; (iv) for any transaction from which such person derived an improper personal benefit; or (v) to any extent that such liability may not be limited or eliminated by virtue of the provisions of Section 102(b)(7) of the General Corporation Law of the State of Delaware or any successor statute. The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is her act and deed and that the facts stated therein are true. IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation has hereunto set her hand this 8th day of December, 1994. /s/ JOYCE KOTZKER ----------------------------- Joyce Kotzker, Incorporator EX-3.26 23 BYLAWS OF FIELDCREST CANNON LICENSING, INC. 1 EXHIBIT 3.26 BYLAWS OF FIELDCREST CANNON LICENSING INC. EFFECTIVE DECEMBER 8, 1994 ARTICLE I Offices Section 1. Principal and Registered Offices. The principal office of the Corporation shall be located at such place as the Board of Directors may specify from time to time. The registered office of the Corporation shall be located at 306 South State Street, Kent County, Dover, Delaware. Section 2. Other Offices. The Corporation may have offices at such other places, either within or without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II Meetings of Stockholders Section 1. Place of Meeting. Meetings of stockholders shall be held at the principal office of the Corporation or at such other place or places, either within or without the State of Delaware, as shall either (i) be designated in the notice of the meeting or (ii) be agreed upon at or before the meeting by a majority of the stockholders entitled to vote at the meeting. Section 2. Annual Meetings. The annual meeting of stockholders shall be at such time as determined by the Board of Directors for the purpose of electing directors of the Corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meetings. If the annual meeting is not held on the day designated by these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article II. A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the President or by order of the Board of Directors, and shall be called by the President or by order of the Board of Directors upon the written request of any member of the Board of Directors or the holder or holders of at least 10% of all the shares of capital stock entitled to vote at the meeting. 2 Section 5. Notice of Meetings. Written or printed notice, stating the time and place of the meeting and, in the case of a special meeting, briefly describing the purpose or purposes of the meeting, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder of record entitled to vote at the meeting, by delivering a written notice thereof to him personally, or by mailing such notice in a postage prepaid envelope directed to him at his last address as it appears on the stock records of the Corporation. It shall be the primary responsibility of the Secretary to give the notice, but notice may be given by or at the direction of the President or other person or persons calling the meeting. If a matter (other than the election of directors) is to be considered at an annual meeting on which a vote of stockholders is required by law or otherwise, notice shall be given as if the meeting were a special meeting. If any stockholder shall, in person or by attorney thereunto authorized, waive in writing notice of any meeting of the stockholders, whether prior to or after such meeting, notice thereof need not be given to him. Notice of any adjourned meeting of the stockholders shall not be required to be given, except where expressly required by law. Section 6. Proxies. A stockholder may attend, represent, and vote his shares at any meeting in person, or be represented and have his shares voted for by a proxy which such stockholder has duly executed in writing. No proxy shall be valid after eleven (11) months from the date of its execution unless a longer period is expressly provided in the proxy. Each proxy shall be revocable unless otherwise expressly provided therein or unless otherwise made irrevocable by law. Section 7. Quorum. Except as otherwise provided by law, the holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. In the absence of a quorum, any officer entitled to preside at, or act as Secretary of, such meeting, shall have the power to adjourn the meeting from time to time until a quorum shall be constituted. At any such adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called. When a quorum is once present to organize a meeting, the stockholders present may continue to do business at the meeting or at any adjournment thereof notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 8. Voting of Shares. Each outstanding share of voting capital stock of the Corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the stockholders, except as otherwise provided in the certificate of incorporation. The vote by the holders of a majority of the shares voted on any matter at a meeting of stockholders at which a quorum is present shall be the act of the stockholders on that matter, unless the vote of a greater number is required by law, by the certificate of incorporation, or by these bylaws of the Corporation. Voting on all matters shall be by voice vote or by a show of hands, unless the holders of 10% of the shares represented at the meeting shall demand a vote by written ballot on a particular matter. Section 9. Action Without Meeting. Any action which the stockholders could take at a meeting may be taken without a meeting if a consent in writing, setting forth the action taken, shall be signed by the holders of outstanding stock having not less than the minimum. -2- 3 number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. The consent shall be filed with the Secretary of the Corporation as part of the corporate records. Such written consent shall have the same force and effect as a vote of stockholders, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the Corporation may do business. Section 10. Meeting by Use of Conference Telephone. Subject to the requirement for notice of meetings and if permitted by applicable law, stockholders may participate in and hold a meeting of such stockholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 11. Record Date. The Board of Directors may fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall be not more than sixty days, and in case of a meeting of stockholders not less ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting. If the stock transfer books are not closed, and no record date is fixed for the determination of stockholders, or of stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the resolution of the Board of Directors declaring the dividend is adopted, as the case may be, shall be the record date for the determination of stockholders. Section 12. List of Stockholders. It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of the stock records, either directly or through a transfer agent appointed by the Board of Directors, to prepare and make, at least ten days before every stockholders meeting, a complete list of stockholders entitled to vote at such meeting arranged in alphabetical order. Such list shall be open to the examination of any stockholder at the principal office of the Corporation for said ten days before such meeting, and shall be produced and kept at the time and place of the meeting during the whole time thereof and shall be subject to the inspection of any stockholder who may be present. The stock records of the Corporation shall be the only evidence of who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such meeting. -3- 4 ARTICLE III Board of Directors Section 1. General Powers. The business and affairs of the Corporation shall be managed by the Board of Directors except as otherwise provided by law, by the certificate of incorporation of the Corporation or by these bylaws. Section 2. Number, Term and Qualification. The Board of Directors of the Corporation shall consist of one or more members, the number of which shall be set each year by the stockholders of the Corporation. Tne initial number of directors shall be four. Each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until his death, resignation or removal pursuant to these bylaws. Directors need not be residents of the State of Delaware or stockholders of the Corporation. Section 3. Removal. Directors may be removed from office with or without cause by a vote of stockholders who hold shares entitled to vote at an election of directors that constitute a majority of the aggregate voting power of the outstanding capital stock of the Corporation. If any directors are so removed, new directors may be elected at the same meeting. Section 4. Resignation. Any director of the Corporation may resign at any time by giving written notice to the President or the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified therein. The acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. Any vacancy in the Corporation's Board of Directors may be filled by a majority of the remaining directors (or the sole remaining director). Any vacancy created by an increase in the authorized number of directors shall be filled only by election at an annual meeting or at a special meeting of stockholders called for that purpose. The stockholders may elect a director at any time to fill a vacancy not filled by the directors. Section 6. Compensation. The directors shall not receive compensation for their services as such, except that the directors shall be entitled to be reimbursed for any reasonable expenses paid by them by reason of their attendance at any regular or special meeting of the Board of Directors or any of its committees, and by resolution of the Board of Directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the Board or any of its committees. Any director may serve the Corporation in any other capacity and receive compensation therefor. -4- 5 ARTICLE IV Meetings of Directors Section 1. Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held immediately following the annual meeting of the stockholders. The Board of Directors may by resolution provide for the holding of regular meetings of the Board on specified dates and at specified times. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on the next business day that is not a legal holiday or on a date designated in the notice of the meeting during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the Board shall be held at the principal office of the Corporation or at such other place as may be designated in the notice of the meeting. Notice of annual meetings or any regular meetings held at the principal office of the Corporation and at the usual scheduled time shall not be required. Section 2. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or any one director. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. The Secretary or other person or persons calling a meeting for which notice is required shall give notice by mail or telegram at least five days before the meeting, or by telephone at least twenty-four hours before the meeting. Oral notice may be substituted for such written notice if given not less than five days before the meeting. Notice of the time, place and purpose of such meeting may be waived in writing before or after such meeting, and shall be equivalent to the giving of the notice. Attendance by a director at a meeting for which notice is required shall constitute a waiver of notice, except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called. Except as otherwise herein provided, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in this notice of such meeting. Section 4. Quorum. A majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the Board of Directors, but a smaller number may adjourn the meeting from time to time until a quorum shall be present. Any regular or special directors' meeting may be adjourned from time to time by those present, whether a quorum is present or not. Section 5. Manner of Acting. Except as otherwise provided by law, these bylaws or the certificate of incorporation of the Corporation or otherwise, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 6. Action Without Meeting. Action taken by a majority of the directors or of a committee of directors without a meeting is nevertheless Board or committee -5- 6 action, if written consent to the action is signed by all the director or members of the committee, as the case may be, and filed with the minutes of the proceedings of the Board or committee, whether done before or after the action is taken. Such unanimous written consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the corporation may do business. Section 7. Meetings by Use of Conference Telephone. Any one or more directors or members of a committee may participate in a meeting of the Board or any of its committees by means of a conference telephone or similar communications device which allows all persons participating in the meeting to hear each other, and such participation in a meeting shall be deemed presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE V Committees Section 1. Designation of Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in these bylaws or in the resolution of the Board of Directors establishing the same, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Such committees or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. Executive Committee. There may be an Executive Committee of not more than three directors designated by resolution passed by a majority of the whole Board of Directors. Such committee may meet at stated times, or on notice to all by any of their own number. During intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, except that the Executive Committee shall not have authority to authorize or approve the following matters: (a) The dissolution, merger or consolidation of the Corporation or the sale, lease or exchange of all or substantially all the property or assets of the Corporation. (b) The designation of an Executive Committee or any other committee of directors having power to exercise any of the authority of the Board of Directors in the management of the Corporation or the filling of vacancies in the Board of Directors or in such committee. -6- 7 (c) Fixing of compensation of the directors for serving on the Board or on such committee. (d) The amendment or repeal of the bylaws, or the adoption of new bylaws. (e) The amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable. Vacancies in the membership of the Executive Committee shall be filled by a majority of the whole Board of Directors at a regular meeting or at a special meeting called for that purpose. Section 3. Minutes. Each committee shall keep minutes of its proceedings and shall report thereon to the Board of Directors at or before the next meeting of the Board. Section 4. Action Without Meeting Telephonic Meeting. Action may be taken by each committee in the manner allowed by the Board of Directors pursuant to Sections 6 and 7 of Article IV. ARTICLE VI Officers Section 1. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a President, a Secretary and a Treasurer. The Board of Directors may also elect a Chairman of the Board of Directors, an Executive Vice President, one or more additional Vice Presidents, a Controller, one or more Assistant Secretaries, one or more Assistant Treasurers, one or more Assistant Controllers, and such other officers as it shall deem necessary. Except as otherwise provided in these bylaws, the additional officers shall have the authority and perform the duties as from time to time may be prescribed by the Board of Directors. Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election and Term. The officers of the Corporation shall be elected by the Board of Directors at the regular meeting of the Board held each year immediately following the annual meeting of the stockholders. Each officer shall hold office until the next regular meeting at which officers are to be elected and until a successor is elected and qualifies or until his death, resignation, or removal pursuant to these bylaws. Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interests of the Corporation will be served, but removal shall be without prejudice to any contract rights of the individual removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. Vacancies among the officers may be created and filled by the Board of Directors. -7- 8 Section 5. Compensation. The compensation and all other terms of employment of the officers shall be fixed by the disinterested members of the Board of Directors. No officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director of the Corporation. Section 6. Chairman of the Board of Directors. The Chairman of the Board of Directors, if such officer is elected, shall preside at meetings of the Board of Directors and shall have such other authority and perform such other duties as the Board of Directors shall designate. Section 7. President. The President shall be in general charge of the affairs of the Corporation in the ordinary course of its business, and shall preside at meetings of the stockholders. The President may perform such acts, not inconsistent with the applicable law or the provisions of these bylaws, as may be performed by the president of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the Corporation. The President shall have such other powers and perform such other duties as the Board of Directors shall designate or as may be provided by applicable law or elsewhere in these bylaws. Section 8. Vice Presidents. The Executive Vice President, if such, officer is elected, shall exercise the powers of the President during that officer's absence or inability to act. In default of both the President and the Executive Vice President, any other Vice President may exercise the powers of the President. Any action taken by a Vice President in the performance of the duties of the President shall be presumptive evidence of the absence or inability to act of the President at the time the action was taken. The Vice Presidents shall have such other powers and perform such other duties as may be assigned by the Board of Directors. Section 9. Treasurer. The Treasurer shall have custody of all funds and securities belonging to the Corporation and shall receive, deposit or disburse the same under the direction of the Board of Directors. The treasurer shall keep full and accurate accounts of the finances of the Corporation and shall cause a true statement of the assets and liabilities of the Corporation as of the close of each fiscal year and of the results of its operations and of changes in surplus, all in reasonable detail, to be made and filed at the principal office of the Corporation within four months after the end of the fiscal year. The statement shall be available for inspection by any stockholder for a period of ten years, and the Treasurer shall mail or otherwise deliver a copy of the latest statement to any stockholder upon written request. The Treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the President or by the Board of Directors. Section 10. Assistant Treasurers. Each Assistant Treasurer shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Treasurers shall exercise the powers of the Treasurer during that officer's absence or inability to act. Section 11. Controller and Assistant Controllers. The Controller shall have charge of the accounting affairs of the Corporation and shall have such other powers and -8- 9 perform such other duties as the Board of Directors shall designate. Each Assistant Controller shall have such powers and perform such duties as may be assigned by the Board of Directors and the Assistant Controllers shall exercise the powers of the Controller during that officer's absence or inability to act. Section 12. Secretary. The Secretary shall keep accurate records of the acts and proceedings of all meetings of stockholders and of the Board of Directors and shall give all notices required by law and by these bylaws. Tne Secretary shall have general charge of the corporate books and records and of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The Secretary shall have general charge of the stock transfer books of the Corporation and shall keep at the principal office of the Corporation a record of stockholders, showing the name and address of each stockholder and the number and class of the shares held by each. The Secretary shall sign such instruments as may require the signature of the Secretary, and in general shall perform the duties incident to the office of Secretary and such other duties as may be assigned from time to time by the President or by the Board of Directors. Section 13. Assistant Secretaries. Each Assistant Secretary shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Secretaries shall exercise the powers of the Secretary during that officer's absence or inability to act. Section 14. Voting Upon Stocks. Unless otherwise ordered by the Board of Directors, the President shall have full power and authority in behalf of the Corporation to attend, act and vote at meetings of the stockholders of any Corporation in which this Corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the Corporation might have possessed and exercised if present. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons. ARTICLE VII Capital Stock Section 1. Certificates. Certificates for shares of the capital stock of the Corporation shall be in such form not inconsistent with the certificate of incorporation of the Corporation as shall be approved by the Board of Directors. The certificates shall be consecutively numbered or otherwise identified. The name and address of the persons to whom they are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the Corporation. Each certificate shall be signed by the President or any Vice President and by the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer; provided, that where a certificate is signed by a transfer agent or assistant transfer agent of the Corporation, the signatures of such officers of the Corporation upon the certificate may be by facsimile, engraved or printed. Each certificate shall be sealed with the seal of the Corporation or a facsimile thereof. -9- 10 Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer books of the Corporation only upon surrender of the certificate for the shares sought to be transferred by the record holder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer shall be cancelled before new certificates for the transferred shares shall be issued. Section 3. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The Board of Directors shall have power and authority to make rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of capital stock of the Corporation. Section 5. Lost Certificates. The Board of Directors may authorize the issuance of a new certificate in place of a certificate claimed to have been lost or destroyed, upon receipt of an affidavit from the person explaining the loss or destruction. When authorizing issuance of a new certificate, the Board may require the claimant to give the Corporation a bond in a sum as it may direct to indemnify the Corporation against loss from any claim with respect to the certificate claimed to have been lost or destroyed; or the Board may, by resolution reciting that the circumstances justify such action, authorize the issuance of the new certificate without requiring a bond. ARTICLE VIII General Provisions Section 1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends out of its earned surplus on its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation and "Delaware" around the perimeter, and the words "Corporate Seal" in the center. Section 3. Waiver of Notice. Whenever notice is required to be given to a stockholder, director or other person under the provisions of these bylaws, the certificate of incorporation of the Corporation or by applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the time stated in the notice, shall be equivalent to giving the notice. Section 4. Depositories and Checks. All funds of the Corporation shall be deposited in the name of the Corporation in such bank, banks, or other financial institutions as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts -10- 11 or other orders signed on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate. Section 5. Bond. The Board of Directors may by resolution require any or all officers, agents and employees of the Corporation to give bond to the Corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the Board. Section 6. Loan. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 7. Taxable Year. The taxable year of the Corporation shall be the period ending on December 31 of each year or such other period as the Board of Directors shall from time to time determine. Section 8. Indemnification of Directors and Officers. (a) Right to Indemnification. Each person who was or is made a party to or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, finds, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the Delaware General Corporation Law requires, an advancement of expenses -11- 12 incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise (hereinafter and "undertaking"). (b) Right of Indemnitee to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances, because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified or to such advancement of expenses under this Section or otherwise shall be on the Corporation. (c) Non-Exclusivity of Right. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this certificate of incorporation, these bylaws, by agreement, by vote of stockholders or disinterested directors or otherwise. (d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another -12- 13 corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss under the Delaware General Corporation Law. (e) Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses, to any agent of the Corporation to the fullest extent of the provisions of the Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation. Section 9. Amendments. Except as otherwise provided herein, these bylaws may be amended or repealed and new bylaws may be adopted by the affirmative vote of the holders of shares of the Corporation then issued and entitled to vote at any annual meeting or at any special meeting of stockholders called for the purpose of considering such action that constitute at least a majority of the aggregate voting power of the outstanding capital stock of the Corporation. Section 10. Stockholders Agreement. To the extent that the provisions of these bylaws are inconsistent with any stockholders agreement subsequently entered into by the holders of the Corporation's capital stock, the stockholders agreement shall control. THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon Licensing, Inc. were duly adopted by the Board of Directors of the Corporation by action taken by unanimous written consent effective the 8th day of December, 1994. This 8th day of December, 1994. /s/ [ILLEGIBLE] ---------------------------- Secretary [Corporate Seal] -13- EX-3.27 24 CERTIFICATE OF INC. OF FIELDCREST CANNON SURE FIT 1 EXHIBIT 3.27 CERTIFICATE OF INCORPORATION OF FIELDCREST CANNON SURE FIT, INC. The undersigned, being of the age of eighteen years or more, does hereby make and acknowledge this Certificate of Incorporation for the purpose of forming a business corporation under and by virtue of the laws of the State of Delaware. I. The name of the corporation is Fieldcrest Cannon Sure Fit, Inc. II. The address of the initial registered office of the corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, Delaware 19904, County of Kent, and the name of the initial registered agent at such address is the The Prentice-Hall Corporation System, Inc. III. The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware. IV. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000) shares of Common Stock, no par value per share. V. The name and address of the sole incorporator are Sheri L. Crockett, 2100 First Union Capital Center, 150 Fayetteville Street Mall, Raleigh, North Carolina 27601. VI. No person who is serving or has served as a director of the corporation shall be liable to the corporation or to any stockholder for monetary damages for breach of any fiduciary 2 duty of such person as a director by reason of any act or omission occurring on or after the date this article becomes effective. Nothing herein shall be deemed to limit or eliminate the liability of any person (i) for any breach of such person's duty of loyalty as a director to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) for the unlawful payment of a dividend by the corporation or the unlawful purchase or redemption of the corporation's capital stock by the corporation; (iv) for any transaction from which such person derived an improper personal benefit; or (v) to any extent that such liability may not be limited or eliminated by virtue of the provisions of Section 102(b)(7) of the General Corporation Law of the State of Delaware or any successor statute. The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is her act and deed and that the facts stated therein are true. IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation has hereunto set her hand this 6th day of January, 1995. /s/ SHERI L. CROCKETT --------------------------------- Sheri L. Crockett, Incorporator EX-3.28 25 BYLAWS OF FIELDCREST CANNON SURE FIT, INC. 1 EXHIBIT 3.28 BYLAWS OF FIELDCREST CANNON SURE FIT, INC. EFFECTIVE JANUARY 6, 1995 ARTICLE I Offices Section 1. Principal and Registered Offices. The principal office of the Corporation shall be located at such place as the Board of Directors may specify from time to time. The registered office of the Corporation shall be located at 306 South State Street, Kent County, Dover, Delaware. Section 2. Other Offices. The Corporation may have offices at such other places, either within or without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II Meetings of Stockholders Section 1. Place of Meeting. Meetings of stockholders shall be held at the principal office of the Corporation or at such other place or places, either within or without the State of Delaware, as shall either (i) be designated in the notice of the meeting or (ii) be agreed upon at or before the meeting by a majority of the stockholders entitled to vote at the meeting. Section 2. Annual Meeting. The annual meeting of stockholders shall be at such time as determined by the Board of Directors for the purpose of electing directors of the Corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meeting. If the annual meeting is not held on the day designated by these bylaws, a substitute annual meeting may he called in accordance with Section 4 of this Article A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the Chief Executive Officer or by order of the Board of Directors, and shall be called by the Chief Executive Officer or by order of the Board of Directors upon the written request of any member of the Board of Directors or the holder or holders of at least 10% of all the shares of capital stock entitled to vote at the meeting. Section 5. Notice of Meetings. Written or printed notice, stating the time and place of the meeting and, in the case of a special meeting, briefly describing the purpose or 2 purposes of the meeting, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder of record entitled to vote at the meeting, by delivering a written notice thereof to him personally, or by mailing such notice in a postage prepaid envelope directed to him at his last address as it appears on the stock records of the Corporation. It shall be the primary responsibility of the Secretary to give the notice, but notice may be given by or at the direction of the Chief Executive Officer or other person or persons calling the meeting. If a matter (other than the election of directors) is to be considered at an annual meeting on which a vote of stockholders is required by law or otherwise, notice shall be given as if the meeting were a special meeting. If any stockholder shall, in person or by attorney thereunto authorized, waive in writing notice of any meeting of the stockholders; whether prior to or after such meeting, notice thereof need not be given to him. Notice of any adjourned meeting of the stockholders shall not be required to be given, except where expressly required by law. Section 6. Proxies. A stockholder may attend, represent, and vote his shares at any meeting in person, or be represented and have his shares voted for by a proxy which such stockholder has duly executed in writing. No proxy shall be valid after eleven (11) months from the date of its execution unless a longer period is expressly provided in the proxy. Each proxy shall be revocable unless otherwise expressly provided therein or unless otherwise made irrevocable by law. Section 7. Quorum. Except as otherwise provided by law, the holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. In the absence of a quorum, any officer entitled to preside at, or act as Secretary of, such meeting, shall have the power to adjourn the meeting from time to time until a quorum shall be constituted. At any such adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called. When a quorum is once present to organize a meeting, the stockholders present may continue to do business at the meeting or at any adjournment thereof notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 8. Voting of Shares. Each outstanding share of voting capital stock of the Corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the stockholders, except as otherwise provided in the certificate of incorporation. The vote by the holders of a majority of the shares voted on any matter at a meeting of stockholders at which a quorum is present shall be the act of the stockholders on that matter, unless the vote of a greater number is required by law, by the certificate of incorporation, or by these bylaws of the Corporation Voting on all matters shall be by voice vote or by a show of hands, unless the holders of 10% of the shares represented at the meeting shall demand a vote by written ballot on a particular matter. Section 9. Action Without Meeting. Any action which the stockholders could take at a meeting may be taken without a meeting if a consent in writing, setting forth the action taken, shall be signed by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. The consent shall be filed with the -2- 3 Secretary of the Corporation as part of the corporate records. Such written consent shall have the same force and effect as a vote of stockholders, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the Corporation may do business. Section 10. Meeting by Use of Conference Telephone. Subject to the requirement for notice of meetings and if permitted by applicable law, stockholders may participate in and hold a meeting of such stockholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 11. Record Date. The Board of Directors may fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall be not more than sixty days, and in case of a meeting of stockholders not less ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting. If the stock transfer books are not closed, and no record date is fixed for the determination of stockholders, or of stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the resolution of the Board of Directors declaring the dividend is adopted, as the case may be, shall be the record date for the determination of stockholders. Section 12. List of Stockholders. It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of the stock records, either directly or through a transfer agent appointed by the Board of Directors, to prepare and make, at least ten days before every stockholders meeting, a complete list of stockholders entitled to vote at such meeting arranged in alphabetical order. Such list shall be open to the examination of any stockholder at the principal office of the Corporation for said ten days before such meeting, and shall be produced and kept at the time and place of the meeting during the whole time thereof and shall be subject to the inspection of any stockholder who may be present. The stock records of the Corporation shall be the only evidence of who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such meeting. -3- 4 ARTICLE III Board of Directors Section 1. General Powers. The business and affairs of the Corporation shall be managed by the Board of Directors except as otherwise provided by law, by the certificate of incorporation of the Corporation or by these bylaws. Section 2. Number, Term and Qualification. The Board of Directors of the Corporation shall consist of one or more members, the number of which shall be set each year by the stockholders of the Corporation. The initial number of directors shall be four. Each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until his death, resignation or removal pursuant to these bylaws. Directors need not be residents of the State of Delaware or stockholders of the Corporation. Section 3. Removal. Directors may be removed from office with or without cause by a vote of stockholders who hold shares entitled to vote at an election of directors that constitute a majority of the aggregate voting power of the outstanding capital stock of the Corporation. If any directors are so removed, new directors may be elected at the same meeting. Section 4. Resignation. Any director of the Corporation may resign at any time by giving written notice to the Chief Executive Officer or the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified therein. The acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. Any vacancy in the Corporation's Board of Directors may be filled by a majority of the remaining directors (or the sole remaining director). Any vacancy created by an increase in the authorized number of directors shall be filled only by election at an annual meeting or at a special meeting of stockholders called for that purpose. The stockholders may elect a director at any time to fill a vacancy not filled by the directors. Section 6. Compensation. The directors shall not receive compensation for their services as such, except that the directors shall be entitled to be reimbursed for any reasonable expenses paid by them by reason of their attendance at any regular or special meeting of the Board of Directors or any of its committees, and by resolution of the Board of Directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the Board or any of its committees. Any director may serve the Corporation in any other capacity and receive compensation therefor. -4- 5 ARTICLE TV Meetings of Directors Section 1. Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held immediately following the annual meeting of the stockholders. The Board of Directors may by resolution provide for the holding of regular meetings of the Board on specified dates and at specified times. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on the next business day that is not a legal holiday or on a date designated in the notice of the meeting during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the Board shall be held at the principal office of the Corporation or at such other place as may be designated in the notice of the meeting. Notice of annual meetings or any regular meetings held at the principal office of the Corporation and at the usual scheduled time shall not be required. Section 2. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the Chief Executive Officer or any one director. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. The Secretary or other person or persons calling a meeting for which notice is required shall give notice by mail or telegram at least five days before the meeting, or by telephone at least twenty-four hours before the meeting. Oral notice may be substituted for such written notice if given not less than five days before the meeting. Notice of the time, place and purpose of such meeting may be waived in writing before or after such meeting, and shall be equivalent to the giving of the notice. Attendance by a director at a meeting for which notice is required shall constitute a waiver of notice, except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called. Except as otherwise herein provided, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in this notice of such meeting Section 4. Quorum. A majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the Board of Directors, but a smaller number may adjourn the meeting from time to time until a quorum shall be present. Any regular or special directors' meeting may be adjourned from time to time by those present, whether a quorum is present or not. Section 5. Manner of Acting. Except as otherwise provided by law, these bylaws or the certificate of incorporation of the Corporation or otherwise, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. -5- 6 Section 6. Action Without Meeting. Action taken by a majority of the directors or of a committee of directors without a meeting is nevertheless Board or committee action, if written consent to the action is signed by all the director or members of the committee, as the case may be, and filed with the minutes of the proceedings of the Board or committee, whether done before or after the action is taken. Such unanimous written consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the corporation may do business. Section 7. Meetings by Use of Conference Telephone. Any one or more directors or members of a committee may participate in a meeting of the Board or any of its committees by means of a conference telephone or similar communications device which allows all persons participating in the meeting to hear each other, and such participation in a meeting shall be deemed presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE V Committees Section 1. Designation of Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in these bylaws or in the resolution of the Board of Directors establishing the same, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Such committees or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. Executive Committee. There may be an Executive Committee of not more than three directors designated by resolution passed by a majority of the whole Board of Directors. Such committee may meet at stated times, or on notice to all by any of their own number. During intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, except that the Executive Committee shall not have authority to authorize or approve the following matters: (a) The dissolution, merger or consolidation of the Corporation or the sale, lease or exchange of all or substantially all the property or assets of the Corporation (b) The designation of an Executive Committee or any other committee of directors having power to exercise any of the authority of the Board of Directors in the management of the Corporation or the filling of vacancies in the Board of Directors or in such committee. -6- 7 (c) The fixing of compensation of the directors for serving on the Board or on such committee. (d) The amendment or repeal of the bylaws, or the adoption of new bylaws. (e) The amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable. Vacancies in the membership of the Executive Committee shall be filled by a majority of the whole Board of Directors at a regular meeting or at a special meeting called for that purpose. Section 3. Minutes. Each committee shall keep minutes of its proceedings and shall report thereon to the Board of Directors at or before the next meeting of the Board. Section 4. Action Without Meeting: Telephonic Meeting. Action may be taken by each committee in the manner allowed by the Board of Directors pursuant to Sections 6 and 7 of Article IV. ARTICLE VI Officers Section 1. Titles. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer and a Treasurer. The Board of Directors may also elect a Chairman of the Board of Directors, an Executive Vice President, one or more additional Vice Presidents, a Controller, one or more Assistant Secretaries, one or more Assistant Treasurers, one or more Assistant Controllers, and such other officers as it shall deem necessary. Except as otherwise provided in these bylaws, the additional officers shall have the authority and perform the duties as from time to time may be prescribed by the Board of Directors. Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election and Term. The officers of the Corporation shall be elected by the Board of Directors at the regular meeting of the Board held each year immediately following the annual meeting of the stockholders. Each officer shall hold office until the next regular meeting at which officers are to be elected and until a successor is elected and qualifies or until his death, resignation, or removal pursuant to these bylaws. Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interests of the Corporation will be saved, but removal shall be without prejudice to any contract rights of the individual removed. Election or appointment of an officer or agent shall not of itself create contract rights. -7- 8 Section 4. Vacancies. Vacancies among the officers may be created and filled by the Board of Directors. Section 5. Compensation. The compensation and all other terms of employment of the officers shall be fixed by the disinterested members of the Board of Directors. No officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director of the Corporation. Section 6. Chairman of the Board of Directors. The Chairman of the Board of Directors, if such officer is elected, shall preside at meetings of the Board of Directors and shall have such other authority and perform such other duties as the Board of Directors shall designate. Section 7. Chief Executive Officer. The Chief Executive Officer shall be in general charge of the affairs of the Corporation in the ordinary course of its business, and shall preside at meetings of the stockholders. The Chief Executive Officer may perform such acts, not inconsistent with the applicable law or the provisions of these bylaws, as may be performed by the chief executive officer of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the Corporation. The Chief Executive Officer shall have such other powers and perform such other duties as the Board of Directors shall designate or as may be provided by applicable law or elsewhere in these bylaws. Section 8. President. The President shall be in general charge of the affairs of the Corporation in the ordinary course of its business, and shall preside at meetings of the stockholders, each in the absence of the Chief Executive Officer. The President may perform such acts, not inconsistent with the applicable law or the provisions of these bylaws, as may be performed by the president of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the Corporation. The President shall have such other powers and perform such other duties as the Board of Directors shall designate or as may be provided by applicable law or elsewhere in these bylaws. Section 9. Vice Presidents. The Executive Vice President if such officer is elected, shall exercise the powers of the Chief Executive Officer or President during that officer's absence or inability to act. In default of the Chief Executive Officer, the President and the Executive Vice President, any other Vice President may exercise the powers of the Chief Executive Officer. Any action taken by a Vice President in the performance of the duties of the Chief Executive Officer shall be presumptive evidence of the absence or inability to act of the Chief Executive Officer at the time the action was taken. The Vice Presidents shall have such other powers and perform such other duties as may be assigned by the Board of Directors. Section 10. Chief Financial Officer/Treasurer. The Chief Financial Officer/Treasurer shall have custody of all funds and securities belonging to the Corporation and shall receive, deposit or disburse the same under the direction of the Board of Directors. The -8- 9 chief financial officer/treasurer shall keep full and accurate accounts of the finances of the Corporation and shall cause a true statement of the assets and liabilities of the Corporation as of the close of each fiscal year and of the results of its operations and of changes in surplus, all in reasonable detail, to be made and filed at the principal office of the Corporation within four months after the end of the fiscal year. The statement shall be available for inspection by any stockholder for a period of ten years, and the Chief Financial Officer/Treasurer shall mail or otherwise deliver a copy of the latest statement to any stockholder upon written request. The Chief Financial Officer/Treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the Chief Executive Officer or by the Board of Directors. Section 11. Assistant Treasurers. Each Assistant Treasurer shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Treasurers shall exercise the powers of the Treasurer during that officer's absence or inability to act. Section 12. Controller and Assistant Controllers. The Controller shall have charge of the accounting affairs of the Corporation and shall have such other powers and perform such other duties as the Board of Directors shall designate. Each Assistant Controller shall have such powers and perform such duties as may be assigned by the Board of Directors and the Assistant Controllers shall exercise the powers of the Controller during that officer's absence or inability to act. Section 13. Secretary. The Secretary shall keep accurate records of the acts and proceedings of all meetings of stockholders and of the Board of Directors and shall give all notices required by law and by these bylaws. The Secretary shall have general charge of the corporate books and records and of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The Secretary shall have general charge of the stock transfer books of the Corporation and shall keep at the principal office of the Corporation a record of stockholders, showing the name and address of each stockholder and the number and class of the shares held by each. The Secretary shall sign such instruments as may require the signature of the Secretary, and in general shall perform the duties incident to the office of Secretary and such other duties as may be assigned from time to time by the Chief Executive Officer or by the Board of Directors. Section 14. Assistant Secretaries. Each Assistant Secretary shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Secretaries shall exercise the powers of the Secretary during that officer's absence or inability to act. Section 15. Voting Upon Stocks. Unless otherwise ordered by the Board of Directors, the Chief Executive Officer shall have full power and authority in behalf of the Corporation to attend, act and vote at meetings of the stockholders of any Corporation in which this Corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the Corporation might have possessed and exercised if present. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons. -9- 10 ARTICLE VII Capital Stock Section 1. Certificates. Certificates for shares of the capital stock of the Corporation shall be in such form not inconsistent with the certificate of incorporation of the Corporation as shall be approved by the Board of Directors. The certificates shall be consecutively numbered or otherwise identified. The name and address of the persons to whom they are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the Corporation. Each certificate shall be signed by the Chief Executive Officer or any Vice President and by the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer; provided, that where a certificate is signed by a transfer agent or assistant transfer agent of the Corporation, the signatures of such officers of the Corporation upon the certificate may be by facsimile, engraved or printed. Each certificate shall be seated with the seal of the Corporation or a facsimile thereof. Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer books of the Corporation only upon surrender of the certificate for the shares sought to be transferred by the record holder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer shall be cancelled before new certificates for the transferred shares shall be issued. Section 3. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The Board of Directors shall have power and authority to make rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of capital stock of the Corporation. Section 5. Lost Certificates. The Board of Directors may authorize the issuance of a new certificate in place of a certificate claimed to have been lost or destroyed, upon receipt of an affidavit from the person explaining the loss or destruction. When authorizing issuance of a new certificate, the Board may require the claimant to give the Corporation a bond in a sum as it may direct to indemnify the Corporation against loss from any claim with respect to the certificate claimed to have been lost or destroyed; or the Board may, by resolution reciting that the circumstances justify such action, authorize the issuance of the new certificate without requiring a bond. -10- 11 ARTICLE VIII General Provisions Section 1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends out of its earned surplus on its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation and "Delaware" around the perimeter, and the words "Corporate Seal" in the center. Section 3. Waiver of Notice. Whenever notice is required to be given to a stockholder, director or other person under the provisions of these bylaws, the certificate of incorporation of the Corporation or by applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the time stated in the notice, shall be equivalent to giving the notice. Section 4. Depositories and Checks. All funds of the Corporation shall be deposited in the name of the Corporation in such bank, banks, or other financial institutions as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts or other orders signed on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate. Section 5. Bond. The Board of Directors may by resolution require any or all officers, agents and employees of the Corporation to give bond to the Corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the Board. Section 6. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 7. Taxable Year. The taxable year of the Corporation shall be the period ending on December 31 of each year or such other period as the Board of Directors shall from time to time determine. Section 8. Indemnification of Directors and Officers (a) Right to Indemnification. Each person who was or is made a party to or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director officer, employee or agent of another corporation or of a partnership, joint -11- 12 venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, finds, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof initiated by such indemnitee only if such proceeding (or part thereof was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement, of expenses"); provided, however, that if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise (hereinafter an undertaking (b) Right of Indemnitee to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of -12- 13 the indemnitee is proper in the circumstances because applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified or to such advancement of expenses under this Section or otherwise shall be on the Corporation. (c) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this certificate of incorporation, these bylaws, by agreement, by vote of stockholders or disinterested directors or otherwise. (d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss under the Delaware General Corporation Law. (e) Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses, to any agent of the Corporation to the fullest extent of the provisions of the Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation. Section 9. Amendments. Except as otherwise provided herein, these bylaws may be amended or repealed and new bylaws may be adopted by the affirmative vote of the holders of shares of the Corporation then issued and entitled to vote at any annual meeting or at any special meeting of stockholders called for the purpose of considering such action that constitute at least a majority of the aggregate voting power of the outstanding capital stock of the Corporation. Section 10. Stockholders Agreement. To the extent that the provisions of these bylaws are inconsistent with any stockholders agreement subsequently entered into by the holders of the Corporation's capital stock, the stockholders agreement shall control. -13- 14 THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon Sure Fit, Inc. were duly adopted by the Board of Directors of the Corporation by action taken by unanimous written consent effective the 6th day of January, 1995. This 16th day of January, 1995. /s/ M. KENNETH DOSS ---------------------------------------- Secretary [Corporate Seal] -14- EX-3.29 26 CERTIFICATE OF INC. OF FIELDCREST CANNON TRANS. 1 EXHIBIT 3.29 CERTIFICATE OF INCORPORATION OF FIELDCREST CANNON TRANSPORTATION, INC. The undersigned, being of the age of eighteen years or more, does hereby make and acknowledge this Certificate of Incorporation for the purpose of forming a business corporation under and by virtue of the laws of the State of Delaware. I. The name of the corporation is Fieldcrest Cannon Transportation, Inc. II. The address of the initial registered office of the corporation in the State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, Delaware 19904, County of Kent, and the name of the initial registered agent at such address is The Prentice-Hall Corporation System, Inc. III. The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware. IV. The total number of shares of stock which the corporation shall have authority to issue is One Thousand (1,000) shares of Common Stock, no par value per share. V. The name and address of the sole incorporator are Joyce Kotzker, 200 West Second Street, 1600 Southern National Financial Center, Winston-Salem, NC 27101. VI. No person who is serving or has served as a director of the corporation shall be liable to the corporation or to any stockholder for monetary damages for breach of any fiduciary 2 this article becomes effective. Nothing herein shall be deemed to limit or eliminate the liability of any person (i) for any breach of such person's duty of loyalty as a director to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) for the unlawful payment of a dividend by the corporation or the unlawful purchase or redemption of the corporation's capital stock by the corporation; (iv) for any transaction from which such person derived an improper personal benefit; or (v) to any extent that such liability may not be limited or eliminated by virtue of the provisions of Section 102(b)(7) of the General Corporation Law of the State of Delaware or any successor statute. The undersigned incorporator hereby acknowledges that the foregoing certificate of incorporation is her act and deed and that the facts stated therein are true. IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation has hereunto set her hand this 8th day of December, 1994. /s/ JOYCE KOTZKER -------------------------------- Joyce Kotzker, Incorporator EX-3.30 27 BYLAWS OF FIELDCREST CANNON TRANSPORTATION, INC. 1 EXHIBIT 3.30 BYLAWS OF FIELDCREST CANNON TRANSPORTATION, INC. EFFECTIVE DECEMBER 8, 1994 ARTICLE Offices Section 1. Principal and Registered Offices. The principal office of the Corporation shall be located at such place as the Board of Directors may specify from time to time. The registered office of the Corporation shall be located at 306 South State Street, Kent County, Dover, Delaware. Section 2. Other Offices. The Corporation may have offices at such other places, either within or without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II Meetings of Stockholders Section 1. Place of Meting. Meetings of stockholders shall be held at the principal office of the Corporation or at such other place or places, either within or without the State of Delaware, as shall either (i) be designated in the notice of the meeting or (ii) be agreed upon at or before the meeting by a majority of the stockholders entitled to vote at the meeting. Section 2. Annual Meetings. The annual meeting of stockholders shall be at such time as determined by the Board of Directors for the purpose of electing directors of the Corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meeting. If the annual meeting is not held on the day designated by these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article II. A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the President or by order of the Board of Directors, and shall be called by the President or by order of the Board of Directors upon the written request of any member of the Board of Directors or the holder or holders of at least 10% of all the shares of capital stock entitled to vote at the meeting. 2 Section 5. Notice of Meetings. Written or printed notice, stating the time and place of the meeting and, in the case of a special meeting, briefly describing the purpose or purposes of the meeting, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder of record entitled to vote at the meeting, by delivering a written notice thereof to him personally, or by mailing such notice in a postage prepaid envelope directed to him at his last address as it appears on the stock records of the Corporation. It shall be the primary responsibility of the Secretary to give the notice, but notice may be given by or at the direction of the President or other person or persons calling the meeting. If a matter (other than the election of directors) is to be considered at an annual meeting on which a vote of stockholders is required by law or otherwise, notice shall be given as if the meeting were a special meeting. If any stockholder shall, in person or by attorney thereunto authorized, waive in writing notice of any meeting of the stockholders, whether prior to or after such meeting, notice thereof need not be given to him. Notice of any adjourned meeting of the stockholders shall not be required to be given, except where expressly required by law. Section 6. Proxies. A stockholder may attend, represent, and vote his shares at any meeting in person, or be represented and have his shares voted for by a proxy which such stockholder has duly executed in writing. No proxy shall be valid after eleven (11) months from the date of its execution unless a longer period is expressly provided in the proxy. Each proxy shall be revocable unless otherwise expressly provided therein or unless otherwise made irrevocable by law. Section 7. Ouorum. Except as otherwise provided by law, the holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. In the absence of a quorum, any officer entitled to preside at, or act as Secretary of, such meeting, shall have the power to adjourn the meeting from time to time until a quorum shall be constituted. At any such adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted at the meeting as originally called. When a quorum is once present to organize a meeting, the stockholders present may continue to do business at the meeting or at any adjournment thereof notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 8. Voting of Shares. Each outstanding share of voting capital stock of the Corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the stockholders, except as otherwise provided in the certificate of incorporation. The vote by the holders of a majority of the shares voted on any matter at a meeting of stockholders at which a quorum is present shall be the act of the stockholders on that matter, unless the vote of a greater number is required by law, by the certificate of incorporation, or by these bylaws of the Corporation. Voting on all matters shall be by voice vote or by a show of hands, unless the holders of 10% of the shares represented at the meeting shall demand a vote by written ballot on a particular matter. Section 9. Action Without Meeting. Any action which the stockholders could take at a meeting may be taken without a meeting if a consent in writing, setting forth the action taken, shall be signed by the holders of outstanding stock having not less than the minimum -2- 3 number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. The consent shall be filed with the Secretary of the Corporation as part of the corporate records. Such written consent shall have the same force and effect as a vote of stockholders, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the Corporation may do business. Section 10. Meeting by Use of Conference Telephone. Subject to the requirement for notice of meetings and if permitted by applicable law, stockholders may participate in and hold a meeting of such stockholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 11. Record Date. The Board of Directors may fix, in advance, a date as the record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall be not more than sixty days, and in case of a meeting of stockholders not less ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting. If the stock transfer books are not closed, and no record date is fixed for the determination of stockholders, or of stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed, or the date on which the resolution of the Board of Directors declaring the dividend is adopted, as the case may be, shall be the record date for the determination of stockholders. Section 12. List of Stockholders. It shall be the duty of the Secretary or other officer of the Corporation who shall have charge of the stock records, either directly or through a transfer agent appointed by the Board of Directors, to prepare and make, at least ten days before every stockholders meeting, a complete list of stockholders entitled to vote at such meeting arranged in alphabetical order. Such list shall be open to the examination of any stockholder at the principal office of the Corporation for said ten days before such meeting, and shall be produced and kept at the time and place of the meeting during the whole time thereof and shall be subject to the inspection of any stockholder who may be present. The stock records of the Corporation shall be the only evidence of who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such meeting. -3- 4 ARTICLE III Board of Directors Section 1. General Powers. The business and affairs of the Corporation shall be managed by the Board of Directors except as otherwise provided by law, by the certificate of incorporation of the Corporation or by these bylaws. Section 2. Number, Term and Qualification The Board of Directors of the Corporation shall consist of one or more members, the number of which shall be set each year by the stockholders of the Corporation. The initial number of directors shall be four. Each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until his death, resignation or removal pursuant to these bylaws. Directors need not be residents of the State of Delaware or stockholders of the Corporation. Section 3. Removal. Directors may be removed from office with or without cause by a vote of stockholders who hold shares entitled to vote at an election of directors that constitute a majority of the aggregate voting power of the outstanding capital stock of the Corporation. If any directors are so removed, new directors may be elected at the same meeting. Section 4. Resignation. Any director of the Corporation may resign at any time by giving written notice to the President or the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified therein. The acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. Any vacancy in the Corporation's Board of Directors may be filled by a majority of the remaining directors (or the sole remaining director). Any vacancy created by an increase in the authorized number of directors shall be filled only by election at an annual meeting or at a special meeting of stockholders called for that purpose. The stockholders may elect a director at any time to fill a vacancy not filled by the directors. Section 6. Compensation. The directors shall not receive compensation for their services as such, except that the directors shall be entitled to be reimbursed for any reasonable expenses paid by them by reason of their attendance at any regular or special meeting of the Board of Directors or any of its committees, and by resolution of the Board of Directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the Board or any of its committees. Any director may serve the Corporation in any other capacity and receive compensation therefor. -4- 5 ARTICLE IV Meetings of Directors Section 1. Annual and Regular Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held immediately following the annual meeting of the stockholders. The Board of Directors may by resolution provide for the holding of regular meetings of the Board on specified dates and at specified times. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on the next business day that is not a legal holiday or on a date designated in the notice of the meeting during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the Board shall be held at the principal office of the Corporation or at such other place as may be designated in the notice of the meeting. Notice of annual meetings or any regular meetings held at the principal office of the Corporation and at the usual scheduled time shall not be required. Section 2. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or any one director. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. The Secretary or other person or persons calling a meeting for which notice is required shall give notice by mail or telegram at least five days before the meeting, or by telephone at least twenty-four hours before the meeting. Oral notice may be substituted for such written notice if given not less than five days before the meeting. Notice of the time, place and purpose of such meeting may be waived in writing before or after such meeting, and shall be equivalent to the giving of the notice. Attendance by a director at a meeting for which notice is required shall constitute a waiver of notice, except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called. Except as otherwise herein provided, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in this notice of such meeting. Section 4. Ouorum. A majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the Board of Directors, but a smaller number may adjourn the meeting from time to time until a quorum shall be present. Any regular or special directors' meeting may be adjourned from time to time by those present, whether a quorum is present or not. Section 5. Manner of Acting. Except. as otherwise provided by law, these bylaws or the certificate of incorporation of the Corporation or otherwise, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 6. Action Without Meeting. Action taken by a majority of the directors or of a committee of directors without a meeting is nevertheless Board or committee -5- 6 action, if written consent to the action is signed by all the director or members of the committee, as the case may be, and filed with the minutes of the proceedings of the Board or committee, whether done before or after the action is taken. Such unanimous written consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any articles, certificates or documents filed with the Secretary of State of Delaware, or any other state wherein the corporation may do business. Section 7. Meeting by Use of Conference Telephone. Any one or more directors or members of a committee may participate in a meeting of the Board or any of its committees by means of a conference telephone or similar communications device which allows all persons participating in the meeting to hear each other, and such participation in a meeting shall be deemed presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE V Committees Section 1. Designation of Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in these bylaws or in the resolution of the Board of Directors establishing the same, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Such committees or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. Executive Committee. There may be an Executive Committee of not more than three directors designated by resolution passed by a majority of the whole Board of Directors. Such committee may meet at stated times, or on notice to all by any of their own number. During intervals between meetings of the Board of Directors, the Executive Committee shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, except that the Executive Committee shall not have authority to authorize or approve the following matters: (a) The dissolution, merger or consolidation of the Corporation or the sale, lease or exchange of all or substantially all the property or assets of the Corporation. (b) The designation of an Executive Committee or any other committee of directors having power to exercise any of the authority of the Board of Directors in the management of the Corporation or the filling of vacancies in the Board of Directors or in such committee. -6- 7 (c) The fixing of compensation of the directors for serving on the Board or on such committee. (d) The amendment or repeal of the bylaws, or the adoption of new bylaws. (e) The amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable. Vacancies in the membership of the Executive Committee shall be filled by a majority of the whole Board of Directors at a regular meeting or at a special meeting called for that purpose. Section 3. Minutes. Each committee shall keep minutes of its proceedings and shall report thereon to the Board of Directors at or before the next meeting of the Board. Section 4. Action Without Meeting: Telephonic Meeting. Action may be taken by each committee in the manner allowed by the Board of Directors pursuant to Sections 6 and 7 of Article IV. ARTICLE VI Officers Section 1. Titles. The officers of the Corporation shall be elected by the Board of Directors and shall consist of a President, a Secretary and a Treasurer. The Board of Directors may also elect a Chairman of the Board of Directors, an Executive Vice President, one or more additional Vice Presidents, a Controller, one or more Assistant Secretaries, one or more Assistant Treasurers, one or more Assistant Controllers, and such other officers as it shall deem necessary. Except as otherwise provided in these bylaws, the additional officers shall have the authority and perform the duties as from time to time may be prescribed by the Board of Directors. Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election and Term. The officers of the Corporation shall be elected by the Board of Directors at the regular meeting of the Board held each year immediately following the annual meeting of the stockholders. Each officer shall hold office until the next regular meeting at which officers are to be elected and until a successor is elected and qualifies or until his death, resignation, or removal pursuant to these bylaws. Section 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment the best interests of the Corporation will be served, but removal shall be without prejudice to any contract rights of the individual removed. Election or appointment of an officer or agent shall not of itself create contract rights. Section 4. Vacancies. Vacancies among the officers may be created and filled by the Board of Directors. -7- 8 Section 5. Compensation. The compensation and all other terms of employment of the officers shall be fixed by the disinterested members of the Board of Directors. No officer shall be prevented from receiving such compensation by reason of the fact that such officer is also a director of the Corporation. Section 6. Chairman of the Board of Directors. The Chairman of the Board of Directors, if such officer is elected, shall preside at meetings of the Board of Directors and shall have such other authority and perform such other duties as the Board of Directors shall designate. Section 7. President. The President shall be in general charge of the affairs of the Corporation in the ordinary course of its business, and shall preside at meetings of the stockholders. The President may perform such acts, not inconsistent with the applicable law or the provisions of these bylaws, as may be performed by the president of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the Corporation. The President shall have such other powers and perform such other duties as the Board of Directors shall designate or as may be provided by applicable law or elsewhere in these bylaws. Section 8. Vice Presidents. The Executive Vice President, if such, officer is elected, shall exercise the powers of the President during that officer's absence or inability to act. In default of both the President and the Executive Vice President, any other Vice President may exercise the powers of the President. Any action taken by a Vice President in the performance of the duties of the President shall be presumptive evidence of the absence or inability to act of the President at the time the action was taken. The Vice Presidents shall have such other powers and perform such other duties as may be assigned by the Board of Directors. Section 9. Treasurer. The Treasurer shall have custody of all funds and securities belonging to the Corporation and shall receive, deposit or disburse the same under the direction of the Board of Directors. The treasurer shall keep full and accurate accounts of the finances of the Corporation and shall cause a true statement of the assets and liabilities of the Corporation as of the close of each fiscal year and of the results of its operations and of changes in surplus, all in reasonable detail, to be made and filed at the principal office of the Corporation within four months after the end of the fiscal year. The statement shall be available for inspection by any stockholder for a period of ten years, and the Treasurer shall mail or otherwise deliver a copy of the latest statement to any stockholder upon written request. The Treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the President or by the Board of Directors. Section 10. Assistant Treasurers. Each Assistant Treasurer shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Treasurers shall exercise the powers of the Treasurer during that officer's absence or inability to act. Section 11. Controller and Assistant Controllers. The Controller shall have charge of the accounting affairs of the Corporation and shall have such other powers and -8- 9 perform such other duties as the Board of Directors shall designate. Each Assistant Controller shall have such powers and perform such duties as may be assigned by the Board of Directors and the Assistant Controllers shall exercise the powers of the Controller during that officer's absence or inability to act. Section 12. Secretary. The Secretary shall keep accurate records of the acts and proceedings of all meetings of stockholders and of the Board of Directors and shall give all notices required by law and by these bylaws. The Secretary shall have general charge of the corporate books and records and of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The Secretary shall have general charge of the stock transfer books of the Corporation and shall keep at the principal office of the Corporation a record of stockholders, showing the name and address of each stockholder and the number and class of the shares held by each. The Secretary shall sign such instruments as may require the signature of the Secretary, and in general shall perform the duties incident to the office of Secretary and such other duties as may be assigned from time to time by the President or by the Board of Directors. Section 13. Assistant Secretaries. Each Assistant Secretary shall have such powers and perform such duties as may be assigned by the Board of Directors, and the Assistant Secretaries shall exercise the powers of the Secretary during that officer's absence or inability to act. Section 14. Voting Upon Stocks. Unless otherwise ordered by the Board of Directors, the President shall have full power and authority in behalf of the Corporation to attend, act and vote at meetings of the stockholders of any Corporation in which this Corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such stock and which, as the owner, the Corporation might have possessed and exercised if present. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or persons. ARTICLE VII Capital Stock Section 1. Certificates. Certificates for shares of the capital stock of the Corporation shall he in such form not inconsistent with the certificate of incorporation of the Corporation as shall be approved by the Board of Directors. The certificates shall be consecutively numbered or otherwise identified. The name and address of the persons to whom they are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the Corporation. Each certificate shall be signed by the President or any Vice President and by the Secretary, Assistant Secretary, Treasurer or Assistant Treasurer; provided, that where a certificate is signed by a transfer agent or assistant transfer agent of the Corporation, the signatures of such officers of the Corporation upon the certificate may be by facsimile, engraved or printed. Each certificate shall be sealed with the seal of the Corporation or a facsimile thereof. -9- 10 Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer books of the Corporation only upon surrender of the certificate for the shares sought to be transferred by the record holder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer shall be cancelled before new certificates for the transferred shares shall be issued. Section 3. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The Board of Directors shall have power and authority to make rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of capital stock of the Corporation. Section 5. Lost Certificates. The Board of Directors may authorize the issuance of a new certificate in place of a certificate claimed to have been lost or destroyed, upon receipt of an affidavit from the person explaining the loss or destruction. When authorizing issuance of a new certificate, the Board may require the claimant to give the Corporation a bond in a sum as it may direct to indemnify the Corporation against loss from any claim with respect to the certificate claimed to have been lost or destroyed; or the Board may, by resolution reciting that the circumstances justify such action, authorize the issuance of the new certificate without requiring a bond. ARTICLE VIII General Provisions Section 1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends out of its earned surplus on its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the Corporation shall have inscribed thereon the name of the Corporation and "Delaware" around the perimeter, and the words "Corporate Seal" in the center. Section 3. Waiver of Notice. Whenever notice is required to be given to a stockholder, director or other person under the provisions of these bylaws, the certificate of incorporation of the Corporation or by applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the time stated in the notice, shall be equivalent to giving the notice. Section 4. Depositories and Checks. All funds of the Corporation shall be deposited in the name of the Corporation in such bank, banks, or other financial institutions as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts -1O- 11 or other orders signed on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate. Section 5. Bond. The Board of Directors may by resolution require any or all officers, agents and employees of the Corporation to give bond to the Corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the Board. Section 6. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Section 7. Taxable Year. The taxable year of the Corporation shall be the period ending on December 31 of each year or such other period as the Board of Directors shall from time to time determine. Section 8. Indemnification of Directors and Officers. (a) Right to Indemnification. Each person who was or is made a party to or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, finds, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, that if the Delaware General Corporation Law requires, an advancement of expenses -11- 12 incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise (hereinafter an "undertaking"). (b) Right of Indemnitee to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified or to such advancement of expenses under this Section or otherwise shall be on the Corporation. (c) Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, this certificate of incorporation, these bylaws, by agreement, by vote of stockholders or disinterested directors or otherwise. (d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another -12- 13 corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss under the Delaware General Corporation Law. (e) Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses, to any agent of the Corporation to the fullest extent of the provisions of the Section with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation. Section 9. Amendments. Except as otherwise provided herein, these bylaws may be amended or repealed and new bylaws may be adopted by the affirmative vote of the holders of shares of the Corporation then issued and entitled to vote at any annual meeting or at any special meeting of stockholders called for the purpose of considering such action that constitute at least a majority of the aggregate voting power of the outstanding capital stock of the Corporation. Section 10. Stockholders Agreement. To the extent that the provisions of these bylaws are inconsistent with any stockholders agreement subsequently entered into by the holders of the Corporation's capital stock, the stockholders agreement shall control. THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon Transportation, Inc. were duly adopted by the Board of Directors of the Corporation by action taken by unanimous written consent effective the 8th day of December, 1994. This 8th day of December, 1994. /s/ M. K. DOSS --------------------------------- Secretary [Corporate Seal] -13- EX-3.31 28 ARTICLES OF INC. OF MANETTA HOME FASHIONS, INC 1 EXHIBIT 3.31 State of North Carolina Department of the Secretary of State ARTICLES OF INCORPORATION Pursuant to Section 55-2-02 of the General Statutes of North Carolina, the undersigned does hereby submit these Articles of Incorporation for the purpose of forming a business corporation. 1. The name of the corporation is: Man-Mill Acquisition, Inc. 2. The corporation is authorized to issue 100,000 shares, all of one class, designated as common stock. 3. The street address, mailing address, and county of the initial registered office of the corporation is: Number and Street: 225 Hillsborough Street City, State, Zip Code: Raleigh, North Carolina 27603 County: Wake 4. The name of the initial registered agent is: CT Corporation System 5. The names and addresses of the persons who are to serve as the initial Board of Directors until the first meeting of shareholders or until their successors be elected and qualified are as follows: Charles M. Hansen, Jr. 4111 Mint Way Dallas, Texas 75237 Jeffrey D. Cordes 4111 Mint Way Dallas, Texas 75237 Stephen P. Richman 4111 Mint Way Dallas, Texas 75237 6. To the full extent from time to time permitted by law, no person who is serving or who has served as a director of the corporation shall be personally liable in any action for monetary damages for breach of his or her duty as a director, whether such action is brought by or in the right of the corporation or otherwise. Neither the amendment or repeal of this Article, nor the adoption of any provision of these Articles of Incorporation inconsistent with this Article, shall eliminate or reduce the protection afforded by this Article to a director of the corporation with respect to any matter which occurred, or any 2 cause of action, suit or claim which but for this Article would have accrued or risen, prior to such amendment, repeal or adoption. 7. The name and address of the incorporator is: Sheri Crockett, Legal Assistant Womble Carlyle Sandridge & Rice 2100 First Union Capitol Center Raleigh, NC 27602 8. These articles will be effective upon filing. This the 24th day of August, 1993. /s/ SHERI CROCKETT ------------------------------- Sheri Crockett, Incorporator 3 State of North Carolina Department of the Secretary of State ARTICLES OF AMENDMENT Pursuant to Section 55-10-06 of the General Statutes of North Carolina, the undersigned corporation hereby submits the following Articles of Amendment for the purposes of amending its Articles of Incorporation: 1. The name of the corporation is: Man-Mill Acquisition, Inc. 2. The text of each amendment adopted is as follows: RESOLVED, that Article I of the Articles of Incorporation of the corporation is amended to read as follows: The name of the corporation shall be Manetta Home Fashions, Inc. 3. If an amendment provides for an exchange, reclassification, or cancellation of issued shares, provisions for implementing the amendment, if not contained in the amendment itself, are as follows: n/a 4. The date of adoption of each amendment was as follows: September 14, 1993 5. The amendment was approved by shareholder action. Shareholder approval for the Articles of Amendment were obtained as required by Chapter 55 of the North Carolina General Statutes. 6. These articles will be effective upon filing. This the 30th day of September, 1993. MAN-MILL ACQUISITION, INC. By: /s/ JEFFREY D. CORDES --------------------------- Jeffrey D. Cordes Vice President EX-3.32 29 BYLAWS OF MANETTA HOME FASHIONS, INC. 1 EXHIBIT 3.32 TABLE OF CONTENTS TO BYLAWS OF MAN-MILL ACQUISITION, INC. EFFECTIVE AUGUST 24, 1993
Page ---- ARTICLE 1 - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Principal and Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE 2 - MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Place of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Substitute Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 4. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 5. Notice of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 7. Shareholders' List. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 8. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 9. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE 3 - BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1. General Powers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2. Number, Term and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 5. Compensation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE 4 - MEETINGS OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 1. Annual and Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 3. Notice of Meetings... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 4. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 5. Manner of Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 6. Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 7. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 8. Meeting by Communications Device.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE 5 - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 1. Election and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 2. Removal; Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
i 2 Section 3. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 4. Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE 6 - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 1. Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 2. Election; Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 5. Compensation... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 6. Chairman and Vice Chairman of the Board of Directors... . . . . . . . . . . . . . . . . . . . . 7 Section 7. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 8. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 9. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 10. Assistant Secretaries.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 11. Treasurer... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 12. Assistant Treasurers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 13. Controller and Assistant Controllers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 14. Voting Upon Stocks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE 7 - CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 1. Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 3. Transfer Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 4. Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 5. Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 6. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 1. Indemnification Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 3. Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 4. Litigation Expense Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5. Approval of Indemnification Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 6. Suits by Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 7. Consideration; Personal Representatives and Other Remedies . . . . . . . . . . . . . . . . . 11 Section 8. Scope of Indemnification Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE 9 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 1. Dividends and other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 2. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 3. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 4. Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 6. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 7. Shareholders' Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ii 3 BYLAWS OF MAN-MILL ACQUISITION, INC. ARTICLE 1 - OFFICES Section 1. Principal and Registered Office. The principal office of the corporation shall be located at 4111 Mint Way, Dallas, Texas 75237. The registered office of the corporation shall be located at 225 Hillsborough Street, Raleigh, North Carolina 27603. Section 2. Other Offices. The corporation may have offices at such other places, either within or without the State of North Carolina, as the board of directors may from time to time determine. ARTICLE 2 - MEETINGS OF SHAREHOLDERS Section 1. Place of Meeting. Meetings of shareholders shall be held at the principal office of the corporation, or at such other place, either within or without the State of North Carolina, as shall be designated in the notice of the meeting. Section 2. Annual Meeting. The annual meeting of shareholders shall be held at such time as determined by resolution of the board of directors for the purpose of electing directors of the corporation and the transaction of such other business as may be properly brought before the meeting. Section 3. Substitute Annual Meeting. If the annual meeting is not held in accordance with these bylaws, a substitute annual meeting may be called in accordance with Section 4 of this Article. A meeting so called shall be designated and treated for all purposes as the annual meeting. Section 4. Special Meetings. Special meetings of the shareholders may be called at any time by the president or the board of directors, and must be called and held within thirty days of demand therefor, if the holders of at least ten percent of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation's secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held. Section 5. Notice of Meetings. At least 10 and no more than 60 days prior to any annual or special meeting of shareholders, the corporation shall notify shareholders of the date, time and place of the meeting and, in the case of a special or substitute annual meeting or where otherwise required by law, shall briefly describe the purpose or purposes of the meeting. Only business within the purpose or purposes described in the notice may be conducted at a special 4 meeting. Unless otherwise required by the articles of incorporation or by law (for example, in the event of a meeting to consider the adoption of a plan of merger or share exchange, a sale of assets other than in the ordinary course of business or a voluntary dissolution), the corporation shall be required to give notice only to shareholders entitled to vote at the meeting. If an annual or special shareholders' meeting is adjourned to a different date, time or place, notice thereof need not be given if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date. It shall be the primary responsibility of the secretary to give the notice, but notice may be given by or at the direction of the president or other person or persons calling the meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail with postage thereon prepaid, correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. Section 6. Quorum. A majority of the votes entitled to be cast by a voting group on a matter, represented in person or by proxy at a meeting of shareholders, shall constitute a quorum for that voting group for any action on that matter, unless quorum requirements are otherwise fixed by a court of competent jurisdiction acting pursuant to Section 55-7-03 of the General Statutes of North Carolina. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof, unless a new record date is or must be set for the adjournment. Action may be taken by a voting group at any meeting at which a quorum of that voting group is represented, regardless of whether action is taken at that meeting by any other voting group. In the absence of a quorum at the opening of any meeting of shareholders, such meeting may be adjourned from time to time by a vote of the majority of the shares voting on the motion to adjourn. Section 7. Shareholders' List. After a record date is fixed for a meeting, the secretary of the corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the shareholders' meeting. Such list shall be arranged by voting group (and within each voting group by class or series of shares) and shall show the address of and number of shares held by each shareholder. The shareholders' list shall be made available for inspection by any shareholder beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or at such other place identified in the meeting notice in the city where the meeting will be held. The corporation shall make the shareholders' list available at the meeting, and any shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment. Section 8. Voting of Shares. Except as otherwise provided by the articles of incorporation or by law, each outstanding share of voting capital stock of the corporation shall be entitled to one vote on each matter submitted to a vote at a meeting of the shareholders. Unless otherwise provided in the articles of incorporation or by law, cumulative voting for directors shall not be allowed. Action on a matter by a voting group for which a quorum is present is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the vote of a greater number is required by law or by the articles of incorporation. Voting on all matters shall be by voice vote or by a show of hands, unless the -2- 5 holders of one-tenth of the shares represented at the meeting shall demand a ballot vote on a particular matter. Absent special circumstances, the shares of the corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, except that this provision shall not limit the power of the corporation to vote shares held by it in a fiduciary capacity. Section 9. Action Without Meeting. Any action which the shareholders could take at a meeting may be taken without a meeting if one or more written consents, setting forth the action taken, shall be signed, before or after such action, by all the shareholders who would be entitled to vote upon the action at a meeting. The consent shall be delivered to the corporation for inclusion in the minutes or filing with the corporate records. If by law, the corporation is required to give its nonvoting shareholders written notice of the proposed action, it shall do so at least 10 days before the action is taken, and such notice must contain or be accompanied by the same material that would have been required by law to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action. ARTICLE 3 - BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the corporation shall be managed under the direction of the board of directors except as otherwise provided by the articles of incorporation or by a valid shareholders' agreement. Section 2. Number, Term and Qualification. The number of directors of the corporation shall consist of one or more individuals. The shareholders at any annual meeting may by resolution fix the number of directors to be elected at the meeting; but in the absence of such resolution, the number of directors elected at the meeting shall constitute the number of directors of the corporation until the next annual meeting of shareholders, unless the number is changed prior to such meeting by action of the shareholders. The Board of Directors shall have the authority to increase or decrease by thirty percent within any twelve-month period the number of directors. Each director's term shall expire at the annual meeting next following the director's election as a director, provided, that notwithstanding the expiration of the term of the director, the director shall continue to hold office until a successor is elected and qualifies or until his death, resignation, removal or disqualification or until there is a decrease in the number of directors. Directors need not be residents of the State of North Carolina or shareholders of the corporation unless the articles of incorporation so provide. Section 3. Removal. Directors may be removed from office with or without cause (unless the articles of incorporation provide that directors may be removed only for cause) provided the notice of the shareholders' meeting at which such action is to be taken states that a purpose of the meeting is removal of the director and the number of votes cast to remove the director exceeds the number of votes cast not to remove him. -3- 6 Section 4. Vacancies. Except as otherwise provided in the articles of incorporation, a vacancy occurring in the board of directors, including, without limitation, a vacancy resulting from an increase in the number of directors or from the failure by the shareholders to elect the full authorized number of directors, may be filled by a majority of the remaining directors or by the sole director remaining in office. The shareholders may elect a director at any time to fill a vacancy not filled by the directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Section 5. Compensation. The directors shall not receive compensation for their services as such, except that by resolution of the board of directors, the directors may be paid fees, which may include but are not restricted to fees for attendance at meetings of the board or of a committee, and they may be reimbursed for expenses of attendance. Any director may serve the corporation in any other capacity and receive compensation therefor. ARTICLE 4 - MEETINGS OF DIRECTORS Section 1. Annual and Regular Meetings. The annual meeting of the board of directors shall be held immediately following the annual meeting of the shareholders. The board of directors may by resolution provide for the holding of regular meetings of the board on specified dates and at specified times. Notice of regular meetings held at the principal office of the corporation and at the usual scheduled time shall not be required. If any date for which a regular meeting is scheduled shall be a legal holiday, the meeting shall be held on a date designated in the notice of the meeting, if any, during either the same week in which the regularly scheduled date falls or during the preceding or following week. Regular meetings of the board shall be held at the principal office of the corporation or at such other place as may be designated in the notice of the meeting. Section 2. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president or any two directors. Such meetings may be held at the time and place designated in the notice of the meeting. Section 3. Notice of Meetings. Unless the articles of incorporation provide otherwise, the annual and regular meetings of the board of directors may be held without notice of the date, time, place or purpose of the meeting. The secretary or other person or persons calling a special meeting shall give notice by any usual means of communication to be sent at least two days before the meeting if notice is sent by means of telephone, telecopy or personal delivery and at least five days before the meeting if notice is sent by mail. A director's attendance at, or participation in, a meeting for which notice is required shall constitute a waiver of notice, unless the director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. Section 4. Quorum. Except as otherwise provided in the articles of incorporation, majority of the directors in office shall constitute a quorum for the transaction of business at a meeting of the board of directors. -4- 7 Section 5. Manner of Acting. Except as otherwise provided in the articles of incorporation, the affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. Section 6. Presumption of Assent. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken is deemed to have assented to the action taken unless he objects at the beginning of the meeting (or promptly upon arrival) to holding, or transacting business at, the meeting, or unless his dissent or abstention is entered in the minutes of the meeting or unless he shall file written notice of his dissent or abstention to such action with the presiding officer of the meeting before its adjournment or with the corporation immediately after adjournment of the meeting. The right of dissent or abstention shall not apply to a director who voted in favor of such action. Section 7. Action Without Meeting. Unless otherwise provided in the articles of incorporation, action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents signed by each director before or after such action, describing the action taken, and included in the minutes or filed with the corporate records. Action taken without a meeting is effective when the last director signs the consent, unless the consent specifies a different effective date. Section 8. Meeting by Communications Device. Unless otherwise provided in the articles of incorporation, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. ARTICLE 5 - COMMITTEES Section 1. Election and Powers. Unless otherwise provided by the articles of incorporation or the bylaws, a majority of the board of directors may create one or more committees and appoint two or more directors to serve at the pleasure of the board on each such committee. To the extent specified by the board of directors or in the articles of incorporation, each committee shall have and may exercise the powers of the board in the management of the business and affairs of the corporation, except that no committee shall have authority to do the following: (a) Authorize distributions. (b) Approve or propose to shareholders action required to be approved by shareholders. (c) Fill vacancies on the board of directors or on any of its committees. -5- 8 (d) Amend the articles of incorporation. (e) Adopt, amend or repeal the bylaws. (f) Approve a plan of merger not requiring shareholder approval. (g) Authorize or approve the reacquisition of shares, except according to a formula or method prescribed by the board of directors. (h) Authorize or approve the issuance, sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee (or a senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors. Section 2. Removal; Vacancies. Any member of a committee may be removed at any time with or without cause, and vacancies in the membership of a committee by means of death, resignation, disqualification or removal shall be filled by a majority of the whole board of directors. Section 3. Meetings. The provisions of Article 4 governing meetings of the board of directors, action without meeting, notice, waiver of notice and quorum and voting requirements shall apply to the committees of the board and its members. Section 4. Minutes. Each committee shall keep minutes of its proceedings and shall report thereon to the board of directors at or before the next meeting of the board. ARTICLE 6 - OFFICERS Section 1. Titles. The officers of the corporation shall be a president and a secretary and may include a chairman and vice chairman of the board of directors, an executive vice president, a treasurer, one or more additional vice presidents, a controller, one or more assistant secretaries, one or more assistant treasurers, one or more assistant controllers, and such other officers as shall be deemed necessary. The officers shall have the authority and perform the duties as set forth herein or as from time to time may be prescribed by the board of directors or by the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of officers). Any two or more offices may be held by the same individual, but no officer may act in more than one capacity where action of two or more officers is required. Section 2. Election; Appointment. The officers of the corporation shall be elected from time to time by the board of directors or appointed from time to time by the president (to the extent that the president is authorized by the board to appoint officers). -6- 9 Section 3. Removal. Any officer may be removed by the board at any time with or without cause whenever in its judgment the best interests of the corporation will be served, but removal shall not itself affect the officer's contract rights, if any, with the corporation. Section 4. Vacancies. Vacancies among the officers may be filled and new offices may be created and filled by the board of directors, or by the president (to the extent authorized by the board). Section 5. Compensation. The compensation of the officers shall be fixed by, or under the direction of, the board of directors. Section 6. Chairman and Vice Chairman of the Board of Directors. The chairman of the board of directors, if such officer is elected, shall preside at meetings of the board of directors and shall have such other authority and perform such other duties as the board of directors shall designate. The vice chairman, if elected, shall preside at meetings of the board in the absence of the chairman and shall have such other authority and perform such other duties as the board of directors shall designate. Section 7. President. The president shall be in general charge of the affairs of the corporation in the ordinary course of its business and shall preside at meetings of the shareholders. The president may perform such acts, not inconsistent with applicable law or the provisions of these bylaws, as may be performed by the president of a corporation and may sign and execute all authorized notes, bonds, contracts and other obligations in the name of the corporation. The president shall have such other powers and perform such other duties as the board of directors shall designate or as may be provided by applicable law or elsewhere in these bylaws. Section 8. Vice Presidents. The executive vice president, if such officer is elected or appointed, shall exercise the powers of the president during that officer's absence or inability to act. In default of both the president and the executive vice president, any other vice president may exercise the powers of the president. Any action taken by a vice president in the performance of the duties of the president shall be presumptive evidence of the absence or inability to act of the president at the time the action was taken. The vice presidents shall have such other powers and perform such other duties as may be assigned by the board of directors or by the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers). Section 9. Secretary. The secretary shall keep accurate records of the acts and proceedings of all meetings of shareholders and of the board of directors and shall give all notices required by law and by these bylaws. The secretary shall have general charge of the corporate books and records and shall have the responsibility and authority to maintain and authenticate such books and records. The secretary shall have general charge of the corporate seal and shall affix the corporate seal to any lawfully executed instrument requiring it. The secretary shall have general charge of the stock transfer books of the corporation and shall keep at the principal office of the corporation a record of shareholders, showing the name and address of each shareholder and the number and class of the shares held by each. The secretary shall -7- 10 sign such instruments as may require the signature of the secretary, and in general shall perform the duties incident to the office of secretary and such other duties as may be assigned from time to time by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers). Section 10. Assistant Secretaries. Each assistant secretary, if such officer is elected, shall have such powers and perform such duties as may be assigned by the board of directors or the president (if authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant secretaries shall exercise the powers of the secretary during that officer's absence or inability to act. Section 11. Treasurer. The treasurer shall have custody of all funds and securities belonging to the corporation and shall receive, deposit or disburse the same under the direction of the board of directors. The treasurer shall keep full and accurate accounts of the finances of the corporation, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for the year unless that information appears elsewhere in the financial statements. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. The corporation shall mail the annual financial statements, or a written notice of their availability, to each shareholder within 120 days of the close of each fiscal year. The treasurer shall in general perform all duties incident to the office and such other duties as may be assigned from time to time by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers). Section 12. Assistant Treasurers. Each assistant treasurer, if such officer is elected, shall have such powers and perform such duties as may be assigned by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant treasurers shall exercise the powers of the treasurer during that officer's absence or inability to act. Section 13. Controller and Assistant Controllers. The controller, if such officer is elected, shall have charge of the accounting affairs of the corporation and shall have such other powers and perform such other duties as the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers) shall designate. Each assistant controller shall have such powers and perform such duties as may be assigned by the board of directors or the president (to the extent that the president is authorized by the board of directors to prescribe the authority and duties of other officers), and the assistant controllers shall exercise the powers of the controller during that officer's absence or inability to act. Section 14. Voting Upon Stocks. Unless otherwise ordered by the board of directors, the president shall have full power and authority in behalf of the corporation to attend, act and vote at meetings of the shareholders of any corporation in which this corporation may hold stock, and at such meetings shall possess and may exercise any and all rights and powers -8- 11 incident to the ownership of such stock and which, as the owner, the corporation might have possessed and exercised if present. The board of directors may by resolution from time to time confer such power and authority upon any other person or persons. ARTICLE 7 - CAPITAL STOCK Section 1. Certificates. Shares of the capital stock of the corporation shall be represented by certificates. The name and address of the persons to whom shares of capital stock of the corporation are issued, with the number of shares and date of issue, shall be entered on the stock transfer records of the corporation. Certificates for shares of the capital stock of the corporation shall be in such form not inconsistent with the articles of incorporation of the corporation as shall be approved by the board of directors. Each certificate shall be signed (either manually or by facsimile) by (a) the president or any vice president and by the secretary, assistant secretary, treasurer or assistant treasurer or (b) any two officers designated by the board of directors. Each certificate may be sealed with the seal of the corporation or a facsimile thereof. Section 2. Transfer of Shares. Transfer of shares shall be made on the stock transfer records of the corporation, and transfers shall be made only upon surrender of the certificate for the shares sought to be transferred by the recordholder or by a duly authorized agent, transferee or legal representative. All certificates surrendered for transfer or reissue shall be cancelled before new certificates for the shares shall be issued. Section 3. Transfer Agent and Registrar. The board of directors may appoint one or more transfer agents and one or more registrars of transfers and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. Section 4. Regulations. The board of directors may make rules and regulations as it deems expedient concerning the issue, transfer and registration of shares of capital stock of the corporation. Section 5. Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the board of directors may fix in advance a date as the record date for the determination of shareholders. The record date shall be not more than 70 days before the meeting or action requiring a determination of shareholders. A determination of shareholders entitled to notice of or to vote at a shareholders' meeting shall be effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is fixed for the determination of shareholders, the record date shall be the day the notice of the meeting is mailed or the day the action requiring a determination of shareholders is taken. If no record date is fixed for action without a meeting, the record date for determining -9- 12 shareholders entitled to take action without a meeting shall be the date the first shareholder signs a consent to the action taken. Section 6. Lost Certificates. The board of directors must authorize the issuance of a new certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken, upon receipt of (a) an affidavit from the person explaining the loss, destruction or wrongful taking, and (b) a bond from the claimant in a sum as the corporation may reasonably direct to indemnify the corporation against loss from any claim with respect to the certificate claimed to have been lost, destroyed or wrongfully taken. The board of directors may, in its discretion, waive the affidavit and bond and authorize the issuance of a new certificate in place of a certificate claimed to have been lost, destroyed or wrongfully taken. ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 1. Indemnification Provisions. Any person who at any time serves or has served as a director or officer of the corporation or of any wholly owned subsidiary of the corporation, or in such capacity at the request of the corporation for any other foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or as a trustee or administrator under any employee benefit plan of the corporation or of any wholly owned subsidiary thereof (a "Claimant"), shall have the right to be indemnified and held harmless by the corporation to the fullest extent from time to time permitted by law against all liabilities and litigation expenses (as hereinafter defined) in the event a claim shall be made or threatened against that person in, or that person is made or threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, and whether or not brought by or on behalf of the corporation, including all appeals therefrom (a "proceeding"), arising out of such service; provided, that such indemnification shall not be effective with respect to (a) that portion of any liabilities or litigation expenses with respect to which the Claimant is entitled to receive payment under any insurance policy or (b) any liabilities or litigation expenses incurred on account of any of the Claimant's activities which were at the time taken known or believed by the Claimant to be clearly in conflict with the best interests of the corporation. Section 2. Definitions. As used in this Article, (a) "liabilities" shall include, without limitation, (1) payments in satisfaction of any judgment, money decree, excise tax, fine or penalty for which Claimant had become liable in any proceeding and (2) payments in settlement of any such proceeding subject, however, to Section 3 of this Article 8; (b) "litigation expenses" shall include, without limitation, (1) reasonable costs and expenses and attorneys' fees and expenses actually incurred by the Claimant in connection with any proceeding and (2) reasonable costs and expenses and attorneys' fees and expenses in connection with the enforcement of rights to the indemnification granted hereby or by applicable law, if such enforcement is successful in whole or in part; and (c) "disinterested directors" shall mean directors who are not party to the proceeding in question. Section 3. Settlements. The corporation shall not be liable to indemnify the Claimant for any amounts paid in settlement of any proceeding effected without the -10- 13 corporation's written consent. The corporation will not unreasonably withhold its consent to any proposed settlement. Section 4. Litigation Expense Advances. (a) Except as provided in subsection (b) below, any litigation expenses shall be advanced to any Claimant within 30 days of receipt by the secretary of the corporation of a demand therefor, together with an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that the Claimant is entitled to be indemnified by the corporation against such expenses. The secretary shall promptly forward notice of the demand and undertaking immediately to all directors of the corporation. (b) Within 10 days after mailing of notice to the directors pursuant to subsection (a) above, any disinterested director may, if desired, call a meeting of all disinterested directors to review the reasonableness of the expenses so requested. No advance shall be made if a majority of the disinterested directors affirmatively determines that the item of expense is unreasonable in amount; but if the disinterested directors determine that a portion of the expense item is reasonable, the corporation shall advance such portion. (c) Without limiting the rights contained in subsection (a) above, the board of directors may take action to advance any litigation expenses to a Claimant upon receipt of an undertaking by or on behalf of the Claimant to repay to the corporation such amount unless it is ultimately determined that the Claimant is entitled to be indemnified by the corporation against such expenses. Section 5. Approval of Indemnification Payments. Except as provided in Section 4 of this Article, the board of directors of the corporation shall take all such action as may be necessary and appropriate to authorize the corporation to pay the indemnification required by Section 1 of this Article, including, without limitation, making a good faith evaluation of the manner in which the Claimant acted and of the reasonable amount of indemnity due the Claimant. In taking any such action, any Claimant who is a director of the corporation shall not be entitled to vote on any matter concerning such Claimant's right to indemnification. Section 6. Suits by Claimant. No Claimant shall be entitled to bring suit against the corporation to enforce his rights under this Article until sixty days after a written claim has been received by the corporation, together with any undertaking to repay as required by Section 4 of this Article. It shall be a defense to any such action that the Claimant's liabilities or litigation expenses were incurred on account of activities described in clause (b) of Section 1, but the burden of proving this defense shall be on the corporation. Neither the failure of the corporation to determine that indemnification of the Claimant is proper, nor determination by the corporation that indemnification is not due because of application of clause (b) of Section 1 shall be a defense to the action or create a presumption that the Claimant has not met the applicable standard of conduct. Section 7. Consideration; Personal Representatives and Other Remedies. Any Claimant who during such time as this Article or corresponding provisions of predecessor bylaws -11- 14 is or has been in effect serves or has served in any of the capacities described in Section 1 shall be deemed to be doing so or to have done so in reliance upon, and as consideration for, the right of indemnification provided herein or therein. The right of indemnification provided herein or therein shall inure to the benefit of the legal representatives of any Claimant hereunder, and the right shall not be exclusive of any other rights to which the Claimant or legal representative may be entitled apart from this Article. Section 8. Scope of Indemnification Rights. The rights granted herein shall not be limited by the provisions of Section 55-8-51 of the General Statutes of North Carolina or any successor statute. ARTICLE 9 - GENERAL PROVISIONS Section 1. Dividends and other Distributions. The board of directors may from time to time declare and the corporation may pay dividends or make other distributions with respect to its outstanding shares in the manner and upon the terms and conditions provided by law. Section 2. Seal. The seal of the corporation shall be any form approved from time to time or at any time by the board of directors. Section 3. Waiver of Notice. Whenever notice is required to be given to a shareholder, director or other person under the provisions of these bylaws, the articles of incorporation or applicable law, a waiver in writing signed by the person or persons entitled to the notice, whether before or after the date and time stated in the notice, and delivered to the corporation shall be equivalent to giving the notice. Section 4. Checks. All checks, drafts or orders for the payment of money shall be signed by the officer or officers or other individuals that the board of directors may from time to time designate. Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed by the board of directors. Section 6. Amendments. Unless otherwise provided in the articles of incorporation or a bylaw adopted by the shareholders or by law, these bylaws may be amended or repealed by the board of directors, except that a bylaw adopted, amended or repealed by the shareholders may not be readopted, amended or repealed by the board of directors if neither the articles of incorporation nor a bylaw adopted by the shareholders authorizes the board of directors to adopt, amend or repeal that particular bylaw or the bylaws generally. These bylaws may be amended or repealed by the shareholders even though the bylaws may also be amended or repealed by the board of directors. A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended or repealed (a) if originally adopted by the shareholders, only by the shareholders, unless such bylaw as originally adopted by the shareholders provides that such bylaw may be amended or repealed by the board of directors or -12- 15 (b) if originally adopted by the board of directors, either by the shareholders or by the board of directors. A bylaw that fixes a greater quorum or voting requirement may not be adopted by the board of directors by a vote less than a majority of the directors then in office and may not itself be amended by a quorum or vote of the directors less than the quorum or vote prescribed in such bylaw or prescribed by the shareholders. Section 7. Shareholders' Agreement. In the event of a conflict between these bylaws and a valid shareholders' agreement, the shareholders' agreement shall control. ---- THIS IS TO CERTIFY that the above bylaws of Man-Mill Acquisition, Inc., were adopted by the board of directors of the corporation by action taken without a meeting effective as of August 24, 1993. This 30 day of August 1993. /s/ JEFFREY D. CORDES ---------------------------- Jeffrey D. Cordes, Secretary [Corporate Seal] -13- 16 STATE OF DELAWARE ) ) ss: COUNTY OF NEW CASTLE ) BE IT REMEMBERED that on this 8th day of March A.D., 1971, personally came before me, the subscriber, a Notary Public for the State of Delaware, W. J. Reif, known to be personally to be such, and acknowledged the said certificate to be his act and deed and that the facts therein stated are truly set forth. GIVEN under my hand and seal of office the day and year aforesaid. A. Dana Atwell ----------------------- Notary Public (NOTARY SEAL) EX-3.33 30 CERTIFICATE OF INC. OF MOORE'S FALLS CORPORATION 1 EXHIBIT 3.33 CERTIFICATE OF INCORPORATION OF MOORE'S FALLS CORPORATION The undersigned, in order to form a corporation under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certify as follows: FIRST: The name of the corporation is MOORE'S FALLS CORPORATION SECOND: The registered office of the corporation in the State of Delaware is located at 100 West 10th Street, in the City of Wilmington, County of New Castle. The name and address of its registered agent is The Corporation Trust Company, 100 West 10th Street, Wilmington, Delaware. THIRD: The nature of the business to be conducted or promoted and the purposes of the corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of all classes of stock which the corporation shall have the authority to issue is One Thousand (1,000) shares, all of which shall be of a single class, without par value. 2 The Board of Directors is hereby authorized within the limitations and restrictions stated in this Article Fourth, to fix by resolution or resolutions the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of each of the authorized classes of stock, including, without limiting the generality of the foregoing, such provisions as may be desired concerning the voting, redemption, dividends, dissolution or the distribution of assets, conversion or exchange, and other subjects or matters as may be fixed by resolution or resolutions of the Board of Directors under the General Corporation Law of Delaware. FIFTH: The name and mailing address of the Incorporator is as follows: NAME MAILING ADDRESS W. J. Reif 100 West Tenth Street Wilmington, Delaware SIXTH: The powers of the incorporator are to terminate upon the filing of this certificate of incorporation with the Secretary of State of the State of Delaware. The names and mailing addresses of the persons who are to -2- 3 serve as directors of the corporation until the first annual meeting of stockholders or until their successors are elected and qualified are as follows:
NAMES MAILING ADDRESSES ----- ----------------- F. C. Dumaine Suite 4500 Prudential Center Boston, Massachusetts 02199 Dudley B. Dumaine Suite 4500 Prudential Center Boston, Massachusetts 02199 Henry T. Wiggin Suite 4500 Prudential Center Boston, Massachusetts 02199 Joseph B. Ely, II Suite 4500 Prudential Center Boston, Massachusetts 02199 Alan L. Lefkowitz Room 1200, 225 Franklin Street Boston, Massachusetts 02110
SEVENTH: (a) Except as otherwise required by law, by the Certificate of Incorporation or by the by-laws of the corporation, as from time to time amended, the business of the corporation shall be managed by its Board of Directors, which shall have and may exercise all the powers of the corporation. The Board of Directors of the corporation is hereby specifically authorized and -3- 4 empowered from time to time in its discretion to determine the extent, if any, to which and the time and place at which, and the conditions under which any stockholder of the corporation may examine books and records of the corporation, other than the books and records now or hereafter required by statute to be kept open for inspection of stockholders of the corporation. The Board of Directors is expressly authorized to make, alter or repeal the by-laws of the corporation. (b) Any vote or votes authorizing liquidation of the corporation or proceedings for its dissolution may provide, subject to the rights of creditors and rights expressly provided for particular classes or series of stocks, for the distribution pro rata among the stockholders of the corporation of the assets of the corporation wholly or in part in kind, whether such assets be in cash or other property, and may authorize the Board of Directors of the corporation to determine the valuation of the different assets of the corporation for the purpose of such liquidation and may divide or authorize the Board of Directors to divide such assets or any part thereof among the stockholders of the corporation, in such manner that every stockholder will receive a proportionate amount in value (determined as aforesaid) of cash or property of -4- 5 the corporation upon such liquidation or dissolution even though each stockholder may not receive a strictly proportionate part of each such asset. (c) Election of directors need not be by ballot. EIGHTH: The number of directors of the corporation shall be such as from time to time shall be fixed by or in the manner provided by the by-laws, but at no time shall the number of directors be fixed at less than three. NINTH: The corporation reserves the right to amend, alter, change or repeal any provisions contained in this certificate of incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders are granted subject to this reservation. TENTH: No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his -5- 6 or their votes are counted for such purpose if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorized the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ELEVENTH: 1. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, -6- 7 administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to be the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (2) The corporation shall indemnify any person who was or is a party or is threatened to be made a party to -7- 8 any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. -8- 9 (3) To the extent that any person referred to in sections 1 and 2 of this paragraph Eleventh has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to therein or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. (4) Any indemnification under sections 1 and 2 of this paragraph Eleventh (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in sections 1 and 2 of this paragraph Eleventh. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion or (c) by the stockholders. (5) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, -9- 10 suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the directors, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the corporation as provided in this paragraph Eleventh. (6) The indemnification provided by this paragraph Eleventh shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (7) The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as -10- 11 such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this paragraph Eleventh. The UNDERSIGNED, hereby declaring and certifying the facts stated in this certificate of incorporation are true, hereunto sets his hand and seal this 8th day of March, 1971. W. J. Reif ------------------------- Incorporator -11- 12 AGREEMENT OF MERGER OF MOORE'S FALLS CORPORATION (a New Hampshire Corporation) INTO MOORE'S FALLS CORPORATION (a Delaware Corporation) AGREEMENT OF MERGER, dated this 26th day of April, 1971, by and between MOORE'S FALLS CORPORATION, a Delaware corporation, and MOORE'S FALLS CORPORATION, a New Hampshire corporation. WITNESSETH THAT: WHEREAS, said MOORE'S FALLS CORPORATION (New Hampshire) is a corporation organized on January 19, 1921 under the laws of the State of New Hampshire, having an authorized capital stock consisting of 30,000 shares of common stock without par value, of which 3,010 are presently issued and outstanding, all held by Amoskeag Company, a Delaware corporation; and WHEREAS, said MOORE'S FALLS CORPORATION (Delaware) is a corporation organized on March 8, 1971 under the laws of the State of Delaware, having an authorized capital stock consisting of 1,000 shares of common stock without par value, of which 10 shares are presently issued and outstanding, all held by Amoskeag Company, a Delaware corporation and shall remain issued and outstanding; and WHEREAS, The board of directors, officers and stockholder of each of said corporations deem it advisable and to the benefit of each of said corporations respectively that MOORE'S FALLS CORPORATION (New Hampshire) be merged into MOORE'S FALLS CORPORATION (Delaware). 13 NOW, THEREFORE, the corporations, parties to this agreement have agreed and do hereby agree each with the other that said MOORE'S FALLS CORPORATION (New Hampshire) shall be merged into said MOORE'S FALLS CORPORATION (Delaware), and do hereby agree upon and prescribe the terms and conditions of the merger, the mode of carrying the same into effect and the amount of the capital stock of said MOORE'S FALLS CORPORATION (Delaware) to be issued to the present holder of the issued and outstanding capital stock of MOORE's FALLS CORPORATION (New Hampshire), as follows: ARTICLE I. The certificate of incorporation and by-laws of MOORE'S FALLS CORPORATION (Delaware), as they shall exist on the effective date of this agreement shall be and remain the certificate of incorporation and the by-laws of the continuing corporation, until the same may be altered, amended or repealed as therein provided or otherwise in accordance with the laws of the State of Delaware. The purposes of the continuing corporation shall be as set forth in said certificate of incorporation, and the total authorized capital stock shall be as therein set forth, namely 1,000 shares of common stock, without par value. ARTICLE II. The principal place of business of the continuing corporation is and shall be located at Suite 4500, Prudential Center in the City of Boston, County of Suffolk, Commonwealth of Massachusetts. ARTICLE III. The first board of directors of the continuing corporation after the filing of this Agreement of Merger shall consist of those - 2 - 14 persons who are now directors of MOORE'S FALLS CORPORATION (Delaware); their respective names and addresses are as follows:
NAMES ADDRESSES ----- --------- F. C. Dumaine Suite 4500, Prudential Center Boston, Massachusetts 02199 Dudley B. Dumaine Suite 4500, Prudential Center Boston, Massachusetts 02199 Henry T. Wiggin Suite 4500, Prudential Center Boston, Massachusetts 02199 Joseph B. Ely, II Suite 4500, Prudential Center Boston, Massachusetts 02199 Alan L. Lefkowitz Room 1200, 225 Franklin Street Boston, Massachusetts 02110
The officers of the continuing corporation after the filing of this Agreement of Merger shall consist of those persons who are holders of the same respective offices of MOORE'S FALLS CORPORATION (Delaware); their respective names, addresses and offices are as follows:
OFFICE NAMES ADDRESSES ------ ----- --------- President Joseph B. Ely, II Suite 4500, Prudential Center Boston, Massachusetts 02199 Treasurer Henry T. Wiggin Suite 4500, Prudential Center Boston, Massachusetts 02199 Secretary Dudley B. Dumaine Suite 4500, Prudential Center Boston, Massachusetts 02199 Assistant Alan L. Lefkowitz Room 1200, 225 Franklin Street Secretary Boston, Massachusetts 02110
ARTICLE IV. The amount of the capital stock of the continuing corporation to be issued to the present holder of the issued and outstanding capital stock of MOORE'S FALLS CORPORATION (New Hampshire), is One - 3 - 15 hundred (100) shares of common stock without par value, and the consideration for the issuance of the shares of said common stock of the continuing corporation to the holder of the issued and outstanding capital stock of said MOORE'S FALLS CORPORATION (New Hampshire), is the surrender by it of the certificates representing shares of the common stock, without par value, of said MOORE'S FALLS CORPORATION (New Hampshire) now held by them, at the ratio of 30.1 share for each one (1) share of the common stock of the continuing corporation to be issued to it. The total number of issued shares of the continuing corporation after this agreement of merger is filed is 110. ARTICLE V. Upon the effective date of the merger, the continuing corporation namely MOORE'S FALLS CORPORATION (Delaware), shall be possessed of all the rights, privileges, powers and franchises as well of a public as of a private nature, and shall be subject to all the restrictions, disabilities and duties of MOORE'S FALLS CORPORATION (New Hampshire), and all and singular, the rights, privileges, powers and franchises of said corporation and all property, real, personal and mixed owned and possessed by said corporation and all debts due to said corporation on whatever account, as well as all other things in action or belonging to said corporation, shall be vested in the continuing corporation; and all property, rights and privileges, powers and franchises and all and every other interest of said MOORE'S FALLS CORPORATION (New Hampshire), shall be thereafter as effectually the property of the continuing corporation, and the title to any real estate, whether by deed or otherwise, vested in said - 4 - 16 MOORE'S FALLS CORPORATION (New Hampshire), shall not revert or be in any way impaired by reason of the said merger, provided that all rights of creditors, and all mortgages and other liens upon the property of said MOORE'S FALLS CORPORATION (New Hampshire), shall be preserved unimpaired, and all debts, liabilities and duties of MOORE'S FALLS CORPORATION (New Hampshire), shall thenceforth attach to the continuing corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it. ARTICLE VI. If at any time the continuing corporation, namely MOORE'S FALLS CORPORATION (Delaware), shall consider or be advised that any further assignments or assurances in law or any things are necessary or desirable to vest in said continuing corporation, according to the terms of this agreement, the title to any property or rights of MOORE'S FALLS CORPORATION (New Hampshire), the proper officers and directors of said MOORE'S FALLS CORPORATION (New Hampshire) shall execute and make all such proper assignments and assurances and do all things necessary or proper to vest title in such property or rights in the continuing corporation, and otherwise to carry out the purposes of this agreement of merger. The continuing corporation shall pay all expenses of carrying this agreement into effect and accomplishing the merger. ARTICLE VII. If this agreement is approved by the vote of the holders of two-thirds of each class of stock entitled to vote on a proposal of merger of each corporation party to this agreement, present in - 5 - 17 person or represented by proxy at separate meetings duly called for the purposes, or acting by written consent where allowed by law, this agreement shall be executed, submitted for approval of the Attorney General or Assistant Attorney General of the State of New Hampshire, and filed with the Secretary of State of New Hampshire and with the Secretary of State of Delaware. It shall become effective upon such filing. As soon as practicable after the effective date of merger, this agreement shall be recorded in the office of the Recorder of Deeds of New Castle County, Delaware, and with the register of deeds for each county in New Hampshire in which MOORE'S FALLS CORPORATION (New Hampshire) owned real estate prior to the merger. IN WITNESS WHEREOF, we have hereto signed our names, and affixed the seal of each respective corporation, this 26th day of April, 1971. MOORE'S FALLS CORPORATION (A Delaware corporation) By /s/ JOSEPH B. ELY, II ------------------------------- Joseph B. Ely, II, President [CORPORATE SEAL] ATTEST: /s/ ALAN L. LEFKOWITZ - --------------------------------------- Alan L. Lefkowitz, Assistant Secretary MOORE'S FALLS CORPORATION (a New Hampshire corporation) By /s/ JOSEPH B. ELY, II -------------------------------- Joseph B. Ely, II, President [CORPORATE SEAL] ATTEST: /s/ ALAN L. LEFKOWITZ - ---------------------------------------- Alan L. Lefkowitz, Assistant Secretary - 6 - 18 WE, THE UNDERSIGNED, being the Treasurer and a majority of the Board of Directors of MOORE'S FALLS CORPORATION, a New Hampshire corporation with its principal place of business in Manchester, County of Hillsborough and State of New Hampshire, do hereby certify that at a meeting of the stockholders duly called for the purpose, held on April 26, 1971, in Manchester, New Hampshire, the following vote was unanimously adopted by a vote of all shares entitled to vote on the subject, namely: VOTED: That this corporation merge with MOORE'S FALLS CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware, in accordance with the provisions of Chapter 294, section 42, of the New Hampshire Revised Statutes Annotated and of Section 252 of the General Corporation laws of Delaware, and enter into an agreement of merger upon such terms and conditions all as provided in said agreement, a copy of which is attached hereto and made a part of the records of this meeting; and That the President of MOORE'S FALLS CORPORATION (New Hampshire), be and he hereby is authorized and directed on behalf of said corporation to make, execute, and deliver said agreement of merger and that the treasurer and a majority of the board of directors of the corporation be and they hereby are authorized and directed on behalf of said corporation to cause the agreement of merger to be submitted for the approval of the Attorney General or Assistant Attorney General of the State of New Hampshire the Secretary of State of the State of Delaware, and subject to such approval to be filed and recorded in the office of the Secretary of State of the State of New Hampshire and the Secretary of State of the State of Delaware, and further to take all such other action as they may deem necessary or convenient to effectuate such agreement under the laws of the State of New Hampshire and the State of Delaware. We further certify that the agreement of merger, a copy of which is attached hereto, is the agreement referred to in the preceding vote; and that said agreement was executed by the respective - 7 - 19 officers of the aforesaid corporation as indicated thereon. Dated: April 27, 1971 /s/ HENRY T. WIGGIN -------------------------------- Henry T. Wiggin, Treasurer Directors: /s/ HENRY T. WIGGIN -------------------------------- H. T. Wiggin /s/ JOSEPH B. ELY, II -------------------------------- Joseph B. Ely, II /s/ ALAN L. LEFKOWITZ -------------------------------- Alan L. Lefkowitz COMMONWEALTH OF MASSACHUSETTS) ) ) SS: April 27, 1971 COUNTY OF SUFFOLK ) Then personally appeared the above-named Henry T. Wiggin (Treasurer and Director), Joseph B. Ely, II and Alan L. Lefkowitz, a majority of the Directors of MOORE'S FALLS CORPORATION,, a New Hampshire corporation, and made oath that the foregoing affidavit by them subscribed is true. Before me, /s/ ELIZABETH W. HITCHCOCK -------------------------------- Notary Public [NOTARIAL SEAL] My Commission Expires Feb. 23, 1972 - 8 - 20 I, ALAN L. LEFKOWITZ, Assistant Secretary of MOORE'S FALLS CORPORATION, a corporation organized and existing under the laws of the State of Delaware, hereby certify, as such Assistant Secretary and under the seal of the said corporation, that the Agreement of Merger to which this certificate is attached, after having been first duly signed on behalf of the said corporation and having been signed on behalf of MOORE'S FALLS CORPORATION, a corporation of the State of New Hampshire, was duly adopted pursuant to Section 288 of Title 8 of the Delaware Code of 1953, as amended, by the unanimous written consent of the stockholder holding all of the issued and outstanding capital stock of the corporation, which Plan and Agreement of Merger thereby was adopted as the act of the stockholder of said MOORE'S FALLS CORPORATION (Delaware), and the duly adopted agreement and act of the said corporation. WITNESS my hand and the seal of said MOORE'S FALLS CORPORATION on this 27th day of April, 1971. /s/ ALAN L. LEFKOWITZ -------------------------------------- [CORPORATE SEAL] Alan L. Lefkowitz, Assistant Secretary COMMONWEALTH OF MASSACHUSETTS) ) ) SS: April 27, 1971 COUNTY OF SUFFOLK ) Then personally appeared the above-named Alan L. Lefkowitz, Assistant Secretary of MOORE'S FALLS CORPORATION, a Delaware corporation, and made oath that the foregoing affidavit by him subscribed is true. Before me, /s/ ELIZABETH W. HITCHCOCK -------------------------------------- [NOTARIAL SEAL] Notary Public My Commission Expires Feb. 23, 1972 - 9 - 21 THE ABOVE AGREEMENT OF MERGER, having been executed on behalf of each corporate party thereto, and having been adopted separately by each corporate party thereto, in accordance with the provisions of the General Corporation Law of the State of Delaware, the President of MOORE'S FALLS CORPORATION (New Hampshire) and the President of MOORE FALL'S CORPORATION (Delaware) now hereby do execute the said Agreement of Merger and the Assistant Secretary of each corporate party thereto now hereby does attest the said Agreement of Merger under the seal of their respective corporations, by authority of the directors and stockholders thereof, as the respective act, deed and agreement of said corporations, on this 27th day of April, 1971. MOORE'S FALLS CORPORATION [CORPORATE SEAL] (New Hampshire) By /s/ JOSEPH B. ELY, II ------------------------------------ Joseph B. Ely, II, President ATTEST: /s/ ALAN L. LEFKOWITZ - -------------------------------------- Alan L. Lefkowitz, Assistant Secretary MOORE'S FALLS CORPORATION [CORPORATE SEAL] (Delaware) By /s/ JOSEPH B. ELY, II ------------------------------------ Joseph B. Ely, II, President ATTEST: /s/ ALAN L. LEFKOWITZ - -------------------------------------- Alan L. Lefkowitz, Assistant Secretary - 10 - 22 ACKNOWLEDGMENT Commonwealth of Massachusetts ) ss. County of Suffolk ) BE IT REMEMBERED, that on this 27th day of April, 1971, personally came before me, a Notary Public, in and for the aforesaid County and Commonwealth, Joseph B. Ely, II, President of MOORE'S FALLS CORPORATION, a Delaware corporation, and he duly executed said Plan and Agreement of Merger before me and acknowledged said Plan and Agreement of Merger to be his act and deed and the act and deed of said corporation and the facts stated therein are true; and that the seal affixed to said Plan and Agreement of Merger and attested by the Secretary of said corporation is the common corporate seal of said corporation. /s/ ELIZABETH W. HITCHCOCK -------------------------------- Notary Public NOTARIAL SEAL My commission expires: Feb. 23, 1972 23 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF MOORE'S FALLS CORPORATION Pursuant to Section 242 It is hereby CERTIFIED for and in behalf of MOORE'S FALLS CORPORATION, a corporation organized and existing under the laws of the State of Delaware that: FIRST: The Board of Directors of said corporation, at a meeting duly held on November 7, 1972, adopted the following resolution setting forth an amendment to the certificate of incorporation and declared the advisability thereof: RESOLVED: That the certificate of incorporation of this corporation be amended by striking out the first paragraph only of Article FOURTH and inserting in place thereof - "FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is Seven Thousand (7,000) shares, of which 6,000 shares shall be 8% Preferred Stock with a par value of $100 each, and One Thousand (1,000) shares shall be Common Stock without par value." SECOND: That in lieu of a meeting and vote by the stockholder entitled to vote with respect to such amendment, the holder of all of the outstanding capital stock entitled to vote thereon, consisting 24 of 110 shares of common stock presently outstanding, has consented in writing on November 7, 1972 to the adoption of the resolution and effecting said amendment. THIRD: That the amendment to the certificate of incorporation of MOORE'S FALLS CORPORATION provided herein is to become effective on January 2, 1973. IN WITNESS WHEREOF, MOORE'S FALLS CORPORATION has caused its corporate seal to be hereunto affixed and this certificate to be signed by Joseph B. Ely, II, its President, and attested by Frederic P. Melzar, its Secretary, this 11th day of December, 1972. MOORE'S FALLS CORPORATION By: /s/ Joseph B. Ely II ----------------------------- President Attest: By /s/ FREDERIC P. MELZAR -------------------------- COMMONWEALTH OF MASSACHUSETTS ) ) ss: COUNTY OF SUFFOLK ) BE IT REMEMBERED that on this 11th day of December, 1972, personally came before me, a Notary Public in and for the County and State aforesaid, Joseph B. Ely, II, President of Moore's Falls Corporation, a corporation of the State of Delaware, and he duly executed said certificate before me and acknowledged the said 25 certificate to be his act and deed and the act and deed of said corporation and the facts stated therein are true; and that the seal affixed to said certificate and attested by the Assistant Secretary of said corporation is the common or corporate seal of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand the seal of office the day and year aforesaid. /s/ ALAN L. LEFKOWITZ -------------------------------- Notary Public NOTARIAL SEAL My commission expires: May 4, 1973 26 CERTIFICATE OF REDUCTION OF CAPITAL * * * * * * MOORE'S FALLS CORPORATION, a corporation organized and existing under the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of Moore's Falls Corporation duly held on August 21, 1974, resolutions were adopted setting forth a proposed reduction of the capital of said corporation in the manner and to the extent hereinafter set forth. RESOLVED: That it is hereby declared advisable for this corporation to call for redemption and redeem the 5,120 shares of 8% Preferred Stock of this corporation now held by Amoskeag Company for a price of $100 per share together with all dividends accrued thereon up to and including August 31, 1974, the date for which said call is hereby made, and that an amount sufficient to pay the dividends accrued to such date be set aside forthwith for the payment thereof. Said redemption shall be in consideration of the issuance of a promissory note of this corporation in the principal amount of $512,000, payable on demand, with interest at 8% per annum. RESOLVED: That it is hereby declared advisable to eliminate the capital of this corporation represented by the 6,000 shares of 8% Preferred Stock with a par value of $100 each presently authorized, including the 5,120 of such shares issued and outstanding but to be redeemed pursuant to the foregoing resolution, and that the capital of this corporation shall be so reduced after such redemption. 27 SECOND: That pursuant to the provisions of Section 244 of The General Corporation Law of the State of Delaware a reduction of the capital of the corporation by the amount of Five Hundred Twelve Thousand Dollars ($512,000) was authorized in the following manner: By eliminating the capital represented by the shares of capital stock which have been redeemed and retired pursuant to the foregoing resolutions, and the shares of capital stock of the corporation, which are retired in connection with the reduction of capital, are identified as being Five Thousand One Hundred Twenty (5,120) shares of the 8% Preferred Stock with a par value of One Hundred Dollars ($100) per share. THIRD: That the assets of the corporation remaining after such reduction are sufficient to pay any debts, the payment of which has not been otherwise provided for. IN WITNESS WHEREOF, said MOORE'S FALLS CORPORATION has caused its corporate seal to be hereunto affixed and this certificate to be signed by Joseph B. Ely, II, its President, and attested by Frederic P. Melzar, its Secretary this 12th day of September, 1974. CORPORATE SEAL MOORE'S FALLS' CORPORATION Attest: By /s/ JOSEPH B. ELY, II ------------------------- President By: /s/ FREDERIC P. MELZAR ------------------------------- Secretary -2- 28 COMMONWEALTH OF MASSACHUSETTS ) ) ss: COUNTY OF SUFFOLK ) BE IT REMEMBERED that on this 12th day of September, 1974, personally came before me, a Notary Public in and for the County and State aforesaid, Joseph B. Ely, II, President of Moore's Falls Corporation, a corporation of the State of Delaware, and he duly executed said certificate before me and acknowledged the said certificate to be his act and deed and the act and deed of said corporation and the facts stated therein are true; and that the seal affixed to said certificate and attested by the Secretary of said corporation is the common or corporate seal of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand the seal of office the day and year aforesaid. /s/ HELEN C. FREDRICKSON ----------------------------------- Notary Public NOTARIAL SEAL My commission expires: Dec. 17, 1976 -3- 29 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF MOORE'S FALLS CORPORATION It is hereby CERTIFIED for and in behalf of MOORE'S FALLS CORPORATION, a corporation organized and existing under the laws of the State of Delaware that: FIRST: The Board of Directors of said corporation, at a meeting duly held on August 21, 1974, adopted the following resolution setting forth an amendment to the certificate of incorporation and declared the advisability thereof: RESOLVED: That the Certificate of Incorporation of this corporation be amended by striking out the first paragraph only of Article FOURTH and inserting in place thereof - "FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is One Thousand (1,000) shares, all of which shall be a single class of Common Stock, without par value." 30 SECOND: That in lieu of a meeting and vote by the stockholder entitled to vote with respect to such amendment, the holder of all of the outstanding capital stock entitled to vote thereon, consisting of 110 shares of common stock without par value and 5,120 shares of 8% Preferred Stock with a par value of $100 per share, then presently outstanding, has consented in writing on August 21, 1974 to the adoption of the resolution and effecting said amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH: That a Certificate of Reduction of Capital pursuant to Section 244(c) of the General Corporation Law of the State of Delaware is being filed with this Certificate of Amendment. IN WITNESS WHEREOF, MOORE'S FALLS CORPORATION has caused its corporate seal to be hereunto affixed and this certificate to be signed by Joseph B. Ely, II, its President, and attested by Frederic P. Melzar, its Secretary, this 12th day of September, 1974. MOORE'S FALLS CORPORATION By /s/ JOSEPH B. ELY, II ----------------------- President Attest: /s/ FREDERIC P. MELZAR - ---------------------------- [CORPORATE SEAL] -2- 31 COMMONWEALTH OF MASSACHUSETTS ) ) ss: COUNTY OF SUFFOLK ) BE IT REMEMBERED that on this 12th day of September, 1974, personally came before me, a Notary Public in and for the County and State aforesaid, Joseph B. Ely, II, President of Moore's Falls Corporation, a corporation of the State of Delaware, and he duly executed said certificate before me and acknowledged the said certificate to be his act and deed and the act and deed of said corporation and the facts stated therein are true; and that the seal affixed to said certificate and attested by the Secretary of said corporation is the common or corporate seal of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand the seal of office the day and year aforesaid. /s/ HELEN C. FREDRICKSON ------------------------------ Notary Public My commission expires: Dec. 17, 1976 [NOTARIAL SEAL] -3- EX-3.34 31 BYLAWS OF MOORE'S FALLS CORPORATION 1 EXHIBIT 3.34 BY-LAWS OF MOORE'S FALLS CORPORATION ARTICLE I. Certificate of Incorporation These by-laws, the powers of the corporation and of its directors and stockholders, and all matters concerning the conduct and regulation of the business of the corporation shall be subject to such provisions in regard thereto as are set forth in the certificate of incorporation filed pursuant to the General Corporation Law of Delaware which is hereby made a part of these by-laws. The term "certificate of incorporation" in these by-laws, unless the context requires otherwise, includes not only the original certificate of incorporation filed to create the corporation but also all other certificates, agreements of merger or consolidation, plans of reorganization, or other instruments, howsoever designated, filed pursuant to the General Corporation Law of Delaware which have the effect of amending or supplementing in some respect the corporation's original certificate of incorporation. ARTICLE II. Annual Meeting An annual meeting of stockholders shall be held for the election of directors and for the transaction of any other business for the transaction of which the meeting shall have been properly convened on the second Tuesday of March in each year at such place, within or without the State of Delaware, and at such time as shall be fixed by the board of directors and specified in the notice of the meeting, if such date is not a legal holiday and if a legal holiday, then at the same hour on the next succeeding day not a legal holiday. Any other proper business may be transacted at the annual meeting. If the annual meeting for election of directors shall not be held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient. 2 ARTICLE III. Special Meetings of Stockholders Special meetings of the stockholders may be held either within or without the State of Delaware, at such time and place and for such purposes as shall be specified in a call for such meeting made by the board of directors or by a writing filed with the secretary signed by the president or by a majority of the directors. ARTICLE IV. Notice of Stockholders' Meetings Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, which notice shall be given not less than ten nor more than fifty days before the date of the meeting, except where longer notice is required by law, to each stockholder entitled to vote at such meeting, by leaving such notice with him or by mailing it, postage prepaid, directed to him at his address as it appears upon the records of the corporation. In case of the death, absence, incapacity or refusal of the secretary, such notice may be given by a person designated either by the secretary or by the person or persons calling the meeting or by the board of directors. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. ARTICLE V. Quorum of Stockholders; Stockholder List At any meeting of the stockholders, a majority of all shares issued and outstanding and entitled to vote upon a question -2- 3 to be considered at the meeting shall constitute a quorum for the consideration of such question when represented at such meeting by the holders thereof in person or by their duly constituted and authorized attorney, but a less interest may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting a majority of the stock so represented thereat and entitled to vote shall, except where a larger vote is required by law, by the certificate of incorporation or by these by-laws, decide any question brought before such meeting. The secretary or other officer having charge of the stock ledger shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city or town where the meeting is to be held, which place shall have been specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Said list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders required by this Article or the books of the corporation, or the stockholders entitled to vote in person or by proxy at any meeting of stockholders. ARTICLE VI. Proxies and Voting Except as otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock held by such stockholder. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy but (except as otherwise expressly permitted by law) no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or so long as it is coupled with an interest sufficient in law to support an irrevocable power. Unless otherwise provided in the certificate of incorporation, any action required by law to, or which may, be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in -3- 4 writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote therein were present and voted. Prompt notice of the taking of such action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE VII. Stockholders' Record Date In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed: (1) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (2) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed. (3) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the board of directors may fix a new record date for the adjourned meeting. -4- 5 ARTICLE VIII. Board of Directors Except as otherwise provided by law or by the certificate of incorporation, the business and affairs of the corporation shall be managed by the board of directors. The number of directors shall be such number, not fewer than one nor more than fifteen, as may be fixed for any corporate year and elected by the stockholders at the annual meeting. During any year the board of directors may be enlarged and additional directors elected to complete the enlarged number, to not more than the maximum number above specified, by the stockholders at any meeting or by a vote of a majority of the directors then in office. The stockholders may, at any meeting held for the purpose during such year, decrease, to not fewer than the minimum number above specified, the number of directors as thus fixed or enlarged and remove directors to the decreased number. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. No director need be a stockholder. ARTICLE IX. Committees The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee and may define the number and qualifications which shall constitute a quorum of such committee. Except as otherwise limited by law, any such committee, to the extent provided in the resolution appointing such committee, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. In the absence or disqualification of a member of committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE X. Meetings of the Board of Directors and of Committees Regular meetings of the board of directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the board may by vote from time to time determine. -5- 6 Special meetings of the board of directors may be held at any place either within or without the State of Delaware at any time when called by the president, treasurer, secretary or two or more directors, reasonable notice of the time and place thereof being given to each director. A waiver of such notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such notice. In any case it shall be deemed sufficient notice to a director to send notice by mail at least forty-eight hours, or to deliver personally or to send notice by telegram at least twenty-four hours, before the meeting, addressed to him at his usual or last known business or residence address. Unless otherwise restricted by the certificate of incorporation or by other provisions of these by-laws, (a) any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board or of such committee, as the case may be, consent thereto in writing and such writing or writings are filed with the minutes of proceedings of the board or committee, and (b) members of the board of directors or of any committee designated by the board may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting. ARTICLE XI. Quorum of the Board of Directors Except as otherwise expressly provided in the certificate of incorporation or in these by-laws, a majority of the total number of directors at the time in office shall constitute a quorum for the transaction of business, but a less number may adjourn any meeting from time to time. Except as otherwise so expressly provided, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, provided, that the affirmative vote in good faith of a majority of the disinterested directors, even though the disinterested directors shall be fewer than a quorum, shall be sufficient to authorize a contract or transaction in which one or more directors have interest if the material facts as to such interest and the relation of the interested directors to the contract or transaction have been disclosed or are known to the directors. ARTICLE XII. Waiver of Notice of Meetings Whenever notice is required to be given under any provision of law or the certificate of incorporation or by-laws, a -6- 7 written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or the by-laws. ARTICLE XIII. Officers and Agents The corporation shall have a president, secretary and treasurer, who shall be chosen by the directors, each of whom shall hold his office until his successor has been chosen and qualified or until his earlier resignation or removal. The corporation may have such other officers and agents as are desired, each of whom shall be chosen by the board of directors and shall hold his office for such term and have such authority and duties as shall be determined by the board of directors. The board of directors may secure the fidelity of any or all of such officers or agents by bond or otherwise. Any number of offices may be held by the same person. Each officer shall, subject to these by-laws, have in addition to the duties and powers herein set forth, such duties and powers as the board of directors shall from time to time designate. In all cases where the duties of any officer, agent or employee are not specifically prescribed by the by-laws, or by the board of directors, such officer, agent or employee shall obey the orders and instructions of the president. Any officer may resign at any time upon written notice to the corporation. ARTICLE XIV. President The president shall, subject to the direction and under the supervision of the board of directors, be the chief executive officer of the corporation and shall have general and active control of its affairs and business and general supervision over its officers, agents and employees. Except as otherwise voted by the board he shall preside at all meetings of the stockholders and of the board of directors at which he is present. The president shall have custody of the treasurer's bond, if any. -7- 8 ARTICLE XV. Secretary The secretary shall record all the proceedings of the meetings of the stockholders and directors in a book, which shall be the property of the corporation, to be kept for that purpose; and perform such other duties as shall be assigned to him by the board of directors. In the absence of the secretary from any such meeting, a temporary secretary shall be chosen, who shall record the proceedings of such meeting in the aforesaid book. ARTICLE XVI. Treasurer The treasurer shall, subject to the direction and under the supervision of the board of directors, have the care and custody of the funds and valuable papers of the corporation, except his own bond, and he shall, except as the board of directors shall generally or in particular cases authorize the endorsement thereof in some other manner, have power to endorse for deposit or collection all notes, checks, drafts and other obligations for the payment of money to the corporation or its order. He shall keep, or cause to be kept, accurate books of account, which shall be the property of the corporation. ARTICLE XVII. Removals The stockholders may, at any meeting called for the purpose, by vote of a majority of the capital stock issued and outstanding and entitled to vote thereon, remove any director from office. The board of directors may, at any meeting called for the purpose, by vote of a majority of their entire number remove from office any officer or agent of the corporation or any member of any committee appointed by the board of directors or by any committee appointed by the board of directors or by any officer or agent of the corporation. ARTICLE XVIII. Vacancies Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise and newly created -8- 9 directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office (though less than a quorum) or by a sole remaining director and each of the incumbents so chosen shall hold office for the unexpired term in respect of which the vacancy occurred and until his successor shall have been duly elected and qualified or for such shorter period as shall be specified in the filling of such vacancy or, if such vacancy shall have occurred in the office of director, until such a successor shall have been chosen by the stockholders. ARTICLE XIX. Certificates of Stock Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors (if one shall be incumbent) or the president or a vice-president and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary, certifying the number of shares owned by him in the corporation. If such certificate is countersigned (1) by a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, any other signatures on the certificate may be facsimile. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue to represent such class or series of stock or there shall be set forth on the face or back of the certificates which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish, without charge to each stockholder who so requests, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Any restriction imposed upon the transfer of shares or registration of transfer of shares shall be noted conspicuously on the certificate representing the shares subject to such restriction. -9- 10 ARTICLE XX. Loss of Certificate The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate in its place and upon such other terms or without any such bond which the board of directors shall prescribe. ARTICLE XXI. Seal The corporate seal shall, subject to alteration by the board of directors, consist of a flat-faced circular die with the word "Delaware" together with the name of the corporation and the year of its organization cut or engraved thereon. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE XXII. Execution of Papers Except as otherwise provided in these by-laws or as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the corporation, shall be signed by the president or by the treasurer. ARTICLE XXIII. Fiscal Year Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the last day of December of each year. -10- 11 ARTICLE XXIV. Amendments Except as otherwise provided by law or by the certificate of incorporation, these by-laws, as from time to time altered or amended, may be made, altered or amended at any annual or special meeting of the stockholders called for the purpose, of which the notice shall specify the subject matter of the proposed alteration or amendment or new by-law or the article or articles to be affected thereby. If the certificate of incorporation so provides, these by-laws may also be made, altered or amended by a majority of the whole number of directors. Such action may be taken at any meeting of the board of directors, of which notice shall have been given as for a meeting of stockholders. -11- EX-3.35 32 CERTIFICATE OF INCORPORATION OF PILLOWTEX, INC. 1 EXHIBIT 3.35 CERTIFICATE OF INCORPORATION OF PILLOWTEX, INC. I, the undersigned, acting as incorporator of Pillowtex, Inc., under the General Corporation Law of Delaware, do hereby adopt the following Certificate of Incorporation for such corporation. First: The name of the corporation is Pillowtex, Inc. Second: The address of the corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, and the name of the its registered agent at such address is The Corporation Trust Company. Third: The purpose of the corporation is to engage in any lawful act or activity for which Corporations may be organized under the General Corporation Law of Delaware. Fourth: The total number of shares that the corporation shall have authority to issue is 3,000 shares of common stock with a par value of $.01 per share. Fifth: No stockholder of this corporation shall, by reason of such person's holding stock of any class, have any preemptive or preferential right to purchase or subscribe to any stock of any class of this corporation, now or hereafter to be authorized, nor for any of its notes, debentures, bonds, or other securities, whether or not the issuance of such stock, or such notes, debentures, bonds, or other securities would adversely affect the dividend or voting rights of such stockholder, other than such rights, if any, as the board of directors, in its discretion, may grant to the stockholders to purchase such additional securities; and the board of directors may issue treasury shares of any class of this corporation, or any notes, debentures, bonds, or other securities convertible into or of any class without offering the same in whole or in part to existing stockholders of any class. Sixth: Elections of directors need not be by written ballot except and to the extent provided otherwise in the bylaws of the corporation. Cumulative voting for the election of directors shall not be permitted. Seventh: The name and mailing address of the incorporator is T. L. Ford, Corporation Trust Center, 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. Eighth: The number of directors constituting the initial board of directors is three and the names and addresses of such persons serving as directors until the first annual meeting of stockholders or until such persons' successors shall be elected and qualified are: 2 Charles M. Hansen, Jr. 4111 Mint Way, Dallas, Texas 75237 Jeffrey D. Cordes 4111 Mint Way, Dallas, Texas 75237 Charles H. Slaybaugh 222 Delaware Ave., 17th Floor, Wilmington, Delaware 19801 Ninth: The corporation shall have perpetual existence. Tenth: The board of directors is expressly authorized to make, alter, or repeal the bylaws of the corporation. Eleventh: A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve international misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Delaware General Corporation Law. Any repeal or modification of this paragraph by the stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification. Twelfth: The undersigned incorporator, for the purpose of forming a corporation pursuant to the General Corporation Law of Delaware, does hereby declare and certify that the foregoing Certificate of Incorporation is such person's act and deed and that the facts herein stated are true, and accordingly, has hereunto set such person's hand this 20th day of March, 1996. /s/ T. L. FORD --------------------------- T. L. Ford 2 EX-3.36 33 BYLAWS OF PILLOWTEX, INC. 1 EXHIBIT 3.36 BYLAWS OF PILLOWTEX,INC. ARTICLE I OFFICES AND AGENT 1.01 Registered Office and Agent. The registered office of the corporation shall be located at Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, and the name of the registered agent of the corporation at such address is The Corporation Trust Company. 1.02 Other Offices. The corporation may also have offices at such other places within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS 2.01 Annual Meetings. An annual meeting of the shareholders shall be held on the first Monday of the third month following the close of each fiscal year of the corporation if not a legal holiday, and if a legal holiday, then on the next day following that is not a legal holiday. At each annual meeting the shareholders shall elect a board of directors and shall transact such other business as may properly be brought before the meeting. 2.02 Call for Special Meetings. Special meetings of the shareholders, for any purpose or purposes may be held at such time and place, within or without the State of Delaware as shall be stated in the notice of the meeting or in a duly executed waiver of notice. Unless otherwise prescribed by statute or by the Certificate of Incorporation, or by these bylaws, special meetings of the shareholders may be called by the President, the board of directors, or by one or more shareholders, the aggregate of whose shares comprise not less than one-tenth of all shares entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the subjects stated in the notice of the meeting, unless such notice shall have been waived. 2.03 Notice. Unless notice is waived, written or printed notice stating the place, date, and time of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the - 1 - 2 President, the Secretary, or the officer or person calling the meeting, to each shareholder of record entitled to vote at the meeting. 2.04 Quorum; Majority Vote. The holders of a majority of the shares issued and outstanding and entitled to vote, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law, the Certificate of Incorporation, or these bylaws. When a quorum is present at any meeting, the vote of the holders of a majority of the shares having voting power present in person or represented by proxy shall decide any question before such meeting, unless the question is one upon which, by express provision of law, the Certificate of Incorporation, or these bylaws, a different vote is required, in which case such express provision shall govern. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. 2.05 Voting. Unless otherwise provided in the Certificate of Incorporation, at every election of directors, each shareholder shall have the right to vote the number of voting shares that such shareholder owns for as many persons as there are directors to be elected. Unless otherwise provided in the Certificate of Incorporation, no shareholder shall be entitled to cumulate such shareholder's votes, and cumulative voting is prohibited. ARTICLE III DIRECTORS 3.01 Powers. The business and affairs of the corporation shall be managed by its board of directors who may exercise all such powers of the corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation, or these bylaws directed or required to be exercised or done by the shareholders. 3.02 Number and Election. The board of directors shall consist of not less than one director; no director need be a shareholder, however, at least one director shall be a resident of the State of Delaware. At each annual meeting of the shareholders, the shareholders may change the number of directors who shall serve for the ensuing year and each such determination shall be a continuing determination of the number of directors until a change by a vote of the shareholders. The directors shall be elected at the annual meeting of the shareholders, except as hereinafter provided, and each director elected shall hold office until such director's successor shall be elected and shall qualify. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors, notwithstanding that the remaining directors constitute less than a quorum of the board of directors, or by the holders of a majority of the shares then entitled to vote in election of directors. A director elected to fill a vacancy shall be elected for the unexpired term of such director's predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election at an annual -2- 3 meeting or a special meeting of the shareholders called for that purpose, or may be filled by the board of directors for a term of office continuing only until the next election of one or more of the directors by the shareholders. 3.03 Removal. Any director may be removed, with or without cause, at any duly constituted meeting of shareholders called expressly for that purpose, by the affirmative vote of the holders of a majority of the shares then entitled to vote in elections of directors. 3.04 First Meeting of New Board. The first meeting of each newly elected board of directors shall be held without further notice immediately following the annual meeting of the shareholders. 3.05 Meetings. Regular meetings of the board of directors may be held without notice at such time and place as shall be determined by the board. Special meetings of the board of directors may be called by or at the direction of the President on 24 hours' notice to each director, either personally or by mail or by telegram, or by facsimile. The purpose or purposes of such meeting need not be stated in the notice thereof, except as is specifically provided in section 11.01 of these bylaws. 3.06 Quorum: Majority Vote. At all meetings of the board of directors, the presence of a majority of the number of directors fixed in the manner provided in these bylaws shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by law, the Certificate of Incorporation, or these bylaws. If a quorum shall not be present at any meeting, the directors present at the meeting may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present. 3.07 Compensation as Directors. Directors, as such, shall not receive any stated salary for their services, but, by resolution of the board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board; provided that nothing contained in these bylaws shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation for such service. 3.08 Committees. The board of directors, by resolution adopted by a majority of the full board of directors, may designate from among its members an executive committee and one or more other committees, each of which shall be comprised of one or more members and, to the extent provided in such resolution, shall have and may exercise all of the authority of the board of directors, except that no such committee shall have the authority of the board of directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation under Section 251 or Section 252 of the Delaware General Corporation Law, recommending to the shareholders the sale, lease, or exchange -3- 4 of all or substantially all of the property and assets of the corporation, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, amending, altering or repealing the bylaws of the corporation or adopting new bylaws for the corporation, altering or repealing any resolution of the board of directors that by its terms provide that it shall not be so amendable or repealable; and, unless the resolution expressly so provides, no committee shall have the power or authority to declare a dividend, or to authorize the issuance of shares of the corporation, or to adopt a merger pursuant to Section 253 of the Delaware General Corporation Law. The designation of such committee and the delegation of authority to such committee shall not operate to relieve the board of directors, or any member of the board, of any responsibility imposed by law. ARTICLE IV NOTICES 4.01 Formalities of Notices. Whenever, under the provisions of law, the Certificate of Incorporation, or these bylaws, notice is required to be given to any director or shareholder and no provision is made as to how such notice shall be given, personal notice shall not be required, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the corporation. Any notice required or permitted to be given by mail shall be deemed to be given at the time when such notice shall have been deposited in the United States mails as aforesaid. 4.02 Waiver of Notices. Whenever any notice is required to be given to any shareholder or director of the corporation under the provisions of law, the Certificate of Incorporation, or these bylaws, a waiver of such notice in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be deemed equivalent to giving such notice. ARTICLE V OFFICERS 5.01 Offices. The officers of the corporation shall be elected by the directors and may include a chairman of the board of directors, a president, one or more vice presidents, a secretary, and a treasurer. The board of directors may also elect or appoint one or more assistant secretaries and assistant treasurers. Any two or more offices may be held by the same person. 5.02 Election of Officers; Term; Removal; Salary. The board of directors at its first meeting after each annual meeting of shareholders shall elect the officers, none of whom need be members of the board. Each officer of the corporation shall hold office until such officer's successor is chosen and qualified or until such officer's death, resignation, or -4- 5 removal from office. Any officer or agent elected or appointed by the board of directors may be removed at any time by the board of directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the board of directors. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 5.03 The President. The President shall be the chief executive officer of the corporation; the President shall preside at all meetings of the shareholders, shall have general and active management of the business and affairs of the corporation, shall see that all orders and resolutions of the board are carried into effect, and shall perform such other duties as the board of directors shall prescribe. 5.04 The Vice Presidents. If the corporation elects or appoints one or more Vice Presidents, then each Vice President shall have such power and perform such duties as the board of directors may from time to time prescribe or as the President may from time to time delegate. 5.05 The Secretary and Assistant Secretaries. The Secretary shall attend all sessions of the board of directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform like duties for the Executive Committee when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or President, under whose supervision the Secretary shall be. The Secretary shall keep in safe custody the seal of the corporation and, when authorized by the board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by the Secretary's signature or by the signature of the Treasurer or an Assistant Secretary. If the corporation does not elect or appoint a person to the office of Treasurer or Assistant Treasurer, then the Secretary shall assume all duties of the Treasurer, as described in paragraph 5.06. Each Assistant Secretary shall have such powers and perform such duties as the board of directors may from time to time prescribe or as the President may from time to time delegate. 5.06 The Treasurer and Assistant Treasurers. The Treasurer shall have the custody of the corporate funds and securities, shall keep full and accurate accounts of receipts and disbursements of the corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as the board of directors may designate. The Treasurer shall disburse the funds of the corporation as the board of directors may order, taking proper vouchers for such disbursements, shall render to the President and directors, at the regular meetings of the board or whenever the board may require it, an account of all the Treasurer's transactions and of the financial condition of the corporation, and shall perform such other duties as the board of directors may prescribe. If the board of directors requires, then the Treasurer shall give the corporation a bond in such form, in such sum, and with such surety or sureties as shall be satisfactory to the board for the faithful performance of the duties of the Treasurer's office -5- 6 and for the restoration to the corporation, in case of the Treasurer's death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in the Treasurer's possession or under the Treasurer's control belonging to the corporation. If no person is elected or appointed to fill the office of Treasurer, then the duties described in this paragraph shall be assumed by the Secretary. ARTICLE VI CERTIFICATES REPRESENTING SHARES 6.01 Delivery, Form and Content. The board of directors shall cause to be delivered to the shareholders certificates in such form as the board of directors may determine representing all shares to which such shareholders are entitled. Certificates shall be consecutively numbered by classes and shall be entered in the books of the corporation as they are issued. Each certificate shall state on its face the holder's name, the number and class of shares, and the par value of such shares or a statement that such shares are without par value. Each certificate shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary and may be sealed with the seal of the corporation or a facsimile. If any certificate is countersigned by a transfer agent, or an assistant transfer agent, or registered by a registrar, other than the corporation or an employee of the corporation, then the signature of any officer may be a facsimile. 6.02 Lost Certificates. The board of directors may direct a new certificate representing shares to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed, upon receiving an affidavit of that fact from the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance of a new certificate, may require the owner of such lost or destroyed certificate, or such person's legal representative, to advertise the same in such manner as the board shall require and/or give the corporation a bond in such form, in such sum, and with such surety or sureties as the board may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed and/or agree to indemnify the corporation against any such claim. 6.03 Transfer. Shares of stock shall be transferable only on the books of the corporation by the holder in person or by such person's duly authorized attorney. Upon surrender to the corporation of the certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, the Corporation shall be obligated to issue a new certificate to the person entitled to the new certificate, cancel the old certificate, and record the transaction upon its books. 6.04 Record Holder. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact of such stock and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or -6- 7 shares on the part of any other person, or any limitation upon the ownership, power, or authority of such holder, whether or not the corporation shall have express or other notice, except as otherwise provided by law. ARTICLE VII DIVIDENDS 7.01 Dividends. Dividends on the outstanding shares of the corporation, subject to the provisions of the Certificate of Incorporation, may be declared by the board of directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the corporation, subject to the provisions of law and the Certificate of Incorporation. The board of directors may fix in advance a record date of such dividend, or the board of directors may close the stock transfer books for such purpose for a period of not more than thirty days prior to the payment date of such dividend. In the absence of any action by the board of directors, the date upon which the board of directors adopts the resolution declaring such dividend shall be the record date. ARTICLE VIII ACTION BY UNANIMOUS CONSENT OR BY CONFERENCE TELEPHONE 8.01 Action by Unanimous Consent. Any action required by the Certificate of Incorporation, these bylaws, or Delaware law to be taken at a meeting of the board of directors of the corporation, or any action that may be taken at any such meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the directors entitled to vote with respect to the subject matter of the action, and such consent is filed in the minute book of the corporation. 8.02 Action by Consent of Shareholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of the shareholders of the corporation, or any action which may be taken at any annual meeting or special meeting of the shareholders, may be taken without a meeting, without prior notice, and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on the action were present and voted. Prompt notice that corporate action was taken without a meeting by less than unanimous written consent shall be given to the stockholders who have not consented in writing. In lieu of any statement regarding a shareholders vote required to be set forth in any document or certificate to be filed with the Delaware Secretary of State, a statement that a written consent and written notice have been given in accordance with the provisions of Section 228 of the Delaware General Corporation Law may be given. -7- 8 8.03 Actions by Conference Telephone. Subject to any notice of meeting requirements in these bylaws or under Delaware law, the board of directors, or members of any committee designated by such board, may participate in and hold a meeting of such board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Minutes of any such meeting shall be promptly prepared by the Secretary, circulated to all directors entitled to vote at the meeting (whether they participated or not), placed in the regular corporate records containing similar meeting minutes, and called to the attention of such board of directors or committee at its next regular meeting. ARTICLE IX INDEMNIFICATION 9.01 Persons. The corporation may indemnify, to the extent permitted in this article, and shall indemnify as required by this article: (a) any person who is or was a director, officer, agent, or employee of the corporation, and (b) any person who serves or served at the corporation's request as a director, officer, partner, venturer, proprietor, trustee, agent, employee, or similar functionary of another corporation or of a partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise. 9.02 Derivative Suits. In case of a suit or action by or in the right of the corporation to procure a judgment in its favor against a person named in paragraph 9.01 by reason of such person holding a position named in paragraph 9.01, the corporation may indemnify such person if the standard in paragraph 9.04 is satisfied, for reasonable expenses actually and reasonably incurred by such person (including attorney's fees) in connection with the defense or settlement of the suit or action and, additionally, for judgments and fines if such person is found liable for negligence in the performance of duties to the corporation. 9.03 Nonderivative Suits. In case of a suit, action, or proceeding (whether civil, criminal, administrative, or investigative), other than a suit by or in behalf of the corporation, collectively hereinafter referred to as a nonderivative suit, against a person named in paragraph 9.01 by reason of such person holding a position named in Paragraph 9.01, the corporation may indemnify such person if the standard in Paragraph 9.04 is satisfied for amounts actually and reasonably incurred by such person in connection with the defense or settlement of the nonderivative suit as follows: -8- 9 (a) Judgments; (b) Penalties, including excise and similar taxes; (c) Fines; (d) Settlements; and (e) Reasonable expenses actually incurred (including attorney's fees). 9.04 Standard. In case of a derivative suit, a person named in paragraph 9.01 may be indemnified if such person acted in good faith in the transaction that is the subject of the suit, and in a manner reasonably believed to be in or not opposed to the corporation's best interest; provided that no indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation unless, and only to the extent that, the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. In the case of nonderivative suit, a person named in paragraph 9.01 may be indemnified if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the corporation's best interest. With respect to any criminal action or proceeding, the person must have had no reasonable cause to believe that the conduct that is the subject of such action was unlawful. The termination of a nonderivative proceeding by judgment, order, settlement, conviction, or on a plea of NOLO CONTENDERE or its equivalent, does not of itself create a presumption that the person does not meet the standards set forth in this paragraph. 9.05 Mandatory Indemnification. The corporation shall indemnify a person named in paragraph 9.01 against expenses (including attorney's fees) actually and reasonably in connection with a proceeding in which such person is a party by reason of such person holding a position named in paragraph 9.01 to the extent such person has been successful, on the merits or otherwise, in the defense of the proceeding. 9.06 Determination that Standard Has Been Met. A determination that the standard of paragraph 9.04 has been satisfied shall be made by: (a) a majority vote of the directors of the corporation who at the time of the vote are not parties to the action, suit, or proceeding even though less than a quorum; or (b) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion; or -9- 10 (c) the shareholders of the corporation. 9.07 Advance Payments. The corporation may pay in advance any expense (including attorney's fees) that may become subject to indemnification under paragraphs 9.01-9.06 if the person receiving the payment affirms in writing that in good faith the person believes the standards set forth in paragraph 9.04 have been met, and undertakes to repay any advance payments if it is ultimately determined that such person has not met those standards. 9.08 Insurance. The corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in paragraph 9.01, against any liability asserted against or incurred by such person in any such position, or arising out of such person's status as such, whether or not the corporation would have power to indemnify such person against such liability under paragraphs 9.01-9.07. 9.09 Additional Indemnification. The rights of indemnification provided in this article IX shall be in addition to any other rights to which any person named in paragraph 9.01 may otherwise be entitled by contract, under the Delaware General Corporation Law or as a matter of law; and if any such person dies, then such rights shall extend to such person's heirs and legal representatives. The provisions of this article IX are separable, and if any provision be held invalid, all other provisions shall only be curtailed to the extent necessary to make such provision enforceable, it being the intent of this article that the corporation indemnify each person named in paragraph 9.01 to the maximum extent permitted by law. ARTICLE X GENERAL PROVISIONS 10.01 Seal and Official Records. The seal of the corporation, if adopted by the board of directors, the stock certificate book, the minute book, and the corporation's financial records shall be of the type that the board of directors determines and establishes and may be changed from time to time in the board's discretion. 10.02 Invalid Provisions. If any part of these bylaws shall be held invalid or inoperative, for any reason, the remaining parts, so far as possible and reasonable, shall be valid and operative. 10.03 Headings. The headings used in these bylaws have been inserted for administrative convenience only and do not constitute matter to be construed in interpretation. -10- 11 ARTICLE XI AMENDMENTS 11.01 Alteration, Amendment, or Repeal. The power to alter, amend, or repeal these bylaws or adopt new bylaws, subject to repeal or change by action of the shareholders, shall be vested in the board of directors. The board of directors may make such alteration, amendment, or repeal at any meeting at which a quorum is present, by the affirmative vote of a majority of the directors present at such meeting, provided notice of the proposed alteration, amendment or repeal contained in the notice of such meeting (or such notice shall have been waived). -11- EX-3.37 34 CERTIFICATE OF TRUST OF PILLOWTEX MGMT SERVICES 1 EXHIBIT 3.37 CERTIFICATE OF TRUST OF PILLOWTEX MANAGEMENT SERVICES COMPANY The undersigned trustees of Pillowtex Management Services Company acting pursuant to the Delaware Business Trust Act hereby state that: 1) the name of the business trust is Pillowtex Management Services Company; 2) the name and address of the trustee satisfying the requirements of Section 3807 of the Delaware Business Trust Act is: PNC Bank, Delaware, 222 Delaware Avenue, 17th Floor, Wilmington, Delaware 19801; 3) this certificate of trust is to be effective upon its filing. Executed this 27th day of March, 1996. /s/ CHRISTOPHER N. BAKER ----------------------------- Christopher N. Baker, Trustee /s/ JEFFREY D. CORDES ----------------------------- Jeffrey D. Cordes, Trustee /s/ SCOTT SHIMIZU ----------------------------- Scott Shimizu, Trustee PNC Bank, Delaware, Trustee By: /s/ W. B. McCARTHY Its: Vice President ----------------------------- EX-3.38 35 DECLARATION OF TRUST OF PILLOWTEX MGMT SERVICES 1 EXHIBIT 3.38 DECLARATION OF TRUST OF PILLOWTEX MANAGEMENT SERVICES COMPANY (A DELAWARE BUSINESS TRUST) TABLE OF CONTENTS ARTICLE 1 ORGANIZATION 1.1 PURPOSE; NAME. ................................................................ 1 1.2 PLACES OF BUSINESS. ........................................................... 1 1.3 LEGAL TITLE. .................................................................. 1 1.4 CLASSIFICATION. ............................................................... 2 ARTICLE 2 TRUSTEES 2.1 MANAGING TRUSTEES. ............................................................ 2 2.2 RESIDENT TRUSTEE. ............................................................. 2 2.3 RESIGNATION OR REMOVAL OF A MANAGING TRUSTEE. ................................. 3 2.4 POWERS OF MANAGING TRUSTEES. .................................................. 3 2.5 LIMITATIONS ON POWERS OF MANAGING TRUSTEES. ................................... 5 2.6 MEETINGS OF MANAGING TRUSTEES. ................................................ 5 ARTICLE 3 BENEFICIAL INTEREST HOLDERS 3.1 INTEREST IN TRUST ESTATE. ..................................................... 6 3.2 ISSUE OF SHARES. .............................................................. 6 3.3 ACQUISITION AND STATUS OF SHARES ACQUIRED BY THE TRUST. ....................... 6 3.4 SHARE REGISTERS. .............................................................. 6 3.5 SHARE CERTIFICATES. ........................................................... 6 3.6 TRANSFERS OF SHARES. .......................................................... 6 3.7 TRANSFERS OF SHARES BY OPERATION OF LAW. ...................................... 7 3.8 NATURE OF SHARES. ............................................................. 7 ARTICLE 4 LIABILITY OF BENEFICIAL INTEREST HOLDERS, TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS AND RELATED PARTY TRANSACTIONS 4.1 LIMITATION OF BENEFICIAL INTEREST HOLDER LIABILITY. ........................... 7 4.2 LIMITATION OF TRUSTEE LIABILITY. .............................................. 7 4.3 EXCULPATORY CLAUSES. .......................................................... 8
2 4.4 INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. .................................. 8 4.5 RELATED PARTY TRANSACTIONS. ................................................... 9 ARTICLE 5 SURPLUS AND DIVIDENDS 5.1 DECLARATION OF DIVIDENDS AND DETERMINATION OF NET PROFITS, EARNINGS AND SURPLUS. ...................................................................... 9 5.2 FIXING OF RECORD DATES. ....................................................... 9 ARTICLE 6 NOTICE 6.1 WHEN NOTICE UNNECESSARY. ...................................................... 10 6.2 METHOD OF GIVING NOTICE. ...................................................... 10 6.3 EVIDENCE OF NOTICE. ........................................................... 10 ARTICLE 7 AMENDMENT AND TERMINATION 7.1 TERMINATION OF TRUST. ......................................................... 10 7.2 EFFECT OF DEATH, BANKRUPTCY OR INCAPACITY OF BENEFICIAL INTEREST HOLDER OR TRUSTEE. ................................................................... 10 7.3 VOLUNTARY TERMINATION OR AMENDMENT OF TRUST. .................................. 10 7.4 FILING OF ACTION AUTHORIZING TERMINATION OR AMENDMENT. ........................ 11 7.5 SALE OF TRUST ESTATE. ......................................................... 11 ARTICLE 8 MISCELLANEOUS 8.1 POWER TO CONSTRUE DECLARATION OF TRUST. ....................................... 11 8.2 HEADINGS. ..................................................................... 11 8.3 EFFECT OF PARTIAL INVALIDITY OF DECLARATION OF TRUST. ......................... 11 8.4 DELAWARE LAW CONTROLLING. ..................................................... 11 8.5 COUNTERPARTS. ................................................................. 11 8.6 FISCAL YEAR. .................................................................. 12
3 DECLARATION OF TRUST This DECLARATION OF TRUST by and among Pillowtex Corporation, a Texas corporation (the "Grantor") and Jeffrey D. Cordes, an individual, Christopher N. Baker, an individual and Scott E. Shimizu, an individual (hereafter sometimes jointly referred to as the "Managing Trustees") and PNC Bank, Delaware, a Delaware state chartered bank (the "Resident Trustee") is effective as of March 27, 1996. The Managing Trustees and the Resident Trustee are hereafter sometimes jointly referred to as the "Trustees". WHEREAS, the Grantor and the Trustees desire to form a business trust in accordance with the provisions of the Delaware Business Trust Act, 12 Del.C. Section 3801 et. seq., (the "Act"); and WHEREAS, the Trust (as hereinafter defined) shall acquire certain property of Grantor as set forth on Exhibit A and incorporated herein by reference, and shall manage the same, and all other property which the Trust may hereafter acquire (the "Trust Estate"), in the manner hereinafter provided. NOW, THEREFORE, the Trustees hereby agree to hold the Trust Estate, as well as all other property which the Trust may acquire, together with the proceeds thereof, in trust, to manage and dispose of the same for the benefit of the holders, from time to time, of the certificates of shares issued and to be issued hereunder in the manner and subject to the Act and this Declaration of Trust. ARTICLE I ORGANIZATION 1.1 PURPOSE; NAME. The Trust is organized to carry on any lawful business or activity. So far as may be practicable, the business of the trust shall be conducted and transacted under the name of Pillowtex Management Services Company or such other name as the Managing Trustees may from time to time determine (the "Trust"), which name (and the words "the Trust," wherever used in this Declaration of Trust, except where the context otherwise requires) shall refer to the Trustees as Trustees, but not personally, and shall not refer to the officers, agents or Beneficial Interest Holders (as hereafter defined) of the Trust. 1.2 PLACES OF BUSINESS. The Trust shall have a Trustee resident, or with its principal place of business, in the State of Delaware as required by Section 3807(a) of the Act and shall have its principal place of business in such places as the Managing Trustees (as hereafter defined) may from time to time select. The Trust may also have offices at such other places as the Managing Trustees may from time to time designate or the business of the Trust may require. The original of this Declaration of Trust and the minutes of the Trust shall be kept at the principal place of business of the Trust, and shall, at all times, be open to the inspection of any Trustee or Beneficial Interest Holder. 1.3 LEGAL TITLE. Legal title to the Trust Estate shall be vested in the Trust, except that the Managing Trustees may cause legal title to any Trust property to be held by or in the name 1 4 of any Managing Trustee or any other person as nominee. If the Managing Trustees cause legal title in any of the Trust Estate to be held in their names, the right, title and interest of the Managing Trustees in and to such property shall automatically vest in successor and additional Managing Trustees upon their qualification and acceptance of election or appointment as Managing Trustees, and they shall thereupon have all the rights and obligations of Managing Trustees, whether or not conveyancing documents have been executed and delivered pursuant to this Declaration of Trust or otherwise. Written evidence of the qualification and acceptance of election or appointment of successor and additional Trustees may be filed with the records of the Trust and in such other offices, agencies or places as the Managing Trustees may deem necessary or desirable. 1.4 CLASSIFICATION. This Declaration of Trust is intended to create a business trust under the Act and not a partnership or joint stock association for state law purposes. However, in accordance with the Act, classification of the Trust as a Delaware business trust is not controlling for the classification of the Trust for Federal income tax purposes. In that regard, this Declaration of Trust shall be construed such that the Trust qualify as an "association" under the Internal Revenue Code of 1986, as amended. ARTICLE 2 TRUSTEES 2.1 MANAGING TRUSTEES. (a) NUMBER. The number of Managing Trustees initially shall be three (3), which number may be increased or decreased by the Managing Trustees then in office from time to time; however, the total number of Managing Trustees shall be not less than two (2) nor more than five (5). Any vacancy created by an increase in the number of Managing Trustees shall be filled by the Grantor acting through its duly authorized officer. (b) INITIAL MANAGING TRUSTEES. The names of the initial Managing Trustees shall be: Jeffrey D. Cordes, Christopher N. Baker and Scott E. Shimizu. The Managing Trustees shall hold office until the death, resignation or removal as Managing Trustee pursuant to the Act or this Declaration of Trust. 2.2 RESIDENT TRUSTEE. (a) INITIAL RESIDENT TRUSTEE. There shall be one (1) Resident Trustee. The initial Resident Trustee shall be: PNC Bank, Delaware (the "Resident Trustee"). The Resident Trustee shall serve until such time as a successor is appointed by the Grantor acting through its duly authorized officer. Notwithstanding the foregoing, the Resident Trustee may resign at any time upon the giving of at least sixty (60) days advance written notice to the Managing Trustees; provided, however, that such resignation shall not become effective unless and until a successor Resident Trustee shall have been appointed by the Managing Trustees. If the Managing Trustees do not act within such sixty (60) day period, the Resident Trustee may apply to the Court of Chancery of the State of Delaware for the appointment of a successor Resident Trustee. 2 5 (b) POWERS OF RESIDENT TRUSTEE. The Resident Trustee shall constitute the Trustee required pursuant to Section 3807(a) of the Act, shall have only the rights, obligations and liabilities specifically provided for in the Declaration of Trust and the Act, and shall have no implied rights, obligations and liabilities with respect to the affairs of the Trust. Notwithstanding any other provision contained herein, unless specifically directed by the Managing Trustees and consented to by the Resident Trustee, the Resident Trustee shall not participate in any decisions relating to, or possess any authority independently to manage or control, the business of the Trust. In no event shall the Resident Trustee have any liability for the acts or omissions of the Managing Trustees. Upon direction by the Managing Trustees, the Resident Trustee shall have the power and authority to execute, deliver, acknowledge and file all necessary documents and to maintain all necessary records of the Trust as required by the Act. The Resident Trustee shall provide prompt notice to the Managing Trustees of its performance of any of the foregoing. The Managing Trustees shall reasonably keep the Resident Trustee informed of any actions taken by the Managing Trustees with respect to the Trust that affect the rights, obligations or liabilities of the Resident Trustee under the Act. (c) COMPENSATION OF RESIDENT TRUSTEE. The Resident Trustee shall be entitled to receive from the Trust reasonable compensation for its services hereunder, as shall be agreed to from time to time by the Trust and the Resident Trustee, and shall be reimbursed for extraordinary expenses including reasonable attorney fees as incurred. 2.3 RESIGNATION OR REMOVAL OF A MANAGING TRUSTEE. Any Managing Trustee may resign by written notice to the remaining Managing Trustees, effective upon execution and delivery to the Trust of such written notice or upon any future date specified in the notice. A Managing Trustee may be removed by the Grantor acting through its duly authorized officer. Upon the resignation or removal of any Managing Trustee, or upon any Managing Trustee otherwise ceasing to be a Managing Trustee, such Managing Trustee shall automatically cease to have any right, title or interest in and to the Trust Estate held in his name, which property shall automatically vest in the remaining Managing Trustees, or, if none, their successors as the same may be appointed hereunder; provided that any Managing Trustee ceasing to be such shall account to the remaining Managing Trustees as they require for all property that he formerly held as Managing Trustee. Any vacancy that is created by any Managing Trustee who resigns or is removed may be filled by the Grantor acting through its duly authorized officer. 2.4 POWERS OF MANAGING TRUSTEES. The Managing Trustees, subject only to the specific limitations in this Declaration of Trust and the Act, shall control and manage the Trust Estate and conduct or cause to be conducted the business and affairs of the Trust. Except as otherwise limited by this Declaration of Trust and the Act, the Managing Trustees shall have the power and authority to do all things, to take all actions and to execute and deliver all agreements, instruments, contracts, deeds and documents as may be necessary or appropriate in connection with the management and conduct of the business and affairs of the Trust, including, without limitation the power and authority to: A. Sell, lease, exchange, transfer, pledge, mortgage or otherwise dispose of the assets of the Trust and to enter into contracts therefor. 3 6 B. Appoint, elect or engage, either as agents, independent contractors, officers, employees or managers of the Trust, such persons as the Managing Trustees may determine from time to time are necessary and appropriate to manage the business and affairs of the Trust. Such persons shall have such titles and relative powers, rights and duties as the Managing Trustees shall determine from time to time. C. Vote any securities of any entity that constitutes all or a part of the Trust Estate. D. Loan or borrow money, guarantee the debts of others and issue Shares (as hereinafter defined) of the Trust as provided herein. E. Fix the compensation of the agents, independent contractors, officers, employees or managers of the Trust and establish in favor of said officers and employees (including officers and employees who may be Trustees), and the officers and employees of any company which may be a subsidiary of or affiliated with the Trust, any plan of profit sharing or other benefit plan providing for any payment for services rendered or to be rendered to the Trust or to such subsidiary or affiliated company out of or based upon the net profits of the Trust or otherwise. F. Sue and be sued, and compromise, settle, arbitrate, abandon or terminate all suits, proceedings, disputes, claims, and demands relating to the Trust Estate arising out of or in connection with the business of the Trust or the administration of the Trust Estate, whether in the name of the Trust or of the Trustees or of the Beneficial Interest Holders or otherwise, before any court, or administrative or other body, or otherwise. G. Delegate to one or more Managing Trustees, officers, employees or other persons engaged or employed by the Trust, the performance of any and all acts or other things, the making of decisions and the execution of such agreements, contracts, deeds, documents or other instruments, either in the names of the Trust or the Managing Trustees, as the Managing Trustees may determine. H. Establish such committees with such powers as the Managing Trustees deem appropriate. I. Purchase and pay for out of the Trust Estate insurance policies insuring the Trust and the Trust Estate against any and all risks, and insuring the Beneficial Interest Holders, Trustees, officers, employees and agents of the Trust individually against all claims and liabilities of any nature arising by reason of holding or having held any such status, office or position or by reason of any action alleged to have been taken or omitted (including those alleged to constitute misconduct, gross negligence, reckless disregard of duty or bad faith) by any such person in such capacity, whether or not the Trust would have the power to indemnify such person against such claim or liability. 4 7 The powers conferred upon the Managing Trustees by this Section and elsewhere in this Declaration of Trust may be delegated to committees, officers and agents of the Trust, and shall not be deemed to be mandatory, but shall, together with any and all implied powers and discretions, be exercised by the Managing Trustees from time to time to the extent deemed by them to be advantageous to the Trust. The acts of the committees, officers and agents, within the scope of their respective authorities, shall be deemed to be the acts of the Managing Trustees and not of the Beneficial Interest Holders. 2.5 LIMITATIONS ON POWERS OF MANAGING TRUSTEES. Notwithstanding anything in this Agreement to the contrary, the Managing Trustees shall not have the power or authority to do any of the following or to cause the Trust to do any of the following without the prior written consent of Grantor: A. Sell, lease or exchange all, or substantially all, of the property and assets of the Trust. B. Merge or consolidate the Trust with or into one or more business trusts, common-law trusts, unincorporated businesses, corporations or partnerships. C. Dissolve the Trust and wind-up its affairs. D. Amend or terminate this Declaration of Trust. 2.6 MEETINGS OF MANAGING TRUSTEES. (a) Meetings may be called at any time by any of the Managing Trustees upon 24 hours' written notice to each of the Managing Trustees. Notice of such meetings shall be given to each of the Managing Trustees as provided in Section 6.2 of this Declaration of Trust. At any meeting of the Managing Trustees, the presence of a majority of the Managing Trustees then in office shall be necessary and sufficient to constitute a quorum for the transaction of business. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. (b) Subject to the notice of meeting requirements in this Declaration of Trust, the Managing Trustees may participate in and hold a meeting of the Managing Trustees by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at such meeting except where a person participates in the meeting solely for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. (c) When a quorum is present at any meeting, a majority of the Managing Trustees present may take any action except as otherwise expressly provided in this Declaration of Trust. 5 8 (d) Unless otherwise restricted by this Declaration of Trust, any action required or permitted by law to be taken at any meeting of the Managing Trustees, may be taken without a meeting if a written consent thereto, setting forth the action so taken, is signed by all Managing Trustees and such written consent is filed at the principal place of business of the Trust. ARTICLE 3 BENEFICIAL INTEREST HOLDERS 3.1 INTEREST IN TRUST ESTATE. The beneficial interest in the Trust Estate shall be in the holders ("Beneficial Interest Holders") from time to time of non-voting, transferrable shares of beneficial interest (the "Shares"). The authorized Shares of beneficial interest shall consist of three thousand (3,000) Shares, $.01 par value. 3.2 ISSUE OF SHARES. Authorized Shares of the Trust may be issued from time to time in such amounts as the Managing Trustees may determine, either for cash, services, securities, property or other value, or in exchange for other Shares of the Trust at the time outstanding, as full paid or part paid Shares and at such price and upon such terms as to valuation of services, securities, property or other value or other Shares and otherwise, as the Managing Trustees may in their absolute discretion see fit and irrespective of the par value thereof, if any. 3.3 ACQUISITION AND STATUS OF SHARES ACQUIRED BY THE TRUST. Shares of this Trust may, in the discretion of the Managing Trustees, be acquired by the Trust either out of surplus or out of capital. If so determined by the Managing Trustees Shares so acquired shall be canceled without, however, thereby reducing the number of authorized Shares; otherwise such Shares shall be held in the treasury as an asset of the Trust and may be sold or otherwise disposed of for such consideration and on such terms as shall from time to time be determined by the Managing Trustees, but such Shares while so held in the treasury shall not be entitled to any dividends and shall not be deemed outstanding for any purpose. 3.4 SHARE REGISTERS. A register or registers shall be kept under the direction of the Managing Trustees which shall contain the names of the Beneficial Interest Holders and their addresses, and the number of Shares held by them respectively, and a record of all transfers thereof. No Beneficial Interest Holder shall be entitled to recognition as such unless his name and address appears on said register. 3.5 SHARE CERTIFICATES. Every Beneficial Interest Holder shall be entitled to receive a certificate in such form as the Managing Trustees shall from time to time approve specifying the number of Shares held by such Beneficial Interest Holder. In case a certificate shall be lost, stolen or destroyed, or become mutilated, the Managing Trustees, upon submission of evidence satisfactory to them of such fact, may issue a new certificate and in that connection may require a bond of indemnity satisfactory to them. Certificates of Shares shall be executed as the Managing Trustees shall from time to time designate. 3.6 TRANSFERS OF SHARES. Every transfer of any Shares (otherwise than by operation of law) shall be in writing under the hand of the transferor, or his agent thereunto duly authorized 6 9 in writing, and upon delivery thereof to the Managing Trustees or to a transfer officer or agent of the Trust, accompanied by the existing certificate for such Shares and such evidence of the genuineness of such transfer, authorization and other matters as may reasonably be required, shall be recorded in the register, and a new certificate representing such Shares shall be issued to the transferee; and in case of a transfer of only a part of the Shares mentioned in any certificate a new certificate for the residue thereof shall be issued to the transferor. Until any transfer shall be so made and recorded, the transferor shall be deemed to be the holder of the Shares purported to be transferred thereby and neither the Managing Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such purported transfer. After a transfer shall be made and recorded as above provided the transferee shall be deemed to be a Beneficial Interest Holder and no consent of the other Beneficial Interest Holders shall be necessary in respect thereof. 3.7 TRANSFERS OF SHARES BY OPERATION OF LAW. Any person becoming entitled to any Shares in consequence of the death, bankruptcy or insolvency of any Beneficial Interest Holder, or otherwise by operation of law, shall be recorded in the register as the holder of the said Shares, and receive a new certificate for the same, upon production of the proper evidence of his right thereto and delivery of the existing certificate to the Managing Trustees or a transfer officer or agent of the Trust. But until such record is made, the Beneficial Interest Holder of record shall be deemed to be the holder of such Shares for all purposes, and neither the Managing Trustees nor any transfer agent or registrar nor any officer or agent of the Trust shall be affected by any notice of such death, bankruptcy, insolvency or other event. 3.8 NATURE OF SHARES. Shares of the Trust shall be personal property entitling the holders only to the rights and interest in the Trust Estate conferred by the law of Delaware and by this Declaration of Trust, and shall not give to the holders any right to possess specific property of the Trust for any purpose. ARTICLE 4 LIABILITY OF BENEFICIAL INTEREST HOLDERS, TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS AND RELATED PARTY TRANSACTIONS 4.1 LIMITATION OF BENEFICIAL INTEREST HOLDER LIABILITY. No Beneficial Interest Holder shall be liable for any debt, claim, demand, judgment or obligation of any kind of, against or with respect to the Trust by reason of being a Beneficial Interest Holder, nor shall any Beneficial Interest Holder, by reason of such status, be subject to any personal liability whatsoever, in tort, contract or otherwise, to any person in connection with the Trust Estate or the affairs of the Trust. 4.2 LIMITATION OF TRUSTEE LIABILITY. A Trustee, when acting in such capacity, shall not be personally liable to any person other than the Trust or a Beneficial Interest Holder for any act, omission or obligation of the Trust or any Trustee. To the maximum extent that Delaware law in effect from time to time permits limitation of the liability of trustees of a business trust, no Trustee shall be liable to the Trust or to any Beneficial Interest Holder for monetary damages for 7 10 breach of any duty (including, without limitation, fiduciary duty) as a Trustee, except (i) for acts or omissions which involve actual fraud or willful misconduct or (ii) for any transaction from which the Trustee derived improper personal benefit. Neither the amendment nor repeal of this Section 4.2, nor the adoption or amendment of any other provision of this Declaration of Trust inconsistent with this Section 4.2, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. 4.3 EXCULPATORY CLAUSES. Neither the Beneficial Interest Holders nor the Trustees, officers, employees or agents of the Trust shall be liable under any written instrument creating an obligation of the Trust, and all persons shall look solely to the Trust Estate for the payment of any claim under or for the performance of that instrument. All such written instruments may contain an express exculpatory clause to the foregoing effect. The omission of the foregoing exculpatory language from any instrument shall not affect the validity or enforceability of such instrument and shall not render any Beneficial Interest Holder, Trustee, officer, employee or agent liable thereunder to any third party, nor shall the Trustee or any officer, employee or agent of the Trust be liable to anyone for such omission. 4.4 INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. (a) The Trust shall indemnify and hold harmless each Trustee and officer of the Trust (including any persons who, while a Trustee or officer of the Trust, is or was serving at the request of the Trust as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise or employee benefit plan) to the maximum extent permitted by law, except to the extent that the indemnitee is found liable for (i) an act or omission involving actual fraud or willful misconduct or (ii) a transaction in which the indemnitee received an improper personal benefit. The Trust shall, upon request by the concerned Trustee or officer assume the defense of any claim made against such Trustee or officer and (i) whether or not such request is made, pay in advance of any final disposition of such claims all costs of defense upon an undertaking by or on behalf of such Trustee or officer to repay such amount if it shall be ultimately determined that such Trustee or officer is not entitled to indemnification by the Trust under this Section, and (ii) satisfy any judgment thereon from the assets of the Trust. (b) In the event any Beneficial Interest Holder or former Beneficial Interest Holder shall be held to be personally liable for any obligation of the Trust solely by reason of his or its being or having been a Beneficial Interest Holder and not because of his or its acts or omissions or some other reason, the Beneficial Interest Holder or former Beneficial Interest Holder (or his or its legal representatives or successors) shall be entitled to be indemnified and held harmless out of the Trust Estate against all loss and expenses arising from such liability. The Trust shall, upon request by the concerned Beneficial Interest Holder, assume the defense of any claim made against the Beneficial Interest Holder and (i) whether or not such request is made, pay in advance of any final disposition of such claims all costs of defense upon an undertaking by or on behalf of such Beneficial Interest Holder to repay such amount if it is ultimately determined that such Beneficial Interest 8 11 Holder is not entitled to indemnification by the Trust under this Section, and (ii) satisfy any judgment thereon from the assets of the Trust. 4.5 RELATED PARTY TRANSACTIONS. Subject to any express restrictions in this Declaration of Trust or adopted by the Managing Trustees, the Trust may enter into any contract or transaction of any kind (including without limitation, for the purchase or sale of property or for any type of services, including those in connection with underwriting or the offer of sale of securities of the Trust) with any person, including any Trustee, officer, employee or agent of the Trust or any person affiliated with a Trustee, officer, employee or agent of the Trust, whether or not any of them has a financial interest in such transaction. ARTICLE 5 SURPLUS AND DIVIDENDS 5.1. DECLARATION OF DIVIDENDS AND DETERMINATION OF NET PROFITS, EARNINGS AND SURPLUS. Subject to the provisions of this Section, the Managing Trustees, in their discretion may from time to time declare dividends payable at any date fixed by them out of the net profits or surplus (whether paid-in or otherwise) of the Trust, in cash or property, including without limitation of the generality of the foregoing, securities of the Trust; but no Beneficial Interest Holder shall have any right to any dividends, whether in cash, property or securities of the Trust, except when and as such dividends shall be paid or notice shall have been given to all the Beneficial Interest Holders who are to receive such dividends that the same have been declared as aforesaid; and no Beneficial Interest Holder or Trustee of the Trust shall be liable personally for any such dividend, and every Beneficial Interest Holder entitled thereto shall look only to the Trust Estate for the payment of any such dividend. The net profits and surplus of the Trust may be determined for any and all purposes on the basis of an income statement and a balance sheet of the Trust in accordance with proper accounting practices. 5.2 FIXING OF RECORD DATES. The Managing Trustees may fix a date, which date shall not precede the date upon which the Managing Trustees fix such date and which date shall not be more than sixty days preceding the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of share capital shall go into effect, and the date so fixed by the Managing Trustees shall be the record date for the determination of the Beneficial Interest Holders entitled to receive payment of any such dividend or to any such allotment of rights or to exercise the rights in respect of any such change, conversion or exchange of share capital, and in such case such Beneficial Interest Holders and only such Beneficial Interest Holders as shall be Beneficial Interest Holders of record on such record date shall be entitled to receive payment of such dividend or to receive such allotment of rights or to exercise such rights, as the case may be, notwithstanding any transfer of any Shares on the share register of the Trust after any such record date. If no record date is fixed by the Managing Trustees, the record date for determining Beneficial Interest Holders for any such purpose shall be at the close of business on the day on which the Managing Trustees adopt a resolution relating thereto. 9 12 ARTICLE 6 NOTICE 6.1 WHEN NOTICE UNNECESSARY. Whenever any notice is required to be given under the provisions of this Declaration of Trust, a waiver thereof in writing, signed by the person entitled to such notice, either before or after the time stated therein, shall be deemed equivalent thereto. Any meeting of Managing Trustees may be held at any time without previous notice if each of the Managing Trustees shall have signed or shall thereafter sign such a waiver or shall be present in person. 6.2 METHOD OF GIVING NOTICE. Whenever any notice is required or permitted to be given under the provisions of this Declaration of Trust, such notice may be given by delivering the same in writing to such party in person, by facsimile transmission, by Federal Express or other reputable courier service, or by sending the same by registered or certified mail, return receipt requested, and shall be deemed given upon delivery if by personal delivery, or upon confirmation of facsimile transmission if sent by facsimile transmission, or upon delivery if sent by Federal Express or other reputable courier service, or four (4) business days after deposit in the United States mail, postage prepaid, in all cases addressed to the person entitled to such notice at his address (or in the case of facsimile transmission, telecopied to such person at the facsimile number for such person) as such address (or facsimile number, as the case may be) appears in the records of the Trust. 6.3 EVIDENCE OF NOTICE. The certificate of any person entitled to give any such notice to the effect that such notice has been given shall be sufficient evidence thereof and shall protect all persons acting in good faith in reliance on such certificate. ARTICLE 7 AMENDMENT AND TERMINATION 7.1 TERMINATION OF TRUST. Unless sooner terminated as provided in Section 7.3, the Trust shall continue perpetually. 7.2 EFFECT OF DEATH, BANKRUPTCY OR INCAPACITY OF BENEFICIAL INTEREST HOLDER OR TRUSTEE. The death, bankruptcy or legal incapacity of a Beneficial Interest Holder or of a Trustee, or any or all of them, or the dissolution of a company that is a Beneficial Interest Holder, or the transfer of Shares by a Beneficial Interest Holder shall not operate to terminate the Trust nor entitle any such Trustee or Beneficial Interest Holder or their legal representatives to an accounting or to take any action in the courts or otherwise. 7.3 VOLUNTARY TERMINATION OR AMENDMENT OF TRUST. The Trust may be terminated or amended at any time by the Grantor; provided, however, nothing contained in this Declaration of Trust shall permit the amendment of this Declaration of Trust to impair the exemption from personal liability of the Beneficial Interest Holders, Trustees, officers and agents of the Trust. 10 13 7.4 FILING OF ACTION AUTHORIZING TERMINATION OR AMENDMENT. A copy of any action by the Grantor terminating or amending the terms of this Declaration of Trust may be recorded or filed in the various public offices, if any, in which this Declaration of Trust is then recorded or filed, and shall be filed at the principal place of business of the Trust and in such other places as may be required by law; but failure so to record or file any such resolution shall not affect the validity thereof. 7.5 SALE OF TRUST ESTATE. Upon the termination of the Trust or in contemplation thereof, the Managing Trustees shall sell and convert into money or into securities the whole or any part of the Trust Estate and after paying, satisfying or discharging all debts, liabilities and obligations of the Trust or after making adequate provision therefor, shall apportion the proceeds thereof and any property forming part of the Trust Estate excepted from such sale among all the Beneficial Interest Holders ratably according to the number of Shares held by them respectively, or the Managing Trustees may upon such termination, or in contemplation thereof, divide the whole or any part of the Trust Estate in its actual state of investment among the Beneficial Interest Holders ratably according to the number of Shares held by them respectively, and for such purposes the Managing Trustees shall have power to determine the values of the property so divided. The powers conferred on the Managing Trustees in this Section shall continue as long as necessary for the liquidation and winding up of the Trust and the distribution of its assets. ARTICLE 8 MISCELLANEOUS 8.1 POWER TO CONSTRUE DECLARATION OF TRUST. The Managing Trustees shall have power to construe this Declaration of Trust and to act on any such construction, and their construction of the same and any action taken pursuant thereto by the Trustees, officers, or agents of the Trust in good faith shall be final and conclusive. 8.2 HEADINGS. The headings of the different articles and sections of this Declaration of Trust are inserted for convenience of reference, and are not to be taken as any part of this Declaration of Trust or to control or affect the meaning, construction or effect of the same. 8.3 EFFECT OF PARTIAL INVALIDITY OF DECLARATION OF TRUST. If any part or parts of this Declaration of Trust shall be held invalid, such invalidity shall not affect the remainder of this Declaration of Trust, which shall be read as if such invalid part or parts did not exist. 8.4 DELAWARE LAW CONTROLLING. This Declaration of Trust is executed with reference to the laws of the State of Delaware, and the rights of all parties and the validity, construction and effect of every provision hereof shall be subject to and construed according to the laws of the State of Delaware. 8.5 COUNTERPARTS. This Declaration of Trust may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 11 14 8.6 FISCAL YEAR. The initial fiscal year of the Trust shall end on the Saturday nearest to December 31, 1996, and each fiscal year of the Trust thereafter shall consist of 52- or 53-week periods beginning on the first day after the end of the immediately preceding fiscal year and ending on the Saturday nearest to the December 31 following that first day. IN WITNESS WHEREOF, the Grantor and Trustees have hereunto set their hands to be effective on the day and year first above written. GRANTOR: PILLOWTEX CORPORATION BY: /s/ JEFFREY D. CORDES ----------------------------------- ITS: Executive Vice President & CFO ----------------------------------- RESIDENT TRUSTEE: PNC BANK, DELAWARE BY: /s/ W. B. McCARTHY ----------------------------------- ITS: VICE-PRESIDENT ----------------------------------- MANAGING TRUSTEES: /s/ JEFFREY D. CORDES ---------------------------------------- Jeffrey D. Cordes /s/ CHRISTOPHER N. BAKER ---------------------------------------- Christopher N. Baker /s/ SCOTT E. SHIMIZU ---------------------------------------- Scott E. Shimizu 12 15 EXHIBIT A PROPERTY OF GRANTOR TO BE ACQUIRED BY TRUST The "Management Assets" and the "Management Liabilities" (as those terms are defined in that certain Restructuring Agreement that is to be entered into as of the 31st day of March, 1996, by and among Pillowtex Corporation, a Texas corporation, Manetta Home Fashions, Inc., a North Carolina corporation, Tennessee Woolen Mills, Inc., a Tennessee corporation, Beacon Manufacturing Company, a North Carolina corporation, Pillowtex, Inc., a Delaware corporation, PTEX Holding Company, a Delaware corporation, and the Trust) shall constitute the initial Trust Estate. 13 EX-3.39 36 CERTIFICATE OF INCORPORATION OF PTEX HOLDING CO. 1 EXHIBIT 3.39 CERTIFICATE OF INCORPORATION OF PTEX HOLDING COMPANY I, the undersigned, acting as incorporator of PTEX Holding Company, under the General Corporation Law of Delaware, do hereby adopt the following Certificate of Incorporation for such corporation. First: The name of the corporation is PTEX Holding Company. Second: The address of the corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, and the name of its registered agent at such address is The Corporation Trust Company. Third: The purpose of the corporation is to engage in any lawful act or activity for which Corporations may be organized under the General Corporation Law of Delaware. Fourth: The total number of shares that the corporation shall have authority to issue is 3,000 shares of common stock with a par value of $.01 per share. Fifth: No stockholder of this corporation shall, by reason of such person's holding stock of any class, have any preemptive or preferential right to purchase or subscribe to any stock of any class of this corporation, now or hereafter to be authorized, nor for any of its notes, debentures, bonds, or other securities, whether or not the issuance of such stock, or such notes, debentures, bonds, or other securities would adversely affect the dividend or voting rights of such stockholder, other than such rights, if any, as the board of directors, in its discretion, may grant to the stockholders to purchase such additional securities; and the board of directors may issue treasury shares of any class of this corporation, or any notes, debentures, bonds, or other securities convertible into or of any class without offering the same in whole or in part to existing stockholders of any class. Sixth: Elections of directors need not be by written ballot except and to the extent provided otherwise in the bylaws of the corporation. Cumulative voting for the election of directors shall not be permitted. Seventh: The name and mailing address of the incorporator is T.L. Ford, Corporation Trust Center, 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. Eighth: The number of directors constituting the initial board of directors is three and the names and addresses of such persons serving as directors until the first annual meeting of stockholders or until such persons' successors shall be elected and qualified are: 2 Charles M. Hansen, Jr. 4111 Mint Way, Dallas, Texas 75237 Ronald M. Wehtje 4111 Mint Way, Dallas, Texas 75237 Charles H. Slaybaugh 222 Delaware Ave., 17th Floor, Wilmington, Delaware 19801 Ninth: The corporation shall have perpetual existence. Tenth: The board of directors is expressly authorized to make, alter, or repeal the bylaws of the corporation. Eleventh: A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Delaware General Corporation Law. Any repeal or modification of this paragraph by the stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the corporation existing at the time of such repeal or modification. Twelfth: The undersigned incorporator, for the purpose of forming a corporation pursuant to the General Corporation Law of Delaware, does hereby declare and certify that the foregoing Certificate of Incorporation is such person's act and deed and that the facts herein stated are true, and accordingly, has hereunto set such person's hand this 20th day of March, 1996. /s/ T. L. FORD -------------------- T. L. Ford 2 EX-3.40 37 BYLAWS OF PTEX HOLDING COMPANY 1 EXHIBIT 3.40 BYLAWS OF PTEX HOLDING COMPANY ARTICLE I OFFICES AND AGENT 1.01 Registered Office and Agent. The registered office of the corporation shall be located at Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, and the name of the registered agent of the corporation at such address is The Corporation Trust Company. 1.02 Other Offices. The corporation may also have offices at such other places within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS 2.01 Annual Meetings. An annual meeting of the shareholders shall be held on the first Monday of the third month following the close of each fiscal year of the corporation if not a legal holiday, and if a legal holiday, then on the next day following that is not a legal holiday. At each annual meeting the shareholders shall elect a board of directors and shall transact such other business as may properly be brought before the meeting. 2.02 Call for Special Meetings. Special meetings of the shareholders, for any purpose or purposes may be held at such time and place, within or without the State of Delaware as shall be stated in the notice of the meeting or in a duly executed waiver of notice. Unless otherwise prescribed by statute or by the Certificate of Incorporation, or by these bylaws, special meetings of the shareholders may be called by the President, the board of directors, or by one or more shareholders, the aggregate of whose shares comprise not less than one-tenth of all shares entitled to vote at the meetings. Business transacted at all special meetings shall be confined to the subjects stated in the notice of the meeting, unless such notice shall have been waived. 2.03 Notice. Unless notice is waived, written or printed notice stating the place, date, and time of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the -1- 2 President, the Secretary, or the officer or person calling the meeting, to each shareholder of record entitled to vote at the meeting. 2.04 Quorum Majority Vote. The holders of a majority of the shares issued and outstanding and entitled to vote, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law, the Certificate of Incorporation, or these bylaws. When a quorum is present at any meeting, the vote of the holders of a majority of the shares having voting power present in person or represented by proxy shall decide any question before such meeting, unless the question is one upon which, by express provision of law, the Certificate of Incorporation, or these bylaws, a different vote is required, in which case such express provision shall govern. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. 2.05 Voting. Unless otherwise provided in the Certificate of Incorporation, at every election of directors, each shareholder shall have the right to vote the number of voting shares that such shareholder owns for as many persons as there are directors to be elected. Unless otherwise provided in the Certificate of Incorporation, no shareholder shall be entitled to cumulate such shareholder's votes, and cumulative voting is prohibited. ARTICLE III DIRECTORS 3.01 Powers. The business and affairs of the corporation shall be managed by its board of directors who may exercise all such powers of the corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation, or these bylaws directed or required to be exercised or done by the shareholders. 3.02 Number and Election. The board of directors shall consist of not less than one director; no director need be a shareholder, however, at least one director shall be a resident of the State of Delaware. At each annual meeting of the shareholders, the shareholders may change the number of directors who shall serve for the ensuing year and each such determination shall be a continuing determination of the number of directors until a change by a vote of the shareholders. The directors shall be elected at the annual meeting of the shareholders, except as hereinafter provided, and each director elected shall hold office until such director's successor shall be elected and shall qualify. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors, notwithstanding that the remaining directors constitute less than a quorum of the board of directors, or by the holders of a majority of the shares then entitled to vote in election of directors. A director elected to fill a vacancy shall be elected for the unexpired term of such director's predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election at an annual -2- 3 meeting or a special meeting of the shareholders called for that purpose, or may be filled by the board of directors for a term of office continuing only until the next election of one or more of the directors by the shareholders. 3.03 Removal. Any director may be removed, with or without cause, at any duly constituted meeting of shareholders called expressly for that purpose, by the affirmative vote of the holders of a majority of the shares then entitled to vote in elections of directors. 3.04 First Meeting of New Board. The first meeting of each newly elected board of directors shall be held without further notice immediately following the annual meeting of the shareholders. 3.05 Meetings. Regular meetings of the board of directors may be held without notice at such time and place as shall be determined by the board. Special meetings of the board of directors may be called by or at the direction of the President on 24 hours' notice to each director, either personally or by mail or by telegram, or by facsimile. The purpose or purposes of such meeting need not be stated in the notice thereof, except as is specifically provided in section 11.01 of these bylaws. 3.06 Quorum; Majority Vote. At all meetings of the board of directors, the presence of a majority of the number of directors fixed in the manner provided in these bylaws shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by law, the Certificate of Incorporation, or these bylaws. If a quorum shall not be present at any meeting, the directors present at the meeting may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present. 3.07 Compensation as Directors. Directors, as such, shall not receive any stated salary for their services, but, by resolution of the board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board; provided that nothing contained in these bylaws shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation for such service. 3.08 Committees. The board of directors, by resolution adopted by a majority of the full board of directors, may designate from among its members an executive committee and one or more other committees, each of which shall be comprised of one or more members and, to the extent provided in such resolution, shall have and may exercise all of the authority of the board of directors, except that no such committee shall have the authority of the board of directors in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation under Section 251 or Section 252 of the Delaware General Corporation Law, recommending to the shareholders the sale, lease, or exchange -3- 4 of all or substantially all of the property and assets of the corporation, recommending to the shareholders a voluntary dissolution of the corporation or a revocation thereof, amending, altering or repealing the bylaws of the corporation or adopting new bylaws for the corporation, altering or repealing any resolution of the board of directors that by its terms provide that it shall not be so amendable or repealable; and, unless the resolution expressly so provides, no committee shall have the power or authority to declare a dividend, or to authorize the issuance of shares of the corporation, or to adopt a merger pursuant to Section 253 of the Delaware General Corporation Law. The designation of such committee and the delegation of authority to such committee shall not operate to relieve the board of directors, or any member of the board, of any responsibility imposed by law. ARTICLE IV NOTICES 4.01 Formalities of Notices. Whenever, under the provisions of law, the Certificate of Incorporation, or these bylaws, notice is required to be given to any director or shareholder and no provision is made as to how such notice shall be given, personal notice shall not be required, but any such notice may be given in writing, by mail, postage prepaid, addressed to such director or shareholder at such address as appears on the books of the corporation. Any notice required or permitted to be given by mail shall be deemed to be given at the time when such notice shall have been deposited in the United States mails as aforesaid. 4.02 Waiver of Notices. Whenever any notice is required to be given to any shareholder or director of the corporation under the provisions of law, the Certificate of Incorporation, or these bylaws, a waiver of such notice in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be deemed equivalent to giving such notice. ARTICLE V OFFICERS 5.01 Offices. The officers of the corporation shall be elected by the directors and may include a chairman of the board of directors, a president, one or more vice presidents, a secretary, and a treasurer. The board of directors may also elect or appoint one or more assistant secretaries and assistant treasurers. Any two or more offices may be held by the same person. 5.02 Election of Officers; Term; Removal; Salary. The board of directors at its first meeting after each annual meeting of shareholders shall elect the officers, none of whom need be members of the board. Each officer of the corporation shall hold office until such officer's successor is chosen and qualified or until such officer's death, resignation, or -4- 5 removal from office. Any officer or agent elected or appointed by the board of directors may be removed at any time by the board of directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the board of directors. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. 5.03 The President. The President shall be the chief executive officer of the corporation; the President shall preside at all meetings of the shareholders, shall have general and active management of the business and affairs of the corporation, shall see that all orders and resolutions of the board are carried into effect, and shall perform such other duties as the board of directors shall prescribe. 5.04 The Vice Presidents. If the corporation elects or appoints one or more Vice Presidents, then each Vice President shall have such power and perform such duties as the board of directors may from time to time prescribe or as the President may from time to time delegate. 5.05 The Secretary and Assistant Secretaries. The Secretary shall attend all sessions of the board of directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose, and shall perform like duties for the Executive Committee when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or President, under whose supervision the Secretary shall be. The Secretary shall keep in safe custody the seal of the corporation and, when authorized by the board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by the Secretary's signature or by the signature of the Treasurer or an Assistant Secretary. If the corporation does not elect or appoint a person to the office of Treasurer or Assistant Treasurer, then the Secretary shall assume all duties of the Treasurer, as described in paragraph 5.06. Each Assistant Secretary shall have such powers and perform such duties as the board of directors may from time to time prescribe or as the President may from time to time delegate. 5.06 The Treasurer and Assistant Treasurers. The Treasurer shall have the custody of the corporate funds and securities, shall keep full and accurate accounts of receipts and disbursements of the corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as the board of directors may designate. The Treasurer shall disburse the funds of the corporation as the board of directors may order, taking proper vouchers for such disbursements, shall render to the President and directors, at the regular meetings of the board or whenever the board may require it, an account of all the Treasurer's transactions and of the financial condition of the corporation, and shall perform such other duties as the board of directors may prescribe. If the board of directors requires, then the Treasurer shall give the corporation a bond in such form, in such sum, and with such surety or sureties as shall be satisfactory to the board for the faithful performance of the duties of the Treasurer's office -5- 6 and for the restoration to the corporation, in case of the Treasurer's death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in the Treasurer's possession or under the Treasurer's control belonging to the corporation. If no person is elected or appointed to fill the office of Treasurer, then the duties described in this paragraph shall be assumed by the Secretary. ARTICLE VI CERTIFICATES REPRESENTING SHARES 6.01 Delivery, Form and Content. The board of directors shall cause to be delivered to the shareholders certificates in such form as the board of directors may determine representing all shares to which such shareholders are entitled. Certificates shall be consecutively numbered by classes and shall be entered in the books of the corporation as they are issued. Each certificate shall state on its face the holder's name, the number and class of shares, and the par value of such shares or a statement that such shares are without par value. Each certificate shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary and may be sealed with the seal of the corporation or a facsimile. If any certificate is countersigned by a transfer agent, or an assistant transfer agent, or registered by a registrar, other than the corporation or an employee of the corporation, then the signature of any officer may be a facsimile. 6.02 Lost Certificates. The board of directors may direct a new certificate representing shares to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed, upon receiving an affidavit of that fact from the person claiming the certificate to be lost or destroyed. When authorizing the issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance of a new certificate, may require the owner of such lost or destroyed certificate, or such person's legal representative, to advertise the same in such manner as the board shall require and/or give the corporation a bond in such form, in such sum, and with such surety or sureties as the board may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed and/or agree to indemnify the corporation against any such claim. 6.03 Transfer. Shares of stock shall be transferable only on the books of the corporation by the holder in person or by such person's duly authorized attorney. Upon surrender to the corporation of the certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer, the Corporation shall be obligated to issue a new certificate to the person entitled to the new certificate, cancel the old certificate, and record the transaction upon its books. 6.04 Record Holder. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact of such stock and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or -6- 7 shares on the part of any other person, or any limitation upon the ownership, power, or authority of such holder, whether or not the corporation shall have express or other notice, except as otherwise provided by law. ARTICLE VII DIVIDENDS 7.01 Dividends. Dividends on the outstanding shares of the corporation, subject to the provisions of the Certificate of Incorporation, may be declared by the board of directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the corporation, subject to the provisions of law and the Certificate of Incorporation. The board of directors may fix in advance a record date of such dividend, or the board of directors may close the stock transfer books for such purpose for a period of not more than thirty days prior to the payment date of such dividend. In the absence of any action by the board of directors, the date upon which the board of directors adopts the resolution declaring such dividend shall be the record date. ARTICLE VIII ACTION BY UNANIMOUS CONSENT OR BY CONFERENCE TELEPHONE 8.01 Action by Unanimous Consent. Any action required by the Certificate of Incorporation, these bylaws, or Delaware law to be taken at a meeting of the board of directors of the corporation, or any action that may be taken at any such meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the directors entitled to vote with respect to the subject matter of the action, and such consent is filed in the minute book of the corporation. 8.02 Action by Consent of Shareholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of the shareholders of the corporation, or any action which may be taken at any annual meeting or special meeting of the shareholders, may be taken without a meeting, without prior notice, and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on the action were present and voted. Prompt notice that corporate action was taken without a meeting by less than unanimous written consent shall be given to the stockholders who have not consented in writing. In lieu of any statement regarding a shareholders vote required to be set forth in any document or certificate to be filed with the Delaware Secretary of State, a statement that a written consent and written notice have been given in accordance with the provisions of Section 228 of the Delaware General Corporation Law may be given. -7- 8 8.03 Actions by Conference Telephone. Subject to any notice of meeting requirements in these bylaws or under Delaware law, the board of directors, or members of any committee designated by such board, may participate in and hold a meeting of such board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Minutes of any such meeting shall be promptly prepared by the Secretary, circulated to all directors entitled to vote at the meeting (whether they participated or not), placed in the regular corporate records containing similar meeting minutes, and called to the attention of such board of directors or committee at its next regular meeting. ARTICLE IX INDEMNIFICATION 9.01 Persons. The corporation may indemnify, to the extent permitted in this article, and shall indemnify as required by this article: (a) any person who is or was a director, officer, agent, or employee of the corporation, and (b) any person who serves or served at the corporation's request as a director, officer, partner, venturer, proprietor, trustee, agent, employee, or similar functionary of another corporation or of a partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise. 9.02 Derivative Suits. In case of a suit or action by or in the right of the corporation to procure a judgment in its favor against a person named in paragraph 9.01 by reason of such person holding a position named in paragraph 9.01, the corporation may indemnify such person if the standard in paragraph 9.04 is satisfied, for reasonable expenses actually and reasonably incurred by such person (including attorney's fees) in connection with the defense or settlement of the suit or action and, additionally, for judgments and fines if such person is found liable for negligence in the performance of duties to the corporation. 9.03 Nonderivative Suits. In case of a suit, action, or proceeding (whether civil, criminal, administrative, or investigative), other than a suit by or in behalf of the corporation, collectively hereinafter referred to as a nonderivative suit, against a person named in paragraph 9.01 by reason of such person holding a position named in paragraph 9.01, the corporation may indemnify such person if the standard in paragraph 9.04 is satisfied for amounts actually and reasonably incurred by such person in connection with the defense or settlement of the nonderivative suit as follows: -8- 9 (a) Judgments; (b) Penalties, including excise and similar taxes; (c) Fines; (d) Settlements; and (e) Reasonable expenses actually incurred (including attorney's fees). 9.04 Standard. In case of a derivative suit, a person named in paragraph 9.01 may be indemnified if such person acted in good faith in the transaction that is the subject of the suit, and in a manner reasonably believed to be in or not opposed to the corporation's best interest; provided that no indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation unless, and only to the extent that, the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. In the case of nonderivative suit, a person named in paragraph 9.01 may be indemnified if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the corporation's best interest. With respect to any criminal action or proceeding, the person must have had no reasonable cause to believe that the conduct that is the subject of such action was unlawful. The termination of a nonderivative proceeding by judgment, order, settlement, conviction, or on a plea of nolo contendere or its equivalent, does not of itself create a presumption that the person does not meet the standards set forth in this paragraph. 9.05 Mandatory Indemnification. The corporation shall indemnify a person named in paragraph 9.01 against expenses (including attorney's fees) actually and reasonably incurred in connection with a proceeding in which such person is a party by reason of such person holding a position named in paragraph 9.01 to the extent such person has been successful, on the merits or otherwise, in the defense of the proceeding. 9.06 Determination that Standard Has Been Met. A determination that the standard of paragraph 9.04 has been satisfied shall be made by: (a) a majority vote of the directors of the corporation who at the time of the vote are not parties to the action, suit, or proceeding even though less than a quorum; or (b) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion; or (c) the shareholders of the corporation. -9- 10 9.07 Advance Payments. The corporation may pay in advance any expense (including attorney's fees) that may become subject to indemnification under paragraphs 9.01-9.06 if the person receiving the payment affirms in writing that in good faith the person believes the standards set forth in paragraph 9.04 have been met, and undertakes to repay any advance payments if it is ultimately determined that such person has not met those standards. 9.08 Insurance. The corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in paragraph 9.01, against any liability asserted against or incurred by such person in any such position, or arising out of such person's status as such, whether or not the corporation would have power to indemnify such person against such liability under paragraphs 9.01-9.07. 9.09 Additional Indemnification. The rights of indemnification provided in this article IX shall be in addition to any other rights to which any person named in paragraph 9.01 may otherwise be entitled by contract, under the Delaware General Corporation Law or as a matter of law; and if any such person dies, then such rights shall extend to such person's heirs and legal representatives. The provisions of this article IX are separable, and if any provision be held invalid, all other provisions shall only be curtailed to the extent necessary to make such provision enforceable, it being the intent of this article that the corporation indemnify each person named in paragraph 9.01 to the maximum extent permitted by law. ARTICLE X GENERAL PROVISIONS 10.01 Seal and Official Records. The seal of the corporation, if adopted by the board of directors, the stock certificate book, the minute book, and the corporation's financial records shall be of the type that the board of directors determines and establishes and may be changed from time to time in the board's discretion. 10.02 Invalid Provisions. If any part of these bylaws shall be held invalid or inoperative, for any reason, the remaining parts, so far as possible and reasonable, shall be valid and operative. 10.03 Headings. The headings used in these bylaws have been inserted for administrative convenience only and do not constitute matter to be construed in interpretation. -10- 11 ARTICLE XI AMENDMENTS 11.01 Alteration, Amendment, or Repeal. The power to alter, amend, or repeal these bylaws or adopt new bylaws, subject to repeal or change by action of the shareholders, shall be vested in the board of directors. The board of directors may make such alteration, amendment, or repeal at any meeting at which a quorum is present, by the affirmative vote of a majority of the directors present at such meeting, provided notice of the proposed alteration, amendment or repeal contained in the notice of such meeting (or such notice shall have been waived). -11- EX-3.41 38 CERTIFICATE OF INCORPORATION OF ST. MARY'S, INC. 1 EXHIBIT 3.41 CERTIFICATE OF INCORPORATION -of- ST. MARYS, INC. ----------- I, THE UNDERSIGNED, in order to form a corporation for the purposes hereinafter stated, under and pursuant to the provisions of the General Corporation Law of the State of Delaware, do hereby certifies as follows: FIRST: The name of the corporation is ST. MARYS, INC. SECOND: The registered office of the corporation is to be located at 306 South State Street, in the City of Dover, in the County of Kent, in the State of Delaware. The name of its registered agent at that address is the United States Corporation Company. THIRD: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware. Without limiting in any manner the scope and generality of the foregoing, it is hereby provided that the corporation shall have the following purposes, objects and powers: To purchase, manufacture, produce, assemble, receive, lease or in any manner acquire, hold, own, use, operate, install, maintain, service, repair, process, alter, improve, import, export, sell, lease, assign, transfer and generally 2 to trade and deal in and with raw materials, natural or manufactured articles or products, machinery, equipment, devices, systems, parts, supplies, apparatus, goods, wares, merchandise and personal property of every kind, nature or description, tangible or intangible, used or capable of being used for any purpose whatsoever; and to engage and participate in any mercantile, manufacturing or trading business of any kind or character. To improve, manage, develop, sell, assign, transfer, lease, mortgage, pledge or otherwise dispose of or turn to account or deal with all or any part of the property of the corporation and from time to time to vary any investment or employment of capital of the corporation. To borrow money, and to make and issue notes, bonds, debentures, obligations and evidences of indebtedness of all kinds, whether secured by mortgage, pledge or otherwise, without limit as to amount, and to secure the same by mortgage, pledge or otherwise; and generally to make and perform agreements and contracts of every kind and description, including contracts of guaranty and suretyship. To lend money for its corporate purposes, invest and reinvest its funds, and take, hold and deal with real and personal property as security for the payment of funds so loaned or invested. To the same extent as natural persons might or could do, to purchase or otherwise acquire, and to hold, own, maintain, work, develop, sell, lease, exchange, hire, convey, mortgage or otherwise dispose of and deal in lands and leaseholds, and any interest, estate and rights in real property, and any personal or mixed property, and any franchises, rights, licenses or privileges necessary, convenient or appropriate for any of the purposes herein expressed. To apply for, obtain, register, purchase, lease or otherwise to acquire and to hold, own, use, develop, operate and introduce and to sell, assign, grant licenses or territorial rights in respect to, or otherwise to turn to account or dispose of, any copyrights, trade marks, trade names, brands, labels, patent rights, letters patent of the United States or of any other country or government, inventions, improvements and processes, whether used in connection with or secured under letters patent or otherwise. 3 To participate with others in any corporation, partnership, limited partnership, joint venture, or other association of any kind, or in any transaction, undertaking or arrangement which the participating corporation would have power to conduct by itself, whether or not such participation involves sharing or delegation of control with or to others; and to be an incorporator, promoter or manager of other corporations of any type or kind. To pay pensions and establish and carry out pension, profit sharing, stock option, stock purchase, stock bonus, retirement, benefit, incentive and commission plans, trusts and provisions for any or all of its directors, officers and employees, and for any or all of the directors, officers and employees of its subsidiaries; and to provide insurance for its benefit on the life of any of its directors, officers or employees, or on the life of any stockholder for the purpose of acquiring at his death shares of its stock owned by such stockholders. To acquire by purchase, subscription or otherwise, and to hold for investment or otherwise and to use, sell, assign, transfer, mortgage, pledge or otherwise deal with or dispose of stocks, bonds or any other obligations or securities of any corporation or corporations; to merge or consolidate with any corporation in such manner as may be permitted by law; to aid in any manner any corporation whose stocks, bonds or other obligations are held or in any manner guaranteed by this corporation, or in which this corporation is in any way interested; and to do any other acts or things for the preservation, protection, improvement or enhancement of the value of any such stock, bonds or other obligations; and while owner of any such stock, bonds or other obligations to exercise all the rights, powers and privileges of ownership thereof, and to exercise any and all voting powers thereon; and to guarantee the payment of dividends upon any stock, the principal or interest or both, of any bonds or other obligations, and the performance of any contracts. To do all and everything necessary, suitable and proper for the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers hereinbefore set forth, either alone or in association with other corporations, firms or individuals, and to do every other 4 act or acts, thing or things incidental or appurtenant to or growing out of or connected with the aforesaid business or powers or any part or parts thereof, provided the same be not inconsistent with the laws under which this corporation is organized. The business or purpose of the corporation is from time to time to do any one or more of the acts and things hereinabove set forth, and it shall have power to conduct and carry on its said business, or any part thereof, and to have one or more offices, and to exercise any or all of its corporate powers and rights, in the State of Delaware, and in the various other states, territories, colonies and dependencies of the United States, in the District of Columbia, and in all or any foreign countries. The enumeration herein of the objects and purposes of the corporation shall be construed as powers as well as objects and purposes and shall not be deemed to exclude by inference any powers, objects or purposes which the corporation is empowered to exercise, whether expressly by force of the laws of the State of Delaware now or hereafter in effect, or impliedly by the reasonable construction of the said laws. FOURTH: The total number of shares of stock which the corporation is authorized to issue is one thousand (1,000) shares, all of which are without par value. FIFTH: The name and address of the incorporator are as follows: NAME ADDRESS ---- ------- Leif A. Tonnessen 60 Wall Street, New York, N.Y. 10005 SIXTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the corporation, and for further definition, limitation and regulation of the powers of the corporation and of its directors and stockholders: 5 (1) The number of directors of the corporation shall be such as from time to time shall be fixed by, or in the manner provided in the by-laws. Election of directors need not be by ballot unless the by-laws so provide. (2) The Board of Directors shall have power without the assent or vote of the stockholders (a) To make, alter, amend, change, add to or repeal the By-Laws of the corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the corporation; to determine the use and disposition of any surplus or net profits; and to fix the times for the declaration and payment of dividends. (b) To determine from time to time whether, and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the corporation (other than the stock ledger) or any of them, shall be open to the inspection of the stockholders. (3) The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the corporation and upon all the stockholders as though it had been approved or ratified by every 6 stockholder of the corporation, whether or not the contract or act would otherwise be open to legal attack because of directors' interest, or for any other reason. (4) In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this certificate, and to any by-laws from time to time made by the stockholders; provided, however, that no by-laws so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made. SEVENTH: The corporation shall, to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto. EIGHTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 29, of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under 7 the provisions of Section 279 of Title 8 of the Delaware Code, after a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequences of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. NINTH: The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. IN WITNESS WHEREOF, I have hereunto set my hand and seal, the 3rd day of January, 1973. /s/ LEIF A. TONNESSEN (L.S.) ---------------------------- Leif A. Tonnessen EX-3.42 39 BYLAWS OF ST. MARY'S INC. 1 EXHIBIT 3.42 B Y - L A W S OF ST. MARYS, INC. ------------ ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE.--The registered office shall be established and maintained at the office of the United States Corporation Company, in the City of Dover, in the County of Kent, in the State of Delaware, and said corporation shall be the registered agent of this corporation in charge thereof. SECTION 2. OTHER OFFICES.--The corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Delaware on the second Wednesday of September. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. OTHER MEETINGS.--Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting. 2 SECTION 3. VOTING.--Each Stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation and, in accordance with the provisions of these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware. A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 4. QUORUM.--Except as otherwise required by Law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof. SECTION 5. SPECIAL MEETINGS.--Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, or by resolution of the directors. SECTION 6. NOTICE OF MEETINGS.--Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than sixty days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat. 3 SECTION 7. ACTION WITHOUT MEETING.--Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS SECTION 1. NUMBER AND TERM.--The number of directors shall be four (4). The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify. Directors need not be stockholders. SECTION 2. RESIGNATIONS.--Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3. VACANCIES.--If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. SECTION 4. REMOVAL.--Any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote. SECTION 5. INCREASE OF NUMBER.--The number of directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify. 4 SECTION 6. POWERS.--The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders. SECTION 7. COMMITTEES.--The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws of the corporation; and, unless the resolution, these By-Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. SECTION 8. MEETINGS.--The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of all the directors. Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the board may be called by the President or by the Secretary on the written request of any two directors 5 on at least two days' notice to each director and shall be held at such place or places as may be determined by the directors, or as shall be stated in the call of the meeting. SECTION 9. QUORUM.--A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. SECTION 10. COMPENSATION --Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor. SECTION 11. ACTION WITHOUT MEETING.--Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee. ARTICLE IV OFFICERS SECTION 1. OFFICERS.--The officers of the corporation shall be a President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENT.--The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN.--The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the 6 Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board Of Directors. SECTION 4. PRESIDENT.--The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. SECTION 5. VICE-PRESIDENT.--Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the directors. SECTION 6. TREASURER.--The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the corporation on as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe. SECTION 7. SECRETARY.--The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by law or by these By-Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose, and shall perform 7 such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.--Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors. ARTICLE V MISCELLANEOUS SECTION 1. CERTIFICATES OF STOCK.--Certificate of stock, signed by the Chairman or Vice Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or an Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. Any of or all the signatures may be facsimiles. SECTION 2. LOST CERTIFICATES.--A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. SECTION 3. TRANSFER OF SHARES.--The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. STOCKHOLDERS RECORD DATE.--In order that the corporation may determine the stockholders entitled to notice of or 8 to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. DIVIDENDS.--Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation. SECTION 6. SEAL.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words "CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. SECTION 7. FISCAL YEAR.--The fiscal year of the corporation shall be the calendar year. SECTION 8. CHECKS.--All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors. SECTION 9. NOTICE AND WAIVER OF NOTICE--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute. 9 Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VI AMENDMENTS These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal or By-Law or By-Laws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws to be made, be contained in the notice of such special meeting. EX-3.43 40 ARTICLES OF AMEND. TO RESTATED CHARTER OF TN 1 EXHIBIT 3.43 CHARTER OF TENNESSEE WOOLEN MILLS, INC. The undersigned natural person or persons, having capacity to contract and acting as the incorporator or incorporators of a corporation organized under the Tennessee General Corporation Act, adopt the following charter for such corporation: 1. The name of the corporation is Tennessee Woolen Mills, Inc. 2. The duration of the corporation shall be perpetual. 3. The address of the principal office of the corporation in the State of Tennessee shall be North Maple Street, Wilson County, Lebanon, Tennessee 37087. 4. The corporation is for profit. 5. The purpose or purposes for which the corporation is organized are to engage in all facets of the textile business including but not limited to the purchase, manufacture, distribution and sale of various textile products and to engage in any lawful act or activity for which corporations for profit may be organized under the laws of the State of Tennessee; and the corporation shall have all powers necessary to conduct such business and engage in such activities, including, but not limited to, the powers enumerated in the Tennessee General Corporation Act or any amendment thereto. 6. The maximum number of shares that the corporation shall have the authority to issue is 1,000 common shares without par value and 900 shares of 8% cumulative redeemable preferred shares with $1,000.00 par value per share. 7. The corporation shall not commence business until consideration of not less than $1,000.00 has been received for the issuance of its shares. 8. Shareholders of the corporation shall have the pre-emptive rights set forth in the Tennessee General Corporation Act. 9. Subject to the provisions of Section 48-512 of the Tennessee General corporation Act, the Board of Directors of the corporation, shall have the power to distribute a portion of the assets of the corporation, in cash or in property, to holders of shares of the corporation out of the capital surplus of the corporation, and such power may be exercised without the vote of the shareholders. 10. Whenever the Directors of the corporation are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth action so taken, signed by all of the Directors entitled to vote thereon. 2 11. The Board of Directors of the corporation may adopt, amend or repeal the By-laws or any By-law of the corporation by the vote of a majority of the members of the entire Board. Dated this 18th day of May, 1984. /s/ RUSSELL H. HIPPE, JR. -------------------------- Russell H. Hippe, Jr. Incorporator 3 DESIGNATION, REVOCATION OR CHANGE OF REGISTERED AGENT OF TENNESSEE WOOLEN MILLS, INC. To the Secretary of State of the State of Tennessee: Pursuant to the provisions of Section 48-1201 of the Tennessee General Corporation Act, the undersigned foreign or domestic corporation or the incorporators of a domestic corporation being organized under the Act submit the following statement for the purpose of designating, revoking, or changing, as the case may be, the registered agent for the corporation in the State of Tennessee: 1. The name of the corporation is Tennessee Woolen Mills, Inc. 2. The address of the corporation is P.O. Box 728, Lebanon, Tennessee 37087. 3. The name and street address of its registered agent in the State of Tennessee shall be Russell H. Hippe, Jr., TRABUE, STURDIVANT & DEWITT, 25th Floor, Life & Casualty Tower, Nashville, TN 37219. Dated this 18th day of May, 1984. TENNESSEE WOOLEN MILLS, INC. By: /s/ RUSSELL H. HIPPE, JR. -------------------------- Russell H. Hippe, Jr. Incorporator 4 RESTATED CHARTER OF TENNESSEE WOOLEN MILLS, INC. Pursuant to the provisions of Section 48-20-107 of the Tennessee Business Corporation Act, the undersigned corporation adopts the following restated charter: 1. The name of the corporation is Tennessee Woolen Mills, Inc. 2. The corporation is for profit. 3. The street address of the corporation's principal office is: North Maple Street Lebanon, Tennessee 37087 County of Wilson. 4. (a) The name of the corporation's registered agent is Jim Brubaker. (b) The address of the corporation's registered office in Tennessee is: North Maple Street Lebanon, Tennessee 37087 County of Wilson. 5. The number of shares of stock the corporation is authorized to issue is one million (1,000,000) shares of common stock, with no par value and 900 shares of 8% cumulative redeemable preferred shares, $1,000 per share par value. 6. The shareholders of the corporation shall not have preemptive rights. 7. To the fullest extent permitted by the Tennessee Business Corporation Act as in effect on the date hereof and as hereafter amended from time to time, a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. If the Tennessee Business Corporation Act or any successor statute is amended after adoption of this provision to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Tennessee Business Corporation Act, as so amended from time to time. Any repeal or modification of this Paragraph 7 by the shareholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification or with respect to events occurring prior to such time. Dated: February 23, 1988 TENNESSEE WOOLEN MILLS, INC. By: /s/ [ILLEGIBLE] ------------------------- Title: [ILLEGIBLE] ------------------- 5 CERTIFICATE OF TENNESSEE WOOLEN MILLS, INC. Pursuant to the provisions of Section 48-20-107(d) of the Tennessee Business Corporation Act, the undersigned corporation hereby certifies that: 1. The attached Restated Charter of Tennessee Woolen Mills, Inc. (the "Company") contains amendments to the Charter of the Company requiring shareholder approval. 2. The Restated Charter was duly adopted by the shareholders pursuant to Action Taken on Written Consent on February 23, 1988. IN WITNESS WHEREOF, this certificate has been duly executed and delivered by a duly authorized officer of the Company on this 23rd day of February, 1988. TENNESSEE WOOLEN MILLS, INC. By: /s/ ----------------------------- Title: --------------------- 6 ARTICLES OF AMENDMENT TO THE RESTATED CHARTER OF TENNESSEE WOOLEN MILLS, INC. Pursuant to the provisions of Section 48-20-106 of the Tennessee Business Corporation Act, the undersigned corporation adopts the following articles of amendment to its restated charter: 1. The name of the corporation is Tennessee Woolen Mills, Inc. 2. The text of the amendment adopted is: "Paragraph 5 of the corporation's restated charter is deleted in its entirety and replaced with the following: 5. The number of shares of stock the Corporation is authorized to issue is: (A) One million (1,000,000) shares of Common Stock, no par value; and (B) One hundred (100) shares of Series A Stock, no par value. The Series A Stock shall have all the rights and privileges of the Corporation's Common Stock, except that the Series A Stock shall not be entitled to vote on matters submitted to the Corporation's shareholders." 3. The corporation is a for-profit corporation. 4. The amendment was duly adopted on January __, 1989 by the shareholders. January , 1989 TENNESSEE WOOLEN MILLS, INC. - --------------------------- ---------------------------- Signature Date Name of Corporation - --------------------------- ---------------------------- Signer's Capacity Signature ---------------------------- Name (typed or printed) EX-3.44 41 BYLAWS OF TENNESSEE WOOLEN MILLS, INC. 1 EXHIBIT 3.44 BY LAWS OF TENNESSEE WOOLEN MILLS, INC. ARTICLE I OFFICES The executive offices of the corporation shall be in Wilson County, Tennessee, but the corporation may have other offices at such places as the Board of Directors may from time to time decide or as the business of the corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders shall be held at the call of the Chairman of the Board during the month of April of each year on a date and at such time and place, either within or without the State of Tennessee, as may be selected by the Chairman of the Board or the Board of Directors and designated in the call of the meeting. Section 2. Special Meeting. Special meetings of the shareholders may be called at any time by the Chairman of the Board, the Board of Directors or the holder or holders of not less than one tenth (1/10) of all the shares entitled to vote at such meeting, to be held at such time and place, either within or without the State of Tennessee, as may be designated in the call of the meeting. Section 3. Notice of Meeting. Written notice stating the place, day and hour of annual and special meetings of shareholders shall be given to each shareholder, either personally or by mail to his last address of record with the Corporation, not less than ten (10) nor more than sixty (60) days before the date of meeting. Notice of any special meeting of shareholders shall state the purpose or purposes for which the meeting is called and the person or persons calling the meeting. Notice of any annual or special meeting of shareholders may be waived by the person or persons entitled thereto by signing a written waiver of notice at any time before or after the meeting is completed, which waiver may be signed by a shareholder or by his attorney-in-fact or proxy holder. Section 4. Voting. At all meetings of shareholders, all shareholders of record shall be entitled to one vote for each share of stock standing in their name and may vote either in person or by proxy. Proxies shall be filed with the Secretary of the meeting before being voted or counted for the purpose of determining the presence of a quorum. 2 Section 5. Quorum. At all meetings of shareholders, a majority of the outstanding shares of stock entitled to vote, represented in person or by proxy, shall constitute a quorum for the transaction of business; and the vote or authorization of a majority of the shares represented at any meeting at which a quorum is present or represented shall determine the action taken on any matter that may come before the meeting unless otherwise specifically required by law or by express provision of the charter or by-laws of the corporation. Section 6. Action by Consent. Whenever the shareholders of the corporation are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by all of the persons or entities entitled to vote thereon. ARTICLE III DIRECTORS Section 1. Number and Qualifications. The business and affairs of the corporation shall be managed and controlled by a Board of Directors, who shall be three in number; provided that if all the shares of the corporation are owned of record by less than three shareholders, the number of Directors may be less than three but not less than the number of shareholders of record. Directors need not be shareholders of the corporation. Section 2. Election and Term of Office. The Directors shall be elected at the first meeting of shareholders and thereafter at the annual meetings of shareholders; but if any such annual meeting is not held or if the Directors are not elected at any such annual meeting, the Directors may be elected at any special meeting of the shareholders. Directors shall be elected by a plurality of the votes cast. The Directors shall hold office until the next annual meeting of shareholders and thereafter until their respective successors have been elected and qualified. Section 3. Meetings. Regular meetings of the Directors shall be held annually following the annual meeting of the shareholders. Special meetings of the Directors may be called at any time by the Chairman of the Board or by any two Directors on at least two days notice sent by any usual means of communication. Notice of any such meeting may be waived by the person or persons entitled thereto by signing a written waiver of notice at any time before or after the meeting is completed. Attendance of a Director at a meeting shall constitute a waiver of notice thereof unless such attendance is for the express purpose of objecting to such meeting. Any meeting of the board of Directors may be held within or without the State of Tennessee at such place as may be determined by the person or persons calling the meeting. Section 4. Quorum. A majority of the total number of Directors then in office shall constitute a quorum for the transaction of business; and the vote or action of a majority of the Directors present at any meeting at which a quorum is had shall decide any matter that may come before the meeting and shall be the act of the Board unless otherwise specifically required by law or by express provision of the charter or by-laws of the corporation. -2- 3 Section 5. Action by Consent. Any action required or permitted to be taken by the Directors of the corporation may be taken without a meeting on written consent, setting forth the action so taken, signed by all the Directors entitled to vote thereon. Section 6. Vacancies. Vacancies in the Board of Directors occurring for any reason, including an increase in the number of Directors, resignation, or the removal of any Director with or without cause, may be filled by vote of a majority of the Directors then in office although less than a quorum exists; but if the offices of a majority of the entire Board of Directors shall be vacant at the same time, such vacancies shall be filled only by vote of the shareholders. A director elected to fill any vacancy shall hold office until the next annual meeting of shareholders and thereafter until his successor has been elected and qualified. Section 7. Removal and Resignation. Any or all of the Directors may be removed with or without cause, at any time, by vote of the shareholders. Any director may resign at any time, such resignation to be made in writing and to take effect immediately or on such later date as may be specified therein without acceptance. Section 8. Committees. From time to time, a majority of the entire Board of Directors may by resolution appoint an executive committee or any other committee or committees for any purpose or purposes to the extent permitted by law, which committee or committees shall have such powers as shall be specified in the resolution of appointment. Section 9. Participation in Meetings. The members of the Board of Directors, or any committee appointed by the Board, may participate in a meeting of the Board or of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to such means shall constitute presence in person at such meeting. The Directors shall be promptly furnished a copy of the minutes of the Board of Directors' meetings. ARTICLE IV OFFICERS Section 1. Designation. The officers of the corporation shall be a Chairman of the Board, a President, one or more Vice Presidents, a Secretary and a Treasurer. Any two or more of such offices may be held by the same person except the offices of President and Secretary. Section 2. Chairman of the Board of Directors. The Chairman of the Board shall be the chief executive officer of the corporation and shall exercise all the powers and duties customarily exercised by the chief executive officer of business corporations. He shall preside at all meetings of the shareholders and the Board of Directors, and he shall call regular and special meetings of the shareholders and Board of Directors in accordance with these by-laws. He shall perform such other duties as may be prescribed by the Board. -3- 4 Section 3. President. The President shall have general supervision of the affairs and property of the corporation, subject to the direction of the Board of Directors and the Chairman of the Board. He shall manage and control the regular business of the corporation; and he may appoint agents and employees of the corporation, other than the officers elected or appointed by the Board, subject to the approval of the Board. In the absence of the Chairman of the Board, the President shall preside at any meeting of the shareholders or the Board of Directors. He shall perform such other duties as may from time to time be prescribed by the Board. Section 4. Vice President. The Vice President or Vice Presidents shall assist the President in the management of the corporation and shall have such other powers and perform such other duties as may from time to time be prescribed by the Board. In the absence, disqualification or incapacity of the President, the senior Vice President shall perform the duties and exercise the powers of the President. Section 5. Secretary. The Secretary shall keep the minutes of all meetings of the shareholders and the Board of Directors in appropriate books, and he shall attend to the giving of all notices for the corporation. He shall have charge of the seal and stock books of the corporation and such other books and papers as the Board may direct, and he shall in general perform all duties incident to the office of Secretary of the corporation. He shall perform such other duties as may from time to time be prescribed by the Board. Section 6. Treasurer. The Treasurer shall have the care and custody of all funds and securities of the corporation, and he shall in general perform all duties incident to the office of Treasurer of the corporation. He shall perform such other duties as may from time to time be prescribed by the Board. Section 7. Other Officers. The Board of Directors may appoint, or may authorize the President to appoint, assistant secretaries and assistant treasurers and such other officers as the Board may from time to time decide, who shall have such authority and perform such duties as may from time to time be prescribed by the Board or designated by the President. Section 8. Election and Term of Office. The officers shall be elected or appointed at the regular meeting of the Board of Directors following the annual meeting of shareholders, provided that any vacancy or newly created office may be filled at a special meeting of the Board. The officers shall hold office at the pleasure of the Board, and any officer may be removed at any time by a majority of the entire Board. Unless otherwise determined by the Board, each officer shall hold office until the next regular meeting of the Board following the annual meeting of shareholders and thereafter until his successor has been elected or appointed and qualified. ARTICLE V SHARES Section 1. Certificates. The shares of the corporation shall be represented by certificates in such form as the Board of Directors may from time to -4- 5 time prescribe. Such certificates shall be numbered consecutively in the order in which they are issued, which numbering system may be separated by class or series if there shall be more than one class or series of shares. The certificates shall be signed by the Chairman of the Board and Secretary unless the Board of Directors shall otherwise designate any two officers of the corporation for such purpose. Section 2. Record. The name and address of all persons to whom the shares of the corporation are issued, the number of shares, and the date of issue shall be entered on the books of the corporation. It shall be the duty of each shareholder to notify the corporation of his address. Section 3. Transfers. The shares of the corporation are transferrable only on the books of the corporation by the registered holder thereof, either in person or by power of attorney, and upon delivery and surrender of the certificate representing such shares properly endorsed for transfer. Certificates exchanged or surrendered shall be cancelled by the Secretary and placed in the corporate records. Section 4. Loss of Certificates. In case of the loss, mutilation or destruction of a certificate representing shares of the corporation, a duplicate certificate may be issued on such terms as the Board of Directors shall prescribe. ARTICLE VI SEAL Section 1. Authority to Adopt. The corporation may have a seal in such form as the Board of Directors may adopt, and the Board of Directors may from time to time change the form of the seal of the corporation. Section 2. Scroll Seal. In the event the Board shall not have adopted a seal or if it is inconvenient to use the adopted seal at any time, an authorized signature made in the name of and on behalf of the corporation followed by the word "Seal" enclosed in parentheses or scroll shall be deemed the seal of the corporation. ARTICLE VII FISCAL YEAR The fiscal year of the corporation shall end on December of each year, but the Board of Directors may from time to time change the fiscal year of the corporation. ARTICLE VIII INDEMNITY Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action suit or proceeding, whether civil, -5- 6 criminal, administrative or investigative (including any action by or in the right of the corporation) by reason of the fact that he is or was serving as an officer or director of the corporation or is or was serving at the request of the corporation as a Director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the corporation against expenses (including reasonable attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith for a purpose which he reasonably believed to be in the best interest of the corporation, and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful, to the maximum extent permitted by, and in the manner provided by, the Tennessee General Corporation Act. ARTICLE IX AMENDMENTS The shareholders of the corporation may adopt new by-laws and may amend or repeal any or all of these by-laws at any annual or special meeting; and also the Board of Directors may adopt new by-laws and may amend or repeal any or all of these by-laws by the vote of a majority of the entire Board, provided that the Board shall make no amendment changing the number of Directors, and provided further that any by-law adopted by the Board may be amended or repealed by the shareholders. CERTIFICATION I certify that the foregoing by-laws were adopted by the Incorporator of this corporation on the 18th day of May, 1984. /s/ JAMES R. BRUBAKER ---------------------------------------------- James R. Brubaker Chairman of the Board -6- EX-4.1 42 INDENTURE, DATED AS OF DECEMBER 18, 1997 1 EXHIBIT 4.1 ================================================================================ ----------------- PILLOWTEX CORPORATION SERIES A AND SERIES B 9% SENIOR SUBORDINATED NOTES DUE 2007 INDENTURE ----------------- Dated as of December 18, 1997 ----------------- Norwest Bank Minnesota, National Association Trustee ----------------- ================================================================================ 1 2 PILLOWTEX CORPORATION Reconciliation and Cross-reference between Trust Indenture Act of 1939 and Indenture dated as of December 18, 1997
Trust Indenture Act Section Indenture Section - ----------------- ----------------- Section 310 (a)(1)....................................7.10 (a)(2)....................................7.10 (a)(3)..........................Not applicable (a)(4)..........................Not applicable (a)(5)....................................7.10 (b).................................7.03, 7.10 Section 311 (a).......................................7.11 (b).......................................7.11 (c).............................Not applicable Section 312 (a).......................................2.05 (b)......................................12.03 (c)......................................12.05 Section 313 (a).......................................7.06 (b).......................................7.06 (c).......................................7.06 (d).......................................7.06 Section 314 (a).................................4.03, 4.04 (b).............................Not applicable (c)................................4.04, 12.04 (d).............................Not applicable (e)...............................12.04, 12.05 Section 315 (a).......................................7.01 (b).......................................7.05 (c).......................................7.01 (d).......................................7.01 (e).......................................6.11 Section 316 (a).................................6.04, 6.05 (b).................................6.06, 6.07 (c).......................................6.10 Section 317 (a).................................6.07, 6.08 (b).......................................2.04 Section 318 (a)......................................12.01
3 TABLE OF CONTENTS
PAGE ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 1.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.04. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE 2. THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 2.04. Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 2.06 . Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 2.08. Outstanding Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE 3. REDEMPTION AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 3.02. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
i 4 Section 3.06. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 3.07. Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 3.08. Mandatory Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 3.09. Offer to Purchase by Application of Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 3.10. Special Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Section 4.01. Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Section 4.02. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Section 4.03. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Section 4.04. Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Section 4.05. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 4.07. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. . . . . . . . . . . . . 42 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. . . . . . . . . . . . . . . . . . . . . 43 Section 4.10. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Section 4.11. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Section 4.12. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 4.13. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 4.14. Offer to Repurchase Upon Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 4.15. No Senior Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Section 4.16. Limitation on Issuances of Guarantees of Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 48 Section 4.17. Payments for Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 4.18. Additional Note Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 4.19. Deposit of Proceeds with Trustee Pending Consummation of the Merger. . . . . . . . . . . . . . . . . 49
ii 5 ARTICLE 5. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.01. Merger, Consolidation, or Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 5.02. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 ARTICLE 6. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 6.04. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Section 6.05. Control by Majority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.07. Rights of Holders of Notes to Receive Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 ARTICLE 7. TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Section 7.06. Reports by Trustee to Holders of the Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 7.11. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . . . . 61
iii 6 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . 61 Section 8.02. Legal Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 8.03. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 8.04. Conditions to Legal or Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. . . 63 Section 8.06. Repayment to Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 8.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 9.01. Without Consent of Holders of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 9.02. With Consent of Holders of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 9.03. Compliance with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 9.04. Revocation and Effect of Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 9.05. Notation on or Exchange of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 9.06. Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE 10. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 10.01. Agreement to Subordinate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 10.02. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 10.03. Default on Designated Senior Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 10.04. Acceleration of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 10.05. When Distribution Must Be Paid Over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 10.06. Notice by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 10.07. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 10.08. Relative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 10.09. Subordination May Not Be Impaired by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 10.10. Distribution or Notice to Representative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
iv 7 Section 10.11. Rights of Trustee and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 10.12. Authorization to Effect Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 10.13. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 ARTICLE 11. NOTE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 11.01. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 11.02. Subordination of Note Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 11.03. Limitation on Guarantor Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 11.04. Execution and Delivery of Note Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 11.05. Guarantors May Consolidate, etc., on Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 11.06. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 ARTICLE 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 12.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 12.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 12.03. Communication by Holders of Notes with Other Holders of Notes. . . . . . . . . . . . . . . . . . . 75 Section 12.04. Certificate and Opinion as to Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 12.05. Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 12.06. Rules by Trustee and Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders. . . . . . . . . . . . . 76 Section 12.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 12.09. No Adverse Interpretation of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 12.10. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 12.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 12.12. Counterpart Originals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 12.13. Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
v 8 EXHIBITS EXHIBIT A FORM OF NOTE EXHIBIT B FORM OF CERTIFICATE OF TRANSFER EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE EXHIBIT D FORM OF CERTIFICATE OF ACQUIRING IAI EXHIBIT E FORM OF NOTE GUARANTEE EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE vi 9 INDENTURE dated as of December 18, 1997 between Pillowtex Corporation, a Texas corporation (the "Company"), each of the existing domestic subsidiaries of the Company listed on the signature page of this Indenture (together, the "Initial Guarantors") and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"). The Company, the Initial Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 9% Series A Senior Subordinated Notes due 2007 (the "Series A Notes") and the 9% Series B Senior Subordinated Notes due 2007 (the "Series B Notes" and, together with the Series A Notes, the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "144A Global Note" means a global note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "Acquired Indebtedness" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person that was not incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "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, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that, beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control, except with respect to the definition of "Related Party" herein. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Cedel that apply to such transfer or exchange. "Asset Sale" means the sale, lease, conveyance or other disposition of any assets (including; without limitation, by way of a sale and leaseback) whether in a single transaction or a series of related transactions that (a) have a fair market value in excess of $1,000,000 or (b) net proceeds in excess of $1,000,000; provided that, the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of this Indenture described in Section 4.15 herein and/or the provisions described in Section 5.01 herein and shall not be deemed to be "Asset Sales." Notwithstanding the foregoing, the following transactions shall not constitute Asset Sales: (i) the conveyance, sale, transfer, 10 assignment or other disposition of inventory and other property in the ordinary course of business; (ii) the sale or disposition of damaged, worn out or other obsolete personal property in the ordinary course of business so long as such property is no longer necessary for the proper conduct of the business of the Company or such Restricted Subsidiary, as applicable; (iii) the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; (iv) the granting of Liens not prohibited by this Indenture; (v) sales of accounts receivable and related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary or by a Receivables Subsidiary in connection with a Qualified Receivables Transaction; (vi) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary) or by a Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary) to the Company or to another Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary); (vii) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary (other than a Receivables Subsidiary) to the Company or to another Wholly Owned Subsidiary (other than a Receivables Subsidiary); (viii) a Restricted Payment that is permitted by Section 4.07 herein; and (ix) the execution of contracts to provide manufacturing consideration and other services, including in connection with Asset Sales. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company, or any authorized committee of the Board of Directors. "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. "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 (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than 12 months from the date of acquisition, (iii) United States dollar or Canadian dollar denominated (or foreign currency fully hedged) time deposits, certificates of deposit, Eurodollar time deposits or Eurodollar certificates of deposit of (a) any domestic commercial bank of recognized standing having capital and surplus in excess of $500 million or (b) any bank whose short term commercial paper rating from Standard & Poor's is at least A-1 or the equivalent thereof or from Moody's is at least A-l or the equivalent thereof (any such bank being an "Approved Lender"), in each ease with maturities of not more than 12 months from the date of acquisition; and (iv) commercial paper 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 Standard & Poor's or P-2 (or the equivalent thereof) or better by Moody's and maturing within 12 months of the date of acquisition. 2 11 "Cedel" means Cedel Bank, SA. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act) other than the Principals or their Related Parties, (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Principals and their Related Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; provided, however, the Merger shall not constitute a Change of Control. "Collateral" means (i) the Collateral Account and the Mutual Fund Account, (ii) the Special Redemption Amount and all other cash or Cash Equivalents deposited in the Collateral Account and the Mutual Fund Account from time to time pursuant to Section 4.19 hereof, (iii) all rights and privileges of the Company with respect to the Collateral Account, the Mutual Fund Account and such Cash and Cash Equivalents, (iv) all dividends, interest and other payments and distributions made on or with respect to such Cash Equivalents, the Collateral Account or the Mutual Fund Account and (v) all proceeds of any of the foregoing. "Company" means Pillowtex Corporation, and any and all successors thereto. "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (ii) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash charges were deducted in computing such Consolidated Net Income minus (v) non-cash items of such Person and its Restricted Subsidiaries increasing Consolidated Net Income for such period, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Restricted Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent (and in same proportion) that the Net Income of such Restricted Subsidiary 3 12 was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividend to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its shareholders. "Consolidated Net Income" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its shareholders, (iii) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded, and (v) the Net Income of any Unrestricted Subsidiary shall be excluded. "Consolidated Net Worth" means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common shareholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person's balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (x) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the date of the Indenture in the book value of any asset owned by such Person or a consolidated Restricted Subsidiary of such Person, (y) all investments as of such date in unconsolidated Restricted Subsidiaries and in Persons that are not Subsidiaries (except, in each case, Permitted Investments), and (z) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the Issue Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company. "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. 4 13 "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Designated Senior Indebtedness" means (i) so long as Senior Indebtedness is outstanding under the New Senior Credit Facilities, all Senior Indebtedness outstanding under the New Senior Credit Facilities and (ii) thereafter, any other Senior Indebtedness permitted under this Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as "Designated Senior Indebtedness." "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 that is 91 days after the date on which the Notes mature. "Eligible Inventory" means, as of any date, all inventory of the Company and any of its Subsidiaries, wherever located, valued in accordance with GAAP and shown on the balance sheet of the Company for the quarterly period most recently ended prior to such date for which financial statements of the Company are available. "Eligible Receivables" means, as of any date, all accounts receivable of the Company and any of its Restricted Subsidiaries arising out of the sale of inventory in the ordinary course of business, valued in accordance with GAAP and shown on the balance sheet of the Company for the quarterly period most recently ended prior to such date for which financial statements of the Company are available. "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). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means the Notes issued in the Exchange Offer pursuant to Section 2.06(f) hereof. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. 5 14 "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means (i) Indebtedness of the Company and its Restricted Subsidiaries in existence on the Issue Date and (ii) Indebtedness of Fieldcrest and its Subsidiaries outstanding on the effective date of the Merger; provided that immediately following the consummation of the Merger all Indebtedness of Fieldcrest outstanding under its existing credit facilities shall be refinanced with the proceeds of borrowings under the New Senior Credit Facility and Fieldcrest's obligations under its 11.25% Senior Subordinated Debentures shall have been satisfied and discharged in accordance with the terms of the Indenture governing such securities. "Fieldcrest" means Fieldcrest Cannon, Inc., a Delaware corporation. "Fixed Charges" means, with respect to any Person for any period, the sum of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period calculated in conformity with GAAP, whether paid or accrued (including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations but excluding amortization of debt, issuance costs and deferred financing fees, incurred in connection with the Merger on or before the Issue Date) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such guarantee or Lien is called upon) and (iv) the product of (a) all cash dividend payments (and non-cash dividend payments in the case of a Person that is a Restricted Subsidiary) on any series of preferred stock of such Person and its Restricted Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall 6 15 be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "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 Issue Date. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof. "Global Note Legend" means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "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. "Guarantor" means each of (i) PTEX Holding Company, a Delaware corporation; Pillowtex Management Services Company, a Delaware business trust; Pillowtex, Inc., a Delaware corporation; Manetta Home Fashions, Inc., a North Carolina corporation; Beacon Manufacturing Company, a North Carolina corporation; and Tennessee Woolen Mills, Inc., a Tennessee corporation; (ii) upon consummation of the Merger, Fieldcrest Cannon, Inc., a Delaware corporation; Crestfield Cotton Company, a Tennessee corporation; Encee, Inc., a Delaware corporation; Fieldcrest Cannon Financing, Inc., a Delaware corporation; Fieldcrest Cannon Licensing, Inc., a Delaware corporation; Fieldcrest Cannon Sure Fit, Inc., a Delaware corporation; Fieldcrest Cannon Transportation, Inc., a Delaware corporation; St. Marys, Inc., a Delaware corporation: Amoskeag Company, a Delaware corporation; Amoskeag Management Corporation, a Delaware corporation; Bangor Investment Company, a Delaware corporation; Moore's Falls Corporation, a Delaware corporation; and Downeast Securities Corporation, a Delaware corporation; and (iii) any other Subsidiary that executes and delivers to the Trustee a Supplemental Indenture in substantially the form of Exhibit F hereto in accordance with the provisions of this Indenture, and their respective successors and assigns. "Guarantor Senior Indebtedness" means, with respect to any Guarantor, (i) the guarantee of such Guarantor of the Company's Obligations under the New Senior Credit Facilities and (ii) any other Indebtedness permitted to be incurred by such Guarantor under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Guarantee of such Guarantor. Notwithstanding anything to the contrary in the foregoing, Guarantor Senior Indebtedness will not include (u) any Indebtedness of such Guarantor representing a guarantee of Indebtedness of the Company or any other Guarantor which Indebtedness is subordinate or junior to, or pari passu with, the Notes or the Guarantee of such other 7 16 Guarantor, as the case may be, (v) any Indebtedness that is expressly subordinate or junior in right of payment to any other Indebtedness of such Guarantor, (w) any liability for federal, state, local or other taxes owed or owing by such Guarantor, (x) any Indebtedness of such Guarantor to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of any Indebtedness that is incurred in violation of the Indenture. "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, the value of foreign currencies and the value of commodities purchased by the Company or any of its Restricted Subsidiaries in the ordinary course of business. "Holder" means a Person in whose name a Note is registered. "IAI Global Note" means the global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors. "Indebtedness" means, with respect to any Person, (a) any indebtedness of such Person, whether or not contingent, (i) in respect of borrowed money; (ii) evidenced by bonds, notes, debentures or similar instruments; (iii) evidenced by letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances; (iv) representing Capital Lease Obligations; (v) representing the balance deferred and unpaid of the purchase price of any property; or (vi) representing any net obligations under Hedging Obligations, if and only 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, and excluding therefrom any portion of any indebtedness constituting an accrued expense or trade payable; (b) all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is assumed by such Person) and, (c) to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person. "Indenture" means this Indenture, as amended or supplemented from time to time. "Independent" means, with respect to the Company and its Subsidiaries, any person who (i) is in fact independent, (ii) does not have any direct financial interest or any material indirect financial interest in the Company or any of its Subsidiaries, or in any Affiliate of the Company or any of its Subsidiaries (other than as a result of holding securities of the Company) and (iii) is not an officer, employee, promoter, underwriter, trustee, partner or person performing similar functions for the Company or any of its Subsidiaries. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Purchasers" means NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs. 8 17 "Investment Assets" means assets and property of the Company and its Restricted Subsidiaries held for investment on the effective date of the Merger with an aggregate fair market value not exceeding $25.0 million. "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 or capital contributions (excluding commission, travel 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, together with all 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 shall not be deemed to be an Investment. "Issue Date'' means the date of this Indenture. "Legal Holiday" means a Saturday, a Sunday or a day on which the Federal Reserve Bank, banking institutions or the Depository Trust Company in the City of New York 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 at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Transmittal" means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "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 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, any capital lease and any other preferential arrangement that has substantially the same practical effect as a security interest in an asset). "Liquidated Damages" means all liquidated damages then owing pursuant to Section [5] of the Registration Rights Agreement. "Merger" means the merger of a wholly-owned subsidiary of the Company with and into Fieldcrest. "Net Income" with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss). 9 18 "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting, and investment banking fees, and sales commissions), any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of Indebtedness (other than Indebtedness under the New Senior Credit Facilities) secured by a Lien on the asset or assets that were the subject of such Asset Sale, and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. "New Senior Credit Facilities" means the credit agreements to be entered into on or prior to the Issue Date by and among the Company, NationsBanc Montgomery Securities, Inc., as arranger and syndication agent, certain lending parties thereto and NationsBank of Texas, N.A., as agent, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreements and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence, irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "New Senior Credit Facilities" shall include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any New Senior Credit Facilities and all refundings, refinancings and replacements of any New Senior Credit Facilities, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as borrowers and issuers include one or more of the Company and its Subsidiaries and their respective successors and assigns, or (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder. "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 (other than the Notes being offered hereby) 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 the documents governing such Indebtedness that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person" means a Person who is not a U.S. Person. "Note Custodian" means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto. "Note Guarantee" means the Guarantee by each Guarantor of the Company's payment obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture. "Notes" has the meaning assigned to it in the preamble to this Indenture. 10 19 "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Offering" means the offering of the Notes by the Company. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 11.06 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee. "Pari Passu Indebtedness" means Indebtedness ranking part passu in right of payment with the Notes. "Participant" means, with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). "Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Permitted Investment" means (i) Investments by the Company or any Guarantor in any person that is or immediately after such Investment becomes a Guarantor, or immediately after such Investment merges or consolidates into the Company or any Guarantor in compliance with the terms of the Indenture, provided that such Person is engaged in all material respects in Related Business; (ii) Investments in the Company by any Guarantor; provided that in the case of Indebtedness constituting any such Investment, such Indebtedness shall be unsecured and subordinated in all respects to the Company's obligations under the Notes; (iii) Hedging Obligations entered into in the ordinary course of the Company's or its Subsidiaries' businesses and otherwise in compliance with the Indenture; (iv) Investments in securities of trade creditors or customers received in settlement of obligations that arose in the ordinary course of business or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (v) Investments made by the Company or any of its Subsidiaries as a result of non-cash consideration received in connection with an Asset Sale made in compliance with Section 4.10 hereof; (vi) any Investment by the Company or a Subsidiary of the Company in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other person or assets in connection with a Qualified Receivables Transaction; provided, that the foregoing Investment in any such person is in the form of a Purchase Money Note, an equity interest or interests in accounts receivable generated by the Company or a Subsidiary of the Company and transferred to any person in connection with a Qualified Receivables Transaction or any such person owning such accounts receivable; (vii) Investments by the Company outstanding on the Issue Date; (viii) acquisitions by the Company of assets, Equity Interests or other securities for consideration consisting 11 20 solely of Capital Stock (other than Disqualified Stock) of the Company; and (ix) Investments in Cash Equivalents or money market funds which invest solely in Cash Equivalents. "Permitted Junior Securities" means common equity securities or debt securities of the Company or any Guarantor that are subordinated at least to the same extent as the Notes Senior Indebtedness and any securities issued in exchange for Senior Indebtedness. "Permitted Lien" means (i) Liens existing on the Issue Date; (ii) Liens securing Senior Indebtedness and Liens on assets of Restricted Subsidiaries securing Guarantor Senior Indebtedness permitted to be incurred under the Indenture; (iii) Liens securing Permitted Refinancing Indebtedness which is incurred to refinance any Indebtedness which has been secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture, provided, however, that such Liens (a) are not materially less favorable to the Holders and are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being refinanced and (b) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so refinanced; (iv) Liens securing the Notes; (v) Liens securing Indebtedness of a Person existing at the time such Person becomes a Subsidiary, provided that such liens were in existence prior to the contemplation of such acquisition, merger or consolidation, were not incurred in anticipation thereof, and do not extend to any other assets; (vi) Liens arising from Indebtedness permitted to be incurred under clause (iii) of Section 4.09 hereof, provided such Liens relate solely to the property, plant or equipment which is purchased, constructed or improved pursuant to such financing; (vii) Liens imposed by governmental authorities for taxes, assessments or other charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or any of its Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (viii) statutory Liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other like Liens arising by operation of law in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof; (ix) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security or similar obligations, including any Lien securing letters of credit issued in the ordinary course of business in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) incurred in the ordinary course of business; (x) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (xi) easements, rights-of-way, zoning restrictions, minor defects or irregularities with title and other similar charges or encumbrances in respect of real property not materially detracting from the value of the property subject thereto and not interfering in any material respect with the ordinary conduct of business of the Company or any of its Subsidiaries; (xii) Liens upon specific items of inventory or other goods and proceeds of any person securing such person's obligations in respect of banker's acceptances issued or created for the account of such person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (xiii) Liens in favor of the Company or a Guarantor; (xiv) leases or subleases granted to others not interfering in any material respect with the business of the Company or its Subsidiaries; (xv) Liens arising out of consignment or similar arrangements for the sale of goods entered into by the Company or any of its Subsidiaries in the ordinary course of business; and (xvi) Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in connection with a Qualified Receivables Transaction. 12 21 "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (i) the aggregate principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the aggregate principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary that is the obliger on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization 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). "Principals" means Charles M. Hansen, Jr., his spouse and any of his lineal descendants. "Private Placement Legend" means the legend set forth in Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "Purchase Money Note" means a promissory note evidencing a line of credit, which may be irrevocable, from, or evidencing other Indebtedness owed to, the Company or any Subsidiary of the Company in connection with a Qualified Receivables Transaction, which note shall be repaid from cash available to the maker of such note, 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 paid in connection with the purchase of newly generated receivables. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Qualified Receivables Transaction" means any transaction or series of transactions that may be entered into by the Company or any Subsidiary pursuant to which the Company or any Subsidiary may sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a transfer by the Company or any Subsidiary) and (ii) any other person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any Subsidiary of the Company, and any assets related thereto, including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts 13 22 receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. "Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of the Company (other than a Subsidiary Guarantor) which engages in no activities other than in connection with the financing or sale of accounts receivable and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary (i) no portion of any Indebtedness or any other Obligations (contingent or otherwise) of which (a) is guaranteed by the Company or any other Restricted Subsidiary of the Company (excluding guarantees of obligations (other than the principal of and interest on, Indebtedness) pursuant to Standard Securitization Undertakings, (b) is recourse to or obligates the Company or any other Restricted Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (c) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (ii) with which neither the Company nor any other Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Company or such other Restricted Subsidiary of the Company 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 accounts receivable; and (iii) to which neither the Company nor any of its other Restricted Subsidiaries 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 the 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. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of December 18, 1997, by and among the Company and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Note" means a global Note bearing the Private Placement Legend and deposited with or on behalf of the Depositary and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "Related Business" means the business conducted (or proposed to be conducted) by the Company and its Subsidiaries as of the Issue Date and any and all businesses that in the good faith judgment of the Board of Directors of the Company are materially related businesses. "Related Party" with respect to any Principal means any trust, corporation, partnership or other entity, the beneficiaries, shareholders, partners, owners, or Persons beneficially holding a 50% or more controlling interest of which consist of such Principal. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Indebtedness. 14 23 "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Investment" means any Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" means each Subsidiary of the Company that is not designated as a Unrestricted Subsidiary in accordance with the provisions of the Indenture. "Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated the Securities Act. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means (i) Indebtedness under the New Senior Credit Facilities (including interest in respect thereof accruing after the commencement of any bankruptcy or similar proceeding to the extent that such interest is allowable as a bankruptcy claim in such proceeding) and (ii) any other Indebtedness permitted to be incurred by the Company under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes. Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include (v) any Indebtedness that is expressly subordinate or junior in right of payment to any other Indebtedness of the Company, (w) any liability for federal, state, local or other taxes owed or owing by the Company (x) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of Indebtedness that is incurred in violation of the Indenture. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of this Indenture. "Special Redemption Amount" has the meaning provided in Section 4.19. 15 24 "Special Redemption Date" means February 16, 1998. "Standard Securitization Undertaking" means representations, warranties, covenants, and indemnities entered into by the Company or any Subsidiary of the Company that are reasonably customary in an accounts receivable transaction. "Stated Maturity" means, with respect to any payment of interest on or principal of any Indebtedness, the date on which such payment was scheduled to be made in the documentation governing such Indebtedness, without regard to the occurrence of any subsequent event or contingency. "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 of one or more Subsidiaries of such Person (or any combination thereof). "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Global Note" means a permanent global Note in the form of Exhibit A1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Subsidiary" means any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (i) has no Indebtedness other than Non-Recourse Debt; (ii) 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; (iii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligations (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (iv) 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 Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing 16 25 requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the 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 described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," 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 Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period, and (ii) no Default or Event of Default would be in existence following such designation. "U.S. Person" means a U.S. person as defined in Rule 902(o) under the Securities Act. "Voting Stock" means, with respect to any Person as of any date, the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment, by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Subsidiary" of any Person means a 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 and one or more Wholly Owned Subsidiaries of such Person. SECTION 1.02. OTHER DEFINITIONS.
Defined in Term Section "Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 "Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09 "Authentication Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02 "Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14 "Change of Control Payment" . . . . . . . . . . . . . . . . . . . . . . . . . 4.14 "Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . 4.14 "Collateral Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19 "Collateral Funds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19 "Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03 "Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 "Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 "incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09 "Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03 "Mutual Fund Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19 "Net Offering Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19 "Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
17 26 "Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09 "Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03 "Productive Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 "Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09 "Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03 "Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.07 "Special Redemption" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01 "Special Redemption Amount" . . . . . . . . . . . . . . . . . . . . . . . . . 4.19
SECTION 1.03. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security Holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes and the Note Guarantees means the Company and the Guarantors, respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; and (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. 18 27 ARTICLE 2. THE NOTES SECTION 2.01.FORM AND DATING. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (a) Global Notes. Notes issued in global form shall be substantially in the form of Exhibit A1 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A1 attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (b) Temporary Global Notes. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, at its New York office, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Cedel Bank certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in 19 28 the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (c) Euroclear and Cedel Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Cedel Bank. SECTION 2.02. EXECUTION AND AUTHENTICATION. One Officer shall sign the Notes for the Company by manual or facsimile signature. The Company's seal may be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Company signed by two Officers (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar. 20 29 The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA Section 312(a). SECTION 2.06 . TRANSFER AND EXCHANGE. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or to the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other 21 30 than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in (ii) accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (iii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant (iv) account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (v) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: 22 31 (A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable. (vi) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act 23 32 and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (vii) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and 24 33 the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (viii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein 25 34 and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (ix) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (x) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a 26 35 certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (c) above, the Regulation S Global Note, and in all other cases, the IAI Global Note. (xi) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such 27 36 exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (xii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: 28 37 (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such 29 38 Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER 30 39 APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY." (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the 31 40 Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. SECTION 2.07. REPLACEMENT NOTES If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. 32 41 SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. SECTION 2.10. TEMPORARY NOTES Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. SECTION 2.11. CANCELLATION. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Company. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation. 33 42 SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date (other than a redemption pursuant to Paragraph 6 of the Notes ("Special Redemption") and, in the event of a Special Redemption, five Business Days before notice of the Special Redemption is to be mailed to Holders (unless a shorter notice period shall be satisfactory to the Trustee), an Officers' Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. SECTION 3.03. NOTICE OF REDEMPTION Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date (other than in connection with a Special Redemption), the Company 34 43 shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. In the event of a Special Redemption, at least 5 Business Days before mailing of Notice of Special Redemption, the Company shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder, with a copy to the Trustee. In the event of a Special Redemption on the Special Redemption Date the Company shall provide the Trustee with notice on or prior to 9:30 a.m. New York City time on the Business Day immediately preceding the Special Redemption Date to effect such Special Redemption. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Company's request, the Trustee shall have the option to give the notice of redemption in the Company's name and at its expense; provided, however, that the Company shall have delivered to the Trustee, at least 45 days prior to the redemption date (other than in connection with a Special Redemption), an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF REDEMPTION PRICE One Business Day prior to the redemption date (other than in connection with a Special Redemption), the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee 35 44 or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon the Company's written request, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. (a) The Notes shall not be redeemable (other than a Special Redemption) at the Company's option prior to December 15, 2002. Thereafter, the Notes shall be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon to the applicable redemption date, if redeemed during the 12-month period, beginning on December 15 of the years indicated below:
Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500% 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
(b) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. SECTION 3.08. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption payments with respect to the Notes (other than a Special Redemption). SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS. In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an Asset Sale Offer, it shall follow the procedures specified below. 36 45 The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than five Business Days after the termination of the Offer Period (the "Purchase Date"), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer. Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state: (a) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrete or accrue interest; (j) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or accrue interest after the Purchase Date; (d) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may only elect to have all of such Note purchased and may not elect to have only a portion of such Note purchased; (e) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (f) that Holders shall be entitled to withdraw their election if the Company, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; (g) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such 37 46 adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $1,000, or integral multiples thereof, shall be purchased); and (h) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon written request from the Company shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. SECTION 3.10. SPECIAL REDEMPTION. On the Special Redemption Date, the Notes shall be subject to mandatory redemption at a redemption price equal to 101% of the principal amount of the Notes, plus accrued interest to the date of redemption, if the Merger is not consummated prior to the Special Redemption Date. The Company shall have the option to redeem the Notes at any time on or prior to the Special Redemption Date if the Merger has not been consummated on or prior to such date at a redemption price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of redemption. ARTICLE 4. COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Company shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition 38 47 interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 4.03. SECTION 4.03. REPORTS. (a) Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Holders of Notes (i) 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 under the Exchange Act if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management's Discussion and Analysis of Financial Condition and Results of Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operation of the Unrestricted Subsidiaries of the Company) and, with respect to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company shall file a copy of all such information and reports with the Commission for public availability and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA Section 314(a). (b) For so long as any Notes remain outstanding, the Company and the Guarantors shall 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. 39 48 SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. SECTION 4.05. TAXES. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. 40 49 SECTION 4.07. RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Equity Interests of the Company or any of its Restricted Subsidiaries (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) to the direct or indirect holders of the Equity Interests of the Company or any of its Restricted Subsidiaries in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company, dividends or distributions payable to the Company or any Restricted Subsidiary of the Company (other than a Receivables Subsidiary) or dividends or distributions made by a Restricted Subsidiary of the Company (other than a Receivables Subsidiary) to all holders of its common stock on a pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company, any Restricted Subsidiary of the Company or any direct or indirect parent of the Company, (other than any such Equity Interests owned by the Company or any Restricted Subsidiary of the Company (other than a Receivables Subsidiary)); (iii) make any payment on or in respect of, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is pari passu with or subordinated to the Notes, except at Stated Maturity or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (v) and (y) of the next succeeding paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) commencing on the effective date of the Merger to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds received by the Company from the issue or sale subsequent to the date of the Indenture of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (iii) to the extent that any Restricted Investment that was made after the date of the Indenture is sold for cash or otherwise liquidated or paid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment, plus (iv) $20.0 million. 41 50 The foregoing provisions will not prohibit (v) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (w) the making of any Restricted Investment, or the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company, in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of other Equity Interests of the Company (other than any Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such Restricted Investment, redemption, repurchase, retirement or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (x) the defeasance, redemption or repurchase of pari passu or subordinated Indebtedness with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness or the substantially concurrent sale (other than to a Restricted Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement or other acquisition shall be excluded from clause (c) (ii) of the preceding paragraph; (y) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company's (or any of its Subsidiaries') management pursuant to any management equity subscription agreement or stock option agreement in effect as of the date of the Indenture; provided that (A) the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any 12-month period plus the aggregate cash proceeds received by the Company during such 12-month period from any reissuance of Equity Interests by the Company to members of management of the Company and its Restricted Subsidiaries, and (B) no Default or Event of Default shall have occurred and be continuing immediately after such transaction; and (z) so long as no Default or Event of Default shall have occurred and be continuing, ordinary dividends paid by the Company in respect of its Common Stock in an aggregate amount not to exceed $6.0 million since the date of the Indenture. The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. For purposes of making such determination, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated shall be deemed to be Restricted Payments at the time of such designations and shall reduce the amount available for Restricted Payments under the first paragraph of this Section 4.07. All such outstanding Investments shall be deemed to constitute Investments in an amount equal to the fair market value of such Investments at the time of such designation. Such designation shall only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The amount of all Restricted Payments (other than cash) shall be the fair market value (evidenced by a resolution of the Board of Directors or a committee of the Board of Directors having at least one Independent director and set forth in an Officers' Certificate delivered to the Trustee) on the date of the Restricted Payment of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, which calculations may be based upon the Company's latest available financial statements. The Merger (including the payment of the Merger consideration) shall not constitute a Restricted Payment under this Section 4.07. 42 51 SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i) (a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. The foregoing shall not apply to encumbrances or restrictions existing under or by reason of (a) applicable law, (b) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (c) customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices, (d) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (iii) above on the property so acquired, or (e) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive than those contained in the agreements governing the Indebtedness being refinanced or (f) any Purchase Money Note, or other Indebtedness or contractual requirements of a Receivables Subsidiary, in each case, incurred in connection with a Qualified Receivables Transaction, provided that such restrictions apply only to such Receivables Subsidiary. SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Indebtedness) and that the Company shall not issue any Disqualified Stock, and shall not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, that (x) the Company and the Guarantors may incur Indebtedness (including Acquired Indebtedness) and (y) the Company may issue shares of Disqualified Stock, in each case if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred, or the Disqualified Stock had been issued, as the case may be, at the beginning of such four-quarter period. The foregoing provisions will not apply to: (i) the incurrence by the Company of Indebtedness under the New Senior Credit Facilities (and guarantees thereof by the Guarantors) in an aggregate principal amount at any time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Subsidiaries thereunder) not to exceed the greater of (x) $600.0 million and (y) the sum of 80% of Eligible Receivables and 65% of Eligible Inventory, less, in the case of each of clause (x) and clause (y), the aggregate amount of all Net 43 52 Proceeds of Asset Sales applied to permanently reduce the commitments with respect to such Indebtedness pursuant to Section 4.10 hereof; (ii) the incurrence by the Company of Indebtedness represented by the Notes and the incurrence by the Guarantors of Indebtedness represented by the Guarantees; (iii) the incurrence by the Company or any of its Subsidiaries of Indebtedness represented by Capital Lease Obligations (whether or not incurred pursuant to sale and leaseback transactions), mortgage financing or purchase money obligations, in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed $15.0 million at any time outstanding; (iv) the incurrence by the Company or any of its Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Existing Indebtedness or Indebtedness that was permitted by the Indenture to be incurred (other than any such Indebtedness incurred pursuant to clause (i), (iii), (v), (vi), (vii) (viii) or (xiii) of this paragraph ); (v) the incurrence by the Company or any of its Wholly Owned Subsidiaries (other than a Receivables Subsidiary) of intercompany Indebtedness between or among the Company and any of its Wholly Owned Subsidiaries (other than a Receivables Subsidiary); provided, however, that (i) if the Company is the obliger on such Indebtedness, such Indebtedness is expressly subordinate to the payment in full of all Obligations with respect to the Notes and (ii) (A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Subsidiary (other than a Receivables Subsidiary) and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Subsidiary (other than a Receivables Subsidiary) shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be; (vi) the incurrence by the Company or any Subsidiary of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk that is permitted by the terms of the Indenture to be incurred; (vii) the incurrence by the Company of Hedging Obligations under commodity hedging and currency exchange agreements; provided that, such agreements were entered into in the ordinary course of business for the purpose of limiting risks that arise in the ordinary course of business; (viii) the incurrence of Indebtedness of a Guarantor represented by guarantees of Indebtedness of the Company that has been incurred in accordance with the terms of the Indenture; (ix) the incurrence of Indebtedness by the Company and its Subsidiaries solely in respect of performance bonds, workers' compensation claims, payment obligations in connection with self-insurance and other similar requirements (to the extent that such incurrence does not result in the incurrence of any obligation to repay any obligation relating to borrowed money of 44 53 others) in the ordinary course of business in accordance with customary industry practices, in amounts and for the purpose customary in the Company's industry; (x) Existing Indebtedness; (xi) the incurrence of Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any such obligations of the Company or any such Subsidiary pursuant to such agreements, in each case incurred in connection with the disposition of any business, assets or Subsidiary of the Company, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition, provided that none of the foregoing results in Indebtedness required to be reflected as indebtedness on the balance sheet of the Company or any such Subsidiary in accordance with GAAP and the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed 100% of the gross proceeds actually received by the Company and its Subsidiaries in connection with such disposition; (xii) the incurrence of Indebtedness by a Receivables Subsidiary that is not recourse to the Company or to any other Subsidiary of the Company (other than Standard Securitization Undertakings) incurred in connection with a Qualified Receivables Transaction; (xiii) the incurrence by the Company of Indebtedness (in addition to Indebtedness permitted by any other clause of this paragraph) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $20.0 million; and (xiv) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was not permitted by this clause (xiv). SECTION 4.10. ASSET SALES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to consummate an Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors or a committee of the Board of Directors, having at least one Independent director, and set forth in an officers' certificate delivered to the Trustee, or by an independent appraisal by an accounting, appraisal or investment banking firm of national standing or, in the case of Investment Assets, an officer's certificate) of the assets or Equity Interests issued or sold or otherwise disposed of and (ii) at least 75% of the consideration therefor (or 50%, in the case of any Investment Assets) received by the Company or such Restricted Subsidiary is in the form of cash; provided that (a) the amount of any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any such Restricted Subsidiary (other than contingent liabilities and liabilities that by their terms are subordinated to the Notes or any guarantee thereof) that are assumed by the transferee of any such assets (pursuant to a customary novation agreement that releases the Company and its Restricted Subsidiaries from all obligations in respect thereof) shall be deemed to be cash for purposes of this provision and (b) any notes or other obligations received by the Company or such Restricted Subsidiary from such transferee in exchange for any such 45 54 assets that are promptly converted into cash (to the extent of cash received) shall be deemed to be cash for purposes of this provision. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply all such Net Proceeds, at its option, (i) to permanently reduce Senior Indebtedness (and correspondingly reduce commitments with respect thereto in the case of any reduction of borrowings under the New Senior Credit Facilities), (ii) to the acquisition of a controlling interest in another business, the making of a capital expenditure or the acquisition of other long-term assets ("Productive Assets"), in each case, in the same or a similar line of business as the Company was engaged in on the Issue Date, or (iii) to reimburse the Company or its Subsidiaries for expenditures made, and costs incurred, to repair, rebuild, replace or restore property subject to loss, damage or taking to the extent that the net proceeds consist of insurance proceeds received on account of such loss, damage or taking. Pending the final application of any such Net Proceeds, the Company may temporarily reduce Senior Indebtedness or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall be required to make an offer to all Holders of Notes and, to the extent required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness (an "Asset Sale Offer") to repurchase the maximum principal amount of Notes and any such Pari Passu Indebtedness that may be repurchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in this Indenture or such Pari Passu Indebtedness, as applicable. To the extent that the aggregate amount of Notes and any such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to an Asset Sale Offer. Notwithstanding the foregoing, the Company and its Subsidiaries shall be permitted to consummate one or more Asset Sales with respect to assets or properties with an aggregate fair market value not in excess of $10.0 million in the aggregate subsequent to the Issue Date without complying with clause (ii) of the first paragraph of this Section 4.10; provided that (x) at least 75% of the consideration for such Asset Sale constitutes either Productive Assets or cash, and (y) any Net Proceeds received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall be subject to the provisions of the second paragraph of this Section 4.10. SECTION 4.11. TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or 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 or amend any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, 46 55 an "Affiliate Transaction"), unless (i) 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, (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million the Company delivers to the Trustee, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) 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 or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, the Company delivers to the Trustee, an opinion as to the fairness to the Holders of Notes of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing; provided that (v) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors or the payment of fees and indemnities to directors of the Company and its Restricted Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary, (w) loans or advances to employees in the ordinary course of business, (x) transactions between or among the Company and/or its Restricted Subsidiaries (other than a Receivables Subsidiary) or between Restricted Subsidiaries (other than Receivables Subsidiaries), (y) Restricted Payments (other than Investments) that are permitted by the provisions of Section 4.07 hereof and (z) sales or other transfers or dispositions of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Subsidiary in a Qualified Receivables Transaction, in each case, shall not be deemed Affiliate Transactions. SECTION 4.12. LIENS. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien securing Indebtedness on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with the Indebtedness so secured until such time as such is no longer secured by a Lien; provided that if such Indebtedness is by its terms expressly subordinated to the Notes or any Guarantee, the Lien securing such Indebtedness shall be subordinate and junior to the Lien securing the Notes and the Guarantees with the same relative priority as such subordinate or junior Indebtedness shall have with respect to the Notes and the Guarantees. SECTION 4.13. CORPORATE EXISTENCE. Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. 47 56 SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the date of repurchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder stating: (1) that the Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no later than 30 business days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. (b) On the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. Prior to complying with the provisions of this Section 4.14, but in any event within 90 days following a Change of Control, the Company shall either repay all outstanding Senior Indebtedness or obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of Notes required by this Section 4.14. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (c) Notwithstanding anything to the contrary in this Section 4.14, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements 48 57 set forth in this Section 4.14 and Section 3.09 hereof and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. SECTION 4.15. NO SENIOR SUBORDINATED DEBT. Notwithstanding the provisions of Section 4.09 hereof, (i) the Company shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Indebtedness of the Company and senior in any respect in right of payment to the Notes, and (ii) no Guarantor shall incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness of such Guarantor that is subordinate or junior in right of payment to any Indebtedness of such Guarantor and senior in any respect in right of payment to the Guarantee of such Guarantor. SECTION 4.16. LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS. The Company shall not permit any of its Subsidiaries that is not a Guarantor to incur, guarantee or secure through the granting of Liens the payment of any Senior Indebtedness and the Company shall not and shall not permit any of its Subsidiaries to pledge any intercompany notes representing obligations of any of its Subsidiaries, to secure the payment of any Senior Indebtedness, in each case unless such Subsidiary, the Company and the Trustee execute and deliver a supplemental indenture to this Indenture evidencing such Subsidiary's Guarantee (providing for the unconditional guarantee by such Subsidiary, on a senior subordinated basis, of the Notes). SECTION 4.17. PAYMENTS FOR CONSENT. Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. SECTION 4.18. ADDITIONAL NOTE GUARANTEES. If the Company or any of its Subsidiaries shall acquire or create another Subsidiary after the date of this Indenture, then such newly acquired or created Subsidiary shall become a Guarantor by executing a Supplemental Indenture in the form attached hereto as Exhibit F and deliver an Opinion of Counsel to the Trustee to the effect that such Supplemental Indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a valid and binding obligation of such Subsidiary, enforceable against such Subsidiary in accordance with its terms (subject to customary exceptions). The provisions of this Section 4.18 shall not apply to (i) any Subsidiary organized outside of the United States and its territories or (ii) any Subsidiary that has properly been designated as an Unrestricted Subsidiary in accordance with this Indenture for so long as it continues to constitute an Unrestricted Subsidiary. SECTION 4.19. DEPOSIT OF PROCEEDS WITH TRUSTEE PENDING CONSUMMATION OF THE MERGER. (a) On the Issue Date, the Company shall deposit with Nations Fund Treasury Reserves Capital Class #082 for the benefit of the Trustee as hereinafter provided the net proceeds 49 58 from the issuance of the Notes (the "Net Offering Proceeds") and such other amount as, when added to the Net Offering Proceeds, equals $186,850,000 plus an amount equal to the interest that would accrue on $185,000,000 from the Issue Date to the Special Redemption Date at an interest rate of 9.00% per annum (the "Special Redemption Amount"). (b) In order to secure the full and punctual payment and performance of the Company's obligation to redeem the Notes upon a Special Redemption, the Company hereby grants to the Trustee, for the benefit of the Holders, a continuing security interest in and to the Collateral, whether now owned or existing or hereafter acquired or arising. The Trustee shall have no obligation to file any financing statement. (c) At all times until the earlier to occur of (i) receipt by the Trustee of (x) an Officers' Certificate stating that the Merger is to be consummated on a date specified therein which shall be on or before the Special Redemption Date on the terms and conditions described in the Offering Memorandum of the Company dated December 15, 1997 relating to the Notes in all material respects and requesting the Trustee to release the Collateral to the order of the Company for application in connection with the Merger and (y) an Opinion of Counsel to the effect that all conditions precedent described in the precedent clause (x) have been satisfied in all material respects and (ii) receipt by the Trustee of notice from the Company pursuant to Section 3.03 hereof to effect a Special Redemption, there shall be maintained with Nations Fund on behalf of the Trustee an account (the "Collateral Account") designated "Pillowtex Corporate Account Pledged to Norwest Bank Minnesota, National Association, as Trustee" which account shall be under the sole dominion and control of the Trustee. On the Issue Date, the Company shall cause the Special Redemption Amount to be deposited in the Collateral Account. Amounts on Deposit in the Collateral Account shall be invested and reinvested from time to time in shares of The Nations Fund Treasury Reserves Capital Class #082 (in an account at the Fund in the name of "Norwest Bank Minnesota, National Association, Trustee" (subject to a security interest in the name of Norwest Bank Minnesota, National Association, as Trustee) (the "Mutual Fund Account")), which shares shall be held in the Collateral Account. Any income received with respect to the balance from time to time standing to the credit of the Collateral Account, including any interest or capital gains on Cash Equivalents, shall remain, or be deposited, in the Collateral Account. The Trustee shall not be liable or accountable for any losses resulting without negligence on the part of the Trustee from the sale or depreciation in the market value of any investment of amounts on deposit in the Collateral Account. Subject to Article Seven hereof, the Trustee solely in its individual capacity hereby waives any rights it may have in such individual capacity to the Collateral Account and all funds and investments therein including, without limitation, any such rights arising through any counterclaim, defense, recoupment, charge, lien or right of set-off. (d) Upon notice from the Company to the Trustee pursuant to subsection (c) (i) above, the security interests in the Collateral shall terminate and all funds in the Collateral Account (the "Collateral Funds") shall be released as follows: (i) $186,500,000.00 plus interest deposited to the Company to an account previously designated by the Company by wire transfer of immediately available funds and (ii) any income with respect to Collateral Funds shall be distributed to the Company as set forth in clause (i). Upon notice from the Company to the Trustee pursuant to subsection (c)(ii) above, the Trustee shall apply Collateral Funds to fund the Special Redemption and the Trustee shall pay to the Company any amount in the Collateral Account in excess of the amount needed to fund the Special Redemption. Section 314(d) of the TIA shall not apply to the release of Collateral pursuant to this provision if such release occurs prior to the filing of the Exchange Offer Registration Statement pursuant to the Registration Rights Agreement, after which time this sentence shall be deemed deleted from this Indenture. 50 59 ARTICLE 5. SUCCESSORS SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. The Company shall not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) 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 shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) 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 shall have been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Subsidiary of the Company (other than a Receivables Subsidiary), 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 shall have been made (A) will have Consolidated Net Worth immediately after the transaction equal to or greater than 95% of the Consolidated Net Worth of the Company immediately preceding the transaction and (B) will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable fourth quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof. SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; provided, however, that the predecessor Company shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all of the Company's assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (1) the Company defaults in the payment of interest on, or Liquidated Damages with respect to, the Notes when the same becomes due and payable and the Default continues 51 60 for a period of 30 days, whether or not such payment is prohibited by the provisions of Article 10 hereof; (2) the Company defaults in the payment of the principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption or otherwise, whether or not such payment is prohibited by the provisions of Article 10 hereof; (3) the Company fails to observe or perform any covenant, condition or agreement on the part of the Company to be observed or performed pursuant to Sections 4.07, 4.09, 4.10, 4.14, 4.19 and 5.01 hereof; (4) the Company fails to comply with any of its other agreements or covenants in, or provisions of, the Notes or this Indenture and the Default continues for a period of 60 days and after notice; (5) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists or shall be created hereafter, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness at its final stated maturity (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its maturity and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other Indebtedness as to which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more; (6) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any of its Subsidiaries and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments exceeds $10.0 million; (7) the Company or any of its Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a Custodian of it or for all substantially all of its property, (d) makes a general assignment for the benefit of its creditors, or (e) generally is not paying its debts as they become due; (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 52 61 (a) is for relief against the Company or any Subsidiary in an involuntary case, (b) appoints a Custodian of the Company or any Subsidiary or for all or substantially all of the property of the Company or any Subsidiary, or (c) orders the liquidation of the Company or any Subsidiary, and the order or decree remains unstayed and in effect for 60 consecutive days; or (9) The Guarantee of any Guarantor is held in judicial proceedings to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of this Indenture) or any Guarantor or any Person acting on behalf of any Guarantor denies or disaffirms such Guarantor's obligations under its Guarantee (other than by reason of a release of such Guarantor from its Guarantee in accordance with the terms of this Indenture. An Event of Default shall not be deemed to have occurred under clause (3), (5) or (6) until the Trustee shall have received written notice from the Company or any of the Holders or unless a Responsible Officer shall have knowledge of such Event of Default. A Default under clause (4) is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in principal amount of the then outstanding Securities notify the Company and the Trustee, of the Default and the Company does not cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in clauses (7) and (8) of Section 6.01 relating to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the then outstanding Securities by written notice to the Company and the Trustee may declare the unpaid principal of and any accrued interest on all the Securities to be due and payable. Upon such declaration the principal and interest shall be due and payable immediately (together with the premium referred to in Section 6.01, if applicable); provided however, that if any Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon a declaration of acceleration, the Notes shall be payable upon the earlier of (x) the day which is five Business Days after the provision to the Company and the agent under the New Credit Senior Facilities of written notice of such declaration and (y) the date of acceleration of any Indebtedness under the New Senior Credit Facilities. If an Event of Default specified in clause (7) or (8) of Section 6.01 relating to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a Significant Subsidiary occurs, such an amount shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal or interest that has become due solely because of the acceleration) have been cured or waived. If an Event of Default occurs on or after December 15, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent 53 62 premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to December 15, 2002 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on December 15 of the years set forth below, as set forth below :
Year Percentage ---- ---------- 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109.000% 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.000% 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.000% 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.000% 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.000%
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Notes (including in connection with an offer to purchase); provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. 54 63 SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the 55 64 Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any and interest, respectively; and Third: to the Company or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree 56 65 of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of 57 66 Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. 58 67 SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. 59 68 The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. 60 69 SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and accrued and unpaid interest and Liquidated Damages on such Notes when such payments are due from the trust referred to below,(b) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (c) the rights, powers, trusts, duties and immunities of the Trustee, and the 61 70 Company's obligations in connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 14.8, hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3) through 6.01(6) hereof shall not constitute Events of Default. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of Notes, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and accrued and unpaid interest and Liquidated Damages on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; (b) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and 62 71 will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (f) the Company must have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (g) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company or any Guarantor with the intent of defeating, hindering, delaying or defrauding creditors, any Guarantor of the Company or others; and (h) the Company must deliver to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to 63 72 Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO COMPANY. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Note Guarantees or the Notes without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; 64 73 (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Company's or a Guarantor's obligations to the Holders of the Notes by a successor to the Company or a Guarantor pursuant to Article 5 or Article 10 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Note; or (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company and the Guarantors in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.14 hereof), the Note Guarantees and the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02. Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Company in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. 65 74 It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Company shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non- consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver, (b) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption or repurchase of the Notes (other than provisions relating to Sections 4.10 or 4.14 hereof), (c) reduce the rate of or change the time for payment of interest on any Note, (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration), (e) make any Note payable in money other than that stated in the Notes, (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes, (g) waive a redemption payment with respect to any Note (other than a payment required by Sections 4.10 or 4.14 hereof), (h) release any Guarantor from any of its obligations under its Guarantee or the Indenture, except in accordance with the terms of this Indenture, (i) make any change to the provisions of Section 4.19 of this Indenture, or (j) make any change in the foregoing amendment and waiver provisions. In addition, any amendment to the provisions of Article 10 of this Indenture (which relate to subordination) or the related definitions will require the consent of the Holders of at least 75% in aggregate principal amount of the Notes then outstanding if such amendment would adversely affect the rights of Holders of Notes. 66 75 SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment or supplemental Indenture until the Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 10. SUBORDINATION SECTION 10.01. AGREEMENT TO SUBORDINATE. Prior to the Merger, the Notes will be senior obligations of the Company pari passu with all other unsubordinated Indebtedness of the Company and senior to all subordinated Indebtedness of the Company. After the Merger, the Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full of all Senior Indebtedness (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Indebtedness. A distribution may consist of cash, securities or other property, by set-off or otherwise. 67 76 SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY Upon any distribution to creditors of the Company in a liquidation or dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, in an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities: (1) holders of Senior Indebtedness shall be entitled to receive payment in full of all Obligations due in respect of such Senior Indebtedness (including, in the case of Senior Indebtedness under the New Senior Credit Facilities, interest after the commencement of any such proceeding at the rate specified in the applicable Senior Indebtedness) before Holders of the Notes shall be entitled to receive any payment with respect to the Notes (2) until all Obligations with respect to Senior Indebtedness (as provided in subsection (1) above) are paid in full, any distribution to which Holders would be entitled but for this Article 10 shall be made to holders of Senior Indebtedness (except that Holders of Notes may receive (i) Permitted Junior Securities and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof), as their interests may appear. SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT. The Company may not make any payment or distribution to the Trustee or any Holder in respect of Obligations with respect to the Notes and may not acquire from the Trustee or any Holder any Notes for cash or property (other than (i) Permitted Junior Securities and (ii) payments and other distributions made from any defeasance trust created pursuant to Section 8.01 hereof) until all principal and other Obligations with respect to the Senior Indebtedness have been paid in full if: (i) a default in the payment of the principal of, premium, if any, or interest on Designated Senior Indebtedness occurs and is continuing beyond any applicable period of grace; or (ii) any other default occurs and is continuing with respect to Designated Senior Indebtedness that permits holders of the Designated Senior Indebtedness as to which such default relates to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from the Company or the holders of any Designated Senior Indebtedness. Payments on the Notes may and shall be resumed (a) in the case of a payment default, upon the date on which such default is cured or waived and (b) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Indebtedness has been accelerated. No new period of payment blockage may be commenced unless and until (i) 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (ii) all scheduled payments of principal, premium, if any, and interest on the Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been waived for a period of not less than 90 days. 68 77 SECTION 10.04. ACCELERATION OF SECURITIES. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration. SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Indebtedness as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Indebtedness remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 10, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 10, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. SECTION 10.06. NOTICE BY COMPANY. The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article 10, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness as provided in this Article 10. SECTION 10.07. SUBROGATION. After all Senior Indebtedness is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Indebtedness. A distribution made under this Article 10 to holders of Senior Indebtedness that otherwise would have been made to Holders of Notes is not, as between the Company and Holders, a payment by the Company on the Notes. SECTION 10.08. RELATIVE RIGHTS. This Article 10 defines the relative rights of Holders of Notes and holders of Senior Indebtedness. Nothing in this Indenture shall: 69 78 (1) impair, as between the Company and Holders of Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (2) affect the relative rights of Holders of Notes and creditors of the Company other than their rights in relation to holders of Senior Indebtedness; or (3) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Holders of Notes. If the Company fails because of this Article 10 to pay principal of or interest on a Note on the due date, the failure is still a Default or Event of Default. SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article 10. Only the Company or a Representative may give the notice. Nothing in this Article 10 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. 70 79 SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Agent is hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. SECTION 10.13. AMENDMENTS. The provisions of this Article 10 shall not be amended or modified without the written consent of the holders of all Senior Indebtedness. ARTICLE 11. NOTE GUARANTEES SECTION 11.01. GUARANTEE. Subject to this Article 10, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection. The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such 71 80 Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE. Prior to the Merger, the Guarantees will be senior obligations of the Guarantors, pari passu with all other unsubordinated Indebtedness of the Guarantors and senior to all subordinated Indebtedness of the Guarantors. From and after the effective time of the Merger, the Obligations of each Guarantor under its Note Guarantee pursuant to this Article 10 shall be junior and subordinated to the Senior Debt of such Guarantor on the same basis as the Notes are junior and subordinated to Senior Debt of the Company. For the purposes of the foregoing sentence, the Trustee and the Holders shall have the right to receive and/or retain payments by any of the Guarantors only at such times as they may receive and/or retain payments in respect of the Notes pursuant to this Indenture, including Article 10 hereof. SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY. Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor under its Note Guarantee and this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 11, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE. To evidence its Note Guarantee set forth in Section 11.01, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by its President or one of its Vice Presidents. 72 81 Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors. In the event that the Company creates or acquires any new Subsidiaries subsequent to the date of this Indenture, if required by Section 4.18 hereof, the Company shall cause such Subsidiaries to execute supplemental indentures to this Indenture and Note Guarantees in accordance with Section 4.18 hereof and this Article 11, to the extent applicable. SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person whether or not affiliated with such Guarantor unless: (a) subject to this Section 11.05 hereof, the Person formed by or surviving any such consolidation or merger (if other than a Guarantor or the Company) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set forth herein or therein; and (b) immediately after giving effect to such transaction, no Default or Event of Default exists. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. 73 82 SECTION 11.06. RELEASES Upon the release by all holders of Senior Indebtedness and Guarantor Senior Indebtedness of all guarantees issued by a Guarantor relating to such Senior Indebtedness and Guarantor Senior Indebtedness and all Liens on the property and assets of such Guarantor relating to Senior Indebtedness and Guarantor Senior Indebtedness or in the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, then such Guarantor (in the event of clause (i) above or a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof. In the event the Company (i) designates a Restricted Subsidiary to be an Unrestricted Subsidiary in accordance with this Indenture or (ii) designates a Subsidiary as a Receivables Subsidiary in accordance with this Indenture, then such newly designated Unrestricted Subsidiary or Receivables Subsidiary, as the case may be, shall be released from its obligations under its Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the applicable provisions of this Indenture, including without limitation Section 4.10 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10. ARTICLE 12. MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control. SECTION 12.02. NOTICES. Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address If to the Company and/or any Guarantor: Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Attention: Treasurer 74 83 If to the Trustee: Norwest Bank Minnesota, National Association 6th Street and Marquette Avenue Minneapolis, MN 55479-0069 Telecopier No.: (612) 667-9825 Attention: Corporate Trust The Company any Guarantor or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. 75 84 SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or such Guarantor under the Notes, the Note Guarantees, this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 12.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. 76 85 SECTION 12.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 12.11. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 77 86 SIGNATURES Dated as of December 18, 1997 PILLOWTEX CORPORATION BY: /S/ JEFFREY D. CORDES --------------------------------- Name: Jeffrey D. Cordes Title: Chief Operating Officer The Initial Guarantors: PTEX HOLDING COMPANY PILLOWTEX, INC. MANETTA HOME FASHIONS, INC. BEACON MANUFACTURING COMPANY PILLOWTEX MANAGEMENT SERVICES COMPANY TENNESSEE WOOLEN MILLS, INC. BY: /S/ JEFFREY D. CORDES --------------------------------- Name: Jeffrey D. Cordes Title: Chief Operating Officer NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION BY: /S/ RAYMOND S. HAVERSTOCK --------------------------------- Name: Raymond S. Haverstock Title: Vice President 87 EXHIBIT A1 (Face of Note) ================================================================================ CUSIP/CINS ------------------- 9% [Series A] [Series B] Senior Subordinated Notes due 2007 No. $ ----- -------------- PILLOWTEX CORPORATION promises to pay to --------------------------------------------------- or registered assigns, the principal sum of ------------------------------------------------ Dollars on December 15, 2007. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 DATED: DECEMBER 18, 1997 PILLOWTEX CORPORATION BY: ----------------------------------- Name: Charles M. Hansen, Jr. Title: Chief Executive Officer This is one of the Global Notes referred to in the within-mentioned Indenture: Norwest Bank Minnesota, National Association as Trustee By: ---------------------------------- Authorized Signatory ================================================================================ A1-1 88 (Back of Note) 9% [Series A] [Series B] Senior Subordinated Notes due 2007 THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENT OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. A1-2 89 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Pillowtex Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 9% per annum from December 18, 1997 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the June 1 or December 1 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE . The Company issued the Notes under an Indenture dated as of December December 18, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to A1-3 90 $185,000,000 million in aggregate principal amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. OPTIONAL REDEMPTION. The Notes shall not be redeemable at the Company's option prior to December 15, 2002. Thereafter, the Notes shall be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon to the applicable redemption date, if redeemed during the 12- month period, beginning on December 15 of the years indicated below:
Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500% 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
6. SPECIAL REDEMPTION. On the Special Redemption Date, the Notes will be subject to mandatory redemption at a redemption price equal to 101% of the principal amount of the Notes, plus accrued interest to the date of redemption, if the Merger is not consummated prior to the Special Redemption Date. Pillowtex will also have the option to redeem the Notes at any time on or prior to the Special Redemption Date if the Merger has not been consummated on or prior to such date at a redemption price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of redemption. 7. MANDATORY REDEMPTION. Except as set forth in paragraph 8 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 8. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the date of repurchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder stating: (1) that the Change of Control Offer is being made pursuant to Section 4.15 of the Indenture and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no later than 30 business days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment A1-4 91 Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $10 million, the Company shall commence an offer to all Holders of Notes and, to the extent required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture or such Pari Passu Indebtedness as applicable. To the extent that the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. 9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. A1-5 92 12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or Guarantor's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14, 4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness at its final stated maturity or (b) results in the acceleration of such Indebtedness prior to its maturity and, in each case, the principal amount of which Indebtedness, together with the principal amount of any other such Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial proceedings to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of this Indenture) or any Guarantor or any Person acting on behalf of any Guarantor denies or disaffirms such Guarantor's obligations under its Note Guarantee (other than by reason of a release of such Guarantor from its Note Guarantee in accordance with the terms of the Indenture). If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately, provided however, that if any Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon a declaration of acceleration, the Notes shall be payable upon the earlier of (x) the day which is five Business Days after the provision to the Company and the agent under the New Credit Senior Facilities of written notice of such declaration and (y) the date of acceleration of any Indebtedness under the New Senior Credit Facilities. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a A1-6 93 Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. 14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 15. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of December 18, 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A1-7 94 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Attention: Treasurer A1-8 95 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint___________________________________________________to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: --------------- Your Signature: --------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A1-9 96 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $________ Date: Your Signature: ------------ ----------------------- (Sign exactly as your name appears on the Note) Tax Identification Number: ------------ -------------------------------------- SIGNATURE GUARANTEE. A1-10 97 SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount of this Amount of Amount of Global Note Signature of decrease in increase in following such authorized officer Principal Amount of Principal Amount decrease (or of Trustee or Note Date of Exchange this Global Note of this Global Note increase) Custodian - ---------------- ---------------- ------------------- --------- ---------
A1-11 98 EXHIBIT A2 (Face of Regulation S Global Note) ================================================================================ CUSIP/CINS --------------- 9% [Series A] [Series B] Senior Subordinated Notes due 2007 No. $ ----- --------------- PILLOWTEX CORPORATION promises to pay to ---------------------------------------------- or registered assigns, the principal sum of -------------------------------------------- Dollars on December 15, 2007 Interest Payment Dates: June 15, and December 15 Record Dates: June 1, and December 1 Dated: December 18, 1997 PILLOWTEX CORPORATION By: ------------------------------ Name: Charles M. Hansen, Jr. Title: Chief Executive Officer This is one of the Regulation S Global Notes referred to in the within-mentioned Indenture: Norwest Bank Minnesota, National Association, as Trustee By: --------------------------------- Authorized Signatory ================================================================================ A2-1 99 (Back of Regulation S Global Note) 9% [Series A] [Series B] Senior Subordinated Notes due 2007 UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. A2-2 100 1. INTEREST. Pillowtex Corporation, a Delaware corporation (the "Company"), promises to pay interest on the principal amount of this Note at 9% per annum from December 18, 1997 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon; until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Senior Subordinated Notes under the Indenture. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the June 1 or December 1 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE . The Company issued the Notes under an Indenture dated as of December 18, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of A2-3 101 the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to $185,000,000 million in aggregate principal amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. OPTIONAL REDEMPTION. The Notes shall not be redeemable at the Company's option prior to December 15, 2002. Thereafter, the Notes shall be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon to the applicable redemption date, if redeemed during the 12- month period, beginning on December 15 of the years indicated below:
Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500% 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
6. SPECIAL REDEMPTION. On the Special Redemption Date, the Notes will be subject to mandatory redemption at a redemption price equal to 101% of the principal amount of the Notes, plus accrued interest to the date of redemption, if the Merger is not consummated prior to the Special Redemption Date. Pillowtex will also have the option to redeem the Notes at any time on or prior to the Special Redemption Date if the Merger has not been consummated on or prior to such date at a redemption price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of redemption. 7. MANDATORY REDEMPTION. Except as set forth in paragraph 8 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 8. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the date of repurchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder stating: (1) that the Change of Control Offer is being made pursuant to Section 4.15 of the Indenture and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no later than 30 business days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the A2-4 102 notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $10 million, the Company shall commence an offer to all Holders of Notes and, to the extent required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture or such Pari Passu Indebtedness as applicable. To the extent that the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. 9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. A2-5 103 12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Note Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or Guarantor's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14, 4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness at its final stated maturity or (b) results in the acceleration of such Indebtedness prior to its maturity and, in each case, the principal amount of which Indebtedness, together with the principal amount of any other such Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial proceedings to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of this Indenture) or any Guarantor or any Person acting on behalf of any Guarantor denies or disaffirms such Guarantor's obligations under its Note Guarantee (other than by reason of a release of such Guarantor from its Note Guarantee in accordance with the terms of the Indenture). If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately, provided however, that if any Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon a declaration of acceleration, the Notes shall be payable upon the earlier of (x) the day which is five Business Days after the provision to the Company and the agent under the New Credit Senior Facilities of written notice of such declaration and (y) the date of acceleration of any Indebtedness under the New Senior Credit Facilities. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a A2-6 104 Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. 14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 15. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the A/B Exchange Registration Rights Agreement dated as of December 18, 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. A2-7 105 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Attention: Treasurer A2-8 106 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint____________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: ----------------- Your Signature: -------------------- (Sign exactly as your name appears on the face of this Note) SIGNATURE GUARANTEE. A2-9 107 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below: [ ] Section 4.10 [ ] Section 4.15 If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased: $________ Date: Your Signature: ------------ --------------------- (Sign exactly as your name appears on the Note) Tax Identification Number: ----------- SIGNATURE GUARANTEE. A2-10 108 SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or of other Restricted Global Notes for an interest in this Regulation S Temporary Global Note, have been made:
Principal Amount of this Amount of Amount of Global Note Signature of decrease in increase in following such authorized officer Principal Amount of Principal Amount decrease (or of Trustee or Note Date of Exchange this Global Note of this Global Note increase) Custodian - ---------------- ---------------- ------------------- --------- ---------
A2-11 109 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Norwest Bank Minnesota, National Association 6th Street and Marquette Avenue Minnesota, MN 55479-0069 Re: 9% Senior Subordinated Notes due 2007 Reference is hereby made to the Indenture, dated as of December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer (the "Company"), and Norwest Bank Minnesota, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ______________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been B-1 110 made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) [ ] such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) [ ] such Transfer is being effected to the Company or a subsidiary thereof; or (c) [ ] such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) [ ] such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Definitive Notes and in the Indenture and the Securities Act. 4. [ ] Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note. B-2 111 (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. By: ------------------------ Name: Title: Dated: B-3 112 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (a) OR (b)] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP _________), or (ii) [ ] Regulation S Global Note (CUSIP _________), or (iii) [ ] IAI Global Note (CUSIP ________); or (b) [ ] a Restricted Definitive Note. 2. After the Transfer the Transferee will hold: [CHECK ONE] (a) [ ] a beneficial interest in the: (i) [ ] 144A Global Note (CUSIP ________), or (ii) [ ] Regulation S Global Note (CUSIP ________), or (iii) [ ] IAI Global Note (CUSIP ________); or (iv) [ ] Unrestricted Global Note (CUSIP __); or (b) [ ] a Restricted Definitive Note; or (c) [ ] an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-4 113 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Norwest Bank Minnesota, National Association 6th Street and Marquette Avenue Minnesota, MN 55479-0069 Re: 9% Senior Subordinated Notes due 2007 (CUSIP______________) Reference is hereby made to the Indenture, dated as of December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer (the "Company"), and Pillowtex Corporation, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ____________, (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note (a) [ ] Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) [ ] Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with C-1 114 the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the 144A Global Note, Regulation S Global Note, IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. C-2 115 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ---------------------------- [Insert Name of Owner] By: ------------------------- Name: Title: Dated: , ---------------- ---- C-3 116 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Norwest Bank Minnesota, National Association 6th Street and Marquette Avenue Minnesota, MN 55479-0069 Re: 9% Senior subordinated Notes due 2007 Reference is hereby made to the Indenture, dated as of December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer (the "Company"), and Norwest Bank Minnesota, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount of: (a) [ ] a beneficial interest in a Global Note, or (b) [ ] a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (c) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of D-1 117 Rule 144(k) under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. We further understand that any subsequent transfer by us of the Notes or beneficial interest therein acquired by us must be effected through one of the Placement Agents. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. -------------------------------------- Insert Name of Accredited Investor By: ----------------------------------- Name: Title: Dated: , ---------------- ----- D-2 118 EXHIBIT E FORM OF NOTATION OF GUARANTEE For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of December 18, 1997 (the "Indenture") among Pillowtex Corporation, the Guarantors listed on the signature page thereto and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture. By: --------------------------- Name: Title: E-1 119 EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT GUARANTORS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of ________________, among __________________ (the "Guaranteeing Subsidiary"), a subsidiary of Pillowtex Corporation (or its permitted successor), a ________ corporation (the "Company"), the Company, the other Guarantors (as defined in the Indenture referred to herein) and Norwest Bank Minnesota, National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of December 18, 1997 providing for the issuance of an aggregate principal amount of up to $ 185,000,000 of 9% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and F-1 120 (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. F-2 121 (i) Pursuant to Section 10.02 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 10 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 11.05 of the Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Guarantor or the Company) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor corporation thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. F-3 122 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including without limitation Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 10 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. F-4 123 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: , ----------------- ----- Pillowtex Corporation By: ------------------------------ Name: Title: [Guaranteeing Subsidiary] By: ------------------------------ Name: Title: Norwest Bank Minnesota, National Association, as Trustee By: ------------------------------ Name: Title: EX-4.2 43 SUPPLEMENTAL INDENTURE, DATED AS OF 12/19/97 1 EXHIBIT 4.2 SUPPLEMENTAL INDENTURE SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated December 19, 1997, among Fieldcrest Cannon, Inc., Crestfield Cotton Company, Encee, Inc., Fieldcrest Cannon Financing, Inc., Fieldcrest Cannon Licensing, Inc., Fieldcrest Cannon International, Inc., Fieldcrest Cannon Sure Fit, Inc., Fieldcrest Cannon Transportation, Inc., St. Marys Inc., Amoskeag Company, Amoskeag Management Corporation, Bangor Investment Company, Moore's Falls Corporation, Downeast Securities Corporation and FCC Canada Inc. (the "Guaranteeing Subsidiary"), a subsidiary of Pillowtex Corporation (or its permitted successor), a Texas corporation (the "Company"), the Company, the other Guarantors (as defined in the Indenture referred to herein) and Norwest Bank Minnesota, National Association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated December 18, 1997 providing for the issuance of an aggregate principal amount of up to $ 185,000,000 of 9% Senior Subordinated Notes due 2007 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: 2 (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived diligence presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the 3 purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 10.02 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 10 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. (a) The Guaranteeing Subsidiary may not consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 11.05 of the Indenture, the Person formed by or surviving any such consolidation or merger (if other than a Guarantor or the Company) unconditionally assumes all the obligations of such Guarantor, pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set forth herein or therein; and (ii) immediately after giving effect to such transaction, no Default or Event of Default exists. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor corporation shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such 4 successor corporation thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all to the capital stock of any Guarantor, then such Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of the Indenture, including without limitation Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 10 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 5 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company. 6 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written. Dated: December 19, 1997 PILLOWTEX CORPORATION By: /s/ Jeffrey D. Cordes ----------------------------------- Name: Jeffrey D. Cordes Title: Chief Operating Officer FIELDCREST CANNON, INC. ENCEE, INC. FIELDCREST CANNON FINANCING, INC. FIELDCREST CANNON LICENSING, INC. FIELDCREST CANNON INTERNATIONAL, INC. FIELDCREST CANNON SURE FIT, INC. FIELDCREST CANNON TRANSPORTATION, INC. ST. MARYS, INC. AMOSKEAG COMPANY AMOSKEAG MANAGEMENT CORPORATION MOORE'S FALLS CORPORATION DOWNEAST SECURITIES CORPORATION CRESTFIELD COTTON COMPANY BANGOR INVESTMENT COMPANY FCC CANADA, INC. By: /s/ Jeffrey D. Cordes ----------------------------------- Name: Jeffrey D. Cordes Title: President NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: /s/ Raymond S. Haverstock ----------------------------------- Name: Raymond S. Haverstock Title: Vice President EX-4.5 44 FORM OF 9% SENIOR SUBORDINATED NOTE 1 EXHIBIT 4.5 ================================================================================ CUSIP/CINS ------------------- 9% Series B Senior Subordinated Notes due 2007 No. $ ----- -------------- PILLOWTEX CORPORATION promises to pay to --------------------------------------------------- or registered assigns, the principal sum of ------------------------------------------------ Dollars on December 15, 2007. Interest Payment Dates: June 15 and December 15 Record Dates: June 1 and December 1 DATED: FEBRUARY __, 1998 PILLOWTEX CORPORATION BY: ----------------------------------- Name: Charles M. Hansen, Jr. Title: Chief Executive Officer This is one of the Global Notes referred to in the within-mentioned Indenture: Norwest Bank Minnesota, National Association as Trustee By: ---------------------------------- Authorized Signatory ================================================================================ 2 (Back of Note) 9% Series B Senior Subordinated Notes due 2007 THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENT OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE. 3 Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Pillowtex Corporation, a Texas corporation (the "Company"), promises to pay interest on the principal amount of this Note at 9% per annum from December 18, 1997 until maturity and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. The Company will pay interest and Liquidated Damages semi-annually on June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be June 15, 1998. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on the June 1 or December 1 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Company maintained for such purpose within or without the City and State of New York, or, at the option of the Company, payment of interest and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity. 4. INDENTURE . The Company issued the Notes under an Indenture dated as of December December 18, 1997 ("Indenture") between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are obligations of the Company limited to 4 $185,000,000 million in aggregate principal amount, plus amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof. 5. OPTIONAL REDEMPTION. The Notes shall not be redeemable at the Company's option prior to December 15, 2002. Thereafter, the Notes shall be subject to redemption at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon to the applicable redemption date, if redeemed during the 12- month period, beginning on December 15 of the years indicated below:
Year Percentage ---- ---------- 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500% 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000% 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500% 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
6. SPECIAL REDEMPTION. On the Special Redemption Date, the Notes will be subject to mandatory redemption at a redemption price equal to 101% of the principal amount of the Notes, plus accrued interest to the date of redemption, if the Merger is not consummated prior to the Special Redemption Date. Pillowtex will also have the option to redeem the Notes at any time on or prior to the Special Redemption Date if the Merger has not been consummated on or prior to such date at a redemption price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of redemption. 7. MANDATORY REDEMPTION. Except as set forth in paragraph 8 below, the Company shall not be required to make mandatory redemption payments with respect to the Notes. 8. REPURCHASE AT OPTION OF HOLDER. (a) Upon the occurrence of a Change of Control, each Holder of Notes shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the date of repurchase (the "Change of Control Payment"). Within 10 days following any Change of Control, the Company shall mail a notice to each Holder stating: (1) that the Change of Control Offer is being made pursuant to Section 4.15 of the Indenture and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no later than 30 business days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment 5 Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change of Control. (b) If the Company or a Restricted Subsidiary consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $10 million, the Company shall commence an offer to all Holders of Notes and, to the extent required by the terms of any Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum principal amount of Notes that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture or such Pari Passu Indebtedness as applicable. To the extent that the aggregate amount of Notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency for general corporate purposes. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. If the aggregate principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata basis. Upon completion of such offer to repurchase, the amount of Excess Proceeds shall be reset at zero. 9. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 6 12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Guarantees or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes voting as a single class, and any existing default or compliance with any provision of the Indenture, the Note Guarantees or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes voting as a single class. Without the consent of any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Company's or Guarantor's obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to allow any Guarantor to execute a supplemental indenture to the Indenture and/or a Note Guarantee with respect to the Notes. 13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14, 4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after notice to comply with any of its other agreements in the Indenture or the Notes; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness at its final stated maturity or (b) results in the acceleration of such Indebtedness prior to its maturity and, in each case, the principal amount of which Indebtedness, together with the principal amount of any other such Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million or more; (vi) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial proceedings to be unenforceable or invalid or ceases for any reason to be in full force and effect (other than in accordance with the terms of this Indenture) or any Guarantor or any Person acting on behalf of any Guarantor denies or disaffirms such Guarantor's obligations under its Note Guarantee (other than by reason of a release of such Guarantor from its Note Guarantee in accordance with the terms of the Indenture). If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately, provided however, that if any Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon a declaration of acceleration, the Notes shall be payable upon the earlier of (x) the day which is five Business Days after the provision to the Company and the agent under the New Credit Senior Facilities of written notice of such declaration and (y) the date of acceleration of any Indebtedness under the New Senior Credit Facilities. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Significant Subsidiary or any group of Subsidiaries that, taken together, would constitute a 7 Significant Subsidiary, all outstanding Notes will become due and payable without further action or notice. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. 14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee. 15. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator or stockholder, of the Company, as such, shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 16. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of December 18, 1997, between the Company and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 8 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to: Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Attention: Treasurer EX-4.6 45 FORM OF GUARANTEE 1 EXHIBIT 4.6 FORM OF NOTATION OF GUARANTEE For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of December 18, 1997 (the "Indenture") among Pillowtex Corporation, the Guarantors listed on the signature page thereto and Norwest Bank Minnesota, National Association, as trustee (the "Trustee"), (a) the due and punctual payment of the principal of, premium, if any, and interest on the Notes (as defined in the Indenture), whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal and premium, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for such purpose; provided, however, that the Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated and subject in right of payment upon any defeasance of this Note in accordance with the provisions of the Indenture. By: --------------------------- Name: Title: EX-5.1 46 OPINION OF JONES, DAY, REAVIS & POGUE 1 EXHIBIT 5.1 [JONES, DAY, REAVIS & POGUE LETTERHEAD] February ____, 1998 Pillowtex Corporation 4111 Mint Way Dallas, Texas 75237 Ladies and Gentlemen: We are acting as counsel to Pillowtex Corporation (the "Company"), a corporation organized under the laws of the State of Texas, in connection with the public offering of $185,000,000 aggregate principal amount of the Company's 9% Senior Subordinated Notes due 2007 (the "Series B Notes"), which are to be guaranteed on a senior unsecured basis pursuant to guarantees (the "Guarantees" and together with the Series B Notes, the "Securities") by each of Amoskeag Company, a Delaware corporation, Amoskeag Management Corporation, a Delaware corporation, Bangor Investment Company, a Maine corporation, Beacon Manufacturing Company, a North Carolina corporation, Crestfield Cotton Company, a Tennessee corporation, Downeast Securities Corporation, a Delaware corporation, Encee, Inc., a Delaware corporation, FCC Canada, Inc., a Delaware corporation, Fieldcrest Cannon Financing, Inc., a Delaware corporation, Fieldcrest Cannon, Inc., a Delaware corporation, Fieldcrest Cannon International, Inc., a Delaware corporation, Fieldcrest Cannon Licensing, Inc., a Delaware corporation, Fieldcrest Cannon Sure Fit, Inc., a Delaware corporation, Fieldcrest Cannon Transportation, Inc., a Delaware corporation, Mannetta Home Fashions, Inc., a North Carolina corporation, Moore's Falls Corporation, a Delaware corporation, Pillowtex, Inc., a Delaware corporation, Pillowtex Management Services Company, a Delaware corporation, PTEX Holding Company, a Delaware corporation, St. Marys, Inc., a Delaware corporation, and Tennessee Woolen Mills, Inc., a Tennessee corporation (collectively, the "Guarantors") and in connection with the preparation of the prospectus (the "Prospectus") contained in the registration statement on Form S-4 (the "Registration Statement") (No. 333-________) filed with the Securities and Exchange Commission by the Company for the purpose of registering the Series B Notes and the Guarantees under the Securities Act of 1933, as amended (the "Act"). The Series B Notes are to be issued pursuant to an exchange offer (the "Exchange Offer") in exchange for a like principal amount of the issued and outstanding 9% Senior Subordinated Notes due 2007 of the Company (the "Series A Notes"), and are to be governed by an Indenture dated as of December 18, 1997 (the "Indenture") by and among the Company, the Guarantors, and Norwest Bank Minnesota, National Association, as Trustee (the "Trustee"). Unless otherwise defined herein, terms defined in the Prospectus are used herein as defined therein. 2 Pillowtex Corporation February __, 1998 Page 2 We have examined originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, agreements, documents, and other instruments and such certificates or comparable documents of public officials and representatives of the Company and the Guarantors and have made such other and further investigations as we have deemed relevant and necessary as a basis for the opinion hereinafter set forth. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity or all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such latter documents. In making our examination of documents executed or to be executed by parties other than the Guarantors that are also Delaware corporations, we have assumed that such parties had or will have the power, corporate or other, to enter into and perform all obligations hereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect of such documents on such parties. Members of the firm are admitted to the bar in the States of New York and Texas, and we do not express any opinion as to the laws of any other jurisdiction other than the General Corporation Law of the State of Delaware. Based on the foregoing, and subject to the qualifications and limitations stated herein, we are of the opinion that, assuming the Indenture has been qualified under the Trust Indenture Act of 1939 (the "Trust Indenture Act"), when the Series B Notes, substantially in the form set forth in an exhibit to the Indenture filed as Exhibit 4.5 to the Registration Statement, have been duly executed by the Company and authenticated by the Trustee in accordance with the Indenture and duly delivered in exchange for the Series A Notes in accordance with the Exchange Offer in the manner described in the Registration Statement, the Series B Notes will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, and the Guarantees will constitute valid and legally binding obligations of the Guarantors, enforceable against the Guarantors, in each case, in accordance with their terms, except to the extent enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law.) We hereby consent to the use of our name under the caption "Legal Matters" in the Prospectus forming part of the Registration Statement and to the filing of this opinion as Exhibit 5 to the Registration Statement. Very truly yours, JONES, DAY, REAVIS & POGUE EX-12.1 47 STATEMENT RE: COMPUTATION OF RATIOS 1 writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote therein were present and voted. Prompt notice of the taking of such action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE VII. Stockholders' Record Date In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed: (1) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (2) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed. (3) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the board of directors may fix a new record date for the adjourned meeting. -4- 2 ARTICLE VIII. Board of Directors Except as otherwise provided by law or by the certificate of incorporation, the business and affairs of the corporation shall be managed by the board of directors. The number of directors shall be such number, not fewer than one nor more than fifteen, as may be fixed for any corporate year and elected by the stockholders at the annual meeting. During any year the board of directors may be enlarged and additional directors elected to complete the enlarged number, to not more than the maximum number above specified, by the stockholders at any meeting or by a vote of a majority of the directors then in office. The stockholders may, at any meeting held for the purpose during such year, decrease, to not fewer than the minimum number above specified, the number of directors as thus fixed or enlarged and remove directors to the decreased number. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. No director need be a stockholder. ARTICLE IX. Committees The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee and may define the number and qualifications which shall constitute a quorum of such committee. Except as otherwise limited by law, any such committee, to the extent provided in the resolution appointing such committee, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. In the absence or disqualification of a member of committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. ARTICLE X. Meetings of the Board of Directors and of Committees Regular meetings of the board of directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the board may by vote from time to time determine. -5- EX-23.2 48 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT The Board of Directors Pillowtex Corporation: We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG PEAT MARWICK LLP Dallas, Texas February 12, 1998 EX-23.3 49 CONSENT OF ERNST & YOUNG LLP 1 Exhibit 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated January 31, 1997, with respect to the financial statements of Fieldcrest Cannon, Inc. incorporated by reference in the Registration Statement (Form S-4) and related Prospectus of Pillowtex Corporation for the registration of $185,000,000 of 9% Senior Subordinated Notes due 2007. /s/ Ernst & Young LLP Greensboro, North Carolina February 11, 1998 EX-24.1 50 POWERS OF ATTORNEY 1 Exhibit 24.1 POWER OF ATTORNEY PILLOWTEX CORPORATION KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Pillowtex Corporation, a Texas corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, 9% Senior Subordinated Notes Due 2007 of the Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. PILLOWTEX CORPORATION By: /s/ CHARLES M. HANSEN, JR., ------------------------------------ Charles M. Hansen, Jr., Chairman of the Board and Chief Executive Officer Dated: February 10, 1998 2 POWER OF ATTORNEY PILLOWTEX CORPORATION KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, to sign on his or her behalf, as a director or officer, or both, as the case may be, of Pillowtex Corporation, a Texas corporation (the "Corporation"), a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, 9% Senior Subordinated Notes Due 2007 of the Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ SCOTT E. SHIMIZU - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Scott E. Shimizu /s/ JEFFREY D. CORDES /s/ PAUL G. GILLEASE - ---------------------------------- ------------------------------------- Jeffrey D. Cordes Paul G. Gillease /s/ CHRISTOPHER N. BAKER /s/ WILLIAM B. MADDEN - ---------------------------------- ------------------------------------- Christopher N. Baker William B. Madden /s/ MARY R. SILVERTHORNE /s/ M. JOSEPH MCHUGH - ---------------------------------- ------------------------------------- Mary R. Silverthorne M. Joseph McHugh /s/ RALPH W. LA ROVERE /s/ KEVIN M. FINLAY - ---------------------------------- ------------------------------------- Ralph W. La Rovere Kevin M. Finlay Dated: February 10, 1998 3 POWER OF ATTORNEY AMOSKEAG COMPANY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Amoskeag Company, a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 4 POWER OF ATTORNEY AMOSKEAG MANAGEMENT CORPORATION KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Amoskeag Management Corporation, a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 5 POWER OF ATTORNEY BANGOR INVESTMENT COMPANY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Bangor Investment Company, a Maine corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes /s/ RONALD M. WEHTJE - ---------------------------------- Ronald M. Wehtje Dated: February 10, 1998 6 POWER OF ATTORNEY BEACON MANUFACTURING COMPANY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Beacon Manufacturing Company, a North Carolina corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 7 POWER OF ATTORNEY CRESTFIELD COTTON COMPANY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Crestfield Cotton Company, a Tennessee corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 8 POWER OF ATTORNEY DOWNEAST SECURITIES CORPORATION KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Downeast Securities Corporation, a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 9 POWER OF ATTORNEY ENCEE, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Encee, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 10 POWER OF ATTORNEY FCC CANADA, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of FCC Canada, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 11 POWER OF ATTORNEY FIELDCREST CANNON FINANCING, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Fieldcrest Cannon Financing, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 12 POWER OF ATTORNEY FIELDCREST CANNON, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Fieldcrest Cannon, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 13 POWER OF ATTORNEY FIELDCREST CANNON INTERNATIONAL, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Fieldcrest Cannon International, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes /s/ RONALD M. WEHTJE - ---------------------------------- Ronald M. Wehtje Dated: February 10, 1998 14 POWER OF ATTORNEY FIELDCREST CANNON LICENSING, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Fieldcrest Cannon Licensing, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 15 POWER OF ATTORNEY FIELDCREST CANNON SURE FIT, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Fieldcrest Cannon Sure Fit, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 16 POWER OF ATTORNEY FIELDCREST CANNON TRANSPORTATION, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Fieldcrest Cannon Transportation, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 17 POWER OF ATTORNEY MANETTA HOME FASHIONS, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Manetta Homes Fashions, Inc., a North Carolina corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 18 POWER OF ATTORNEY MOORE'S FALLS CORPORATION KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Moore's Falls Corporation, a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes /s/ RONALD M. WEHTJE - ---------------------------------- Ronald M. Wehtje Dated: February 10, 1998 19 POWER OF ATTORNEY PILLOWTEX, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Pillowtex, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes /s/ CHARLES H. SLAYBAUGH - ---------------------------------- Charles H. Slaybaugh Dated: February 10, 1998 20 POWER OF ATTORNEY PILLOWTEX MANAGEMENT SERVICES COMPANY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Pillowtex Management Services Company, a Delaware trust company (the "Trust"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ JEFFREY D. CORDES /s/ CHRISTOPHER N. BAKER - ---------------------------------- ------------------------------------- Jeffrey D. Cordes Christopher N. Baker /s/ SCOTT E. SHIMIZU - ---------------------------------- Scott E. Shimizu Dated: February 10, 1998 21 POWER OF ATTORNEY PTEX HOLDING COMPANY KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of PTEX Holding Company, a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes /s/ CHARLES H. SLAYBAUGH - ---------------------------------- Charles H. Slaybaugh Dated: February 10, 1998 22 POWER OF ATTORNEY ST. MARY'S, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of St. Marys, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 23 POWER OF ATTORNEY TENNESSEE WOOLEN MILLS, INC. KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of Tennessee Woolen Mills, Inc., a Tennessee corporation (the "Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the Corporation to sign on the Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated registration statement relating thereto permitted pursuant to Rule 462 under the Securities Act of 1933, as amended (the "Securities Act")), for the purpose of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and any or all post-effective amendments to the Registration Statement (and any such abbreviated registration statement), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney or attorneys-in-fact, each of them with or without the others, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as it might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. /s/ CHARLES M. HANSEN, JR. /s/ JEFFREY D. CORDES - ---------------------------------- ------------------------------------- Charles M. Hansen, Jr. Jeffrey D. Cordes Dated: February 10, 1998 EX-25.1 51 STATEMENT OF ELIGIBILITY UNDER THE TRUST IND. ACT 1 EXHIBIT 25.1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO - ---- SECTION 305(b)(2) NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A U.S. NATIONAL BANKING ASSOCIATION 41-1592157 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national Identification No.) bank) SIXTH STREET AND MARQUETTE AVENUE Minneapolis, Minnesota 55479 (Address of principal executive offices) (Zip code) Stanley S. Stroup, General Counsel NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION Sixth Street and Marquette Avenue Minneapolis, Minnesota 55479 (612) 667-1234 (Agent for Service) --------------------------- PILLOWTEX CORPORATION (Exact name of obligor as specified in its charter) TEXAS 75-2147728 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4111 MINT WAY DALLAS, TEXAS 75237-1605 (Address of principal executive offices) (Zip code) --------------------------- 9% SENIOR SUBORDINATED NOTES DUE 2007 (Title of the indenture securities) =============================================================================== 2 Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Treasury Department Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C. The Board of Governors of the Federal Reserve System Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None with respect to the trustee. No responses are included for Items 3-14 of this Form T-1 because the obligor is not in default as provided under Item 13. Item 15. Foreign Trustee. Not applicable. ---------------- Item 16. List of Exhibits. List below all exhibits filed as a part of ----------------- this Statement of Eligibility. Norwest Bank incorporates by reference into this Form T-1 the exhibits attached hereto. Exhibit 1. a. A copy of the Articles of Association of the trustee now in effect.* Exhibit 2. a. A copy of the certificate of authority of the trustee to commence business issued June 28, 1872, by the Comptroller of the Currency to The Northwestern National Bank of Minneapolis.* b. A copy of the certificate of the Comptroller of the Currency dated January 2, 1934, approving the consolidation of The Northwestern National Bank of Minneapolis and The Minnesota Loan and Trust Company of Minneapolis, with the surviving entity being titled Northwestern National Bank and Trust Company of Minneapolis.* c. A copy of the certificate of the Acting Comptroller of the Currency dated January 12, 1943, as to change of corporate title of Northwestern National Bank and Trust Company of Minneapolis to Northwestern National Bank of Minneapolis.* 3 d. A copy of the letter dated May 12, 1983 from the Regional Counsel, Comptroller of the Currency, acknowledging receipt of notice of name change effective May 1, 1983 from Northwestern National Bank of Minneapolis to Norwest Bank Minneapolis, National Association.* e. A copy of the letter dated January 4, 1988 from the Administrator of National Banks for the Comptroller of the Currency certifying approval of consolidation and merger effective January 1, 1988 of Norwest Bank Minneapolis, National Association with various other banks under the title of "Norwest Bank Minnesota, National Association."* Exhibit 3. A copy of the authorization of the trustee to exercise corporate trust powers issued January 2, 1934, by the Federal Reserve Board.* Exhibit 4. Copy of By-laws of the trustee as now in effect.* Exhibit 5. Not applicable. Exhibit 6. The consent of the trustee required by Section 321(b) of the Act. Exhibit 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority.** Exhibit 8. Not applicable. Exhibit 9. Not applicable. * Incorporated by reference to exhibit number 25 filed with registration statement number 33-66026. ** Incorporated by reference to exhibit number 25 filed with registration statement number 333-43005. 4 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Norwest Bank Minnesota, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Minneapolis and State of Minnesota on the 11th day of February 1998. NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION /s/ JANE Y. SCHWEIGER --------------------------------- Jane Y. Schweiger Corporate Trust Officer 5 EXHIBIT 6 February 11, 1998 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION /s/ JANE Y. SCHWEIGER --------------------------------- Jane Y. Schweiger Corporate Trust Officer EX-99.1 52 FORM OF LETTER OF TRANSMITTAL 1 EXHIBIT 99.1 LETTER OF TRANSMITTAL OFFER TO EXCHANGE 9% SENIOR SUBORDINATED NOTES DUE 2007, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, FOR ANY AND ALL OUTSTANDING 9% SENIOR SUBORDINATED NOTES DUE 2007 OF PILLOWTEX CORPORATION THE EXCHANGE OFFER WILL EXPIRE AT P.M., NEW YORK CITY TIME, ON , 1998 UNLESS EXTENDED (THE "EXPIRATION DATE"). Deliver to: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, EXCHANGE AGENT By Registered or Certified Mail: By Overnight Delivery: By Hand Delivery: Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Corporate Trust Operations Corporate Trust Services Northstar East Building P.O. Box 1517 Sixth and Marquette Avenue 608 Second Avenue South, 12th Minneapolis, MN 55480-1517 Minneapolis, MN 55479-0113 Floor Corporate Trust Services Minneapolis, MN
Facsimile Transmission Number: (For Eligible Institutions Only) (612) 667-4927 Confirm Receipt of Facsimile by Telephone: (612) 667-9764 Delivery of this instrument to an address other than as set forth above or transmission of instructions via a facsimile number other than the one listed above will not constitute a valid delivery. The instructions accompanying this Letter of Transmittal should be read carefully before this Letter of Transmittal is completed. THIS INSTRUMENT SHOULD NOT BE DELIVERED TO THE COMPANY. The undersigned acknowledges that the undersigned has received and reviewed the Prospectus dated February , 1998 (the "Prospectus") of Pillowtex Corporation (the "Company") and this Letter of Transmittal (the "Letter of Transmittal"), which together constitute (i) the Company's offer (the "Exchange Offer") to exchange $1,000 in principal amount at maturity of its newly issued 9% Senior Subordinated Notes due 2007 (the "Series B Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement of which the Prospectus is a part, for $1,000 in principal amount at maturity of its outstanding 9% Senior Subordinated Notes due 2007 (the "Series A Notes"), of which $185,000,000 in principal amount at maturity are issued and outstanding. Other capitalized terms used but not defined herein have the meaning given to them in the Prospectus. This Letter of Transmittal is to be completed by a Holder (as defined herein) of Series A Notes either (i) if certificates are to be forwarded herewith or (ii) if a tender of certificates for Series A Notes, if available, is to be made by book-entry transfer to the account maintained by the Exchange Agent at the Depository Trust Company (the "DTC") pursuant to the procedures set forth in "The Exchange Offer -- Procedures for Tendering Series A Notes" section of the Prospectus. Holders of Series A Notes whose certificates are not immediately available, or who are unable to deliver their certificates or confirmation of the book-entry tender of their Series A Notes into the Exchange Agent's account at DTC (a "Book-Entry Confirmation") and all other documents required by this Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date, must tender their Series A Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus. See Instruction 1. Delivery of documents to DTC does not constitute delivery to the Exchange Agent. The term "Holder" with respect to the Exchange Offer means any person in whose name Series A Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered Holder. The undersigned has completed, executed, and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Holders who wish to tender their Series A Notes must complete this Letter of Transmittal in its entirety. 2 PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE PROVIDING ANY INFORMATION BELOW. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND LETTER OF TRANSMITTAL SHOULD BE DIRECTED TO THE EXCHANGE AGENT AT (612) 667-2344 OR AT ITS ADDRESS SET FORTH ABOVE. List below the Series A Notes to which this Letter of Transmittal relates. DESCRIPTION OF SERIES A NOTES - -------------------------------------------------------------------------------- AGGREGATE PRINCIPAL NAME(S) AND ADDRESS(ES) AMOUNT OF SERIES A NOTES OF REGISTERED HOLDERS REPRESENTED BY PRINCIPAL AMOUNT OF (PLEASE COMPLETE, IF BLANK) CERTIFICATE NUMBER(S) CERTIFICATE(S) SERIES A NOTES TENDERED* - --------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- TOTAL - --------------------------------------------------------------------------------------------------------------------- * Unless indicated in the column labeled "Principal Amount of Series A Notes Tendered," any tendering Holder of Series A Notes will be deemed to have tendered the entire principal amount of Series A Notes represented by the column labeled "Aggregate Principal Amount of Series A Notes Represented by Certificate(s)." - ---------------------------------------------------------------------------------------------------------------------
If the space provided above is inadequate, list the certificate numbers and principal amount of Series A Notes on a separate signed schedule and affix the list to this Letter of Transmittal. [ ] CHECK HERE IF TENDERED SERIES A NOTES ARE ENCLOSED HEREWITH. [ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER DEFINED) ONLY): Name of Tendering Institution: - -------------------------------------------------------------------------------- Account Number: - -------------------------------------------------------------------------------- Transaction Code Number: - -------------------------------------------------------------------------------- [ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY): Name(s) of Registered Holder(s) of Series A Notes: - -------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: - -------------------------------------------------------------------- Window Ticket Number (if available): - -------------------------------------------------------------------------------- Name of Institution that Guaranteed Delivery: - --------------------------------------------------------------------------- Account Number (if delivered by book-entry transfer): - ------------------------------------------------------------------ 2 3 SPECIAL ISSUANCE INSTRUCTIONS (See Instructions 4, 5 and 6) To be completed ONLY (i) if certificates for Series A Notes not tendered, or Series B Notes issued in exchange for Series A Notes accepted for exchange, are to be issued in the name of someone other than the undersigned, or (ii) if Series A Notes tendered by book-entry transfer that are not exchanged are to be returned by credit to an account maintained at DTC. Issue Certificate(s) to: Name: (Please Print) Address: - ------------------------------------------------------ - ------------------------------------------------------ (Include Zip Code) ------------------------------------------------------ (Taxpayer Identification or Social Security No.) ------------------------------------------------------ (Please Also Complete Substitute Form W-9) SPECIAL DELIVERY INSTRUCTIONS (See Instructions 4, 5 and 6) To be completed ONLY if certificates for Series A Notes not tendered, or Series B Notes issued in exchange for Series A Notes accepted for exchange, are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown above. Mail and deliver Certificate(s) to: Name: (Please Print) Address: - ------------------------------------------------------ - ------------------------------------------------------ (Include Zip Code) 3 4 Ladies and Gentlemen: Subject to the terms and conditions of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of Series A Notes indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Series A Notes tendered in accordance with this Letter of Transmittal, the undersigned sells, assigns, and transfers to, or upon the order of, the Company all right, title and interest in and to the Series A Notes tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company) with respect to the tendered Series A Notes with full power of substitution to (i) deliver certificates for such Series A Notes, or transfer ownership of such Series A Notes on the account books maintained by DTC, to the Company and deliver all accompanying evidences of transfer and authenticity to, or upon the order of, the Company, and (ii) present such Series A Notes for transfer on the books of the Company and receive all benefits and otherwise exercise all rights of beneficial ownership of such Series A Notes, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that he or she has full power and authority to tender, sell, assign, and transfer the Series A Notes tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges, and encumbrances and not subject to any adverse claim, when the same are acquired by the Company. The undersigned hereby further represents that (i) any Series B Notes acquired in exchange for Series A Notes tendered hereby will have been acquired in the ordinary course of business of the person receiving such Series B Notes, whether or not such person is the undersigned, (ii) neither the undersigned nor any such other person is engaging in or intends to engage in a distribution of the Series B Notes, (iii) neither the Holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Series B Notes, and (iv) neither the Holder nor any such other person is an "affiliate" (as defined in Rule 405 under the Securities Act) of the Company. The undersigned also acknowledges that this Exchange Offer is being made in reliance upon interpretations contained in letters issued to third parties by the staff of the Securities and Exchange Commission (the "SEC") that the Series B Notes issued in exchange for the Series A Notes pursuant to the Exchange Offer may be offered for resale, resold, and otherwise transferred by Holders thereof (other than any such Holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Series B Notes are acquired in the ordinary course of such Holder's business and such Holder is not engaging in and does not intend to engage in a distribution of the Series B Notes and has no arrangement or understanding with any person to participate in a distribution of such Series B Notes. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Series B Notes. If the undersigned is a broker-dealer that will receive Series B Notes for its own account in exchange for Series A Notes that were acquired as a result of market-making activities or other trading activities (a "Participating Broker-Dealer"), it acknowledges that it will deliver a prospectus in connection with any resale of such Series B Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the assignment, transfer, and purchase of the Series A Notes tendered hereby. For purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Series A Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. If any tendered Series A Notes are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Series A Notes will be returned, without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under "Special Delivery Instructions" or, in the case of Series A Notes tendered by book-entry transfer, such unaccepted Series A Notes will be credited to an account at DTC, as promptly as practicable after the Expiration Date. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding upon the undersigned's heirs, personal representatives, successors, and assigns. The undersigned understands that tenders of Series A Notes pursuant to the procedures described under the caption "The Exchange Offer -- Procedures for Tendering Series A Notes" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated under "Special Issuance Instructions," please issue the certificates representing the Series B Notes issued in exchange for the Series A Notes accepted for exchange and return any Series A Notes not tendered or not exchanged in the name(s) of the undersigned. Similarly, unless otherwise indicated under "Special Delivery Instructions," please send the certificates representing the Series B Notes issued in exchange for the Series A Notes accepted for exchange and any certificates for Series A Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the certificates 4 5 representing the Series B Notes issued in exchange for the Series A Notes accepted for exchange in the name(s) of, and return any Series A Notes not tendered or not exchanged and send said certificates to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Payment Instructions" and "Special Delivery Instructions" to transfer any Series A Notes from the name of the registered Holder(s) thereof if the Company does not accept for exchange any of the Series A Notes so tendered. Holders of Series A Notes who wish to tender their Series A Notes and (i) whose Series A Notes are not immediately available, or (ii) who cannot deliver their Series A Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date (or who cannot comply with the book-entry transfer procedures on a timely basis), may tender their Series A Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 1 regarding the completion of this Letter of Transmittal. 5 6 PLEASE SIGN HERE WHETHER OR NOT SERIES A NOTES ARE BEING PHYSICALLY TENDERED HEREBY X ------------------------------------------------------- ----------------------------------------------- (Date) X ------------------------------------------------------- ----------------------------------------------- (Signature(s) of Registered Holder(s) (Date) or Authorized Signatory)
Area Code and Telephone Number(s): -------------------------------------------- Tax Identification or Social Security Number(s): ------------------------------- The above lines must be signed by the registered Holder(s) of Series A Notes as their name(s) appear(s) on the certificate for the Series A Notes or by person(s) authorized to become registered Holder(s) by a properly completed bond power from the registered Holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Series A Notes to which this Letter of Transmittal relates are held of record by two or more joint Holders, then all such Holders must sign this Letter of Transmittal. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence satisfactory to the Company of such person's authority so to act. See Instruction 4 regarding the completion of this Letter of Transmittal. Name(s): ----------------------------------- ----------------------------- (Please Print) Capacity: ---------------------------------------------------------------------- Address: ----------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Include Zip Code) SIGNATURE(S) GUARANTEED BY AN ELIGIBLE INSTITUTION (AS HEREINAFTER DEFINED): (IF REQUIRED BY INSTRUCTION 4) - ------------------------------------------------------ ------------------------------------------- (Authorized Signature) (Title) - ------------------------------------------------------ ------------------------------------------- (Name of Firm) (Date)
6 7 PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW. - ------------------------------------------------------------------------------------------------------------------ PAYER'S NAME: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION - ------------------------------------------------------------------------------------------------------------------ SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW ------------------------------------------------ DEPARTMENT OF THE TREASURY PART 2 -- Check the box if you are exempt from INTERNAL REVENUE SERVICE backup withholding. [ ] ------------------------------------------------ CERTIFICATION -- Under the penalties of perjury, I certify that (1) the number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or the IRS has notified me that I am no longer subject to backup withholding. (You must cross out Item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting of interest or PAYER'S REQUEST FOR TAXPAYER dividends on your return.) IDENTIFICATION NUMBER Signature Date ("TIN") CERTIFICATION - ------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: NORWEST BANK MINNESOTA, - ------------------------------------------------------------------------------------------------------------------ SUBSTITUTE Social Security Number FORM W-9 OR ---------------------------------------- Employer ID Number ------------------------------------------------ DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE ------------------------------------------------ PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") CERTIFICATION - ------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number. - ------------------------------------------------------ --------------------------------------------------- Signature Date
7 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND SERIES A NOTES. The tendered Series A Notes or any confirmation of a book-entry transfer (a "Book-Entry Confirmation"), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. THE METHOD OF DELIVERY OF THE TENDERED SERIES A NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Holders who wish to tender their Series A Notes and (i) whose Series A Notes are not immediately available, or (ii) who cannot deliver their Series A Notes, this Letter of Transmittal, or any other documents required hereby to the Exchange Agent prior to the Expiration Date, or (iii) who are unable to complete the procedure for book-entry transfer on a timely basis, must tender their Series A Notes according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder of the Series A Notes, the certificate number or numbers of such Series A Notes and the aggregate principal amount of Series A Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, this Letter of Transmittal (or facsimile hereof) together with the certificate(s) representing the Series A Notes or a Book-Entry Confirmation and any other required documents will be deposited by the Eligible Institution (as hereinafter defined) with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Series A Notes (or a Book-Entry Confirmation) in proper form for transfer, must be received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date, all as provided in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." Any Holder of Series A Notes who wishes to tender his Series A Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Series A Notes according to the guaranteed delivery procedures set forth above. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Series A Notes, and withdrawal of tendered Series A Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Series A Notes not properly tendered or any Series A Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Series A Notes. The Company's interpretation of the terms and conditions of the Exchange Offer, including the instructions in this Letter of Transmittal and those set forth in the Prospectus under the caption "The Exchange Offer -- Certain Conditions to the Exchange Offer," shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Series A Notes must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Series A Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Series A Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Series A Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holders of Series A Notes, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. 2. TENDER BY HOLDER. Only a Holder of Series A Notes may tender such Series A Notes in the Exchange Offer. Any beneficial holder of Series A Notes who is not the registered Holder and who wishes to tender should arrange with the registered Holder to execute and deliver this Letter of Transmittal on his behalf or must, prior to completing and executing this Letter of Transmittal and delivering his Series A Notes, either make appropriate arrangements to register ownership of the Series A Notes in such holder's name, or obtain a properly completed bond power from the registered Holder. The transfer of registered ownership of Series A Notes may take considerable time. 3. PARTIAL TENDERS. If less than the entire principal amount of Series A Notes represented by a certificate is tendered, the tendering Holder should fill in the aggregate principal amount tendered in the third column of the box entitled "Description of Series A Notes" above. The entire principal amount of Series A Notes set forth on the certificate delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Series A Notes is not tendered, then a Series A Notes certificate for the principal amount of Series A Notes not tendered and a certificate or certificates representing Series B Notes issued in exchange for any Series A Notes accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal, promptly after the Series A Notes are accepted for exchange, or in the case of Series A 8 9 Notes tendered by book-entry transfer, such indentured Series A Notes and Series B Notes issued in exchange for any Series A Notes accepted will be credited to accounts at DTC. 4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof) is signed by the record Holder(s) of the Series A Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the Series A Notes without alteration, enlargement, or any change whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder or Holders of Series A Notes tendered and the certificate or certificates for Series B Notes issued in exchange therefor are to be issued (or if certificates representing the principal amount of Series A Notes not tendered are to be reissued) to the registered Holder, the said Holder need not and should not endorse any tendered Series A Notes, nor provide a separate bond power. In any other case, such Holder must either properly endorse the Series A Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered Holder or Holders of any Series A Notes listed, such Series A Notes must be endorsed or accompanied by appropriate bond powers, in each case signed as the name of the registered Holder or Holders appears on the Series A Notes. If this Letter of Transmittal (or facsimile hereof) or any Series A Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Letter of Transmittal. Endorsements on Series A Notes or signatures on bond powers required by this Instruction 4 must be guaranteed by an Eligible Institution. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a participant in a Recognized Signature Guarantee Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed if (i) this Letter of Transmittal is signed by the registered Holder(s) of the Series A Notes tendered herewith and such Holder(s) have not completed the box set forth herein entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions," or (ii) if such Series A Notes are tendered for the account of an Eligible Institution. 5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. Tendering Holders should indicate, in the applicable box or boxes, the name and address to which Series B Notes or substitute Series A Notes for the principal amount of Series A Notes not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 6. TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable to the exchange of Series A Notes pursuant to the Exchange Offer. If, however, certificates representing Series B Notes or Series A Notes (for any principal amount of Series A Notes not tendered or accepted for exchange) are to be delivered to, or are to be registered or issued in the name of, any person other than the registered Holder of the Series A Notes tendered hereby, or if tendered Series A Notes are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Series A Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or on any other persons) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Series A Notes listed in this Letter of Transmittal. 7. FORM W-9. Any Holder who tenders his Series A Notes is required to provide the Exchange Agent with a correct Taxpayer Identification Number ("TIN") on the Form W-9 which is enclosed herewith. If such Holder is an individual, the TIN is his or her social security number. Failure to provide the information on the Form W-9 may subject the surrendering Holder to 31% Federal income tax withholding on any payment made to Holders of the Series B Notes. Exempt Holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. For additional information in this regard, please refer to the enclosed Guidelines for Certification of TIN on Substitute Form W-9. In order to satisfy the Exchange Agent that a foreign individual qualifies as an exempt recipient, the Holder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 may be obtained from the Exchange Agent. 8. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend, waive, or modify specified conditions in the Exchange Offer, set forth in the Prospectus under the caption "The Exchange Offer -- Certain Conditions to the Exchange Offer," in the case of any Series A Notes tendered. 9. MUTILATED, LOST, STOLEN OR DESTROYED SERIES A NOTES. Any tendering Holder whose Series A Notes have been mutilated, lost, stolen, or destroyed should contact the Exchange Agent at the address indicated herein for further instructions. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance and requests for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company, or other nominee for assistance concerning the Exchange Offer. 9 10 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GUIDE THE PAYER. -- Social Security Numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer Identification Numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. - --------------------------------------------------------------- ---------------------------------------------------------------
GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - -------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals (joint The actual owner of the account) account or, if combined funds, any one of the individuals (1) 3. Custodian account of a minor The minor (2) (Uniform Gift to Minors Act) 4. (a) The usual revocable savings The grantor- trustee (1) trust account (grantor is also trustee) (b) So-called trust account The actual owner (1) that is not a legal or valid trust under State law 5. Sole proprietorship account The owner (3) 6. A valid trust, estate, or The legal entity (Do not pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) (4) 7. Corporate account The corporation 8. Religious, charitable, or The organization educational organization account 9. Partnership The partnership 10. Association, club or other The organization tax-exempt organization 11. A broker or registered nominee The broker or nominee 12. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------------------------- --------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's Social Security Number. (3) Show the name of the owner. You may also enter your business name. You may use your Social Security Number or Employer Identification Number. (4) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 10 11 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a Taxpayer Identification Number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on broker transactions include the following: - - A corporation. - - A financial institution. - - An organization exempt from tax under Section 501(a), or an individual retirement plan. - - The United States or any agency or instrumentality thereof. - - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - - An international organization or any agency or instrumentality thereof. - - A registered dealer in securities or commodities registered in the United States or a possession of the United States. - - A real estate investment trust. - - A common trust fund operated by a bank under Section 584(a). - - An entity registered at all times under the Investment Company Act of 1940. - - A foreign central bank of issue. - - A person registered under the Investment Advisors Act of 1940 who regularly acts as a broker. Payments of interest not generally subject to backup withholding include the following: - - Payments to nonresident aliens subject to withholding under Section 1441. - - Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident partner. - - Payments made by certain foreign organizations. Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend, interest, or other payments to give Taxpayer Identification Numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a Taxpayer Identification Number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish your Taxpayer IDENTIFICATION NUMBER to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS. 11 12 (DO NOT WRITE IN SPACE BELOW) CERTIFICATE SERIES A NOTES SERIES A NOTES SURRENDERED TENDERED ACCEPTED
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Delivery Prepared by: - ---------------------------------- Checked by: - -------------------------------------------- Date: - ----------------------------------------------------- 12 EX-99.2 53 FORM OF NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR PILLOWTEX CORP. LOGO This form or one substantially equivalent hereto must be used to accept the Exchange Offer of Pillowtex Corporation (the "Company") made pursuant to the Prospectus, dated February , 1998 (the "Prospectus"), if certificates for Series A Notes of the Company are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Exchange Agent prior to 5:00 p.m, New York City time, on the Expiration Date of the Exchange Offer. Such form may be delivered or transmitted by facsimile transmission, mail, overnight courier or hand delivery to Norwest Bank Minnesota, National Association (the "Exchange Agent") as set forth below. In addition, in order to utilize the guaranteed delivery procedure to tender Series A Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or facsimile thereof) must also be received by the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized terms not defined herein are defined in the Prospectus. Deliver to: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, EXCHANGE AGENT By Registered or Certified Mail: By Hand or Overnight Delivery: By Hand Delivery: Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Corporate Trust Operations Corporate Trust Services Northstar East Building P.O. Box 1517 Sixth and Marquette Avenue 608 Second Avenue South, 12th Minneapolis, MN 55480-1517 Minneapolis, MN 55479-0113 Floor Corporate Trust Services Minneapolis, MN
Facsimile Transmission Number: (For Eligible Institutions Only) (612) 667-4927 Confirm Receipt of Facsimile by Telephone: (612) 667-9764 Delivery of this instrument to an address other than as set forth above or transmission of instructions via a facsimile number other than the one listed above will not constitute a valid delivery. Ladies and Gentlemen: Upon the terms and conditions set forth in the Prospectus and the accompanying Letter of Transmittal, the undersigned hereby tenders to the Company the principal amount of Series A Notes set forth below, pursuant to the guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus. By so tendering, the undersigned hereby does make, at and as of the date hereof, the representations and warranties of a tendering Holder of Series A Notes set forth in the Letter of Transmittal. Principal Amount of Series A Notes Tendered: If Series A Notes will be delivered by - ------------------------------------------------ book-entry transfer to the Depository Trust Certificate Nos. (if available): Company, provide account number: - ------------------------------------------------ DTC Account Number: Total Principal Amount Represented by Series A --------------------------------- Notes Certificate(s): - ------------------------------------------------
2 ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS, AND ASSIGNS OF THE UNDERSIGNED. PLEASE SIGN HERE - ------------------------------------------------------------ ------------------------------------------------ (Date) - ------------------------------------------------------------ ------------------------------------------------ Signature(s) of Registered Holder(s) or Authorized Signatory (Date)
Area Code and Telephone Number: - ------------------------------------------------------ Must be signed by the Holder(s) of Series A Notes as their name(s) appear(s) on certificates for Series A Notes or by person(s) authorized to become registered Holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer, or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below: (Please print name(s) and addresses) Name(s): ------------------------------------------------------------ ------------------------------------------------------------ (Please Print) Capacity: ------------------------------------------------------------ Address: ------------------------------------------------------------ ------------------------------------------------------------ (Include Zip Code)
2 3 GUARANTEE The undersigned, a member of a registered national securities exchange, or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an officer or correspondent in the United States, hereby guarantees that the certificates representing the principal amount of Series A Notes tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Series A Notes into the Exchange Agent's account at DTC pursuant to the procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus, together with a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof) with any required signature guarantee and any other documents required by the Letter of Transmittal, will be received by the Exchange Agent at the address set forth above, within three New York Stock Exchange trading days after the Expiration Date. Name of Firm Authorized Signature Address Title Name: Zip Code (Please Type or Print) Area Code and Telephone No.: Dated:
NOTE: DO NOT SEND CERTIFICATES FOR SERIES A NOTES WITH THIS FORM. CERTIFICATES FOR SERIES A NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 -----END PRIVACY-ENHANCED MESSAGE-----