Exhibit 99.3
PLEDGE AGREEMENT
By
POLYMER GROUP, INC.,
and
THE DOMESTIC SUBSIDIARIES PARTY HERETO,
as Pledgors,
and
CITICORP NORTH AMERICA, INC.,
as First Lien Collateral Agent
and
as Second Lien Collateral Agent
----------------------
Dated as of April 27, 2004
TABLE OF CONTENTS
PAGE
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SECTION 1. Pledge......................................................................................2
SECTION 2. Delivery of the Securities Collateral.......................................................3
SECTION 3. Representations, Warranties and Covenants...................................................3
SECTION 4. Registration in Nominee Name; Denominations.................................................4
SECTION 5. Voting Rights; Dividends and Interest, etc..................................................4
SECTION 6. Remedies upon Default.......................................................................6
SECTION 7. Application of Proceeds of Sale.............................................................7
SECTION 8. Collateral Agent Appointed Attorney-in-Fact.................................................7
SECTION 9. Waivers; Amendment..........................................................................7
SECTION 10. Securities Act, etc.........................................................................8
SECTION 11. Registration, etc...........................................................................8
SECTION 12. Termination or Release......................................................................9
SECTION 13. Notices....................................................................................10
SECTION 14. Further Assurances.........................................................................10
SECTION 15. Binding Effect; Several Agreement; Assignment..............................................10
SECTION 16. Survival of Agreement; Severability........................................................10
SECTION 17. GOVERNING LAW..............................................................................11
SECTION 18. Counterparts...............................................................................11
SECTION 19. Rules of Interpretation....................................................................11
SECTION 20. Jurisdiction; Consent to Service of Process................................................11
SECTION 21. WAIVER OF JURY TRIAL.......................................................................12
SECTION 22. Additional Pledgors........................................................................12
SECTION 23. Financing Statements.......................................................................12
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SECTION 24. No Deemed Dividend.........................................................................12
SECTION 25. Concerning Collateral Agent................................................................13
SCHEDULES
Schedule I Domestic Subsidiaries
Schedule II Pledged Stock and Debt Securities
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PLEDGE AGREEMENT
PLEDGE AGREEMENT (as amended, amended and restated, supplemented
or otherwise modified from time to time, this "AGREEMENT") dated as of April 27,
2004, among POLYMER GROUP, INC., a Delaware corporation (the "BORROWER"), each
Domestic Subsidiary of the Borrower listed on Schedule I hereto (collectively,
together with each Domestic Subsidiary that becomes a party hereto pursuant to
Section 22 of this Agreement, the "SUBSIDIARY GUARANTORS" and, together with the
Borrower, the "PLEDGORS"), CITICORP NORTH AMERICA, INC., as collateral agent (in
such capacity, the "FIRST LIEN COLLATERAL AGENT") on behalf of the First Lien
Secured Parties (as defined in the Credit Agreement) and as collateral agent
(the "SECOND LIEN COLLATERAL AGENT") on behalf of the Second Lien Secured
Parties (as defined in the Credit Agreement) pursuant to the Credit Agreement
(as hereinafter defined), as pledgee, assignee and secured party.
R E C I T A L S
A. The Borrower, the Collateral Agents, Citicorp North
America, Inc., as administrative agent (in such capacity, and together with any
successors in such capacity, the "ADMINISTRATIVE AGENT") for the Lenders (as
hereinafter defined), as documentation agent (in such capacity, the
"DOCUMENTATION AGENT"), and as syndication agent (in such capacity, the
"SYNDICATION AGENT") and Citicorp Global Markets Inc. ("CGMI"), as sole lead
arranger and sole bookrunner (in such capacity, the "LEAD ARRANGER"), and the
lending institutions from time to time party thereto (the "LENDERS") have, in
connection with the execution and delivery of this Agreement, entered into that
certain credit agreement, dated as of the date hereof (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), providing for the making of Loans to the Borrower and the issuance
of and participations in Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement.
B. Each Subsidiary Guarantor has, pursuant to the Guarantee
Agreement, dated as of the date hereof, among other things, unconditionally
guaranteed the obligations of the Borrower under the Credit Agreement.
C. The Borrower and each Subsidiary Guarantor will receive
substantial benefits from the execution, delivery and performance of the
obligations of the Borrower under the Credit Agreement and are, therefore,
willing to enter into this Agreement.
D. Contemporaneously with the execution and delivery of this
Agreement, the Borrower and the Subsidiary Guarantors have executed and
delivered to the Collateral Agents a Security Agreement (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "SECURITY
AGREEMENT").
E. This Agreement is given by each Pledgor in favor of the
Collateral Agents for the benefit of the respective Secured Parties (as defined
in the Security Agreement) to secure the payment and performance of the
obligations (whether or not constituting future advances, obligatory or
otherwise) of the Borrower and any and all of the Subsidiary Guarantors from
time to time arising under or in respect of this Agreement, the Credit
Agreement, the other Loan Documents and the other Obligations (as defined in the
Security Agreement).
Capitalized terms used herein and not defined herein shall have
meanings assigned to such terms in the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Pledgor, the receipt and sufficiency of which are
hereby acknowledged, each Pledgor hereby makes the following representations and
warranties to each Collateral Agent for the benefit of the respective Secured
Parties (and each of their respective successors and assigns), and agrees as
follows:
SECTION 1. PLEDGE. (a) It being expressly understood and agreed
that the security interests granted herein for the benefit of the Collateral
Agents on behalf of the applicable Secured Parties shall be subject to the
intercreditor and subordination terms of the Credit Agreement and the Collateral
Sharing Agreement, the following liens on the Collateral are hereby granted:
(i) As collateral security for the payment and performance, in
full of all the First Lien Obligations, each Pledgor hereby pledges and grants
to the First Lien Collateral Agent, for the ratable benefit of First Lien
Secured Parties, a lien on and security interest in and to all of the right,
title and interest of such Pledgor in, to and under (a) all the shares of
capital stock and other Equity Interests owned by it listed on Schedule II
hereto and any shares of capital stock and other Equity Interests obtained in
the future by such Pledgor and not deposited into a Securities Account pursuant
to the Security Agreement and the certificates, if any, representing all such
shares or interests (collectively, the "PLEDGED STOCK"); PROVIDED that the
Pledged Stock shall not include (i) more than 65% of the issued and outstanding
shares of voting stock of any Non-U.S. Subsidiary or (ii) to the extent that
applicable law requires that a Subsidiary of the Pledgor issue directors'
qualifying shares, such qualifying shares; (b)(i) all debt securities owned by
it listed opposite the name of the Pledgor on Schedule II hereto, (ii) all debt
securities in the future issued to the Pledgor and not deposited into a
Securities Account (as defined in the Security Agreement) pursuant to the
Security Agreement and (iii) all promissory notes and any other instruments
evidencing such debt securities (collectively, the "PLEDGED DEBT SECURITIES" and
together with the Pledged Stock, the "PLEDGED SECURITIES"); (c) subject to
Section 5, all payments of principal or interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of, in exchange for or upon the conversion of the
securities referred to in clauses (a) and (b) above; (d) subject to Section 5,
all rights and privileges of the Pledgor with respect to the securities and
other property referred to in clauses (a), (b) and (c) above; and (e) all
proceeds of any and all of the foregoing (all the foregoing, collectively, the
"SECURITIES COLLATERAL.")
(ii) As collateral security for the payment and performance in
full of all the Second Lien Obligations, each Pledgor hereby pledges and grants
to the Second Lien Collateral Agent for the ratable benefit of the Second Lien
Secured Parties, a lien on and security interest in all of such Pledgor's right,
title and interest of such Pledgor in, to and under (a) the Pledged Stock;
PROVIDED that the Pledged Stock shall not include (i) more than 65% of the
issued and outstanding shares of voting stock of any Non-U.S. Subsidiary or (ii)
to the extent that applicable law requires that a Subsidiary of the Pledgor
issue directors' qualifying shares, such qualifying shares; (b) the Pledged Debt
Securities; (c) subject to Section 5, all payments of principal or interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, in exchange for or upon the
conversion of the securities referred to in clauses (a) and (b) above; (d)
subject to Section 5, all rights and privileges of the Pledgor with respect to
the securities and other property referred to in clauses (a), (b) and (c) above;
and (e) all proceeds of any and all of the foregoing; PROVIDED that the Liens
granted pursuant to this clause (a)(ii) shall be subject and subordinate to the
Liens granted to secure the First Lien Obligations pursuant to the immediately
preceding clause (a)(i) and further subject to the intercreditor and
subordination provisions of the Credit Agreement and the Collateral Sharing
Agreement.
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(b) Upon delivery to the Collateral Agent, (a) any
certificated Pledged Securities now or hereafter included in the Securities
Collateral shall be accompanied by stock or bond powers duly executed in blank
or other instruments of transfer reasonably satisfactory to the Collateral Agent
and by such other instruments and documents as the Collateral Agent may
reasonably request and (b) all other property comprising part of the Securities
Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Pledgor and such other instruments or documents as
the Collateral Agent may reasonably request. Each subsequent delivery of Pledged
Securities shall be accompanied by a schedule describing the securities then
being pledged hereunder, which schedule shall be attached hereto as a supplement
to Schedule II and made a part hereof. Each schedule so delivered shall
supplement any prior schedules so delivered.
TO HAVE AND TO HOLD the Securities Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agents for the benefit of the respective
Secured Parties; SUBJECT, HOWEVER, to the terms, covenants and conditions
hereinafter set forth.
SECTION 2. DELIVERY OF THE SECURITIES COLLATERAL. (a) Each
Pledgor agrees to promptly deliver or cause to be delivered to the Collateral
Agent any and all Pledged Securities, and any and all certificates or other
instruments or documents representing the Securities Collateral, other than
those Pledged Securities to be held in a Securities Account which Securities
Account will be subject to a Control Agreement (as defined in the Security
Agreement) pursuant to the terms of the Security Agreement.
(b) Each Pledgor will cause any Indebtedness for borrowed
money owed to such Pledgor by any Person to be evidenced by a duly executed
promissory note that is pledged to the Collateral Agents for the benefit of the
respective Secured Parties and delivered to the Collateral Agent pursuant to the
terms hereof (PROVIDED that this clause (b) shall not apply to any such
Indebtedness in an aggregate principal amount less than $500,000 of any Person
that is not a Subsidiary).
(c) If any Equity Interests now or hereafter acquired by any
Pledgor constituting Pledged Stock are uncertificated, such Pledgor shall
promptly notify each Collateral Agent thereof and shall use commercially
reasonable efforts to cause such Equity Interests to be certificated. If, after
using commercially reasonable efforts, such Pledgor is not able to have such
Equity Interests certificated, such Pledgor shall comply with its obligations
under Section 3.05(c) of the Security Agreement.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each
Pledgor hereby represents, warrants and covenants, as to itself and the
Securities Collateral pledged by it hereunder, to and with each Collateral Agent
that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of the
capital stock or other Equity Interests of the issuer with respect thereto;
(b) except for the security interests granted hereunder, such
Pledgor (i) is the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II, (ii) holds the same free and clear of
all Liens, other than the Liens created hereunder, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to
exist any security interest in or other Lien on, the Securities Collateral,
other than pursuant hereto or in accordance with the
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Credit Agreement, and (iv) subject to Section 2 and Section 5, will cause
any and all Securities Collateral, whether for value paid by such Pledgor
or otherwise, to be forthwith deposited with the Collateral Agent and
pledged or assigned hereunder;
(c) except as set forth in the proviso to Section 1(a)(i), the
Pledged Stock and Pledged Securities set forth on Schedule II constitute
all of the securities owned by such Pledgor that are not included in the
definition of Collateral under the Security Agreement;
(d) such Pledgor (i) has the power and authority to pledge the
Securities Collateral in the manner hereby done or contemplated and (ii)
will defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement), however arising, of
all Persons whomsoever;
(e) by virtue of (i) the execution and delivery by the
Pledgors of this Agreement, when the Pledged Securities, certificates or
other documents representing or evidencing the Securities Collateral are
delivered to the Collateral Agent in accordance with this Agreement or (ii)
in the case of uncertificated Equity Interests, the filing of a UCC
financing statement or its equivalent in other jurisdictions, each
Collateral Agent will obtain a valid and perfected lien upon and security
interest in such Pledged Securities under
New York law and/or any other
applicable jurisdiction as security for the payment and performance of the
Obligations, subject to no Liens other than the liens created hereunder;
(f) all of the Pledged Stock issued by any Pledgor has been
duly authorized and validly issued and is fully paid and nonassessable;
(g) all of the Pledged Debt Securities issued by any Pledgor
have been duly authorized, executed and delivered and are the enforceable
obligations of the issuer thereof; and
(h) all information set forth herein relating to the Pledged
Securities is accurate and complete in all material respects as of the date
hereof.
SECTION 4. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent;
PROVIDED that the Collateral Agent shall not exercise any such right without the
prior written consent of the Borrower if no Event of Default has occurred and is
continuing. During the continuance of any Event of Default, each Pledgor will
promptly give to the Collateral Agents copies of any notices or other
communications received by it with respect to Pledged Securities registered in
the name of such Pledgor. During the continuance of any Event of Default, the
Collateral Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
SECTION 5. VOTING RIGHTS; DIVIDENDS AND INTEREST, ETC. (a)
Unless and until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall have the right to exercise any and all
voting and/or other consensual rights and powers enuring to an owner of
Pledged Securities or any part thereof for any
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purpose consistent with the terms of this Agreement, the Credit Agreement
and the other Loan Documents; PROVIDED, HOWEVER, that such Pledgor will not
be entitled to exercise any such right if the result thereof could
reasonably be expected to materially and adversely affect the rights and
remedies of any of the Secured Parties under this Agreement, the Credit
Agreement or any other Loan Document or the ability of the Secured Parties
to exercise the same;
(ii) Each Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all such
proxies, powers of attorney and other instruments as such Pledgor may
reasonably request for the purpose of enabling such Pledgor to exercise the
voting and/or consensual rights and powers it is entitled to exercise
pursuant to subparagraph (i) above and to receive the cash dividends it is
entitled to receive pursuant to subparagraph (iii) below; and
(iii) Subject to the next sentence, each Pledgor shall be
entitled to receive and retain any and all cash dividends, interest,
principal and other amounts paid on the Pledged Securities to the extent
and only to the extent that such cash dividends, interest, principal and
other amounts are permitted by or not prohibited by, and otherwise paid in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable laws. All noncash dividends, interest,
principal and other amounts, and all dividends, interest, principal and
other amounts paid or payable in cash or otherwise in connection with a
partial or total liquidation or dissolution, return of capital, capital
surplus or paid-in surplus, and all other distributions (other than
distributions referred to in the preceding sentence) made on or in respect
of the Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification of
the outstanding capital stock of the issuer of any Pledged Securities or
received in exchange for Pledged Securities or any part thereof, or in
redemption thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer may be a party
or otherwise, shall be and become part of the Securities Collateral, and,
if received by any Pledgor, shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Pledgor to dividends, interest, principal or other
amounts that such Pledgor is authorized to receive pursuant to paragraph
(a)(iii) above shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall have the sole and exclusive right and
authority to receive and retain such dividends, interest, principal or other
amounts. All dividends, interest, principal or other amounts received by the
Pledgor contrary to the provisions of this Section 5 shall be held in trust for
the benefit of the Collateral Agents, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon written demand in the same form as so received (with any necessary
endorsement). Any and all money and other property paid over to or received by
the Collateral Agent pursuant to the provisions of this paragraph (b) shall be
retained by the Collateral Agent in the Collateral Account established pursuant
to the Security Agreement and shall be applied in accordance with the provisions
of Section 7. Within five (5) Business Days after all such Events of Default
have been cured or waived, the Collateral Agent shall repay to each Pledgor all
cash dividends, interest or principal (including interest earned thereon) that
such Pledgor would otherwise be permitted to retain pursuant to the terms of
paragraph (a)(iii) above and which remain in such account; PROVIDED, HOWEVER,
the Collateral Agent shall be under no obligation with respect to the investment
of such cash dividends, interest or principal, including, for the avoidance of
doubt, any requirement to invest such cash dividends, interest or principal in
any class of investment, interest-bearing or otherwise.
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(c) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Pledgor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of
this Section 5, and the obligations of the Collateral Agent under paragraph
(a)(ii) of this Section 5, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers.
After all Events of Default have been cured or waived, such Pledgor will have
the right to exercise the voting and consensual rights and powers that it would
otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i)
above.
SECTION 6. REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, subject to applicable regulatory
and legal requirements, the Collateral Agent may sell or otherwise dispose of
the Securities Collateral, or any part thereof, at public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate; provided that
any disposition of Securities Collateral by private sale be deemed to have been
made in a commercially reasonable manner. Each such purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of any Pledgor, and, to the extent permitted by applicable law, the Pledgors
hereby waive all rights of redemption, stay, valuation and appraisal any Pledgor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor ten (10) Business Days'
prior written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-611 of the Uniform Commercial Code as in effect in the
State of
New York or its equivalent in other jurisdictions (the "UCC")) of the
Collateral Agent's intention to make any sale or other disposition of such
Pledgor's Securities Collateral. Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker's board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Securities Collateral, or
portion thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and state in
the notice of such sale. At any such sale, the Securities Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Securities Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of such Securities Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Securities Collateral is made on credit or for
future delivery, the Securities Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Securities Collateral so sold and, in case of any such failure, such Securities
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this Section 6, any
Secured Party may bid for or purchase, free from any right of redemption, stay,
valuation or appraisal on the part of any Pledgor (all said rights being also
hereby waived and released), the Securities Collateral or any part thereof
offered for sale and may make payment on account thereof by using any Obligation
then due and payable to such Secured Party from any Pledgor as a credit against
the purchase price, and such Secured Party may, upon compliance with the terms
of sale, hold, retain and dispose of such property without further
accountability to any Pledgor therefor. For purposes hereof, (a) a written
agreement
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to purchase the Securities Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Collateral Agent shall be free to carry out such sale
pursuant to such agreement and (c) no Pledgor shall be entitled to the return of
the Securities Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a suit or suits at
law or in equity to foreclose upon the Securities Collateral and to sell the
Securities Collateral or any portion thereof pursuant to a judgment or decree of
a court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section
shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-611 of the UCC or its equivalent in other jurisdictions, as
applicable.
SECTION 7. APPLICATION OF PROCEEDS OF SALE. The proceeds of any
sale of Securities Collateral pursuant to Section 6, as well as any Securities
Collateral consisting of cash, shall be applied by the Collateral Agent as
provided in the Collateral Sharing Agreement.
SECTION 8. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Subject
to Section 25, each Pledgor hereby appoints each Collateral Agent the
attorney-in-fact of such Pledgor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument that either
Collateral Agent may deem reasonably necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an interest,
PROVIDED that the Collateral Agent shall only take any action pursuant to such
appointment upon the occurrence and during the continuation of an Event of
Default. Without limiting the generality of the foregoing, the Collateral Agent
shall have the right, upon the occurrence and during the continuance of an Event
of Default, with full power of substitution either in the Collateral Agent's
name or in the name of such Pledgor, to ask for, demand, xxx for, collect,
receive and give acquittance for any and all moneys due or to become due under
and by virtue of any Securities Collateral, to endorse checks, drafts, orders
and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Securities Collateral or any part thereof or on account thereof and to
give full discharge for the same, to settle, compromise, prosecute or defend any
action, claim or proceeding with respect thereto, and to sell, assign, endorse,
pledge, transfer and to make any agreement respecting, or otherwise deal with,
the same; PROVIDED, HOWEVER, that nothing herein contained shall be construed as
requiring or obligating either Collateral Agent to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by such
Collateral Agent, or to present or file any claim or notice, or to take any
action with respect to the Securities Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby.
The Collateral Agents and the other Secured Parties shall be accountable only
for amounts actually received as a result of the exercise of the powers granted
to them herein, and neither they nor their officers, directors, employees or
agents shall be responsible to any Pledgor for any act or failure to act
hereunder, except for their own gross negligence, willful misconduct or bad
faith.
SECTION 9. WAIVERS; AMENDMENT. (a) No failure or delay of
either Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of either Collateral Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
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otherwise have. No waiver of any provisions of this Agreement or any other Loan
Document or consent to any departure by any Pledgor therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any Pledgor in any case
shall entitle such Pledgor or any other Pledgor to any other or further notice
or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
among the Borrower, the Collateral Agents and the Pledgors with respect to which
such waiver, amendment or modification is to apply subject to any consents
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 10. SECURITIES ACT, ETC. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "FEDERAL SECURITIES LAWS") or equivalent legislation
in any other jurisdiction with respect to any disposition of the Pledged
Securities permitted hereunder. Each Pledgor understands that compliance with
the Federal Securities Laws or equivalent legislation in any other jurisdiction
might very strictly limit the course of conduct of the Collateral Agents if the
Collateral Agents were to attempt to dispose of all or any part of the Pledged
Securities, and might also limit the extent to which or the manner in which any
subsequent transferee of any Pledged Securities could dispose of the same.
Similarly, there may be other legal restrictions or limitations affecting the
Collateral Agents in any attempt to dispose of all or part of the Pledged
Securities under applicable Blue Sky or other state securities laws or similar
laws analogous in purpose or effect. Each Pledgor recognizes that in light of
such restrictions and limitations the Collateral Agents may, with respect to any
sale of the Pledged Securities, limit the purchasers to those who will represent
and agree, among other things, to acquire such Pledged Securities for their own
account for investment, and not with a view to the distribution or resale
thereof, and upon consummation of any such sale the Collateral Agents shall have
the right to assign, transfer and deliver to the purchaser or purchasers thereof
the Collateral so sold. Each Pledgor acknowledges and agrees that in light of
such restrictions and limitations, the Collateral Agents, in their sole and
absolute discretion (but subject to the other provisions of this Agreement), (a)
may proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof shall have been
filed under the Federal Securities Laws or equivalent legislation in any other
jurisdiction and (b) may approach and negotiate with a single potential
purchaser to effect such sale. Each Pledgor acknowledges and agrees that any
such sale might result in prices and other terms less favorable to the seller
than if such sale were a public sale without such restrictions. In the event of
any such sale, each Collateral Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Securities at a price that such
Collateral Agent, in its sole and absolute discretion, may in good xxxxx xxxx
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 10 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which such Collateral Agent sells.
SECTION 11. REGISTRATION, ETC. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities of
the Borrower at a public sale, it will, at any time and from time to
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time, upon the reasonable written request of the Collateral Agent, use its
commercially reasonable efforts to take or to cause the issuer of such Pledged
Securities to take such action and prepare, distribute, file and/or cause to
become effective such documents as are required or advisable in the reasonable
opinion of counsel for the Collateral Agent to permit the public sale of such
Pledged Securities. Each Pledgor further agrees to indemnify, defend and hold
harmless the Collateral Agent, each other Secured Party, any underwriter and
their respective officers, directors, affiliates and controlling Persons
(collectively, "INDEMNITEES") from and against all loss, liability, expenses,
costs of counsel (including, without limitation, reasonable fees and expenses to
the Collateral Agent of legal counsel) and claims (including the reasonable
costs of investigation) that they may incur insofar as such loss, liability,
expense or claim arises out of or is based upon any alleged untrue statement of
a material fact contained in any prospectus (or any amendment or supplement
thereto) or in any notification or offering circular, or arises out of or is
based upon any alleged omission to state a material fact required to be stated
therein or necessary to make the statements in any thereof not misleading,
except insofar as the same may have been caused by any untrue statement or
omission based upon information furnished in writing to such Pledgor or the
issuer of such Pledged Securities by the Collateral Agent or any other Secured
Party expressly for use therein. Each Pledgor further agrees, upon such written
request referred to above, to use its reasonable best efforts to qualify, file
or register, or cause the issuer of such Pledged Securities to qualify, file or
register, any of the Pledged Securities under the Blue Sky or other securities
laws of such states as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations. Each Pledgor will bear all reasonable costs and expenses of
carrying out its obligations under this Section 11. Each Pledgor acknowledges
that there is no adequate remedy at law for failure by it to comply with the
provisions of this Section 11 and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in
this Section 11 may be specifically enforced.
SECTION 12. TERMINATION OR RELEASE. (a) This Agreement and the
security interests granted hereby (i) shall terminate when all the Obligations
have been paid in full (except for contingent indemnity obligations not then
due), the Lenders have no further commitment to lend under the Credit Agreement
or to issue or participate in Letters of Credit and the LC Exposure has been
reduced to zero (at which time each Collateral Agent shall execute and deliver
to each Pledgor, at such Pledgor's expense, all UCC termination statements or
their equivalent in any other jurisdiction and other documents which such
Pledgor shall reasonably request to evidence such termination) and (ii) shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment in respect of any Obligation is rescinded or must otherwise be
restored by any Secured Party upon any bankruptcy or reorganization of any
Pledgor or otherwise. Any execution and delivery of termination statements or
documents pursuant to this Section 12(a) shall be without recourse to or
warranty by the Collateral Agents. A Subsidiary Guarantor shall automatically be
released from its obligations hereunder and the Security Interests in the
Collateral of such Subsidiary Guarantor shall be automatically released in the
event that the Equity Interests of such Subsidiary Guarantor shall be sold,
transferred or otherwise disposed of to a Person that is not an Affiliate of
Borrower such that such Person is no longer a Subsidiary of Borrower in
accordance with the terms of each Loan Document.
(b) Upon any sale or other transfer by any Pledgor of any
Securities Collateral that is permitted under each Loan Document to any Person
that is not a Pledgor, or upon the effectiveness of any written consent to the
release of the security interests granted hereby in any Securities Collateral
pursuant to Section 9.08 of the Credit Agreement, the security interests in such
Securities Collateral shall be automatically released. If the capital stock of a
Pledgor is sold, transferred or otherwise disposed of to a Person that is not an
Affiliate of the Borrower so that such Pledgor is no longer a Subsidiary of the
Borrower
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pursuant to a transaction permitted by the Credit Agreement, such Pledgor shall
be released from its obligations under this Agreement without further action.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), each Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 12 shall be without recourse to
or warranty by the Collateral Agents.
SECTION 13. NOTICES. All communications and notices hereunder
shall be in writing and given as provided in Section 10.01 of the Credit
Agreement. All communications and notices hereunder to any Pledgor that is a
Domestic Subsidiary shall be given to it c/o the Borrower at the Borrower's
address as provided in Section 9.01 of the Credit Agreement, with a copy to the
Borrower.
SECTION 14. FURTHER ASSURANCES. Each Pledgor agrees to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as either Collateral Agent may at any
time reasonably request in connection with the administration and enforcement of
this Agreement or with respect to the Securities Collateral or any part thereof
or in order better to assure and confirm unto the Collateral Agents, their
rights and remedies hereunder.
SECTION 15. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENT.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the permitted successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of any
Pledgor that are contained in this Agreement shall bind and inure to the benefit
of its permitted successors and assigns. This Agreement shall become effective
as to any Pledgor when a counterpart (including a facsimile copy) hereof
executed on behalf of such Pledgor shall have been delivered to the Collateral
Agents and a counterpart hereof shall have been executed on behalf of the
Collateral Agents, and thereafter shall be binding upon such Pledgor and the
Collateral Agents and their respective successors and assigns, and shall enure
to the benefit of such Pledgor, the Collateral Agents and the other Secured
Parties, and their respective successors and assigns, except that no Pledgor
shall have the right to assign its rights hereunder or any interest herein or in
the Securities Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Loan Documents.
This Agreement shall be construed as a separate agreement with respect to each
Pledgor and may be amended, modified, supplemented, waived or released with
respect to any Pledgor without the approval of any other Pledgor and without
affecting the obligations of any other Pledgor hereunder.
SECTION 16. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All
covenants, agreements, representations and warranties made by any Pledgor herein
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Collateral Agents and the other
Secured Parties and shall survive the making by the Lenders of the Loans, and
the Lenders' issuance of and participations in Letters of Credit, regardless of
any investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect until this Agreement shall terminate.
(b) In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of
-10-
the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions. It is understood and agreed that this Agreement shall create
separate security interests in the Securities Collateral securing the
Obligations, as provided in Section 1, and that any determination by any court
with jurisdiction that the security interests securing any Obligation or class
of Obligations is invalid for any reason shall not in and of itself invalidate
the security interests securing any other Obligations hereunder.
SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 18. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute a single contract, and shall become
effective as provided in Section 15. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 19. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
SECTION 20. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
Each party hereto hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any
New York State court or
Federal court of the United States of America sitting in
New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such
New York State court or, to the extent permitted by applicable law, in
such Federal court referred to above. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable law. Nothing in this Agreement shall affect any right
that the Collateral Agents or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against any Pledgor or its properties in the courts of any
jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any
New York State or Federal court referred to in paragraph
(a) of this Section. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
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(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 13. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 21. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 22. ADDITIONAL PLEDGORS. Pursuant to Section 5.16 of the
Credit Agreement, each Domestic Subsidiary of the Borrower that was not in
existence or not a Domestic Subsidiary on the date of the Credit Agreement is
required to enter into this Agreement as a Pledgor upon becoming a Domestic
Subsidiary. Upon execution and delivery by the Collateral Agents and such
Domestic Subsidiary of an instrument in the form of Annex I attached to the
Security Agreement, such Domestic Subsidiary shall become a Pledgor hereunder
with the same force and effect as if originally named as a Pledgor herein. The
execution and delivery of such instrument shall not require the consent of any
Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new Pledgor
as a party to this Agreement.
SECTION 23. FINANCING STATEMENTS. Each Pledgor hereby irrevocably
authorizes each Collateral Agent at any time and from time to time to file in
any relevant jurisdiction any initial financing statements (including fixture
filings) and amendments thereto that contain the information required by Article
9 of the Uniform Commercial Code of each applicable jurisdiction for the filing
of any financing statement or amendment relating to the Securities Collateral,
including (i) whether such Pledgor is an organization, the type of organization
and any organizational identification number issued to such Pledgor, (ii) any
financing or continuation statements or other documents without the signature of
such Pledgor where permitted by law, including the filing of a financing
statement describing the Securities Collateral as "all assets in which the
Pledgor now owns or hereafter acquires rights" and (iii) in the case of a
financing statement filed as a fixture filing or covering Securities Collateral
constituting minerals or the like to be extracted or timber to be cut, a
sufficient description of the real property to which such Securities Collateral
relates. Each Pledgor agrees to provide all information described in the
immediately preceding sentence to each Collateral Agent promptly upon request.
Copies of such financing statements, as filed, should be sent promptly to the
Borrower at the address provided in Section 9.01 of the Credit Agreement.
SECTION 24. NO DEEMED DIVIDEND. Notwithstanding the foregoing, no
Pledgor shall be required to take any action pursuant to this Agreement that the
Borrower has reasonably determined would either result in material adverse tax
consequences under Section 956 of the Code or would contravene any applicable
law, rule or regulation.
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SECTION 25. CONCERNING COLLATERAL AGENT. Notwithstanding
anything to the contrary contained herein, the Second Lien Collateral Agent
covenants that it shall not exercise any rights or remedies under this Agreement
or any other Security Document, including the Control Agreements, (other than
make any filings in order to protect, preserve and maintain the Second Lien
Collateral Agent's security interest hereunder) until the Discharge of First
Lien Obligations. The Second Lien Collateral Agent hereby appoints the First
Lien Collateral Agent as its agent with power and authority to accept, hold,
administer and enforce, for the benefit of the Second Lien Collateral Agent, all
interests, rights and remedies under any and all (i) Securities Collateral in
which the security interest is perfected by possession by the First Lien
Collateral Agent and (ii) Investment Property with respect to which the First
Lien Collateral Agent is the registered owner. Upon the Discharge of First Lien
Obligations, the First Lien Collateral Agent shall (i) deliver all Securities
Collateral in its possession to the Second Lien Collateral Agent and (ii)
instruct each applicable Pledgor to comply with provisions of the second
sentence of Section 3.05(c) of the Security Agreement with respect to the Second
Lien Collateral Agent. The First Lien Collateral Agent hereby acknowledges with
respect to any existing and future Collateral which it holds in its possession
that it also holds such Collateral for the Second Lien Collateral Agent.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
POLYMER GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx III
---------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Chief Financial Officer
S-1
BONLAM (S.C.), INC.
CHICOPEE, INC.
DOMINION TEXTILE (USA) INC.
FABPRO ORIENTED POLYMERS, INC.
FABRENE CORP.
FABRENE GROUP L.L.C.
FIBERGOL CORPORATION
FIBERTECH GROUP, INC.
FNA ACQUISITION, INC.
FNA POLYMER CORP.
LORETEX CORPORATION
PGI EUROPE, INC.
PGI POLYMER, INC.
PNA CORP.
POLY-BOND INC.
POLYIONIX SEPARATION TECHNOLOGIES, INC.
PRISTINE BRANDS CORPORATION
TECHNETICS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx III
---------------------------------------
Name: Xxxxxx X. Xxxxx III
Title: Chief Financial Officer
S-15
CITICORP NORTH AMERICA, INC.,
as First Lien Collateral Agent and Second
Lien Collateral Agent
By: /s/ Xxxxx Xxxxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice President
S-16
Schedule I to the
Pledge Agreement
DOMESTIC SUBSIDIARIES
Bonlam (S.C.), Inc.
Chicopee, Inc.
Dominion Textile (USA) Inc.
FabPro Oriented Polymers, Inc.
Fabrene Corp.
Fabrene Group L.L.C.
FiberGol Corporation
FiberTech Group, Inc.
FNA Acquisition, Inc.
FNA Polymer Corp.
Loretex Corporation
PGI Europe, Inc.
PGI Polymer, Inc.
PNA Corp.
Poly-Bond Inc.
PolyIonix Separation Technologies, Inc.
Pristine Brands Corporation
Technetics Group, Inc.
Schedule II to the
Pledge Agreement
PLEDGED STOCK
NUMBER NUMBER AND
OF CLASS OF SHARES/ PERCENTAGE
ISSUER CERTIFICATE REGISTERED OWNER TYPE OF INTEREST OF SHARES/INTERESTS
----------------------------- ----------- ---------------- ---------------- -------------------
PLEDGED DEBT SECURITIES
ISSUER PAYEE PRINCIPAL AMOUNT DATE OF NOTE MATURITY DATE
----------------------------- ----- ---------------- ------------ -------------
