Exhibit 4.1
Privileged and Confidential
---------------------------
[CONFORMED COPY]
AGREEMENT
This Agreement, dated as of October 27, 1997 (the "Agreement"), is
made and entered into by and among Polymer Group, Inc., a Delaware corporation
("PGI"), DT Acquisition, Inc., a corporation organized under the laws of Canada
("DTA") and Xxxxx & Lord Incorporated, a Delaware corporation ("GL") (PGI, DTA
and GL are referred to sometimes herein as a "Party").
WHEREAS, PGI and certain investors currently own approximately 14.5%
of the outstanding common shares (the "Common Shares") of Dominion Textile,
Inc., a corporation organized under the laws of Canada ("Target");
WHEREAS, DTA intends to commence, directly or indirectly, a tender
offer to acquire all of the outstanding Common Shares of Target and all of the
outstanding first preferred shares ("First Preferred") of Target;
WHEREAS, PGI, after completing the Target Acquisition (as defined
below), is primarily interested in (i) retaining the nonwoven textile group
businesses of Target (conducted primarily through the Dominion Industrial
Fabrics Company division ("DIFCO") of Target, two indirect, wholly owned
subsidiaries of Target, Poly-Bond Inc., a Delaware corporation, and Nordlys
S.A., a company organized under the laws of the Republic of France, and the
Dominion Nonwoven (South America) Argentinean joint venture) (collectively, the
"Nonwoven Business"); and (ii) disposing of the apparel fabrics textile group
businesses of Target (conducted primarily through the Swift Textiles Canada
division of Target, six direct or indirect wholly owned subsidiaries of Target
(Dominion Textile (USA) Inc., a Delaware corporation, Swift Textiles, Inc., a
Delaware corporation, Dominion Textile (Asia) Pte. Ltd., a company organized
under the laws of Singapore, Swift Textiles (Far East) Ltd., a company organized
under the laws of Hong Kong, Dominion Textile International B.V., a company
organized under the laws of the Netherlands, and Klopman International S.r.L., a
company organized under the laws of Italy), and Swift Textiles Europe Ltd., a
company organized under the laws of the Republic of Ireland) (collectively, the
"Apparel Fabric Business", and together with the Nonwoven Business, the
"Businesses");
WHEREAS, following the Target Acquisition by DTA, GL, directly or
through one or more affiliates (such entities are collectively referred to
herein as the "GL Buyer") is interested in acquiring (the "Transaction") the
Apparel Fabric Business from PGI; and
WHEREAS, PGI and GL are entering into this Agreement for the purpose
of setting forth the rights and obligations of each Party following an
acquisition by DTA, directly or indirectly, of all of the outstanding Common
Shares of Target (including the Common Shares owned by PGI, The Intertech Group,
Inc. ("TIG") and Xxxxx Xxxxxx), or all or substantially all of the assets or
operations of Target (any such acquisition referred to herein as the "Target
Acquisition").
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
Parties hereto intending to be legally bound, hereby agree as follows:
1. Exclusivity. Until this Agreement has been terminated in
accordance with its terms, each Party agrees that it will not, and shall cause
any of their respective affiliates, representatives, officers, directors, agents
or stockholders not to, (a) enter into any arrangement, agreement, understanding
or negotiations with respect to a possible Target Acquisition, with any other
Person, including Target (other than with respect to the Target Acquisition),
nor (b) enter into any agreement, arrangement, understanding or negotiations
with any other Person, including Target (other than with respect to the Target
Acquisition), with respect to (i) the acquisition of only the Nonwoven Business
or only the Apparel Fabric Business, or any portion of the assets, operations,
business or any securities of Target or any similar transaction, however
structured, or (ii) the investment in any other Person (other than through DTA
or an affiliate of PGI or TIG formed for the purpose of the Target Acquisition)
formed for any such purpose; provided, that in the event this Agreement is
terminated pursuant to clause (c) of Section 14 below, the provisions of the
first sentence of this Section 1 shall survive for two months following the date
of such termination. Following the consummation of the Target Acquisition, PGI
agrees that until the termination of this Agreement it will not, and shall cause
its representatives, officers, directors, agents, stockholders or controlled
affiliates, including Target, not to provide any non-public information to any
Person in connection with any offer or proposal to acquire all or any portion of
the assets, operations, business, or securities related to the Apparel Fabric
Business. PGI will not and following consummation of the Target Acquisition
will cause Target not to, enter into any agreement, arrangement or understanding
requiring it to abandon or terminate the Transaction (other than any agreement,
arrangement or understanding with any governmental or regulatory body or
agency). Each of PGI and GL represents to the other Party that neither is party
to or bound by any agreement with respect to the Target Acquisition other than
this Agreement. The term "Person" in this Agreement will be interpreted broadly
to include, without limitation, any corporation, company (including limited
liability company), partnership, joint venture or individual.
2. Purchase and Sale of Assets. At the earliest possible time that
DTA is able to cause Target to consummate the Transaction following (a) the
purchase by DTA of all of the outstanding Common Shares of Target, or (b) the
acquisition of all or substantially all of the Apparel Fabric Business of
Target, DTA hereby agrees to sell to GL and GL hereby agrees to purchase from
DTA, the Apparel Fabric Business of Target for cash in an amount to be
determined in accordance with Section 3 hereof. The exact structure of the
transaction pursuant to which GL will acquire the Apparel Fabric Business and
PGI will acquire the Nonwovens Business will be determined by the Parties in
good faith to accomplish the objectives contained in this Agreement and minimize
overall tax liabilities. The terms of the agreements relating to the purchase
of the Apparel Fabric Business and Nonwovens Business, as applicable, shall
contain customary terms and conditions for acquisitions of public companies. In
particular, there will be no survival of any representations or warranties, and
limited customary indemnification provisions (related to the allocation of
liabilities of the Businesses) contained in the purchase agreements. To the
extent any assets are used in both the Apparel Fabric Business and Nonwovens
Business, the Parties will enter into an agreement providing for joint use, or
will otherwise agree to an equitable solution for such asset. In the event the
Parties are unable to
-2-
negotiate in good faith an agreement or agreements for the purchase and sale of
the Apparel Fabric Business or the purchase and sale of the Nonwovens Business,
as applicable, at the option of DTA, the Apparel Fabric Business shall be sold
to GL by either a sale of stock of the corporation or corporations containing
the Apparel Fabric Business, or by a sale of the assets necessary for the
Apparel Fabric Business, on an "as is," "where is" and "with all faults" basis,
without any express or implied representations, and without any other
representations, warranties, covenants, agreements or indemnities (other than
related to the allocation of liabilities of the Businesses).
3. Determination of Purchase Price and Allocation.
(a) Cash to Target Stockholders. The Parties agree to determine the
purchase price for each Business by first allocating the amount of cash
consideration (and the fair market value of any consideration other than
cash) paid by DTA to holders of Common Shares of Target (including the
amount that would otherwise have been paid to PGI and TIG in respect of
their Common Shares if such Common Shares are not acquired by DTA pursuant
to the public takeover bid) and First Preferred shares of Target to effect
the Target Acquisition in the proportion of 60.0% for the purchase of the
Apparel Fabric Business and 40.0% for the purchase of the Nonwovens
Business. In addition, the purchase price for each Business shall be
adjusted, and the assets and liabilities with respect thereto shall be
allocated to each Business, as specifically provided in the following
clauses (b), (c), (d), (e) and (f) of this Section.
(b) Specific Allocable Assets and Liabilities. All assets and
liabilities of Target that are specifically allocable to the Apparel Fabric
Business shall be transferred to and assumed by GL and the GL Buyer, and
all assets and liabilities of Target that are specifically allocable to the
Nonwoven Business shall be retained by PGI and DTA, without any adjustment
in the purchase price for each Business.
(c) Transaction Related and Similar Assets and Liabilities. The net
amount of any assets or liabilities that are part of, or resulted from, the
Businesses as a whole on a shared basis and, except as expressly provided
in clause (iv), assets and liabilities associated with the Target
Acquisition and the Transaction, including, without limitation, (i) the tax
liabilities and assets associated with the transactions contemplated
hereby, including taxes imposed in connection with separating the Apparel
Fabric Business and the Nonwovens Business and transferring such businesses
to GL and PGI, respectively, (ii) any litigation costs and expenses related
to the Target Acquisition or Target defense costs and expenses, (iii) any
corporate overhead liabilities or corporate assets, (iv) any transaction
costs incurred by or on behalf of DTA or PGI solely in connection with the
proposed Target Acquisition, including an amount necessary to compensate
PGI and DTA for obtaining commitments for, and utilizing, the financing
provided directly to DTA by The Chase Manhattan Bank and First Union
National Bank pursuant to the commitment letter dated October 27, 1997,
including the interest expense incurred for the amount necessary to
complete the Target Acquisition and related transactions, but not including
the investment banking and merger and acquisition advisory fees specified
in clause (d)(ii) below or any transaction costs, commitment fees or
financing fees, payable by either PGI or GL in connection with providing
the financing required to
-3-
complete the Target Acquisition or the subsequent purchase and sale of the
Apparel Fabric Business and the Nonwovens Business, (v) the principal
amount of outstanding corporate indebtedness assumed by either Party or
Business or the amounts paid to retire, repay or acquire outstanding
corporate indebtedness (whether in the nature of payments of principal,
interest, premiums, defeasance costs, tender payments, overdrafts,
penalties, breakage costs, fees, litigation expenses, other expenses or
indemnities relating thereto) and Preferred Shares of Target, and (vi)
similar liabilities, shall increase the purchase price of the Apparel
Fabric Business by 60.0% of the total of such amount, and shall increase
the purchase price of the Nonwovens Business by 40.0% of the total of such
amount; provided, if such adjustment is not practicable because of the
nature of the assets or liabilities, such assets or liabilities shall be
acquired by, assumed by or borne by, respectively, each Business in the
respective percentage.
(d) Other Assets and Liabilities. The net amount of any other such
assets or liabilities, including (i) any assets or liabilities related to
any discontinued operations of Target or not otherwise related to either
Business or otherwise described in clause (c) of this Section, which may
include environmental, retiree medical, or similar liabilities and (ii)
investment banking and merger and acquisition advisory fees incurred by or
on behalf of PGI or DTA in connection with the Target Acquisition, shall
increase the purchase price of the Apparel Fabric Business by 50.0% of the
total of such amounts and shall increase the purchase price of the
Nonwovens Business by 50.0% of the total of such amount; provided, if such
adjustment is not practicable because of the nature of the assets or
liabilities, such assets or liabilities shall be acquired by, assumed by or
borne by, respectively, each Business in the respective percentage.
(e) Aggregate Asset and Liability Adjustment. To the extent that the
allocation of assets to, and assumption of liabilities by, each Business as
contemplated by clauses (c) and (d) of this Section cannot be accomplished
in the exact proportions set forth in such clauses as a result of the
nature of the specific assets or liabilities, all of the assets acquired or
liabilities assumed by each Party shall be determined on an aggregate basis
and an appropriate adjustment will be made to compensate a Party that has
assumed, on a net overall basis, liabilities in excess of its respective
percentages and require a payment from a Party that has acquired, on a net
overall basis, assets in excess of its respective percentages. Any such
adjustment may take the form of a reallocation of corporate level cash, a
payment from one Party to the other Party, transfer of other assets or
other appropriate mechanism.
(f) DIFCO Adjustment. The purchase price allocation percentage of
60.0% for the Apparel Fabric Business and 40.0% for the Nonwovens Business
contained in clauses (a) and (c) of this Section 3 shall be subject to
possible further adjustment in accordance with Annex A attached hereto
related to the earnings before interest, depreciation and amortization of
DIFCO.
(g) Illustrative Example. An illustrative example of the calculation
of the purchase price for each Business is set forth on Annex B attached
hereto.
-4-
4. Structure of Transaction.
(a) Plan of Arrangement. The Parties agree that the most desirable
form of the Target Acquisition may be a plan of arrangement with court
approval under Canadian laws, designed to accomplish the objectives set
forth in this Agreement and minimize overall tax liabilities associated
with the Transaction and will attempt to utilize this structure if
possible. To this end, GL agrees to enter into any agreement or agreements
with PGI and Target to accomplish this form of transaction.
(b) DTA. In the event a plan of arrangement is not possible or
desirable, PGI intends to proceed by causing DTA, a Canadian company, to
commence a public takeover bid for the outstanding Common Shares and
associated preferred share purchase rights. To the extent that, following
the commencement of a public takeover bid by DTA, a plan of arrangement
becomes possible, the Parties will proceed under clause (a) of this
Section. Subject to the other provisions of this Agreement and until
consummation of the Transaction, DTA will not engage in any other business,
incur any other liabilities, sell any of its securities or make any
distributions in respect of its securities, other than a distribution to
its stockholders of the cash proceeds or other consideration received by
DTA in respect of the Common Shares owned by DTA and tendered into the
public takeover bid or a return to its stockholders of the Common Shares
that were contributed to DTA by its stockholders.
5. Conditions. Following the consummation of the Target
Acquisition, the closing of the Transaction will be subject only to the
following conditions:
(i) The absence of any final injunction or decree preventing
the sale of the Apparel Fabric Business to GL;
(ii) The receipt of all required material governmental or
regulatory approvals and consents, the failure of which to obtain would
prevent the sale of the Apparel Fabric Business to GL; and
(iii) The repayment, retirement or acquisition of all
outstanding bank indebtedness of Target and its subsidiaries and the issued
and outstanding publicly issued senior notes of Target and its
subsidiaries.
6. Agreement to Disclose Identity. Each Party agrees to permit DTA
to disclose in the takeover circular its identity and the ownership of Common
Shares of DTA and Target by each Party and the nature of this Agreement;
provided, that each Party will have the opportunity to approve any description
of it contained in any publicly filed document, such approval not to be
unreasonably withheld.
7. No Additional Acquisitions of Common Shares. Neither Party shall
acquire any additional Common Shares without the prior consent of the other
Party. In addition, neither Party shall become the "beneficial owner" (within
the meaning of Canadian and U.S. securities laws
-5-
and Target's shareholder rights plan) of any Common Shares without the prior
consent of the other Party. As of the date hereof, GL does not "beneficially
own" any Common Shares.
8. Liquidated Damages. In the event that GL shall breach this
Agreement in any material respect or fail to satisfy its obligations in any
material respect hereunder for any reason, in addition to any other remedy
available to PGI hereunder for a breach of this Agreement by GL, GL agrees to
pay to PGI liquidated damages in the amount of $35.0 million. In the event that
either PGI or ZB Holdings, Inc. ("ZBH") shall breach this Agreement in any
material respect or fail to satisfy its obligations in any material respect
hereunder, in addition to any other remedy available to GL hereunder for a
breach of this Agreement by PGI or ZBH, as applicable, PGI or ZBH, as the case
may be, shall pay liquidated damages to GL in the amount of $35.0 million. Any
amounts payable pursuant to this Section 8 shall be payable in two equal
installments, one-half of which shall be paid within two business days of the
date of the breach resulting in the payment and the remaining one-half payable
on the second anniversary of the date of such breach. Any amounts paid by GL or
PGI to the other Party following a termination of this Agreement pursuant to
Section 9 shall be credited on a dollar-for-dollar basis against the $35.0
million amount that is otherwise payable to such Party pursuant to this Section
8, with any amount paid by PGI applied to reduce the amount payable by ZBH. The
provisions of this Section 8 shall be the exclusion remedy in the event of a
breach of Section 2 or Section 11 hereof.
9. Expenses. Except as otherwise provided in Section 3 and Section
8, each Party shall bear its out-of-pocket fees and expenses incurred in
connection with the transactions contemplated by this Agreement; provided, that
if this Agreement is terminated pursuant to clauses (b), (d), (e), (i), (ii),
(iii), (x), (y) or (z) of Section 14, (A) 60.0% of the out-of-pocket fees and
expenses incurred by PGI, any investors acting with PGI with respect to the
Target Acquisition and by or on behalf of DTA which would be included in the
determination of Purchase Price under Section 3 will be payable by GL and GL
Buyer and 40.0% will be payable by PGI and DTA and (B) 50.0% of any break-up
fee, termination payments or other payments made to or for the benefit of DTA by
or on behalf of Target relating to the Target Acquisition (other than with
respect to the Common Shares owned by DTA) will be payable to GL and GL Buyer
and 50.0% will be payable to PGI and DTA.
10. Covenants. Promptly following the execution of this Agreement,
PGI and GL shall enter into good faith negotiations to enter into an agreement
or agreements to provide for the separate operation of the Apparel Fabric
Business and the Nonwovens Business by GL and PGI, respectively, following the
Target Acquisition. Promptly following the consummation of the Target
Acquisition, PGI and DTA shall commence negotiations with GL to arrive at a
mutually satisfactory structure for the Transaction. All Parties shall use
their respective commercially reasonable efforts to close the Transaction on an
expedited basis. DTA will use its commercial best efforts to obtain access and
information regarding Target and the Businesses. In the event that DTA obtains
any such access and/or information regarding Target or the Businesses at any
time, DTA will (i) promptly provide the same access and/or information to GL and
(ii) utilize such access and/or seek such information regarding both Businesses
with equal efforts and diligence; provided, GL enters into any necessary
confidentiality agreements or arrangements.
-6-
11. Financing. The financing for the Target Acquisition will be
provided as follows:
(a) GL Financing. GL agrees to provide to DTA $132 million for the
purpose of the Target Acquisition concurrently with the tender to DTA of
the funds to be provided by the letter specified in paragraph (b) of this
Section.
(b) DTA Financing. Attached hereto as Annex C is a true, complete
and executed copy of a letter of commitment dated October 27, 1997, from
The Chase Manhattan Bank and First Union National Bank to DTA, to provide
for borrowing by DTA of up to $255.0 million, which includes a revolving
facility in an amount of $25.0 million. DTA shall not consent to any
amendment, modification or waiver of such commitment letter, the related
fee letter, and the related credit agreement without the consent of GL.
(c) PGI Financing. PGI agrees to provide to DTA $25 million for the
purpose of the Target Acquisition concurrently with the tender to DTA of
the funds to be provided by the letter specified in paragraph (b) of this
Section. This obligation may be satisfied by crediting to PGI an amount
equal to the value of the Common Shares contributed to DTA that were owned
by PGI, valued at the price paid to the holders of Common Shares pursuant
to the public takeover bid.
(d) ZBH Financing. ZBH agrees to provide to DTA $63 million for the
purpose of the Target Acquisition concurrently with the tender to DTA of
the funds to be provided by the letter specified in paragraph (b) of this
Section. This obligation may be satisfied by crediting to ZBH an amount
equal to the value of the Common Shares contributed to DTA that were owned
by TIG, valued at the price paid to the holders of Common Shares pursuant
to the public takeover bid.
(e) Ratable Reductions. In the event that the aggregate funds
required in connection with the public takeover bid (and to pay related
fees and expenses and interest) are less than $450.0 million, ratable
reductions shall be made in the amount of the funds to be provided by GL,
PGI and ZBH described above.
12. Binding Effect. The Parties agree that, until the execution of
the definitive agreement or agreements contemplated by Section 2 of this
Agreement, the provisions of this Agreement shall be a binding commitment of the
Parties with respect to the subject matter hereof.
13. Confidentiality. The Parties agree that the provisions of the
Confidentiality Agreement dated as of September 5, 1997 (the "Confidentiality
Agreement), shall be binding upon the Parties and such provisions are
incorporated herein by reference.
14. Termination. This Agreement will automatically be terminated and
be of no further force and effect upon the earlier of (a) the execution of
definitive acquisition agreements for the Transaction, (b) mutual agreement of
the Parties, (c) the occurrence of a "Termination Event" as defined in the
letter of even date herewith from PGI to GL, (d) subject to the proviso of the
first
-7-
sentence of Section 1, the termination, abandonment, or withdrawal of the tender
offer related to the Target Acquisition without the purchase of any Common
Shares pursuant thereto following its commencement for any reason (other than as
a result of the implementation of a plan of arrangement with court approval
under Canadian laws which is approved by the board of directors of Target, DTA,
PGI and GL) and (e) April 30, 1998; provided, that in the event a Party
materially breaches this Agreement or is unable to fulfil any conditions
required to be fulfilled, and such breach is not cured within five business days
following notice from the other Parties, the non-breaching Parties may terminate
this Agreement on the tenth business day following delivery of such notice and
thereafter, the non-breaching Parties will not be subject to the restrictions
contained in Section 1. In the event this Agreement is terminated pursuant to
this Section 14 by a non-breaching Party, a breaching Party will not be relieved
of any liability it may have as a result of any breach of this Agreement
occurring prior to the termination of this Agreement. Notwithstanding the
foregoing, only until the time (the "Acceptance Time") that DTA or PGI has taken
up and paid for any Common Shares pursuant to the tender offer related to the
Target Acquisition, acquired a majority of the outstanding Common Shares of
Target or acquired all or substantially all of the assets of the Apparel Fabric
Business, GL may, upon written notice, terminate this Agreement if (i) any
material adverse change in the business, assets, condition (financing or
otherwise), results of operations, cash flows, prospects or properties relating
to the Apparel Fabric Business has occurred during the period beginning on the
date hereof until the Acceptance Time, (ii) Target has taken any action
following the date hereof and prior to the Acceptance Time, out of the ordinary
course of business, which has a material adverse effect on the Apparel Fabric
Business or the ability of the Parties to consummate the Target Acquisition, the
Transaction or the transactions contemplated hereby, or (iii) the failure of
Target to redeem Target's Rights Plan, adopted as of August 9, 1989 (and any
other similar "poison-pill" or other plan with the purpose of preventing or
obstructing any takeover of Target implemented by Target subsequent hereto), or
failure of PGI or DTA to obtain a cease-trade order, in the Province of Ontario,
the Province of Quebec and such other provinces as may be necessary, of the
rights issued under such Plan by April 30, 1998. Notwithstanding the foregoing,
only until the time (the "Acceptance Time") that DTA or PGI has taken up and
paid for any Common Shares pursuant to the tender offer related to the Target
Acquisition, acquired a majority of the outstanding Common Shares of Target or
acquired all or substantially all of the assets of the Apparel Fabric Business,
PGI and DTA may, upon written notice, terminate this Agreement if (x) any
material adverse change in the business, assets, condition (financing or
otherwise), results of operations, cash flows, prospects or properties relating
to the Nonwovens Business has occurred during the period beginning on the date
hereof until the Acceptance Time, (y) Target has taken any action following the
date hereof and prior to the Acceptance Time, out of the ordinary course of
business, which has a material adverse effect on the Nonwovens Business or the
ability of the Parties to consummate the Target Acquisition, the Transaction or
the transactions contemplated hereby, or (z) the failure of Target to redeem
Target's Rights Plan, adopted as of August 9, 1989 (and any other similar
"poison-pill" or other plan with the purpose of preventing or obstructing any
takeover of Target implemented by Target subsequent hereto), or failure of PGI
or DTA to obtain a cease-trade order, in the Province of Ontario, the Province
of Quebec and such other provinces as may be necessary, of the rights issued
under such Plan by April 30, 1998.
15. Further Assurances. Subject to the terms and conditions
contained herein, each Party agrees to use commercially reasonable efforts to
take, or cause to be taken, all action and
-8-
to do, or cause to be done, all things necessary, proper or advisable under
applicable law and regulation to consummate the Transaction in accordance with
the terms of this Agreement. In case at any time following the date hereof any
further action is necessary or desirable to carry out the purpose of this
Agreement, the Parties agree to discuss taking such action in good faith.
16. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
conflicts of law principles thereof. This Agreement, together with the
Confidentiality Agreement and the letter agreement of even date herewith from
PGI to GL described in Section 14(c), constitutes the entire agreement and
supersedes all prior agreements and understandings, written and oral, among the
Parties with respect to the subject matter hereof. If any provision of this
Agreement is deemed invalid, illegal or incapable of enforcement by any rule of
law or public policy, all other provisions of this Agreement shall remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated by this Agreement are not affected in any manner
materially adverse to any Party. Upon any determination that any provision of
this Agreement is invalid, illegal or incapable of enforcement, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible to the transactions
originally contemplated by the Parties. Each Party may assign its rights
hereunder only to any of its affiliates, but may not assign its obligations or
delegate its duties hereunder without the prior written approval of the other
Party hereto; provided, that in connection with any such assignment to an
affiliate, the assigning party must guarantee all of the obligations owed to the
other Party hereunder. The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, and therefore
agree that, in addition to any other remedy to which any Party may be entitled
to at law or in equity, the Parties shall be entitled to injunctive relief to
prevent breaches of this Agreement and to enforce specifically the provisions
hereof; provided, that no Party will be entitled to seek specific performance
hereunder in any particular circumstances to the extent that the provisions of
Section 8 apply to such circumstances. All notices required by this letter
agreement shall be in writing and may be sent by registered or certified mail,
return receipt requested, by overnight courier or by facsimile (with confirming
copy sent by overnight courier). All notices to GL shall be made to Xxxxxx
Xxxxxx, Chairman, President and Chief Executive Officer of GL, and all notices
to PGI shall be made to Xxxxx Xxxxxx, Chairman, President and Chief Executive
Officer of PGI, at the addresses of their respective principal executive
offices. This Agreement may be executed in counterparts and delivered by
facsimile transmission.
* * * * *
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereto duly authorized, all as of the
date first above written.
POLYMER GROUP, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Its: Chairman, President and Chief Executive Officer
-----------------------------------------------
DT ACQUISITION INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Its: Chairman, President and Chief Executive Officer
-----------------------------------------------
XXXXX & LORD INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Its: Chairman, President and Chief Executive Officer
-----------------------------------------------
ZB HOLDING, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Its: Chairman, President and Chief Executive Officer
-----------------------------------------------
-10-
ANNEX A
DIFCO Adjustment
Following the consummation of the Target Acquisition, the Parties
shall determine the actual earnings before interest, depreciation and
amortization for the one-year period ending June 30, 1997 ("EBITDA") for DIFCO
("DIFCO EBITDA"), and for the Apparel Fabric Business and the Nonwovens Business
("Total EBITDA"). Such determinations shall be made in United States dollars
and be based upon generally accepted accounting principles as consistently
applied, and verified by Ernst & Young LLP. To the extent that the DIFCO EBITDA
exceeds U.S.$2.8 million for such period, the 60.0% purchase price percentage
allocation for the Apparel Fabric Business and the 40.0% purchase price
percentage allocation for the Nonwovens Business contained in Sections 3(a) and
3(c) will be adjusted in accordance with the following formula:
(a) If the DIFCO EBITDA exceeds U.S.$2.8 million, the excess amount
over $2.8 million will be determined (the "DIFCO Excess Amount"). The
percentage of the DIFCO Excess Amount compared to Total EBITDA will be
determined (the "Excess Percentage"), rounded to the nearest 0.1%. The
60.0% purchase price percentage allocation for the Apparel Fabric Business
will be reduced by the Excess Percentage, and the 40.0% purchase price
percentage allocation for the Nonwovens Business will be increased by the
Excess Percentage.
(b) As an illustrative example, if DIFCO EBITDA equaled $3.8 million,
the DIFCO Excess Amount would be $1.0 million. If, in this example, Total
EBITDA equaled $100.0 million, the Excess Percentage would equal 1.0%, and
the purchase price percentage for the Apparel Fabric Business would be
reduced to 59.0%, and the purchase price percentage of the Nonwovens
Business would be increased to 41.0%.
(c) If the DIFCO EBITDA is equal to or less than U.S.$2.8 million, no
adjustment will be made.
(d) The adjustment in this Annex A will only apply to the percentages
set forth in Sections 3(a) and 3(c).
-11-
