Exhibit 4.19
Execution Version
The security represented by this instrument was originally issued as of
June 21, 2001 and has not been registered under the Securities Act of 1933,
as amended.
Consoltex Holdings, Inc.
DEBENTURE
June 21, 2001 $2,200,000.00
Consoltex Holdings, Inc., a Delaware corporation (the "Company"),
hereby promises to pay to the order of AIP/CGI, Inc., a Delaware
corporation and the sole stockholder of the Company ("Holder"), the
principal amount of $2,200,000.00 together with interest thereon calculated
from the date hereof in accordance with the provisions of this Debenture.
Capitalized terms used in this Debenture have the meanings given them in
paragraphs 3 and 7 hereof.
1. Payment of Interest.
(a) Generally. Except as otherwise expressly provided in
paragraph 4(b) hereof, interest shall accrue at the rate of ten and
one-half percent (10.5%) per annum (computed on the basis of a 365-day year
and the actual number of days elapsed in any year) on the unpaid principal
amount of this Debenture outstanding from time to time, or (if less) at the
highest rate then permitted under applicable law. Subject to the provisions
of paragraph 3 hereof, the Company shall pay to the holder of this
Debenture all accrued interest on the last day of each March, June,
September and December, beginning June 30, 2001 in accordance with the
provisions of paragraph 1(b) hereof. Unless prohibited under applicable
law, any accrued interest which is not paid on the date on which it is due
and payable shall bear interest at the same rate at which interest is then
accruing on the principal amount of this Debenture until such interest is
paid (either in cash or by the issuance of PIK Debentures pursuant to
paragraph 1(b) below). Any accrued interest which for any reason has not
theretofore been paid, including, without limitation, by reason of the
application of paragraph 3 hereof, shall be paid in full on the date on
which the final principal payment on this Debenture is made. Interest shall
accrue on any principal payment due under this Debenture until such time as
payment therefor is actually delivered to the holder of this Debenture.
(b) PIK Debentures. The Company shall, in lieu of the
payment in whole or in part of interest in cash on this Debenture, pay
interest on this Debenture through the issuance of additional Debentures
("PIK Debentures"); provided that any interest paid by the issuance of PIK
Debentures shall be calculated as accruing at the rate of ten and one-half
percent (10.5%) per annum (computed on the basis of a 365-day year and the
actual number of days elapsed) or (if less) at the highest rate then
permitted under applicable law. Such PIK Debentures shall be in an
aggregate principal amount equal to the amount of interest which has
accrued with respect to this Debenture (less any cash interest payments),
and such PIK Debentures shall be identical to the Debentures otherwise
issued. Except as expressly provided herein, the term "Debentures" shall
include all PIK Debentures that may be issued pursuant to this paragraph
1(b).
2. Payment of Principal on Debenture.
(a) Scheduled Payments. The Company shall pay the
principal amount of $2,200,000.00 (or such lesser principal amount then
outstanding) to the holder of this Debenture on October 15, 2003, together
with all accrued and unpaid interest on the principal amount being repaid.
(b) Prepayments.
(i) Subject to paragraph 2(b)(ii) below, the
Company may, at any time and from time to time without premium or penalty,
prepay all or any portion (in whole number multiples of $10,000 only) of
the outstanding principal amount of the Debentures; provided that such
prepayment is not prohibited by the provisions of paragraph 3 hereof. In
connection with each prepayment of principal hereunder, the Company shall
also pay all accrued and unpaid interest on the principal amount of the
Debentures being repaid.
(ii) The Company shall send written notice of
its election to make a prepayment on the Debentures to each holder of the
Debentures at least five days prior to the date of prepayment. No earlier
than ten days after the notice of prepayment, the Company shall deliver to
each holder of the Debentures in person or by registered or certified mail,
return receipt requested, a cashier's or certified check for the full
amount which the Company intends to prepay on such holder's Debenture plus
interest accrued on the outstanding principal amount of such holder's
Debenture through the date of prepayment specified in the Company's notice.
(iii) If the notes issued pursuant to the
Indenture are satisfied in full prior to October 15, 2003, then the Company
shall pay to the holders of the Debentures the full amount of interest then
accrued on, and the full amount of principal of, the Debentures.
3. Subordination.
(a) Additional Definitions. For purposes of this Section
3, the following terms shall have the following meanings:
oCredit Party" means the Company and each other Borrower or
Guarantor and each other party granting a security interest in Collateral
(as defined in the Credit Agreement) to secure payment of the Senior
Obligations, as each of such terms are defined in the Credit Agreement.
oSenior Creditors" means the Agents (as defined in the Credit
Agreement), the Lenders (as defined in the Credit Agreement), and all other
future holders (or any one of them) of the Senior Obligations.
oSenior Loan Documents" means (i) the Credit Agreement, together
with the Loan Documents (as defined in the Credit Agreement) and all other
documents, instruments and agreements related thereto, and any amendments,
restatements, supplements or modifications of or with respect to any of the
foregoing, and (ii) any other agreement, document or instrument executed by
any borrower, guarantor in connection with the Senior Obligations,
including without limitation pursuant to a refinancing, refunding or
replacement of any of the Senior Obligations.
oSenior Obligations" means all debt or other obligations of any
nature, whether now existing or hereafter arising, consisting of (i) all
principal, interest (including any interest accruing after the commencement
of any bankruptcy, insolvency, receivership or similar proceedings and any
other interest that would have accrued but for the commencement of such
proceedings, whether or not allowed), fees, reimbursement obligations
arising in connection with letters of credit, indemnification obligations,
costs and expenses payable by any or all of Credit Parties under any of the
Senior Loan Documents, including without limitation all Obligations (as
defined in the Credit Agreement) now and hereafter existing, and (ii) all
indebtedness of any or all of the Credit Parties under any amendments,
modification, renewals, extensions, restatements or loan documents
evidencing refinancings, refundings or replacements of any of the
foregoing.
oStandstill Period" means the period of time from the date hereof
to and including the 91st day following the Facility Termination Date (as
defined in the Credit Agreement).
oSubordinated Creditors" means, collectively, any holder or owner
from time to time of any interest in any of the Subordinated Obligations.
oSubordinated Transaction Documents" means, (i) the Debentures,
(ii) any PIK Debentures issued pursuant to the Debentures, and (iii) all
other documents entered into in connection therewith or herewith which
relate to indebtedness or liabilities of the Company to all or any of the
Subordinated Creditors, incurred thereunder and the other obligations
evidenced thereby and any amendments, restatements, supplements or
modifications of or with respect to any of the foregoing and permitted
hereunder.
oSubordinated Obligations" means the indebtedness, obligations and
liabilities of the Company under the Subordinated Transaction Documents.
(b) Subordination. The Subordinated Obligations are, and
shall at all relevant times remain, subordinated to the Senior Obligations
to the extent and in the manner herein provided. Except to the extent
expressly permitted under paragraph 3(d) hereof and the receipt of PIK
Debentures in accordance with the terms of paragraph 1(b) hereof in lieu of
cash interest payments, the Subordinated Creditors will not at any time
during the Standstill Period ask, demand, sue for, accept or exercise any
remedy in respect of any security for, or take or receive from the
Company or any other Credit Party (whether, without limitation, by
demanding or receiving any scheduled payment, or mandatory or optional
prepayment, of principal, interest, fees, expenses, reimbursements,
indemnification obligations or other amounts owing thereby, exercising
liens or rights of setoff, or by any other action or manner), the whole or
any part of any amounts which may now or hereafter be owing by the Company
or any successors or assigns of the Company including, without limitation,
any receiver, trustee or debtor in possession (the term "Company"
hereinafter shall include any such successors or assigns of the Company),
to the Subordinated Creditors which now or hereafter constitute or
otherwise were or will be incurred in connection with the Subordinated
Obligations (whether such amounts represent principal or interest or other
obligations which are due or not due, direct or indirect, absolute or
contingent or obligations arising from the exercise of any redemption, put
or similar right in respect of any Subordinated Obligations, or any
warrants or any stock issued in connection with the exercise thereof),
including, without limitation, the taking of any instruments evidencing
such amounts nor any security for any of the foregoing (other than the
delivery by the Company, and the receipt by the Subordinated Creditors, of
the Subordinated Transaction Documents).
(c) No Payment or Exercise of Remedies. The Subordinated
Creditors will not at any time during the Standstill Period, including
following any acceleration of the maturity of any amount owing on the
Subordinated Obligations, take any action to enforce or collect amounts so
owing against the Company or any security for any Subordinated Obligation
or act as a petitioning creditor in any bankruptcy, insolvency,
reorganization, receivership or similar proceeding (an "Insolvency
Proceeding") filed against the Company or any other Credit Party.
(d) Permitted Receipts. Notwithstanding the foregoing,
each Subordinated Creditor shall be entitled to receive and retain payment
on the Debentures to the extent such payment consists solely of stock or
obligations which are issued by the Company or any corporation succeeding
to the Company or acquiring its property and assets, pursuant to
reorganization proceedings or dissolution or liquidation proceedings or
upon any merger, consolidation, sale, lease, transfer or other disposal, so
long as such stock or obligations are subordinate and junior at least to
the extent provided hereunder to the payment of Senior Indebtedness to the
extent then outstanding and to the payment of any stock or obligations
which are issued in exchange for Senior Indebtedness to the extent then
outstanding.
(e) No Liens. During the Standstill Period no
Subordinated Creditor shall have a security interest or other rights in any
assets or property of the Company or any other Credit Party as security for
the Subordinated Obligations. If any Subordinated Creditor shall foreclose
or realize on, or otherwise receive or come into possession of, any such
assets or property in violation of the terms hereof, such Subordinated
Creditor shall promptly deliver such assets or property, or the proceeds
thereof, to the Senior Creditors (such assets or property, and proceeds
thereof, being held in trust by such Subordinated Creditor for the benefit
of the Senior Creditors until such delivery). The provisions of this
paragraph 3(e) are effective irrespective of any event or circumstance
pertaining to the time or order of acquisition, attachment or perfection of
any security interest or lien of the Senior Creditors or the Subordinated
Creditors in any assets, or the time or order of filing or recording of
financing statements or any other document or instrument by the Senior
Creditors or the Subordinated Creditors.
(f) Bankruptcy Distributions. In the event of any
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the
assets of the Company or the proceeds thereof to creditors of the Company
upon any indebtedness of the Company, by reason of the liquidation,
dissolution or other winding up of the Company or the Company's business,
or, in the event of any Insolvency Proceeding, then and in any such event,
any payment or distribution of any kind or character, either in cash,
securities or other property but excluding property permitted to be
retained by the Subordinated Creditors under paragraph 3(d), which shall be
payable or deliverable to any Subordinated Creditor upon or with respect to
any or all the Subordinated Obligations shall be paid or delivered directly
to the Senior Creditors for application against the Senior Obligations,
whether due or not due, in a manner which the Senior Creditors, in their
sole discretion, shall determine, at all times during the Standstill
Period, and the Senior Creditors or their representative is hereby
irrevocably authorized and empowered to ask for, demand, sue for, collect,
and receive and receipt for every such payment or distribution and give
acquittance therefor.
(g) Receipts by Subordinated Creditors Held in Trust.
Except to the extent expressly permitted under paragraph 3(d) hereof and
the receipt of PIK Debentures in accordance with the terms of paragraph
1(b) hereof in lieu of cash interest payments, should any payment or
distribution of security or proceeds thereof be received by any
Subordinated Creditor constituting or otherwise received with respect to
the Subordinated Obligations during the Standstill Period, each
Subordinated Creditor agrees forthwith to deliver the same to the Senior
Creditors or their representative in precisely the form received (except
for the endorsement or assignment of such Subordinated Creditor where the
Senior Creditors or their representative, in its or their sole discretion,
deems same to be necessary), for application against the Senior
Obligations, whether due or not due, and until so delivered, the same shall
be held in trust by such Subordinated Creditor as property of the Senior
Creditors.
(h) Continuity of Subordination. The provisions of this
Section 3 shall continue and remain in full force and effect
notwithstanding the occurrence at any time and from time to time of any
modification of or affecting the Senior Obligations or the security
therefor or the Credit Parties, without notice to the Subordinated
Creditors, including by way of example and not by limitation: (i) the sale,
assignment, refinancing, modification, amendment, rearrangement,
postponement, extension, renewal, increase, restructuring, acceleration or
demand for payment of the Senior Obligations in whole or in part and as
often as the Senior Creditors may wish; (ii) the waiver, failure to
enforce, surrender, impairment, modification or exchange of any of the
Senior Creditors' rights under any of the Senior Loan Documents; (iii) the
settlement, release (by operation of law or otherwise), compromise,
collection or liquidation, in any manner, of any of the Senior Obligations;
or (iv) the release of any Credit Party, or any of them, or any other
endorser, guarantor or other person from any liability on any of the Senior
Obligations, or release of any collateral for the Senior Obligations, all
of which events the Senior Creditors may take, in their sole discretion, at
any time and from time to time during the Standstill Period.
4. Events of Default.
(a) Definition. For purposes of this Debenture, an Event
of Default shall be deemed to have occurred if:
(i) the Company fails to pay when due and
payable (whether at maturity or otherwise) the full amount of
interest then accrued on any Debenture or the full amount of any
principal payment on any Debenture and such failure to pay is not
cured within ten (10) days after the occurrence thereof;
(ii) the Company fails to perform or observe any
other provision contained in the Debentures and such failure is
not cured within ten (10) days after the occurrence hereof;
provided that no Event of Default shall be deemed to have occurred
under this subparagraph (ii) if the Company establishes (to the
reasonable satisfaction of the holders of a majority of the
principal amount of the Debentures then outstanding) that (A) the
particular Event of Default has not been caused by knowing or
purposeful conduct by the Company or any Subsidiary, (B) the
Company has exercised, and continues to exercise, best efforts to
expeditiously cure the Event of Default (if cure is possible), (C)
the Event of Default is not material to the financial condition,
operations, assets or business prospects of the Company and its
Subsidiaries, taken as a whole and (D) the Event of Default is not
material to any holder's investment in the Debentures;
(iii) the Company or any Subsidiary makes an
assignment for the benefit of creditors or admits in writing its
inability to pay its debts generally as they become due; or an
order, judgment or decree is entered adjudicating the Company or
any Subsidiary bankrupt or insolvent; or any order for relief with
respect to the Company or any Subsidiary is entered under the
Federal Bankruptcy Code; or the Company or any Subsidiary
petitions or applies to any tribunal for the appointment of a
custodian, trustee, receiver or liquidator of the Company or any
Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences any proceeding (other than
a proceeding for the voluntary liquidation and dissolution of any
Subsidiary) relating to the Company or any Subsidiary under any
bankruptcy reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction; or
any such petition or application is filed, or any such proceeding
is commenced, against the Company or any Subsidiary and either (A)
the Company or any such Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein or (B)
such petition, application or proceeding is not dismissed within
60 days; or
(iv) the Company or any Subsidiary defaults in
the performance of any obligation under the Indenture or the
Credit Agreement and any such default causes payments thereunder
to become due prior to its stated maturity.
The foregoing shall constitute Events of Default whatever the
reason or cause for any such Event of Default and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body.
(b) Consequences of Events of Default.
(i) If an Event of Default of the type described
in paragraph 4(a)(iii) hereof has occurred, the aggregate principal amount
of the Debentures (together with all accrued interest thereon and all other
amounts due and payable with respect thereto) shall become immediately due
and payable without any action on the part of the holders of the
Debentures, and, subject to the provisions of paragraph 3(a) hereof, the
Company shall immediately pay to the holders of the Debentures all amounts
due and payable with respect to the Debentures.
(ii) If any Event of Default of the type
described in paragraphs 4(a)(i) or (ii) hereof has occurred and continued
for 15 days or any other Event of Default (other than under paragraph
4(a)(iii) hereof) has occurred and is continuing, the holder or holders of
Debentures representing a majority of the aggregate principal amount of
Debentures then outstanding may declare all or any portion of the
outstanding principal amount of the Debentures (together with all accrued
interest thereon and all other amounts due and payable with respect
thereto) to be immediately due and payable and may, subject to the
provisions of paragraph 3 hereof, demand immediate payment of all or any
portion of the outstanding principal amount of the Debentures (together
with all such other amounts then due and payable) held by such holder or
holders. The Company shall give prompt written notice of any such demand to
the other holders of Debentures, each of which may, subject to the
provisions of paragraph 3 hereof, demand immediate payment of all or any
portion of such holder's Debenture. Subject to the provisions of paragraph
3 hereof, if any holder or holders of the Debentures demand immediate
payment of all or any portion of the Debentures, the Company shall
immediately pay to such holder or holders all amounts due and payable with
respect to such Debentures.
(iii) Each holder of the Debentures shall also
have any other rights which such holder may have been afforded under any
contract or agreement at any time and any other rights which such holder
may have pursuant to applicable law.
(iv) The Company hereby waives diligence,
presentment, protest and demand and notice of protest and demand, dishonor
and nonpayment of this Debenture, and expressly agrees that this Debenture,
or any payment hereunder, may be extended from time to time, all without in
any way affecting the liability of the Company hereunder.
5. Ranking. Notwithstanding anything to the contrary contained
herein, as among Holder and the holders of the senior subordinated notes
issued under the Indenture and that certain Convertible Debenture issued by
the Company on September 29, 2000 to Les Gantiers Holding, B.V. (the "Les
Gantiers Debenture"), the payment obligations of the Company hereunder
shall be pari passu with the payment obligations contained in the senior
subordinated notes issued under the Indenture and the Les Gantiers
Debenture.
6. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of the Debentures may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the
written consent of the holders of at least a majority of the outstanding
principal amount of the Debentures; provided that no such action shall
change (a) the rate at which or the manner in which interest accrues on the
Debentures or the times at which such interest becomes payable, (b) any
provision relating to the scheduled payments or prepayments of principal on
the Debentures or (c) the Conversion Price of the Debentures or the number
of shares or the class of stock into which the Debentures are convertible,
without the written consent of the holders at least 66 2/3% of the
outstanding principal amount of the Debentures.
7. Definitions. For purposes of the Debentures, the following
capitalized terms have the following meaning.
oCommon Stock" means, collectively the Company's common stock, par
value $0.01 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of
par or stated value in respect to the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
oCredit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of November 7, 2000, as amended on December 29, 2000
and March 30, 2001, by and among Consoltex Holdings, Inc., Consoltex Inc.,
Consoltex Mexico, S.A. de C.V., Consoltex (USA) Inc., The Balson-Hercules
Group Ltd., LINQ Industrial Fabrics, Inc., and Rafytek, S.A. de C.V. as
borrowers, certain subsidiaries of the borrowers as guarantors, Bank of
America, N.A., as U.S. Agent, National Bank of Canada, as Canadian Agent
and the lenders party thereto, as amended, modified, supplemented, amended
and restated, refinanced or replaced heretofore and from time to time
hereafter.
oIndenture" means collectively the Indenture, dated September 30,
1993, together with the Supplemental Indenture dated August 18, 1994, the
Second Supplemental Indenture dated September 29, 2000, and the Third
Supplemental Indenture dated April 12, 2001, among Consoltex Inc. (formerly
Consoltex Group Inc.), Consoltex (USA) Inc., The Balson-Hercules Group
Ltd., LINQ Industrial Fabrics, Inc., Rafytek, S.A. de C.V., Consoltex
Mexico, S.A. de C.V. and U.S. Bank Trust National Association (formerly
First Trust National Association), as Trustee, as amended from time to
time.
oPerson" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
oSubsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of 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 that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a limited liability company, partnership,
association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest
in a limited liability company, partnership, association or other business
entity if such Person or Persons shall be allocated a majority of limited
liability company, partnership, association or other business entity gains
or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other
business entity.
8. Cancellation. After all principal and accrued interest at any
time owed on this Debenture has been paid in full, this Debenture shall be
surrendered to the Company for cancellation and shall not be reissued.
9. Payments. Unless otherwise expressly provided herein, all
payments to be made to the holders of the Debentures shall be made in the
lawful money of the United States of America in immediately available
funds.
10. Place of Payment. Payments of principal and interest shall be
delivered to Holder at the following address:
AIP/CGI, Inc.
1/8f(1)American Industrial Partners
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxxxxx X. Xxxxxx
or to such other address or to the attention of such other person as
specified by prior written notice to the Company.
11. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is a Saturday,
Sunday or legal holiday in the State of New York, the payment shall be due
and payable on, and the time period shall automatically be extended to, the
next business day immediately following such Saturday, Sunday or legal
holiday, and interest shall continue to accrue at the required rate
hereunder until any such payment is made.
12. Usury Laws. It is the intention of the Company and the holder
of this Debenture to conform strictly to all applicable usury laws now or
hereafter in force, and any interest payable under this Debenture shall be
subject to reduction to the amount not in excess of the maximum legal
amount allowed under the applicable usury laws as now or hereafter
construed by the courts having jurisdiction over such matters. If the
maturity of this Debenture is accelerated by reason of an election by the
holder hereof resulting from an Event of Default, voluntary prepayment by
the Company or otherwise, then earned interest may never include more than
the maximum amount permitted by law, computed from the date hereof until
payment, and any interest in excess of the maximum amount permitted by law
shall be canceled automatically and, if theretofore paid, shall at the
option of the holder hereof either be rebated to the Company or credited on
the principal amount of this Debenture, or if this Debenture has been paid,
then the excess shall be rebated to the Company. The aggregate of all
interest (whether designated as interest, service charges, points or
otherwise) contracted for, chargeable, or receivable under this Debenture
shall under no circumstances exceed the maximum legal rate upon the unpaid
principal balance of this Debenture remaining unpaid from time to time. If
such interest does exceed the maximum legal rate, it shall be deemed a
mistake and such excess shall be canceled automatically and, if theretofore
paid, rebated to the Company or credited on the principal amount of this
Debenture, or if this Debenture has been repaid, then such excess shall be
rebated to the Company.
13. Certain Rights. So long as the Debenture is outstanding and
Holder is the holder of a majority of the outstanding voting securities of
the Company, Holder shall cause one (1) representative designated by the
holders of a majority in aggregate principal amount of the outstanding
Debentures to be appointed and maintained as member of the board of
directors of the Company.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has executed and delivered this
Debenture on date first written above.
CONSOLTEX HOLDINGS, INC.
By:/s/Xxxx Xx Xxxxx
-----------------------------------
Name: Xxxx Xx Xxxxx
Title: Executive Vice-President,
Finance and Taxation
