Exhibit 4
PRIVILEGED AND CONFIDENTIAL
[Execution Copy]
OPERATING AGREEMENT
BY AND AMONG
DT ACQUISITION INC.,
POLYMER GROUP, INC.
AND
XXXXX & LORD INCORPORATED
REGARDING
DOMINION TEXTILE INC.
This operating agreement, dated as of December 19, 1997 (the "Operating
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 the
"Parties"). Capitalized terms used but not defined herein shall have the
respective meanings set forth in the DTA Offers and Takeover Bid Circular dated
October 29, 1997, as amended by the Notice of Extension and Variation dated
November 18, 1997, the Notice of Extension dated December 2, 1997 and the Notice
of Extension and Variation dated December 8, 1997.
WHEREAS, DTA has commenced a public takeover bid to acquire all of the
outstanding common shares of Dominion Textile Inc., a corporation organized
under the laws of Canada ("Target") (such acquisition referred to herein as the
"Target Acquisition") and all of the outstanding first preferred shares of
Target;
WHEREAS, PGI, GL and DTA have entered into an agreement dated as of
October 27, 1997 (the "Agreement"), as amended and supplemented by the letter
agreement dated as of October 27, 1997 between the Parties and the three letter
agreements dated as of November 16, 1997 between the Parties (the Agreement as
so amended and supplemented is referred to herein as the "Purchase Agreement"),
which would, contingent on the completion of the Target Acquisition by DTA, (i)
transfer the Nonwovens Business (including its proportionate liabilities) to
PGI, and (ii) transfer the Apparel Fabric Business (including its proportionate
liabilities) to GL (such transfers referred to herein as the "Purchase Agreement
Transaction");
WHEREAS, PGI, GL and an affiliate of PGI have committed to lend money
to DTA to provide funds to DTA to complete the Target Acquisition; WHEREAS, PGI
and GL each has expertise with respect to the Nonwovens Business and the Apparel
Fabric Business, respectively, and, upon completion of the Target Acquisition,
Target
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December 19, 1997
Page 2
would benefit from the utilization of their expertise in the management of
Target's operations; and
WHEREAS, DTA, PGI and GL are entering into this Agreement for the
purpose of setting forth certain management rights and responsibilities of each
Party during the period following the appointment by DTA of all of the directors
of Target's board of directors and prior to completion of the Purchase Agreement
Transaction.
NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto intending to be legally bound, hereby agree
as follows:
1.DEFINITIONS. In addition to terms otherwise defined herein and in
the Offers, the following terms have the meanings set forth below:
(a) "Agreement" has the meaning set forth in the preface
above.
(b) "Apparel Committee" has the meaning set forth in Section
2(a).
(c) "Business" has the meaning set forth in Section 2(a).
(d) "DTA" has the meaning set forth in the preface above.
(e) "GL" has the meaning set forth in the preface above.
(f) "Nonwovens Committee" has the meaning set forth in Section
2(a).
(g) "Operating Agreement" has the meaning set forth in the
preface above.
(h) "Operating Committees" has the meaning set forth in
Section 2(a).
(i) "PGI" has the meaning set forth in the preface above.
(j) "Parties" has the meaning set forth in the preface above.
(k) "Partner" means an individual who is designated as a
member of the Partners Committee pursuant to Section 3(b).
(l) "Partners Committee" means the executive committee
designated pursuant to Section 3.
(m) "Purchase Agreement" has the meaning set forth in the
preface above.
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December 19, 1997
Page 3
(n) "Purchase Agreement Transaction" has the meaning set forth
in the preface above.
(o) "Target" has the meaning set forth in the preface above.
(p) "Target Acquisition" has the meaning set forth in the
preface above.
2. DAY-TO-DAY MANAGEMENT: THE APPAREL COMMITTEE AND THE NONWOVENS
COMMITTEE. The Parties hereby expressly agree that this Operating Agreement
shall set forth the exclusive arrangement for the management and operation of
the Apparel Fabric Business and the Nonwovens Business. The Parties agree to
take (and to cause their subsidiaries and affiliates to take) whatever actions
are necessary or desirable (whether in such Party's capacity as a stockholder
(whether direct or indirect), director, Partner or otherwise, and including,
without limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), to
effect the management of the Businesses as set forth herein and in a manner
consistent with the undertakings given to the Minister of Industry by the
Parties. The Parties agree that they will not take any actions specifically for
the purpose of frustrating the intent of this Operating Agreement.
(a) OPERATING COMMITTEE RESPONSIBILITIES. The Apparel Fabric
Business operating committee (the "Apparel Committee") shall manage the
day-to-day affairs of the Apparel Fabric Business. The Nonwovens
Business operating committee (the "Nonwovens Committee", and together
with the Apparel Committee the "Operating Committees") shall manage the
day-to-day affairs of the Nonwovens Business (the Nonwovens Business
and the Apparel Fabric Business are each referred to sometimes herein
as a "Business" and, collectively, as the "Businesses"). Each Operating
Committee shall, in accordance with the direction established by the
Partners Committee, make all decisions and exercise all powers
necessary for the day-to-day operation of its respective Business,
including the power to appoint or cause to be appointed officers and
agents and to execute contracts; provided, however, the powers of the
Operating Committees shall not be construed to extend to those matters
that are reserved for decision by the Partners Committee under Section
3 of this Operating Agreement. Each Operating Committee shall operate
its respective Business consistent with the provisions of this
Operating Agreement and the Purchase Agreement.
(b) FORMATION AND COMPOSITION OF OPERATING COMMITTEES. The
Apparel Committee shall consist of the Partners who are the GL nominees
to the Partners Committee. The Nonwovens Committee shall consist of the
Partners who are the PGI nominees to the Partners Committee. Each
member of an Operating Committee shall serve so long as the person is a
Partner and shall cease to be a member of an Operating Committee in the
event that the person ceases to be a Partner.
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December 19, 1997
Page 4
(c) PROCEDURES GOVERNING OPERATING COMMITTEES.
(i) Each Operating Committee shall meet with such
frequency and at such places (including meetings by telephone
or video conference) as mutually decided by the members of the
respective Operating Committee.
(ii) Meetings of an Operating Committee may be called
by any of its respective members. Notice (by hand, telephone,
overnight courier, or the U.S. mail) shall be given to all
members of the respective Operating Committee at any time
prior to a meeting (notice shall be deemed given when
received). If the notice requirement is not met, an Operating
Committee meeting shall nonetheless be valid as if held after
due notice if all members of the Operating Committee attend
without objection to the lack of notice or if, either before
or after such meeting, each member of the Operating Committee
signs a written waiver of notice, a consent to the holding of
such meeting or a written approval of the minutes of such
meeting.
(iii) No meeting of an Operating Committee may be
validly convened unless both members of the respective
Operating Committee are present (either in person or by
proxy). A member of an Operating Committee may appoint another
person as his or her proxy to represent such member at any
such Operating Committee meeting for any purpose, including
voting and quorum purposes.
(iv) Each member of an Operating Committee shall have
one (1) vote at all meetings of their respective Operating
Committee. All resolutions of an Operating Committee must be
adopted by the unanimous vote of all members of the Operating
Committee present (or their proxies). Minutes shall be kept of
each meeting of an Operating Committee, copies of which shall
be transmitted to each member for approval as to the accuracy
of the minutes. A resolution in writing which is signed by all
of the members of an Operating Committee shall be valid and
effective as if it had been unanimously passed at a meeting of
the respective Operating Committee duly convened and held.
Copies of any such resolutions shall be filed with the minutes
of the meetings of such Operating Committee.
(v) Each of GL and PGI shall pay the expenses
(including travel expenses) incurred by the Operating
Committee members nominated by it to attend Operating
Committee meetings.
(vi) By unanimous consent of its respective members,
an Operating Committee may adopt such other procedures
governing meetings and the conduct of business as it shall
deem appropriate.
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December 19, 1997
Page 5
3. THE PARTNERS COMMITTEE
(a) PARTNERS COMMITTEE RESPONSIBILITIES. Subject to change by
agreement of GL and PGI, the management of each of the Businesses shall
be conducted exclusively by the applicable Operating Committee,
provided that the approval of the Partners Committee shall be required
prior to:
(i) approving any activity outside of the ordinary
course of business, consistent with past practice, of the
Apparel Fabric Business or the Nonwovens Business, considered
individually;
(ii) approving any acquisition or agreement to
acquire, by amalgamating, merging, consolidating or entering
into a business combination with or purchasing or leasing
substantially all of the assets of or otherwise, any business
or undertaking or any corporation, partnership, association or
other business organization or division thereof, if such
transactions, individually or in the aggregate, represent a
value to or commitment of Target or either Business of
$250,000 or more;
(iii) approving the sale, lease, transfer or other
disposition of any of the property or assets, real or
personal, including intangible assets and stock of
subsidiaries with respect to either Business, that,
individually or in the aggregate, (x) represent a value to or
commitment of Target or either Business of $250,000 or more,
or (y) have a book value of $250,000 or more;
(iv) executing or canceling any mortgage, security
interest or similar document or instrument purporting to
encumber any one or more of the assets of either Business if
such transactions, individually or in the aggregate, represent
a value to or commitment of Target or either Business of
$50,000 or more;
(v) entering into, amending or terminating any
agreements, covenants or contracts that, individually or in
the aggregate, represent a value to or commitment of Target or
either Business of $250,000 or more;
(vi) modifying, amending, waiving or terminating any
confidentiality agreement Target or either Business has
entered into with third parties;
(vii) guaranteeing the payment of any indebtedness,
or incurring any liability or indebtedness for borrowed money,
that, individually or in the aggregate, represents a
commitment of Target or either Business of $10,000 or more;
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December 19, 1997
Page 6
(viii) lending funds on behalf of Target or either
Business that, individually or in the aggregate, represent a
value to or commitment of Target or either Business of $25,000
or more;
(ix) committing to any capital expenditure or
investment, including any capital or operating lease, that,
individually or in the aggregate, represents a value to or
commitment of Target or either Business of $25,000 or more;
(x) making any capital expenditure, investment or
other payment pursuant to any contract or commitment if there
is insufficient cash within the particular Business to make
such payment;
(xi) entering into (or amending, modifying, waiving
or deviating from the previously approved terms of) any
transaction between (x) Target or either Business and (y) any
Party or any affiliate of a Party (other than transactions
with a Party (or its affiliates) which are specifically
authorized by the Purchase Agreement);
(xii) entering into (or amending, modifying, waiving
or deviating from the previously approved terms of) any
transaction which benefits any Party (or its affiliates)
(other than transactions benefitting a Party (or its
affiliates) which are specifically authorized by the Purchase
Agreement);
(xiii) approving or changing the salaries, bonuses or
other compensation payable to any officer or employee of
Target or either Business;
(xiv) commencing, prosecuting, defending or settling
any case, controversy, claim, cause of action or dispute which
arises out of or relates to the Target or either Business and
which involves claims in excess of $25,000 to Target, either
Business or any Party;
(xv) determining how best to maintain, protect and
defend the rights and interests in and to the intellectual
property of Target and each Business;
(xvi) approving new bank accounts which shall hold
funds of Target or either Business;
(xvii) approving the purchase of insurance policies;
(xviii) approving any distribution of assets
(including cash) of Target or either Business to any Party (or
its subsidiary) or to the other Business;
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December 19, 1997
Page 7
(xix) adopting, amending or terminating any (a)
collective bargaining agreement, (b) plan, policy, arrangement
or understanding providing any of the following benefits to
current or former employees of Target or either Business:
bonus, pension, profit sharing, deferred compensation,
incentive compensation, equity or quasi-equity based
compensation, retirement, vacation, severance, disability,
death benefit or insurance or (c) other personnel practices or
policies;
(xx) creating any subsidiary of Target or either
Business;
(xxi) causing Target or either Business or any of
their subsidiaries to cease doing business, liquidate or
dissolve, file a petition in bankruptcy, make an assignment
for the benefit of creditors or take or allow to be taken
against it any similar action;
(xxii) permitting any subsidiary of Target or either
Business to take any action described above; and
(xxiii) performing all other duties specifically
reserved to the Partners Committee in this Operating Agreement
or subsequently delegated to the Partners Committee by
agreement of GL and PGI.
(b) FORMATION AND COMPOSITION OF THE PARTNERS COMMITTEE. The
Partners Committee shall consist of four (4) individuals or such other
even number of individuals as GL and PGI from time to time may agree in
writing; provided that each of PGI and GL shall have the right to
nominate an equal number of Partners to the Partners Committee. The
Parties shall cause the board of directors of Target to appoint the
persons so nominated by PGI and GL to serve on the Partners Committee.
All such Partners shall be officers or employees of the Party which
nominated them (or one of its affiliates) or an employee of Target. The
initial Partners shall be Xxxxx Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxx
and Xxxxxxx X. Xxxxxx. Xxxxx Xxxxxx and Xxxxx X. Xxxx shall be deemed
nominated by PGI, and Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx shall be
deemed nominated by GL. At the request of either PGI or GL, which
request must relate to a Partner nominated by the requesting Party, the
Parties shall cause Target's board of directors to replace a Partner,
provided that no revocation shall be valid until a notice thereof has
been given to the other Parties.
(c) OPERATION OF THE PARTNERS COMMITTEE. The Partners
Committee shall meet with such frequency and at such places (including
meetings by telephone or video conference) as mutually decided by the
Partners, provided that there shall be a face-to-face Partners
Committee meeting at least once every two (2) months.
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(i) Meetings may be called by any Partner on at least
seven (7) days prior written notice to each Partner. If the
notice requirement is not met, a Partners Committee meeting
shall nonetheless be valid as if held after due notice if all
Partners attend without objection to the lack of notice or if,
either before or after such meeting, each Partner signs a
written waiver of notice, a consent to the holding of such
meeting or a written approval of the minutes of such meeting.
(ii) No meeting of the Partners Committee may be
validly convened unless at least one (1) Partner nominated by
PGI and at least one (1) Partner nominated by GL are present
(either in person or by proxy). A Partner may appoint another
person as his or her proxy to represent such Partner at any
meeting for any purpose, including voting and quorum purposes.
(iii) Each Partner shall have one (1) vote at all
meetings of the Partners Committee. All resolutions of the
Partners Committee must be adopted by the unanimous vote of
all Partners present (or their proxies). Minutes shall be kept
of each meeting of the Partners Committee, copies of which
shall be transmitted to each Partner for approval as to the
accuracy of the minutes. A resolution in writing which is
signed by all of the Partners shall be valid and effective as
if it had been unanimously passed at a meeting of the Partners
Committee duly convened and held. Copies of any such
resolutions shall be filed with the minutes of the Partners
Committee meetings. The respective counsel of each of GL and
PGI shall be permitted to attend all Partners Committee
meetings.
(iv) Each of GL and PGI shall pay the expenses
(including travel expenses) incurred by the Partners nominated
by it to attend Partners Committee meetings.
(v) By unanimous consent of all Partners, the
Partners Committee may adopt such other procedures governing
meetings and the conduct of business as it shall deem
appropriate.
4. RESOLUTION OF POTENTIAL PARTNERS COMMITTEE IMPASSE.
(a) MEDIATION. The Partners shall attempt to settle all
matters before the Partners Committee through consultation and
negotiation in good faith and in a spirit of mutual cooperation. In the
event that the Partners Committee does not reach a decision on a matter
within twenty (20) business days from the date that the matter was
submitted to the Partners Committee, then the matter will be deemed to
be a dispute and such dispute will be mediated by a mediator to be
selected by the Partner demanding mediation and to be consented to by
all other Partners. No Partner may unreasonably withhold consent to the
selection of a
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December 19, 1997
Page 9
mediator. By mutual agreement, however, the Partners may postpone
mediation until the Partners have each completed some specified but
limited inquiry regarding the matter.
(b) ARBITRATION. In the event that the Partners Committee,
with or without the involvement of a mediator, does not reach agreement
on a matter within forty (40) business days from the date the matter
was submitted to the Partners Committee, then, at the request of any
Partner, the matter shall be submitted to arbitration by such Partner
delivering a notice of arbitration (a "Notice of Arbitration") to a
Partner who was nominated by a Party other than the Party that
nominated the Partner requesting arbitration. Such Notice of
Arbitration shall specify the matters as to which arbitration is
sought, the nature of any dispute and any other matters required to be
included therein by the Rules and Commentary for Non-Administered
Arbitration of Business Disputes, as in effect from time to time (the
"Rules"), of the Center for Public Resources, Inc. ("CPR"). A partner
of Ernst & Young having expertise in the textile industry to be
selected by such accounting firm and not by either Party, shall be the
arbitrator (the "Arbitrator"); provided, however, that, in the event
that the Arbitrator for any reason withdraws or is disqualified from
serving in that capacity and cannot be replaced by another qualified
partner of such accounting firm because of such accounting firm's
withdrawal or disqualification, CPR shall select as a substitute
Arbitrator a person who is or has been actively employed in an
executive or managerial capacity in the textile industry or with an
independent public accounting firm having expertise in that area.
The Arbitrator will determine the allocations of the costs and
expenses of arbitration (except for fees and expenses of legal counsel,
if any, selected by a party, which shall be borne by such party) as
well as the resolution of any dispute governed by this Section 4. The
Arbitrator shall be instructed to resolve any dispute in a manner that
is consistent with the Purchase Agreement and this Operating Agreement.
The arbitration shall be conducted in Atlanta, Georgia, under the
Rules, except as modified by agreement of GL and PGI. The pendency of
any arbitration under this Section 4 shall not in any way relieve the
Partners from continuing to carry out their responsibilities under this
Operating Agreement in good faith.
Evidentiary hearings, if any, shall not exceed three (3)
business days. The Arbitrator shall conduct the arbitration so that a
final result, determination, finding or judgment (the "Final
Determination") is made or rendered as soon as practicable, but in no
event later than forty (40) business days after the receipt by the
relevant Partner(s) of the Notice of Arbitration nor later than ten
(10) business days following the completion of all other aspects of the
arbitration. The Arbitrator shall seek a Final Determination that
maximizes the net benefit to the Parties while allocating benefits and
detriments in a manner equitable to the Parties in light of the
Parties' relationship.
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December 19, 1997
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The Final Determination shall be signed by the Arbitrator, and
shall be limited to the matters properly set forth in the Notice of
Arbitration. The Final Determination shall be final and binding on the
Partners Committee, and there shall be no appeal or reexamination of
the Final Determination, except as provided in Sections 10 and 11 of
the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq. Any Partner or
Party may enforce any Final Determination in any state or federal court
having jurisdiction over the dispute. For the purpose of any action or
proceeding instituted with respect to any Final Determination, each
Partner and Party irrevocably consents to the service of process by
registered mail or personal service and hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter have as to personal jurisdiction, the laying of the venue of
any such action or proceeding brought in any such court and any claim
that any such action or proceeding brought in any court has been
brought in an inconvenient forum.
(c) LIMITED APPLICATION OF DISPUTE RESOLUTION PROCEDURES. The
dispute resolution procedures provided in Sections 4(a) and 4(b) shall
apply only to the resolution of matters properly submitted to the
Partners Committee regarding the operations of Target and its
subsidiaries. These dispute resolution procedures shall not be
construed to apply to any other disputes arising out of or concerning
this Operating Agreement and shall not be construed to apply to or
alter any other agreement between the Parties.
5. INDEMNIFICATION OF PARTNERS AND DIRECTORS AND OFFICERS OF DTA.
(a) SCOPE OF INDEMNIFICATION. In addition to any other right
to indemnification granted by the bylaws or articles of incorporation
of either the Target or DTA (Target and DTA are together referred to as
the "Indemnifying Parties"), each person who was or is made a party to
or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding") by reason of the fact that
he or she is or was a Partner or a member of an Operating Committee or
an officer or director of DTA (hereinafter an "Indemnitee"), whether
the basis of such a Proceeding is alleged action by the Indemnitee in
an official capacity as a Partner, director, or officer or in any other
capacity while serving as a Partner, director, or officer, shall be
indemnified and held harmless by the Indemnifying Parties to the
fullest extent authorized by law (including indemnification for
negligence, gross negligence and breach of fiduciary duty to the extent
so authorized), as the law now exists or may hereinafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Indemnifying Parties to provide broader
indemnification rights than such law permitted the Indemnifying Parties
to provide prior to such amendment), against all expense, liability and
loss (including attorneys' fees, judgments, fines, excise taxes, or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith. However, it is
provided that:
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(i) an Indemnitee shall not be entitled to be
indemnified by the Indemnifying Parties unless he or she acted
in good faith in what such person reasonably believed to be in
accordance with the Purchase Agreement and this Operating
Agreement and, with respect to criminal action or proceeding,
he or she must not have had reasonable cause to believe that
his or her conduct was unlawful;
(ii) any indemnification pursuant to this Section 5
shall be recoverable only from the assets of the Indemnifying
Parties and not from the assets of any other Party.
(b) ADVANCEMENT OF EXPENSES. The right to indemnification
conferred in this Section 5 shall include the right to be paid by the
Indemnifying Parties the expenses (including attorneys' fees) incurred
in defending any Proceeding in advance of its final disposition,
subject to the receipt of an undertaking from such Indemnitee to
promptly repay any amounts so advanced in the event that he or she is
not ultimately entitled to receive indemnification under Section 5(a).
(c) SURVIVAL. The rights of indemnification in Sections 5(a)
and 5(b) shall be contractual rights, and such rights shall continue as
to an Indemnitee who has ceased to be a Partner, director or officer
and shall inure to the benefit of the Indemnitee's heirs, executors and
administrators;
(d) NON-EXCLUSIVE RIGHTS. The rights to indemnification and to
the advancement of expenses conferred in this Section 5 shall not be
exclusive of any other right that any person may have or hereafter
acquire under any statute, agreement, vote of the directors or
shareholders or otherwise.
(e) INSURANCE. The Indemnifying Parties may maintain
insurance, at their expense, to protect themselves and any Indemnitee
against any expense, liability or loss, whether or not the Indemnifying
Parties would have the power to indemnify such person against such
expense, liability or loss under relevant laws.
6. WAIVER OF CONFLICT OF INTEREST. Each Party hereby waives any claim
or cause of action against any other Party, any Partner nominated by another
Party, or any person ("Appointee") appointed by an Operating Committee which
consists of Partners nominated by another Party, for any breach of fiduciary
duty to the Target by such Partner or Appointee as a result of any potential or
actual conflict of interest. Each Party acknowledges and agrees that in the
event of any such conflict of interest, each such Partner or Appointee, subject
to applicable law, may act in the best interest of the Party which, directly or
indirectly through an Operating Committee, nominated him or her. Subject to
applicable law, no Partner or Appointee shall be obligated to recommend or take
any action that prefers the interests of the Target over the interests of a
Party, and the Target and the
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Parties waive the fiduciary duty, if any, to the Target of each such Partner or
Appointee in the event of any such conflict of interest. The foregoing shall not
limit the right of any Party and its affiliates to pursue available remedies
against the other Parties and their affiliates for breach of any representation,
warranty, covenant or agreement contained in the Purchase Agreement and this
Operating Agreement.
7. PUBLIC ANNOUNCEMENTS. Neither GL on the one hand or PGI and DTA on
the other hand shall make or send a public announcement or communication
regarding this Operating Agreement unless it has first obtained the prior
written approval of PGI or GL, respectively (which approval shall not be
unreasonably withheld); provided that any Party may make any public disclosure
it believes in good faith, upon advice of counsel, is required by applicable
law, the regulations of the stock exchange on which the Party's stock is traded
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party, whether GL on the one hand or PGI and DTA
on the other hand, will use reasonable efforts to consult PGI or GL,
respectively, prior to making the disclosure). The Parties agree that in
response to any questions or inquiries from third parties, any statements shall
be consistent with the provisions of this Operating Agreement and no statements
will be made that would be likely to mislead or confuse third parties regarding
the management authority agreed to herein.
8. ENTIRE AGREEMENT. This Operating Agreement and the Purchase
Agreement together contain the entire agreement and understanding among the
Parties.
9. AMENDMENTS. This Operating Agreement may be amended only upon the
written consent of each of GL and PGI.
10. TERMINATION. This Operating Agreement will automatically be
terminated and be of no further force and effect upon the earlier of (a) mutual
agreement of the Parties, (b) the termination of the Purchase Agreement, or (c)
the completion of the Purchase Agreement Transaction; provided, that in the
event a Party materially breaches this Operating Agreement or is unable to
fulfil any conditions required to be fulfilled, and such breach is not cured
within fifteen days following notice from another Party, the non-breaching
Parties may terminate this Operating Agreement on or after the twenty-second day
following delivery of such notice. Termination of this Operating Agreement by a
non-breaching Party pursuant to this Section 10 will not relieve the breaching
Party of any liability it may have as a result of any breach of the Purchase
Agreement or this Operating Agreement.
11. CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Operating Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Operating Agreement shall
be construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Operating Agreement. Any reference
to any federal, state, local, or foreign
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statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.
12. MISCELLANEOUS. THIS OPERATING 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. IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAWS OF THE STATE OF NEW YORK SHALL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS OPERATING AGREEMENT, EVEN THOUGH UNDER NEW YORK'S CHOICE OF
LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
MAY ORDINARILY APPLY. If any provision of this Operating Agreement is deemed
invalid, illegal or incapable of enforcement by any rule of law or public
policy, all other provisions of this Operating Agreement shall remain in full
force and effect. Upon any determination that any provision of this Operating
Agreement is invalid, illegal or incapable of enforcement, the Parties shall
negotiate in good faith to modify this Operating Agreement so as to effect the
original intent of the Parties as closely as possible to the management rights
and responsibilities originally contemplated by the Parties. Each Party may
assign its rights hereunder only to any of its affiliates, but neither GL on the
one hand or PGI and DTA on the other hand may assign its obligations or delegate
its duties hereunder without the prior written approval of PGI or GL,
respectively; provided, that in connection with any such assignment to an
affiliate, the assigning party must guarantee all of the obligations owed to the
other Parties hereunder. The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Operating 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 Operating Agreement and to enforce
specifically the provisions hereof (without posting a bond or other security).
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 and DTA shall be made to Xxxxx
Xxxxxx, Chairman, President and Chief Executive Officer of PGI and DTA, at the
addresses of their respective principal executive offices. This Operating
Agreement may be executed in counterparts and delivered by facsimile
transmission. Nothing in this Operating Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Operating Agreement on any persons other than the Parties hereto and their
affiliates and respective permitted successors and assigns.
* * * * *
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Operating Agreement
December 19, 1997
Page 14
IN WITNESS WHEREOF, the parties hereto have caused this
Operating Agreement to be signed by their respective officers thereto duly
authorized, all as of the date first above written.
POLYMER GROUP, INC.
By: _______________________________________
Its: _______________________________________
DT ACQUISITION INC.
By: _______________________________________
Its: _______________________________________
XXXXX & LORD INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx ___________________
Its: Executive Vice-President___________________
-14-
