<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended June 28, 1997 or
----------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
------------------- ----------------------
Commission file number 333-4723
--------------------------------------------------------
Clark-Schwebel Holdings, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3883016
- ----------------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2200 South Murray Avenue, Anderson, SC 29622
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(864) 224-3506
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------------- ---------------
As of June 28, 1997, there were 9,000 shares outstanding of common stock of
Clark-Schwebel Holdings, Inc.
<PAGE> 2
CLARK-SCHWEBEL HOLDINGS, INC.
FORM 10-Q QUARTERLY REPORT FOR
FISCAL QUARTER ENDED JUNE 28, 1997
TABLE OF CONTENTS
PAGE NO.
PART I - FINANCIAL INFORMATION:
ITEM 1. Financial Statements: 3
Consolidated Balance Sheets as of
December 28, 1996 and June 28, 1997. 4
Consolidated Statements of Income for the
Three and Six Months ended June 28, 1997 and
June 29, 1996. 5
Consolidated Statements of Cash Flows for the
Six Months ended June 28, 1997 and June 29, 1996. 6
Notes to Condensed and Consolidated Financial Statements. 7
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 12
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk. 23
PART II - OTHER INFORMATION:
ITEM 4. Submission of Matters to a Vote of Securityholders. 24
ITEM 6. Exhibits and Reports on Form 8-K. 24
SIGNATURES 25
EXHIBITS
Exhibit 3.1 - Amended and Restated Certificate of Incorporation
Exhibit 3.2 - Amended Bylaws
Exhibit 10.1 - Registration Rights Agreement
Exhibit 10.2 - Second Amendment to Credit Agreement
Exhibit 27 - Financial Data Schedule
(electronic filing only)
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(See Pages 4 - 10 - This page is intentionally left blank)
3
<PAGE> 4
CLARK-SCHWEBEL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1996 and JUNE 28, 1997
(Dollars in Thousands Except Per Share Data)
<TABLE>
<CAPTION>
DECEMBER 28, JUNE 28,
1996 1997
--------- ---------
(Successor Basis) (Successor Basis)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,064 $ 14,352
Accounts receivable, net 25,794 26,351
Inventories, net 32,633 36,763
Other 592 703
--------- ---------
Total current assets 63,083 78,169
--------- ---------
PROPERTY, PLANT AND EQUIPMENT 67,936 68,149
Accumulated depreciation (5,841) (8,514)
--------- ---------
Property, plant and equipment, net 62,095 59,635
--------- ---------
EQUITY INVESTMENTS 63,426 62,130
GOODWILL 44,333 43,780
OTHER ASSETS 6,808 6,391
--------- ---------
TOTAL ASSETS $ 239,745 $ 250,105
========= =========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 21,448 $ 28,973
Accrued liabilities 14,338 13,561
Deferred tax liabilities -- current 2,056 2,056
Current maturities of long-term debt 51 366
--------- ---------
Total current liabilities 37,893 44,956
--------- ---------
LONG-TERM DEBT 123,440 120,824
DEFERRED TAX LIABILITIES 21,458 20,170
LONG-TERM BENEFIT PLANS AND OTHER 7,121 9,535
COMMITMENTS AND CONTINGENCIES
--------- ---------
TOTAL LIABILITIES 189,912 195,485
--------- ---------
EQUITY:
Preferred stock (par value per share - $.01) - 12.5%
participating, 10,000 shares authorized, 1,000 shares
issued and outstanding (see Note 6) 35,000 35,000
Common stock (par value per share - $.01) - 100,000
shares authorized, 9,000 shares issued and outstanding,
less management loans of $822 and $799, respectively
(see Note 6) 9,178 9,201
Retained earnings 7,005 13,987
Cumulative translation adjustment (1,350) (3,568)
--------- ---------
Total equity 49,833 54,620
--------- ---------
TOTAL LIABILITIES AND EQUITY $ 239,745 $ 250,105
========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
CLARK-SCHWEBEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31, April 18, March 30, December 29,
1996 - 1995 - 1996 - 1997 - 1996 -
April 17, April 17, June 29, June 28, June 28,
1996 1996 1996 1997 1997
------- -------- -------- --------- ---------
(Predecessor Basis) (Successor Basis)
<S> <C> <C> <C> <C> <C>
Net sales $ 8,741 $ 68,911 $ 47,330 $ 61,061 $ 123,299
Cost of goods sold 7,107 54,958 37,744 47,217 95,851
------- -------- -------- --------- ---------
Gross profit 1,634 13,953 9,586 13,844 27,448
Selling, general and administrative
expenses 937 4,812 3,023 3,825 7,727
------- -------- -------- --------- ---------
Operating income 697 9,141 6,563 10,019 19,721
Other income (expense):
Interest expense (20) (148) (3,134) (3,147) (6,427)
Other, net (5) (5) (1) (3) (3)
------- -------- -------- --------- ---------
Income before income taxes 672 8,988 3,428 6,869 13,291
Provision for income tax (269) (3,595) (1,471) (2,824) (5,475)
Income from equity investees, net 267 1,174 985 944 1,582
------- -------- -------- --------- ---------
Net income $ 670 $ 6,567 $ 2,942 4,989 9,398
======= ========
Accrued dividends on preferred stock (873) (1,225) (2,416)
-------- --------- ---------
Net income applicable to common shares $ 2,069 $ 3,764 $ 6,982
======== ========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
CLARK-SCHWEBEL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - Dollars in Thousands)
<TABLE>
<CAPTION>
December 31, December 29,
1995 - April 18 - 1996 -
April 17, June 29, June 28,
1996 1996 1997
-------- --------- --------
(Predecessor Basis) (Successor Basis)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 6,567 $ 2,942 $ 9,398
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of goodwill
and unearned revenue 3,526 2,006 4,562
Amortization of deferred financing cost 0 173 417
Deferred tax provision 1,404 (112) (595)
Income from equity investments, net (1,174) (985) (1,540)
Loss on sale of equipment 0 0 11
Changes in assets and liabilities, net of
the effects of the purchase of the company:
Accounts receivable 1,832 1,620 (557)
Inventories (2,883) 1,466 (4,130)
Prepaid expenses and other (187) 105 98
Accounts payable (697) 7,784 7,525
Accrued liabilities (289) 5,301 (570)
Other (131) 1,208 (6)
-------- --------- --------
Net cash provided by operating
activities 7,968 21,508 14,613
-------- --------- --------
INVESTING ACTIVITIES:
Purchases of equipment (1,603) (396) (3,541)
Payment for purchase of Company 0 (192,895) 0
Proceeds from sale of equipment 0 0 1,494
-------- --------- --------
Net cash used in investing (1,603) (193,291) (2,047)
activities
-------- --------- --------
FINANCING ACTIVITIES:
Investment by Springs (10,955) 0 0
Transfer of assets retained by Springs 4,461 0 0
Proceeds from issuance of stock 0 45,000 0
Payment of acquisition fees, net 0 (10,500) 0
Loans to management investors 0 (822) 0
Proceeds from long-term borrowings 0 160,000 0
Principal payments under long-term debt and
capital lease obligations (29) (18,764) (2,301)
Proceeds from repayment of loans to
management investors 0 0 23
-------- --------- --------
Net cash provided by (used in)
financing activities (6,523) 174,914 (2,278)
-------- --------- --------
NET CHANGE IN CASH (158) 3,131 10,288
CASH, BEGINNING OF PERIOD 584 426 4,064
-------- --------- --------
CASH, END OF PERIOD $ 426 $ 3,557 $ 14,352
======== ========= ========
CASH PAID FOR INTEREST $ 120 $ 516 $ 6,030
======== ========= ========
CASH PAID FOR TAXES $ 0 $ 100 $ 6,372
======== ========= ========
</TABLE>
Noncash Transaction: The company accrued dividends on preferred stock of $2,416
for the period of December 29, 1996 - June 28, 1997.
See notes to consolidated financial statements.
6
<PAGE> 7
CLARK-SCHWEBEL HOLDINGS, INC.
NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS in THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the assets,
liabilities and results of operations as of June 28, 1997 and for the period
from December 29, 1996 to June 28, 1997 of Clark-Schwebel Holdings, Inc., the
successor company ("Company"), following the change in ownership (see Note 2).
The Company's primary asset is all of the capital stock of Clark-Schwebel, Inc.,
its operating company. The statements also include the assets and liabilities of
the Company as of December 28, 1996, and the results of operations for the
period of December 31, 1995 to April 17, 1996 of Fort Mill A Inc., the
predecessor company ("Predecessor Company"), prior to the change in ownership,
and the results of operations of Clark-Schwebel Holdings, Inc., the successor
company, for the period from April 18, 1996 to June 29, 1996, following the
change in ownership. The statements of the Predecessor Company include certain
expenses that historically were accounted for only at the Springs Industries,
Inc. ("Springs") - parent company level.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X of the Securities and Exchange Commission (SEC).
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
All significant intercompany balances and transactions have been eliminated. The
balance sheet at December 28, 1996 has been derived from the audited financial
statements at that date. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Results of operations for interim periods are
not necessarily indicative of results for the entire year. For further
information, refer to the Company's consolidated financial statements and
footnotes for the year ended December 28, 1996 included in the Company's Form
10-K for the year then ended.
2. CHANGE IN OWNERSHIP TRANSACTION
On February 24, 1996, the Company, Springs and affiliates of Vestar Equity
Partners, L.P. (Vestar), entered into an Agreement and Plan of Merger
(Agreement) whereby an affiliate of Vestar would acquire the Company (the
"Acquisition"). Pursuant to the Agreement, on April 17, 1996 (Closing Date),
Vestar/CS Holding Company, LLC (Vestar/CS) purchased all of the issued and
outstanding capital stock of Fort Mill A Inc. from Springs for approximately
$192,895. The sources of cash for this purchase included $110,000 of senior
notes, an equity contribution of $45,000 and bank debt. On the day following the
Closing Date, Vestar/CS had an 82% common equity interest and management
investors had an 18% common equity interest in the Company.
Under the Agreement, Springs agreed to (i) assume responsibility for
repayment of the Industrial Revenue Bonds payable in 2010 and related accrued
interest, (ii) pay $959 in certain accrued employee benefits, (iii) provide
indemnification for certain environmental, tax and other matters, (iv) retain
the accounts receivable from one customer (which totaled $2,782 as of December
30, 1995) and related $1,400 reserve, and (v) retain the $99 accrued obligation
related to the Company's Long-term Disability Plan. At the Closing Date, all
payable and receivable accounts between the Company and Springs were canceled.
The acquisition was accounted for as a purchase business combination.
The adjustment to net assets represents the step-up to fair value of the net
assets acquired as follows:
7
<PAGE> 8
<TABLE>
<S> <C>
Purchase price $ 192,895
Nonfinancing portion of fees and expenses 2,780
---------
Total purchase price 195,675
Less fair value of net assets acquired (150,547)
---------
Excess of purchase price over fair value of net assets acquired $ 45,128
=========
</TABLE>
The fair values of Clark-Schwebel, Inc.'s assets and liabilities at the
date of acquisition are presented below:
<TABLE>
<S> <C>
Current assets $ 68,410
Property, plant and equipment 66,391
Equity investments 62,314
Current liabilities (20,282)
Other liabilities (26,286)
----------
Net assets acquired $ 150,547
==========
</TABLE>
Following the acquisition, the purchase cost (including the fees and
expenses related thereto) was allocated to the tangible and intangible assets
and liabilities of the Company based upon their respective fair values. This
resulted in a step-up in the basis of inventory of $5,274 and property, plant
and equipment of $15,000. The excess of the purchase price over the fair value
of net assets acquired of $45,128 was recorded as goodwill, and is being
amortized on a straight-line basis over a period of 40 years.
Additional agreements include Transition Agreements for specified
periods in which Springs would be compensated for certain services provided to
the Company, and a Management Agreement that specifies services to be provided
to the Company by an affiliate of Vestar.
In accordance with agreements related to the change of ownership
transaction, certain assets totaling $4,461 were transferred to Springs in the
first quarter of 1996. This balance has been separately disclosed on the face of
the accompanying 1996 statements of cash flows.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Following is a summary of the significant accounting policies used in
the preparation of the financial statements of the Company.
Basis of Consolidation - The consolidated financial statements include the
accounts of the Company and its operating company and wholly-owned subsidiary,
Clark-Schwebel, Inc. All material intercompany amounts and transactions have
been eliminated.
Fiscal Year - The Company's operations are based on a fifty-two or
fifty-three week fiscal year ending on the Saturday closest to December 31.
Accordingly, the interim periods will also be reported on the Saturday closest
to the calendar quarter end. The fiscal year ended January 3, 1998 is referrred
to herein as 1997. The fiscal year ended December 28, 1996 is referred to herein
as 1996. The 1996 fiscal year consisted of 52 weeks, while the 1997 fiscal year
will consist of 53 weeks.
8
<PAGE> 9
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates include the allowance for doubtful
accounts receivable and the liabilities for certain long-term benefit plans.
Actual results could differ from such estimates.
Revenue Recognition - Revenue from product sales is recognized at the
time ownership of the goods transfers to the customer and the earnings process
is complete. This generally occurs when the goods are shipped.
Cash and Cash Equivalents - Cash and cash equivalents include cash on
hand and in the bank as well as short term investments held for the purpose of
general liquidity. Such investments normally mature within three months from the
date of acquisition.
Accounts Receivable - The Company establishes an allowance for doubtful
accounts based upon factors including the credit risk of specific customers,
historical trends and other information. The Company performs ongoing credit
evaluations of its customers' financial condition and generally requires no
collateral.
Inventories - Inventories are valued at the lower of cost or market.
Cost is determined using the last-in, first-out (LIFO) method for substantially
all inventories.
Property, Plant, and Equipment - Property, plant, and equipment is recorded
at cost and depreciation is computed on a straight-line basis over the estimated
useful lives of the related assets. Estimated useful lives are as follows:
Land improvements 10 to 20 years
Buildings and improvements 20 to 40 years
Machinery and equipment 3 to 11 years
Equity Investments - The company owns equity interests in CS-Interglas AG
(headquartered in Germany), Asahi-Schwebel Co., Ltd. (headquartered in Japan)
and Clark Schwebel Tech-Fab Company (located in Anderson, SC), which are
accounted for using the equity method of accounting.
Foreign Currency - The foreign equity investments are translated at
year-end exchange rates. Equity income and losses are translated at the average
rate during the year. Cumulative translation adjustments are reflected as a
separate component of stockholders' equity.
Postretirement Benefits - Postretirement benefits are accounted for
pursuant to Statement of Financial Accounting Standards ("SFAS") No. 106,
Employers Accounting for Postretirement Benefits Other Than Pensions. SFAS No.
106 requires that the projected future cost of providing postretirement
benefits, such as health care and life insurance, be recognized as an expense as
employees render service rather than when claims are incurred.
Income Taxes - Income taxes are accounted for pursuant to SFAS 109,
Accounting for Income Taxes. Under SFAS No. 109, deferred income tax assets and
liabilities represent the future income tax effect of temporary differences
between the book and tax bases of assets and liabilities assuming they will be
realized and settled at the amounts reported in the financial statements. The
provision for income taxes included in the accompanying financial statements is
computed in a manner consistent with SFAS No. 109.
9
<PAGE> 10
4. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 28, June 28,
1996 1997
--------- ---------
<S> <C> <C>
Senior Notes, payable in 2006, interest at 10.5% $ 110,000 $ 110,000
Term Loan payable in quarterly installments; subsequently
prepaid in July 1997 (see Note 6) 13,440 11,190
Revolving Credit Agreement, due 2002, interest at variable
rates 0 0
Capitalized lease obligation payable in equal monthly
installments of $7, through June 1997 51 0
--------- ---------
Total 123,491 121,190
Less current maturities (51) (366)
--------- ---------
Long-term debt $ 123,440 $ 120,824
========= =========
</TABLE>
The senior notes accrue interest at a fixed rate of 10.5% per annum, with
interest payable semiannually in arrears on April 15 and October 15. The senior
notes are not redeemable at the option of the Company prior to April 15, 2001,
except in the event of a public equity offering of the Company, at which time a
portion of the senior notes would be redeemable. The debt under the credit
facility bears interest which varies with LIBOR plus a margin which varies with
the Company's leverage ratio. On June 28, 1997 the interest rate was 7.19% per
annum. Interest is typically payable monthly. The Company pays a quarterly
commitment fee equal to 0.375% on the unused portion of the revolving credit
facility which was $55,000 at June 28, 1997.
The revolving credit facility and the senior notes contain certain
restrictive covenants which provide limitations on the company with respect to
restricted payments, indebtedness, liens, investments, dividends, distributions,
transactions with affiliates, debt repayments, capital expenditures, mergers,
and consolidations. The bank facility and senior note covenants also require
maintenance of certain financial ratios. At June 28, 1997, the Company was in
compliance with such covenants.
The aggregate five-year maturities of long-term debt subsequent to June
28, 1997 follow: 1997 - $366; 1998 - $1,665; 1999 - $2,081; 2000 - $2,498; 2001
- - $2,914. These amounts relate to the Term Loan which was subsequently prepaid
in July 1997.
5. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
December 28, June 28,
1996 1997
-------- --------
<S> <C> <C>
Finished goods $ 9,264 $ 12,452
Raw material and supplies 9,254 10,093
In process 15,215 15,581
-------- --------
Total at standard cost (which approximates average cost) 33,733 38,126
Less LIFO reserve (1,100) (1,363)
-------- --------
Inventories, net $ 32,633 $ 36,763
======== ========
</TABLE>
10
<PAGE> 11
6. Subsequent Events
On July 14, 1997, the Company amended the terms of its outstanding
participating preferred stock (the "Preferred Stock") by amending and restating
its certificate of incorporation (the "Certificate") to allow the Company to
redeem such Preferred Stock using one of the following alternatives: (i) on or
after August 14, 1997 for 12.5% Senior Debentures due 2007 (the "Senior
Debentures") of the Company and up to $5 million in cash (on the terms and
subject to the conditions set forth in the Certificate); (ii) on or after August
14, 1997 but prior to July 15, 2002 for cash in an amount equal to 112.5% of the
sum of the liquidation value of the Preferred Stock and all accumulated
dividends thereon; (iii) after July 15, 2002 for cash in an amount equal to a
percentage of the sum of the liquidation value of the Preferred Stock and all
accumulated dividends thereon (106.25% for redemptions in the year beginning on
July 15, 2002; 104.167% for redemptions in the year beginning on July 15, 2003;
102.083% for redemptions in the year beginning on July 15, 2004; and 100% for
redemptions in the year beginning on July 15, 2005 and thereafter); and (iv)
upon the consummation of a change of control transaction or a public or private
equity offering for cash in an amount equal to 106% of the liquidation value of
the Preferred Stock and all accumulated dividends thereon. All accrued but
unpaid dividends on the Preferred Stock to the date of redemption and certain
consideration (either cash or shares of the Company's Common Stock) for the
participation feature of the Preferred Stock will be payable on the date of any
such redemption. The Preferred Stock must be redeemed by the Company on July 15,
2007. Accordingly, Preferred Stock outstanding subsequent to July 14, 1997 will
not be included in the Equity classification on the Company's consolidated
balance sheet.
If the Company does not exercise one of its redemption options, or until
it does, the Company's Certificate provides that dividends will be paid
quarterly in cash at the rate of 12.5% to the extent permitted by the Credit
Agreement and the indenture governing the Senior Notes. If the Company chooses
not to redeem all of its outstanding Preferred Stock by August 28, 1997, the
holders thereof are entitled to certain shelf registration rights.
The Senior Debentures, if issued, would be subject to an indenture
containing terms similar to those contained in the indenture governing the
Senior Notes and the holders thereof would be entitled to certain registration
rights. Interest on the Senior Debentures would be payable in cash semi-annually
to the extent permitted by the Credit Agreement and the indenture governing the
Senior Notes. If the Company is unable to pay interest in cash due to the
prohibitions contained in the Credit Agreement or such indenture, interest on
the Senior Debentures would be payable in additional Senior Debentures.
Additionally, on July 14, 1997, the Company prepaid all of its
outstanding indebtedness under the Term Loan and amended the Credit Agreement to
provide, among other things, that the Company may, subject to certain
conditions, pay cash dividends on the Preferred Stock, pay up to $5 million in
cash and issue Senior Debentures in a redemption of the Preferred Stock, and
make semi-annual interest payments in cash on the Senior Debentures. The
Revolving Credit Facility under the Credit Agreement was also amended to
increase the aggregate amount of commitments thereunder to $65 million.
Vestar/CS-Holding sold the Preferred Stock on July 14, 1997 and
simultaneously purchased 10% of the outstanding Common Stock of the Company from
the management investors on a pro rata basis. Upon the consummation of that
transaction, all of the Company's outstanding loans to management were repaid in
full.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the
consolidated financial statements and the notes thereto. The accompanying
analysis compares the results of operations of Clark-Schwebel Holdings, Inc.,
the successor company ("Company"), for the three months ended June 28, 1997 to
the three months ended June 29, 1996. The results of operations for the three
months ended June 29, 1996 represents the combined results of Fort Mill A Inc.,
the predecessor company ("Predecessor Company"), for the period of March 31,
1996 through April 17, 1996, and the successor Company for the period of April
18, 1996 through June 29, 1996, in order to establish comparative periods. The
accompanying analysis also compares the results of operations of the Company for
the six months ended June 28, 1997 to the six months ended June 29, 1996. The
results of operations for the six months ended June 29, 1996 represents the
combined results of the Predecessor Company for the period of December 31, 1995
through April 17, 1996, and the successor Company for the period of April 18,
1996 through June 29, 1996, in order to establish comparative periods. No pro
forma adjustments were made to the financial statements for purposes of this
analysis due to the insignificance of the adjustments on operating income.
Interest expense for the periods is generally not comparable, and the impact of
interest expense on the successor Company is discussed below.
12
<PAGE> 13
General
Second quarter 1997 results reflected improvement in both sales and
operating income when compared to the same period in 1996. Sales of both fiber
glass and high performance fabrics were up from the same period a year ago.
Although quarterly sales were strong, demand for electronic fiber glass fabric
moderated in the latter part of the quarter from levels experienced earlier in
the year. The Company believes that this slowdown is temporary in nature, but
management is unable to predict the duration of the slowdown. Operating income
increased as a result of the overall higher volume, favorable sales mix and
lower variable costs achieved through improved operating efficiencies.
Results of Operations
Second Quarter 1997 Compared to Second Quarter 1996
The following table sets forth for the Company selected income
statement data for the periods indicated.
13
<PAGE> 14
<TABLE>
<CAPTION> Three month
Period from Period from Combined three period from
March 31- April 18- month period from March 30-
April 17, 1996 June 29, 1996 March 31- June 28, 1997
(Predecessor Basis) (Successor Basis) June 29, 1996 (Successor Basis)
------------------- ----------------- ------------------ -----------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net sales $ 8,741 $ 47,330 $ 56,071 $ 61,061
Cost of goods sold 7,107 37,744 44,851 47,217
--------- --------- --------- ---------
Gross profit 1,634 9,586 11,220 13,844
Selling, general and administrative expenses 937 3,023 3,960 3,825
--------- --------- --------- ---------
Operating income 697 6,563 7,260 10,019
Interest expense (20) (3,134) (3,154) (3,147)
Other income (expense), net (5) (1) (6) (3)
Provision for income tax (269) (1,471) (1,740) (2,824)
Income from equity investees, net 267 985 1,252 944
--------- --------- --------- ---------
Net income $ 670 $ 2,942 $ 3,612 $ 4,989
========= ========= ========= =========
PERCENTAGE OF NET SALES
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 81.3 79.7 80.0 77.3
--------- --------- --------- ---------
Gross profit 18.7 20.3 20.0 22.7
Selling, general and administrative expenses 10.7 6.4 7.1 6.3
--------- --------- --------- ---------
Operating income 8.0 13.9 12.9 16.4
Interest expense (0.2) (6.6) (5.6) (5.1)
Provision for income tax (3.1) (3.1) (3.1) (4.6)
Income from equity investees, net 3.0 2.0 2.2 1.5
--------- --------- --------- ---------
Net income 7.7 % 6.2 % 6.4 % 8.2 %
========= ========= ========= =========
</TABLE>
Net Sales
Net sales for the second quarter of 1997 increased $5.0 million, or
8.9%, to $61.1 million from $56.1 million in 1996. Overall fiber glass sales
were up by $2.9 million, or 6.1%, while high performance sales were up by $2.1
million, or 24.7%. Sales of electronic fiber glass and composite material fiber
glass increased by 6.3% and 5.5%, respectively, when compared to 1996. High
performance sales in the second quarter of 1997 improved significantly from
second quarter 1996 as a result of higher sales to the military ballistics
market.
Gross Profit
Gross profit for the second quarter of 1997 increased $2.6 million, or
23.4%, to $13.8 million from $11.2 million in 1996. Gross profit as a percentage
of net sales improved to 22.7% in 1997 from 20.0% in 1996. The improvement in
gross profit
14
<PAGE> 15
resulted primarily from higher sales in 1997 compared to 1996, a shift in sales
mix weighted more towards higher margin fiber glass fabrics, and the favorable
impact of improved manufacturing efficiencies.
SG&A
Selling, general, and administrative expenses, at $3.8 million, were
slightly lower than the $4.0 million reported in the second quarter of 1996. The
decline resulted primarily from the second quarter 1996 payout to certain
executives of compensation under Springs Industries' executive compensation
plans which vested and were paid on the closing of the Acquisition. As a
percentage of net sales, SG&A expenses decreased to 6.3% in 1997 from 7.0% in
1996.
Operating Income
Operating income increased $2.7 million to $10.0 million in the second
quarter of 1997 from $7.3 million in the same period a year ago. As a percentage
of net sales, operating income was 16.4%, up from 12.9% in 1996. The increases
in sales and gross profit led to the increase in operating income.
Interest Expense
Interest expense incurred by the Company was flat at $3.1 million, for
both the second quarter of 1997 and 1996.
15
<PAGE> 16
Income From Equity Investees, Net
Income from equity investees, net, decreased by $0.3 million to $0.9
million from $1.2 million in the second quarter of 1996. A decrease in the
operating results reported by CS-Interglas primarily caused the decrease in
equity income. CS-Interglas reported an improvement in demand from the weak
levels experienced in the first quarter of 1997, but the market did not recover
to the demand levels experienced in the second quarter a year ago. Results
reported by Asahi-Schwebel continue strong and were slightly higher than a year
ago while results for CS-Tech Fab were slightly lower than last year's results.
The equity investment balance as of June 28, 1997 decreased by $1.3 million from
the December 28, 1996 balance sheet. The decline resulted primarily from a
strengthening U.S. dollar relative to the German mark (the functional currency
for CS-Interglas) and the Japanese yen (the functional currency for
Asahi-Schwebel), net of additional equity income recorded in 1997. The change in
the equity investment balance had no impact on results of operations or on cash
flows in the second quarter or the first half of 1997.
Net Income
The $2.8 million increase in operating income reported in the second
quarter of 1997 led to a $1.1 million increase in the provision for taxes. After
considering the $0.3 million decrease in income from equity investees, the
overall net effect was a $1.4 million increase in second quarter net income when
compared to the same period last year.
16
<PAGE> 17
First Six Months of 1997 Compared to the First Six Months of 1996
Results of Operations
The following table sets forth for the Company selected income
statement data for the periods indicated.
<TABLE>
<CAPTION> Six month
Period from Period from Combined six period from
December 31, 1995 April 18- month period from December 29, 1996
-April 17, 1996 June 29, 1996 December 31, 1995 -June 28, 1997
(Predecessor Basis) (Successor Basis) -June 28, 1996 (Successor Basis)
------------------- ----------------- ------------------ -----------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net sales $ 68,911 $ 47,330 $ 116,241 $ 123,299
Cost of goods sold 54,958 37,744 92,702 95,851
--------- --------- --------- ---------
Gross profit 13,953 9,586 23,539 27,448
Selling, general and administrative expenses 4,812 3,023 7,835 7,727
--------- --------- --------- ---------
Operating income 9,141 6,563 15,704 19,721
Interest expense (148) (3,134) (3,282) (6,427)
Other income (expense), net (5) (1) (6) (3)
Provision for income tax (3,595) (1,471) (5,066) (5,475)
Income from equity investees, net 1,174 985 2,159 1,582
--------- --------- --------- ---------
Net income $ 6,567 $ 2,942 $ 9,509 $ 9,398
========= ========= ========= =========
PERCENTAGE OF NET SALES
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of goods sold 79.7 79.7 79.7 77.7
--------- --------- --------- ---------
Gross profit 20.3 20.3 20.3 22.3
Selling, general and administrative expenses 7.0 6.4 6.8 6.3
--------- --------- --------- ---------
Operating income 13.3 13.9 13.5 16.0
Interest expense (0.2) (6.6) (2.8) (5.2)
Provision for income tax (5.2) (3.1) (4.3) (4.5)
Income (loss) from equity investees, net 1.7 2.0 1.8 1.3
--------- --------- --------- ---------
Net income 9.6 % 6.2 % 8.2 % 7.6 %
========= ========= ========= =========
</TABLE>
Net Sales
Net sales for the six months ended June 28, 1997 increased $7.1
million, or 6.1%, to $123.3 million from $116.2 million in 1996. Overall fiber
glass sales were up by $6.1 million, or 6.3%, while high performance sales were
up by $1.0 million, or 5.0%. Sales of electronic fiber glass increased 4.9%,
while sales of composite material fiber glass increased by 10.8% when compared
to the first six months in 1996. Higher demand from the aerospace industry
accounted for most of the increased sales of composite material fiber glass.
17
<PAGE> 18
Gross Profit
Gross profit for the first half of 1997 increased $3.9 million, or
16.6%, to $27.4 million from $23.5 million in 1996. Gross profit as a percentage
of net sales improved to 22.3% in 1997 from 20.3% in 1996. The improvement in
gross profit resulted primarily from higher sales in 1997 compared to 1996, a
shift in sales mix weighted more towards higher margin fiber glass fabrics, and
the favorable impact of improved manufacturing efficiencies.
SG&A
Selling, general, and administrative expenses were relatively flat at
$7.7 million and $7.8 million, respectively, for the first half of 1997 and
1996. As a percentage of net sales, SG&A expenses decreased to 6.3% in 1997 from
6.7% in 1996.
Operating Income
As a result of the above factors, operating income for the first half
of 1997 increased by $4.0 million to $19.7 million from $15.7 million in 1996.
As a percentage of net sales, operating income increased to 16.0% in the first
half of 1997 from 13.5% in 1996.
Interest Expense
Interest expense is not fully comparable to the prior period because of
the financing related to the Acquisition of the Company from Springs. Interest
expense
18
<PAGE> 19
incurred by the Company in the first half of 1997 was $6.4 million, attributable
primarily to interest expense related to the Senior Notes.
Income From Equity Investees, Net
Income from equity investees, net, decreased by $0.6 million to $1.6
million in the first half of 1997 from $2.2 million in 1996. A decrease in the
operating results reported by CS-Interglas primarily caused the decrease in
equity income. Weaker demand relative to a year ago in Europe for electronic
fiber glass fabric led to the decrease in operating results reported by
CS-Interglas. Results reported by Asahi-Schwebel were slightly higher and
results for CS-Tech Fab were slightly lower than last year's comparable results.
Net Income
The significant improvement in operating income ($4.0 million) was more
than offset by the increase in interest expense ($3.1 million), higher income
tax expense ($0.4 million), and lower income from equity investees, net ($0.6
million), as net income for the first half of 1997 decreased by $0.1 million to
$9.4 million from $9.5 million in the first half of 1996.
Liquidity and Capital Resources
On April 17, 1996, the Company was purchased from Springs for
approximately $192.9 million, funded by a combination of equity and debt. Equity
of $45.0 million was provided by Vestar/CS-Holding and management investors in
exchange for all of the
19
<PAGE> 20
capital stock of the Company. Debt of $160.0 million was used to finance the
acquisition. This debt consisted of the following: $110.0 million of Senior
Notes, $15.0 million of loans under a Term Loan under the Credit Agreement, and
$35.0 million of loans under a Revolving Credit Facility under the Credit
Agreement. The required amortization payments remaining under the Term Loan are
$0.4 million in 1997, $1.6 million in 1998, $2.1 million in 1999, $2.5 million
in 2000, $2.9 in million in 2001 and $1.6 million in 2002. As required by the
Credit Agreement, the Company prepaid $2.3 million of the Term Loan in the first
quarter of 1997. The Revolving Credit Facility matures in April 2002.
Substantially all of the assets of Clark-Schwebel Inc., (the "Operating
Company"), are subject to liens in favor of the Credit Agreement lenders. Other
than upon a change of control or as a result of certain asset sales, the
Operating Company will not be required to make any principal payments in respect
of the Senior Notes until maturity in April 2006. The Operating Company is
required to make semi-annual interest payments on April 15 and October 15 with
respect to the Senior Notes. Depending on market conditions and the Company's
financial position, the Operating Company may from time to time make open market
purchases of Senior Notes. Any such purchases would be subject to the Operating
Company satisfying restrictive covenants and financial ratio tests under the
Credit Agreement.
Cash provided by operating activities in the first six months of 1997 was $14.6
million, compared with $29.5 million provided in the same period a year ago. The
Company spent $3.5 million on capital additions during that period. The Company
anticipates capital expenditures will approximate $10.0 million for fiscal 1997.
As of June 28, 1997
20
<PAGE> 21
the Company had cash and cash equivalents of approximately $14.3 million. In
addition, the Company had $55.0 million of undrawn availability under the
Revolving Credit Facility. The Company ended the quarter with debt, net of cash,
of $106.8 million, consisting of $110.0 million in Senior Notes, $11.2 million
under the Term Loan, and $14.3 million in cash and cash equivalents.
To meet its liquidity needs, the Company has relied and expects to continue to
rely on internally generated funds and, to the extent necessary, on undrawn
commitments available under the Revolving Credit Facility. The Company believes
that cash generated from operations and borrowing resources will be sufficient
to fund the Company's cash needs for the foreseeable future.
Recent Developments
On July 14, 1997, the Company amended the terms of its outstanding
participating preferred stock (the "Preferred Stock") by amending and restating
its certificate of incorporation (the "Certificate") to allow the Company to
redeem such Preferred Stock using one of the following alternatives: (i) on or
after August 14, 1997 for 12.5% Senior Debentures due 2007 (the "Senior
Debentures") of the Company and up to $5 million in cash (on the terms and
subject to the conditions set forth in the Certificate); (ii) on or after August
14, 1997 but prior to July 15, 2002 for cash in an amount equal to 112.5% of the
sum of the liquidation value of the Preferred Stock and all accumulated
dividends thereon; (iii) after July 15, 2002 for cash in an amount equal to a
21
<PAGE> 22
percentage of the sum of the liquidation value of the Preferred Stock and all
accumulated dividends thereon (106.25% for redemptions in the year beginning on
July 15, 2002; 104.167% for redemptions in the year beginning on July 15, 2003;
102.083% for redemptions in the year beginning on July 15, 2004; and 100% for
redemptions in the year beginning on July 15, 2005 and thereafter); and (iv)
upon the consummation of a change of control transaction or a public or private
equity offering for cash in an amount equal to 106% of the liquidation value of
the Preferred Stock and all accumulated dividends thereon. All accrued but
unpaid dividends on the Preferred Stock to the date of redemption and certain
consideration (either cash or shares of the Company's Common Stock) for the
participation feature of the Preferred Stock will be payable on the date of any
such redemption. The Preferred Stock must be redeemed by the Company on July 15,
2007.
If the Company does not exercise one of its redemption options, or until it
does, the Company's Certificate provides that dividends will be paid quarterly
in cash at the rate of 12.5% to the extent permitted by the Credit Agreement and
the indenture governing the Senior Notes. If the Company chooses not to redeem
all of its outstanding Preferred Stock by August 28, 1997, the holders thereof
are entitled to certain shelf registration rights.
The Senior Debentures, if issued, would be subject to an indenture containing
terms similar to those contained in the indenture governing the Senior Notes and
the holders thereof would be entitled to certain registration rights. Interest
on the Senior Debentures
22
<PAGE> 23
would be payable in cash semi-annually to the extent permitted by the Credit
Agreement and the indenture governing the Senior Notes. If the Company is unable
to pay interest in cash due to the prohibitions contained in the Credit
Agreement or such indenture, interest on the Senior Debentures would be payable
in additional Senior Debentures.
Additionally, on July 14, 1997, the Company prepaid all of its outstanding
indebtedness under the Term Loan and amended the Credit Agreement to provide,
among other things, that the Company may, subject to certain conditions, pay
cash dividends on the Preferred Stock, pay up to $5 million in cash and issue
Senior Debentures in a redemption of the Preferred Stock, and make semi-annual
interest payments in cash on the Senior Debentures. The Revolving Credit
Facility under the Credit Agreement was also amended to increase the aggregate
amount of commitments thereunder to $65 million.
Vestar/CS-Holding sold the Preferred Stock on July 14, 1997 and simultaneously
purchased 10% of the outstanding Common Stock of the Company from the management
investors on a pro rata basis. Upon the consummation of that transaction, all of
the Company's outstanding loans to management were repaid in full.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
23
<PAGE> 24
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the annual meeting of shareholders of Clark-Schwebel Holdings, Inc.
held on July 15, 1997, each of the following was elected as a director of
Clark-Schwebel Holdings, Inc. by a vote of 9,000 shares voting in favor and no
shares abstaining or withholding their votes: Daniel S. O'Connell, Sander M.
Levy, Norman W. Alpert, Arthur J. Nagle, Gerard Seelig, Frank Greenberg, John
Howard, Jack P. Schwebel, William D. Bennison , Richard C. Wolfe.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit 3.1 - Amended and Restated Certificate of Incorporation
Exhibit 3.2 - Amended Bylaws
Exhibit 10.1 - Registration Rights Agreement
Exhibit 10.2 - Second Amendment to Credit Agreement
Exhibit 27 - Financial Data Schedule
(electronic filing only)
(b) Reports on Form 8-K.
No report was filed during the quarter ended June 28, 1997 on
Form 8-K.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLARK-SCHWEBEL HOLDINGS, INC.
-------------------------------------------
(Registrant)
Date August 11, 1997 /s/ William D. Bennison
------------------------ -------------------------------------------
Name: William D. Bennison
Title: President
Date August 11, 1997 /s/ Donald R. Burnette
------------------------ -------------------------------------------
Name: Donald R. Burnette
Title: Vice President and Chief
Financial Officer
25
<PAGE> 26
EXHIBIT INDEX
Exhibit 3.1 Amended and Restated Certificate of Incorporation
Exhibit 3.2 Amended Bylaws
Exhibit 10.1 Registration Rights Agreement
Exhibit 10.2 Second Amendment to Credit Agreement
Exhibit 27 Financial Data Schedule
(electronic filing only)
<PAGE> 1
EXHIBIT 3.1
CLARK-SCHWEBEL HOLDINGS, INC.
July 14, 1997
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
FIRST: The name of the corporation (hereinafter referred to as the
"Corporation") is Clark-Schwebel Holdings, Inc.
SECOND: The address of its registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name
of its registered agent at such address is The Corporation Trust Company.
THIRD: The purposes of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH:
PART A. AUTHORIZED SHARES
The total number of shares of capital stock which the
Corporation has authority to issue is 110,000 shares, consisting of:
(1) 10,000 shares of 12.5% Senior Exchangeable Participating
Preferred Stock (the "Senior Preferred Stock"); and
(2) 100,000 shares of Common Stock, par value $.01 per share
(the "Common Stock").
Certain capitalized terms used in this Amended and Restated Certificate
of Incorporation are defined in Section 10 of Part B of this Article FOURTH.
PART B. PROVISIONS APPLICABLE TO SENIOR PREFERRED STOCK
SECTION 1. RANK. The Senior Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank senior to all classes of Common Stock of
the Corporation and each other class of capital stock or series of preferred
stock of the Corporation hereafter created by the Board of Directors the terms
of which do not expressly provide that it ranks on a parity with the Senior
<PAGE> 2
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Corporation (collectively
referred to with the Common Stock of the Corporation as "Junior Securities").
The Senior Preferred Stock shall, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Corporation, rank on a parity with any class of capital stock or series of
preferred stock hereafter created by the Board of Directors, the terms of which
expressly provide that such class or series shall rank on a parity with the
Senior Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Corporation (collectively
referred to as "Parity Securities"); provided that any such Parity Securities
that were not approved by the Holders in accordance with Section 5(b)(i) of this
Part B shall be deemed to be Junior Securities and not Parity Securities.
SECTION 2. DIVIDENDS.
(a) Beginning on the day after the Closing Date, the Holders
of the outstanding shares of Senior Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, dividends on each share of Senior Preferred Stock,
at a rate per annum equal to 12.5% of the Premium Base Value of such share. All
such dividends shall accrue on a daily basis, whether or not declared, on
outstanding shares of Senior Preferred Stock from the day after the Closing
Date. Dividends that have accrued during a Quarterly Dividend Period shall be
payable only in cash quarterly in arrears on each Dividend Payment Date;
provided however, that if dividends are not paid in full in cash on a Dividend
Payment Date because C-S, Inc. is prohibited from making dividends or
distributions to the Corporation under Section 4.9 of the Existing Indenture or
by the Credit Agreement, then such dividends shall not be payable in cash but
shall accumulate and shall remain Accumulated Dividends until paid.
Notwithstanding the foregoing, if dividends are not paid in full in cash on a
Dividend Payment Date (other than for the reasons set forth in the proviso of
the immediately preceding sentence), in addition to the rights available to the
Holders under Section 5(c) of this Part B, such dividends shall accumulate and
shall remain Accumulated Dividends until paid. Dividends shall be payable to
Holders of record as they appear on the stock register of the Corporation on
such record dates, not less than 10 nor more than 60 days preceding the related
Dividend Payment Date, as shall be fixed by the Board of Directors. Dividends
shall cease to accumulate and accrue in respect of a share of the Senior
Preferred Stock on the first to occur of (i) the Debenture Exchange Date and
(ii) the Redemption Date of such share unless the Corporation shall have failed
to pay the applicable Redemption Price on the Debenture Exchange Date or
Redemption Date, as the case may be, of such share.
(b) All dividends paid with respect to shares of the Senior
Preferred Stock pursuant to paragraph (a) of this Section 2 shall be paid
ratably among the Holders entitled thereto based on the number of shares of
Senior Preferred Stock held by each such Holder.
(c) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare any dividends on shares of the Senior Preferred Stock at any time.
(d) Accumulated Dividends and dividends in connection with any
optional redemption pursuant to Section 4(a) of this Part B may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
Holders of record on such date, not more
<PAGE> 3
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(e) Except for dividends of or payments using Joint Venture
Funds, which are permitted at any time, and except as and to the extent provided
in Section 9(c)(iv) of this Part B:
(i) No full dividends shall be declared by the Board
of Directors or paid or funds set apart for payment of dividends by the
Corporation on any Parity Securities for any period unless all Accumulated
Dividends on all outstanding shares of Senior Preferred Stock shall have been or
contemporaneously are declared and paid in full in cash for all Quarterly
Dividend Periods terminating on or prior to the date of payment of such full
dividends on such Parity Securities. If any dividends are not paid in full, as
aforesaid, upon the shares of the Senior Preferred Stock and any other Parity
Securities, all dividends declared upon shares of the Senior Preferred Stock and
any other Parity Securities shall be declared pro rata so that the amount of
dividends declared per share on the Senior Preferred Stock and such Parity
Securities shall in all cases bear to each other the same ratio that accrued and
accumulated dividends per share on the Senior Preferred Stock and such Parity
Securities bear to each other.
(ii) So long as any shares of Senior Preferred Stock
are outstanding, the Corporation shall not declare, pay or set apart for payment
any dividend on any of the Junior Securities or make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Junior Securities, or make any distribution in respect thereof, either
directly or indirectly, and whether in cash, obligations or shares of the
capital stock of the Corporation or other property (other than dividends on
Junior Securities paid in additional shares of Junior Securities), and shall not
permit any corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Junior Securities or any such
warrants, rights, calls or options unless all Accumulated Dividends and Accrued
Dividends determined in accordance herewith have been paid in full on the
outstanding shares of Senior Preferred Stock.
(iii) So long as any shares of Senior Preferred Stock
are outstanding, the Corporation shall not make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Parity Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Parity Securities, and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase or redeem any
of the Parity Securities or any such warrants, rights calls or options unless
the dividends determined in accordance herewith on the Senior Preferred Stock
have been paid in full.
(f) If any Dividend Payment Date occurs on a day that is not a
Business Day, any Accrued Dividends otherwise payable on such Dividend Payment
Date shall be paid on the next succeeding Business Day.
(g) The Holders of Senior Preferred Stock shall be entitled to
participate, on a share for share basis with the Common Stock, in all dividends
declared or paid on the Common Stock.
<PAGE> 4
SECTION 3. LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Corporation, each Holder shall be entitled
to be paid for each share of Senior Preferred Stock held by such Holder, out of
the assets of the Corporation available for distribution to its stockholders, an
amount in cash equal to the sum of (A) the Premium Base Value of such share plus
(B) Accrued Dividends on such share plus (c) Liquidated Damages, if any, on such
share, before any payment shall be made or any assets distributed to the holders
of any of the Junior Securities, including, without limitation, Common Stock of
the Corporation, and thereafter the Holders of Senior Preferred Stock shall be
entitled to participate, on a share-for-share basis (after giving effect to any
adjustments required under Section 4 or 5 of Part C of this Article FOURTH),
with the Common Stock in all amounts available to be distributed to the holders
of Common Stock in any liquidation, dissolution or winding up of the affairs of
the Corporation. Except as provided in the preceding sentence, Holders of shares
of Senior Preferred Stock shall not be entitled to any distribution in the event
of liquidation, dissolution or winding-up of the affairs of the Corporation. If
the assets of the Corporation are not sufficient to pay in full the amount to
which the Holders of outstanding shares of the Senior Preferred Stock and all
Parity Securities are entitled, then the holders of all such shares shall share
equally and ratably in such distribution of assets of the Corporation in
accordance with the amounts which would be payable on such distribution if the
amount to which the Holders of outstanding shares of Senior Preferred Stock and
the holders of outstanding shares of all Parity Securities are entitled were
paid in full.
(b) After payment of the full amount to which they are
entitled under Section 3(a) of this Part B, the Holders of shares of the Senior
Preferred Stock shall not be entitled to any further participation in any
distribution of assets of the Corporation.
(c) For the purposes of this Section 3, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more corporations shall be deemed to be a liquidation, dissolution or
winding-up of the affairs of the Corporation (unless such sale, conveyance,
exchange or transfer is in connection with a dissolution or winding-up of the
business of the Corporation).
SECTION 4. REDEMPTION.
(a) REDEMPTIONS AT THE OPTION OF THE CORPORATION.
(i) REDEMPTIONS FOR EXCHANGE DEBENTURES. At any time
on or after August 14, 1997, the Corporation may, at its option, redeem all (but
not less than all) of the outstanding shares of the Senior Preferred Stock, in
the manner provided in paragraph (c)(ii) of this Section 4, for the
Corporation's Exchange Debentures and, in any redemption pursuant to this
Section 4(a)(i), each Holder shall be entitled to receive, in respect of each
share of Senior Preferred Stock held by such Holder, (x) an Exchange Debenture
having a face amount equal to the Exchange Debenture Amount as of the Debenture
Exchange Date and (y) the Cash Election Amount; provided that on the Debenture
Exchange Date the Exchange Debenture Indenture shall
<PAGE> 5
have been executed and delivered by the Corporation and the trustee named
therein and an opinion of counsel in the form of Exhibit C-2 to the Purchase
Agreement shall have been delivered to the Holders.
(ii) REDEMPTIONS FOR CASH ON OR AFTER AUGUST 14,
1997, BUT PRIOR TO JULY 15, 2002. At any time on or after August 14, 1997, but
prior to July 15, 2002, the Corporation, at its option, may redeem all (but not
less than all) of the outstanding shares of Senior Preferred Stock in the manner
provided in paragraph (c)(i) of this Section 4 and, in any redemption pursuant
to this Section 4(a)(ii), each Holder shall be entitled to receive, in respect
of each share of Senior Preferred Stock held by such Holder, (A) an amount in
cash equal to the Early Redemption Price and (B) the Participation Price, in
each case as of the Redemption Date.
(iii) REDEMPTION AFTER JULY 15, 2002. The
Corporation, at its option, may redeem at any time and from time to time on or
after July 15, 2002, in whole or in part, in the manner provided in paragraph
(c)(i) of this Section 4, any or all of the shares of the Senior Preferred Stock
and, in any redemption pursuant to this Section 4(a)(iii), each Holder shall be
entitled to receive, in respect of each share of Senior Preferred Stock held by
such Holder, (A) an amount in cash equal to the sum of (1) the product of (x)
the applicable percentage set forth below and (y) the Premium Base Value of such
share, plus (2) Accrued Dividends on such share, plus (3) Liquidated Damages (if
any) on such share, in each case as of the Redemption Date, if redeemed during
the 12-month period beginning on July 15 of each of the calendar years indicated
below:
Year Percentage
---- ----------
2002 .......................... 106.250%
2003 ......................... 104.167%
2004 ......................... 102.083%
2005 and thereafter .......... 100.000%
and (B) the Participation Price of such share as of the Redemption Date (the
"Optional Redemption Price").
(iv) REDEMPTIONS ON AN EQUITY OFFERING OR A CHANGE OF
CONTROL. Upon the consummation of a Change of Control or upon the consummation
of an Equity Offering, in each case on or after January 15, 1998, the
Corporation may redeem, in the manner provided in paragraph (c)(i) of this
Section 4, in whole or in part, all or any of the outstanding shares of the
Senior Preferred Stock, and, in any redemption pursuant to this Section
4(a)(iv), each Holder shall be entitled to receive, in respect of each share of
Senior Preferred Stock held by such Holder, (A) an amount in cash equal to the
Contingent Redemption Price and (B) the Participation Price, in each case as of
the Redemption Date; provided that, in the event of a redemption upon the
consummation of an Equity Offering, such redemption shall be made with the
proceeds of such Equity Offering, and shall occur within 60 days after
consummation of such Equity Offering.
(b) MANDATORY REDEMPTION. On July 15, 2007, the Corporation
shall redeem (subject to the legal availability of funds therefor) from any
source of funds legally available therefor, in the manner provided in paragraph
(c)(i) of this Section 4, all of the shares of the
<PAGE> 6
Senior Preferred Stock then outstanding and, in any redemption pursuant to this
Section 4(b), each Holder shall be entitled to receive, in respect of each share
of Senior Preferred Stock held by such Holder, (A) an amount in cash equal to
the Mandatory Redemption Price and (B) the Participation Price, in each case as
of July 15, 2007.
(c) PROCEDURES FOR REDEMPTION.
(i) FOR CASH AND THE PARTICIPATION PRICE.
(A) With respect to redemptions under
Section 4(a)(ii), (iii) or (iv) or Section 4(b) of this Part B, at least three
days, but not more than 45 days, prior to the date fixed for any redemption of
the Senior Preferred Stock, written notice (the "Redemption Notice") shall be
given by first-class mail, postage prepaid, or reputable overnight carrier
service, or via facsimile, to each Holder of record on the record date fixed for
such redemption of the Senior Preferred Stock at such Holder's address as the
same appears on the stock register of the Corporation, provided that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Senior Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Corporation has failed
to give said notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (a)(ii),
(a)(iii), (a)(iv) or (b) of this Section 4;
(2) the applicable Redemption Price for each share of Senior
Preferred Stock to be redeemed;
(3) whether all or less than all the outstanding shares of the
Senior Preferred Stock are to be redeemed and the total number of
shares of the Senior Preferred Stock being redeemed;
(4) the number of shares of Senior Preferred Stock held, as of
the appropriate record date, by the Holder that the Corporation intends
to redeem;
(5) the date fixed for redemption (the "Redemption Date");
(6) that the Holder is to surrender to the Corporation, at the
place or places where certificates for shares of Senior Preferred Stock
are to be surrendered for redemption, in the manner and at the price
designated, the certificate or certificates representing the shares of
Senior Preferred Stock to be redeemed; and
(7) that dividends and Liquidated Damages (if any) on the
shares of the Senior Preferred Stock to be redeemed shall cease to
accrue and accumulate on such Redemption Date unless the Corporation
defaults in the payment of the applicable Redemption Price.
<PAGE> 7
(B) Each Holder of Senior Preferred Stock
shall surrender the certificate or certificates representing such shares of
Senior Preferred Stock to the Corporation, duly endorsed, in the manner and at
the place designated in the Redemption Notice, and on the Redemption Date (1)
the applicable Redemption Price for such shares shall be payable to the Person
whose name appears on such certificate or certificates as the owner thereof in
the manner specified herein (and, in the event that the Corporation exercises
its option under this Amended and Restated Certificate of Incorporation to
deliver shares of Common Stock as part of the Redemption Price, a certificate
evidencing the applicable number of shares of Common Stock shall be issued to
such Holder), and (2) each surrendered certificate representing such shares of
Senior Preferred Stock shall be canceled and retired. In the event that less
than all of the shares represented by any surrendered certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares of Senior
Preferred Stock.
(C) Unless the Corporation defaults in the
payment in full of the Redemption Price, dividends and Liquidated Damages (if
any) on the Senior Preferred Stock called for redemption shall cease to accrue
and accumulate on the Redemption Date, and the Holders of such redemption shares
shall cease to have any further rights with respect thereto on the Redemption
Date, other than the right to receive the applicable Redemption Price, without
interest, and to receive a certificate evidencing the shares of Common Stock
issued in redemption of such shares, if any.
(D) In the event of a redemption of only a
portion of the then outstanding shares of the Senior Preferred Stock, the
Corporation shall effect such redemption as it determines, pro rata according to
the number of shares of Senior Preferred Stock held by each Holder or by lot, as
may be determined by the Corporation in its sole discretion, except that the
Corporation may redeem such shares held by any Holders of fewer than 100 shares
(or shares held by Holders who would hold less than 100 shares as a result of
such redemption), without regard to any pro rata redemption requirement.
(ii) FOR EXCHANGE DEBENTURES AND THE PARTICIPATION
PRICE.
(A) With respect to redemptions under
Section 4(a)(i) of this Part B, at least three days, and not more than 45 days,
prior to the date fixed for any redemption of the Senior Preferred Stock,
written notice (the "Debentures Redemption Notice") shall be given by
first-class mail, postage prepaid, or reputable overnight carrier service, or
via facsimile, to each Holder of record on the record date fixed for such
redemption of the Senior Preferred Stock at such Holder's address as the same
appears on the stock register of the Corporation, provided that no failure to
give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Senior Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Corporation has failed
to give said notice or except as to the Holder or Holders whose notice was
defective. The Debentures Redemption Notice shall state:
(1) that the Corporation is exercising its option to
redeem the Senior Preferred Stock pursuant to Section 4(a)(i);
(2) the Exchange Debenture Amount and the Cash
Election Amount, if any;
<PAGE> 8
(3) the date fixed for exchange (the "Debentures
Exchange Date");
(4) that the Holder is to surrender to the
Corporation, at the place or places where certificates for
shares of Senior Preferred Stock are to be surrendered for
redemption, in the manner designated in the Debentures
Exchange Notice, the certificate or certificates representing
the shares of Senior Preferred Stock to be redeemed;
(5) that dividends and Liquidated Damages (if any) on
the shares of Senior Preferred Stock to be redeemed shall
cease to accrue and accumulate on the day immediately
preceding the Debentures Exchange Date whether or not
certificates for shares of Senior Preferred Stock are
surrendered for redemption on the Debentures Exchange Date
unless the Corporation shall default in the delivery of
Exchange Debentures; and
(6) that interest on the Exchange Debentures shall
accrue beginning on the Debentures Exchange Date whether or
not certificates for shares of Senior Preferred Stock are
surrendered for redemption on the Debentures Exchange Date.
(B) On or before the Debentures Exchange
Date, each Holder of Senior Preferred Stock shall surrender the certificate or
certificates representing such shares of Senior Preferred Stock, in the manner
and at the place designated in the Debentures Exchange Notice. On the Debentures
Exchange Date, if the conditions set forth in clauses (A) and (B) of Section
4(a)(i) of this Part B are satisfied, the Corporation shall cause the Exchange
Debentures to be executed on the Debentures Exchange Date and, upon surrender in
accordance with the Debentures Exchange Notice of the certificates for shares of
Senior Preferred Stock, the Corporation shall issue the Exchange Debentures the
Holders are entitled to receive under Section 4(a)(i) of this Part B in exchange
for the Senior Preferred Stock in registered form without coupons, in principal
amounts of $1,000 and integral multiples thereof to the extent possible. The
Corporation will issue Exchange Debentures in principal amounts less than $1,000
as necessary for each Holder of Senior Preferred Stock to receive Exchange
Debentures representing the entire amount of Exchange Debentures to which such
Holder is entitled; provided that the Corporation may, at its option, pay cash
in lieu of issuing an Exchange Debenture in a principal amount of less than
$1,000. The Corporation shall pay interest on the Exchange Debentures at the
rate and on the dates specified therein from the Debentures Exchange Date.
(C) If notice has been mailed as aforesaid,
and if on or before the Debentures Exchange Date (1) the Exchange Debenture
Indenture shall have been duly executed and delivered by the Corporation and the
trustee under the Exchange Debenture Indenture and (2) all Exchange Debentures
necessary for such redemption shall have been duly executed by the Corporation
and delivered to such trustee with irrevocable instructions to authenticate the
Exchange Debentures necessary for such redemption and the Exchange Debentures
shall have been duly authenticated by such trustee, then unless the Corporation
defaults in the payment in full of the Cash Election Amount, dividends and
Liquidated Damages (if any) shall cease to accrue and accumulate on the
outstanding shares of Senior Preferred Stock on the day immediately preceding
the Debentures Exchange Date and the Holders of shares of the Senior
<PAGE> 9
Preferred Stock shall cease to have any further rights with respect thereto on
the Debentures Exchange Date, other than the right to receive the applicable
Redemption Price, and the Person or Persons entitled to receive the Exchange
Debentures issuable in such redemption shall be treated for all purposes as the
registered holder or holders of such Exchange Debentures as of the Debentures
Exchange Date.
SECTION 5. VOTING RIGHTS.
(a) RIGHT TO VOTE WITH THE COMMON STOCK. Except as otherwise
required by applicable law or in this Amended and Restated Certificate of
Incorporation, the Senior Preferred Stock shall vote together with the Common
Stock as one class and each holder of Senior Preferred Stock shall be entitled
to one vote per share of Senior Preferred Stock (after giving effect to any
adjustments required under Section 4 of Part C of this Article FOURTH) on all
matters to be voted on by the Corporation's stockholders.
(b) RIGHT TO VOTE IN SPECIFIED CIRCUMSTANCES.
(i) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not authorize (1) any Junior Securities that
are, by their terms, mandatorily redeemable prior to July 15, 2007 or (2) any
class of Parity Securities, without the affirmative vote or consent of Holders
of at least 50% of the outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting, except that without the approval of Holders of the Senior Preferred
Stock, the Corporation may authorize or issue shares of Parity Securities in a
redemption in exchange for, or the proceeds of which are used to redeem, any or
all shares of Senior Preferred Stock then outstanding, provided that (A) in the
case of Parity Securities issued in exchange for, or the proceeds of which are
used to redeem, less than all shares of Senior Preferred Stock then outstanding,
the aggregate liquidation preference of such Parity Securities shall not exceed
the aggregate applicable Redemption Price and expenses incurred in connection
with the refinancing of the Senior Preferred Stock so exchanged or redeemed and
(B) such Parity Securities shall not be mandatorily redeemable prior to July 15,
2007.
(ii) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not amend this Article FOURTH so as to affect
adversely the specified rights, preferences, privileges or voting rights of
Holders of shares of Senior Preferred Stock or to authorize the issuance of any
additional shares of Senior Preferred Stock without the affirmative vote or
consent of Holders of a least 50% of the outstanding shares of Senior Preferred
Stock, voting or consenting, as the case may be, separately as one class, given
in person or by proxy, either in writing or by resolution adopted at an annual
or special meeting.
(iii) Except as set forth in Section 5(b)(i) above, (A) the
creation, authorization or issuance of any shares of any Junior Securities or
Parity Securities, (B) the decrease in the amount of authorized capital stock of
any class, including any preferred stock, or (C) the increase in the amount of
authorized capital stock of any class of Junior Securities shall not require the
consent of Holders of Senior Preferred Stock and shall not, unless not complying
<PAGE> 10
with Section 5(b)(i), be deemed to affect adversely the rights, preferences,
privileges or voting rights of Holders of shares of Senior Preferred Stock.
(c) (i) If on or after the Closing Date one of the following
events occurs (each such event described in clauses (1), (2), (3), (4) and (5)
is referred to herein as a "Voting Rights Triggering Event"): (1) dividends on
the Senior Preferred Stock are in arrears and unpaid for four consecutive
quarterly periods (other than due to the application of the prohibitions
contained in Section 4.9 of the Existing Indenture or in the Credit Agreement)
(a "Dividend Default"), (2) the Corporation fails to discharge any redemption
obligation of the Senior Preferred Stock when required (a "Redemption Default"),
whether or not the Corporation is permitted to do so by the terms of any
indenture, credit agreement or any other obligations of the Corporation; (3) the
Corporation fails to make an offer to purchase all outstanding shares of Senior
Preferred Stock following a Change of Control if such offer to purchase is
required to be made pursuant to Section 9(a) hereof or fails to purchase shares
of Senior Preferred Stock from holders who elect to have such shares purchased
pursuant to such Change of Control Offer (a "Change of Control Default"),
whether or not the Corporation is permitted to do so by the terms of any
indenture, credit agreement or any other obligation of the Corporation; (4) the
Corporation breaches or violates one of the provisions set forth in Section 9
hereof and the breach or violation continues for a period of 30 days or more (a
"Restriction Default"); or (5) a default occurs on the obligations to pay
principal of, interest on or any other payment obligation when due at final
maturity (a "Payment Default") on one or more classes of Indebtedness of the
Corporation, whether such Indebtedness exists on the Closing Date or is incurred
thereafter, having individually or in the aggregate, an outstanding principal
amount of $25,000,000 or more, or any other Payment Default occurs on one or
more such classes of Indebtedness and such class or classes of Indebtedness in
an aggregate amount of $5,000,000 or more, then, in any such case, the number of
directors constituting the Board of Directors shall be adjusted to permit the
Holders of the majority of the then outstanding Senior Preferred Stock, voting
separately as one class, to elect two directors. Subject to Section 5(c)(ii)
below, Holders of a majority of the issued and outstanding shares of the Senior
Preferred Stock, voting separately as one class, shall have the exclusive right
to elect two directors at a meeting therefor called upon occurrence of Voting
Rights Triggering Event, and at every subsequent meeting at which the terms of
office of the directors so elected by the Holders of the Senior Preferred Stock
expire (other than as described in Section 5 (c)(ii) below).
(ii) The right of the Holders of Senior Preferred Stock voting
separately as one class to elect members of the Board of Directors as set forth
in Section 5(c)(i) above shall continue until such time as (1) in the event such
right arises due to a Dividend Default, all Accumulated Dividends that are in
arrears on the Senior Preferred Stock (other than due to the application of the
prohibitions contained in Section 4.9 of the Existing Indenture or in the Credit
Agreement) are paid in full in cash; and (2) in the event such right arises due
to a Redemption Default, a Change of Control Default, a Restriction Default or a
Payment Default, the Corporation remedies any such failure, breach or default,
at which time the term of any directors elected pursuant to Section 5(c)(i)
shall terminate, subject always to the same provisions for the renewal and
divestment of such special voting rights in the case of any future Voting Rights
Triggering Event. At any time after voting power to elect directors shall have
become vested and be continuing in the Holders of shares of the Senior Preferred
Stock pursuant to Section 5(c)(i), or if vacancies shall exist in the offices of
directors elected by the Holders of shares of the Senior Preferred Stock, a
proper officer of the Corporation may, and upon the
<PAGE> 11
written request of the Holders of record of at least 10% of the shares of Senior
Preferred Stock then outstanding addressed to the Secretary of the Corporation
shall, call a special meeting of the Holders of Senior Preferred Stock, for the
purpose of electing the directors which such Holders are entitled to elect. If
such meeting shall not be called by the proper officer of the Corporation within
20 days after personal service of said written request upon the Secretary of the
Corporation, or within 20 days after mailing the same within the United States
by certified mail, addressed to the Secretary of the Corporation at its
principal executive offices, then the Holders of record of at least 20% of the
outstanding shares of the Senior Preferred Stock may designate in writing one of
their members to call such meeting at the expense of the Corporation, and such
meeting may be called by the Person so designated upon the notice required for
the annual meeting of the stockholders of the Corporation and shall be held at
the place for holding the annual meetings of stockholders or such other place in
the United States as shall be designated in such notice. Notwithstanding the
provisions of this Section 5(c)(ii), no such special meeting shall be called if
any such request is received less than 30 days before the date fixed for the
next ensuing annual or special meeting of stockholders of the Corporation. Any
Holder of shares of the Senior Preferred Stock so designated shall have, and the
Corporation shall provide, access to the lists of Holders of shares of the
Senior Preferred Stock for purposes of calling a meeting pursuant to the
provisions of this Section 5(c)(ii).
(iii) At any meeting held for the purpose of electing
directors at which the Holders of Senior Preferred Stock shall have the right,
voting separately as one class, to elect directors as aforesaid, the presence in
person or by proxy of the Holders of at least a majority of the outstanding
Senior Preferred Stock shall be required to constitute a quorum of such Senior
Preferred Stock.
(d) MANNER OF VOTING. In any case in which the Holders of
shares of the Senior Preferred Stock shall be entitled to vote pursuant to
Section 5(b) or 5(c) of this Part B or pursuant to the laws of the State of
Delaware, each Holder of shares of the Senior Preferred Stock shall be entitled
to one vote for each share of Senior Preferred Stock held (after giving effect
to any adjustments required under Section 4 or 5 of Part C of this Article
FOURTH).
SECTION 6. PREEMPTIVE RIGHTS. No shares of Senior Preferred Stock shall
have any rights of preemption whatsoever as to any securities of the
Corporation, or any warrants, rights or options issued or granted with respect
thereto, regardless of how such securities or such warrants, rights or options
may be designated, issued or granted.
SECTION 7. BUSINESS DAY. If any payment, redemption or exchange shall
be required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
SECTION 8. CASH PAYMENTS. Notwithstanding any other provision to the
contrary contained in this Part B, any amount due in cash to the Holders under
the terms hereof shall be rounded to the nearest whole cent, and the Corporation
shall be deemed to have paid in full any such amount when the Corporation has
paid such rounded amount as provided herein.
<PAGE> 12
SECTION 9. COVENANTS. For so long as any shares of Senior Preferred
Stock are outstanding:
(a) CHANGE OF CONTROL.
(i) Upon the occurrence of a Corporation Change of Control,
each Holder of Senior Preferred Stock shall have the right to require the
Corporation to purchase all or any part of such Holder's Senior Preferred Stock
not otherwise redeemed by the Corporation pursuant to Section 4(a)(iv) of this
Part B pursuant to the offer described in clause (ii) of this Section 9(a) (a
"Change of Control Offer") at a purchase price per share equal to (A) an amount
in cash equal to the sum of (1) 101% of the Premium Base Value of each such
share, plus (2) Accrued Dividends on each such share plus (3) Liquidated
Damages, if any, on each such share, and (B) the Participation Price of each
such share, in each case as of the Change of Control Purchase Date (the "Change
of Control Purchase Price"). The Change of Control Offer shall remain open for a
period of 20 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the "Change of
Control Offer Period"). No later than five Business Days after the termination
of the Change of Control Offer Period (the "Change of Control Purchase Date"),
the Corporation shall purchase all Senior Preferred Stock tendered in response
to the Change of Control Offer.
(ii) Within 30 days following any Corporation Change of
Control, the Corporation shall mail a notice, which shall govern the terms of
the Change of Control Offer, to each Holder, and such notice shall state: (1)
that the Change of Control Offer is being made pursuant to this covenant and the
length of time the Change of Control Offer shall remain open; (2) the Change of
Control Purchase Price and the Change of Control Purchase Date; (3) that any
shares of Senior Preferred Stock not validly tendered and any shares of Senior
Preferred Stock properly withdrawn shall continue to accrue and accumulate
dividends in accordance with the terms of this Part B; (4) that, unless the
Corporation defaults in the payment of the Change of Control Purchase Price, all
shares of Senior Preferred Stock accepted for payment pursuant to the Offer
shall cease to accrue and accumulate dividends after the Change of Control
Purchase Date; and (5) a description of the procedures to be followed by such
Holder in order to have its shares of Senior Preferred Stock validly tendered
and a description of the procedures to be followed by such Holder in order to
withdraw tendered shares.
(iii) On the Change of Control Purchase Date, (A) the
Corporation shall, to the extent lawful, (1) accept for payment all shares of
Senior Preferred Stock or portions thereof tendered pursuant to the Change of
Control Offer, (2) deposit with the transfer agent the Change of Control
Purchase Price in respect of all shares of Senior Preferred Stock or portions
thereof so tendered, (3) deliver or cause to be delivered to the transfer agent
the Senior Preferred Stock so accepted together with an officers' certificate
stating the total number of shares of Senior Preferred Stock or portions thereof
being purchased by the Corporation, (4) promptly mail, or cause to be mailed, to
each Holder of shares of Senior Preferred Stock so accepted, payment of the
Change of Control Purchase Price for such shares, and (5) arrange to have
promptly authenticated and mailed (or cause to be transferred by book entry) to
each Holder a new share certificate representing any unpurchased shares of the
Senior Preferred Stock represented by the certificate tendered pursuant to the
Change of Control Offer, if any, and (B) unless the Corporation defaults in the
payment for the shares of Senior Preferred Stock tendered pursuant to the Offer,
dividends shall cease to accrue and accumulate with respect to the shares
<PAGE> 13
of Senior Preferred Stock tendered and all rights of Holders of such tendered
shares shall terminate, except for the right to receive payment of the Change of
Control Purchase Price therefor, on the Change of Control Purchase Date.
(iv) The Corporation shall comply with Rule 14e-1 under the
Exchange Act and any securities laws and regulations, to the extent such laws
and regulations are applicable to the repurchase of shares of the Senior
Preferred Stock in connection with a Corporation Change of Control.
(v) To the extent that less than all of the outstanding shares
of Senior Preferred Stock are tendered pursuant to an Offer, the Corporation may
use any proceeds from a Corporation Change of Control for general corporate
purposes.
(b) MERGER OR CONSOLIDATION. The Corporation shall not, in a
single transaction or series of related transactions, consolidate or merge with
or into (whether or not the Corporation is the surviving corporation), or
directly and/or indirectly through its Restricted Subsidiaries sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets determined on a consolidated basis for the Corporation and
its Restricted Subsidiaries taken as a whole in one or more related
transactions, to another corporation, Person or entity unless (A) the
Corporation is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than the Corporation) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (B) the Senior
Preferred Stock shall be converted into or exchanged for and shall become shares
of the entity or Person formed by or surviving any such consolidation or merger
(of other than the Corporation) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition is made and such
shares shall have substantially the same powers, preferences and relative
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereon, that the Senior Preferred Stock had
immediately prior to such consolidation, merger, sale, assignment, transfer,
lease, conveyance or other disposition; (c) immediately after such transaction,
no Voting Rights Triggering Event, and no event that after the giving of notice
or lapse of time or both would become a Voting Rights Triggering Event, exists;
(D) the Corporation or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Corporation), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made shall have Consolidated Net Worth immediately after the transaction equal
to or greater than the Consolidated Net Worth of the Corporation immediately
preceding the transaction; and (E) the Corporation shall have delivered to the
transfer agent an Officers' Certificate and an opinion of counsel to the effect
that such transaction complies with respect to the foregoing matters.
(c) JUNIOR PAYMENTS. The Corporation shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, (A)
declare or pay any dividend or make any distribution on account of any Junior
Securities or any of its Restricted Subsidiaries' Equity Interests (including
without limitation any payment in connection with any merger or consolidation
involving the Corporation) other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) or dividends or distributions
payable to the Corporation or any Wholly Owned Subsidiary of the Corporation,
(B) purchase, redeem or otherwise acquire
<PAGE> 14
or retire for value any Junior Securities or any of its Restricted Subsidiaries'
Equity Interests (including without limitation any payment in connection with
any merger or consolidation involving the Corporation) or (c) make any
Restricted Investment (all such dividends, distributions, purchases,
redemptions, acquisitions, retirements and Restricted Investments being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(1) a Voting Rights Triggering Event shall not have occurred
and be continuing or would not occur as a consequence thereof;
(2) all dividends on the Senior Preferred Stock payable on
Dividend Payment Dates have not been declared and paid in cash; and
(3) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Corporation and its Restricted
Subsidiaries after the Closing Date and all Restricted Payments made by the
Restricted Subsidiaries during the period commencing after April 17, 1996
through the Closing Date, is less than the sum of, without duplication, (a) 50%
of the Consolidated Net Income (as defined in the Exchange Debenture Indenture)
of the Corporation for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after April 17, 1996 to the end
of the Corporation's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (b) to the extent not included in the amount described in clause
(a) above, 100% of the aggregate net cash proceeds received after April 17, 1996
by the Corporation from the issue or sale of, or from additional capital
contributions in respect of, Equity Interests of the Corporation or of debt
securities of the Corporation or any Restricted Subsidiary that have been
converted into, or canceled in exchange for, Equity Interests of the Corporation
(other than Equity Interests (or convertible debt securities) sold to a
Restricted Subsidiary or an Unrestricted Subsidiary of the Corporation and other
than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (c) 100% of any cash dividends received by the
Corporation or a Wholly Owned Subsidiary after the Closing Date from an
Unrestricted Subsidiary of the Corporation, plus (d) 100% of the cash proceeds
realized upon the sale of any Unrestricted Subsidiary (less the amount of any
reserve established for purchase price adjustments and less the maximum amount
of any indemnification or similar contingent obligation for the benefit of the
purchaser, any of its Affiliates or any other third party in such sale, in each
case as adjusted for any permanent reduction in any such amount on or after the
date of such sale, other than by virtue of a payment made to such Person)
following April 17, 1996, plus (e) to the extent that any Restricted Investment
that was made after April 17, 1996 is sold to an unaffiliated purchaser for cash
or otherwise liquidated or repaid for cash, the cash proceeds realized with
respect to such Restricted Investment (less the cost of disposition, if any),
plus (f) 100% of Joint Venture Funds.
The foregoing provisions shall not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration, such payment would
comply with all of the provisions of this Part B;
<PAGE> 15
(ii) the making of any Restricted Investment in exchange for,
or out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Corporation) of, or from substantially concurrent additional
capital contributions in respect of, Equity Interests of the Corporation (other
than Disqualified Stock);
(iii) subject to Section 2(e) of this Part B, (X) the
redemption, repurchase, retirement or other acquisition of any Parity Securities
of the Corporation in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Corporation) of, or from
substantially concurrent additional capital contributions in respect of, other
Parity or Junior Securities of the Corporation (other than any Disqualified
Stock of the Corporation) or out of proceeds of a Corporation Change of Control
available for general corporate purposes after consummation of purchases of
Senior Preferred Stock pursuant to a Change of Control Offer and (Y) the
redemption, repurchase, retirement or other acquisition of any Junior Securities
of the Corporation in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Corporation) of, or from
substantially concurrent additional capital contributions in respect of, other
Junior Securities of the Corporation (other than any Disqualified Stock of the
Corporation) or out of proceeds of a Corporation Change of Control available for
general corporate purposes after consummation of purchases of Senior Preferred
Stock pursuant to a Change of Control Offer;
(iv) the declaration or payment of any dividend to the
Corporation for, or the direct repurchase, redemption or other acquisition or
retirement for value of any Equity Interests of the Corporation or any
Restricted Subsidiary of the Corporation or any direct or indirect parent of the
Corporation held by any member of the Corporation's or any Restricted
Subsidiary's management pursuant to any management agreement, stock option
agreement or plan or stockholders agreement; provided that (X) the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests will not exceed $1.0 million in any fiscal year (plus any amount
available for such payments hereunder since April 17, 1996 which have not been
used for such purpose) or (Y) $5.0 million in the aggregate (in each case, net
of the cash proceeds received by the Corporation from subsequent reissuances of
such Equity Interests to new members of management);
(v) the distribution of the Joint Ventures or interests in the
Joint Ventures or any Joint Venture Funds;
(vi) loans to members of management of the Corporation or any
of its Restricted Subsidiaries the proceeds of which are used for a concurrent
purchase of Equity Interests of the Corporation;
(vii) payments under the Management Advisory Agreement; and
(viii) the payment of director's fees and the reasonable
expenses of the directors of the Corporation and its Restricted Subsidiaries in
an aggregate amount not to exceed $100,000 per year; and
(ix) any payments permitted under the Existing Indenture (and
amounts expended in respect of such payments under this clause (x) shall be
excluded or included, as applicable, in the calculation of the aggregate amount
of Restricted Payments under clause (3) of
<PAGE> 16
this Section 9(c) made by the Restricted Subsidiaries to the extent such amounts
are excluded or included, as applicable, in the calculation of "Restricted
Payments" as defined in and calculated under the Existing Indenture).
In determining the aggregate amount of Restricted Payments made after
the Closing Date, 100% of the amounts expended pursuant to the foregoing clauses
(ii), (iii), (iv) and (vi) shall be included in such calculation and none of the
amounts expended pursuant to the foregoing clauses (i), (v), (vii), (viii) and
(ix) shall be included in such calculation.
The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary (subject to clause (c) of the definition of "Permitted
Investments") if such designation would not cause a Voting Rights Triggering
Event. For purposes of making such determination, all outstanding Investments
(other than Investments of Joint Venture Funds) by the Corporation and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated shall be deemed to be Restricted Payments at the time of such
designation and shall reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments shall be
deemed to constitute Investments (I) in any Subsidiary that was not formerly a
Joint Venture, in an amount equal to the greatest of (x) the net book value of
such Investments at the time of such designation, (y) the fair market value of
such Investments at the time of such designation and (z) the original fair
market value of such Investments at the time they were made or (II) in any
Subsidiary that was formerly a Joint Venture, in an amount equal to the amount
of such Investments made by the Corporation or any of its Restricted
Subsidiaries since the Closing Date. Such designation shall only be permitted if
such Restricted Payment would be permitted at such time and if such Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Holders) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Corporation
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the
Corporation shall deliver to the Holders an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculation required by this covenant were computed, which calculations may be
based upon the Corporation's latest available financial statements.
(d) TRANSACTIONS WITH AFFILIATES. The Corporation shall not,
and shall not permit any of its Restricted Subsidiaries to, sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make any contract, agreement,
understanding, loan, advance or Guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Corporation
or its relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Corporation or such Restricted Subsidiary
with an unrelated Person and (ii) the Corporation delivers to the transfer
agent, if any, with respect to the Senior Preferred Stock or the Holders (a)
with respect to any Affiliate Transaction entered into after the Closing Date
involving aggregate consideration in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of
<PAGE> 17
Directors and (b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, an opinion as to the fairness to the
Corporation or such Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an investment banking firm of national
standing; provided that the following shall not be deemed to be Affiliate
Transactions: (1) reasonable compensation paid to, and indemnity provided on
behalf of, officers and directors of the Corporation, C-S, Inc. or any
Restricted Subsidiary as determined in good faith by the Corporation's Board of
Directors or senior management; (2) the provision of administrative or
management services by C-S, Inc. or any of its officers to the Corporation or
any of the Restricted Subsidiaries, (3) the existence of, or the performance by
the Corporation under the terms of, any securityholders agreement, registration
rights agreement, voting trust agreement, loan document with employees or
purchase agreement to which it is a party on the date of this Amended and
Restated Certificate of Incorporation, including pursuant to any amendment
thereto; provided, that any such amendment is not more disadvantageous to the
Holders of the Senior Preferred Stock in any material respect than the original
agreement as in effect on the date of this Amended and Restated Certificate of
Incorporation, (4) any employment agreement entered into by the Corporation or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Corporation or such Restricted
Subsidiary, (5) transactions between or among the Corporation and/or its Wholly
Owned Subsidiaries, (6) fees paid and reimbursement of out-of-pocket expenses
pursuant to the Management Advisory Agreement; and (7) transactions permitted by
the covenant described in Section 9(c) of this Part B.
(e) REPORTS. Whether or not required by the rules and
regulations of the SEC, so long as any shares of Senior Preferred Stock are
outstanding, the Corporation will furnish to the Holders of Senior Preferred
Stock, (A) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Corporation were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the
Corporation's certified independent accountants and (B) all current reports that
would be required to be filed with the SEC on Form 8-K if the Corporation was
required to file such reports. In addition, whether or not required by the rules
and regulations of the SEC, the Corporation will file a copy of all such
information and reports with the SEC for public availability (unless the SEC
will not accept such a filing) and shall promptly make such information
available to securities analysts and prospective investors upon request. In
addition, for so long as any shares of Senior Preferred Stock remain
outstanding, the Corporation shall furnish to all Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 10. DEFINITIONS. As used in this Article FOURTH, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accrued Dividends" means, as of any date of determination, dividends
that have accrued but that have not been paid since the immediately preceding
Dividend Payment Date through the day before the date of determination.
<PAGE> 18
"Accumulated Dividends" means, as of any date of determination, all
dividends that have accrued during Quarterly Dividend Periods ending prior to
the date of determination but that were not paid on the applicable Dividend
Payment Date and that have not been paid as of the date of determination.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Board of Directors" means the Board of Directors of the Corporation,
or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Election Amount" has the meaning set forth in the definition of
"Exchange Debenture Amount."
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and
<PAGE> 19
surplus in excess of $100.0 million for direct obligations issued by or fully
guaranteed by the United States of America in which the Corporation shall have a
perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100% of
the amount of repurchase obligations, and (e) interests in money market mutual
funds which invest solely in assets or securities of the type described in
subparagraphs (a), (b), (c) or (d) hereof.
"Change of Control" means a Corporation Change of Control or a
Subsidiary Change of Control, as applicable.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Consolidated Net Income" has the meaning set forth in the Exchange
Debenture Indenture.
"Consolidated Net Worth" of a Person at any date means the amount by
which the assets of such Person and its consolidated Restricted Subsidiaries
(less any revaluation or other write-up subsequent to the date of this Indenture
in any such assets (other than write-ups resulting from foreign currency
translations and write-ups of tangible assets of a going concern business made
within twelve months after the acquisition of such business)) exceed the sum of
(a) the total liabilities of such Person and its consolidated Restricted
Subsidiaries, plus (b) any Disqualified Stock of such Person or any consolidated
Restricted Subsidiaries of such Person issued to any Person other than such
Person or a Wholly Owned Subsidiary of such Person, in each case determined in
accordance with GAAP.
"Contingent Redemption Price" means, with respect to a share of Senior
Preferred Stock, an amount equal to the sum of (a) 106% of Premium Base Value of
such share plus (b) Accrued Dividends on such share plus (c) Liquidated Damages
(if any) on such share, in each case as of the date of determination.
"Corporate Obligations" means, as of the last day of the fiscal quarter
ending immediately prior to or on, as applicable, the date of determination, the
difference between (a) the sum of (i) the amount of all outstanding Indebtedness
of the Corporation plus (ii) the aggregate Premium Base Value of all outstanding
shares of Senior Preferred Stock plus (iii) the aggregate Accrued Dividends on
all outstanding shares of Senior Preferred Stock plus (iv) the aggregate
Liquidated Damages, if any, on all outstanding shares of Senior Preferred Stock,
and (b) the Corporation's cash on hand as of such last day.
"Corporation Change of Control" means such time as (i) prior to the
initial public offering by the Corporation of its common stock (other than a
public offering pursuant to a registration statement on Form S-8), Vestar and
its Affiliates (collectively, the "Initial Investors") cease to have, directly
or indirectly, in the aggregate at least 51% of the voting power of the voting
stock of the Corporation or (ii) after the initial public offering by the
Corporation of its common stock (other than a public offering pursuant to a
registration statement on Form S-8), (A) any Schedule 13D, Form 13F or Schedule
13G under the Exchange Act, or any amendment to such Schedule or Form, is
received by the Corporation which indicates that, or the Corporation otherwise
becomes aware that, a "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act) has become, directly or indirectly, the
"beneficial owner," by way
<PAGE> 20
of merger, consolidation or otherwise, of 35% or more of the voting power of the
voting stock of the Corporation on a fully diluted basis after giving effect to
the conversion and exercise of all outstanding warrants, options and other
securities of the Corporation, as the case may be (whether or not such
securities are then currently convertible or exercisable) and (B) such person or
group has become, directly or indirectly, the beneficial owner of a greater
percentage of the voting capital stock of the Corporation, calculated on such
fully diluted basis, than beneficially owned by the Initial Investors, or (iii)
the sale, lease or transfer of all or substantially all of the assets of the
Corporation and its Subsidiaries taken as a whole to any person or group (other
than to a Wholly Owned Subsidiary of the Corporation or the Initial Investors),
or (iv) during any period of two consecutive calendar years, individuals who at
the beginning of such period constituted the Board of Directors of the
Corporation (together with any new directors whose election by the Board of
Directors of the Corporation or whose nomination for election by the
stockholders of the Corporation, as the case may be, was approved by a vote of a
majority of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of the Corporation, as the case may be, then in office.
"Credit Agreement" means, collectively, (i) that certain Credit
Agreement, as in effect on the date of this Amended and Restated Certificate of
Incorporation, by and among the Corporation, C-S, Inc., the lenders that may be
from time to time parties thereto and The Chase Manhattan Bank (formerly known
as Chemical Bank), as administrative agent, as the foregoing may from time to
time be amended, renewed, supplemented or otherwise modified at the option of
the parties thereto, including increases in the principal amount thereof; and
(ii) after The Chase Manhattan Bank, as administrative agent, has acknowledged
in writing that the Credit Agreement has been terminated and all then
outstanding Indebtedness thereunder or with respect thereto has been repaid in
full in cash and discharged, any successors to or replacements of (as designated
by the board of directors of C-S, Inc. in its sole judgment, and evidenced by a
resolution) such Credit Agreement, as such successors or replacements may from
time to time be amended, renewed, supplemented, modified or replaced, including
increases in the principal amount thereof.
"C-S, Inc." means Clark-Schwebel, Inc., a Delaware corporation.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Determined Common Stock Value" means, as of any date of determination,
an amount equal to the difference between (a) the sum of (i) the product of (A)
4.8 multiplied by (B) EBITDA for the twelve months immediately preceding the
last day of the fiscal quarter ending immediately prior to the date of
determination plus (ii) $30,000,000 and (b) Corporate Obligations as of the last
day of such fiscal quarter.
"Determined Participation Value" means an amount equal to the product
of (a) .10 and (b) Determined Common Stock Value.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or
<PAGE> 21
otherwise, or redeemable at the option of the Holder thereof, in whole or in
part, on or prior to July 15, 2007.
"Dividend Payment Date" means October 15, January 15, April 15 and July
15 of each year, provided that the first Dividend Payment Date shall be October
15, 1997.
"Early Redemption Price" means, with respect to a share of Senior
Preferred Stock, an amount equal to the sum of (a) 112.5% of Premium Base Value
of such share plus (b) Accrued Dividends on such share plus (c) Liquidated
Damages (if any) on such share, in each case as of the date of determination.
"EBITDA" shall mean, for any period, without duplication, the sum of
(a) Net Income for such period, (b) all federal, state, local and foreign income
taxes deducted in determining such Net Income, (c) interest expense deducted in
determining such Net Income, (d) depreciation, amortization and other noncash
expenses or charges (including any charges resulting from the write-up of
inventory) deducted in determining such Net Income (and not already excluded
from the definition of the term "Net Income") and (e) fees and expenses in
connection with the Transaction (as defined in the Credit Agreement) deducted in
determining EBITDA for such period.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means a Public Equity Offering or a Private Equity
Offering.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Debenture Amount" means, with respect to a share of Senior
Preferred Stock, an amount equal to the difference between (i) the sum of (a)
the Premium Base Value of such share plus (b) Accrued Dividends on such share
plus (c) Liquidated Damages (if any) on such share plus (d) the result obtained
by dividing Participation Value by the Multiplier, where in each case the
applicable date of determination shall be the Debentures Exchange Date; provided
that Holdings may elect to redeem a portion of the outstanding shares of Senior
Preferred Stock in cash for an aggregate amount not to exceed $5,000,000 (the
amount so elected, when divided by the number of shares of Senior Preferred
Stock outstanding, is referred to herein as the "Cash Election Amount") and, if
the Corporation so elects, the Participation Value used to calculate the
Exchange Debenture Amount pursuant to this clause (d) shall be reduced by the
amount of cash so used and (ii) the difference between (a) the sum of all
Accrued Dividends and Accumulated Dividends, if any, in each case since the
Closing Date and (b) the result obtained by dividing the amount determined under
clause (ii)(a) of this definition by the Multiplier.
"Exchange Debenture Indenture" means an indenture which shall govern
the Exchange Debentures and which shall be substantially in the form of Exhibit
B to the Purchase Agreement.
"Exchange Debentures" means the Corporation's 12.5% Senior Exchange
Debentures due 2007 which, when issued, shall be subject to the Exchange
Debenture Indenture and substantially in the form of Exhibit A to the Exchange
Debenture Indenture.
<PAGE> 22
"Existing Indenture" means that certain Indenture dated as of April 17,
1996, by and among Fleet National Bank, as Trustee, CSI as successor by merger
to each of Clark-S Acquisition Corporation and CS Finance Corporation of
Delaware, as Issuer, the Corporation and the Subsidiary Guarantors named therein
as in effect on the date of this Amended and Restated Certificate of
Incorporation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Amended and Restated
Certificate of Incorporation.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a share Senior Preferred Stock is
registered on the Corporation's books.
"Indebtedness" (a) for purposes of the definition of "Corporate
Obligations" means, with respect to any Person, any indebtedness of such Person,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations (except any such balance
that constitutes an accrued expense or trade payable), and all accrued interest,
penalties, premiums, fees, late charges and other liabilities payable under the
terms of any of the foregoing, if and to the extent any of the foregoing
Indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, as well as all Indebtedness of others secured by a Lien on any asset of
such Person (whether or not such indebtedness is assumed by such Person), the
maximum fixed repurchase price of Disqualified Stock issued by such Person in
each case, if held by any Person other than the Corporation or a Subsidiary of
the Corporation, and, to the extent not otherwise included, the Guarantee by
such Person or its Subsidiaries of any Indebtedness of any other Person and (b)
for all other purposes of this Amended and Restated Certificate of
Incorporation, has the meaning set forth in the Exchange Debenture Indenture.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (other than advances to customers in the ordinary
<PAGE> 23
course of business that are recorded as accounts receivable on the books of such
Person) or capital contributions (excluding commission, travel, relocation and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Corporation for consideration consisting of common equity securities of the
Corporation or of any direct or indirect parent of the Corporation shall not be
deemed to be an Investment.
"Joint Venture Funds" means any distributions or dividends, directly
or indirectly, of or from any of the Joint Ventures or interests in the Joint
Ventures or any proceeds from the sale of, or distributions or dividends from,
any of the Joint Ventures.
"Joint Ventures" means (a) each of Clark-Schwebel Corporation,
Clark-Schwebel Tech-Fab Company, CS-Interglas AG and Asahi-Schwebel Co., Ltd.
and (b) any other Person whose sole assets are directly or indirectly (i) a
Joint Venture (unless such Joint Venture or Person is a Restricted Subsidiary by
virtue of an Investment pursuant to clause (c) of the definition of "Permitted
Investments"), (ii) any interest in a Joint Venture, and (iii) Joint Venture
Funds.
"Legal Holiday" means a Saturday, a Sunday or a day on which federal
offices or banking institutions in the City of New York or at a place of payment
are authorized by law, regulation or executive order to remain closed.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to the Registration Rights Agreement.
"Liquidation Preference Amount" means $40,780.615 per share of Senior
Preferred Stock.
"Management Advisory Agreement" means the agreement dated as of April
17, 1996, among Vestar, the Corporation and C-S, Inc., with only such
amendments, alterations, modifications or waivers thereto which are not
materially adverse to the interests of the Corporation or the Holders.
"Mandatory Redemption Price" means, with respect to a share of Senior
Preferred Stock, an amount equal to the sum of (a) the Premium Base Value of
such share plus (b) Accrued Dividends on such share plus (c) Liquidated Damages
(if any) on such share, in each case as of the date of determination.
"Moody's" means Moody's Investors Service, Inc. and its successors.
<PAGE> 24
"Multiplier" means 1.0575.
"Net Income" shall mean, for any period, the aggregate net income (or
net deficit) from continuing operations (before any dividends) of the
Corporation and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP, which shall be equal to gross revenues for the
Corporation and its Subsidiaries determined on a consolidated basis during such
period less the aggregate for the Corporation and its Subsidiaries determined on
a consolidated basis during such period of, without duplication, (a) cost of
goods sold, (b) interest expense, (c) operating expenses, (d) selling, general
and administrative expenses, (e) taxes, (f) depreciation, depletion and
amortization of properties and (g) any other items that are treated as expense
under GAAP, all computed in accordance with GAAP; provided, however that the
term "Net Income" shall exclude (i) extraordinary gains and losses from the sale
of assets other than in the ordinary course of business (including dispositions
of obsolete fixed assets), (ii) other noncash income not otherwise excluded from
the definition of the term "Net Income" and any charge resulting from the
write-up after April 17, 1996 in the value of any asset and (iii) distributions
received from, and the financial results of, Joint Ventures.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice President of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Officers of such Person, one
of whom must be the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of such Person.
"Optional Redemption Price" has the meaning set forth in Section
4(a)(iii) of this Part B.
"Participation Price" means, with respect to a share of Senior
Preferred Stock, either (a) an amount in cash equal to the Participation Value
of such share or (b) one share of Common Stock (after giving effect to any
adjustments required under Section 4 or 5 of Part C of this Article FOURTH), as
determined by the Corporation in its sole discretion. "Participation Value"
means, with respect to a share of Senior Preferred Stock, the result obtained by
dividing (a) the greater of (i) $10 million plus interest thereon at the rate of
11.38% per annum from the Closing Date to the Redemption Date, Debenture
Exchange Date or Change of Control Purchase Date, as the case may be, and (ii)
Determined Participation Value by (b) the number of outstanding shares of Senior
Preferred Stock (after giving effect to any adjustments required under Section 4
or 5 of Part C of this Article FOURTH).
"Permitted Investments" means (a) any Investments permitted by the
Existing Indenture (regardless of whether such Existing Indenture is in effect
at the time of such Investment); (b) Investments by the Corporation or any of
its Restricted Subsidiaries in cash in an amount not to exceed $5.0 million in
the aggregate; (c) Investments by the Corporation or any of its Restricted
Subsidiaries in cash in an amount not to exceed $15.0 million in the aggregate
to enable the Corporation or any of its Restricted Subsidiaries to purchase or
otherwise acquire equity interests in the Joint Ventures; provided that upon the
consummation of any such Investment pursuant to this clause (c) the Joint
Venture in which the Investment is made
<PAGE> 25
becomes a Restricted Subsidiary; (d) stock, obligations or securities received
in settlement of debts created in the ordinary course of business and owing to
the Corporation or any of its Subsidiaries or in satisfaction of judgments; (e)
the conversion or exchange of debt of CS-Interglas AG for common securities of
CS-Interglas AG; (f) the contribution of shares of stock or other equity
securities of an Unrestricted Subsidiary of the Corporation to another
Subsidiary of the Corporation; (g) Investments in any Wholly Owned Subsidiary of
the Corporation (or in CS Interglas AG to the extent it is a Wholly Owned
Subsidiary of the Corporation) and that is engaged in the same or a similar line
of business as the Corporation and its Restricted Subsidiaries were engaged in
on the Closing Date and reasonable extensions or expansions thereof; (h)
Investments by the Corporation in any Person if as a result of such Investment
(1) such Person becomes a Wholly Owned Subsidiary of the Corporation that is
engaged in the same or a similar line of business as the Corporation and its
Restricted Subsidiaries were engaged in on the Closing Date and reasonable
extensions or expansions thereof or (2) such Person is merged, consolidated or
amalgamated with or into or transfers or conveys substantially all of its assets
to, or is liquidated into, the Corporation or a Wholly Owned Subsidiary of the
Corporation that is engaged in the same or a similar line of business as the
Corporation and its Restricted Subsidiaries were engaged in on the Closing Date
and reasonable extensions or expansions thereof; and (i) Investments by the
Corporation or any of its Restricted Subsidiaries using Joint Venture Funds.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, other business entity or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any such
entity or substantially all of the assets of any such entity, subdivision or
business).
"Premium Base Value" means, with respect to a share of Senior Preferred
Stock, (a) the Liquidation Preference Amount of such share plus (b) Accumulated
Dividends on such share (if any).
"Private Equity Offering" means a private offering of (i) Equity
Interests of the Corporation other than Disqualified Stock of the Corporation or
(ii) of Equity Interests of the Corporation's parent or indirect parent
corporation other than Disqualified Stock of the Corporation's parent or
indirect parent corporation to the extent that the cash proceeds therefrom are
contributed to the equity capital of the Corporation or are used to purchase
Equity Interests of the Corporation (other than Disqualified Stock of the
Corporation).
"Public Equity Offering" means an underwritten public offering pursuant
to a registration statement filed with the SEC in accordance with the Securities
Act of (i) Equity Interests of the Corporation other than Disqualified Stock of
the Corporation or (ii) of Equity Interests of the Corporation's parent or
indirect parent corporation other than Disqualified Stock of the Corporation's
parent or indirect parent corporation to the extent that the cash proceeds
therefrom are contributed to the equity capital of the Corporation or are used
to purchase Equity Interests of the Corporation (other than Disqualified Stock
of the Corporation).
"Purchase Agreement" means that certain purchase agreement dated as of
July 14, 1997 among the Corporation, Vestar/CS Holding Company, L.L.C. and
Donaldson, Lufkin & Jenrette Securities Corporation.
<PAGE> 26
"Quarterly Dividend Period" shall mean the quarterly period commencing
on July 15, October 15, January 15 or April 15, as applicable, and ending on the
day before the following Dividend Payment Date.
"Redemption Date" with respect to any shares of Senior Preferred Stock,
means the date on which such shares of Senior Preferred Stock are redeemed by
the Corporation.
"Redemption Price" of a share of Senior Preferred Stock means (a) with
respect to a redemption pursuant to Section 4(a)(i), the Exchange Debentures
issuable pursuant to Section 4(a)(i), and the Cash Election Amount, if any,
collectively, (b) with respect to a redemption pursuant to Section 4(a)(ii), the
Early Redemption Price and the Participation Price, collectively, (c) with
respect to redemptions pursuant to Section 4(a)(iii), the Optional Redemption
Price, (d) with respect to redemptions pursuant to Section 4(a)(iv), the
Contingent Redemption Price and the Participation Price, collectively, and (e)
with respect to a redemption pursuant to Section 4(b), the Mandatory Redemption
Price and the Participation Price, collectively.
"Registration Default" shall have the meaning ascribed thereto in the
Registration Rights Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement by and between the Corporation and Donaldson, Lufkin & Jenrette
Securities Corporation dated July 14, 1997, as such agreement may be amended,
modified or supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Subsidiary Change of Control" means, with respect to a Restricted
Subsidiary, such time as (i) prior to the initial public offering by such
Restricted Subsidiary of its common stock (other
<PAGE> 27
than a public offering pursuant to a registration statement on Form S-8), the
Initial Investors cease to have, directly or indirectly, in the aggregate at
least 51% of the voting power of the voting stock of such Restricted Subsidiary
or the Corporation ceases to own, directly or indirectly, 100% of the voting
power of such Restricted Subsidiary or (ii) after the initial public offering by
such Restricted Subsidiary of its common stock (other than a public offering
pursuant to a registration statement on Form S-8), (A) any Schedule 13D, Form
13F or Schedule 13G under the Exchange Act, or any amendment to such Schedule or
Form, is received by such Restricted Subsidiary which indicates that, or such
Restricted Subsidiary otherwise becomes aware that, a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) has
become, directly or indirectly, the "beneficial owner," by way of merger,
consolidation or otherwise, of 35% or more of the voting power of the voting
stock of such Restricted Subsidiary or on a fully diluted basis after giving
effect to the conversion and exercise of all outstanding warrants, options and
other securities of such Restricted Subsidiary, as the case may be (whether or
not such securities are then currently convertible or exercisable), and (B) such
person or group has become, directly or indirectly, the beneficial owner of a
greater percentage of the voting capital stock of such Restricted Subsidiary,
calculated on such fully diluted basis, than beneficially owned by the Initial
Investors or the Corporation, or (iii) the sale, lease or transfer of all or
substantially all of the assets of such Restricted Subsidiary and its
Subsidiaries taken as a whole to any person or group (other than the Initial
Investors or the Corporation or any of its Subsidiaries), or (iv) during any
period of two consecutive calendar years, individuals who at the beginning of
such period constituted the board of directors of such Restricted Subsidiary
(together with any new directors whose election by the board of directors of
such Restricted Subsidiary or whose nomination for election by the shareholders
of such Restricted Subsidiary, as the case may be, was approved by a vote of a
majority of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of such Restricted Subsidiary, as the case may be, then in office.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Corporation or any Restricted Subsidiary
of the Corporation unless the terms of any such agreement, contract, arrangement
or understanding are no less favorable to the Corporation or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Corporation; (c) is a Person with respect to which neither
the Corporation nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any Indebtedness
of the Corporation or any of its Restricted Subsidiaries. Any such designation
by the Board of Directors shall be evidenced by delivering a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 9(c) of this Part B to the Holders. If,
at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary and any Indebtedness of such Subsidiary shall be deemed
to be incurred by a Restricted Subsidiary of the Corporation as of such date.
The Board of Directors of the Corporation may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary;
<PAGE> 28
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Corporation of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if no Voting Rights Triggering Event would be in existence following
such designation. Notwithstanding anything to the contrary in the foregoing, to
the extent a Joint Venture is or becomes a Subsidiary, as the case may be, it is
or it shall, as the case may be, initially be an Unrestricted Subsidiary (A)
except to the extent that it becomes a Subsidiary in connection with an
Investment pursuant to clause (c) of the definition of "Permitted Investment" or
(B) unless such Subsidiary is designated by the Board of Directors as a
Restricted Subsidiary for purposes hereof pursuant to a Board Resolution at the
time such Joint Venture becomes a Subsidiary.
"Vestar" means Vestar Equity Partners, L.P.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) (or in the case of CS-Interglas
AG 90% of the outstanding Capital Stock or other ownership interests) shall at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries of
such Person. Unrestricted Subsidiaries shall not be included in the definition
of Wholly Owned Subsidiaries for the purposes of this Amended and Restated
Certificate of Incorporation.
PART C. PROVISIONS APPLICABLE TO COMMON STOCK
SECTION 1. VOTING RIGHTS. Except as otherwise required by applicable
law and the provisions of this Amended and Restated Certificate of
Incorporation, the holders of Common Stock shall be entitled to one vote per
share on all matters to be voted on by the Corporation's stockholders.
SECTION 2. DIVIDENDS. As and when dividends are declared or paid on the
Common Stock, whether in cash, property or securities of the Corporation subject
to Section 1(f) of Part B, the holders of Common Stock shall be entitled to
participate in such dividends ratably on a per share basis. The rights of the
holders of Common Stock to receive dividends are subject to the provisions of
the Senior Preferred Stock.
SECTION 3. LIQUIDATION. Subject to the provisions of the Senior
Preferred Stock, the holders of the Common Stock shall be entitled to
participate ratably on a per share basis in all amounts available to be
distributed to the holders of the Common Stock in any liquidation, dissolution
or winding up of the affairs of the Corporation.
SECTION 4. SUBDIVISION OR COMBINATION OF COMMON STOCK. If the
Corporation at any time (i) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) shares of Common Stock into a greater number of
shares or (ii) combines (by reverse stock split or otherwise) shares of Common
Stock into a smaller number of shares, then the shares of Senior Preferred Stock
shall be subdivided or combined, as the case may be, in the same manner and the
Liquidation Preference Amount (and all Accumulated Dividends and Accrued
Dividends thereon) shall be proportionately adjusted.
<PAGE> 29
SECTION 5. ANTIDILUTION. If the Corporation issues Common Stock (or any
options, warrants or other rights to acquire Common Stock) at a purchase price
or exercise price, as the case may be, equal to less than the fair market value
of such Common Stock (such fair market value to be determined by the Board of
Directors in good faith) on the date of such issuance, then the Board of
Directors will adjust the outstanding shares of Senior Preferred Stock to
account for the resulting dilution to the Common Stock participation feature of
the Senior Preferred Stock.
PART D. PROVISIONS APPLICABLE TO CAPITAL STOCK
SECTION 1. REGISTRATION OF TRANSFER. The Corporation shall keep at its
principal office a register for the registration of capital stock of the
Corporation. Upon the surrender of any certificate representing capital stock of
the Corporation at such place, the Corporation shall, at the request of the
record holder of such certificate, execute and deliver (at the Corporation's
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares represented by the surrendered certificate.
Each such new certificate shall be registered in such name and shall represent
such number of shares as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate, and dividends shall accrue on the capital stock of the Corporation
represented by such new certificate from the date to which dividends have been
fully paid on such capital stock represented by the surrendered certificate. The
issuance of new certificates shall be made without charge to the holders of the
surrendered certificates for any issuance tax in respect therefor or other cost
incurred by the Corporation in connection with such issuance.
SECTION 2. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing shares of any series of capital stock of the
Corporation, and in the case of any such loss, theft or destruction, upon
receipt of indemnity reasonably satisfactory to the Corporation (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such series represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue on the
capital stock of the Corporation represented by such new certificate from the
date to which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.
SECTION 3. AMENDMENT AND WAIVER. No amendment, modification or waiver
shall be binding or effective with respect to any provision of (i) Parts B, C or
D of this Article FOURTH (or any definitions used therein) without the prior
approval of the Holders of a majority of the Senior Preferred Stock outstanding
at the time such action is taken and (ii) Part C of this Article FOURTH (or any
definitions used therein) without the prior approval of the holders of a
majority of the Common Stock and the Preferred Stock, in each case outstanding
at the time such action is taken, voting together as one class. Any approval
required by this Section 3 may be obtained by vote at an annual or special
meeting of the Corporation's stockholders or without a meeting by written
consent.
<PAGE> 30
SECTION 4. NOTICES. Except as otherwise expressly provided hereunder,
all notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charges prepaid, and shall be deemed to
have been given three days after the date of mailing or one day after the date
of delivery with such overnight courier service; provided that such notices are
sent (i) to the Corporation, at its principal executive offices and (ii) to any
stockholder, at such holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by any such holder).
FIFTH: The Corporation is to have perpetual existence.
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is hereby authorized to adopt, amend or repeal
the bylaws of the Corporation.
SEVENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the bylaws may provide. The books of the Corporation may
be kept outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the bylaws of the
Corporation. Elections of directors need not be by written ballot unless the
bylaws of the Corporation so provide.
EIGHTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or any creditor or stockholder thereof or on the
application of an receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or the stockholders
or class of stockholders of the Corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders, or class of
stockholders, of the Corporation, as the case may be, and also on this
Corporation.
NINTH: To the fullest extent permitted by the General Corporation Law
of the State of Delaware (including, without limitation, Section 102(b)(7)), as
amended from time to time, no director of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. Any repeal or amendment of this Article NINTH or adoption of
any provision of this Amended and Restated Certificate of Incorporation
inconsistent with this Article NINTH shall have prospective effect only and
shall not adversely affect the liability of a director of the Corporation with
respect to any act or omission occurring at or before the time of such repeal,
amendment or adoption of an inconsistent provision.
<PAGE> 31
TENTH: The Corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware (including, without limitation,
Section 145 thereof), as amended from time to time, indemnify any promoter,
director or officer whom it shall have power to indemnify from and against any
and all of the expenses liabilities or other losses of any nature. The
indemnification provided in this Article TENTH shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be promoter, director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ELEVENTH: The Corporation elects out of and shall not be governed by
Section 203 of the General Corporation Law of the State of Delaware.
TWELFTH: The Corporation reserves the right to amend or repeal any
provision contained in this Amended and Restated Certificate of Incorporation in
the manner now hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
* * * * *
<PAGE> 1
EXHIBIT 3.2
AMENDMENT
TO
BYLAWS
OF
CLARK-SCHWEBEL HOLDINGS, INC.
Section 1 of Article III of the Bylaws of Clark-Schwebel Holdings, Inc. shall be
amended, effective as of July 14, 1997, and thereafter only for so long as any
shares of Senior Preferred Stock (as defined in the Amended and Restated
Certificate of Incorporation) remain outstanding, to add the following paragraph
at the end of such Section 1:
Notwithstanding the foregoing, upon any occurrence of a Voting
Rights Triggering Event (as such term is defined in Section 5(c)(i) of Part B of
Article Fourth of the corporation's Amended and Restated Certificate of
Incorporation), then, in any such case, the number of directors constituting the
Board of Directors shall be increased to permit the holders of the majority of
the then outstanding Senior Preferred Stock (as such term is defined in the
corporation's Amended and Restated Certificate of Incorporation), voting
separately as one class, to elect two directors. The term of any director
elected pursuant to the foregoing sentence shall terminate in accordance with
the provisions of Section 5(c)(ii) of Part B of Article Fourth of the
corporation's Amended and Restated Certificate of Incorporation, whereupon the
number of directors constituting the Board of Directors automatically shall be
decreased by two.
<PAGE> 1
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
Dated as of July 14, 1997
between
Clark-Schwebel Holdings, Inc.
and
Donaldson, Lufkin & Jenrette Securities Corporation,
(the "Purchaser")
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of July 14, 1997 by and between Clark-Schwebel Holdings, Inc., a
Delaware corporation (the "Company") and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Purchaser") who has agreed to purchase the Company's 12-1/2%
Senior Exchangeable Participating Preferred Stock due 2007 (the "Preferred
Shares") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated July 14,
1997 (the "Purchase Agreement"), by and among the Company, Vestar/CS Holding
Company, LLC, ("Vestar") and the Purchaser. In order to induce the Purchaser to
purchase the Preferred Shares, Vestar has agreed to cause the Company to provide
the registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the obligations of the Purchaser set forth
in Section 7(h) of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Debentures to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement as continuously effective and the
keeping open of the Exchange Offer for a period not less than the minimum period
required pursuant to Section 4(b) hereof and (iii) the delivery, by the Company
to the Registrar under the Indenture, of Series B Debentures in the same
aggregate principal amount as the aggregate principal amount of Series A
Debentures tendered by the Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to (i) the Preferred Shares, each
Dividend Payment Date and (ii) the Series A Debentures, each Interest Payment
Date.
Dividend Payment Date: Means January 15, April 15, July 15 and October 15
of each year.
Effectiveness Target Date: As defined in Section 6.
Exchange Act: The Securities Exchange Act of 1934, as amended.
<PAGE> 3
Exchange Offer: The registration by the Company under the Act of the
Series B Debentures pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Series A Debentures that
constitute Transfer Restricted Securities the opportunity to exchange all such
outstanding Series A Debentures that constitute Transfer Restricted Securities
held by such Holders for Series B Debentures in an aggregate principal amount
equal to the aggregate principal amount of Series A Debentures that constitute
Transfer Restricted Securities tendered by such Holders in response to such
exchange offer.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchaser proposes to sell
the Series A Securities to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain institutional
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Act ("Accredited Institutions").
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 9(a) hereof.
Indenture: An Indenture, substantially in the form attached to the
Purchase Agreement as Exhibit B, between the Company and State Street Bank and
Trust Company, as trustee (the "Trustee"), pursuant to which the Series A
Debentures and the Series B Debentures, if any, would be issued, as such
Indenture is amended or supplemented from time to time in accordance with the
terms thereof.
Indenture Effective Date: The date as of which the Indenture has been
executed by the parties thereto and the Series A Debentures shall have been
issued thereunder.
Interest Payment Date: means January 15 and July 15 of each year.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Preferred Shares: As defined in the preamble hereto.
Preferred Shares Shelf Registration Statement: As defined in Section 3(a)
hereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Purchaser: As defined in the preamble hereto.
<PAGE> 4
Record Holder: With respect to any Damages Payment Date relating to Series
A Securities, the Person who is a Holder of Series A Securities on the record
date with respect to the Dividend Payment Date or Interest Payment Date, as
applicable, on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 6 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) a registration for resale of Preferred Shares pursuant to the Preferred
Shares Shelf Registration Statement, (b) an offering of Series B Debentures
pursuant to an Exchange Offer or (c) the registration for resale of Series A
Debentures that constitute Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Series A Debentures: The Company's 12-1/2% Series A Debentures due 2007 to
be issuable under the Indenture.
Series A Securities: The Company's (i) Preferred Shares or (ii) 12-1/2%
Series A Debentures due 2007 issuable under to the Indenture.
Series B Debentures: The Company's 12-1/2% Series B Senior Debentures due
2007 issuable under the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 5 hereof.
Shelf Registration Statement: As defined in Section 5 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each outstanding Series A Security, until
the earliest to occur of (a) the date on which the Preferred Shares effectively
have been registered under the Act and disposed of in accordance with the
Preferred Shares Shelf Registration Statement, (b) the date on which Series A
Debentures are exchanged in the Exchange Offer by a Person other than a
Broker-Dealer for Series B Debentures and is entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (c) following the exchange by a Broker-Dealer in the
Exchange Offer of Series A Debentures for Series B Debentures, the date on which
such Series B Debentures are sold to a purchaser who receives from such
Broker-Dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (d) the date on which
the Series A Debentures effectively have been registered under the Act and
disposed of in accordance with the Shelf Registration Statement or (e) the date
on which such Series A Debentures are distributed to the public pursuant to Rule
144 under the Act.
<PAGE> 5
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
SECTION 3. PREFERRED SHARES SHELF REGISTRATION STATEMENT
(a) Unless the Preferred Shares shall have been exchanged for the Series A
Debentures pursuant to the Amended and Restated Certificate of Incorporation of
the Company, the Company shall (i) cause to be filed under the Act with the
Commission as soon as practicable after the Closing Date, but in no event later
than 45 days after the Closing Date, a shelf registration statement pursuant to
Rule 415 under the Act (the "Preferred Shares Shelf Registration Statement"),
relating to all Preferred Shares the Holders of which have provided the
information required pursuant to Section 3(c) hereof, and (ii) use its
reasonable best efforts to cause such Preferred Shares Shelf Registration
Statement to become effective on or prior to the date which is 120 days after
the Closing Date.
(b) The Company shall use its reasonable best efforts to keep such
Preferred Shares Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Sections 7(b) and (c)
hereof for a period of three years from the effective date thereof (as extended
pursuant to Section 7(c)(i)) or such shorter period that will terminate when all
Preferred Shares are no longer Transfer Restricted Securities or all Preferred
Shares covered by such Preferred Shares Shelf Registration Statement have been
sold pursuant thereto, and to ensure that such Preferred Shares Shelf
Registration Statement conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of three years from the effective date thereof (as
extended pursuant to Section 7(c)(i)) or such shorter period that will terminate
when all Preferred Shares are no longer Transfer Restricted Securities or all
Preferred Shares covered by such Preferred Shares Shelf Registration Statement
have been sold pursuant thereto.
(c) No Holder of Preferred Shares that are Transfer Restricted Securities
may include any of its Preferred Shares that are Transfer Restricted Securities
in any Preferred Shares Shelf Registration Statement pursuant to this Agreement
unless and until such Holder furnishes to the Company in writing, within 20
business days after receipt of a request therefor, such information as the
Company reasonably may request for use in connection with any Preferred Shares
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. No Holder of Preferred Shares that are Transfer Restricted Securities
shall be entitled to Liquidated Damages pursuant to Section 6 hereof unless and
until such Holder shall have used its best efforts to provide all such
reasonably requested information. Each Holder as to which any Preferred Shares
Shelf Registration Statement is being effected agrees to furnish promptly to the
Company all information
<PAGE> 6
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
(d) The Company agrees not to, and to use their reasonable best efforts to
cause its affiliates not to, offer, sell, contract to sell or grant any option
to purchase or otherwise transfer or dispose of any debt security issued by the
Company or any security convertible into or exchangeable or exercisable for any
such debt security, including a sale pursuant to Rule 144 under the Act, during
the 30-day period beginning on the closing date of each Underwritten Offering
made pursuant to the Preferred Shares Shelf Registration Statement (except as
part of such Underwritten Registration).
SECTION 4. REGISTERED EXCHANGE OFFER
(a) If the Preferred Shares have been exchanged for the Series A
Debentures, unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 7(a) below
have been complied with), the Company shall (i) cause to be filed under the Act
with the Commission as soon as practicable after the Indenture Effective Date,
but in no event later than 45 days after the Indenture Effective Date, an
Exchange Offer Registration Statement relating to the Series B Debentures and
the Exchange Offer, (ii) use their best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 120 days after the Indenture Effective Date, (iii) in
connection with the foregoing, file (A) all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause such
Exchange Offer Registration Statement to become effective, (B) if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) all filings in connection with the
registration and qualification of such Series B Debentures as are necessary
under the Blue Sky laws of such jurisdictions in order to permit Consummation of
the Exchange Offer, and (iv) upon the effectiveness of such Registration
Statement, use their best efforts to issue on or prior to 150 days after the
Indenture Effective Date (the "Exchange Offer Effectiveness Date") such Series B
Debentures in exchange for all Series A Debentures tendered prior thereto in the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of such Series B Debentures to be offered in exchange for the
Series B Debentures and to permit resales of Series A Debentures held by
Broker-Dealers as contemplated by Section 4(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement to
be effective continuously and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Series B Debentures shall be included in the
Exchange Offer Registration Statement. The Company shall use its best efforts to
cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become effective, but in no
event later than 30 business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who
<PAGE> 7
holds Series A Debentures that are Transfer Restricted Securities and that were
acquired for its own account as a result of market-making activities or other
trading activities (other than Transfer Restricted Securities acquired directly
from the Company), may exchange such Series A Debentures pursuant to the
Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter"
within the meaning of the Act and, consequently, must deliver a prospectus
meeting the requirements of the Act in connection with any resales of the Series
B Debentures received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such resales by Broker-Dealers that the Commission
may require in order to permit such resales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Series A Debentures or Series B Debentures held by any such Broker-Dealer except
to the extent required by the Commission as a result of a change in policy after
the date of this Agreement.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 7(c) below to the extent necessary to
ensure that it is available for resales of Series B Debentures acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that such Exchange Offer Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period equal to the shorter of (A) two hundred and ten (210)
consecutive days after the date the Exchange Offer is Consummated (subject to
the provisions of Section 7(c)(i) below) and (B) the date on which all Transfer
Restricted Securities acquired in the Exchange Offer by Restricted
Broker-Dealers have been sold to the public by such Restricted Broker-Dealers.
In order to facilitate such resales, at any time during such 210-day period
the Company shall provide to Broker-Dealers, promptly upon request, and in no
event more than five business days after any such request, sufficient copies of
the latest version of such Prospectus.
SECTION 5. SHELF REGISTRATION
(a) Shelf Registration. If the Preferred Shares have been exchanged for
the Series A Debentures, and (i) the Company is not required to file an Exchange
Offer Registration Statement with respect to the Series B Debentures because the
Exchange Offer is not permitted by applicable law (after the procedures set
forth in Section 7(a) below have been complied with) or Commission policy or
(ii) if any Holder of Series A Debentures that are Transfer Restricted
Securities shall notify the Company within 10 business days following
Consummation of the Exchange Offer that (A) such Holder was prohibited by law or
Commission policy from participating in the Exchange Offer, (B) such Holder may
not resell the Series B Debentures acquired by it in the Exchange Offer to the
public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Series A
Debentures acquired directly from the Company or one of its affiliates, then the
Company shall
<PAGE> 8
(x) cause to be filed on or prior to (1) in the case of a
Registration Statement filed pursuant to clause (i) above, the earlier to
occur of 45 days after the date on which the Company determines that it is
not required to file the Exchange Offer Registration Statement or 75 days
after the Indenture Effective Date and (2) in the case of a Registration
Statement filed pursuant to clause (ii) above, 45 days after the date on
which the Company receives the notice specified in clause (ii) above, a
shelf registration statement pursuant to Rule 415 under the Act (which may
be an amendment to the Exchange Offer Registration Statement (in either
event, the "Shelf Registration Statement")), relating to all Series A
Debentures that are Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 5(b)
hereof, and shall
(y) use its reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to (1) in the case
of a Registration Statement filed pursuant to clause (i) above, 120 days
after the date on which the Company becomes obligated to file such Shelf
Registration Statement and (2) in the case of a Registration Statement
filed pursuant to clause (ii) above, 120 days after the date on which the
Company receives the notice specified in clause (ii) above. If, after the
Company has filed an Exchange Offer Registration Statement which satisfies
the requirements of Section 4(a) above, the Company is required to file and
make effective a Shelf Registration Statement solely because the Exchange
Offer shall not be permitted under applicable federal law, then the filing
of the Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above. Such an event shall have no effect on the
requirements of clause (y) above, or on the Effectiveness Target Date as
defined in Section 6 below.
The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 7(b) and (c) hereof for a period of three
years from the effective date thereof (as extended pursuant to Section 7(c)(i)
or such shorter period that will terminate when all Series A Debentures are no
longer Transfer Restricted Securities or all Series A Debentures covered by such
Shelf Registration Statement have been sold pursuant thereto, and to ensure that
such Shelf Registration Statement conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of three years from the effective date
thereof (as extended pursuant to Section 7(c)(i)) or such shorter period that
will terminate when all Series A Debentures are no longer Transfer Restricted
Securities or all Series A Debentures covered by such Shelf Registration
Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Series A Debentures that are Transfer
Restricted Securities may include any of its Series A Debentures that are
Transfer Restricted Securities in any Shelf Registration Statement pursuant to
this Agreement unless and until such Holder furnishes to the Company in writing,
within 20 business days after receipt of a request therefor, such information as
the Company reasonably may request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Series A Debentures that are Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 6 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to
<PAGE> 9
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
(c) Restrictions on Sale of Certain Securities by Others. The Company
agrees not to, and to use their reasonable best efforts to cause its affiliates
not to, offer, sell, contract to sell or grant any option to purchase or
otherwise transfer or dispose of any debt security issued by the Company or any
security convertible into or exchangeable or exercisable for any such debt
security, including a sale pursuant to Rule 144 under the Act, during the 30-day
period beginning on the closing date of each Underwritten Offering made pursuant
to the Shelf Registration Statement (except as part of such Underwritten
Registration).
SECTION 6. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement are
not filed with the Commission on or prior to the date specified for such filing
in Sections 3, 4 or 5 of this Agreement, as applicable, (ii) any of such
Registration Statements have not been declared effective by the Commission on or
prior to the date specified for such effectiveness in Sections 3, 4 or 5 of this
Agreement, as applicable, (the "Effectiveness Target Date"), (iii) the Exchange
Offer, if any, has not been Consummated within 150 days after the Indenture
Effective Date or (iv) subject to the provisions of Section 7(c)(i) below, any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself immediately declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), the Company hereby agrees to pay
liquidated damages to each Holder of Transfer Restricted Securities, during the
first 90-day period immediately following the occurrence of such Registration
Default, in an amount equal to $.05 per week per $1,000 of liquidation value or
principal amount, as the case may be, of the Transfer Restricted Securities held
by such Holder for so long as the Registration Default continues. The amount of
liquidated damages payable to each Holder shall increase by an additional $.05
per week per $1,000 of liquidation value or principal amount, as the case may
be, of Transfer Restricted Securities held by such Holder for each subsequent
90-day period, up to a maximum amount of liquidated damages of $.30 per week per
$1,000 of liquidation value or principal amount, as the case may be, of Transfer
Restricted Securities held by such Holder. All accrued liquidated damages shall
be paid by the Company on each Damages Payment Date (i) to the Global Note
Holder by wire transfer of immediately available funds and (ii) to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified, as provided in the Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Company set forth in the preceding paragraph that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such Security shall have been
satisfied in full.
<PAGE> 10
SECTION 7. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall comply with all of the provisions of Section 7(c)
below, shall use its reasonable best efforts to effect such exchange to permit
the sale of Series A Debentures that constitute Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Company hereby agrees to seek a no-action letter or
other favorable decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Series A Debentures. The Company
hereby agrees to pursue the issuance of such a decision to the Commission
staff level, but shall not be required to take commercially unreasonable
action to effect a change of Commission policy. The Company hereby agrees,
however, (A) to participate in telephonic conferences with the Commission,
(B) to deliver to the Commission staff an analysis prepared by counsel to
the Company setting forth the legal bases, if any, upon which such counsel
has concluded that such an Exchange Offer should be permitted and (C) to
pursue diligently a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Series A Debentures
that constitute Transfer Restricted Securities shall furnish, upon the
request of the Company, prior to the Consummation thereof, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that such Holder (A) is not an affiliate of the Company, (B) is
not engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Debentures to be issued in the Exchange Offer and (C) is acquiring
the Series B Debentures in its ordinary course of business. In addition,
all such Holders of Series A Debentures that constitute Transfer Restricted
Securities otherwise shall cooperate in the Company's preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees (X) that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including any no-action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and (Y) that such a secondary resale transaction should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of Series B Debentures obtained by such Holder in
exchange for Series A Debentures acquired by such Holder directly from the
Company or its affiliates.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company
<PAGE> 11
is registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above and
(B) including a representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the Series B
Debentures to be received in the Exchange Offer and that, to the best of
the Company's information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Debentures in its ordinary course
of business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Debentures received in the
Exchange Offer.
(b) Shelf Registration Statements. In connection with the Preferred Shares
Shelf Registration Statement or the Shelf Registration Statement, as applicable,
the Company shall comply with all of the provisions of Section 7(c) below and
shall use its best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution thereof, and pursuant thereto the Company as
expeditiously as possible will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement in order to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Series A Securities and Series B Debentures by Broker-Dealers), the Company
shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Sections 3, 4 or 5 of this
Agreement, as applicable. Upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company promptly shall file an appropriate
amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of either
clause (A) or (B), use its best efforts to cause such amendment to be
declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter. Notwithstanding the foregoing, the Company may
suspend the effectiveness of (1) the Registration Statement relating to the
Exchange Offer for up to 10 days during the 210-day period referred to in
Section 4(c) and (2) the Preferred Shares Shelf Registration Statement or
the Shelf Registration Statement, as applicable, for up to 30 days in each
year during which such Preferred Shares Shelf Registration Statement or
Shelf Registration Statement, as applicable, is required to be effective
and usable hereunder (measured from the date of effectiveness of such
Preferred Shares Shelf Registration Statement or Shelf Registration
Statement to successive anniversaries thereof) if (A) either (y)(I) the
Company shall be engaged in a material acquisition or disposition and
(II)(aa) such acquisition or disposition is required to be disclosed in the
Registration Statement, the related Prospectus or any amendment or
supplemental thereto, or the failure by the Company to disclose such
<PAGE> 12
transaction in the Registration Statement or related Prospectus, or any
amendment or supplemental thereto, as then amended or supplemented, would
cause such Registration Statement, Prospectus or amendment or supplement
thereto, to contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statement therein not
misleading, in the light of the circumstances under which they were made,
(bb) information regarding the existence of such acquisition or disposition
has not then been publicly disclosed by or on behalf of the Company and
(cc) a majority of the Board of Directors of the Company determines in the
exercise of its good faith judgment that disclosure of such acquisition or
disposition would not be in the best interest of the Company and its
subsidiaries or would have a material adverse effect on the consummation of
such acquisition or disposition or (z) a majority of the Board of Directors
of the Company determines in the exercise of its good faith judgment that
compliance with the disclosure obligations set forth in this Section
7(c)(i) would otherwise have a material adverse effect on the Company and
its subsidiaries, taken as a whole, and (B) the Company notifies the
Holders within two business days after such Board of Directors makes the
relevant determination set forth in clause (A); provided, however, that in
each such case the applicable period specified in Sections 3, 4 and 5
hereof during which the applicable Registration Statement is required to be
kept effective and usable shall be extended by the number of days during
which such effectiveness was suspended pursuant to the foregoing.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Sections 3, 4 or 5 hereof, as applicable, or such shorter period
as will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
and, if requested by such Persons, confirm such advice in writing, (A) when
the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B)
of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement under
the Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale in
any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement thereto
or any document incorporated by reference therein untrue, or that requires
the making of any additions to or changes in the Registration Statement or
the Prospectus in order to make the statements therein not misleading. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration
<PAGE> 13
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities
or Blue Sky laws the Company shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to each Purchaser, each of the selling Holders and
each of the underwriter(s), if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least five business days, and the Company will not file any
such Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which a selling Holder of Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s), if
any, shall object within five business days after the receipt thereof. A
selling Holder or underwriter, if any, shall be deemed to have objected
reasonably to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission or fails to comply with the applicable
requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement subsequent to
the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriter(s), if
any, reasonably may request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to any such
underwriter(s), the purchase price being paid therefor and any other terms
of the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
<PAGE> 14
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority of the outstanding shares of
Preferred Shares or principal amount of Series A Debentures, as applicable
covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby consents
to the use of the Prospectus and any amendment or supplement thereto by
each of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent
as may be requested by any Purchaser or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the Company shall:
(A) furnish to each Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request
and as are customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the Consummation of the
Exchange Offer and, if applicable, upon the effectiveness of the
Preferred Shares Shelf Registration Statement or the Shelf Registration
Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Preferred
Shares Shelf Registration Statement or the Shelf Registration
Statement, as the case may be, signed by (x) the President or any
Vice President and (y) a principal financial or accounting officer
of the Company, confirming, as of the date thereof, the matters
set forth in paragraphs (a), (b), (c) and (d) of Section 7 of the
Purchase Agreement and such other matters as such parties may
reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Preferred
Shares Shelf Registration Statement or the Shelf Registration
Statement, as the case may be, of counsel for the Company covering
the matters set forth in Exhibit C to the Purchase Agreement and
such other matters as the Holders and/or managing underwriter(s)
reasonably may request, and in any event including a statement to
the effect that such counsel has participated in conferences with
<PAGE> 15
officers and other representatives of the Company, representatives
of the independent public accountants for the Company, the
Purchaser's representatives and the Purchaser's counsel in
connection with the preparation of such Registration Statement and
the related Prospectus and have considered the matters required to
be stated therein and the statements contained therein, although
such counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that on the basis
of the foregoing (relying upon facts provided to such counsel by
officers and other representatives of the Company and without
independent check or verification), that no facts came to such
counsel's attention that caused such counsel to believe that the
applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective, and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as
of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included
in any Registration Statement contemplated by this Agreement or
the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness of
the Shelf Registration Statement, as the case may be, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with primary underwritten
offerings;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 9 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as reasonably
may be requested by such parties to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company pursuant to
this clause (xi), if any.
The provisions of this clause (a) shall be applicable at each closing under
such underwriting or similar agreement, as and to the extent required thereunder
and, if at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the Company
promptly shall so advise the Purchasers and the underwriter(s), if any, and each
selling Holder and, if requested by such Persons, shall confirm such advice in
writing;
<PAGE> 16
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s) may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the Preferred Shares Shelf
Registration Statement or the Shelf Registration Statement; provided,
however, that the Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xiii) upon the request of any Holder of Series A Debentures
covered by the Shelf Registration Statement, shall issue the corresponding
Series B Debentures, having an aggregate principal amount equal to the
aggregate principal amount of the Series A Debentures surrendered to the
Company by such Holder in exchange therefor or being sold by such Holder,
such Series B Debentures to be registered in the name of such Holder or in
the name of the purchaser(s) of such Debentures; in return, the Series A
Debentures held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s),
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends, and enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary in order to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (viii)
above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading; provided, however, the Company shall not
be required to comply with this clause (xvi) if, and only for so long as
(A) either (l)(y) the Company shall be engaged in a material acquisition or
disposition and (z)(I) such acquisition or disposition is required to be
disclosed in the Registration Statement, the related Prospectus or any
amendment or supplement thereto, or the failure by the Company to disclose
such transaction in the Registration Statement or related Prospectus, or
any amendment or supplement thereto, as then amended or supplemented, would
cause such Registration Statement, Prospectus or amendment or supplement
thereto, to contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein no
<PAGE> 17
misleading, in the light of the circumstances under which they were made,
(II) information regarding the existence of such acquisition or disposition
has not been publicly disclosed by or on behalf of the Company and (III) a
majority of the Board of Directors of the Company determines in the
exercise of its good faith judgment that disclosure of such acquisition or
disposition would not be in the best interests of the Company and its
subsidiaries or would have a material adverse effect on the consummation of
such acquisition or disposition or (2) a majority of the Board of Directors
of the Company determines in the exercise of its good faith judgment that
compliance with the disclosure obligations set forth in this clause (xvi)
would otherwise have a material adverse effect on the Company and its
subsidiaries, taken as whole, and (B) the Company notifies the Holders
within two business days after the Board of Directors makes the relevant
determination set forth in clause (A); provided, however, that in each such
case the period specified in Sections 3, 4 and 5 hereof during which the
applicable Registration Statement is required to be kept effective and
usable shall be extended by the number of days during which such
effectiveness was suspended pursuant to the foregoing;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement,
and provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for deposit
with the Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm or best efforts Underwritten Offering or (B) if not
sold to underwriters in such an offering, beginning with the first month of
the Company's first fiscal quarter commencing after the effective date of
the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement, and, in connection therewith, cooperate with the Trustee
and the Holders of Series A Debentures or Series B Debentures, as the case
may be, to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner;
<PAGE> 18
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by
the Holders of a majority of the outstanding Preferred Shares or aggregate
principal amount of Series A Debentures, as applicable, or the
underwriters, if any; and
(xxii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Company of the existence of any fact of the
kind described in Section 7(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 7(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Sections 3, 4 or 5
hereof, as applicable, shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
7(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 7(c)(xvi) hereof or
shall have received the Advice.
SECTION 8. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter" and its counsel that may be required by
the rules and regulations of the NASD)); (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B
Debentures to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company the Holders of Transfer Restricted Securities; (v)
all application and filing fees in connection with listing Series B Debentures
on a national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
<PAGE> 19
SECTION 9. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder and
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any Holder (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of each Holder and each controlling person (any
person referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "Indemnified Holder") to the fullest extent lawful, from and against any
and all losses, claims, damages, judgments, actions and other liabilities
(collectively, "Liabilities"), and will reimburse each Indemnified Holder for
all fees and expenses (including, without limitation, the reasonable fees and
expenses of counsel to any Indemnified Holder) (collectively, "Expenses") as
they are incurred in investigating, preparing, pursuing or defending any claim
or action, or any proceeding or investigation by any governmental agency or
body, whether or not in connection with pending or threatened litigation and
whether or not any Indemnified Holder is a party (collectively, "Actions"),
directly or indirectly caused by, related to, based upon, arising out of or in
connection with any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, preliminary Prospectus or
Prospectus (including any amendments thereof and supplements thereto), or by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
Liabilities or Expenses are caused by an untrue statement or omission or alleged
untrue statement or omission (i) that is made in reliance upon and in conformity
with information relating to an Indemnified Holder furnished in writing to the
Company by such Indemnified Holder expressly for use therein or (ii) that is
made in any preliminary Prospectus if a copy of the final Prospectus (as then
amended or supplemented) was not sent or given by or on behalf of the Holder to
the person asserting any such loss, claim, damage, liability or expense, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Series A Securities or Series B Debentures and
the final prospectus (as then amended or supplemented) would have corrected such
untrue statement or omission. The Company also agrees to reimburse each
Indemnified Holder for all Expenses as incurred in connection with enforcing
such Indemnified Holder's rights under this Agreement (including, without
limitation, its rights under this Section 9). The Company shall notify each
Indemnified Holder promptly of the institution, threat or assertion of any
Action in connection with the matters addressed by this Agreement which involves
the Company or an Indemnified Holder.
Upon receipt by an Indemnified Holder of notice of an Action against such
Indemnified Holder with respect to which indemnity may be sought under this
Section 9, such Indemnified Holder shall promptly notify the Company in writing;
provided that the failure to so notify the Company shall not relieve the Company
from any liability which the Company may have on account of this indemnity or
otherwise, except to the extent the Company shall have been materially
prejudiced by such failure. The Company shall, if requested by such Indemnified
Holder, assume the defense of any such Action, including the employment of
counsel reasonably satisfactory to such Indemnified Holder. Any Indemnified
Holder shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Holder, unless: (i) the Company has
failed promptly to assume the defense and employ counsel reasonably satisfactory
to such Indemnified Holder, (ii) the indemnifying party has authorized the
employment of counsel for such
<PAGE> 20
Indemnified Holder at the expense of the indemnifying party or (iii) the named
parties to any such Action (including any impleaded parties) include such
Indemnified Holder and the Company, and such Indemnified Holder shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or in addition to those available to the Company;
provided that the Company shall not in such event be responsible hereunder for
the fees and expenses of more than one firm of separate counsel in connection
with any Action in the same jurisdiction, in addition to any local counsel. The
Company shall not be liable for any settlement of any Action effected without
its written consent (which shall not be unreasonably withheld) and the Company
agrees to indemnify and hold harmless any Indemnified Holder from and against
any Liability or Expense by reason of any settlement of any Action effected with
the written consent of the Company. Notwithstanding the immediately preceding
sentence, if at any time an Indemnified Holder shall have requested the Company
to reimburse the Indemnified Holder for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Company agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than sixty (60)
business days after receipt by the Company of the aforesaid request and (ii) the
Company shall not have reimbursed the Indemnified Holder in accordance with such
request prior to the date of such settlement. In addition, the Company will not,
without the prior written consent of each Indemnified Holder, settle any pending
or threatened Action in respect of which indemnification or contribution may be
sought hereunder (whether or not any Indemnified Holder is a party thereto),
unless such settlement includes an unconditional release of such Indemnified
Holder from all Liabilities on claims that are the subject matter of such
proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and not
jointly, to indemnify and hold harmless the Company, and its directors,
officers, and any person controlling (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Company, and the respective officers,
directors, partners, employees, representatives and agents of each such person,
to the same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to Liabilities and Expenses incurred
in investigating, preparing, pursuing or defending Actions caused by or arising
out of, based on or in connection with information relating to such Holder
furnished in writing by or on behalf of such Holder expressly for use in any
Registration Statement or Prospectus or any amendment or supplement thereto. In
case any Action shall be brought against the Company or its directors or
officers or any such controlling person in respect of which indemnity may be
sought against a Holder of Transfer Restricted Securities, such Holder shall
have the rights and duties given the Company and the Company or its directors or
officers or such controlling person shall have the rights and duties given to
each Holder by the preceding paragraph. In no event shall the liability of any
selling Holder hereunder be greater than the amount by which the total proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation exceeds the sum of (A) the amount paid by
such Holder for such Registrable Securities plus (B) the amount of any damages
which such Holder has otherwise been required to pay by reason of a claim or
action based on such information.
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under Section 9(a) or Section 9(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any Liabilities
or Expenses referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
<PAGE> 21
paid or payable by such indemnified party as a result of such Liabilities or
Expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Holders on the other
hand from their sale of Transfer Restricted Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and of the
Indemnified Holder, as well as any other relevant equitable considerations. The
relative benefits received by the Company and any Indemnified Holder shall be
deemed to be in the same proportion as (x) the total proceeds from the offering
of Transfer Restricted Securities to the Purchasers (net of discounts but before
deducting expenses) received by the Company and (y) the total proceeds received
by such Indemnified Holder upon its sale of Transfer Restricted Securities which
otherwise would give rise to the indemnification obligation, respectively. The
relative fault of the Company on the one hand and of the Indemnified Holder on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and each Holder of Transfer Restricted Securities agrees that
it would not be just and equitable if contribution pursuant to this Section 9(c)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the Liabilities and Expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth in
the second paragraph of Section 9(a), any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any Action. Notwithstanding any other provision of this Section 9,
none of the Holders (and its related Indemnified Holders) shall be required to
contribute, in the aggregate, an amount in excess of the amount by which the
total proceeds received by such Holder with respect to the sale of its Series A
Debentures giving rise to such Liabilities or Expenses exceeds the sum of (A)
the amount paid by such Holder for such Series A Debentures plus (B) the amount
of any damages which such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 9(c) are several in proportion to the number
of shares or principal amount, as the case may be, of Series A Securities held
by each of the Holders hereunder and not joint.
SECTION 10. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to effect resales of such Transfer Restricted
Securities pursuant to Rule 144A.
<PAGE> 22
SECTION 11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements.
SECTION 12. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Preferred
Shares Shelf Registration Statement or the Shelf Registration Statement who
desire to do so may sell such Transfer Restricted Securities in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities included in such offering; provided that such
investment bankers and managers must be reasonably satisfactory to the Company.
SECTION 13. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
a breach of any of the provisions of this Agreement will cause irreparable
injury to the Holders, that the Holders have no adequate remedy by law in
respect of such breach and, as a consequence, that each and every provision
contained in this Agreement shall be specifically enforceable against the
Company, and the Company hereby waives and agrees not to assert as a defense to
the request or granting of specific performance of any such provision that any
breach of any such provision does not or would not cause irreparable harm or is
or would be compensable by an award of money damages in respect of such breach.
(b) No Inconsistent Agreements. The Company will not enter, on or after the
date of this Agreement, into any agreement with respect to its securities that
would be inconsistent with the rights granted to the Holders in this Agreement
or otherwise would conflict with the provisions hereof. The rights granted to
the Holders hereunder do not in any way conflict with and are not inconsistent
in any way with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Series A Debentures and Series B Debentures.
The Company will not take any action, or permit any change to occur, with
respect to the Series A Debentures or Series B Debentures that would materially
and adversely affect the ability of the Holders to Consummate any Exchange
Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the
<PAGE> 23
outstanding shares of Preferred Shares or principal amount of Series A
Debentures, as applicable. Notwithstanding the foregoing, the Holders of a
majority of the outstanding principal amount of Series A Debentures, as
applicable being tendered or registered may give a waiver or consent to
departure from the provisions hereof, which waiver or consent relates
exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and does not directly or indirectly affect the
rights of other Holders whose securities are not being tendered pursuant to such
Exchange Offer.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, then at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company, then:
Clark-Schwebel Holdings, Inc.
c/o Clark-Schwebel, Inc.
P.O. Box 2627
2200 South Murray Avenue
Anderson, SC 29622
Telecopier No.: 803-260-3377
Attention: William D. Bennison
and Donald Burnette
With a copy to:
Kirkland & Ellis
655 15th Street, N.W.
Washington, D.C. 20005
Telecopier No.: (202) 878-5200
Attention: Jack M. Feder
All such notices and communications shall be deemed to have been duly given
as follows: (A) at the time delivered by hand, if personally delivered; (B) five
business days after being deposited in the mail, postage prepaid, if mailed; (C)
when answered back, if telexed; (D) when receipt acknowledged, if telecopied;
and (E) on the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
delivered concurrently to the Trustee, at the address specified in the
Indenture, by the Person giving the same.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the
<PAGE> 24
need for an express assignment, subsequent Holders of Transfer Restricted
Securities; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign acquired Transfer Restricted Securities from
such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT
OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CLARK-SCHWEBEL HOLDINGS, INC.
By: /s/ William D. Bennison
--------------------------------------
Name: William D. Bennison
Title: President
Accepted and agreed to as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Thomas G. McGonagle
------------------------------
Name: Thomas G. McGonagle
Title: Managing Director
<PAGE> 1
EXHIBIT 10.2
SECOND AMENDMENT TO CREDIT AGREEMENT
SECOND AMENDMENT, dated as of July 14, 1997 (this
"Amendment"), to the CREDIT AGREEMENT, dated as of April 17, 1996, as amended by
the First Amendment, dated as of March 27, 1997 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Clark-Schwebel, Inc., a Delaware corporation (the "Borrower"),
Clark-Schwebel Holdings, Inc., a Delaware corporation (the "Parent"), each of
the lenders identified on the signature pages thereof and their successors and
assigns (the "Lenders"), The Chase Manhattan Bank (as successor to Chemical
Bank), as Administrative Agent, Collateral Agent, Documentation Agent and
Syndication Agent, The Chase Manhattan Bank Delaware, as Issuing Bank and
Bankers Trust Company, Fleet National Bank, and NationsBank, N.A. as Co-Agents.
W I T N E S S E T H :
WHEREAS, the Borrower and the Parent have requested that the
Lenders agree to increase the Revolving Credit Commitments under the Credit
Agreement to $65,000,000 and to permit the Borrower to use the proceeds of the
Revolving Credit Loans to finance dividends to pay the cash portion of the
redemption of the Parent Senior Exchangeable Preferred Stock and to finance the
repurchase of Senior Notes, all to the extent set forth in this Amendment;
WHEREAS, the Borrower has agreed to repay the Term Loans in
full; and
WHEREAS, the parties hereto agree to amend the Credit
Agreement on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement shall be used herein as defined therein.
SECTION 2. AMENDMENT OF CREDIT AGREEMENT
2.1 Amendment to Preamble to the Credit Agreement. The Preamble to
the Credit Agreement is hereby amended as follows:
<PAGE> 2
(a) by deleting the reference to "$55,000,000" in the third
paragraph thereof and substituting therefor "$65,000,000".
(b) by deleting the period at the end of the penultimate
sentence of the last paragraph thereof and substituting therefor the
following:
and to finance dividends to pay the cash portion of the
redemption of the Parent Senior Exchangeable Preferred Stock
and to finance the repurchase of Senior Notes.
2.2 Amendment to Section 1.01 of the Credit Agreement. Section 1.01 of
the Credit Agreement is hereby amended as follows:
(a) by deleting the chart in the definition of "Applicable
Percentage" and replacing it with the following:
<TABLE>
<CAPTION>
Eurodollar ABR Fee
Spread Spread Percentage
------ ------ ----------
<S> <C> <C> <C>
Category 1
Leverage Ratio of greater than or equal to 3.5 to 1.25% 0% 0.375%
1.0
Category 2
Leverage Ratio of greater than or equal to 3.0 and 1.00% 0% 0.300%
less than 3.5 to 1.0
Category 3
Leverage Ratio of greater than or equal to 2.25 0.875% 0% 0.250%
and less than 3.0 to 1.0
Category 4
Leverage Ratio of less than 2.25 to 1.0 0.75% 0% 0.250%
</TABLE>
(b) by inserting the following definitions in appropriate
alphabetical order:
"Joint Venture Funds" means any distributions or
dividends, directly or indirectly, of or from any of the Joint
Ventures or interests in the Joint Ventures or any proceeds
from the sale of, or distributions or dividends from, any of
the Joint Ventures.
"Parent Senior Exchange Debenture Indenture" shall
mean the Indenture by the Parent in favor of State Street Bank
and Trust Company, as trustee, pursuant to which the Parent
Senior Exchange Debentures are issued.
<PAGE> 3
"Parent Senior Exchange Debentures" shall mean the
12.5% Senior Exchange Debentures of the Parent issued upon the
exchange of Parent Senior Exchangeable Preferred Stock in
accordance with the Parent Senior Exchange Debenture
Indenture.
"Parent Senior Exchangeable Preferred Stock" shall
mean the 12.5% Senior Exchangeable Participating Preferred
Stock due 2007, par value $.01 per share, of the Parent.
(c) by amending the definition of "Cash Interest Expense" as
follows:
(i) by deleting the word "and" at the end of the
first clause (ii) thereof and substituting therefor a comma;
and
(ii) by adding the following new clause (iv)
immediately after clause (iii) thereof:
and (iv) interest expense payable in connection with
the Parent Senior Exchange Debentures.
(d) by amending the definition of "Joint Ventures" by adding
at the end of clause (e) thereof the phrase "or Joint Venture Funds";
(e) by amending the definition of "Leverage Ratio" by adding
the following at the end of clause (a)(ii) thereof:
less the amount of cash and Permitted Investments
held by the Parent and its Subsidiaries free of Liens
(other than Liens in favor of the Lenders) at any
time that no Revolving Loans are outstanding;
provided, that the Parent Senior Exchange Debentures
(including Parent Senior Exchange Debentures issued
as payment of interest thereon) shall be excluded
from the calculation of the Leverage Ratio.
(f) by amending the definition of "Parent Preferred Stock" by
deleting such definition in its entirety and substituting therefor the
following:
"Parent Preferred Stock" shall mean the Parent Senior
Exchangeable Preferred Stock.
(g) by amending the definition of "Permitted Investments" as
follows:
(i) by deleting the word "and" at the end of
paragraph (e) thereof;
<PAGE> 4
(ii) by relettering paragraph (f) thereof as
paragraph (g) and by deleting the phrase "paragraphs (a)-(e)
above" and substituting therefor the phrase "paragraphs
(a)-(f) above"; and
(iii) by inserting the following new paragraph (f)
between paragraphs (e) and (g) thereof:
(f) direct obligations issued by any state of the
United States of America or any political subdivision
of any such state or any public instrumentality or
municipality thereof maturing within 270 days from
the date of acquisition thereof and, at the time of
acquisition thereof having one of the two highest
ratings obtainable from either S&P or Moody's.
(h) by amending the definition of "Prepayment Event" as
follows:
(i) by deleting the word "and" at the end of clause
(xi) thereof;
(ii) by deleting the period at the end of clause
(xii) and substituting therefor the phrase "; and"; and
(iii) by adding the following new clause (xiii) at
the end thereof:
(xiii) the issuance of the Parent Senior Exchangeable
Preferred Stock and the issuance of the Parent
Senior Exchange Debentures (including Parent Senior
Exchange Debentures issued as payment of interest
thereon) upon the exchange of Parent Senior
Exchangeable Preferred Stock.
2.3 Amendment of Section 5.04 of the Credit Agreement. Section 5.04 of
the Credit Agreement is hereby amended as by deleting paragraph (h) thereof in
its entirety and substituting therefor the following:
(h) [Intentionally Omitted];
2.4 Amendment of Section 6.01 of the Credit Agreement. Section 6.01 of
the Credit Agreement is hereby amended as follows:
(a) by deleting the word "and" which appears at the end of
paragraph (o);
(b) by deleting the period at the end of paragraph (p) and
substituting therefor the phrase "; and"; and
(c) by adding the following new paragraph (q) at the end
thereof:
<PAGE> 5
(q) Indebtedness of the Parent evidenced by the
Parent Senior Exchange Debentures (including Parent
Senior Exchange Debentures issued as payment of
interest thereon).
2.5 Amendment to Section 6.06 of the Credit Agreement. Section 6.06 of
the Credit Agreement is hereby amended as follows:
(a) by deleting the word "and" at the end of clause (k)
thereof;
(b) by adding the following immediately after clause (l)
thereof but before the phrase "provided, however" therein:
, (m) the Borrower may pay dividends to the Parent in
an amount sufficient to allow the Parent (i) to
repurchase Parent Senior Exchangeable Preferred
Stock, provided that any such cash dividend for such
purpose shall not exceed $5,000,000, (ii) to pay
quarterly dividend payments on the Parent Senior
Exchangeable Preferred Stock, (iii) if such Parent
Senior Exchangeable Preferred Stock is exchanged into
Parent Senior Exchange Debentures, to make
semi-annual interest payments on such Parent Senior
Exchange Debentures and (iv) to pay fees and expenses
in connection with the issuance and repurchase of
Parent Senior Exchangeable Preferred Stock and Parent
Senior Exchange Debentures and (n) the Parent may
make the Restricted Payments described in clauses (i)
and (ii) of the immediately preceding clause (m) and
(o) the Parent may exchange its 12.5% Holdings
Participating Preferred Stock, $.01 par value, for
the Parent Senior Exchangeable Preferred Stock.
(c) by replacing the references to "clauses (c), (e) and (g)"
in clause (B) of the second proviso therein with a reference to clauses
(c), (e), (g), (m), (n) and (o); and
(d) by deleting the period at the end of such Section 6.06 and
replacing it with the following:
and (C) no dividend or distribution may be made
pursuant to subclauses (ii) or (iii) of clause (m) of
this Section 6.06 if at the time of such Restricted
Payment and immediately after giving effect thereto,
the Borrower would not be in pro forma compliance
with Sections 6.13 and 6.14 of this Agreement as of
the most recently ended fiscal quarter or year, as
the case may be.
2.6 Amendment to Section 6.07 of the Credit Agreement. Section 6.07 of
the Credit Agreement is amended as follows:
(a) by deleting the word "and" which appears at the end of
clause (vii) and substituting therefor a comma; and
<PAGE> 6
(b) by adding the following new clause (viii) at the end
thereof:
and (viii) the issuance and redemption of the Parent
Senior Exchangeable Preferred Stock and the Parent
Senior Exchange Debentures and payment-in-kind
payments thereon, and the performance by the Parent
of its obligations with respect thereto.
2.7 Amendment to Section 6.08 of the Credit Agreement. Section 6.08 of
the Credit Agreement is hereby amended as follows:
(a) by deleting the word "and" which appears at the end of
clause (iv) and substituting therefor a comma; and
(b) by adding the following new clause (vi) at the end
thereof:
and (vi) performing its obligations in connection
with the Parent Senior Exchangeable Preferred Stock
and Parent Senior Exchange Debentures.
2.8 Amendment to Section 6.09 of the Credit Agreement. Section 6.09 of
the Credit Agreement is hereby amended by adding immediately after the phrase
"Senior Notes Documents" the phrase "or the Parent Senior Exchange Debentures or
the Parent Senior Exchange Debenture Indenture, other than the repurchase of
Senior Notes for an aggregate purchase price not to exceed $10,000,000, as long
as no Default or Event of Default has occurred and is continuing or would result
therefrom and the Borrower would be in pro forma compliance with Sections 6.13,
6.14 and 6.15 of this Agreement as of the date on which such repurchase of
Senior Notes is made".
2.9 Amendment to Section 6.10 of the Credit Agreement. Section 6.10 of
the Credit Agreement is hereby amended as follows:
(a) by adding immediately after clause (i) of paragraph (a)
thereof the phrase "provided, the Lenders consent to the Amended and
Restated Certificate of Incorporation of the Parent dated July __,
1997"; and
(b) by adding immediately after the phrase "or Merger
Document" in paragraph (b) thereof the phrase "or document evidencing
or creating any Parent Senior Exchange Debentures including the Parent
Senior Exchange Indenture".
2.10 Amendment to Section 6.15 of the Credit Agreement. Section 6.15 of
the Credit Agreement is hereby amended by adding the following immediately after
the phrase "senior secured Indebtedness":
"(other than the Parent Senior Exchange Debentures, including
Parent Senior Exchange Debentures issued as payment of
interest thereon)".
<PAGE> 7
2.11 Amendment to Revolving Credit Commitments; Schedule 2.01 to the
Credit Agreement. The Credit Agreement is hereby amended by increasing the
amount of the aggregate Revolving Credit Commitments to $65,000,000 and by
inserting as a new Schedule 2.01 the Schedule 2.01 attached hereto.
SECTION 3. MISCELLANEOUS
3.1 Continuing Effect; No Other Amendments. Except as expressly amended
hereby, the Credit Agreement is, and shall remain, in full force and effect in
accordance with its terms. The amendments contained herein shall not constitute
an amendment or waiver of any other provision of the Credit Agreement or the
Loan Documents except as expressly set forth herein.
3.2 Effectiveness. This Amendment shall become effective on the date
(the "Effective Date") on which the following conditions precedent shall have
been satisfied:
(a) the Administrative Agent shall have received counterparts
of this Amendment duly executed by the Borrower, the Parent and the
Lenders;
(b) the Borrower shall have prepaid the outstanding Term
Loans, including all unpaid accrued interest thereto, and in connection
with such prepayment, the notice requirements of Section 2.12(a) are
waived hereby;
(c) amendments to the Security Documents in form and substance
satisfactory to the Administrative Agent shall have been executed by
the Loan Parties and delivered to the Administrative Agent, and such
further actions as may be reasonably requested by the Administrative
Agent shall have been taken to preserve the perfection and priority of
the Liens created under the Security Documents and the Loan Parties'
respective obligations thereunder;
(d) each Lender which is party to the Credit Agreement after
the Effective Date shall have received an amendment fee equal to 0.10%
of its Revolving Credit Commitment; and
(e) the fees and expenses required to be paid to the
Administrative Agent in connection with this Amendment shall have been
paid.
3.3 Representations and Warranties. After giving effect to the
amendments contained herein, on the Effective Date, the Company and the Parent
each hereby confirms, reaffirms and restates the representations and warranties
set forth in Article III of the Credit Agreement, except if such representation
relates to an earlier date, such representation is true and correct as of such
earlier date; provided that each reference to such Article III to "this
Agreement" shall be deemed to be a reference both to this Amendment and to the
Credit Agreement as amended by this Amendment.
<PAGE> 8
3.4 Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
3.5 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
CLARK-SCHWEBEL, INC.
By: /s/ Donald R. Burnette
---------------------------------
Name: Donald R. Burnette
Title: Secretary
CLARK-SCHWEBEL HOLDINGS, INC.
By: /s/ Donald R. Burnette
---------------------------------
Name: Donald R. Burnette
Title: Secretary
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent, Collateral Agent,
Documentation Agent and Syndication
Agent
By: /s/ Stephanie Parker
---------------------------------
Name: Stephanie Parker
Title: Assistant Vice President
THE CHASE MANHATTAN BANK
DELAWARE, as Issuing Bank
By: /s/ Richard J. Nolan, Jr.
---------------------------------
Name: Richard J. Nolan, Jr.
Title: President and CEO
<PAGE> 10
BANKERS TRUST COMPANY, individually
and as Co-Agent
By: /s/ Patricia Hogan
---------------------------------
Name: Patricia Hogan
Title: Vice President
FLEET NATIONAL BANK, individually and
as Co-Agent
By: /s/ Mark Cordes
---------------------------------
Name: Mark Cordes
Title: Vice President
NATIONSBANK, N.A., individually and
as Co-Agent
By: /s/ Richard G. Parkhurst, Jr.
---------------------------------
Name: Richard G. Parkhurst, Jr.
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT, as a
Lender
By: /s/ Thomas J. Leissl
---------------------------------
Name: Thomas J. Leissl
Title: Vice President
By: /s/ Christopher Lally
---------------------------------
Name: Christopher Lally
Title: Asst. Treasurer
<PAGE> 11
SCHEDULE 2.01
TO CREDIT AGREEMENT
Commitments
Lender Revolving Credit Commitment
The Chase Manhattan Bank
270 Park Avenue
New York, NY 10017
Attention: Don Benson
Telephone: 212-270-1134
Telecopy: 212-270-1063 $16,947,000.00
Bankers Trust Company
130 Liberty Street
New York, NY 10006
Attention: Larry Zimmerman
Telephone: 212-250-9461
Telecopy: 212-250-0810 $12,071,000.00
Fleet National Bank
1 Federal Street
Boston, MA 02110
Attention: Mark Cordes
Telephone: 617-346-4381
Telecopy: 617-346-4806 $12,071,000.00
NationsBank
767 Fifth Avenue
New York, NY 10153
Attention: Margaret Flanagan
Telephone: 212-407-5377
Telecopy: 212-838-1811 $12,071,000.00
BHF-Bank
590 Madison Avenue
New York, NY 10022
Attention: Tom Leissl
Telephone: 212-756-5500
Telecopy: 212-756-5536 $11,840,000.00
--------------
Total $65,000,000.00
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> JUN-28-1997<F1>
<CASH> 14,352
<SECURITIES> 0
<RECEIVABLES> 26,351
<ALLOWANCES> 0
<INVENTORY> 36,763
<CURRENT-ASSETS> 78,169
<PP&E> 68,149
<DEPRECIATION> 8,514
<TOTAL-ASSETS> 250,105
<CURRENT-LIABILITIES> 44,956
<BONDS> 120,824
0
35,000
<COMMON> 9,201
<OTHER-SE> 10,419
<TOTAL-LIABILITY-AND-EQUITY> 250,105
<SALES> 123,299
<TOTAL-REVENUES> 123,299
<CGS> 95,851
<TOTAL-COSTS> 95,851
<OTHER-EXPENSES> 7,727
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,427
<INCOME-PRETAX> 13,291
<INCOME-TAX> 5,475
<INCOME-CONTINUING> 9,398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,398
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>The results of operations for the six months ended June 28, 1997 represent the
results of Clark-Schwebel Holdings, Inc. ("Company") for the period of December
29, 1996 through June 28, 1997 (successor company). A change in ownership
resulted from a leveraged buyout on April 17, 1996, and the transaction
resulted in a new basis of accounting for the Company. Therefore, the results
of operations for the six months ended June 28, 1997 are not fully comparable
to preceding reporting periods. This schedule contains summary financial
information from the Company's financial statements and is qualified in its
entirety by reference to such financial statements.
</FN>
</TABLE>
