<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 18, 1999
(November 12, 1999)
GEORGIA GULF CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-9753 58-1563799
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
400 PERIMETER CENTER TERRACE, SUITE 595, ATLANTA, GEORGIA 30346
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: ____(770) 395-4500____
________________________________________________
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF THE VINYLS BUSINESS OF CONDEA VISTA COMPANY
OVERVIEW
On November 12, 1999, Georgia Gulf Corporation closed its acquisition of the
vinyls business of CONDEA Vista Company pursuant to an Asset Purchase Agreement
dated August 30, 1999. A copy of the press release announcing the acquisition,
dated November 15, 1999, is attached hereto as Exhibit 99.1 and is hereby
incorporated by reference herein.
Georgia Gulf paid $260 million for these assets at closing, with an
additional $10 million payment deferred for about two years. Before this
transaction, there were no material relationships between Georgia Gulf and any
of its affiliates and CONDEA Vista and any of its affiliates. The vinyls
business of CONDEA Vista consists of facilities for the integrated production of
vinyl chloride monomer ("VCM"), polyvinyl chloride ("PVC") resins and PVC
compounds, which will now be operated by Georgia Gulf. The vinyls business of
CONDEA Vista is comprised of the following assets:
- A VCM facility located in Lake Charles, Louisiana with an annual capacity
of 975 million pounds and a 50% ownership interest in PHH Monomers,
L.L.C., a joint venture that operates a VCM facility that has annual
capacity of 1.15 billion pounds. The vinyls business' share of PHH
Monomers' production is 575 million pounds and, combined with the owned
facility, the vinyls business has an annual VCM capacity of 1.5 billion
pounds. The primary raw materials for VCM are chlorine and ethylene. These
facilities are supplied with chlorine through a pipeline from PPG
Industries, Inc. and supplied with ethylene via pipeline from CONDEA Vista
and other third parties.
- PVC resin facilities located in Aberdeen, Mississippi and Oklahoma City,
Oklahoma with a combined annual capacity of 1.5 billion pounds. VCM to
produce PVC resin is provided by railcar from the Lake Charles facilities.
- PVC compound facilities located in Mansfield, Massachusetts;
Jeffersontown, Kentucky and Aberdeen, Mississippi with a combined annual
capacity of 265 million pounds. The Aberdeen, Mississippi facility also
has capacity to produce 20 million pounds of linear plasticizers, which
are used internally in the production of PVC compounds. PVC resin and
purchased plasticizers, which are used to produce PVC compounds, are
provided by railcar, pipeline and truck.
Georgia Gulf acquired each of the above facilities and the land on which it is
situated, except that it has leased the land and building at the Mansfield,
Massachusetts facility.
Georgia Gulf and CONDEA Vista also entered into an ethylene sales agreement,
an alcohol sales agreement, and a services and supply agreement. As part of the
acquisition, CONDEA Vista assigned to Georgia Gulf its chlorine supply contract
with PPG Industries. In addition, CONDEA Vista and Georgia Gulf entered into a
site access, cooperation and remedial control agreement that establishes the
parties' responsibilities for the remediation of environmental matters at the
facilities acquired.
Georgia Gulf acquired the assets of the vinyls business of CONDEA Vista
through wholly-owned subsidiaries. At the same time, it transferred its existing
operating assets to various wholly-owned subsidiaries. In connection with this
transfer, these subsidiaries expressly assumed and agreed to pay Georgia Gulf's
obligations under its existing $100 million aggregate principal amount 7 5/8%
senior notes due 2005, its existing $17 million payment obligations in respect
of industrial revenue bonds due 2009, and its existing $7.9 million
payable-in-kind note payable to Praxair, Inc., although Georgia Gulf will remain
obligated under these debt instruments.
2
<PAGE>
ETHYLENE AND ALCOHOL SALES AGREEMENTS
CONDEA Vista provides ethylene by pipeline to the owned Lake Charles VCM
facility. Georgia Gulf entered into an ethylene sales agreement that provides
for the sale by CONDEA Vista for an initial term of seven years, on a
take-or-pay basis, of 600 million pounds of ethylene for three years, followed
by an optional reduction in required purchases of 100 million pounds per year
for the final four years of the contract. The contract may be renewed on an
annual basis unless canceled upon at least twenty-four months notice. In
addition, Georgia Gulf will purchase its linear alcohol requirements for the
production of plasticizers from CONDEA Vista under an agreement for a five year
period with one year renewal terms.
SERVICES AND SUPPLY AGREEMENTS
Georgia Gulf will pay CONDEA Vista a base annual operating and facilities
fee of $600,000 for a ten-year period, plus the direct and indirect
administrative costs of providing services for the operation of the Lake Charles
VCM facility. CONDEA Vista will provide a variety of site-related services and
supply arrangements which the VCM facility has traditionally shared with other
operations at CONDEA Vista's Lake Charles location. These services are to be
provided over periods of time which vary from one to ten years with various
early termination and renewal provisions. In addition, under the agreement
Georgia Gulf will pay for its ratable share of capital improvements made to the
facilities that provide the supplied services. Georgia Gulf also entered into a
transition services agreement, which provides that CONDEA Vista will provide
specified administrative services to Georgia Gulf for a period of six months for
a monthly fee not to exceed $1.4 million, with an option for a six month
extension.
SITE ACCESS, COOPERATION AND REMEDIAL CONTROL AGREEMENT
The purpose of the site access agreement is to establish CONDEA Vista's and
Georgia Gulf's respective responsibilities for the payment of specified expenses
associated with, and the control and conduct of the remediation of,
environmental matters relating to the vinyls business of CONDEA Vista, such as
selecting contractors, approving remediation work to be performed and
interacting with government agencies. In general, the party responsible for the
cost of remediation will control the activities necessary to complete the
remediation. CONDEA Vista is responsible for all costs of remediation at the
Lake Charles VCM facility for a period of ten years. After this ten year period,
Georgia Gulf will be responsible for remediation costs at the Lake Charles VCM
facility up to $150,000 of expense per year, as well as costs in any year in
excess of this annual amount up to an aggregate one-time amount of $2,250,000.
Georgia Gulf will be responsible for remediation costs at the other acquired
facilities until the level of expense incurred by Georgia Gulf meets a specified
amount for each facility which in the aggregate equals $700,000.
ENVIRONMENTAL MATTERS AND OTHER CLAIMS
In addition to CONDEA Vista's obligation to continue the ongoing remediation
activities existing at closing, the asset purchase agreement requires CONDEA
Vista to indemnify Georgia Gulf for claims made regarding environmental matters.
For environmental contamination that is currently known, Georgia Gulf's claims
for indemnification may be made at any time. As to environmental matters that
are unknown, Georgia Gulf's claims for indemnification must generally be made
within 10 years from the closing of the acquisition. Further, the agreement with
CONDEA Vista provides for the presumption that all later discovered on-site
environmental contamination arose before closing, and is therefore CONDEA
Vista's responsibility, except in the event CONDEA Vista demonstrates that
Georgia Gulf caused the environmental contamination by a major, unaddressed
release. CONDEA Vista will also be responsible with respect to claims of
contamination to a nearby estuary for periods during which it operated the Lake
Charles facility.
3
<PAGE>
The asset purchase agreement also outlines responsibility for employee and
independent contractor exposure claims. CONDEA Vista is responsible for
pre-closing exposure, and Georgia Gulf is responsible for post-closing exposure
on a pro rata basis determined by a claimant's years of employment or service
before and after closing. There is, however, a presumption for claims brought in
the first five years after closing by current or former CONDEA Vista employees
and contractors that, absent a showing of new acute exposure after closing, all
responsibility will be deemed to have arisen before closing and will be solely
CONDEA Vista's.
THE FINANCING
Georgia Gulf financed the acquisition of the vinyls business of CONDEA Vista
and refinanced some of its existing indebtedness through a new senior credit
facility and an offering of $200,000,000 aggregate principal amount of its
10 3/8% senior subordinated notes due 2007. In connection with the acquisition,
Georgia Gulf exercised its purchase option under its operating lease on its
co-generation facility. In addition, its existing $100 million aggregate
principal amount 7 5/8% senior notes due 2005 became secured as required by the
terms of the related indenture. The new senior credit facility consists of a six
year $100 million revolving credit facility, a six year $225 million term
loan A facility and a seven year term $200 million loan B facility. Georgia Gulf
and its principal subsidiaries are co-borrowers under this facility, and Georgia
Gulf and those subsidiaries guaranteed that debt. Giving effect to these
transactions as if they occurred on September 30, 1999, the estimated sources
and uses of funds were as follows:
<TABLE>
<CAPTION>
AMOUNT
($ IN MILLIONS)
---------------
<S> <C>
SOURCES:
Revolving Credit Facility (1)............................... $ 29.7
Term Loan A................................................. 225.0
Term Loan B................................................. 200.0
10 3/8 Notes................................................ 200.0
Cash on hand................................................ 3.2
------
Total sources........................................... $657.9
======
USES:
Purchase of the vinyls business of CONDEA Vista(1).......... $260.0
Refinancing of existing debt and other financing
arrangements(2)........................................... 379.4
Fees and expenses........................................... 18.5
------
Total uses.............................................. $657.9
======
</TABLE>
- ------------------------------
(1) Does not give effect to pro forma working capital purchase price adjustment
of $8.9 million. See Exhibit 99.3.
(2) Reflects the refinancing of $271.6 million of existing debt and
$107.8 million related to the purchase of the co-generation facility under
the terms of the operating lease.
4
<PAGE>
PRODUCTS AND MARKETS OF GEORGIA GULF AFTER THE ACQUISITION
The following table shows Georgia Gulf's annual production capacities,
facility locations and major end-uses for its primary products after giving
effect to the acquisition of the vinyls business of CONDEA Vista:
<TABLE>
<CAPTION>
ANNUAL FACILITY
PRODUCT CAPACITY LOCATIONS END-USES
- ------- -------- --------- --------
<S> <C> <C> <C>
CHLOROVINYLS
PVC Compounds 875 million lbs. Aberdeen, MS; All production is sold to third
Gallman, MS; parties for use in various end-uses
Jeffersontown, KY; including window frames, containers,
Madison, MS; pipe fittings, wire insulation and
Mansfield, MA; and jacketing, film and sheet, medical
Tiptonville, TN devices, electrical wall boxes and
equipment, and custom extrusions for
various consumer applications.
PVC Resins 2.7 billion lbs. Aberdeen, MS; About 75% of production is sold to
Oklahoma third parties for PVC compounding for
City, OK; and use in the applications described
Plaquemine, LA above, as well as in house siding and
pipe, with the remainder used
internally to produce PVC compounds.
VCM 3.1 billion lbs. Lake Charles, LA About 85% of production is used
and internally for PVC resin production,
Plaquemine, LA and the remainder is sold in domestic
and export markets.
Caustic Soda 500,000 tons Plaquemine, LA All production is sold to third
parties for use in pulp and paper
manufacturing, alumina manufacturing,
and the manufacture of other
chemicals.
Chlorine 450,000 tons Plaquemine, LA All production is consumed internally
in the production of VCM.
AROMATICS
Phenol 660 million lbs. Pasadena, TX and All production is sold to third
Plaquemine, LA parties for use in a wide range of
end-use products including wood
adhesives, engineered plastics, oil
additives, and pharmaceuticals.
Acetone 408 million lbs. Pasadena, TX and All production is sold to third
Plaquemine, LA parties for use in a wide range of
products including acrylic sheeting,
surface coating resins, and engineered
plastics.
Cumene 1.5 billion lbs. Pasadena, TX About 80% of production is consumed
internally in the production of phenol
and acetone, and the remainder is sold
to other phenol producers.
</TABLE>
5
<PAGE>
The financial statements of CONDEA Vista Company Vinyls Group are included
as Exhibit 99.2 and are hereby incorporated by reference herein. These financial
statements should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Vinyls Business
of CONDEA Vista Company" presented below. The pro forma financial statements of
Georgia Gulf Corporation, which reflect the acquisition of the vinyls business
of CONDEA Vista Company and the refinancing of Georgia Gulf's indebtedness, are
included as Exhibit 99.3 and are hereby incorporated by reference herein. The
new senior credit facility is included as Exhibit 10.1.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF THE VINYLS BUSINESS OF CONDEA VISTA COMPANY
OVERVIEW
The vinyls business of CONDEA Vista manufactures and sells VCM, PVC resins
and PVC compounds. It has a VCM facility in Lake Charles, Louisiana and owns a
50% interest in a separate VCM facility in Lake Charles. The vinyls business
also has PVC resin facilities in Aberdeen, Mississippi and Oklahoma City,
Oklahoma and has PVC compound facilities in Aberdeen, Mississippi;
Jeffersontown, Kentucky; and Mansfield, Massachusetts. The vinyls business
manufactures VCM from ethylene and chlorine, which is primarily consumed in the
production of PVC resins. Most of the PVC resin production is sold to third
parties, and a small portion of the PVC resin production is used internally as
raw materials for PVC compounds, which are then sold to third parties.
On August 30, 1999, CONDEA Vista executed an asset purchase agreement to
divest the vinyls business to Georgia Gulf for a cash purchase price of
approximately $270 million.
RESULTS OF OPERATIONS
The following table sets forth the historical financial data of the vinyls
business of CONDEA Vista for the three year period ended June 30, 1999 and the
three months ended September 30, 1998 and 1999. The data as of and for the
fiscal years ended June 30, 1997, 1998 and 1999 are derived from audited
financial statements of the vinyls business of CONDEA Vista included in
Exhibit 99.2. The data as of and for the three month periods ended
September 30, 1998 and 1999 have been derived from unaudited condensed financial
statements of the vinyls business of CONDEA Vista included in Exhibit 99.2. You
should not consider the results for the three month periods to be indicative of
full year results. The data presented below should be read in conjunction with
the audited and unaudited financial statements and the related notes, as well as
the pro forma financial information and related notes, included as exhibits to
this Form 8-K Report.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------
1997 1998 1999
------------------- ------------------- -------------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales................ $394.4 100.0% $403.1 100.0% $344.9 100.0%
Cost of sales............ 380.6 96.5% 400.3 99.3% 318.5 92.3%
Selling, general and
administrative......... 26.1 6.6% 30.1 7.5% 27.0 7.8%
Operating loss........... (41.8) 10.6% (94.5) 23.5% (23.0) 6.7%
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------
1998 1999
------------------- -------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net sales................ $ 82.5 100.0% $112.0 100.0%
Cost of sales............ 80.1 97.0% 98.7 88.1%
Selling, general and
administrative......... 7.9 9.5% 6.1 5.5%
Operating loss........... (12.5) 15.2% (0.1) 0.1%
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
For the three months ended September 30, 1999, net sales for the vinyls
business were $112.0 million, an increase of 35.8% compared to $82.5 million for
the same period in 1998. This increase was primarily due to increases in average
selling prices and higher sales volumes. PVC resin sales volumes increased 13.7%
for the three months ended September 30, 1999 as compared to the same period in
1998, while VCM sales volumes declined as more VCM was consumed internally in
the production of PVC resin. Cost of sales for the period were $98.7 million, an
increase of 23.2% compared to $80.1 million in the comparable period in 1998.
This increase related to higher volumes of raw materials purchased due to
increased sales volumes as well as higher raw material costs, primarily related
to ethylene. Additionally, the vinyls business incurred a scheduled maintenance
turnaround at one of its VCM facilities, which also resulted in an increase to
cost of sales. As a percentage of net sales, cost of goods sold decreased to
88.1% from 97.0% in the prior year period. This decrease was the result of
higher selling price increases that exceeded increases in the cost of raw
materials resulting in improved margins. Selling, general and administrative
expenses for the period were $6.1 million, a decrease of 22.8% compared to
$7.9 million for the comparable period in 1998. This decrease related to reduced
expenditures related to cost cutting and restructuring actions undertaken by the
vinyls business in the
7
<PAGE>
fourth quarter of fiscal 1999. As a percentage of net sales, selling, general
and administrative expenses decreased to 5.5% from 9.5% in the prior year. This
decrease was the result of the increase in net sales and the restructuring
actions discussed above. For the three months ended September 30, 1999 the
vinyls business reported an operating loss of $0.1 million compared to an
operating loss of $12.5 million for the comparable period in 1998. This
improvement was the result of to the factors described above.
FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO THE FISCAL YEAR ENDED JUNE 30, 1998
For the fiscal year ended June 30, 1999 net sales for the vinyls business
were $344.9 million, a decrease of 14.4% compared to $403.1 million for the 1998
fiscal year. This decrease was primarily due to decreases in prices that fully
offset higher sales volumes. PVC resin sales volumes increased 13.4% in 1999
compared to 1998, while VCM sales volumes declined as more VCM was consumed
internally in the production of PVC resin. Cost of sales for the period were
$318.5 million, a decrease of 20.4% compared to $400.3 million in fiscal 1998.
This decrease related primarily to lower raw material prices. As a percentage of
net sales, cost of goods sold decreased to 92.3% from 99.3% in the prior year
period. This decrease was the result of lower raw material costs that more than
fully offset the decline in selling prices. Selling, general and administrative
expenses for fiscal 1999 were $27.0 million, a decrease of 10.3% compared to
$30.1 million for fiscal 1998. This decrease primarily related to lower levels
of legal expenses in fiscal 1999 compared to fiscal 1998. As a percentage of net
sales, selling, general and administrative expenses increased to 7.8% from 7.5%
in the prior year period. This increase was primarily the result of lower net
sales due to the decrease in pricing as mentioned above. For fiscal 1999 the
vinyls business reported an operating loss of $23.0 million compared to an
operating loss of $94.5 million in fiscal 1998. Fiscal 1998 results include a
$42.1 million charge for a litigation settlement relating to a class action suit
for groundwater contamination arising from a rupture of an ethylene dichloride
pipeline. In fiscal 1999, $7.0 million of the accrual for the settlement was
reversed.
FISCAL YEAR ENDED JUNE 30, 1998 COMPARED TO THE FISCAL YEAR ENDED JUNE 30, 1997
For the fiscal year ended June 30, 1998 net sales for the vinyls business
were $403.1 million, an increase of 2.2% compared to $394.4 million for the 1997
fiscal year. This increase was primarily due to increases in sales volumes that
more than offset decreases in selling prices. PVC volumes increased 11.3%
compared to 1998 and excess VCM volumes increased as VCM was sold in the export
market. Cost of sales for the period were $400.3 million, an increase of 5.2%
compared to $380.6 million in fiscal 1997. This increase related to increased
volumes of raw materials purchased as a result of sales volume increases. As a
percentage of net sales, cost of goods sold increased to 99.3% from 96.5% in the
prior year period. This increase was the result of a decline in selling prices.
Selling, general and administrative expenses for fiscal 1999 were
$30.1 million, an increase of 15.3% compared to $26.1 million for fiscal 1998.
This increase related primarily to higher levels of legal expenses related to
the settlement of environmental litigation in fiscal 1998. As a percentage of
net sales, selling, general and administrative expenses increased to 7.5% in
1998 from 6.6% in the prior year. For fiscal 1998 the vinyls business reported
an operating loss of $94.5 million compared to an operating loss of
$41.8 million in fiscal 1997. This decline was primarily related to the
environmental litigation settlement and legal expenses described above.
LIQUIDITY AND CAPITAL RESOURCES
The capital and liquidity requirements of the vinyls business have
traditionally been provided by CONDEA Vista. Capital expenditures for the vinyls
business averaged $34.5 million for the fiscal years ended June 30, 1997 and
1998. The expenditures were principally for expansion of production capacity.
Capital expenditures for the fiscal year ended June 30, 1999 declined to
$15.1 million, reflecting the completion of the major capacity expansion
projects.
The vinyls business required cash of $95.8 million from CONDEA Vista for the
three year period ended June 30, 1999 to fund the deficit generated by operating
activities and its capital expenditure program.
8
<PAGE>
ITEM 5. OTHER EVENTS.
PRIVATE PLACEMENT
On November 12, 1999, Georgia Gulf Corporation completed the issuance of
$200,000,000 aggregate principal amount of its 10 3/8% senior subordinated notes
due 2007 in a private placement. The indenture related to the 10 3/8% notes is
included as Exhibit 4.1.
DISCONTINUATION OF THE METHANOL BUSINESS
The methanol market continues to suffer from overcapacity and low-cost
imports as significant increases in global supply have created an imbalance
between supply and demand. As a result, several domestic methanol producers
idled their methanol plants. Georgia Gulf ceased operating its methanol plant in
December 1998. Georgia Gulf has continued to meet its existing contractual
obligations to supply methanol to its customers by purchasing imported methanol.
In September 1999, Georgia Gulf announced that it would exit the methanol
business entirely at the end of 1999. As a result, Georgia Gulf incurred a
charge against earnings of $7.6 million, net of tax benefits, during the third
quarter of 1999 to write-off certain methanol assets and to accrue losses
related to its methanol buy and resale program through the end of the year.
The financial statements of Georgia Gulf Corporation have been restated to
reflect the discontinuation of the methanol business. These restated financial
statements are included as Exhibit 99.4 and are hereby incorporated by reference
herein.
* * * * * * *
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995: A number of the matters discussed in this report and the attached
Exhibits that are not historical or current facts deal with potential future
circumstances and developments. These forward-looking statements are based on
management's assumptions regarding business conditions, and actual results may
be materially different. Risks and uncertainties inherent in these assumptions
include, but are not limited to, future global economic conditions, industry
production capacity, and other factors discussed in the Securities and Exchange
Commission filings of Georgia Gulf Corporation, including the annual report on
Form 10-K for the year ended December 31, 1998 and the quarterly report on
Form 10-Q for the quarter ended September 30, 1999.
9
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Attached as Exhibit 99.2 are the following financial statements of
CONDEA Vista Company Vinyls Group:
Report of Independent Public Accountants
Financial Statements:
Balance Sheets as of June 30, 1999 and 1998
Statement of Income and Changes in Owner's Investment for the
Years Ended June 30, 1999, 1998 and 1997
Statement of Cash Flows for the Years Ended June 30, 1999, 1998
and 1997
Notes to Financial Statements
Condensed Balance Sheets as of September 30, 1999 (unaudited) and
June 30, 1999
Condensed Statements of Income and Changes in Owner's Investment
for the Three Months Ended September 30, 1999 and 1998
(unaudited)
Condensed Statements of Cash Flows for the Three Months Ended
September 30, 1999 and 1998 (unaudited)
Notes to Condensed Financial Statements (unaudited)
(B) PRO FORMA FINANCIAL INFORMATION.
Attached as Exhibit 99.3 are the following unaudited pro forma
combined condensed financial data:
Pro Forma Consolidated Statement of Income for the Year Ended
December 31, 1998 (unaudited)
Pro Forma Consolidated Statement of Income for the Twelve Months
Ended September 30, 1999 (unaudited)
Pro Form Consolidated Statement of Income for the Nine Months
Ended September 30, 1999 (unaudited)
Pro Forma Consolidated Balance Sheet as of September 30, 1999
(unaudited)
Notes to Pro Forma Combined Condensed Financial Data (unaudited)
10
<PAGE>
(C) EXHIBITS.
The following exhibits are filed with this report:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
----------- -------------------
<S> <C>
4.1 Indenture dated as of November 12, 1999 between Georgia Gulf
Corporation and SunTrust Bank, Atlanta, as trustee.
10.1 Credit Agreement dated as of November 12, 1999 between
Georgia Gulf Corporation, the Eligible Subsidiaries referred
to therein, the Lenders party thereto, and the The Chase
Manhattan Bank as Administrative Agent, Syndication Agent
and Collateral Agent.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
99.1 Press Release dated November 15, 1999.
99.2 CONDEA Vista Company Vinyls Group Financial Statements.
99.3 Pro Forma Financial Statements.
99.4 Restated Financial Statements of Georgia Gulf Corporation.
</TABLE>
11
<PAGE>
SIGNATURE
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 hereunto duly authorized.
<TABLE>
<S> <C> <C>
GEORGIA GULF CORPORATION
By: /s/ RICHARD B. MARCHESE
-----------------------------------------
Richard B. Marchese
VICE PRESIDENT FINANCE,
CHIEF FINANCIAL OFFICER AND TREASURER
Date: November 18, 1999
</TABLE>
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
----------- -------------------
<S> <C>
4.1 Indenture dated as of November 12, 1999 between Georgia Gulf
Corporation and SunTrust Bank, Atlanta, as trustee.
10.1 Credit Agreement dated as of November 12, 1999 between
Georgia Gulf Corporation, the Eligible Subsidiaries referred
to therein, the Lenders party thereto, and the The Chase
Manhattan Bank as Administrative Agent, Syndication Agent
and Collateral Agent.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
99.1 Press Release dated November 15, 1999.
99.2 CONDEA Vista Company Vinyls Group Financial Statements.
99.3 Pro Forma Financial Statements.
99.4 Restated Financial Statements of Georgia Gulf Corporation.
</TABLE>
13
<PAGE>
========================================
GEORGIA GULF CORPORATION
THE SUBSIDIARY GUARANTORS PARTIES HERETO,
AND
SUNTRUST BANK, ATLANTA,
AS TRUSTEE
10 3/8% Senior Subordinated Notes due 2007
===========
INDENTURE
Dated as of November 12, 1999
===========
========================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference .................1
SECTION 1.1. Definitions......................................................1
SECTION 1.2. Other Definitions...............................................32
SECTION 1.3. Incorporation by Reference of Trust Indenture Act...............33
SECTION 1.4. Rules of Construction...........................................33
ARTICLE II
The Securities...............................34
SECTION 2.1. Form, Dating....................................................34
SECTION 2.2. Execution and Authentication....................................40
SECTION 2.3. Registrar and Paying Agent......................................41
SECTION 2.4. Paying Agent To Hold Money in Trust.............................41
SECTION 2.5. Securityholder Lists............................................42
SECTION 2.6. Transfer and Exchange...........................................42
SECTION 2.7. Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors.................45
SECTION 2.8. Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S..............................47
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities.................48
SECTION 2.10. Outstanding Securities..........................................49
SECTION 2.11. Temporary Securities............................................49
SECTION 2.12. Cancellation....................................................50
SECTION 2.13. Payment of Interest; Defaulted Interest.........................50
SECTION 2.14. Computation of Interest.........................................51
SECTION 2.15. CUSIP Numbers...................................................51
ARTICLE III
Covenants.................................51
SECTION 3.1. Payment of Securities...........................................51
SECTION 3.2. SEC Reports and Available Information...........................52
SECTION 3.3. Limitation on Indebtedness......................................52
SECTION 3.4. Limitation on Restricted Payments...............................55
SECTION 3.5. Limitation on Restrictions on Distributions from Restricted
Subsidiaries....................................................58
i
<PAGE>
SECTION 3.6. Limitation on Sales of Assets and Subsidiary Stock..............59
SECTION 3.7. Limitation on Affiliate Transactions............................61
SECTION 3.8. Change of Control...............................................62
SECTION 3.9. Limitation on Sale of Capital Stock of Restricted Subsidiaries..64
SECTION 3.10. Limitation on Liens............................................64
SECTION 3.11. Future Subsidiary Guarantors...................................64
SECTION 3.12. Limitation on Lines of Business................................64
SECTION 3.13. Qualified Receivables Transactions.............................64
SECTION 3.14. Maintenance of Office or Agency................................65
SECTION 3.15. Limitation on Layering.........................................65
SECTION 3.16. Corporate Existence............................................65
SECTION 3.17. Payment of Taxes and Other Claims..............................66
SECTION 3.18. Payments for Consent...........................................66
SECTION 3.19. Compliance Certificate.........................................66
SECTION 3.20. Further Instruments and Acts...................................66
SECTION 3.21. Statement by Officers as to Default............................66
ARTICLE IV
Successor Company.............................67
SECTION 4.1. Merger and Consolidation........................................67
ARTICLE V
Redemption of Securities..........................68
SECTION 5.1. Optional Redemption.............................................68
SECTION 5.2. Applicability of Article........................................68
SECTION 5.3. Election to Redeem; Notice to Trustee...........................68
SECTION 5.4. Selection by Trustee of Securities to Be Redeemed...............68
SECTION 5.5. Notice of Redemption............................................69
SECTION 5.6. Deposit of Redemption Price.....................................70
SECTION 5.7. Securities Payable on Redemption Date...........................70
SECTION 5.8. Securities Redeemed in Part.....................................70
ARTICLE VI
Defaults and Remedies...........................71
SECTION 6.1. Events of Default...............................................71
SECTION 6.2. Acceleration....................................................74
SECTION 6.3. Other Remedies..................................................74
SECTION 6.4. Waiver of Past Defaults.........................................74
ii
<PAGE>
SECTION 6.5. Control by Majority.............................................75
SECTION 6.6. Limitation on Suits.............................................75
SECTION 6.7. Rights of Holders to Receive Payment............................75
SECTION 6.8. Collection Suit by Trustee......................................76
SECTION 6.9. Trustee May File Proofs of Claim................................76
SECTION 6.10. Priorities.....................................................76
SECTION 6.11. Undertaking for Costs..........................................76
SECTION 6.12. Additional Payments............................................77
ARTICLE VII
Trustee..................................77
SECTION 7.1. Duties of Trustee...............................................77
SECTION 7.2. Rights of Trustee...............................................78
SECTION 7.3. Individual Rights of Trustee....................................79
SECTION 7.4. Trustee's Disclaimer............................................79
SECTION 7.5. Notice of Defaults..............................................79
SECTION 7.6. Reports by Trustee to Holders...................................79
SECTION 7.7. Compensation and Indemnity......................................80
SECTION 7.8. Replacement of Trustee..........................................80
SECTION 7.9. Successor Trustee by Merger.....................................81
SECTION 7.10. Eligibility; Disqualification..................................82
SECTION 7.11. Preferential Collection of Claims Against Company..............82
SECTION 7.12. Trustee's Application for Instruction from the Company.........82
ARTICLE VIII
Discharge of Indenture; Defeasance.....................82
SECTION 8.1. Discharge of Liability on Securities; Defeasance................82
SECTION 8.2. Conditions to Defeasance........................................84
SECTION 8.3. Application of Trust Money......................................85
SECTION 8.4. Repayment to Company............................................85
SECTION 8.5. Indemnity for U.S. Government Obligations.......................86
SECTION 8.6. Reinstatement...................................................86
ARTICLE IX
Amendments.................................86
SECTION 9.1. Without Consent of Holders......................................86
SECTION 9.2. With Consent of Holders.........................................87
SECTION 9.3. Compliance with Trust Indenture Act.............................88
iii
<PAGE>
SECTION 9.4. Revocation and Effect of Consents and Waivers...................88
SECTION 9.5. Notation on or Exchange of Securities...........................88
SECTION 9.6. Trustee To Sign Amendments......................................89
ARTICLE X
Subordination...............................89
SECTION 10.1. Agreement To Subordinate.......................................89
SECTION 10.2. Liquidation, Dissolution, Bankruptcy...........................89
SECTION 10.3. Default on Senior Indebtedness.................................89
SECTION 10.4. Acceleration of Payment of Securities..........................90
SECTION 10.5. When Distribution Must Be Paid Over............................90
SECTION 10.6. Subrogation....................................................91
SECTION 10.7. Relative Rights................................................91
SECTION 10.8. Subordination May Not Be Impaired by Company...................91
SECTION 10.9. Rights of Trustee and Paying Agent.............................91
SECTION 10.10. Distribution or Notice to Representative......................92
SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right
To Accelerate.................................................92
SECTION 10.12. Trust Moneys Not Subordinated.................................92
SECTION 10.13. Trustee Entitled To Rely......................................92
SECTION 10.14. Trustee To Effectuate Subordination...........................92
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness......93
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Indebtedness
on Subordination Provisions...................................93
ARTICLE XI
Subsidiary Guarantee............................93
SECTION 11.1. Subsidiary Guarantee...........................................93
SECTION 11.2. Limitation on Liability; Termination, Release and Discharge....95
SECTION 11.3. Right of Contribution..........................................95
SECTION 11.4. No Subrogation.................................................96
ARTICLE XII
Subordination...............................96
SECTION 12.1. Agreement To Subordinate.......................................96
SECTION 12.2. Liquidation, Dissolution, Bankruptcy...........................96
SECTION 12.3. Default on Guarantor Senior Indebtedness.......................97
iv
<PAGE>
SECTION 12.4. Acceleration of Payment of Securities..........................98
SECTION 12.5. When Distribution Must Be Paid Over............................98
SECTION 12.6. Subrogation....................................................98
SECTION 12.7. Relative Rights................................................98
SECTION 12.8. Subordination May Not Be Impaired by Company...................99
SECTION 12.9. Rights of Trustee and Paying Agent.............................99
SECTION 12.10. Distribution or Notice to Representative......................99
SECTION 12.11. Article XII Not To Prevent Events of Default or Limit Right
To Accelerate.................................................99
SECTION 12.12. Trust Moneys Not Subordinated.................................99
SECTION 12.13. Trustee Entitled To Rely......................................99
SECTION 12.14. Trustee To Effectuate Subordination..........................100
SECTION 12.15. Trustee Not Fiduciary for Holders of Guarantor Senior
Indebtedness.................................................100
SECTION 12.16. Reliance by Holders of Guarantor Senior Indebtedness on
Indebtedness on Subordination Provisions. ...................100
ARTICLE XIII
Miscellaneous..............................101
SECTION 13.1. Trust Indenture Act Controls..................................101
SECTION 13.2. Notices.......................................................101
SECTION 13.3. Communication by Holders with other Holders...................102
SECTION 13.4. Certificate and Opinion as to Conditions Precedent............102
SECTION 13.5. Statements Required in Certificate or Opinion.................102
SECTION 13.6. When Securities Disregarded...................................102
SECTION 13.7. Rules by Trustee, Paying Agent and Registrar..................103
SECTION 13.8. Legal Holidays................................................103
SECTION 13.9. Governing Law.................................................103
SECTION 13.10. No Recourse Against Others...................................103
SECTION 13.11. Successors...................................................103
SECTION 13.12. Multiple Originals...........................................103
SECTION 13.13. Variable Provisions..........................................103
SECTION 13.14. Qualification of Indenture...................................103
SECTION 13.15. Table of Contents; Headings..................................104
EXHIBIT A Form of the Initial Security
EXHIBIT B Form of the Exchange Security
EXHIBIT C Form of Subsidiary Guarantee
v
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) ....................................... 7.10
(a)(2) ....................................... 7.10
(a)(3) ....................................... N.A.
(a)(4) ....................................... N.A.
(b) ....................................... 7.8; 7.10
(c) ....................................... N.A.
311(a) ....................................... 7.11
(b) ....................................... 7.11
(c) ....................................... N.A.
312(a) ....................................... 2.5
(b) ....................................... 13.3
(c) ....................................... 13.3
313(a) ....................................... 7.6
(b)(1) ....................................... N.A.
(b)(2) ....................................... 7.6
(c) ....................................... 7.6
(d) ....................................... 7.6
314(a) ....................................... 3.2; 3.19; 13.2
(b) ....................................... N.A.
(c)(1) ....................................... 13.4
(c)(2) ....................................... 13.4
(c)(3) ....................................... N.A.
(d) ....................................... N.A.
(e) ....................................... 13.5
315(a) ....................................... 7.1
(b) ....................................... 7.5; 13.2
(c) ....................................... 7.1
(d) ....................................... 7.1
(e) ....................................... 6.11
316(a)(last sentence) ....................................... 13.6
(a)(1)(A) ....................................... 6.5
(a)(1)(B) ....................................... 6.4
(a)(2) ....................................... N.A.
(b) ....................................... 6.7
317(a)(1) ....................................... 6.8
(a)(2) ....................................... 6.9
(b) ....................................... 2.4
318(a) ....................................... 13.1
N.A. means Not Applicable.
vi
<PAGE>
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
vii
<PAGE>
INDENTURE dated as of November 12, 1999, among GEORGIA GULF
CORPORATION, a Delaware corporation (the "COMPANY"), THE SUBSIDIARY GUARANTORS
(as defined) and SunTrust Bank, Atlanta, a Georgia banking corporation (the
"TRUSTEE") as Trustee.
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (i) the Company's 10
3/8% Senior Subordinated Notes due 2007 on the date hereof (the "ORIGINAL
SECURITIES" or "INITIAL SECURITIES"), and (ii) if and when issued in exchange
for Initial Securities as provided in the Exchange and Registration Rights
Agreement or a similar agreement relating to Initial Securities, the Company's
10 3/8% Senior Subordinated Notes due 2007 (the "EXCHANGE SECURITIES") and (iii)
if and when issued as provided in the Exchange and Registration Rights
Agreement, the Private Exchange Securities (as defined in the Exchange and
Registration Rights Agreement; together with Initial Securities and Exchange
Securities, the "SECURITIES").
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital
Stock) to be used by the Company or a Restricted Subsidiary in
a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital
Stock by the Company or a Restricted Subsidiary of the
Company; or
(3) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary of the Company;
PROVIDED, HOWEVER, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Related Business.
"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 the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
PROVIDED that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Disposition" means any direct or indirect sale, lease (other
than an operating lease entered into in the ordinary course of business),
transfer, issuance or other disposition, or a series
<PAGE>
2
of related sales, leases, transfers, issuances or dispositions that are part of
a common plan, of shares of Capital Stock of a Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries, including any disposition by means of a merger, consolidation or
similar transaction. For purposes of this definition, any series of related
transactions that, if effected as a single transaction, would constitute an
Asset Disposition, will be deemed to be a single Asset Disposition effected when
the last transaction which is a part of that series is effected.
Notwithstanding the preceding, the following items shall not be
deemed to be Asset Dispositions:
(1) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary
(other than a Receivables Entity);
(2) the sale of cash or Cash Equivalents in the ordinary course of
business;
(3) a disposition of inventory in the ordinary course of business;
(4) a disposition of obsolete or worn out equipment or equipment that is
no longer useful in the conduct of the business of the Company and
its Restricted Subsidiaries and that is disposed of in each case in
the ordinary course of business;
(5) transactions permitted under SECTION 4.1;
(6) an issuance of Capital Stock by a Restricted Subsidiary of the
Company to the Company or to a Wholly-Owned Subsidiary (other than a
Receivables Entity);
(7) for purposes of SECTION 3.6 only, the making of a Permitted
Investment or a disposition subject to SECTION 3.4;
(8) an Asset Swap; PROVIDED that (a) at the time of entering into such
Asset Swap and immediately after giving effect to such Asset Swap,
no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof and (b) the terms of such
Asset Swap have been approved by a majority of the members of the
Board of Directors of the Company;
(9) sales of accounts receivable and related assets or an interest
therein of the type specified in the definition of "Qualified
Receivables Transaction" to a Receivables Entity;
(10) dispositions of assets with an aggregate fair market value since the
Issue Date of less than $25.0 million;
<PAGE>
3
(11) dispositions in connection with Permitted Liens;
(12) the licensing or sublicensing of intellectual property or other
general intangibles and licenses, leases or subleases of other
property in the ordinary course of business and which do not
materially interfere with the business of the Company and its
Restricted Subsidiaries;
(13) dispositions of assets included in the Company's methanol business
in existence on the Issue Date to the extent the operation of such
assets are reflected on the Company's consolidated financial
statements as discontinued operations; and
(14) foreclosure on assets.
"Asset Swap" means the concurrent purchase and sale or exchange of
Related Business Assets between the Company or any of its Restricted
Subsidiaries and another Person; PROVIDED that any cash received must be applied
in accordance with SECTION 3.6.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded
semi-annually) of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1)
the sum of the products of the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or redemption or similar payment with respect to such Preferred Stock multiplied
by the amount of such payment by (2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding
on the Issue Date or Incurred after the Issue Date, payable under or in respect
of the Senior Credit Agreement and any related notes, collateral documents,
letters of credit and guarantees and any Interest Rate Agreement entered into in
connection with the Senior Credit Agreement, including principal, premium, if
any, interest (including interest accruing after or which would accrue but for
the filing of any petition in bankruptcy or for reorganization relating to the
Company or any Subsidiary at the rate specified therein whether or not a claim
for post filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banking institutions are authorized or required by law
to close in New York City.
<PAGE>
4
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation will be the capitalized amount of such obligation
at the time any determination thereof is to be made as determined in accordance
with GAAP, and the Stated Maturity thereof will be the date of the last payment
of rent or any other amount due under such lease prior to the first date such
lease may be terminated without penalty.
"Cash Equivalents" means:
(1) securities issued or directly and fully guaranteed or insured by the
United States Government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof), having maturities of not more than one
year from the date of acquisition;
(2) marketable general obligations issued by any state of the United
States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the
date of acquisition thereof (provided that the full faith and credit
of the United States is pledged in support thereof) and, at the time
of acquisition thereof, having a credit rating of "A" or better from
either Standard & Poor's Ratings Services or Moody's Investors
Service, Inc.;
(3) certificates of deposit, time deposits, eurodollar time deposits,
overnight bank deposits or bankers' acceptances having maturities of
not more than one year from the date of acquisition thereof issued
by any commercial bank, the long-term debt of which is rated at the
time of acquisition thereof at least "A" or the equivalent thereof
by Standard & Poor's Ratings Services, or "A" or the equivalent
thereof by Moody's Investors Service, Inc., and having combined
capital and surplus in excess of $500 million;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1), (2) and
(3) entered into with any bank meeting the qualifications specified
in clause (3) above;
(5) commercial paper rated at the time of acquisition thereof at least
"A-2" or the equivalent thereof by Standard & Poor's Ratings
Services or "P-2" or the equivalent thereof by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and in any case maturing
within one year after the date of acquisition thereof; and
<PAGE>
5
(6) interests in any investment company or money market fund which
invests solely in instruments of the type specified in clauses (1)
through (5) above.
"Change of Control" means:
(1) (A) any "person" or "group" of related persons (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person or group shall be deemed to
have "beneficial ownership" of all shares that any such person or
group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting
Stock of the Company (or its successor by merger, consolidation or
purchase of all or substantially all of its assets) (for the
purposes of this clause, such person or group shall be deemed to
beneficially own any Voting Stock of the Company held by an entity,
if such person or group "beneficially owns" (as defined above),
directly or indirectly, more than 35% of the voting power of the
Voting Stock of such entity); or
(2) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or
(3) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of
the Company and its Restricted Subsidiaries taken as a whole to any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act); or
(4) the adoption by the stockholders of the Company of a plan or
proposal for the liquidation or dissolution of the Company.
"Closing Date" with respect to any Initial Securities, means the
date on which such Initial Securities are originally issued.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means any commodity futures contract,
commodity option or other similar agreement or arrangement entered into by the
Company or any of its Restricted Subsidiaries designed to protect the Company or
any of its Restricted Subsidiaries against fluctuations in the price of raw
materials or power used in the ordinary course of the Company or its Restricted
Subsidiaries.
"Company" means Georgia Gulf Corporation or a successor.
<PAGE>
6
"Consolidated Coverage Ratio" means as of any date of determination,
with respect to any Person, the ratio of (x) the aggregate amount of
Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which financial statements are in existence to (y) Consolidated Interest Expense
for such four fiscal quarters, PROVIDED, HOWEVER, that:
(1) if the Company or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of such
period that remains outstanding on such date of determination
or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness,
Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been
Incurred on the first day of such period (except that in
making such computation, the amount of Indebtedness under any
revolving credit facility outstanding on the date of such
calculation will be computed based on (i) the average daily
balance of such Indebtedness during such four fiscal quarters
or such shorter period for which such facility was outstanding
or (ii) if such facility was created after the end of such
four fiscal quarters, the average daily balance of such
Indebtedness during the period from the date of creation of
such facility to the date of such calculation) and the
discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first
day of such period; or
(b) has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of the period that is no
longer outstanding on such date of determination or if the
transaction giving rise to the need to calculate the
Consolidated Coverage Ratio involves a discharge of
Indebtedness (in each case other than Indebtedness incurred
under any revolving credit facility unless such Indebtedness
has been permanently repaid and the related commitment
terminated), Consolidated EBITDA and Consolidated Interest
Expense for such period will be calculated after giving effect
on a pro forma basis to such discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if
such discharge had occurred on the first day of such period;
(2) if since the beginning of such period the Company or any Restricted
Subsidiary will have made any Asset Disposition or if the
transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Asset Disposition:
(a) the Consolidated EBITDA for such period will be reduced by an
amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset
Disposition for such period or increased by
<PAGE>
7
an amount equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such period; and
(b) Consolidated Interest Expense for such period will be reduced
by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or
any Restricted Subsidiary repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with such
Asset Disposition for such period (or, if the Capital Stock of
any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) will have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary or is merged with or into the Company) or an acquisition
of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an
operating unit, division or line of business, Consolidated EBITDA
and Consolidated Interest Expense for such period will be calculated
after giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period; and
(4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such
period) will have made any Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary during such period, Consolidated EBITDA and
Consolidated Interest Expense for such period will be calculated
after giving pro forma effect thereto as if such Asset Disposition
or Investment or acquisition of assets occurred on the first day of
such period.
For purposes of this definition, whenever pro forma effect is to be given to any
calculation under this definition, the pro forma calculations will be determined
in good faith by a responsible financial or accounting officer of the Company
(including pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
<PAGE>
8
"Consolidated EBITDA" for any period means, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated depreciation expense;
(4) consolidated amortization of intangibles;
(5) other non-cash charges reducing Consolidated Net Income (excluding
any such non-cash charge to the extent it represents an accrual of
or reserve for cash charges in any future period or amortization of
a prepaid cash expense that was paid in a prior period not included
in the calculation).
Notwithstanding the preceding sentence, clauses (2) through (5) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to
the extent the amounts set forth in clauses (2) through (5) are in excess of
those necessary to offset a net loss of such Restricted Subsidiary or if such
Restricted Subsidiary has net income for such period included in Consolidated
Net Income, only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
"Consolidated Income Taxes" means, with respect to any Person for
any period, taxes imposed upon such Person or other payments required to be made
by such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income for such period), regardless of
whether such taxes or payments are required to be remitted to any governmental
authority.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
whether paid or accrued, plus, to the extent not included in such interest
expense:
(1) interest expense attributable to Capitalized Lease Obligations and
the interest portion of rent expense associated with Attributable
Indebtedness in respect of the relevant lease
<PAGE>
9
giving rise thereto, determined as if such lease were a capitalized
lease in accordance with GAAP and the interest component of any
deferred payment obligations;
(2) amortization of debt discount;
(3) non-cash interest expense;
(4) commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing;
(5) the interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries;
(6) net costs associated with Hedging Obligations (including
amortization of fees);
(7) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period;
(8) the product of (a) all dividends paid or payable in cash, Cash
Equivalents or Indebtedness or accrued during such period on any
series of Disqualified Stock of such Person or on Preferred Stock of
its Restricted Subsidiaries payable to a party other than the
Company or a Wholly-Owned Subsidiary, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus
the then current combined federal, state, provincial and local
statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP; and
(9) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan
or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust; PROVIDED, HOWEVER, that there will be excluded therefrom any
such interest expense of any Unrestricted Subsidiary to the extent
the related Indebtedness is not Guaranteed or paid by the Company or
any Restricted Subsidiary.
For purposes of the foregoing, total interest expense will be determined after
giving effect to any net payments made or received by the Company and its
Subsidiaries with respect to Interest Rate Agreements, but excluding net
payments made or received with respect to the termination of Interest Rate
Agreements terminated on or before March 31, 2000 relating to Indebtedness
existing on the Issue Date.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; PROVIDED, HOWEVER, that there will not be included in such
Consolidated Net Income:
<PAGE>
10
(1) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that:
(a) subject to the limitations contained in clauses (4), (5) and
(6) below, the Company's equity in the net income of any such
Person for such period will be included in such Consolidated
Net Income up to the aggregate amount of cash which could have
been distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations
contained in clause (3) below); and
(b) the Company's equity in a net loss of any such Person (other
than an Unrestricted Subsidiary) for such period will be
included in determining such Consolidated Net Income to the
extent such loss has been funded with cash from the Company or
a Restricted Subsidiary;
(2) any net income (loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;
(3) any net income (but not loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company,
except that:
(a) subject to the limitations contained in clauses (4), (5) and
(6) below, the Company's equity in the net income of any such
Restricted Subsidiary for such period will be included in such
Consolidated Net Income up to the aggregate amount of cash
that could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted
Subsidiary as a dividend (subject, in the case of a dividend
to another Restricted Subsidiary, to the limitation contained
in this clause); and
(b) the Company's equity in a net loss of any such Restricted
Subsidiary for such period will be included in determining
such Consolidated Net Income;
(4) any gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of the Company or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/Leaseback
Transaction but excluding sales, transfers or other dispositions in
connection with Qualified Receivables Transactions) which is not
sold or otherwise disposed of in the ordinary course of business and
any gain (loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
(5) any extraordinary gain or loss; and
<PAGE>
11
(6) the cumulative effect of a change in accounting principles.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the date of this
Indenture; or
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in SECTION
2.13.
"Definitive Securities" means certificated Securities.
"Designated Guarantor Senior Indebtedness" means (1) the Bank
Indebtedness (to the extent such Bank Indebtedness constitutes Guarantor Senior
Indebtedness) and (2) any other Guarantor Senior Indebtedness which, at the date
of determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to lend
up to, at least $25 million and is specifically designated in the instrument
evidencing or governing such Guarantor Senior Indebtedness as "Designated
Guarantor Senior Indebtedness" for purposes of this Indenture.
"Designated Senior Indebtedness" means (1) the Bank Indebtedness (to
the extent such Bank Indebtedness constitutes Senior Indebtedness) and (2) any
other Senior Indebtedness which, at the date of determination, has an aggregate
principal amount outstanding of, or under which, at the date of determination,
the holders thereof are committed to lend up to, at least $25 million and is
specifically designated in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Determination Date" means the last calendar day of each month.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which 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:
<PAGE>
12
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock (excluding Capital Stock which is convertible or exchangeable
solely at the option of the Company or a Restricted Subsidiary); or
(3) is redeemable at the option of the holder of the Capital Stock, in
whole or in part,
in each case on or prior to the date that is 91 days after the date (a) on which
the Securities mature or (b) on which there are no Securities outstanding,
PROVIDED that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at
the option of the holder thereof prior to such date will be deemed to be
Disqualified Stock; PROVIDED, FURTHER that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or asset sale (each defined in a substantially identical
manner to the corresponding definitions in this Indenture) shall not constitute
Disqualified Stock if the terms of such Capital Stock (and all such securities
into which it is convertible or for which it is ratable or exchangeable) provide
that the Company may not repurchase or redeem any such Capital Stock (and all
such securities into which it is convertible or for which it is ratable or
exchangeable) pursuant to such provision prior to compliance by the Company with
the provisions of SECTION 3.8 and SECTION 3.6 and such repurchase or redemption
complies with SECTION 3.4.
"Domestic Subsidiary" means any Restricted Subsidiary that is
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"DTC" means The Depository Trust Company, its nominees and their
respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.
"Equity Offering" means an offering for cash by the Company of its
common stock, or options, warrants or rights with respect to its common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated the Issue Date among Chase Securities Inc.,
the Subsidiary Guarantors and the Company.
"Exchange Securities" has the meaning ascribed to it in the second
introductory paragraph of this Indenture.
"Fiscal Year" means the fiscal year of the Company ending on
December 31 of each year.
<PAGE>
13
"Foreign Subsidiary" means any Restricted Subsidiary that is not
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of this Indenture, including those
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 approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture will be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well,
to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, the following obligations, whether outstanding on the date of this
Indenture or thereafter issued, created, Incurred or assumed, without
duplication:
(1) the Bank Indebtedness Incurred by such Subsidiary Guarantor;
(2) all Guarantees by such Subsidiary Guarantor of Senior Indebtedness
of the Company or Guarantor Senior Indebtedness of any other
Subsidiary Guarantor; and
(3) all obligations consisting of principal of, premium on, if any,
accrued and unpaid interest on, and fees and other amounts relating
to, all other Indebtedness of the Subsidiary Guarantor. Guarantor
Senior Indebtedness includes interest accruing after, or which would
accrue but for, the filing of any petition in bankruptcy or for
reorganization relating to the Subsidiary Guarantor regardless of
whether post- filing interest is allowed in such proceeding.
<PAGE>
14
Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided
that the obligations in respect of such Indebtedness are not
superior in right of, or are subordinate to, payment of the
Securities and the Subsidiary Guarantee;
(2) any obligations of such Subsidiary Guarantor to another Subsidiary
or the Company;
(3) any liability for Federal, state, local, foreign or other taxes owed
or owing by such Subsidiary Guarantor;
(4) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor that is expressly subordinate or junior in right of
payment to any other Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor, including, without limitation, any Guarantor
Senior Subordinated Indebtedness and Guarantor Subordinated
Obligations of such Guarantor; or
(6) any Capital Stock.
"Guarantor Senior Subordinated Indebtedness" means, with respect to
a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that specifically
provides that such Indebtedness is to rank equally in right of payment with the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and is
not expressly subordinated by its terms in right of payment to any Indebtedness
of such Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is expressly
subordinate in right of payment to the obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee pursuant to a written agreement.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Commodity Agreement, Interest Rate Agreement or Currency
Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered in the Note Register.
<PAGE>
15
"Incur" means issue, create, assume, Guarantee, incur or otherwise
become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of
a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) will be deemed to
be incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium, if any, in respect of indebtedness of
such Person for borrowed money;
(2) the principal of and premium, if any, in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) the principal component of all obligations of such Person in respect
of letters of credit, bankers' acceptances or other similar
instruments (including reimbursement obligations with respect
thereto except to the extent such reimbursement obligation relates
to a trade payable and such obligation is satisfied within 30 days
of Incurrence);
(4) the principal component of all obligations of such Person to pay the
deferred and unpaid purchase price of property (except trade
payables), which purchase price is due more than six months after
the date of placing such property in service or taking delivery and
title thereto;
(5) Capitalized Lease Obligations and all Attributable Indebtedness of
such Person;
(6) the principal component or liquidation preference of all obligations
of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect to any
Subsidiary, any Preferred Stock (but excluding, in each case, any
accrued dividends);
(7) the principal component of all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; PROVIDED, HOWEVER, that the
amount of such Indebtedness will be the lesser of (a) the fair
market value of such asset at such date of determination and (b) the
amount of such Indebtedness of such other Persons;
(8) the principal component of Indebtedness of other Persons to the
extent Guaranteed by such Person; and
(9) to the extent not otherwise included in this definition, net
obligations of such Person under Commodity Agreements, Currency
Agreements and Interest Rate Agreements
<PAGE>
16
(the amount of any such obligations to be equal at any time to the
termination value of such agreement or arrangement giving rise to
such obligation that would be payable by such Person at such time);
PROVIDED that notwithstanding the preceding, the following items shall not
constitute Indebtedness of a Person:
(1) Qualified Receivables Transactions entered into by such Person; and
(2) take-or-pay obligations contained in supply agreements entered into
in the ordinary course of business of such Person.
The amount of Indebtedness of any Person at any date will be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
In addition, "Indebtedness" of any Person shall include Indebtedness
described in the preceding paragraph that would not appear as a liability on the
balance sheet of such Person if:
(1) such Indebtedness is the obligation of a partnership or joint
venture that is not a Restricted Subsidiary (a "Joint Venture");
(2) such Person or a Restricted Subsidiary of such Person is a general
partner of the Joint Venture (a "General Partner"); and
(3) there is recourse, by contract or operation of law, with respect to
the payment of such Indebtedness to property or assets of such
Person or a Restricted Subsidiary of such Person; and then such
Indebtedness shall be included in an amount not to exceed:
(a) the lesser of (i) the net assets of the General Partner and
(ii) the amount of such obligations to the extent that there
is recourse, by contract or operation of law, to the property
or assets of such Person or a Restricted Subsidiary of such
Person; or
(b) if less than the amount determined pursuant to clause (a)
immediately above, the actual amount of such Indebtedness that
is recourse to such Person or a Restricted Subsidiary of such
Person, if the Indebtedness is evidenced by a writing and is
for a determinable amount and the related interest expense
shall be included in Consolidated Interest Expense to the
extent actually paid by the Company or its Restricted
Subsidiaries.
"Indenture" means this Indenture as amended or supplemented from
time to time.
<PAGE>
17
"Initial Securities" has the meaning ascribed to it in the second
introductory paragraph of this Indenture.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED that
none of the following will be deemed to be an Investment:
(1) Hedging Obligations entered into in the ordinary course of business
and in compliance with this Indenture;
(2) endorsements of negotiable instruments and documents in the ordinary
course of business; and
(3) an acquisition of assets, Capital Stock or other securities by the
Company or a Subsidiary for consideration to the extent such
consideration consists of common equity securities of the Company.
For purposes of SECTION 3.4,
(1) "Investment" will include the portion (proportionate to the
Company's equity interest in a Restricted Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value
of the net assets of such Restricted Subsidiary of the Company at
the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the
Company will be deemed to continue to have a permanent "Investment"
in an Unrestricted Subsidiary in an amount (if positive) equal to
(a) the Company's "Investment" in such Subsidiary at the time of
such redesignation less (b) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market
value of the net assets (as conclusively determined by the Board of
Directors of the Company in good faith) of such Subsidiary at the
time that such Subsidiary is so re-designated a Restricted
Subsidiary; and
<PAGE>
18
(2) any property transferred to or from an Unrestricted Subsidiary will
be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors of
the Company. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Voting Stock of any
Restricted Subsidiary of the Company such that, after giving effect
to any such sale or disposition, such entity is no longer a
Subsidiary of the Company, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal to
the fair market value (as conclusively determined by the Board of
Directors of the Company in good faith) of the Capital Stock of such
Subsidiary not sold or disposed of.
"Issue Date" means the date on which the Original Securities are
originally issued.
"Legal Holiday" has the meaning ascribed to it in SECTION 13.8.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording tax
expenses, commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be
paid or accrued as a liability under GAAP (after taking into account
any available tax credits or deductions and any tax sharing
agreements), as a consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of
any Lien upon such assets, or which must by its terms, or in order
to obtain a necessary consent to such Asset Disposition, or by
applicable law be repaid out of the proceeds from such Asset
Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition; and
(4) the deduction of appropriate amounts to be provided by the seller as
a reserve, in accordance with GAAP, against any liabilities
associated with the assets disposed of in
<PAGE>
19
such Asset Disposition and retained by the Company or any Restricted
Subsidiary after such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any Restricted Subsidiary (a)
provides any Guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that
would constitute Indebtedness) or (b) is directly or indirectly
liable (as a guarantor or otherwise);
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of the Company or any
Restricted Subsidiary to declare a default under such other
Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and
(3) with respect to each Incurrence of Indebtedness having a principal
amount in excess of $100,000, the explicit terms of which provide
there is no recourse against any of the assets of the Company or its
Restricted Subsidiaries.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Note Register" means the register of Securities, maintained by the
Trustee, pursuant to SECTION 2.3.
"Obligations" has the meaning ascribed to it in SECTION 11.1.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Corporate Controller or the Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and either an Assistant Treasurer or an Assistant Secretary of
the Company.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee.
<PAGE>
20
"Original Securities" means the Company's 10 3/8% Senior
Subordinated Notes due 2007 originally issued on the Issue Date.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) a Restricted Subsidiary (other than a Receivables Entity) or a
Person which will, upon the making of such Investment, become a
Restricted Subsidiary (other than a Receivables Entity); PROVIDED,
HOWEVER, that the primary business of such Restricted Subsidiary is
a Related Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted
Subsidiary (other than a Receivables Entity); PROVIDED, HOWEVER,
that such Person's primary business is a Related Business;
(3) cash and Cash Equivalents;
(4) receivables owing to the Company or any Restricted Subsidiary
created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; PROVIDED,
HOWEVER, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such
Restricted Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company
or any Restricted Subsidiary or in satisfaction of judgments or
pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of a debtor;
(8) Investments made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with SECTION 3.6;
(9) Investments in existence on the Issue Date;
<PAGE>
21
(10) Commodity Agreements, Currency Agreements, Interest Rate Agreements
and related Hedging Obligations, which transactions or obligations
are Incurred in compliance with SECTION 3.3;
(11) Investments by the Company or any of its Restricted Subsidiaries,
together with all other Investments pursuant to this clause (11), in
an aggregate amount at the time of such Investment not to exceed
$25.0 million outstanding at any one time;
(12) Guarantees issued in accordance with SECTION 3.3;
(13) Investments by the Company or a Restricted Subsidiary in a
Receivables Entity or any Investment by a Receivables Entity in any
other Person, in each case, in connection with a Qualified
Receivables Transaction, PROVIDED, HOWEVER, that any Investment in
any such Person is in the form of a Purchase Money Note, or any
equity interest or interests in accounts receivable and related
assets generated by the Company or a Restricted Subsidiary and
transferred to any Person in connection with a Qualified Receivables
Transaction or any such Person owning such accounts receivable; and
(14) Investments by the Company or any of its Restricted Subsidiaries in
a Permitted Joint Venture, so long as (a) such Permitted Joint
Venture does not have any Indebtedness for borrowed money at any
time on or after the date of such Investment (other than
Indebtedness owing to the equity holders of such Permitted Joint
Venture, the Company or any Restricted Subsidiary of the Company),
(b) the documentation governing such Permitted Joint Venture does
not contain a restriction on distributions to the Company or its
Restricted Subsidiaries, (c) such Permitted Joint Venture is engaged
only in a Related Business and (d) after giving pro forma effect to
such Investment, the Company would be permitted to Incur $1.00 of
additional Indebtedness under SECTION 3.3(a).
"Permitted Joint Venture" means, with respect to any Person, (a) any
corporation, association, or other business entity (other than a partnership) of
which 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 of determination owned or
controlled, directly or indirectly, by such Person or one or more of the
Restricted Subsidiaries of that Person or a combination thereof and (b) any
partnership, joint venture, limited liability company or similar entity of which
(1) 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Restricted Subsidiaries of that Person or a combination thereof whether in
the form of membership, general, special or limited partnership interests or
otherwise and (2) either such Person or any Restricted Subsidiary of such Person
is a controlling general partner or no other Person controls such entity.
"Permitted Liens" means, with respect to any Person:
<PAGE>
22
(1) Liens securing Indebtedness and other obligations under the Senior
Credit Agreement and related Hedging Obligations and other Senior
Indebtedness and liens on assets of Restricted Subsidiaries securing
Guarantees of Indebtedness and other obligations under the Senior
Credit Agreement and other Guarantor Senior Indebtedness permitted
to be incurred under this Indenture;
(2) pledges or deposits by such Person under workmen's compensation
laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other
than for the payment of Indebtedness) or leases to which such Person
is a party, or deposits to secure public or statutory obligations of
such Person or deposits or cash or United States government bonds to
secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import or customs duties
or for the payment of rent, in each case Incurred in the ordinary
course of business;
(3) Liens imposed by law, including carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings if a reserve or
other appropriate provisions, if any, as shall be required by GAAP
shall have been made in respect thereof;
(4) Liens for taxes, assessments or other governmental charges not yet
subject to penalties for non-payment or which are being contested in
good faith by appropriate proceedings provided appropriate reserves
required pursuant to GAAP have been made in respect thereof;
(5) Liens in favor of issuers of surety or performance bonds or letters
of credit or bankers' acceptances issued pursuant to the request of
and for the account of such Person in the ordinary course of its
business; PROVIDED, HOWEVER, that such letters of credit do not
constitute Indebtedness;
(6) encumbrances, easements or reservations of, or rights of others for,
licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or liens incidental to
the conduct of the business of such Person or to the ownership of
its properties which do not in the aggregate materially adversely
affect the value of said properties or materially impair their use
in the operation of the business of such Person;
(7) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under this Indenture,
secured by a Lien on the same property securing such Hedging
Obligation;
(8) leases and subleases of real property which do not materially
interfere with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
<PAGE>
23
(9) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment
have not been finally terminated or the period within which such
proceedings may be initiated has not expired;
(10) Liens for the purpose of securing the payment of all or a part of
the purchase price of, or Capitalized Lease Obligations with respect
to, assets or property acquired or constructed in the ordinary
course of business PROVIDED that:
(a) the aggregate principal amount of Indebtedness secured by such
Liens is otherwise permitted to be Incurred under this
Indenture and does not exceed the cost of the assets or
property so acquired or constructed; and
(b) such Liens are created within 180 days of construction or
acquisition of such assets or property and do not encumber any
other assets or property of the Company or any Restricted
Subsidiary other than such assets or property and assets
affixed or appurtenant thereto;
(11) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a depositary institution; PROVIDED that:
(a) such deposit account is not a dedicated cash collateral
account and is not subject to restrictions against access by
the Company in excess of those set forth by regulations
promulgated by the Federal Reserve Board; and
(b) such deposit account is not intended by the Company or any
Restricted Subsidiary to provide collateral to the depository
institution;
(12) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Company and
its Restricted Subsidiaries in the ordinary course of business;
(13) Liens existing on the Issue Date;
(14) Liens on property or shares of stock of a Person at the time such
Person becomes a Restricted Subsidiary; PROVIDED, HOWEVER, that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such other Person becoming a Restricted
Subsidiary; PROVIDED FURTHER, HOWEVER, that any such Lien may not
extend to any other property owned by the Company or any Restricted
Subsidiary;
(15) Liens on property at the time the Company or a Restricted Subsidiary
acquired the property, including any acquisition by means of a
merger or consolidation with or into
<PAGE>
24
the Company or any Restricted Subsidiary; PROVIDED, HOWEVER, that
such Liens are not created, incurred or assumed in connection with,
or in contemplation of, such acquisition; PROVIDED FURTHER, HOWEVER,
that such Liens may not extend to any other property owned by the
Company or any Restricted Subsidiary;
(16) Liens securing Indebtedness or other obligations of a Restricted
Subsidiary owing to the Company or a Wholly-Owned Subsidiary (other
than a Receivables Entity);
(17) Liens securing the Securities and the Subsidiary Guarantees;
(18) Liens securing Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, PROVIDED that any such
Lien is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements
under which the original Lien arose, could secure) the Indebtedness
being refinanced or is in respect of property that is the security
for a Permitted Lien hereunder; and
(19) Liens on assets transferred to a Receivables Entity or on assets of
a Receivables Entity, in either case incurred in connection with a
Qualified Receivables Transaction.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
hereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Private Exchange Securities" shall have the meaning set forth in
the Exchange and Registration Rights Agreement or a similar agreement relating
to Initial Securities.
"Purchase Money Note" means a promissory note of a Receivables
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Restricted Subsidiary of the Company in connection with a Qualified
Receivables Transaction to a Receivables Entity, which note is repayable from
cash available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts owing to such investors and amounts paid in connection with the purchase
of newly generated accounts receivable.
"Qualified Receivables Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its Restricted
Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (1) a
<PAGE>
25
Receivables Entity (in the case of a transfer by the Company or any of its
Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by
a Receivables Entity), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of the Company or any
of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, the proceeds of such receivables and other assets which are
customarily transferred, or in respect of which security interests are
customarily granted in connection with asset securitization involving accounts
receivable.
"QIB" means any "qualified institutional buyer" (as defined in Rule
144A under the Securities Act).
"Receivables Entity" means a Wholly-Owned Subsidiary of the Company
(or another Person in which the Company or any Restricted Subsidiary of the
Company makes an Investment and to which the Company or any Restricted
Subsidiary of the Company transfers accounts receivable and related assets)
which engages in no activities other than in connection with the financing of
accounts receivable and which is designated by the Board of Directors of the
Company (as provided below) as a Receivables Entity:
(1) of which no portion of the Indebtedness or any other obligations
(contingent or otherwise):
(a) is guaranteed by the Company or any Restricted Subsidiary of
the Company (excluding guarantees of Obligations (other than
the principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings);
(b) is recourse to or obligates the Company or any Restricted
Subsidiary of the Company in any way other than pursuant to
Standard Securitization Undertakings; or
(c) subjects any property or asset of the Company or any
Restricted Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings;
(2) with which neither the Company nor any Restricted Subsidiary of the
Company has any material contract, agreement, arrangement or
understanding (except in connection with a Purchase Money Note or
Qualified Receivables Transaction) other than on terms no less
favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons that are not
Affiliates of the Company, other than fees payable in the ordinary
course of business in connection with servicing accounts receivable;
and
<PAGE>
26
(3) to which neither the Company nor any Restricted Subsidiary of the
Company has any obligation to maintain or preserve such entity's
financial condition or cause such entity to achieve certain levels
of operating results.
Any such designation by the Board of Directors of the Company shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the resolution of
the Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"Redemption Date" means, with respect to any redemption of
Securities, the date of redemption with respect thereto.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance", "refinances", and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Indenture or Incurred in compliance with this Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, PROVIDED, HOWEVER, that:
(1) (a) if the Stated Maturity of the Indebtedness being refinanced is
earlier than or the same as the Stated Maturity of the Securities,
the Refinancing Indebtedness has a Stated Maturity no earlier than
the Stated Maturity of the Indebtedness being refinanced or (b) if
the Stated Maturity of the Indebtedness being refinanced is later
than the Stated Maturity of the Securities, the Refinancing
Indebtedness has a Stated Maturity at least 91 days later than the
Stated Maturity of the Securities;
(2) the Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater
than the Average Life of the Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate
issue price) that is equal to or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the
aggregate accreted value) then outstanding of the Indebtedness being
refinanced (plus, without duplication, any additional Indebtedness
incurred to pay interest or premiums required by the instruments
governing such existing Indebtedness as in effect at the time of
issuance of such Refinancing Indebtedness and fees in connection
therewith); and
(4) if the Indebtedness being refinanced is subordinated in right of
payment to the Securities or the Subsidiary Guarantee, such
Refinancing Indebtedness is subordinated in right of payment to the
Securities or the Subsidiary Guarantee on terms at least as
favorable to
<PAGE>
27
the Holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded.
"Registered Exchange Offer" shall have the meaning set forth in the
Exchange and Registration Rights Agreement.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the Issue Date.
"Related Business Assets" means assets used or useful in a Related
Business.
"Representative" means any trustee, agent or representative (if any)
of an issue of Senior Indebtedness or Guarantor Senior Indebtedness; PROVIDED
that when used in connection with the Senior Credit Agreement, the term
"Representative"shall refer to the administrative agent under the Senior Credit
Agreement.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40 consecutive days beginning on and
including the later of (A) the day on which the Initial Securities are offered
to persons other than distributors (as defined in Regulation S under the
Securities Act) and (B) the Issue Date.
"Restricted Securities Legend" means the Private Placement Legend
set forth in clause (A) of SECTION 2.1(c) or the Regulation S Legend set forth
in clause (B) of SECTION 2.1(c), as applicable.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the collective reference to the Initial
Securities, Exchange Securities and Private Exchange Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by DTC), or any successor Person thereto and shall
initially be the Trustee.
<PAGE>
28
"Senior Credit Agreement" means one or more debt facilities
(including, without limitation, the Credit Agreement, dated as of November 12,
1999, to be entered into among the Company, the eligible subsidiaries referred
to therein, The Chase Manhattan Bank, as Administrative Agent, Syndication Agent
and Collateral Agent, and the lenders parties thereto from time to time) or
commercial paper facilities to which the Company is a party with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(and whether or not with the original administrative agent and lenders or
another administrative agent or agents or other lenders and whether provided
under the original credit agreement or any other credit or other agreement or
indenture).
"Senior Indebtedness" means, whether outstanding on the Issue Date
or thereafter issued, created, Incurred or assumed, the Bank Indebtedness
Incurred by the Company, and all other Indebtedness of the Company, including
accrued and unpaid interest (including interest accruing after, or which would
accrue but for, the filing of any petition in bankruptcy or for reorganization
relating to the Company at the rate specified in the documentation with respect
thereto whether or not a claim for post-filing interest is allowed in such
proceeding) and fees relating thereto; PROVIDED, HOWEVER, that Senior
Indebtedness will not include:
(1) any Indebtedness with respect to which, in the instrument creating
or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness
are not superior in right of, or are subordinate to, payment of the
Securities and the Subsidiary Guarantees;
(2) any obligation of the Company to any Subsidiary;
(3) any liability for Federal, state, foreign, local or other taxes owed
or owing by the Company;
(4) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities);
(5) any Indebtedness, Guarantee or obligation of the Company that is
expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Company, including,
without limitation, any Senior Subordinated Indebtedness and any
Subordinated Obligations; or
(6) any Capital Stock.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank equally with the Securities
<PAGE>
29
in right of payment and is not subordinated by its terms in right of payment to
any Indebtedness or other obligation of the Company which is not Senior
Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary of the Company which are reasonably customary in
securitization of accounts receivable transactions.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any contingent obligations to repay,
redeem or repurchase any such principal prior to the date originally scheduled
for the payment thereof.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership and joint venture interests) 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 (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of the Company.
"Subsidiary Guarantee" means, individually, any Guarantee of payment
of the Securities by a Subsidiary Guarantor pursuant to the terms of this
Indenture and any supplemental indenture thereto, and, collectively, all such
Guarantees. Each such Subsidiary Guarantee will be in the form prescribed by
this Indenture.
"Subsidiary Guarantor" means each Subsidiary of the Company in
existence on the Issue Date other than a Receivables Entity and any Restricted
Subsidiary created or acquired by the Company after the Issue Date other than a
Foreign Subsidiary or a Receivables Entity which has not guaranteed Senior
Indebtedness or Guarantor Senior Indebtedness or Incurred Indebtedness under the
Senior Credit Agreement and any other Subsidiary that executes a Subsidiary
Guarantee in accordance with the terms of this Indenture.
<PAGE>
30
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary
of the Company (including any newly acquired or newly formed Subsidiary or a
Person becoming a Subsidiary through merger or consolidation or Investment
therein) to be an Unrestricted Subsidiary only if:
(1) such Subsidiary or any of its Subsidiaries does not own any Capital
Stock or Indebtedness of or have any Investment in, or own or hold
any Lien on any property of, any other Subsidiary of the Company
which is not a Subsidiary of the Subsidiary to be so designated or
otherwise an Unrestricted Subsidiary;
(2) all the Indebtedness of such Subsidiary and its Subsidiaries shall,
at the date of designation, and will at all times thereafter,
consist of Non-Recourse Debt;
(3) such designation and the Investment of the Company in such
Subsidiary complies with SECTION 3.4;
(4) such Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly,
all or substantially all of the business of the Company and its
Subsidiaries;
(5) such Subsidiary is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation:
<PAGE>
31
(a) to subscribe for additional Capital Stock of such Person; or
(b) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of
operating results; and
(6) on the date such Subsidiary is designated an Unrestricted
Subsidiary, such Subsidiary is not a party to any agreement,
contract, arrangement or understanding with the Company or any
Restricted Subsidiary with terms substantially less favorable to the
Company than those that might have been obtained from Persons who
are not Affiliates of the Company.
Any such designation by the Board of Directors of the Company shall
be evidenced to the Trustee by filing with the Trustee a resolution of the Board
of Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. 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 for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.
The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and the Company could
incur at least $1.00 of additional Indebtedness under SECTION 3.3(a) on a pro
forma basis taking into account such designation.
"Voting Stock" of a Person means all classes of Capital Stock of
such Person then outstanding and normally entitled to vote in the election of
directors or other governing body.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, all of the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly-Owned Subsidiary.
<PAGE>
32
SECTION 1.2. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction".......................................... 3.7
"Agent Member"................................................... 2.1(d)
"Asset Sale Offer"............................................... 3.6
"Asset Sale Offer Amount"........................................ 3.6
"Asset Sale Offer Period"........................................ 3.6
"Asset Sale Purchase Date"....................................... 3.6
"Authenticating Agent"........................................... 2.2
"Bankruptcy Law"................................................. 6.1
"Blockage Notice"................................................ 10.3
"Change of Control".............................................. 3.8
"Change of Control Offer"........................................ 3.8
"Change of Control Payment"...................................... 3.8
"Change of Control Payment Date"................................. 3.8
"Company Order".................................................. 2.2
"Corporate Trust Office"......................................... 3.14
"covenant defeasance option"..................................... 8.1(b)
"Custodian"...................................................... 6.1
"Event of Default"............................................... 6.1
"Excess Proceeds"................................................ 3.6
"Exchange Global Note"........................................... 2.1(a)
"Global Securities".............................................. 2.1(a)
"IAI" ........................................................ 2.1(a)
"Institutional Accredited Investor Global Note".................. 2.1(a)
"legal defeasance option"........................................ 8.1(b)
"Pari Passu Notes"............................................... 3.6
"Paying Agent"................................................... 2.3
"Payment Blockage Period"........................................ 10.3
"Private Placement Legend"....................................... 2.1(c)
"Registrar"...................................................... 2.3
"Regulation S"................................................... 2.1(a)
"Regulation S Global Note"....................................... 2.1(a)
"Regulation S Legend"............................................ 2.1(c)
"Regulation S Note".............................................. 2.1(a)
"Resale Restriction Termination Date"............................ 2.6
"Restricted Payment"............................................. 3.4
"Rule 144A"...................................................... 2.1(a)
"Rule 144A Global Note".......................................... 2.1(a)
"Rule 144A Note"................................................. 2.1(a)
"Special Interest Payment Date".................................. 2.13
<PAGE>
33
"Special Record Date"............................................ 2.13
"Successor Company".............................................. 4.1
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
<PAGE>
34
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
THE SECURITIES
SECTION 2.1. FORM, DATING AND TERMS. (a) The Original Securities are
being offered and sold by the Company pursuant to a Purchase Agreement, dated
November 10, 1999, among the Company, the Subsidiary Guarantors and Chase
Securities Inc. The Original Securities will be resold initially only to (A)
qualified institutional buyers (as defined in Rule 144A under the Securities Act
("RULE 144A")) in reliance on Rule 144A ("QIBs") and (B) Persons other than U.S.
Persons (as defined in Regulation S under the Securities Act ("REGULATION S"))
in reliance on Regulation S. Such Original Securities may thereafter be
transferred to among others, QIBs, purchasers in reliance on Regulation S and
IAIs in accordance with Rule 501 of the Securities Act in accordance with the
procedure described herein.
Initial Securities offered and sold to qualified institutional
buyers in the United States of America in reliance on Rule 144A (the "RULE 144A
Note") will be issued on the Issue Date in the form of a permanent global
Security, without interest coupons, substantially in the form of Exhibit A,
which is hereby incorporated by reference and made a part of this Indenture,
including appropriate legends as set forth in SECTION 2.1(c) (the "RULE 144A
GLOBAL NOTE"), deposited with the Trustee, as custodian for DTC, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
Rule 144A Global Note may be represented by more than one certificate, if so
required by DTC's rules regarding the maximum principal amount to be represented
by a single certificate. The aggregate principal amount of the Rule 144A Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for DTC or its nominee, as hereinafter
provided.
Initial Securities offered and sold outside the United States of
America (the "REGULATION S NOTE") in reliance on Regulation S shall be issued in
the form of a permanent global Security substantially in the form of EXHIBIT A
(the "REGULATION S GLOBAL NOTE") deposited with the Trustee, as custodian for
DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The Regulation S Global Note may be represented by more
than one certificate, if so required by DTC's rules regarding the maximum
principal amount to be represented by a single certificate. The aggregate
principal amount of the Regulation S Global Note may from time to time be
<PAGE>
35
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided.
Initial Securities resold to institutional "accredited investors"
(as defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who
are not QIBs ("IAIs") in the United States of America will be issued in the form
of a permanent global Security substantially in the form of EXHIBIT A (the
"INSTITUTIONAL ACCREDITED INVESTOR GLOBAL NOTE") deposited with the Trustee, as
custodian for DTC, duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The Institutional Accredited Investor Global Note may
be represented by more that one certificate, if so required by DTC's rules
regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Institutional Accredited
Investor Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.
Exchange Securities exchanged for interests in the Rule 144A Note,
the Regulation S Note and the Institutional Accredited Investor Global Note will
be issued in the form of a permanent global Security substantially in the form
of EXHIBIT B, which is hereby incorporated by reference and made a part of this
Indenture, deposited with the Trustee as hereinafter provided, including the
appropriate legend set forth in SECTION 2.1(c) (the "EXCHANGE GLOBAL NOTE"). The
Exchange Global Note may be represented by more than one certificate, if so
required by DTC's rules regarding the maximum principal amount to be represented
by a single certificate.
The Rule 144A Global Note, the Regulation S Global Note, the
Institutional Investor Global Note and the Exchange Global Note are sometimes
collectively herein referred to as the "Global Securities."
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York, or at such other office or agency of
the Company as may be maintained for such purpose pursuant to SECTION 2.3;
PROVIDED, HOWEVER, that, at the option of the Company, each installment of
interest may be paid by (i) check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Note Register or (ii) wire
transfer to an account located in the United States maintained by the payee.
Payments in respect of Securities represented by a Global Security (including
principal, premium and interest) will be made by wire transfer of immediately
available funds to the accounts specified by DTC.
The Private Exchange Securities shall be in the form of EXHIBIT A.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage, in addition to those set forth on EXHIBITS A AND B
and in SECTION 2.1(c). The Company and the Trustee shall approve the forms of
the Securities and any notation, endorsement or legend on them. Each Security
shall be dated the date of its authentication. The terms of the Securities set
forth in EXHIBIT A and exhibit B are part of the terms of this Indenture and, to
the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to be bound by such terms.
<PAGE>
36
(b) DENOMINATIONS. The Securities shall be issuable only in fully
registered form, without coupons, and only in denominations of $1,000 and any
integral multiple thereof.
(c) RESTRICTIVE LEGENDS. Unless and until (i) an Initial Security is
sold under an effective registration statement or (ii) an Initial Security is
exchanged for an Exchange Security in connection with an effective registration
statement, in each case pursuant to the Exchange and Registration Rights
Agreement or a similar agreement,
(A) the Rule 144A Global Note and the Institutional Accredited
Investor Global Note shall bear the following legend (the "PRIVATE PLACEMENT
LEGEND") on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR,
IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF
<PAGE>
37
THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."; and
(B) the Regulation S Global Note shall bear the following legend
(the "REGULATION S LEGEND") on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S.
PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2) BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S, (E) TO AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM
PRINCIPAL AMOUNT OF
<PAGE>
38
THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM AND IN THE CASE OF THE FOREGOING CLAUSE (E), A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE TRUSTEE.
THIS LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE DAYS BEGINNING ON AND
INCLUDING THE LATER OF (A) THE DAY ON WHICH THE SECURITIES ARE OFFERED TO
PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B) THE
DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
(C) The Global Securities, whether or not an Initial Security, shall
bear the following legend on the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF."
<PAGE>
39
(d) BOOK-ENTRY PROVISIONS. (i) This SECTION 2.1(d) shall apply only
to Global Securities deposited with the Trustee, as custodian for DTC.
(ii) Each Global Security initially shall (x) be registered in the
name of DTC for such Global Security or the nominee of DTC, (y) be delivered to
the Trustee as custodian for DTC and (z) bear legends as set forth in SECTION
2.1(c).
(iii) Members of, or participants in, DTC ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by DTC or by the Trustee as the custodian of DTC or under such
Global Security, and DTC may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or impair, as between DTC and its Agent Members,
the operation of customary practices of DTC governing the exercise of the rights
of a Holder of a beneficial interest in any Global Security.
(iv) In connection with any transfer of a portion of the beneficial
interest in a Global Security pursuant to subsection (e) of this Section to
beneficial owners who are required to hold Definitive Securities, the Securities
Custodian shall reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Definitive Securities of like tenor and amount.
(v) In connection with the transfer of an entire Global Security to
beneficial owners pursuant to subsection (e) of this Section, such Global
Security shall be deemed to be surrendered to the Trustee for cancellation, and
the Company shall execute, and the Trustee shall authenticate and deliver, to
each beneficial owner identified by DTC in exchange for its beneficial interest
in such Global Security, an equal aggregate principal amount of Definitive
Securities of authorized denominations.
(vi) The registered Holder of a Global Security may grant proxies
and otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(e) DEFINITIVE SECURITIES. (i) Except as provided below, owners of
beneficial interests in Global Securities will not be entitled to receive
Definitive Securities. If required to do so pursuant to any applicable law or
regulation, beneficial owners may obtain Definitive Securities in exchange for
their beneficial interests in a Global Security upon written request in
accordance with DTC's and the Registrar's procedures. In addition, Definitive
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Security if (a) DTC notifies the Company that
it is unwilling or unable to continue as depositary for such Global Security or
DTC ceases to be a clearing agency registered under the Exchange Act, at a time
when DTC is required to be so registered in order to act as depositary, and in
each case a successor depositary is not appointed by the Company within
<PAGE>
40
90 days of such notice or, (b) the Company executes and delivers to the Trustee
and Registrar an Officers' Certificate stating that such Global Security shall
be so exchangeable or (c) an Event of Default has occurred and is continuing and
the Registrar has received a request from DTC.
(ii) Any Definitive Security delivered in exchange for an interest
in a Global Security pursuant to SECTION 2.1(d)(iv) or (v) shall, except as
otherwise provided by SECTION 2.6(c), bear the applicable legend regarding
transfer restrictions applicable to the Definitive Security set forth in SECTION
2.1(c).
(iii) In connection with the exchange of a portion of a Definitive
Security for a beneficial interest in a Global Security, the Trustee shall
cancel such Definitive Security, and the Company shall execute, and the Trustee
shall authenticate and deliver, to the transferring Holder a new Definitive
Security representing the principal amount not so transferred.
SECTION 2.2. EXECUTION AND AUTHENTICATION. One Officer shall sign
the Securities for the Company by manual or facsimile signature. If an Officer
whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless,
after giving effect to any exchange of Initial Securities for Exchange
Securities.
A Security shall not be valid until an authorized signatory of the
Trustee manually authenticates the Security. The signature of the Trustee on a
Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture. A Security shall be dated
the date of its authentication.
At any time and from time to time after the execution and delivery
of this Indenture, the Trustee shall authenticate and make available for
delivery: (1) Original Securities for original issue on the Issue Date in an
aggregate principal amount of $200.0 million and (2) Exchange Securities for
issue only in a Registered Exchange Offer pursuant to the Exchange and
Registration Rights Agreement, and only in exchange for Initial Securities of an
equal principal amount, in each case upon a written order of the Company signed
by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company (the "COMPANY ORDER"). Such Company Order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities or Exchange Securities. The aggregate
principal amount of notes which may be authenticated and delivered under this
Indenture is limited to $200.0 million outstanding, except for Securities
authenticated and delivered upon registration or transfer of, or in exchange
for, or in lieu of, other Securities of the same class pursuant to SECTION 2.6,
SECTION 2.9, SECTION 2.11, SECTION 5.8, SECTION 9.5 and except for transactions
similar to the Registered Exchange Offer. All Securities issued on the Issue
Date shall be identical in all respects other than issue dates, the date from
which interest accrues and any changes relating thereto. Notwithstanding
anything to the contrary contained in this Indenture, all notes issued under
this Indenture shall vote and consent together on all matters as one class and
no series of notes will have the right to vote or consent as a separate class on
any matter.
<PAGE>
41
The Trustee may appoint an agent (the "AUTHENTICATING AGENT")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.
In case the Company or any Subsidiary Guarantor, pursuant to ARTICLE
IV, shall be consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to any Person, and the successor Person resulting
from such consolidation, or surviving such merger, or into which the Company or
any Subsidiary Guarantor shall have been merged, or the Person which shall have
received a conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to
ARTICLE IV, any of the Securities authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person with such changes
in phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such order for the purpose
of such exchange. If Securities shall at any time be authenticated and delivered
in any new name of a successor Person pursuant to this SECTION 2.2 in exchange
or substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time outstanding for
Securities authenticated and delivered in such new name.
SECTION 2.3. REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "REGISTRAR") and an office or agency where
Securities may be presented for payment (the "PAYING AGENT"). The Company shall
cause each of the Registrar and the Paying Agent to maintain an office or agency
in the Borough of Manhattan, The City of New York. The Registrar shall keep a
register of the Securities and of their transfer and exchange (the "NOTE
REGISTER"). The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to SECTION 7.7. The
Company or any of its Restricted Subsidiaries may act as Paying Agent,
Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent for the Securities.
<PAGE>
42
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST. By at least 10:00
a.m (New York City time) on the date on which any principal of or interest on
any Security is due and payable, the Company shall deposit with the Paying Agent
a sum sufficient to pay such principal or interest when due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that such
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by such Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee in writing of any
default by the Company or any Subsidiary Guarantor in making any such payment.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate the
money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent (other than the Trustee) to pay
all money held by it to the Trustee and to account for any funds disbursed by
such Paying Agent. Upon complying with this Section, the Paying Agent (if other
than the Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
SECTION 2.5. SECURITYHOLDER LISTS. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, or to the extent otherwise required under the TIA, the Company shall
furnish to the Trustee, in writing at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) The following provisions shall apply with respect to any
proposed transfer of a Rule 144A Note or an Institutional Accredited Investor
Global Note prior to the date which is two years after the later of the date of
its original issue and the last date on which the Company or any affiliate of
the Company was the owner of such Securities (or any predecessor thereto) (the
"RESALE RESTRICTION TERMINATION DATE"):
(i) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Global Note or a beneficial interest therein to a QIB
shall be made upon the representation of the transferee in the form as set
forth on the reverse of the Security that it is purchasing for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(ii) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Global Note or a beneficial interest therein to an IAI
shall be made upon receipt by the Trustee or its
<PAGE>
43
agent of a certificate substantially in the form set forth in SECTION 2.7
from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them; and
(iii) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Global Note or a beneficial interest therein to a
Non-U.S. Person shall be made upon receipt by the Trustee or its agent of
a certificate substantially in the form set forth in SECTION 2.8 from the
proposed transferee and, if requested by the Company or the Trustee, the
delivery of an opinion of counsel, certification and/or other information
satisfactory to each of them.
(b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Note prior to the expiration of the
Restricted Period:
(i) a transfer of a Regulation S Note or a beneficial interest
therein to a QIB shall be made upon the representation of the transferee,
in the form of assignment on the reverse of the certificate, that it is
purchasing the Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule
144A, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim
the exemption from registration provided by Rule 144A;
(ii) a transfer of a Regulation S Note or a beneficial
interest therein to an IAI shall be made upon receipt by the Trustee or
its agent of a certificate substantially in the form set forth in SECTION
2.7 from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them; and
(iii) a transfer of a Regulation S Note or a beneficial
interest therein to a Non- U.S. Person shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set forth
in SECTION 2.8 hereof from the proposed transferee and, if requested by
the Company or the Trustee, receipt by the Trustee or its agent of an
opinion of counsel, certification and/or other information satisfactory to
each of them.
After the expiration of the Restricted Period, interests in the
Regulation S Note may be transferred without requiring certification set forth
in SECTION 2.7, SECTION 2.8 or any additional certification.
(c) RESTRICTED SECURITIES LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing
<PAGE>
44
a Restricted Securities Legend, the Registrar shall deliver only Securities that
bear a Restricted Securities Legend unless there is delivered to the Registrar
an Opinion of Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to SECTION 2.1 or this SECTION
2.6. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable prior written notice to the Registrar.
(e) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
SECURITIES.
(i) To permit registrations of transfers and exchanges, the
Company shall, subject to the other terms and conditions of this Article
II, execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments or similar governmental charges payable upon
exchange or transfer pursuant to SECTIONS 3.6, 3.8 OR 9.5).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning (1) 15 days before the mailing of a notice of an offer to
repurchase or redeem Securities and ending at the close of business on the
day of such mailing or (2) 15 days before an interest payment date and
ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name
a Security is registered as the absolute owner of such Security for the
purpose of receiving payment of principal of and interest on such Security
and for all other purposes whatsoever, whether or not such Security is
overdue, and none of the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.
(v) Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to section 2.1(d) shall, except as
otherwise provided by SECTION 2.6(c), bear the applicable legend regarding
transfer restrictions applicable to the Definitive Security set forth in
SECTION 2.1(c).
<PAGE>
45
(vi) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(f) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, DTC or other Person with respect to the accuracy
of the records of DTC or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person (other
than DTC) of any notice (including any notice of redemption) or the payment of
any amount or delivery of any Securities (or other security or property) under
or with respect to such Securities. All notices and communications to be given
to the Holders and all payments to be made to Holders in respect of the
Securities shall be given or made only to or upon the order of the registered
Holders (which shall be DTC or its nominee in the case of a Global Security).
The rights of beneficial owners in any Global Security shall be exercised only
through DTC subject to the applicable rules and procedures of DTC. The Trustee
may rely and shall be fully protected in relying upon information furnished by
DTC with respect to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among DTC participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
SECTION 2.7. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS.
[Date]
Georgia Gulf Corporation
c/o SunTrust Bank, Atlanta
25 Park Place, 24th Floor
Atlanta, Georgia 30303
Attention: Corporate Trust Division
Dear Sirs:
This certificate is delivered to request a transfer of $_________
principal amount of the 10 3/8% Senior Subordinated Notes due 2007 (the
"Securities") of Georgia Gulf Corporation (the "Company").
<PAGE>
46
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Securities
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is two years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) pursuant to
offers and sales that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such
an institutional "accredited investor," in each case in a minimum principal
amount of Securities of $250,000 or (f) pursuant to any other available
exemption from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the disposition of
our property or the property of such investor account or accounts be at all
times within our or their control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply subsequent
to the Resale Restriction Termination Date. If any resale or other transfer of
the Securities is proposed to be made pursuant to clause (e) above prior to the
Resale Restriction Termination Date, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Company and the
<PAGE>
47
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and that it is acquiring such Securities
for investment purposes and not for distribution in violation of the Securities
Act. Each purchaser acknowledges that the Company and the Trustee reserve the
right prior to any offer, sale or other transfer prior to the Resale Termination
Date of the Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
TRANSFEREE:________________________
BY:________________________________
SECTION 2.8. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS PURSUANT TO REGULATION S.
[Date]
Georgia Gulf Corporation
c/o SunTrust Bank, Atlanta
25 Park Place, 24th Floor
Atlanta, Georgia 30303
Attention: Corporate Trust Division
Re: Georgia Gulf Corporation
10 3/8% Senior Subordinated Notes due 2007 (the "Securities")
-------------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(a) the offer of the Securities was not made to a person in the
United States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (ii) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
<PAGE>
48
(c) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:____________________________
_______________________________
Authorized Signature
SECTION 2.9. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES. If a
mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code are
met and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is
replaced, and, in the absence of notice to the Company, any Subsidiary Guarantor
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon Company Order the Trustee shall authenticate
and make available for delivery, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
<PAGE>
49
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Subsidiary Guarantor (if
applicable) and any other obligor upon the Securities, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10. OUTSTANDING SECURITIES. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security ceases to be outstanding in the event the
Company or a Subsidiary of the Company holds the Security, PROVIDED, HOWEVER,
that (i) for purposes of determining which are outstanding for consent or voting
purposes hereunder, Securities shall cease to be outstanding in the event the
Company or an Affiliate of the Company holds the Security and (ii) in
determining whether the Trustee shall be protected in making a determination
whether the Holders of the requisite principal amount of outstanding Securities
are present at a meeting of Holders of Securities for quorum purposes or have
consented to or voted in favor of any request, demand, authorization, direction,
notice, consent, waiver, amendment or modification hereunder, or relying upon
any such quorum, consent or vote, only Securities which a Trust Officer of the
Trustee actually knows to be held by the Company or an Affiliate of the Company
shall not be considered outstanding.
If a Security is replaced pursuant to SECTION 2.9, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.11. TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities.
<PAGE>
50
Temporary Securities shall be substantially in the form of Definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at any office
or agency maintained by the Company for that purpose and such exchange shall be
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute, and the Trustee shall
authenticate and make available for delivery in exchange therefor, one or more
Definitive Securities representing an equal principal amount of Securities.
Until so exchanged, the Holder of temporary Securities shall in all respects be
entitled to the same benefits under this Indenture as a holder of Definitive
Securities.
SECTION 2.12. CANCELLATION. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and dispose of such Securities in accordance with its internal
policies including delivery of a Certificate of Destruction describing such
Securities. The Company may not issue new Securities to replace Securities it
has paid or delivered to the Trustee for cancellation for any reason other than
in connection with a transfer or exchange.
SECTION 2.13. PAYMENT OF INTEREST; DEFAULTED INTEREST. Interest on
any Security which is payable, and is punctually paid or duly provided for, on
any interest payment date shall be paid to the Person in whose name such
Security (or one or more predecessor Securities) is registered at the close of
business on the regular record date for such interest at the office or agency of
the Company maintained for such purpose pursuant to SECTION 2.3.
Any interest on any Security which is payable, but is not paid when
the same becomes due and payable and such nonpayment continues for a period of
30 days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Securities (such defaulted interest and interest thereon herein collectively
called "DEFAULTED INTEREST") shall be paid by the Company, at its election in
each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date (as defined below) for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date (not less than 30 days after such
notice) of the proposed payment (the "SPECIAL INTEREST PAYMENT DATE"), and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the
<PAGE>
51
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a record date (the
"SPECIAL RECORD DATE") for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
Special Interest Payment Date and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date, and in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date and Special
Interest Payment Date therefor to be given in the manner provided for in
SECTION 13.2, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date and Special Interest Payment Date therefor having been so
given, such Defaulted Interest shall be paid on the Special Interest
Payment Date to the Persons in whose names the Securities (or their
respective predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of, transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.14. COMPUTATION OF INTEREST. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 2.15. CUSIP NUMBERS. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
PROVIDED, HOWEVER, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such CUSIP
numbers. The Company shall promptly notify the Trustee of any change in the
CUSIP numbers.
<PAGE>
52
ARTICLE III
COVENANTS
SECTION 3.1. PAYMENT OF SECURITIES. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 3.2. SEC REPORTS AND AVAILABLE INFORMATION. (a)
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted
by the Exchange Act, the Company will file with the Commission, and provide the
Trustee and the Holders of the Securities with, the annual reports and the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act within the time periods
specified therein. In the event that the Company is not permitted to file such
reports, documents and information with the Commission pursuant to the Exchange
Act, the Company will nevertheless provide such Exchange Act information to the
Trustee and the Holders of the Securities as if the Company were subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act within the
time periods specified therein. The Company shall also comply with the other
provisions of TIA Section 314(a). Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(b) If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by SECTION 3.2(a) shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes to the
financial statements, and in Management's Discussion and Analysis of Results of
Operations and Financial Condition, of the financial condition and results of
operations of the Company and its Restricted Subsidiaries.
<PAGE>
53
SECTION 3.3. LIMITATION ON INDEBTEDNESS. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness; PROVIDED, HOWEVER, that the Company and the Subsidiary Guarantors
may Incur Indebtedness if on the date of the Incurrence: (1) the Consolidated
Coverage Ratio for the Company and its Restricted Subsidiaries is at least (a)
2.00 to 1.00, if such Indebtedness is Incurred on or before November 1, 2001 and
(b) 2.25 to 1.00, if such Indebtedness is Incurred thereafter; and (2) no
Default or Event of Default has occurred or is continuing or would occur as a
consequence of Incurring the Indebtedness.
(b) SECTION 3.3(a) will not prohibit the incurrence of the following
Indebtedness: (1) Indebtedness Incurred pursuant to the Senior Credit Agreement
in an aggregate principal amount up to $525 million at any one time outstanding
less the aggregate principal amount of all principal repayments with the
proceeds of Asset Dispositions permanently reducing the commitments thereunder;
provided that repayments with the proceeds of Asset Sales shall not reduce the
amount permitted to be Incurred under this clause (1) to an aggregate principal
amount less than $100.0 million; (2) Indebtedness of the Company owing to and
held by any Restricted Subsidiary (other than a Receivables Entity) or
Indebtedness of a Restricted Subsidiary owing to and held by the Company or any
Restricted Subsidiary (other than a Receivables Entity); PROVIDED, HOWEVER, (a)
if the Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all obligations
with respect to the Securities; and (b) (i) any subsequent issuance or transfer
of Capital Stock or any other event which results in any such Indebtedness being
beneficially held by a Person other than the Company or a Restricted Subsidiary
(other than a Receivables Entity) of the Company; and (ii) any sale or other
transfer of any such Indebtedness to a Person other than the Company or a
Restricted Subsidiary (other than a Receivables Entity) of the Company shall be
deemed, in each case, to constitute an Incurrence of such Indebtedness by the
Company or such Subsidiary, as the case may be; (3) Indebtedness represented by
(a) the Securities, (b) any Indebtedness (other than the Indebtedness described
in clauses (1), (2), (5), (6), (7), (8) and (9)) outstanding on the Issue Date
and (c) any Refinancing Indebtedness Incurred in respect of any Indebtedness
described in clause (3) or clause (4) or Incurred pursuant to SECTION 3.3(a);
(4) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date
on which such Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred (a) to provide all or any portion of the funds utilized to
consummate the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was otherwise
acquired by the Company or (b) otherwise in connection with, or in contemplation
of, such acquisition); PROVIDED, HOWEVER, that at the time such Restricted
Subsidiary is acquired by the Company, the Company would have been able to Incur
$1.00 of additional Indebtedness pursuant to SECTION 3.3(a) after giving effect
to the Incurrence of such Indebtedness pursuant to this clause (4); (5)
Indebtedness under Commodity Agreements, Currency Agreements and Interest Rate
Agreements; PROVIDED, that in the case of Currency Agreements, such Currency
Agreements are related to business transactions of the Company or its Restricted
Subsidiaries entered into in the ordinary course of business, or in the case of
Currency Agreements and Interest Rate Agreements, such Currency Agreements and
Interest Rate Agreements are entered into for bona fide hedging purposes of the
Company or its Restricted Subsidiaries (as determined in good faith by the Board
of Directors or senior management of the Company) and substantially correspond
in terms of notional amount, duration, currencies and interest rates, as
applicable, to Indebtedness of the Company
<PAGE>
54
or its Restricted Subsidiaries Incurred without violation of this Indenture, or
in the case of Commodity Agreements, such Commodity Agreements are entered into
for valid business purposes other than speculative purposes (as determined by
the Company's or such Restricted Subsidiary's principal financial officer in the
exercise of his or her good faith business judgment); (6) the Subsidiary
Guarantees and other Guarantees by the Subsidiary Guarantors of Indebtedness
Incurred in accordance with the provisions of this Indenture; PROVIDED that in
the event such Indebtedness that is being Guaranteed is (a) Senior Subordinated
Indebtedness or Guarantor Senior Subordinated Indebtedness, then the related
Guarantee shall rank equally in right of payment to the Subsidiary Guarantee or
(b) a Subordinated Obligation or a Guarantor Subordinated Obligation, then the
related Guarantee shall be subordinated in right of payment to the Subsidiary
Guarantee; (7) Indebtedness incurred in respect of workers' compensation claims,
self-insurance obligations, performance, surety and similar bonds and completion
guarantees provided by the Company in the ordinary course of business; (8)
Indebtedness arising from agreements of the Company or a Restricted Subsidiary
providing for indemnification, adjustment of purchase price or similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or Capital Stock of a Restricted Subsidiary,
PROVIDED that the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received by the
Company and its Restricted Subsidiaries in connection with such disposition; (9)
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business,
PROVIDED, HOWEVER, that such Indebtedness is extinguished within five business
days of Incurrence; and (10) in addition to the items referred to in clauses (1)
through (9) above, Indebtedness of the Company and the Subsidiary Guarantors in
an aggregate outstanding principal amount which, when taken together with the
principal amount of all other Indebtedness Incurred pursuant to this clause (10)
and then outstanding, will not exceed $75.0 million (it being understood that
any Indebtedness Incurred under this clause (10) shall cease to be deemed
Incurred or outstanding for purposes of this clause (10) but shall be deemed to
be Incurred for purposes of SECTION 3.3(a) from and after the first date on
which the Company could have Incurred such Indebtedness under SECTION 3.3(a)
without reliance on this clause (10)).
(c) The Company will not Incur any Indebtedness under SECTION 3.3(b)
if the proceeds thereof are used, directly or indirectly, to refinance any
Subordinated Obligations of the Company unless such Indebtedness will be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor will incur any indebtedness if the proceeds
thereof are used, directly or indirectly, to refinance any Guarantor
Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness
will be subordinated to the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee to at least the same extent as such Guarantor Subordinated
Obligations. No Subsidiary Guarantor will incur any Indebtedness if the proceeds
thereof are used, directly or indirectly, to refinance any Guarantor Senior
Subordinated Indebtedness unless such refinancing Indebtedness is either
Guarantor Senior Subordinated Indebtedness or Guarantor Subordinated
Obligations. No Restricted Subsidiary other than a Subsidiary Guarantor may
Incur any Indebtedness if the proceeds are used to refinance Indebtedness of the
Company.
<PAGE>
55
(d) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness incurred pursuant to and in
compliance with, this SECTION 3.3: (1) in the event that Indebtedness meets the
criteria of more than one of the types of Indebtedness described in SECTION
3.3(a) or (b), the Company, in its sole discretion, will classify such item of
Indebtedness on the date of Incurrence and only be required to include the
amount and type of such Indebtedness in one of such clauses; provided that all
Indebtedness Incurred under the Senior Credit Agreement on the Issue Date shall
be Incurred exclusively pursuant to clause (1) of SECTION 3.3(b); and (2) the
amount of Indebtedness issued at a price that is less than the principal amount
thereof will be equal to the amount of the liability in respect thereof
determined in accordance with GAAP. Accrual of interest, accrual of dividends,
the accretion of accreted value, the payment of interest in the form of
additional Indebtedness and the payment of dividends in the form of additional
shares of Preferred Stock will not be deemed to be an incurrence of Indebtedness
for purposes of this SECTION 3.3. The amount of any Indebtedness outstanding as
of any date shall be (i) the accreted value of the Indebtedness in the case of
any Indebtedness issued with original issue discount and (ii) the principal
amount or liquidation preference thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness. For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; PROVIDED that if such Indebtedness is Incurred to
refinance other Indebtedness denominated in a foreign currency, and such
refinancing would cause the applicable U.S. dollar-dominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the
date of such refinancing, such U.S. dollar-dominated restriction shall be deemed
not to have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced. Notwithstanding any other provision of this SECTION 3.3, the maximum
amount of Indebtedness that the Company may Incur pursuant to this SECTION 3.3
shall not be deemed to be exceeded solely as a result of fluctuations in the
exchange rate of currencies. The principal amount of any Indebtedness incurred
to refinance other Indebtedness, if Incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency
exchange rate applicable to the currencies in which such Refinancing
Indebtedness is denominated that is in effect on the date of such refinancing.
(d) The Company will not permit any of its Unrestricted Subsidiaries
to Incur any Indebtedness or issue any shares of Disqualified Stock, other than
Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a
Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be
Incurred by a Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under this SECTION
3.3, the Company shall be in Default of this SECTION 3.3).
SECTION 3.4. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries, directly or
indirectly, to: (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
<PAGE>
56
Subsidiaries) except: (A) dividends or distributions payable in Capital Stock of
the Company (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock of the Company; and (B) dividends or
distributions payable to the Company or a Restricted Subsidiary of the Company
(and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its
other holders of common Capital Stock on a pro rata basis); (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any direct or indirect parent of the Company held by Persons other than the
Company or a Restricted Subsidiary of the Company (other than in exchange for
Capital Stock of the Company (other than Disqualified Stock)); (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or Guarantor Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations or
Guarantor Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase or acquisition); or (iv)
make any Restricted Investment in any Person; (any such dividend, distribution,
purchase, redemption, repurchase, defeasance, other acquisition, retirement or
Restricted Investment referred to in clauses (i) through (iv) shall be referred
to herein as a "RESTRICTED PAYMENT"), if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
from the Restricted Payment); or
(2) the Company is not able to incur an additional $1.00 of
Indebtedness pursuant to SECTION 3.3(a) after giving effect to such
Restricted Payment; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made subsequent to the Issue Date would
exceed the sum of: (A) 50% of Consolidated Net Income for the period
(treated as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of the most
recent fiscal quarter ending prior to the date of such Restricted Payment
for which financial statements are in existence (or, in case such
Consolidated Net Income is a deficit, minus 100% of such deficit); (B) the
aggregate Net Cash Proceeds received by the Company from the issue or sale
of its Capital Stock (other than Disqualified Stock) or other capital
contributions subsequent to the Issue Date (other than Net Cash Proceeds
received from an issuance or sale of such Capital Stock to a Subsidiary of
the Company or an employee stock ownership plan, option plan or similar
trust to the extent such sale to an employee stock ownership plan, option
plan or similar trust is financed by loans from or guaranteed by the
Company or any Restricted Subsidiary unless such loans have been repaid
with cash on or prior to the date of determination); (C) the amount by
which Indebtedness of the Company is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Issue Date of any Indebtedness of the Company
convertible or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or other property,
distributed by the Company upon such conversion or exchange); and (D) the
amount equal to the net reduction in Restricted
<PAGE>
57
Investments made by the Company or any of its Restricted Subsidiaries in
any Person resulting from: (x) repurchases or redemptions of such
Restricted Investments by such Person, proceeds realized upon the sale of
such Restricted Investment to an unaffiliated purchaser, repayments of
loans or advances or other transfers of assets (including by way of
dividend or distribution) by such Person to the Company or any Restricted
Subsidiary of the Company; or (y) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided
in the definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Unrestricted Subsidiary,
which amount in each case under this clause (D) was included in the
calculation of the amount of Restricted Payments; PROVIDED, HOWEVER, that
no amount will be included under this clause (D) to the extent it is
already included in Consolidated Net Income.
(b) The provisions of SECTION 3.4(a) will not prohibit: (1) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee stock
ownership plan or similar trust to the extent such sale to an employee stock
ownership plan or similar trust is financed by loans from or guaranteed by the
Company or any Restricted Subsidiary unless such loans have been repaid with
cash on or prior to the date of determination); PROVIDED, HOWEVER, that (A) such
purchase or redemption will be excluded in subsequent calculations of the amount
of Restricted Payments and (B) the Net Cash Proceeds from such sale will be
excluded from SECTION 3.4(a)(3)(B); (2) any purchase or redemption of
Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company that qualifies as Refinancing Indebtedness; PROVIDED, HOWEVER, that
such purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments; (3) so long as no Default or Event of Default has
occurred and is continuing, any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under SECTION 3.6;
PROVIDED, HOWEVER, that such purchase or redemption will be excluded in
subsequent calculations of the amount of Restricted Payments; (4) dividends paid
within 60 days after the date of declaration if at such date of declaration such
dividend would have complied with this SECTION 3.4; PROVIDED, HOWEVER, that such
dividends will be included in subsequent calculations of the amount of
Restricted Payments; (5) so long as no Default or Event of Default has occurred
and is continuing, loans or advances to employees or directors of the Company or
any Subsidiary of the Company the proceeds of which are used to purchase Capital
Stock of the Company, in an aggregate amount not in excess of $5.0 million at
any one time outstanding; PROVIDED, HOWEVER, that the amount of such loans and
advances will be included in subsequent calculations of the amount of Restricted
Payments; (6) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of any class or
series of Disqualified Stock of the Company issued in accordance with the terms
of this Indenture to the extent such dividends are included in the definition of
"Consolidated Interest Expense"; PROVIDED that the payment of such dividends
will be excluded from the calculation of Restricted Payments; (7) repurchases of
Capital Stock deemed to occur upon the exercise of stock options if such Capital
Stock represents a portion of the exercise price thereof; PROVIDED, HOWEVER,
that such repurchases will be
<PAGE>
58
excluded from subsequent calculations of the amount of Restricted Payments; and
(8) Restricted Payments in an amount not to exceed $25.0 million.
The amount of all Restricted Payments, other than cash, shall be the
fair market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be paid, transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any cash Restricted Payment shall be its face amount
and any non-cash Restricted Payment shall be determined conclusively by the
Board of Directors acting in good faith whose resolution with respect thereto
shall be delivered to the Trustee, such determination to be based upon an
opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if such fair market value is estimated to exceed $50.0
million. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this SECTION 3.4 were computed, together with a copy of
any fairness opinion or appraisal required by this Indenture.
SECTION 3.5. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES . The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to: (1) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligations owed to the
Company or any Restricted Subsidiary; (2) make any loans or advances to the
Company or any Restricted Subsidiary; or (3) transfer any of its property or
assets to the Company or any Restricted Subsidiary. The preceding provisions
will not prohibit: (i) any encumbrance or restriction pursuant to an agreement
in effect at or entered into on the date of this Indenture, including, without
limitation, this Indenture and the Senior Credit Agreement in effect on such
date; (ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by a
Restricted Subsidiary on or before the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness Incurred as consideration
in, or to provide all or any portion of the funds utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the Company or in
contemplation thereof) and outstanding on such date; (iii) any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
effecting a refinancing of Indebtedness Incurred pursuant to an agreement
referred to in SECTION 3.5(i) OR (ii) or this clause (iii) or contained in any
amendment to an agreement referred to in SECTION 3.5(i) OR (ii) or this clause
(iii); PROVIDED, HOWEVER, that the encumbrances and restrictions with respect to
such Restricted Subsidiary contained in any such agreement or amendment are no
less favorable in any material respect to the Holders of the Securities than the
encumbrances and restrictions contained in such agreements referred to in
SECTION 3.5(i) OR (ii) on the Issue Date or the date such Restricted Subsidiary
became a Restricted Subsidiary, whichever is applicable; (iv) in the case of
clause (3) of this SECTION 3.5, any encumbrance or restriction: (a) that
restricts in a customary manner the subletting, assignment or transfer of any
property or asset that is subject to a lease, license or similar contract, or
the assignment or transfer of any such lease, license or other contract; (b)
contained in mortgages, pledges or other security agreements permitted under
this
<PAGE>
59
Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the
extent such encumbrances or restrictions restrict the transfer of the property
subject to such mortgages,pledges or other security agreements; or (c) pursuant
to customary provisions restricting dispositions of real property interests set
forth in any reciprocal easement agreements of the Company or any Restricted
Subsidiary; (v) purchase money obligations for property acquired in the ordinary
course of business that impose encumbrances or restrictions of the nature
described in clause (3) of this SECTION 3.5 on the property so acquired; (vi)
any Purchase Money Note or other Indebtedness or contractual requirements
incurred with respect to a Qualified Receivables Transaction relating
exclusively to a Receivables Entity that, in the good faith determination of the
Board of Directors, are necessary to effect such Qualified Receivables
Transaction; (vii) any restriction with respect to a Restricted Subsidiary (or
any of its property or assets) imposed pursuant to an agreement entered into for
the direct or indirect sale or disposition of all or substantially all the
Capital Stock or assets of such Restricted Subsidiary (or the property or assets
that are subject to such restriction) pending the closing of such sale or
disposition; (viii) encumbrances or restrictions arising or existing by reason
of applicable law or any applicable rule, regulation or order; and (ix)
customary provisions with respect to the distribution of assets or property in
joint venture agreements.
SECTION 3.6. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a)
The Company will not, and will not permit any of its Restricted Subsidiaries to,
make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Disposition at least equal to
the fair market value (including as to the value of all non-cash consideration),
as determined in good faith by the Board of Directors, of the shares and assets
subject to such Asset Disposition; (2) at least 75% of the consideration from
such Asset Disposition received by the Company or such Restricted Subsidiary, as
the case may be, is in the form of cash or Cash Equivalents; and (3) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company or such Restricted Subsidiary, as the case may be: (A) FIRST, to
the extent the Company or any Restricted Subsidiary, as the case may be, elects
(or is required by the terms of any Senior Indebtedness), to prepay, repay or
purchase Senior Indebtedness or Indebtedness (other than any Preferred Stock or
Guarantor Subordinated Obligation) of a Restricted Subsidiary that is a
Subsidiary Guarantor (in each case other than Indebtedness owed to the Company
or an Affiliate of the Company) within 360 days from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; PROVIDED,
HOWEVER, that, in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to this clause (A), the Company or such Restricted
Subsidiary will retire such Indebtedness and will cause the related commitment
(if any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased; and (B) SECOND, to the extent of the balance of
such Net Available Cash after application in accordance with clause (A), to the
extent the Company or such Restricted Subsidiary elects, to invest in Additional
Assets within 360 days from the later of the date of such Asset Disposition or
the receipt of such Net Available Cash.
(b) Any Net Available Cash from Asset Sales that are not applied or
invested as provided in SECTION 3.6(a) will be deemed to constitute "EXCESS
PROCEEDS." On the 361st day after an Asset Disposition, if the aggregate amount
of Excess Proceeds exceeds $50.0 million, the Company will be required to make
an offer ("ASSET SALE OFFER") to all Holders of Securities and to the extent
<PAGE>
60
required by the terms of other Senior Subordinated Indebtedness, to all holders
of other Senior Subordinated Indebtedness outstanding with similar provisions
requiring the Company to make an offer to purchase such Senior Subordinated
Indebtedness with the proceeds from any Asset Disposition ("PARI PASSU NOTES"),
to purchase the maximum principal amount of Securities and any such Pari Passu
Notes to which the Asset Sale Offer applies that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount of the Pari Passu Notes plus accrued and unpaid interest to the
date of purchase, in accordance with the procedures set forth in this Indenture
or the agreements governing the Pari Passu Notes, as applicable, in each case in
integral multiples of $1,000. To the extent that the aggregate amount of
Securities and Pari Passu Notes so validly tendered and not properly withdrawn
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes, subject to
the other covenants contained in this Indenture. If the aggregate principal
amount of Securities surrendered by Holders of the Securities and other Pari
Passu Notes surrendered by holders or lenders, collectively, exceeds the amount
of Excess Proceeds, the Trustee shall select the Securities and Pari Passu Notes
to be purchased on a pro rata basis on the basis of the aggregate principal
amount of tendered Securities and Pari Passu Notes. Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
(c) (1) The Asset Sale Offer will remain open for a period of 20
Business Days following its commencement, except to the extent that a longer
period is required by applicable law (the "ASSET SALE OFFER PERIOD"). No later
than five Business Days after the termination of the Asset Sale Offer Period
(the "ASSET SALE PURCHASE DATE"), the Company will purchase the principal amount
of Securities and Pari Passu Notes required to be purchased pursuant to this
SECTION 3.6 (the "ASSET SALE OFFER AMOUNT") or, if less than the Asset Sale
Offer Amount has been so validly tendered, all Securities and Pari Passu Notes
validly tendered in response to the Asset Sale Offer.
(2) If the Asset Sale Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest will be paid to the Person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Securities pursuant to the Asset
Sale Offer.
(3) On or before the Asset Sale Purchase Date, the Company will, to
the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Asset Sale Offer Amount of Securities and Pari Passu Notes or
portions of Securities and Pari Passu Notes so validly tendered and not properly
withdrawn pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer
Amount has been validly tendered and not properly withdrawn, all Securities and
Pari Passu Notes so validly tendered and not properly withdrawn, in each case in
integral multiples of $1,000. The Company will deliver to the Trustee an
Officers' Certificate stating that such Securities or portions thereof were
accepted for payment by the Company in accordance with the terms of this SECTION
3.6 and, in addition, the Company will deliver all certificates and notes
required, if any, by the agreements governing the Pari Passu Notes. The Company
or the Paying Agent, as the case may be, will promptly (but in any case not
later than five Business Days after the termination of the Asset Sale Offer
Period) mail or deliver to each tendering Holder of Securities or holder or
lender of Pari Passu Notes, as the
<PAGE>
61
case may be, an amount equal to the purchase price of the Securities or Pari
Passu Notes so validly tendered and not properly withdrawn by such Holder or
lender, as the case may be, and accepted by the Company for purchase, and the
Company will promptly issue a new Security, and the Trustee, upon delivery of an
Officers' Certificate from the Company will authenticate and mail or deliver
such new Security to such Holder, in a principal amount equal to any unpurchased
portion of the Security surrendered; PROVIDED that each such new Security will
be in a principal amount of $1,000 or an integral multiple of $1,000. In
addition, the Company will take any and all other actions required by the
agreements governing the Pari Passu Notes. Any Security not so accepted will be
promptly mailed or delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Asset Sale Offer on the Asset Sale
Purchase Date.
For the purposes of this SECTION 3.6, the following will be deemed
to be cash:
(1) the assumption by the transferee of Indebtedness (other than Senior
Subordinated Indebtedness, Subordinated Obligations or Disqualified
Stock) of the Company or Indebtedness (other than Guarantor Senior
Subordinated Indebtedness, Guarantor Subordinated Obligations or
Preferred Stock) of any Restricted Subsidiary of the Company and the
release of the Company or such Restricted Subsidiary from all
liability on such Indebtedness in connection with such Asset
Disposition (in which case the Company will, without further action,
be deemed to have applied such deemed cash to Indebtedness in
accordance with SECTION 3.6(a)(3)(A)); and
(2) securities, notes or other obligations received by the Company or
any Restricted Subsidiary of the Company from the transferee that
are promptly converted by the Company or such Restricted Subsidiary
into cash.
(d) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with this SECTION 3.6, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Indenture by virtue of any conflict.
SECTION 3.7. LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company (an "AFFILIATE TRANSACTION") UNLESS: (1) the terms of
such Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained in
a comparable transaction at the time of such transaction in arm's-length
dealings with a Person who is not such an Affiliate; (2) in the event such
Affiliate Transaction involves an aggregate amount in excess of $10.0 million,
the terms of such transaction have been approved by a majority of the members of
the Board of Directors of the Company and by a majority of the members of such
Board having no personal stake in such transaction, if any (and such
<PAGE>
62
majority or majorities, as the case may be, determines that such Affiliate
Transaction satisfies the criteria in SECTION 3.7(a)(1)); and (3) in the event
such Affiliate Transaction involves an aggregate amount in excess of $50.0
million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is not materially less favorable than those that might reasonably
have been obtained in a comparable transaction at such time on an arms-length
basis from a Person that is not an Affiliate.
(b) SECTION 3.7(a) will not apply to: (1) any Restricted Payment
(other than a Restricted Investment) permitted to be made pursuant to SECTION
3.4; (2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans and other reasonable fees,
compensation, benefits and indemnities paid or entered into by the Company or
its Restricted Subsidiaries in the ordinary course of business to or with
officers, directors or employees of the Company and its Restricted Subsidiaries;
(3) loans or advances to employees in the ordinary course of business of the
Company or any of its Restricted Subsidiaries; (4) any transaction between the
Company and a Restricted Subsidiary (other than a Receivables Entity) or between
Restricted Subsidiaries (other than a Receivables Entity); (5) the payment of
reasonable and customary fees paid to, and indemnity provided on behalf of,
officers, directors or employees of the Company or any Restricted Subsidiary of
the Company; (6) sales or other transfers or dispositions of accounts receivable
and other related assets customarily transferred in an asset securitization
transaction involving accounts receivable to a Receivables Entity in a Qualified
Receivables Transaction, and acquisitions of Permitted Investments in connection
with a Qualified Receivables Transaction; and (7) the performance of obligations
of the Company or any of its Restricted Subsidiaries under the terms of any
agreement to which the Company or any of its Restricted Subsidiaries is a party
on the Issue Date and identified on a schedule to this Indenture on the Issue
Date, as these agreements may be amended, modified or supplemented from time to
time; PROVIDED, HOWEVER that any future amendment, modification or supplement
entered into after the Issue Date will be permitted to the extent that its terms
are not more disadvantageous to the Holders of the Securities than the terms of
the agreements in effect on the Issue Date.
SECTION 3.8. CHANGE OF CONTROL. Upon the occurrence of a Change of
Control, each Holder will have the right to require the Company to repurchase
all or any part (in integral multiples of $1,000) of such Holder's Securities at
a purchase price in cash equal to 101% of the principal amount of the Securities
plus accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date).
Within 30 days following any Change of Control, the Company shall
mail a notice (the "CHANGE OF CONTROL OFFER") to each Holder, with a copy to the
Trustee, stating: (i) that a Change of Control has occurred and that such Holder
has the right to require the Company pursuant to this SECTION 3.8 to purchase
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date)
<PAGE>
63
(the "CHANGE OF CONTROL PAYMENT"); (ii) the repurchase date (which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed); (iii) that any Security not tendered shall continue to accrue interest,
if any; (iv) that, unless the Company defaults in the payment of principal or
interest, all Securities accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest, if any, after the Change of Control
Payment Date; (v) that Holders electing to have any Securities purchased
pursuant to a Change of Control Offer shall be required to surrender the
Securities to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the date of purchase
for the Change of Control Payment Date; (vi) that Holders shall be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of Securities delivered for purchase, and a
statement that such Holder is withdrawing its election to have the Securities
purchased; (vii) that Holders whose Securities are being purchased only in part
shall be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered, which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof; and (viii) the
procedures determined by the Company, consistent with this SECTION 3.8, that a
Holder must follow in order to have its Securities repurchased.
Prior to mailing a Change of Control Offer, and as a condition to
such mailing (i) all Senior Indebtedness must be repaid in full, or the Company
must offer to repay all Senior Indebtedness and repay all Senior Indebtedness
held by holders who accept such offer or (ii) the requisite holders of each
issue of Senior Indebtedness shall have consented to such Change of Control
Offer being made and waived the event of default under such Senior Indebtedness,
if any, caused by the Change of Control. The Company will effect such repayment
or obtain such consent and waiver within 30 days following any Change of
Control, it being a Default of this SECTION 3.8 if the Company fails to so
comply.
On a Business Day that is no earlier than 30 days nor later than 60
days from the date that the Company mails or causes to be mailed notice of the
Change of Control to the Holders (the "CHANGE OF CONTROL PAYMENT DATE"), the
Company shall, to the extent lawful, (i) accept for payment all Securities or
portions thereof in integral multiples of $1,000 properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal
to the Change of Control Payment in respect of all the Securities or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Trustee
the Securities so accepted together with an Officers' Certificate stating the
aggregate principal amount of such Securities or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder of
the Securities so tendered the Change of Control Payment for such Securities,
and the Trustee shall promptly authenticate and mail (or cause to be transferred
by book-entry) to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; PROVIDED that each
such new Security shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
<PAGE>
64
The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this SECTION 3.8 applicable to a Change of Control Offer made by the
Company and purchases all Securities validly tendered and not withdrawn under
such Change of Control Offer.
The Company will comply, to the extent applicable, with the
requirements of SECTION 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
SECTION 3.8. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Company will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue thereof.
SECTION 3.9. LIMITATION ON SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise dispose
of any Voting Stock of any Restricted Subsidiary or to issue any of the Voting
Stock of a Restricted Subsidiary (other than, if necessary, shares of its Voting
Stock constituting directors' qualifying shares) to any Person except: (1) to
the Company or a Wholly-Owned Subsidiary (other than a Receivables Entity); or
(2) in compliance with SECTION 3.6 and immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would continue to be a Restricted
Subsidiary.
Notwithstanding the preceding paragraph, the Company may sell all
the Voting Stock of a Restricted Subsidiary as long as the Company complies with
the terms of SECTION 3.6.
SECTION 3.10. LIMITATION ON LIENS. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur or suffer to exist any Lien (other than Permitted Liens) upon any
of its property or assets (including Capital Stock), whether owned on the date
of this Indenture or acquired thereafter, securing any Senior Subordinated
Indebtedness, Subordinated Obligations, Guarantor Senior Subordinated
Indebtedness or Guarantor Subordinated Obligations, unless contemporaneously
with the incurrence of the Liens effective provision is made to secure the
Indebtedness due under this Indenture and the Securities or, in respect of Liens
on any Restricted Subsidiary's property or assets, any Subsidiary Guarantee of
such Restricted Subsidiary, equally and ratably with (or prior to in the case of
Liens with respect to Subordinated Obligations or Guarantor Subordinated
Obligations, as the case may be) the Indebtedness secured by such Lien for so
long as such Indebtedness is so secured.
SECTION 3.11. FUTURE SUBSIDIARY GUARANTORS. After the Issue Date,
the Company will cause each Restricted Subsidiary other than a Foreign
Subsidiary or Receivables Entity which has not guaranteed Senior Indebtedness or
Guarantor Senior Indebtedness or Incurred Indebtedness under the Senior Credit
Agreement to execute and deliver to the Trustee a Subsidiary Guarantee pursuant
to which such Subsidiary Guarantor will unconditionally Guarantee, on a joint
and several basis, the full
<PAGE>
65
and prompt payment of the principal of, premium, if any, and interest on the
Securities on a senior subordinated basis.
SECTION 3.12. LIMITATION ON LINES OF BUSINESS. The Company will not,
and will not permit any Restricted Subsidiary to, engage in any business other
than a Related Business.
SECTION 3.13. QUALIFIED RECEIVABLES TRANSACTIONS. The Company may,
and any of its Restricted Subsidiaries may, sell (including a sale in exchange
for a Purchase Money Note of or Capital Stock in a Receivables Entity) at any
time and from time to time, accounts receivable to any Receivables Entity;
provided that the aggregate consideration received in such sales is at least
equal to the aggregate fair market value of the receivables sold; PROVIDED
FURTHER that the Company and its Restricted Subsidiaries shall not engage in
such sales unless, pro forma for such sales, the Company could Incur $1.00 of
additional Indebtedness pursuant to SECTION 3.3(a).
SECTION 3.14. MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in The City of New York, an office or agency where the Securities may
be presented or surrendered for payment, where, if applicable, the Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The principal corporate trust office of the Trustee, or
if the Trustee's principal corporate trust office is not located in The City of
New York, any other office or agency maintained by the Trustee in The City of
New York (the "CORPORATE TRUST OFFICE"), shall be such office or agency of the
Company, unless the Company shall designate and maintain some other office or
agency for one or more of such purposes. The Company will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes and may from time
to time rescind any such designation; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such other
office or agency.
SECTION 3.15. LIMITATION ON LAYERING. The Company will not Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is contractually subordinated in right of payment
to Senior Subordinated Indebtedness. No Subsidiary Guarantor will Incur any
Indebtedness if such Indebtedness is contractually subordinate or junior in
ranking in any respect to any Guarantor Senior Indebtedness of such Subsidiary
Guarantor unless such Indebtedness
<PAGE>
66
is Guarantor Senior Subordinated Indebtedness of such Subsidiary Guarantor or is
contractually subordinated in right of payment to Guarantor Senior Subordinated
Indebtedness of such Subsidiary Guarantor.
SECTION 3.16. CORPORATE EXISTENCE. Subject to ARTICLE IV and SECTION
11.2, the Company will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and that of each
Restricted Subsidiary and the corporate rights (charter and statutory) licenses
and franchises of the Company and each Restricted Subsidiary; PROVIDED, HOWEVER,
that the Company shall not be required to preserve any such existence (except
the Company), right, license or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and each of its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not, and will not
be, disadvantageous in any material respect to the Holders, and provided,
further, the Company may merge in accordance with SECTIONS 4.1 and 11.2.
SECTION 3.17. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary and (ii) all lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a material
liability or lien upon the property of the Company or any Restricted Subsidiary;
PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which appropriate reserves, if necessary (in the
good faith judgment of management of the Company), are being maintained in
accordance with GAAP or where the failure to effect such payment will not be
disadvantageous to the Holders.
SECTION 3.18. PAYMENTS FOR CONSENT. Neither the Company nor any of
its Restricted Subsidiaries will, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fees or otherwise, to any
Holder of any Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or is paid to all Holders of the
Securities that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
SECTION 3.19. COMPLIANCE CERTIFICATE. The Company shall deliver to
the Trustee within 120 days after the end of each Fiscal Year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during such period. If they do,
the certificate shall describe the Default or Event of Default, its status and
what action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA Section 314(a)(4).
<PAGE>
67
SECTION 3.20. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.21. STATEMENT BY OFFICERS AS TO DEFAULT. The Company shall
deliver to the Trustee, as soon as possible and in any event within five days
after the Company becomes aware of the occurrence of any Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Company proposes to take with
respect thereto.
ARTICLE IV
SUCCESSOR COMPANY
SECTION 4.1. MERGER AND CONSOLIDATION. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "SUCCESSOR
COMPANY") shall be a corporation, partnership, trust or limited liability
company organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the Successor
Company (if not the Company) shall expressly assume, by supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities and
this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor
Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default or Event of
Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to SECTION 3.3(a) of this Indenture;
(iv) each Subsidiary Guarantor, unless it is the other party to the
transactions described above, in which case clause (i) and SECTION 11.2
shall apply, shall have by supplemental indenture confirmed that its
Subsidiary Guarantee shall apply for such Person's obligations in respect
of this Indenture and the Securities and its obligations under the
Exchange and Registration Rights Agreement shall continue to be in effect;
and
<PAGE>
68
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture, if any,
comply with this Indenture.
For purposes of this SECTION 4.1, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company will succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but, in
the case of a lease of all or substantially all its assets, the Company will not
be released from the obligation to pay the principal of and interest on the
Securities. Solely for the purpose of computing amounts described in clause 3(A)
of Section 3.4(a), the Successor Company shall only be deemed to have succeeded
and be substituted for the Company with respect to periods subsequent to the
effective time of such merger, consolidation, combination or transfer of assets.
Notwithstanding clause (iii) of the first sentence of this SECTION
4.1, (x) any Restricted Subsidiary of the Company (other than a Receivables
Entity) may consolidate with, merge into or transfer all or part of its
properties and assets to the Company, and (y) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction to realize tax or other benefits.
ARTICLE V
REDEMPTION OF SECURITIES
SECTION 5.1. OPTIONAL REDEMPTION. The Securities may be redeemed, as
a whole or from time to time in part, subject to the conditions and at the
redemption prices specified in the form of Securities set forth in EXHIBITS A
AND B hereto, which are hereby incorporated by reference and made a part of this
Indenture, together with accrued and unpaid interest to the Redemption Date.
SECTION 5.2. APPLICABILITY OF ARTICLE. Redemption of Securities at
the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.
SECTION 5.3. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Company to redeem any Securities pursuant to SECTION 5.1 shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company,
the Company shall, upon not later than the earlier of the date that is 30 days
prior to the Redemption Date fixed by the Company or the date on which notice is
given to the Holders (except as provided in SECTION 5.5 or unless a shorter
notice shall be satisfactory
<PAGE>
69
to the Trustee), notify the Trustee of such Redemption Date and of the principal
amount of Securities to be redeemed and shall deliver to the Trustee such
documentation and records as shall enable the Trustee to select the Securities
to be redeemed pursuant to SECTION 5.4.
SECTION 5.4. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If
less than all the Securities are to be redeemed at any time pursuant to an
optional redemption, the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
outstanding Securities not previously called for redemption, in compliance with
the requirements of the principal securities exchange, if any, on which such
Securities are listed, or, if such Securities are not so listed, on a PRO RATA
basis, by lot or by such other method as the Trustee shall deem fair and
appropriate (and in such manner as complies with applicable legal requirements)
and which may provide for the selection for redemption of portions of the
principal of the Securities; PROVIDED, HOWEVER, that no such partial redemption
shall reduce the portion of the principal amount of a Security not redeemed to
less than $1,000.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
SECTION 5.5. NOTICE OF REDEMPTION. Notice of redemption shall be
given in the manner provided for in SECTION 13.2 not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed. The Trustee shall give notice of redemption in the Company's name and
at the Company's expense; PROVIDED, HOWEVER, that the Company shall deliver to
the Trustee, at least 45 days prior to the Redemption Date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the redemption price and the amount of accrued interest to
the Redemption Date payable as provided in SECTION 5.7, if any,
(3) if less than all outstanding Securities are to be
redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of
Securities to be redeemed and the aggregate principal amount of Securities
to be outstanding after such partial redemption,
<PAGE>
70
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will receive,
without charge, a new Security or Securities of authorized denominations
for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the redemption price (and
accrued interest, if any, to the Redemption Date payable as provided in
SECTION 5.7) will become due and payable upon each such Security, or the
portion thereof, to be redeemed, and, unless the Company defaults in
making the redemption payment, that interest on Securities called for
redemption (or the portion thereof) will cease to accrue on and after said
date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued interest, if
any,
(7) the name and address of the Paying Agent,
(8) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to
the accuracy or correctness of the CUSIP number, if any, listed in such
notice or printed on the Securities, and
(10) the paragraph of the Securities pursuant to which the
Securities are to be redeemed.
SECTION 5.6. DEPOSIT OF REDEMPTION PRICE. Prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in SECTION 2.4) an amount of money sufficient to pay the redemption
price of, and accrued interest on, all the Securities which are to be redeemed
on that date.
SECTION 5.7. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the redemption price
therein specified (together with accrued interest, if any, to the Redemption
Date), and from and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
redemption price, together with accrued interest, if any, to the Redemption Date
(subject to the rights of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
<PAGE>
71
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.
SECTION 5.8. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to SECTION 3.14 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing),
and the Company shall execute, and the Trustee shall authenticate and make
available for delivery to the Holder of such Security at the expense of the
Company, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered, PROVIDED, that each such new Security will be in a principal amount
of $1,000 or integral multiple thereof.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest or additional
interest (as required by the Exchange and Registration Rights Agreement)
on any Security when the same becomes due and payable, and such default
continues for a period of 30 days (whether or not such payment is
prohibited by ARTICLE X);
(2) the Company defaults in the payment of the principal or premium,
if any, of any Security when the same becomes due and payable at its
Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise (whether or not such payment is prohibited by
ARTICLE X).
(3) the Company or any Subsidiary Guarantor fails to comply with
ARTICLE IV or SECTION 11.2 of this Indenture;
(4) the Company fails to comply with any of SECTIONS 3.2, 3.3, 3.4,
3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17
and 3.18 (in each case other than a failure to repurchase Securities when
required pursuant to SECTION 3.6 or 3.8, which failure shall constitute an
Event of Default under SECTION 6.1(2) and other than a failure to comply
with Article IV or SECTION 11.2 which failure shall constitute an Event of
Default under SECTION
<PAGE>
72
6.1(3)) and such failure continues for 30 days after the notice specified
below (with such notice only given after the expiry of the periods
permitted to perform an obligation);
(5) the Company defaults in the performance of or a breach by the
Company of any other covenant or agreement in this Indenture or under the
Securities (other than those referred to in (1), (2), (3) or (4) above)
and such default continues for 60 days after the notice specified below
(with such notice only given after the expiry of the periods permitted to
perform an obligation);
(6) there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), other than Indebtedness
owed to the Company or a Restricted Subsidiary, whether such Indebtedness
or guarantee now exists, or is created after the date of this Indenture,
which default (a) is caused by a failure to pay principal of, or interest
or premium, if any, on such Indebtedness before the expiration of the
grace period provided in such Indebtedness ("PAYMENT DEFAULT") or (b)
results in the acceleration of such Indebtedness prior to its maturity
(the "CROSS ACCELERATION PROVISION") and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $25.0 million or
more or its foreign currency equivalent at the time;
(7) the Company or any Significant Subsidiary or a group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law (as defined below):
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian (as defined
below) of it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
<PAGE>
73
(A) is for relief against the Company or any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries) would constitute a
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries) would constitute a
Significant Subsidiary or for any substantial part of their
property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary or any group of Restricted Subsidiaries that,
taken together (as of the latest audited consolidated financial
statements for the Company and its Restricted Subsidiaries) would
constitute a Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(9) the Company or any Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries)
would constitute a Significant Subsidiary fails to pay final judgments
aggregating in excess of $25.0 million or its foreign currency equivalent
at the time (net of any amounts with respect to which a reputable and
creditworthy insurance company has acknowledged liability in writing),
which judgments are not paid, discharged or stayed for a period of 60
days; or
(10) any Subsidiary Guarantee of a Significant Subsidiary or of any
group of Restricted Subsidiaries that, taken together (as of the latest
audited consolidated financial statements for the Company and its
Restricted Subsidiaries) would constitute a Significant Subsidiary ceases
to be in full force and effect (except as contemplated by the terms of
this Indenture), or any Subsidiary Guarantee of a Significant Subsidiary
or any group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries) would constitute a Significant Subsidiary is
declared in a judicial proceeding to be null and void, or any Subsidiary
Guarantor that is a Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for the Company and its Restricted Subsidiaries)
would constitute a Significant Subsidiary denies or disaffirms its
obligations under the terms of this Indenture or its Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
<PAGE>
74
The term "BANKRUPTCY LAW" means Title 11, UNITED STATES CODE, or any
similar Federal or state law for the relief of debtors. The term "CUSTODIAN"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or (5) of
this SECTION 6.1 will not constitute an Event of Default until the Trustee or
the Holders of at least 25% in principal amount of the outstanding Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified in said clause (4) or (5) after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after an
Officer of the Company becomes aware of the occurrence thereof, written notice
in the form of an Officers' Certificate of any Default or Event of Default under
clauses (3), (4), (5), (6), (7), (8), (9) or (10) of this Section 6.1, which
such notice shall contain the status thereof and a description of the action
being taken or proposed to be taken by the Company in respect thereof.
SECTION 6.2. ACCELERATION. If an Event of Default (other than an
Event of Default specified in SECTION 6.1(7) OR (8)) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
outstanding principal amount of the Securities by notice to the Company and the
Trustee, may, and the Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued and unpaid interest, on all the
Securities to be due and payable. Upon such a declaration, such principal,
premium, if any, and accrued and unpaid interest shall be immediately due and
payable; PROVIDED, HOWEVER that so long as any Indebtedness permitted by this
Indenture to be incurred under the Senior Credit Agreement (if such borrowings
under the Senior Credit Agreement constitute Senior Indebtedness or Guarantor
Senior Indebtedness) shall be outstanding, no such acceleration shall be
effective until the earlier of (x) acceleration of any such Indebtedness under
the Senior Credit Agreement or (y) five business days after the giving of the
acceleration notice to the Company and the administrative agent under the Senior
Credit Agreement of such acceleration. In the event of a declaration of
acceleration because an Event of Default set forth in SECTION 6.1(6) above has
occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default or payment default
triggering such Event of Default pursuant to SECTION 6.1(6) shall be remedied or
cured by the Company and/or the relevant Restricted Subsidiary or the holders of
the relevant Indebtedness have rescinded the declaration of acceleration in
respect of such Indebtedness within 20 days after the declaration of
acceleration with respect thereto and if (i) the annulment of the acceleration
of the Securities would not conflict with any judgment or decree of a court of
competent jurisdiction and (ii) all existing Events of Default, other than the
nonpayment of principal, premium or interest on the Securities that has become
due solely because of such acceleration, have been cured or waived. If an Event
of Default specified in SECTION 6.1(7) OR (8) occurs and is continuing, the
principal of, premium, if any, and accrued and unpaid interest on all the
Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. No such
rescission shall affect any subsequent Default or Event of Default or impair any
right consequent thereto.
<PAGE>
75
SECTION 6.3. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of (or premium, if any) or interest on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. WAIVER OF PAST DEFAULTS. The Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may (a)
waive, by their consent (including, without limitation consents obtained in
connection with a purchase of, or tender offer or exchange offer for,
Securities), an existing Default or Event of Default and its consequences except
(i) a Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on a Security or (ii) a Default or Event of Default
in respect of a provision that under SECTION 9.2 cannot be amended without the
consent of each Securityholder affected and (b) rescind any such acceleration
with respect to the Securities and its consequences if (1) rescission would not
conflict with any judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, other than the nonpayment of the principal
of, premium, if any, and interest on the Securities that have become due solely
by such declaration of acceleration, have been cured or waived. When a Default
or Event of Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
consequent right.
SECTION 6.5. CONTROL BY MAJORITY. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to SECTIONS 7.1 AND 7.2, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.6. LIMITATION ON SUITS. Subject to SECTION 6.7, a
Securityholder may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal amount of
the Securities make a request to the Trustee to pursue the remedy;
<PAGE>
76
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction that, in the opinion of the Trustee,
is inconsistent with such request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding
any other provision of this Indenture (including, without limitation, SECTION
6.6), the right of any Holder to receive payment of principal of, premium (if
any) or interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default
specified in SECTION 6.1(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in SECTION
7.7.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries or
its or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under SECTION 7.7.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or
property pursuant to this ARTICLE VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under SECTION 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind,
<PAGE>
77
according to the amounts due and payable on the Securities for principal
and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by the Company, a suit by a Holder pursuant to SECTION 6.7 or a
suit by Holders of more than 10% in outstanding principal amount of the
Securities.
SECTION 6.12. ADDITIONAL PAYMENTS. In the case of any Event of
Default occurring by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding payment of
the premium that the Company would have had to pay if the Company then had
elected to redeem the Securities pursuant to the optional redemption provisions
of this Indenture or was required to repurchase the Securities, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Securities. If an Event of Default
occurs prior to November 1, 2003 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Securities prior to November 1,
2003, the premium specified in this Indenture shall also become immediately due
and payable to the extent permitted by law upon the acceleration of the
Securities.
ARTICLE VII
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs; PROVIDED that if an Event of
Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered to the Trustee
reasonable indemnity or security against loss, liability or expense.
<PAGE>
78
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to
determine whether or not they conform on their face to the requirements of
this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to SECTION 6.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
<PAGE>
79
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(j) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
(including reasonable attorneys' fees and expenses) and liabilities that might
be incurred by it in compliance with such request or direction.
SECTION 7.2. RIGHTS OF TRUSTEE. Subject to SECTION 7.1, (a) The
Trustee may conclusively rely on any document (whether in its original or
facsimile form) reasonably believed by it to be genuine and to have been signed
or presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate and/or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on an
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers, unless the Trustee's conduct constitutes wilful misconduct or
negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with SECTIONS 7.10 and 7.11.
SECTION 7.4. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible
<PAGE>
80
for any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS. If a Default or Event of Default
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Securityholder notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium (if any), or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, a committee of its board of
directors or a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each May 15 beginning with the May 15, following the date
of this Indenture, and in any event prior to July 15 in each year, the
Trustee shall mail to each Securityholder a brief report dated as of such May
15 that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Section 313(b). The Trustee shall also transmit by mail all reports
required by TIA Section 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.7. COMPENSATION AND INDEMNITY. The Company shall pay to
the Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder as the Company and the Trustee shall from time
to time agree in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, costs of preparing and
reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to Securityholders and reasonable costs of counsel retained
by the Trustee in connection with the delivery of an Opinion of Counsel or
otherwise, in addition to the compensation for its services. Such expenses shall
include the reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts. The Company shall
indemnify the Trustee against any and all loss, liability, damages, claims or
expense (including reasonable attorneys' fees and expenses) incurred by it
without negligence or wilful misconduct on its part in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
SECTION 7.7) and of defending itself against any claims (whether asserted by any
Securityholder, the Company or otherwise). The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the fees and expenses of such counsel provided
that the Company shall not be required to pay such fees and expenses if it
assumes the Trustee's defense, and, in the reasonable judgment of outside
<PAGE>
81
counsel to the Trustee, there is no conflict of interest between the Company and
the Trustee in connection with such defense. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct or negligence.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this SECTION 7.7 shall not be
subordinate to any other liability or Indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(7) or (8) with respect to
the Company, the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with SECTION 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of the Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in SECTION 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities
<PAGE>
82
may petition, at the Company's expense, any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with SECTION 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under SECTION 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts
created by this Indenture, any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver
such Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such
cases such certificates shall have the full force which it is anywhere in the
Securities or in this Indenture provided that the certificate of the Trustee
shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $100 million as set forth in
its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b); PROVIDED, HOWEVER, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 7.12. TRUSTEE'S APPLICATION FOR INSTRUCTION FROM THE
COMPANY. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such
<PAGE>
83
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. (a)
Subject to SECTION 8.1(c), when (i)(x) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to SECTION 2.9)
for cancellation or (y) all outstanding Securities not theretofore delivered for
cancellation have become due and payable, whether at maturity or upon redemption
or will become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name and at the expense
of the Company and the Company or any Subsidiary Guarantor irrevocably deposits
or causes to be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders money in U.S. dollars, non-callable U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation for principal, premium, if any, and accrued interest to the
date of maturity or redemption, (ii) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the Company or
any Subsidiary Guarantor is a party or by which the Company or any Guarantor is
bound; (iii) the Company or any Subsidiary Guarantor has paid or caused to be
paid all sums payable by it under this Indenture and the Securities; and (iv)
the Company has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of such Securities at
maturity or the Redemption Date, as the case may be, then the Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) and at the
cost and expense of the Company.
(b) Subject to SECTIONS 8.1(c) and 8.2, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("LEGAL DEFEASANCE OPTION"), and after giving effect to such legal defeasance,
any omission to comply with such obligations shall no longer constitute a
Default or Event of Default or (ii) its obligations under SECTIONS 3.2, 3.3,
3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.15, 3.18, and 4.1(iii)
and the Company may omit to comply with and shall have no liability in respect
of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply with such
covenants shall no longer constitute a Default or an Event of Default under
SECTION 6.1(3) and 6.1(4) and the operation of SECTIONS 6.1(6), 6.1(7) (but only
with respect to
<PAGE>
84
a Significant Subsidiary), 6.1(8) (but only with respect to a Significant
Subsidiary), 6.1(9) and 6.1(10), and the events specified in such Sections shall
no longer constitute an Event of Default (clauses (ii) being referred to as the
"COVENANT DEFEASANCE OPTION"), but except as specified above, the remainder of
this Indenture and the Securities shall be unaffected thereby. The Company may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option. If the Company exercises its covenant defeasance
option, the Company may elect to have any Subsidiary Guarantees in effect at
such time terminate.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default, and the
Subsidiary Guarantees in effect at such time shall terminate. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in SECTION 6.1(4) (as such
Section relates to 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
3.13, 3.15 and 3.18), 6.1(6), 6.1(7) (but only with respect to a Significant
Subsidiary), 6.1(8) (but only with respect to a Significant Subsidiary), 6.1(9)
or 6.1(10) or because of the failure of the Company to comply with SECTION
4.1(iii).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of SECTIONS 8.1(a) and (b), the
Company's obligations in SECTIONS 2.2, 2.3, 2.4, 2.5, 2.6, 2.9, 2.10, 2.11, 3.1,
3.14, 3.16, 3.17, 3.19, 3.20, 3.21, 6.7, 7.7, 7.8 and in this ARTICLE 8 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in SECTIONS 7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. CONDITIONS TO DEFEASANCE. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee for
the benefit of the Holders money in U.S. dollars or U.S. Government
Obligations or a combination thereof for the payment of principal,
premium, if any, and interest on the Securities to maturity or redemption,
as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, with respect to certain
bankruptcy or insolvency Events of Default, on the 91st day after such
date of deposit;
<PAGE>
85
(4) such legal defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a Default under, this Indenture or
any other material agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel (subject to customary assumptions and exclusions) to the effect
that (A) the Securities and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the deposit
and that no Holder of the Securities is an insider of the Company, after
the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' right generally;
(6) the deposit does not constitute a default under any other
agreement binding on the Company;
(7) the Company delivers to the Trustee an Opinion of Counsel
(subject to customary assumptions and exclusions) to the effect that the
trust resulting from the deposit does not constitute, or is qualified as,
a regulated investment company under the Investment Company Act of 1940;
(8) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel (subject to customary
assumptions and exclusions) in the United States stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such legal defeasance had
not occurred;
(9) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel (subject to customary
assumptions and exclusions) in the United States to the effect that the
Securityholders will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and covenant defeasance and will
be subject to federal income tax on the same amount, in the same manner
and at the same times as would have been the case if such deposit and
covenant defeasance had not occurred; and
(10) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities and this Indenture as
contemplated by this ARTICLE VIII have been complied with.
SECTION 8.3. APPLICATION OF TRUST MONEY. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
ARTICLE VIII. It shall apply the
<PAGE>
86
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of principal
of and interest on the Securities.
SECTION 8.4. REPAYMENT TO COMPANY. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.6. REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
ARTICLE VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this ARTICLE VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this ARTICLE VIII; PROVIDED, HOWEVER, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
SECTION 9.1. WITHOUT CONSENT OF HOLDERS. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with ARTICLE IV in respect of the assumption by a
Successor Company of an obligation of the Company under this Indenture;
<PAGE>
87
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; PROVIDED, HOWEVER, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to secure
the Securities;
(5) to add to the covenants of the Company and the Subsidiary
Guarantors for the benefit of the Holders or to surrender any right or
power herein conferred upon the Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities, which
will have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Securities,
as a single issue of securities.
However, no amendment may be made to the provisions of ARTICLE X that adversely
affect the rights of any holder of Senior Indebtedness then outstanding unless
the holders of such Senior Indebtedness (or any group or representative thereof
authorized to give consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.2. WITH CONSENT OF HOLDERS. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Securities). However, without the
consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the stated rate of or extend the stated time for payment
of interest on any Security;
<PAGE>
88
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption or repurchase of
any Security or change the time at which any Security may or shall be
redeemed or repurchased as described above under SECTION 3.6, SECTION 3.8
(including an amendment to the definition of "Change of Control") or
ARTICLE V or any similar provision, whether through an amendment to or
waiver of SECTION 3.6, SECTION 3.8 or ARTICLE V, a definition or
otherwise;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Holder to receive payment of principal
of, premium, if any, and interest on such Holder's Securities on or after
the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities; or
(7) make any change to the amendment provisions which require each
Holder's consent or to the waiver provisions.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver shall become effective upon receipt by the Trustee of the
requisite number of written consents under SECTION 9.1 or 9.2 as applicable.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such
<PAGE>
89
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
SECTION 9.5. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to SECTIONS 7.1 AND 7.2) shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
ARTICLE X
SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by, and all other obligations in respect of, the Securities is subordinated in
right of payment, to the extent and in the manner provided in this ARTICLE X, to
the prior payment of all Senior Indebtedness and that the subordination is for
the benefit of and enforceable by the holders of Senior Indebtedness. The
Securities shall in all respects rank PARI PASSU with all other Senior
Subordinated Indebtedness of the Company and only Indebtedness of the Company
that is Senior Indebtedness will rank senior to the Securities in accordance
with the provisions set forth herein. All provisions of this ARTICLE X shall be
subject to SECTION 10.12.
SECTION 10.2. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
reorganization, bankruptcy, insolvency, receivership or similar proceeding
relating to the Company or its properties or an assignment for the benefit of
creditors or marshalling of the Company's assets or liabilities:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all Senior Indebtedness
before Securityholders shall be entitled to receive
<PAGE>
90
any payment of principal of or interest on or other amounts with respect
to the Securities from the Company; and
(2) until the Senior Indebtedness is paid in full in cash or Cash
Equivalents, any payment or distribution to which Securityholders would be
entitled but for this ARTICLE X shall be made to holders of Senior
Indebtedness, as their respective interests may appear.
SECTION 10.3. DEFAULT ON SENIOR INDEBTEDNESS. The Company shall not
pay the principal of, premium (if any) or interest on or other payment
obligations in respect of the Securities or make any deposit pursuant to SECTION
8.2 or repurchase or, redeem or otherwise retire any Securities (collectively,
"PAY THE SECURITIES") if (i) any Senior Indebtedness is not paid when due in
cash or Cash Equivalents or (ii) any other default on Senior Indebtedness occurs
and the maturity of such Senior Indebtedness is accelerated in accordance with
its terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded in writing or (y) such Senior
Indebtedness has been paid in full in cash or Cash Equivalents; PROVIDED,
HOWEVER, that the Company may pay the Securities, without regard to the
foregoing, if the Company and the Trustee receive written notice approving such
payment from the Representative of the Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred and is continuing. During the continuance of any default (other than a
default described in clause (i) of the preceding sentence or a default resulting
in acceleration described in clause (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities (except in (i) Capital Stock
(other than Disqualified Stock) issued by the Company to pay interest on the
Securities or issued in exchange for the Securities, (ii) in securities
substantially identical to the Securities issued by the Company in payment of
interest thereon or (iii) in securities issued by the Company which are
subordinated to Senior Indebtedness at least to the same extent as the
Securities and having an Average Life at least equal to the remaining Average
Life of the Securities) for a period (a "PAYMENT BLOCKAGE PERIOD") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "BLOCKAGE NOTICE") of such default from the Representative(s) of the holders
of such Designated Senior Indebtedness specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full in
cash or Cash Equivalents). Notwithstanding the provisions of the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness or
the Representative(s) of such holders shall have accelerated the maturity of
such Designated Senior Indebtedness, the Company may resume payments on the
Securities after the end of such Payment Blockage Period. Not more than one
Blockage Notice may be given, and not more than one Payment Blockage may occur,
in any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period.
<PAGE>
91
SECTION 10.4. ACCELERATION OF PAYMENT OF SECURITIES. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration; PROVIDED, HOWEVER, that the
Company and the Trustee shall be obligated to notify such a Representative only
if such Representative has delivered or caused to be delivered to the Company or
the Trustee an address for service of such a notice (and the Company and the
Trustee shall only be obligated to deliver the notice to the address so
specified). If any Designated Senior Indebtedness is outstanding, the Company
shall not pay the Securities until five Business Days after the holders or
Representative(s) of such Designated Senior Indebtedness receives notice of such
acceleration and, thereafter, may pay the Securities, only if this ARTICLE X
otherwise permits payments at that time.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
is made to Securityholders that because of this ARTICLE X should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness and promptly pay it over to them as
their respective interests may appear.
SECTION 10.6. SUBROGATION. After all Senior Indebtedness is paid in
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article X to holders of Senior Indebtedness which otherwise would have been made
to Securityholders is not, as between the Company and Securityholders, a payment
by the Company of Senior Indebtedness.
SECTION 10.7. RELATIVE RIGHTS. This ARTICLE X defines the relative
rights of Securityholders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness to receive distributions
otherwise payable to Securityholders.
SECTION 10.8. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right
of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by the failure of any of them to comply with this
Indenture.
SECTION 10.9. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
SECTION 10.3, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
<PAGE>
92
receives notice in writing satisfactory to it that payments may not be made
under this ARTICLE X. The Company, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness may give the notice;
PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
ARTICLE X with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in ARTICLE VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this ARTICLE X shall apply to claims of, or payments to, the
Trustee under or pursuant to SECTION 7.7.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their Representative (if
any).
SECTION 10.11. ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE. The failure to make a payment in respect of the Securities,
by reason of any provision in this ARTICLE X, shall not be construed as
preventing the occurrence of a Default or Event of Default. Nothing in this
ARTICLE X shall have any effect on the right of the Securityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION 10.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under ARTICLE VIII by the Trustee
for the payment of principal of premium, if any, and interest on the Securities
shall not be subordinated to the prior payment of any Senior Indebtedness or
subject to the restrictions set forth in this ARTICLE X, and none of the
Securityholders shall be obligated to pay over any such amount to the Company,
any holder of Senior Indebtedness, or any other creditor of the Company.
SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this ARTICLE X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in SECTION 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this ARTICLE X. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this ARTICLE X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the
<PAGE>
93
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this ARTICLE X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of SECTIONS 7.1 and 7.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this ARTICLE X.
SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article X and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this ARTICLE X or otherwise.
SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
INDEBTEDNESS ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XI
SUBSIDIARY GUARANTEE
SECTION 11.1. SUBSIDIARY GUARANTEE. Each Subsidiary Guarantor hereby
fully, unconditionally and irrevocably guarantees, as primary obligor and not
merely as surety, jointly and severally with each other Subsidiary Guarantor, to
each Holder of the Securities and the Trustee the full and punctual payment when
due, whether at maturity, by acceleration, by redemption or otherwise, of the
principal of, premium, if any, and interest on the Securities and all other
obligations of the Company under this Indenture (all the foregoing being
hereinafter collectively called the "OBLIGATIONS"). Each Subsidiary Guarantor
further agrees (to the extent permitted by law) that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
it, and that it will remain bound under this ARTICLE XI notwithstanding any
extension or renewal of any Obligation.
<PAGE>
94
Each Subsidiary Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Securities or the Obligations. The obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder to assert any claim or demand or to enforce any right or remedy against
the Company or any other person under this Indenture, the Securities or any
other agreement or otherwise; (b) any extension or renewal of any thereof; (c)
any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (e) the failure of any Holder to exercise any right or remedy
against any other Subsidiary Guarantor; or (f) any change in the ownership of
the Company.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a Guarantee of payment when due (and not a
Guarantee of collection) and waives any right to require that any resort be had
by any Holder to any security held for payment of the Obligations.
The obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than payment of the Obligations in full), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Subsidiary Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder to assert any claim or demand or
to enforce any remedy under this Indenture, the Securities or any other
agreement, by any waiver or modification of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of any Subsidiary
Guarantor or would otherwise operate as a discharge of such Subsidiary Guarantor
as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of or interest
on any of the Obligations is rescinded or must otherwise be restored by any
Holder upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against any Subsidiary Guarantor
by virtue hereof, upon the failure of the Company to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, each Subsidiary Guarantor hereby promises to and will,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid
amount of such Obligations then due and owing and (ii) accrued and unpaid
interest on such Obligations then due and owing (but only to the extent not
prohibited by law).
<PAGE>
95
Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x)
the maturity of the Obligations guaranteed hereby may be accelerated as provided
in this Indenture for the purposes of its Subsidiary Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby and (y) in the
event of any such declaration of acceleration of such Obligations, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Subsidiary Guarantor for the purposes of this Subsidiary
Guarantee.
Each Subsidiary Guarantor also agrees to pay any and all reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or the Holders in enforcing any rights under this Section.
SECTION 11.2. LIMITATION ON LIABILITY; TERMINATION, RELEASE AND
DISCHARGE. The obligations of each Subsidiary Guarantor hereunder will be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any guarantees under the Senior Credit Agreement) and after
giving effect to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell
its assets to the Company or another Subsidiary Guarantor without limitation.
Subject to ARTICLE III and ARTICLE IV, each Subsidiary Guarantor may consolidate
with or merge into or sell all or substantially all its assets to a corporation,
partnership or trust other than the Company or another Subsidiary Guarantor
(whether or not affiliated with the Subsidiary Guarantor), except that if the
surviving corporation of any such merger or consolidation is a Subsidiary of the
Company, such merger, consolidation or sale shall not be permitted unless (i)
the Person formed by or surviving any such consolidation or merger assumes all
the obligations of such Subsidiary under the Subsidiary Guarantee pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee in respect of the Securities, this Indenture and the Subsidiary
Guarantee, (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; and (iii) the Company delivers to the Trustee an
Officers' Certificate and an Opinion of Counsel addressed to the Trustee with
respect to the foregoing matters. Upon the sale or disposition of a Subsidiary
Guarantor (by merger, consolidation, the sale of its Capital Stock or the sale
of all or substantially all of its assets (other than by lease)) and whether or
not the Subsidiary Guarantor is the surviving corporation in such transaction to
a Person (whether or not an Affiliate of the Subsidiary Guarantor) which is not
the Company or a Restricted Subsidiary of the Company (other than a Receivables
Entity), which sale or disposition is otherwise in compliance with this
Indenture (including SECTIONS 3.6 and 3.9), such Subsidiary Guarantor will be
deemed released from all its obligations under this Indenture and its Subsidiary
Guarantee and such Subsidiary Guarantee will terminate; PROVIDED, HOWEVER, that
any such termination will occur only to the extent that all obligations of such
Subsidiary Guarantor under the Senior Credit Agreement and all of its guarantees
of, and under all of its pledges of
<PAGE>
96
assets or other security interests which secure, any other Indebtedness of the
Company or its Restricted Subsidiaries will also terminate upon such release,
sale or transfer.
A Subsidiary Guarantor will be deemed released and relieved of its
obligations under this Indenture and its Subsidiary Guarantee without any
further action required on the part of the Company or such Subsidiary Guarantor
upon the designation of such Subsidiary Guarantor as an Unrestricted Subsidiary
in accordance with the terms of this Indenture.
SECTION 11.3. RIGHT OF CONTRIBUTION. Each Subsidiary Guarantor
hereby agrees that to the extent that any Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made on the obligations under
the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek
and receive contribution from and against the Company or any other Subsidiary
Guarantor who has not paid its proportionate share of such payment. Each
Subsidiary Guarantor's right of contribution shall be subject to the terms and
conditions of SECTION 3.5. The provisions of this SECTION 11.3 shall in no
respect limit the obligations and liabilities of each Subsidiary Guarantor to
the Trustee and the Holders and each Subsidiary Guarantor shall remain liable to
the Trustee and the Holders for the full amount guaranteed by such Subsidiary
Guarantor hereunder.
SECTION 11.4. NO SUBROGATION. Notwithstanding any payment or
payments made by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor
shall be entitled to be subrogated to any of the rights of the Trustee or any
Holder against the Company or any other Subsidiary Guarantor or any collateral
security or guarantee or right of offset held by the Trustee or any Holder for
the payment of the Obligations, nor shall any Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
any Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by such Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
ARTICLE XII
SUBORDINATION OF SUBSIDIARY GUARANTEES
SECTION 12.1. AGREEMENT TO SUBORDINATE. Each Subsidiary Guarantor
agrees, and each Securityholder by accepting a Security agrees, that the
Indebtedness evidenced by, and all other obligations in respect of, the
Subsidiary Guarantees are subordinated in right of payment, to the extent and in
the manner provided in this ARTICLE XII, to the prior payment of all Guarantor
Senior Indebtedness of the applicable Subsidiary Guarantor and that the
subordination is for the benefit of and
<PAGE>
97
enforceable by the holders of Guarantor Senior Indebtedness of the applicable
Subsidiary Guarantor. The Subsidiary Guarantees shall in all respects rank PARI
PASSU with all other Guarantor Senior Subordinated Indebtedness of the
Subsidiary Guarantor and only Indebtedness of the Subsidiary Guarantor that is
Guarantor Senior Indebtedness will rank senior to the Subsidiary Guarantees in
accordance with the provisions set forth herein. All provisions of this Article
XII shall be subject to SECTION 12.12.
SECTION 12.2. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment
or distribution of the assets of any Subsidiary Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of any Subsidiary
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to any Subsidiary Guarantor or its properties:
(1) holders of Guarantor Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full in cash or Cash
Equivalents of all Guarantor Senior Indebtedness of such Subsidiary
Guarantor before Securityholders shall be entitled to receive any payment
of principal of or interest on or other amounts with respect to the
Subsidiary Guarantees from any Subsidiary Guarantor; and
(2) until the Guarantor Senior Indebtedness of such Subsidiary
Guarantor is paid in full in cash or Cash Equivalents, any payment or
distribution to which Securityholders would be entitled but for this
ARTICLE XII shall be made to holders of Guarantor Senior Indebtedness of
such Subsidiary Guarantor, as their respective interests may appear.
SECTION 12.3. DEFAULT ON GUARANTOR SENIOR INDEBTEDNESS. A Subsidiary
Guarantor shall not pay the principal of, premium (if any) or interest on or
other payment obligations in respect of the Subsidiary Guarantees or make any
deposit pursuant to SECTION 8.2 or repurchase or, redeem otherwise retire the
Subsidiary Guarantee (collectively, "PAY THE SECURITIES") if (i) any Senior
Indebtedness or Guarantor Senior Indebtedness of the applicable Subsidiary
Guarantor is not paid when due in cash or Cash Equivalents or (ii) any other
default on Senior Indebtedness or Guarantor Senior Indebtedness of the
applicable Subsidiary Guarantor occurs and the maturity of such Senior
Indebtedness or Guarantor Senior Indebtedness is accelerated in accordance with
its terms unless, in either case, (x) the default has been cured or waived and
any such acceleration has been rescinded in writing or (y) such Senior
Indebtedness or Guarantor Senior Indebtedness of the applicable Subsidiary
Guarantor has been paid in full in cash or Cash Equivalents; PROVIDED, HOWEVER,
that each Subsidiary Guarantor may pay the Securities, without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of the Senior Indebtedness or Guarantor Senior
Indebtedness of the applicable Subsidiary Guarantor with respect to which either
of the events set forth in clause (i) or (ii) of this sentence has occurred and
is continuing. During the continuance of any default (other than a default
described in clause (i) of this sentence or a default resulting in acceleration
set forth in clause (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness or Designated Guarantor Senior Indebtedness of
the applicable Subsidiary Guarantor pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable
<PAGE>
98
grace periods, each Subsidiary Guarantor may not pay the Securities during the
Payment Blockage Period (as defined in SECTION 10.3) commencing upon the receipt
by the Trustee (with a copy to the Company) of the Blockage Notice (as defined
in SECTION 10.3) of such default from the Representative(s) of the holders of
Designated Senior Indebtedness or Designated Guarantor Senior Indebtedness of
the applicable Subsidiary Guarantor specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness or Designated Guarantor Senior
Indebtedness has been repaid in full in cash or Cash Equivalents).
Notwithstanding the provisions of the immediately preceding sentence, unless the
holders of such Designated Senior Indebtedness or Designated Guarantor Senior
Indebtedness of the applicable Subsidiary Guarantor or the Representative(s) of
such holders shall have accelerated the maturity of such Designated Senior
Indebtedness or such Designated Guarantor Senior Indebtedness, such Subsidiary
Guarantor may resume payments on the Securities after the end of such Payment
Blockage Period. Not more than one Blockage Notice may be given, and not more
than one Payment Blockage may occur, in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness or Designated Guarantor Senior Indebtedness of the applicable
Subsidiary Guarantor during such period.
SECTION 12.4. ACCELERATION OF PAYMENT OF SECURITIES. If payment of
the Securities is accelerated because of an Event of Default, each Subsidiary
Guarantor and the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or Designated Guarantor Senior Indebtedness (or their
Representatives) of the acceleration; PROVIDED, HOWEVER, that the Company and
the Trustee shall be obligated to notify such a Representative only if such
Representative has delivered or caused to be delivered to the Company and the
Trustee an address for service of such a notice (and the Company and the Trustee
shall only be obligated to deliver the notice to the address so specified). If
any Designated Senior Indebtedness or Designated Guarantor Senior Indebtedness
is outstanding, each Subsidiary Guarantor shall not pay the Securities until
five Business Days after the holders or Representative(s) of such Designated
Senior Indebtedness or Designated Guarantor Senior Indebtedness of the
applicable Subsidiary Guarantor receives notice of such acceleration and,
thereafter, may pay the Securities, only if this ARTICLE XII otherwise permits
payments at that time.
SECTION 12.5. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution
is made to Securityholders that because of this ARTICLE XII should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Guarantor Senior Indebtedness of the applicable Subsidiary
Guarantor and promptly pay it over to them as their respective interests may
appear.
SECTION 12.6. SUBROGATION. After all Guarantor Senior Indebtedness
is paid in full and until the Securities are paid in full, Securityholders shall
be subrogated to the rights of holders of Guarantor Senior Indebtedness to
receive distributions applicable to Guarantor Senior Indebtedness. A
distribution made under this ARTICLE XII to holders of Guarantor Senior
Indebtedness which
<PAGE>
99
otherwise would have been made to Securityholders is not, as between the Company
and Securityholders, a payment by the Company of Guarantor Senior Indebtedness.
SECTION 12.7. RELATIVE RIGHTS. This Article XII defines the relative
rights of Securityholders and holders of Guarantor Senior Indebtedness. Nothing
in this Indenture shall:
(1) impair, as between Subsidiary Guarantor and Securityholders, the
obligation of each Subsidiary Guarantor which is absolute and
unconditional, to guarantee the payment of principal of and interest on
the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Guarantor Senior Indebtedness to receive
distributions otherwise payable to Securityholders.
SECTION 12.8. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right
of any holder of Guarantor Senior Indebtedness to enforce the subordination of
the Indebtedness evidenced by the Subsidiary Guarantees shall be impaired by any
act or failure to act by any Subsidiary Guarantor or by the failure of any of
them to comply with this Indenture.
SECTION 12.9. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding
SECTION 12.3, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice in writing satisfactory to it that payments may not be made
under this Article XII. Each Subsidiary Guarantor, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; PROVIDED, HOWEVER, that, if an issue of
Guarantor Senior Indebtedness has a Representative, only the Representative may
give the notice.
The Trustee in its individual or any other capacity may hold
Guarantor Senior Indebtedness with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this ARTICLE XII with respect to any Guarantor Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Guarantor
Senior Indebtedness; and nothing in ARTICLE VII shall deprive the Trustee of any
of its rights as such holder. Nothing in this ARTICLE XII shall apply to claims
of, or payments to, the Trustee under or pursuant to SECTION 7.7.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Guarantor Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE. The failure to make a payment in respect of the Securities
and the Subsidiary Guarantees, by reason of any provision in this ARTICLE XII
shall not be construed as preventing the occurrence of a
<PAGE>
100
Default or Event of Default. Nothing in this ARTICLE XII shall have any effect
on the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 12.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under ARTICLE VIII by the Trustee
for the payment of principal of and interest on the Securities or the Subsidiary
Guarantees shall not be subordinated to the prior payment of any Guarantor
Senior Indebtedness or subject to the restrictions set forth in this ARTICLE
XII, and none of the Securityholders shall be obligated to pay over any such
amount to the Company, any holder of Guarantor Senior Indebtedness, or any other
creditor of such Subsidiary Guarantor.
SECTION 12.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this ARTICLE XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in SECTION 12.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Guarantor
Senior Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Guarantor Senior
Indebtedness and other Indebtedness of the each Subsidiary Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this ARTICLE XII. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Guarantor Senior Indebtedness to
participate in any payment or distribution pursuant to this ARTICLE XII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Guarantor Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this ARTICLE XII, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of SECTIONS
7.1 and 7.2 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this ARTICLE XII.
SECTION 12.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Guarantor Senior Indebtedness as provided in this ARTICLE XII and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF GUARANTOR SENIOR
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Indebtedness and shall not be liable to any such
holders if it shall mistakenly pay over or distribute to Securityholders or any
Subsidiary Guarantor or any other Person, money or assets to which any holders
of Guarantor Senior Indebtedness shall be entitled by virtue of this ARTICLE XII
or otherwise.
<PAGE>
101
SECTION 12.16. RELIANCE BY HOLDERS OF GUARANTOR SENIOR INDEBTEDNESS
ON INDEBTEDNESS ON SUBORDINATION PROVISIONS. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Guarantor Senior Indebtedness, whether such Guarantor Senior Indebtedness
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Guarantor Senior
Indebtedness and such holder of Guarantor Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. Each Subsidiary Guarantor in addition to performing its
obligations under its Subsidiary Guarantee shall perform such other obligations
as may be imposed upon it with respect to this Indenture under the TIA.
SECTION 13.2. NOTICES. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Georgia Gulf Corporation
400 Perimeter Center Terrace
Suite 595
Atlanta, Georgia 30346
Attention: Joel I. Beerman, Vice President--
General Counsel and Secretary
With a copy to:
Jones, Day, Reavis & Pogue
3500 One Atlantic Center
303 Peachtree Street
Atlanta, Georgia 30308
Attention: Lisa Stater
<PAGE>
102
if to the Trustee:
SunTrust Bank, Atlanta
25 Park Place, 24th Floor
Atlanta, Georgia 30303
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a registered Securityholder
shall be mailed to the Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
<PAGE>
103
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.
SECTION 13.6. WHEN SECURITIES DISREGARDED. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.7. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
Trustee may make reasonable rules for action by, or a meeting of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 13.8. LEGAL HOLIDAYS. A "LEGAL HOLIDAY" is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York City. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.
SECTION 13.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. An incorporator,
director, officer, employee, stockholder or controlling person, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company under the Securities, this Indenture or the
Subsidiary Guarantees or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
<PAGE>
104
SECTION 13.11. SUCCESSORS. All agreements of the Company in this
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 13.13. VARIABLE PROVISIONS. The Company initially appoints
the Trustee as Paying Agent and Registrar and custodian with respect to any
Global Securities.
SECTION 13.14. QUALIFICATION OF INDENTURE. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Exchange and Registration Rights Agreement and shall pay all reasonable costs
and expenses (including attorneys' fees and expenses for the Company, the
Trustee and the Holders) incurred in connection therewith, including, but not
limited to, costs and expenses of qualification of this Indenture and the
Securities and printing this Indenture and the Securities. The Trustee shall be
entitled to receive from the Company any such Officers' Certificates, Opinions
of Counsel or other documentation as it may reasonably request in connection
with any such qualification of this Indenture under the TIA.
SECTION 13.15. TABLE OF CONTENTS; HEADINGS. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
105
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
GEORGIA GULF CORPORATION
By: /s/ RICHARD B. MARCHESE
--------------------------------
Name: RICHARD B. MARCHESE
Title: VICE PRESIDENT
GEORGIA GULF CHEMICALS & VINYLS, LLC
By: /s/ RICHARD B. MARCHESE
--------------------------------
Name: RICHARD B. MARCHESE
Title: VICE PRESIDENT
GEORGIA GULF LAKE CHARLES, LLC
By: /s/ RICHARD B. MARCHESE
--------------------------------
Name: RICHARD B. MARCHESE
Title: VICE PRESIDENT
NORTH AMERICA PLASTICS, LLC
By: /s/ RICHARD B. MARCHESE
--------------------------------
Name: RICHARD B. MARCHESE
Title: VICE PRESIDENT
<PAGE>
106
GG TERMINAL MANAGEMENT
CORPORATION
By: /s/ RICHARD B. MARCHESE
--------------------------------
Name: RICHARD B. MARCHESE
Title: VICE PRESIDENT
GREAT RIVER OIL & GAS CORPORATION
By: /s/ RICHARD B. MARCHESE
--------------------------------
Name: RICHARD B. MARCHESE
Title: VICE PRESIDENT
SUNTRUST BANK, ATLANTA, as Trustee
By: /s/ OLGA G. WARREN
--------------------------------
Name: OLGA G. WARREN
Title: VICE PRESIDENT
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Applicable Restricted Securities Legend]
[Depository Legend, if applicable]
No. [___] Principal Amount $[_____________], as
revised by the Schedule of Increases and
Decreases in Global Security attached hereto
CUSIP NO. ____________
ISIN: ____________
10 3/8% Senior Subordinated Notes due 2007
Georgia Gulf Corporation, a Delaware corporation, promises to pay to
[__________], or registered assigns, the principal sum of [_______________]
Dollars, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto, on November 1, 2007.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other
side of this Security.
GEORGIA GULF CORPORATION
By:_____________________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
SUNTRUST BANK, ATLANTA
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By__________________________________
A-1
<PAGE>
Authorized Signatory Date: November __, 1999
A-2
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
10 3/8% Senior Subordinated Note due 2007
1. INTEREST
Georgia Gulf Corporation, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1
of each year commencing May 1, 2000. Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from November 12, 1999. The Company shall pay interest
on overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. Payments in respect of Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by
the transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
Definitive Security (including principal, premium, if any, and interest) by
mailing a check to the registered address of each Holder thereof; PROVIDED,
HOWEVER, that payments on the Securities may also be made, in the case of a
Holder of a least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 15 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, SunTrust Bank, Atlanta (the "Trustee"), will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without
A-3
<PAGE>
notice to any Securityholder. The Company or any of its Restricted Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
November 12, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such
terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are general unsecured senior subordinated obligations
of the Company limited to $200.0 million aggregate principal amount (subject to
Section 2.9 of the Indenture). This Security is one of the Original Securities
(also referred to as Initial Securities) referred to in the Indenture. The
Initial Securities, Private Exchange Securities and the Exchange Securities will
be treated as a single class of securities under the Indenture. The Indenture
imposes certain limitations on, among other things: the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries, the purchase or
redemption of Capital Stock of the Company, certain purchases or redemptions of
Subordinated Obligations, the Incurrence of Liens by the Company or its
Restricted Subsidiaries, the sale or transfer of assets and Capital Stock of
Restricted Subsidiaries, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the business activities and investments of the Company and its
Restricted Subsidiaries, mergers and consolidation, and transactions with
Affiliates. In addition, the Indenture limits the ability of the Company and its
Restricted Subsidiaries to restrict distributions and dividends from Restricted
Subsidiaries.
To guarantee the due and punctual payment of the principal, premium,
if any, and interest on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be due
and payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
5. REDEMPTION
Except as set forth below, the Securities will not be redeemable at
the option of the Company prior to November 1, 2003. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
A-4
<PAGE>
and unpaid interest to the redemption date(subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
If redeemed during the 12-month period commencing on November 1 of
the years set forth below:
PERIOD REDEMPTION
- ------ PRICE
-----
2003 105.188%
2004 103.458%
2005 101.729%
2006 and thereafter 100.000%
In addition, at any time and from time to time prior to November 1,
2002, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings received by the Company at a redemption price (expressed as a
percentage of principal amount) of 110.375% plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); PROVIDED, HOWEVER, that at least 65% of the original principal amount of
the Securities must remain outstanding after each such redemption; PROVIDED
FURTHER, that each such redemption occurs within 60 days of the date of closing
of such Equity Offering.
In the case of any partial redemption, selection of the Securities
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the Securities
are listed or, if the Securities are not listed, then on a pro rata basis, by
lot or by such other method as the Trustee in its sole discretion shall deem to
be fair and appropriate, although no Securities of $1,000 in original principal
amount or less will be redeemed in part. If any Security is to be redeemed in
part only, the notice of redemption relating to such Security shall state the
portion of the principal amount thereof to be redeemed. A new Security in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Security. On and
after the redemption date, interest will cease to accrue on Securities or
portions thereof called for redemption as long as the Company has deposited with
the Paying Agent funds in satisfaction of the applicable redemption price
pursuant to the Indenture.
6. REPURCHASE PROVISIONS
(a) Upon a Change of Control any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the
Securities of such Holder at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) as
provided in, and subject to the terms of, the Indenture.
A-5
<PAGE>
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to SECTION 3.6(b) of the Indenture, the Company will be
required to apply such Excess Proceeds to the repayment of the Securities and
any Pari Passu Notes in accordance with the procedures set forth in SECTION 3.6
of the Indenture.
7. SUBORDINATION
The Securities are subordinated to Senior Indebtedness, as defined
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose.
8. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange (i) any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
for a period beginning 15 days before the mailing of a notice of Securities to
be redeemed and ending on the date of such mailing or (ii) any Securities for a
period beginning 15 days before an interest payment date and ending on such
interest payment date.
9. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner
of it for all purposes.
10. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
11. DEFEASANCE
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
A-6
<PAGE>
12. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment or in
respect of a provision that cannot be amended without the written consent of
each Securityholder affected) or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in principal amount of the
then outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with ARTICLE IV of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants of the
Company and the Subsidiary Guarantors, or surrender rights and powers conferred
on the Company, or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Securities.
13. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest when due on the Securities; (ii) default in payment
of principal or premium, if any, on the Securities at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraphs 5 and 6
of the Securities, upon declaration or otherwise; (iii) the failure by the
Company or any Subsidiary Guarantor to comply with its obligations under ARTICLE
IV or SECTION 11.2 of the Indenture; (iv) failure by the Company to comply for
30 days after notice with any of its obligations under the covenants described
under SECTIONS 3.2 through 3.18 inclusive of the Indenture (in each case, other
than a failure to purchase Securities when required pursuant to SECTION 3.6 or
3.8, which failure shall constitute an Event of Default under clause (ii) above
and other than a failure to comply with ARTICLE IV or SECTION 11.2 which failure
shall constitute an Event of Default under clause (iii) above); (v) the failure
by the Company to comply for 60 days after notice with its other agreements
contained in the Indenture or under the Securities (other than those referred to
in (i), (ii), (iii) or (iv) above); (vi) default under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries), other than Indebtedness owed to the Company
or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness before the expiration of the grace period provided in such
Indebtedness ("Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its maturity (the "cross acceleration provision") and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more; (vii) certain events of bankruptcy, insolvency or
reorganization of the Company or a Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for
A-7
<PAGE>
the Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary (the "bankruptcy provisions"); (viii) failure by the Company or any
Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and
its Restricted Subsidiaries) would constitute a Significant Subsidiary to pay
final judgments aggregating in excess of $25.0 million or its foreign currency
equivalent at the time (net of any amounts with respect to which a reputable and
creditworthy insurance company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days (the
"judgment default provision") or (ix) any Subsidiary Guarantee of a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary ceases to be
in full force and effect (except as contemplated by the terms of the Indenture)
or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor that is a Significant Subsidiary or group of Restricted Subsidiaries
that taken together as of the latest audited consolidated financial statements
of the Company and its Restricted Subsidiaries would constitute a Significant
Subsidiary denies or disaffirms its obligations under the Indenture or its
Subsidiary Guarantee. However, a default under clauses (iv) and (v) will not
constitute an Event of Default until the Trustee or the Holders of at least 25%
in principal amount of the outstanding Securities notify the Company of the
default and the Company does not cure such default within the time specified in
clauses (iv) and (v) hereof after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
A-8
<PAGE>
15. NO RECOURSE AGAINST OTHERS
An incorporator, director, officer, employee, stockholder or
controlling person, as such, of each of the Company, or any Subsidiary Guarantor
shall not have any liability for any obligations of the Company under the
Securities, the Indenture or any Subsidiary Guarantees or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
16. AUTHENTICATION
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
17. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
18. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. GOVERNING LAW
This Security shall be governed by, and construed in accordance
with, the laws of the State of New York.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Georgia Gulf Corporation
400 Perimeter Center Terrace
Suite 595
Atlanta, Georgia 30346
A-9
<PAGE>
Attention: Joel I. Beerman, Vice President--General Counsel
and Secretary
A-10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_________________________________________________________________
(Print or type assignee's name, address and zip code)
_____________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date:____________________ Your Signature:___________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 / / acquired for the undersigned's own account, without transfer;
or
2 / / transferred to the Company; or
3 / / transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended (the "Securities Act");
or
4 / / transferred pursuant to an effective registration statement
under the Securities Act; or
A-11
<PAGE>
5 / / transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6 / / transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act), that has furnished to the Trustee a signed
letter containing certain representations and agreements (the
form of which letter appears as SECTION 2.7 of the Indenture);
or
7 / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
_______________________________
Signature
Signature Guarantee:
____________________________________ _______________________________
(Signature must be guaranteed) Signature
________________________________________________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
____________________________________
A-12
<PAGE>
Dated:
A-13
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Date of Principal Amount of this Principal Amount of this Global Security following such signatory of Trustee or
Exchange Global Security Global Security decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
_____________ ____________________________ ___________________________ ____________________________ ____________________________
</TABLE>
A-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to SECTION 3.6 or 3.8 of the Indenture, check either box:
/ / / /
3.6 3.8
If you want to elect to have only part of this Security purchased by
the Company pursuant to SECTION 3.6 or 3.8 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $
Date: __________ Your Signature________________________________________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
A-15
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Depository Legend, if applicable]
No. [_____] Principal Amount $[____________],
as revised by the Schedule of
Increases and Decreases in Global
Security attached hereto
CUSIP NO. _____________
ISIN: _____________
10 3/8% Senior Subordinated Notes due 2007
Georgia Gulf Corporation, a Delaware corporation, promises to pay to
[______________], or registered assigns, the principal sum of [_______________]
Dollars, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto, on November 1, 2007.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other
side of this Security.
GEORGIA GULF CORPORATION
By:_____________________________________
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
SUNTRUST BANK, ATLANTA,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
B-1
<PAGE>
By:_________________________________
Authorized Signatory Date:___________________________________
B-2
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
10 3/8% Senior Subordinated Note due 2007
1. INTEREST
Georgia Gulf Corporation, a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on May 1 and November 1
of each year commencing May 1, 2000. Interest on the Securities will accrue from
the most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from November 12, 1999. The Company shall pay interest
on overdue principal or premium, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Securities to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT
By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Company shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Company will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the April 15 or October 15 next preceding
the interest payment date even if Securities are cancelled, repurchased or
redeemed after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. Payments in respect of Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by
the transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
Definitive Security (including principal, premium, if any, and interest) by
mailing a check to the registered address of each Holder thereof; PROVIDED,
HOWEVER, that payments on the Securities may also be made, in the case of a
Holder of a least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 15 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, SunTrust Bank, Atlanta (the "Trustee"), will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without
B-3
<PAGE>
notice to any Securityholder. The Company or any of its Restricted Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
November 12, 1999 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such
terms, and Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are general unsecured senior subordinated obligations
of the Company limited to $200.0 million aggregate principal amount (subject to
SECTION 2.9 of the Indenture). The Initial Securities, Private Exchange
Securities and the Exchange Securities will be treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on,
among other things: the Incurrence of Indebtedness by the Company and its
Restricted Subsidiaries, the purchase or redemption of Capital Stock of the
Company, certain purchases or redemptions of Subordinated Obligations, the
Incurrence of Liens by the Company or its Restricted Subsidiaries, the sale or
transfer of assets and Capital Stock of Restricted Subsidiaries, the issuance or
sale of Capital Stock of Restricted Subsidiaries, the business activities and
investments of the Company and its Restricted Subsidiaries, mergers and
consolidation, and transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Restricted Subsidiaries to restrict
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal, premium,
if any, and interest on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be due
and payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future Subsidiary Guarantors, together with the
Subsidiary Guarantors, will unconditionally guarantee), jointly and severally,
such obligations on a senior subordinated basis pursuant to the terms of the
Indenture.
5. REDEMPTION
Except as set forth below, the Securities will not be redeemable at
the option of the Company prior to November 1, 2003. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
B-4
<PAGE>
If redeemed during the 12-month period commencing on November 1 of
the years set forth below:
PERIOD REDEMPTION
- ------ PRICE
-----
2003 105.188%
2004 103.458%
2005 101.729%
2006 and thereafter 100.000%
In addition, at any time and from time to time prior to November 1,
2002, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings received by the Company at a redemption price (expressed as a
percentage of principal amount) of 110.375% plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); PROVIDED, HOWEVER, that at least 65% of the original principal amount of
the Securities must remain outstanding after each such redemption; PROVIDED
FURTHER, that each such redemption occurs within 60 days of the date of closing
of such Equity Offering.
In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed, then on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Securities of $1,000 in original principal amount
or less will be redeemed in part. If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the portion
of the principal amount thereof to be redeemed. A new Security in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption as long as the Company has deposited with the Paying Agent
funds in satisfaction of the applicable redemption price pursuant to the
Indenture.
6. REPURCHASE PROVISIONS
(a) Upon a Change of Control any Holder of Securities will have the
right to cause the Company to repurchase all or any part of the Securities of
such Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
B-5
<PAGE>
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to SECTION 3.6(b) of the Indenture, the Company will be
required to apply such Excess Proceeds to the repayment of the Securities and
any Pari Passu Notes in accordance with the procedures set forth in SECTION 3.6
of the Indenture.
7. SUBORDINATION
The Securities are subordinated to Senior Indebtedness, as defined
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give them effect and
appoints the Trustee as attorney-in-fact for such purpose.
8. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange (i) any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
for a period beginning 15 days before the mailing of a notice of Securities to
be redeemed and ending on the date of such mailing or (ii) any Securities for a
period beginning 15 days before an interest payment date and ending on such
interest payment date.
9. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner
of it for all purposes.
10. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
11. DEFEASANCE
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
B-6
<PAGE>
12. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment or in
respect of a provision that cannot be amended without the written consent of
each Securityholder affected) or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in principal amount of the
then outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with ARTICLE IV of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants of the
Company and the Subsidiary Guarantors, or surrender rights and powers conferred
on the Company, or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Securities.
13. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest when due on the Securities; (ii) default in payment
of principal or premium, if any, on the Securities at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraphs 5 and 6
of the Securities, upon declaration or otherwise; (iii) the failure by the
Company or any Subsidiary Guarantor to comply with its obligations under ARTICLE
IV or SECTION 11.2 of the Indenture; (iv) failure by the Company to comply for
30 days after notice with any of its obligations under the covenants described
under SECTIONS 3.2 through 3.18 inclusive of the Indenture (in each case, other
than a failure to purchase Securities when required pursuant to SECTION 3.6 or
3.8, which failure shall constitute an Event of Default under clause (ii) above
and other than a failure to comply with ARTICLE IV or SECTION 11.2 which failure
shall constitute an Event of Default under clause (iii) above); (v) the failure
by the Company to comply for 60 days after notice with its other agreements
contained in the Indenture or under the Securities (other than those referred to
in (i), (ii), (iii) or (iv) above); (vi) default under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries), other than Indebtedness owed to the Company
or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness before the expiration of the grace period provided in such
Indebtedness ("Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its maturity (the "cross acceleration provision") and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more; (vii) certain events of bankruptcy, insolvency or
reorganization of the Company or a Significant Subsidiary or group of Restricted
Subsidiaries that, taken together (as of the latest audited consolidated
financial statements for
B-7
<PAGE>
the Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary (the "bankruptcy provisions"); (viii) failure by the Company or any
Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Company and
its Restricted Subsidiaries) would constitute a Significant Subsidiary to pay
final judgments aggregating in excess of $25.0 million or its foreign currency
equivalent at the time (net of any amounts with respect to which a reputable and
creditworthy insurance company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days (the
"judgment default provision") or (ix) any Subsidiary Guarantee of a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary ceases to be
in full force and effect (except as contemplated by the terms of the Indenture)
or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor that is a Significant Subsidiary or group of Restricted Subsidiaries
that taken together as of the latest audited consolidated financial statements
of the Company and its Restricted Subsidiaries would constitute a Significant
Subsidiary denies or disaffirms its obligations under the Indenture or its
Subsidiary Guarantee. However, a default under clauses (iv) and (v) will not
constitute an Event of Default until the Trustee or the Holders of at least 25%
in principal amount of the outstanding Securities notify the Company of the
default and the Company does not cure such default within the time specified in
clauses (iv) and (v) hereof after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
B-8
<PAGE>
15. NO RECOURSE AGAINST OTHERS
An incorporator, director, officer, employee, stockholder or
controlling person, as such, of each of the Company, or any Subsidiary Guarantor
shall not have any liability for any obligations of the Company under the
Securities, the Indenture or any Subsidiary Guarantees or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
16. AUTHENTICATION
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.
17. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
18. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. GOVERNING LAW
This Security shall be governed by, and construed in accordance
with, the laws of the State of New York.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Georgia Gulf Corporation
400 Perimeter Center Terrace
Suite 595
Atlanta, Georgia 30346
B-9
<PAGE>
Attention: Joel I. Beerman, Vice President--General Counsel
and Secretary
B-10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_________________________________________________________________
(Print or type assignee's name, address and zip code)
_____________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date: _______________ Your Signature____________________________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-11
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Date of Principal Amount of this Principal Amount of this Global Security following such signatory of Trustee or
Exchange Global Security Global Security decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
_____________ ____________________________ ___________________________ ____________________________ ____________________________
</TABLE>
B-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.6 or 3.8 of the Indenture, check either box:
/ / / /
3.6 3.8
If you want to elect to have only part of this Security purchased by
the Company pursuant to SECTION 3.6 or 3.8 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $
Date: _______________ Your Signature:__________________________________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
B-13
<PAGE>
EXHIBIT C
FORM OF SUBSIDIARY GUARANTEE
This Supplemental Indenture, dated as of [__________] (this
"SUPPLEMENTAL INDENTURE" or "GUARANTEE"), among [name of future Subsidiary
Guarantor] (the "Guarantor"), Georgia Gulf Corporation (together with its
successors and assigns, the "COMPANY"), each other then existing Subsidiary
Guarantor under the Indenture referred to below, and SunTrust Bank, Atlanta, as
Trustee under the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
heretofore executed and delivered an Indenture, dated as of November 12, 1999
(as amended, supplemented, waived or otherwise modified, the "INDENTURE"),
providing for the issuance of an aggregate principal amount of $200.0 million of
10 3/8% Senior Subordinated Notes due 2007 of the Company (the "Securities");
WHEREAS, SECTION 3.11 of the Indenture provides that the Company is
required to cause (i) each Restricted Subsidiary other than a Foreign Subsidiary
or Receivables Entity which has not guaranteed Senior Indebtedness or Guarantor
Senior Indebtedness or Incurred Indebtedness under the Senior Credit Agreement
created or acquired by the Company or one or more of its Restricted Subsidiaries
and (ii) each Restricted Subsidiary, at any time such Restricted Subsidiary
ceases to be a Foreign Subsidiary or Receivables Entity which has not guaranteed
Senior Indebtedness or Guarantor Senior Indebtedness or Incurred Indebtedness
under the Senior Credit Agreement, to execute and deliver to the Trustee a
Subsidiary Guarantee pursuant to which such Restricted Subsidiary will
unconditionally Guarantee, on a joint and several basis with the other
Subsidiary Guarantors, the full and prompt payment of the principal of, premium,
if any, and interest on the Securities on a senior subordinated basis; and
WHEREAS, pursuant to SECTION 9.1 of the Indenture, the Trustee and
the Company are authorized to execute and deliver this Supplemental Indenture to
amend the Indenture, without the consent of any Securityholder;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor, the Company, the other Subsidiary Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the Holders of the
Securities as follows:
C-1
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Subsidiary Guarantee,
terms defined in the Indenture or in the preamble or recital hereto are used
herein as therein defined, except that the term "Holders" in this Guarantee
shall refer to the term "Holders" as defined in the Indenture and the Trustee
acting on behalf or for the benefit of such holders. The words "herein,"
"hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.
ARTICLE II
AGREEMENT TO BE BOUND; GUARANTEE
SECTION 2.1 AGREEMENT TO BE BOUND. The Guarantor hereby becomes a
party to the Indenture as a Subsidiary Guarantor and as such will have all of
the rights and be subject to all of the obligations and agreements of a
Subsidiary Guarantor under the Indenture. The Guarantor agrees to be bound by
all of the provisions of the Indenture applicable to a Subsidiary Guarantor and
to perform all of the obligations and agreements of a Subsidiary Guarantor under
the Indenture.
SECTION 2.2 GUARANTEE. The Guarantor hereby fully, unconditionally
and irrevocably guarantees, as primary obligor and not merely as surety, jointly
and severally with each other Subsidiary Guarantor, to each Holder of the
Securities and the Trustee, the full and punctual payment when due, whether at
maturity, by acceleration, by redemption or otherwise, of the Obligations
pursuant to ARTICLE XI of the Indenture on a senior subordinated basis.
SECTION 2.3 SUBORDINATION. The Guarantor hereby agrees to be bound
by the subordination provisions of ARTICLE XII of the Indenture.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 NOTICES. All notices and other communications to the
Guarantor shall be given as provided in the Indenture to the Guarantor, at its
address set forth below, with a copy to the Company as provided in the Indenture
for notices to the Company.
SECTION 3.2 PARTIES. Nothing expressed or mentioned herein is
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or in respect of this Supplemental Indenture or the Indenture or any
provision herein or therein contained.
C-2
<PAGE>
SECTION 3.3 GOVERNING LAW. This Supplemental Indenture shall be
governed by the laws of the State of New York.
SECTION 3.4 SEVERABILITY CLAUSE. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
SECTION 3.5 RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART
OF INDENTURE. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture shall
form a part of the Indenture for all purposes, and every Holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby. The
Trustee makes no representation or warranty as to the validity or sufficiency of
this Supplemental Indenture.
SECTION 3.6 COUNTERPARTS. The parties hereto may sign one or more
copies of this Supplemental Indenture in counterparts, all of which together
shall constitute one and the same agreement.
SECTION 3.7 HEADINGS. The headings of the Articles and the sections
in this Guarantee are for convenience of reference only and shall not be deemed
to alter or affect the meaning or interpretation of any provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
as a Subsidiary Guarantor
By:_____________________________________
Name:
Title:
SUNTRUST BANK, ATLANTA, as Trustee
By:_____________________________________
Name:
Title:
C-3
<PAGE>
GEORGIA GULF CORPORATION
By:_____________________________________
Name:
Title:
[SUBSIDIARY GUARANTORS]
By:_____________________________________
Name:
Title:
C-4
<PAGE>
[CONFORMED COPY]
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of
November 12, 1999
among
GEORGIA GULF CORPORATION
The ELIGIBLE SUBSIDIARIES Referred to Herein
The LENDERS Party Hereto
THE CHASE MANHATTAN BANK,
as Administrative Agent, Syndication Agent and Collateral Agent
and
BANK OF AMERICA, N.A. and
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
as Co-Documentation Agents
---------------------------
CHASE SECURITIES INC.,
as Lead Arranger
and Sole Book Manager
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINED TERMS....................................................................2
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS..........................................29
SECTION 1.03. TERMS GENERALLY.................................................................29
SECTION 1.04. ACCOUNTING TERMS; GAAP..........................................................30
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS.....................................................................30
SECTION 2.02. LOANS AND BORROWINGS............................................................30
SECTION 2.03. REQUESTS FOR BORROWINGS.........................................................31
SECTION 2.04. LETTERS OF CREDIT...............................................................32
SECTION 2.05. FUNDING OF BORROWINGS...........................................................37
SECTION 2.06. INTEREST ELECTIONS..............................................................38
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS........................................39
SECTION 2.08. REPAYMENT OF LOANS; EVIDENCE OF DEBT............................................40
SECTION 2.09. AMORTIZATION OF TERM LOANS......................................................41
SECTION 2.10. PREPAYMENT OF LOANS.............................................................43
SECTION 2.11. FEES............................................................................47
SECTION 2.12. INTEREST........................................................................48
SECTION 2.13. ALTERNATE RATE OF INTEREST......................................................49
SECTION 2.14. INCREASED COSTS.................................................................49
SECTION 2.15. BREAK FUNDING PAYMENTS..........................................................51
SECTION 2.16. TAXES...........................................................................51
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-
OFFS............................................................................52
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS..................................54
SECTION 2.19. TERMINATION OF DESIGNATION OF ELIGIBLE SUBSIDIARY AS A
BORROWER........................................................................55
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. ORGANIZATION; POWERS............................................................56
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY...................................................56
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS............................................56
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.................................56
SECTION 3.05. PROPERTIES......................................................................57
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS............................................58
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS.............................................61
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS...........................................62
SECTION 3.09. TAXES...........................................................................62
SECTION 3.10. ERISA...........................................................................62
SECTION 3.11. DISCLOSURE......................................................................62
SECTION 3.12. SUBSIDIARIES....................................................................63
SECTION 3.13. INSURANCE.......................................................................63
SECTION 3.14. LABOR MATTERS...................................................................63
SECTION 3.15. SOLVENCY........................................................................63
SECTION 3.16. SENIOR INDEBTEDNESS.............................................................64
SECTION 3.17. YEAR 2000.......................................................................64
SECTION 3.18. REGULATIONS U AND X.............................................................64
SECTION 3.19. NO BURDENSOME RESTRICTIONS......................................................64
SECTION 3.20. ACQUISITION DOCUMENTS...........................................................64
SECTION 3.21. SECURITY DOCUMENTS..............................................................65
ARTICLE 4
CONDITIONS
SECTION 4.01. EFFECTIVE DATE..................................................................65
SECTION 4.02. EACH CREDIT EVENT...............................................................68
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION......................................69
SECTION 5.02. NOTICES OF MATERIAL EVENTS......................................................70
SECTION 5.03. INFORMATION REGARDING COLLATERAL................................................71
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS..................................................72
SECTION 5.05. PAYMENT OF OBLIGATIONS..........................................................72
SECTION 5.06. MAINTENANCE OF PROPERTIES.......................................................72
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 5.07. INSURANCE.......................................................................72
SECTION 5.08. CASUALTY AND CONDEMNATION.......................................................74
SECTION 5.09. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS..................................74
SECTION 5.10. COMPLIANCE WITH LAWS; MATERIAL CONTRACTS........................................75
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT...........................................75
SECTION 5.12. ADDITIONAL SUBSIDIARIES.........................................................75
SECTION 5.13. FURTHER ASSURANCES..............................................................75
SECTION 5.14. LANDLORD AND WAREHOUSEMAN WAIVERS...............................................76
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01. INDEBTEDNESS; CERTAIN EQUITY SECURITIES.........................................77
SECTION 6.02. LIENS...........................................................................78
SECTION 6.03. FUNDAMENTAL CHANGES.............................................................80
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS....................................................................80
SECTION 6.05. ASSET SALES.....................................................................82
SECTION 6.06. HEDGING AGREEMENTS..............................................................84
SECTION 6.07. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS;
SYNTHETIC PURCHASE AGREEMENTS...................................................84
SECTION 6.08. TRANSACTIONS WITH AFFILIATES....................................................86
SECTION 6.09. RESTRICTIVE AGREEMENTS..........................................................86
SECTION 6.10. AMENDMENT OF MATERIAL DOCUMENTS.................................................87
SECTION 6.11. ACCOUNTING CHANGES..............................................................87
SECTION 6.12. SALE AND LEASEBACK..............................................................87
SECTION 6.13. BANK ACCOUNTS...................................................................88
SECTION 6.14. CAPITAL EXPENDITURES............................................................88
SECTION 6.15. LEVERAGE RATIO..................................................................88
SECTION 6.16. INTEREST COVERAGE RATIO.........................................................88
ARTICLE 7
EVENTS OF DEFAULT
ARTICLE 8
THE AGENT
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES
SECTION 9.01. ORGANIZATION; POWER.............................................................94
SECTION 9.02. AUTHORIZATION; ENFORCEABILITY; CONTRAVENTION....................................95
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES........................................................................95
SECTION 10.02. WAIVERS; AMENDMENTS............................................................96
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER.............................................98
SECTION 10.04. SUCCESSORS AND ASSIGNS........................................................100
SECTION 10.05. SURVIVAL......................................................................103
SECTION 10.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS......................................103
SECTION 10.07. SEVERABILITY..................................................................103
SECTION 10.08. RIGHT OF SETOFF...............................................................104
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.......................................................................104
SECTION 10.10. WAIVER OF JURY TRIAL..........................................................105
SECTION 10.11. HEADINGS......................................................................105
SECTION 10.12. CONFIDENTIALITY...............................................................105
SECTION 10.13. INTEREST RATE LIMITATION......................................................106
</TABLE>
iv
<PAGE>
SCHEDULES*:
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Existing Investments
Schedule 6.09 -- Existing Restrictions
Schedule 6.13 -- Bank Accounts
EXHIBITS*:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Jones, Day, Reavis & Pogue
Exhibit C -- Form of Opinion of Borrower's Local Counsel
Exhibit D -- Form of Opinion of Davis Polk & Wardwell
Exhibit E -- Form of Collateral Agreement
Exhibit F -- Form of Subordination Agreement
Exhibit G -- Form of Election to Terminate
* Omitted from this version.
<PAGE>
CREDIT AGREEMENT dated as of November 12, 1999, among GEORGIA GULF
CORPORATION, the ELIGIBLE SUBSIDIARIES referred to herein, the LENDERS party
hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent, Syndication Agent
and Collateral Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"ACCEPTING TRANCHE B LENDER" has the meaning set forth in
Section 2.10(h)(iii).
"ACQUIRED ASSETS" shall have the meaning set forth in Section 1.02 of
the Asset Purchase Agreement.
"ACQUIRED BUSINESS" means the vinyls business of the Seller, comprised
of the "Purchased Operating Business" and the "Purchased Equity Interest", in
each case as defined in the Asset Purchase Agreement.
"ACQUISITION" means the acquisition by the Eligible Subsidiaries of the
Acquired Assets from the Seller, and the assumption by the Eligible Subsidiaries
of the Assumed Liabilities from the Seller, all pursuant to the Asset Purchase
Agreement and the Company's assignment to the Eligible Subsidiaries of its
rights and obligations thereunder.
"ACQUISITION DOCUMENTS" means (i) the Asset Purchase Agreement, (ii)
the Ethylene Sales Agreement between GG Lake Charles and the Seller,
substantially in the form of Exhibit D to the Asset Purchase Agreement, (iii)
the Services and Supply Agreement between GG Lake Charles and the Seller,
substantially in the form of Exhibit E to the Asset Purchase Agreement, (iv) the
Site Access, Cooperation and Remedial Control Agreement between the Company and
the Seller, substantially in the form of Exhibit F to the Asset Purchase
Agreement, (v) the Alcohol Sales Agreement
2
<PAGE>
between GG Lake Charles and the Seller, substantially in the form of Exhibit G
to the Asset Purchase Agreement, (vi) the Undertaking of RWE-DEA in favor of the
Company, substantially in the form of Exhibit H to the Asset Purchase Agreement,
(vii) the Lease between Plastics and the Seller relating to the Mansfield,
Massachusetts plant, substantially in the form of Exhibit I to the Asset
Purchase Agreement and (viii) the Subordination Agreement.
"ADJUSTED LIBO RATE" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, in its capacity
as administrative agent for the Lenders hereunder.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"AFFILIATE" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"AGENT" means The Chase Manhattan Bank, in its capacities as
Administrative Agent, Syndication Agent and Collateral Agent, collectively, or
in any one of such capacities, as the context may require.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE PERCENTAGE" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"APPLICABLE RATE" means, for any day (a) with respect to any Tranche B
Term Loan, (i) 1.75% per annum, in the case of an ABR Loan, or (ii) 2.75% per
annum, in the case of a Eurodollar Loan, (b) with respect to the commitment fees
3
<PAGE>
payable hereunder, the applicable rate per annum set forth below under the
caption "COMMITMENT FEE RATE", based upon the Leverage Ratio as of the most
recent determination date, and (c) with respect to any ABR Loan or Eurodollar
Loan that is a Revolving Loan or a Tranche A Term Loan, as the case may be, the
applicable rate per annum set forth below under the caption "ABR SPREAD" or
"EURODOLLAR SPREAD", as the case may be, based upon the Leverage Ratio as of the
most recent determination date; PROVIDED that until May 15, 2000, the
"Applicable Rate" for purposes of clause (b) and clause (c) shall be the
applicable rate per annum set forth below in Category 5; and PROVIDED FURTHER
that on and after the first date following May 15, 2000 on which the
Administrative Agent has received evidence satisfactory to it that the Company's
senior secured Indebtedness under this Agreement has been rated at or above the
level of BBB-by S&P and Baa3 by Moody's, the "APPLICABLE RATE" for purposes of
clause (c) shall be the applicable rate determined in accordance with such
clause (c) MINUS 0.5%:
<TABLE>
<CAPTION>
Eurodollar Commitment
Leverage Ratio ABR Spread Spread Fee Rate
- ------------------------------------------- --------------- ------------- --------------
<S> <C> <C> <C>
Category 1 0.75% 1.75% 0.375%
less than or equal to 2.5:1
Category 2 1.00% 2.00% 0.375%
greater than 2.5:1 and less than or
equal to 3.0:1
Category 3 1.25% 2.25% 0.500%
greater than 3.0:1 and less than or
equal to 3.5:1
Category 4 1.50% 2.50% 0.500%
greater than 3.5:1 and less than or
equal to 4.0:1
Category 5 1.75% 2.75% 0.500%
greater than 4.0:1
</TABLE>
For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Company's fiscal year
based upon the Company's consolidated financial statements delivered pursuant to
Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; PROVIDED
that, solely for purposes of calculating the Leverage Ratio to
4
<PAGE>
determine the Applicable Rate, the term Funded Indebtedness shall exclude
Indebtedness pursuant to any Permitted Receivables Transaction; and PROVIDED
FURTHER that the Leverage Ratio shall be deemed to be in Category 5 (A) at any
time that an Event of Default has occurred and is continuing or (B) if the
Company fails to deliver the consolidated financial statements required to be
delivered by it pursuant to Section 5.01(a) or (b), during the period from the
expiration of the time for delivery thereof until such consolidated financial
statements are delivered.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as
of August 30, 1999 between the Seller and the Company, as amended, subject to
Section 6.10, from time to time.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 1.03
of the Asset Purchase Agreement.
"BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
"BORROWER" means the Company or any Eligible Subsidiary, as the context
may require, and their respective successors, and "BORROWERS" means all of the
foregoing. When used in connection with a specific Loan, Borrowing or Letter of
Credit, the term "BORROWER" means the obligor (or proposed obligor) with respect
thereto. As the context may require, the terms "BORROWER" and "BORROWERS"
include the Company in its capacity as guarantor of the Obligations of the
Eligible Subsidiaries.
"BORROWING" means Loans of the same Class and Type to the same
Borrower, made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect.
"BORROWING REQUEST" means a request by any Borrower for a Borrowing in
accordance with Section 2.03.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; PROVIDED that, when used in connection with a Eurodollar Loan,
the term "BUSINESS DAY" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
5
<PAGE>
"CAPITAL EXPENDITURES" means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Company and
its consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Company for such period prepared in accordance
with GAAP and (b) Capital Lease Obligations incurred by the Company and its
consolidated Subsidiaries during such period, but excluding expenditures for the
restoration or replacement of fixed assets to the extent financed by (i) the
proceeds of an insurance policy maintained by the Company or any of its
Subsidiaries covering casualty losses with respect to real or personal property
or improvements, (ii) the proceeds of any condemnation proceeding with respect
to the assets of the Company or any Subsidiary, and (iii) any proceeds received
as a payment under any indemnity provision of the Asset Purchase Agreement.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CHANGE IN CONTROL" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Exchange Act and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) other than Permitted
Holders, of shares representing more than 30% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Company;
(b) occupation of a majority of the seats (other than vacant seats) on the board
of directors of the Company by Persons who were neither (i) nominated by the
board of directors of the Company nor (ii) appointed by directors so nominated;
(c) the acquisition of direct or indirect Control of the Company by any Person
or group other than Permitted Holders; or (d) the occurrence of a "Change of
Control" as defined in the Subordinated Debt Documents or the documents under
which any Replacement Subordinated Indebtedness is issued.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
6
<PAGE>
"CLASS", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans or Tranche B Term Loans and, when used in reference to any
Commitment, refers to whether such Commitment is a Revolving Commitment, Tranche
A Commitment or Tranche B Commitment.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COGENERATION FACILITY" means the 250-megawatt cogeneration facility at
Vinyls' manufacturing facility in Plaquemine, Louisiana.
"COLLATERAL" means any and all "COLLATERAL", as defined in any
applicable
Security Document.
"COLLATERAL AGENT" means The Chase Manhattan Bank, in its capacity as
collateral agent for the Secured Parties (as defined in the Collateral
Agreement) in connection with the Collateral Agreement.
"COLLATERAL AGREEMENT" means the Guarantee and Collateral Agreement
among the Company, the Eligible Subsidiaries, the other Subsidiary Loan Parties
and the Administrative Agent, substantially in the form of Exhibit E.
"COLLATERAL AND GUARANTEE REQUIREMENT" means the requirement that:
(a) the Collateral Agent shall have received from each Loan
Party either (i) a counterpart of the Collateral Agreement duly executed and
delivered on behalf of such Loan Party or (ii) in the case of any Person that
becomes a Loan Party after the Effective Date, a supplement to the Collateral
Agreement, in the form specified therein, duly executed and delivered on behalf
of such Loan Party;
(b) all outstanding Equity Interests of each Eligible
Subsidiary and each other Subsidiary owned by or on behalf of any Loan Party
shall have been pledged pursuant to the Collateral Agreement (except that the
Loan Parties shall not be required to pledge more than 65% of the outstanding
voting Equity Interests of any Foreign Subsidiary that is not a Loan Party) and
the Collateral Agent shall have received certificates or other instruments
representing all such Equity Interests, together with stock powers, or other
instruments of transfer with respect thereto, endorsed in blank;
(c) all Indebtedness of the Company and each Subsidiary that
is owing to any Loan Party shall be evidenced by a promissory note and shall
have been
7
<PAGE>
pledged pursuant to the Collateral Agreement and the Collateral Agent shall have
received all such promissory notes, together with instruments of transfer with
respect thereto endorsed in blank;
(d) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested by
the Collateral Agent to be filed, registered or recorded to create the Liens
intended to be created by the Collateral Agreement and perfect such Liens to the
extent required by, and with the priority required by, the Collateral Agreement,
shall have been filed, registered or recorded or delivered to the Collateral
Agent for filing, registration or recording;
(e) the Collateral Agent shall have received (i) counterparts
of a Mortgage with respect to each Mortgaged Property duly executed and
delivered by the record owner of such Mortgaged Property, (ii) a policy or
policies of title insurance issued by a nationally recognized title insurance
company insuring the Lien of each such Mortgage as a valid first Lien on the
Mortgaged Property described therein, free of any other Liens except as
expressly permitted by Section 6.02, together with such endorsements,
coinsurance and reinsurance as the Administrative Agent or the Required Lenders
may reasonably request, and (iii) such surveys, abstracts, appraisals, legal
opinions and other documents as the Administrative Agent or the Required Lenders
may reasonably request with respect to any such Mortgage or Mortgaged Property;
and
(f) each Loan Party shall have obtained all consents and
approvals required to be obtained by it in connection with the execution and
delivery of all Security Documents to which it is a party, the performance of
its obligations thereunder and the granting by it of the Liens thereunder.
"COMMITMENT" means a Revolving Commitment, Tranche A Commitment or
Tranche B Commitment, or any combination thereof (as the context requires).
"COMPANY" means Georgia Gulf Corporation, a Delaware corporation.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, the excess
of (a) the sum of (i) the interest expense (including imputed interest expense
in respect of Capital Lease Obligations) of the Company and the Subsidiaries for
such period, determined on a consolidated basis, (ii) any interest accrued
during such period in respect of Indebtedness of the Company or any Subsidiary
that is required to be capitalized rather than included in consolidated interest
expense for such period in accordance with GAAP, plus (iii) any cash payments
(other than fees and expenses paid in connection with the closings under this
Agreement, the Asset Purchase Agreement and the Subordinated Debt Documents)
made during such period in respect
8
<PAGE>
of obligations referred to in clause (b)(ii) below that were amortized or
accrued in a previous period, minus (b) the sum of (i) to the extent included in
such consolidated interest expense for such period, non-cash amounts
attributable to amortization of financing costs paid in a previous period, plus
(ii) to the extent included in such consolidated interest expense for such
period, non-cash amounts attributable to amortization of debt discounts or
accrued interest payable in kind for such period.
"CONSOLIDATED EBITDA" means, for any period, the sum of:
(a) consolidated net income of the Company and its consolidated
Subsidiaries for such period (exclusive of (x) the effect of any extraordinary
gain or loss in accordance with GAAP, (y) the income of any Person (other than
the Company) in which any other Person (other than the Company or any Subsidiary
or any director holding qualifying shares in compliance with applicable law)
owns on Equity Interest, except to the extent of the amount of dividends or
other distributions actually paid to the Company or any Subsidiary during such
period, and (z) the income or loss of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Company or any
Subsidiary or the date that such Person's assets are acquired by the Company or
any Subsidiary), PLUS
(b) to the extent deducted in determining such consolidated net income,
the aggregate amount of (i) interest expense, (ii) income tax expense and (iii)
depreciation and amortization (including without limitation amortization of debt
issuance costs) and other similar non-cash charges;
PROVIDED that, for purposes of determining Consolidated EBITDA for any
period ending on or prior to December 31, 2000, Consolidated EBITDA for such
period shall be increased to include, on a pro forma basis, the amount of
consolidated net income related to the Company's discontinued methanol
operations; and
PROVIDED FURTHER that, for purposes of determining compliance with
Section 6.15 and 6.16 of this Agreement on the last day of any fiscal quarter
ending on or prior to December 31, 2000, Consolidated EBITDA for the period of
four consecutive fiscal quarters of the Company ended on any such day (the
"REFERENCE PERIOD") shall be (i) calculated, on a pro forma basis, to include,
for any such Reference Period ending on or prior to September 30, 1999,
Consolidated EBITDA as computed herein above of the "CONDEA Vista Company Vinyls
Group" for the business included within, and on a basis consistent with, the
audited financial statements for the CONDEA Vista Company Vinyls Group
accompanying the report of PricewaterhouseCoopers LLP dated September 29, 1999;
(ii) increased by $20,000,000 for each such Reference Period (to reflect
synergies created by the Acquisition); and (iii) increased for the Reference
Period ending on December 31, 1999 by $12,000,000, for the Reference
9
<PAGE>
Period ending on March 31, 2000 by $9,000,000, for the Reference Period ending
on June 30, 2000 by $6,000,000 and for the Reference Period ending on September
30, 2000 by $3,000,000 (to reflect Cogeneration Facility lease expense as if it
had been treated as interest expense on the Company's consolidated balance sheet
for the relevant period); and
PROVIDED FURTHER that, for purposes of determining Consolidated EBITDA,
no deduction shall be made for (and to the extent deducted there shall be added
to Consolidated EBITDA) severance expense incurred with respect to employees of
the Seller hired by the Company or any of its Subsidiaries coincident with the
closing of the Acquisition and whose employment is terminated on or prior to
December 31, 2000.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DEFERRED TRANCHE B UNSCHEDULED PREPAYMENT DATE" has the meaning set
forth in Section 2.10(h).
"DELAYED PURCHASE PRICE" means the deferred consideration for the
Acquired Assets, in an aggregate amount not to exceed $10,000,000, payable by
the Company to the Seller on the terms and subject to the conditions set forth
in the Asset Purchase Agreement.
"DISCLOSED MATTERS" means the actions, suits and proceedings disclosed
in Schedule 3.06.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"EFFECTIVE DATE" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"ELECTION TO TERMINATE" means an Election to Terminate substantially in
the form of Exhibit G.
10
<PAGE>
"ELIGIBLE SUBSIDIARY" means any of Vinyls, Plastics and GG Lake Charles
as to which an Election to Terminate shall not have been delivered to the
Administrative Agent.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"EQUITY INTERESTS" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity interests in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "ACCUMULATED FUNDING DEFICIENCY" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Company or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to
11
<PAGE>
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Company or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"EURODOLLAR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"EVENT OF DEFAULT" has the meaning assigned to such term in Article 7.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCESS CASH FLOW" means, for any fiscal year, the sum (without
duplication) of:
(a) Consolidated EBITDA for such period, adjusted to exclude any gains
or losses attributable to Prepayment Events; PLUS
(b) cash interest income and extraordinary cash income of the Company
and its consolidated Subsidiaries (to the extent not included in Consolidated
EBITDA), adjusted to exclude any cash gains or losses attributable to Prepayment
Events; MINUS
(c) Capital Expenditures for such period (except to the extent
attributable to the incurrence of Capital Lease Obligations or otherwise
financed by incurring Long-Term Indebtedness); MINUS
(d) cash interest expense and extraordinary cash expense of the Company
and its consolidated Subsidiaries for such period (to the extent not included in
Consolidated EBITDA); MINUS
(e) the aggregate principal amount of the Term Loans repaid or prepaid
during such period; MINUS
(f) cash payments with respect to taxes made during such period; MINUS
(g) payments of the Delayed Purchase Price pursuant to and in
accordance with the Acquisition Documents; MINUS
12
<PAGE>
(h) payments made pursuant to Section 6.07(a)(ii) or (iii).
"EXCLUDED TAXES" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of any Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Company
under Section 2.18(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from any Borrower with respect to any withholding tax
pursuant to Section 2.16(a), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.16(e).
"EXISTING INDENTURE" means the Indenture dated as of November 15, 1995
between the Company and LaSalle Bank National Association (formerly known as
LaSalle National Bank), as Trustee, as supplemented by the First Supplemental
Indenture dated as of November 12, 1999 between the Company and LaSalle Bank
National Association, as Trustee, and the Second Supplemental Indenture dated as
of November 12, 1999 between Vinyls (as successor company to the Company) and
LaSalle Bank National Association, as Trustee.
"EXISTING LEASE FACILITY" means the Participation Agreement dated as of
February 6, 1996 among the Company, First Security Bank of Utah, N.A.,
NationsBanc Leasing Corporation of North Carolina, the various banks and other
lending institutions party thereto and NationsBank, N.A. (South), as amended,
supplemented or otherwise modified to the Effective Date.
"EXISTING NOTES" means the 75/8% Notes due 2005 issued pursuant to the
Existing Indenture.
"EXISTING RECEIVABLES FACILITY" means the $50,000,000 receivables
facility pursuant to (i) the Receivables Purchase Agreement dated March 10,
1998, between the Company, as seller and collection agent, and GGRC Corp., as
purchaser, as modified by the Joinder and First Amendment to Receivables
Purchase Agreement, dated as of November 10, 1999, among the Company, as seller
and collection agent, Vinyls, as seller and collection agent, and GGRC Corp., as
purchaser, and (ii) the
13
<PAGE>
Receivables Transfer Agreement dated as of March 10, 1998 by and among GGRC
Corp., as transferor, the Company, individually and as collection agent, and
Blue Ridge Asset Funding Corporation, individually and as agent for and on
behalf of itself and any commercial paper funding conduit or bank or liquidity
bank designated by the Administrative Agent, as amended by the First Amendment
dated as of March 9, 1999, and as further modified and amended by the Joinder
and Second Amendment to Receivables Transfer Agreement, dated as of November 10,
1999, by and among GGRC Corp., the Company, Vinyls and Blue Ridge Asset Funding
Corporation.
"EXISTING REVOLVER" means the $350,000,000 credit facility of the
Company under the Credit Agreement dated as of March 30, 1995 among the Company,
the lenders party thereto and The Chase Manhattan Bank, as administrative agent,
as amended, supplemented or otherwise modified to the Effective Date.
"EXISTING TERM FACILITY" means the $100,000,000 Term Loan Agreement
dated as of June 29, 1995 among the Company, each of the lenders party thereto,
and The Industrial Bank of Japan, Limited, as administrative agent for such
lenders.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"FINANCING TRANSACTIONS" means (a) the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is to be a
party, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder and (b) the execution, delivery and performance
by each Loan Party of the Subordinated Debt Documents to which it is to be a
party, the issuance of the Subordinated Debt and the use of the proceeds
thereof.
"FIRST BORROWING DATE" means the date of the initial Term Borrowing
hereunder in accordance with Section 2.03 which date shall be on or after the
Effective Date and on or before the Termination Date.
14
<PAGE>
"FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Company is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"FOREIGN SUBSIDIARY" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"FUNDED INDEBTEDNESS" shall mean, as of any date, the aggregate
principal amount of Indebtedness of the Company and its Subsidiaries outstanding
on such date, which matures more than one year after the incurrence thereof or
is extendible, renewable or refundable, at the option of the obligor, to a date
more than one year after the incurrence thereof (including the current portion
thereof).
"GAAP" means generally accepted accounting principles in the United
States of America.
"GALLMAN INDEBTEDNESS" means all liabilities and obligations of the
Company and Vinyls in respect of $17,000,000 in aggregate original principal
amount of industrial development revenue bonds due May 1, 2009 issued by the
Mississippi Business Finance Corporation, including, without limitation,
reimbursement obligations and obligations in respect of letters of credit issued
in connection therewith, which liabilities and obligations of the Company and
Vinyls are secured only by Vinyls' existing and future real and personal
property located at its Gallman, Mississippi facility.
"GG LAKE CHARLES" means Georgia Gulf Lake Charles, LLC, a Delaware
limited liability company and a wholly owned Subsidiary of the Company.
"GGRC CORP.", a Delaware corporation and wholly owned special purpose
Subsidiary of the Company.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and
including any obligation of
15
<PAGE>
the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or (d)
as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; PROVIDED, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"HEDGING AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"INCENTIVE EQUITY PLAN" means any of (i) the Company's 1990 Incentive
Equity Plan, (ii) the Company's 1998 Equity and Performance Incentive Plan and
(iii) any substantially similar incentive equity plan adopted from time to time
by the Company or any of its Subsidiaries, in each case as the same shall be
amended, supplemented or otherwise modified and in effect from time to time.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty, (j) all
16
<PAGE>
obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances, (k) all Equity Interests of such Person which are subject to
redemption otherwise than at the sole option of such Person and (l) to the
extent not otherwise included, indebtedness or other similar obligations
(including, if applicable, net investment amounts) pursuant to any Permitted
Receivables Transaction. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INFORMATION MEMORANDUM" means the Confidential Information Memorandum
dated October, 1999 relating to the Company and the Transactions.
"INTEREST ELECTION REQUEST" means a request by the relevant Borrower to
convert or continue a Revolving Borrowing or Term Borrowing in accordance with
Section 2.06.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"INTEREST PERIOD" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter (or twelve months thereafter if, at the time of the relevant
Borrowing, all Lenders participating therein agree to make an Interest Period of
such duration available), as the relevant Borrower may elect, PROVIDED, that (i)
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day and
(ii) any Interest Period that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and thereafter
17
<PAGE>
shall be the effective date of the most recent conversion or continuation of
such Borrowing.
"ISSUING BANK" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.04(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "ISSUING BANK" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC DISBURSEMENT" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC EXPOSURE" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrowers at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"LENDERS" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LETTER OF CREDIT" means any letter of credit issued pursuant to this
Agreement.
"LEVERAGE RATIO" means, on the last day of any fiscal quarter or fiscal
year of the Company, the ratio of Funded Indebtedness as of such date to
Consolidated EBITDA for the period of four consecutive fiscal quarters of the
Company ended on such date; PROVIDED that for purposes of calculating the
Leverage Ratio to determine compliance with Section 6.15, the term "Funded
Indebtedness" will be deemed to include Indebtedness described in clause (l) of
the definition of "Indebtedness".
"LIBO RATE" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits
18
<PAGE>
with a maturity comparable to such Interest Period. In the event that such rate
is not available at such time for any reason, then the "LIBO RATE" with respect
to such Eurodollar Borrowing for such Interest Period shall be the rate at which
dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LOAN DOCUMENTS" means this Agreement, any promissory note issued by a
Borrower pursuant to Section 2.08(e) hereof, the Letters of Credit, the
Collateral Agreement and the other Security Documents.
"LOAN PARTIES" means the Borrowers and the other Subsidiary Loan
Parties, and "LOAN PARTY" means any one of them as the context may require.
"LOANS" means the loans made by the Lenders to the Borrowers pursuant
to this Agreement.
"LONG-TERM INDEBTEDNESS" means any Indebtedness that, in accordance
with GAAP, constitutes (or, when incurred, constituted) a long-term liability.
"MATERIAL ADVERSE CHANGE" means any event, development or circumstance
that has had or could reasonably be expected to have material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and the Subsidiaries taken as a whole, after giving
effect to the Acquisition, (b) the validity or enforceability of any Loan
Document or (c) the rights or remedies of, or benefits available to, the
Administrative Agent or the Lenders under any Loan Document.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Company and its Subsidiaries in an aggregate principal
amount exceeding $10,000,000. For purposes of determining Material Indebtedness,
the "principal amount" of the obligations of the Company or any Subsidiary in
respect of
19
<PAGE>
any Hedging Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Company or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
"MOODY'S" means Moody's Investors Service, Inc.
"MORTGAGE" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Administrative Agent.
"MORTGAGED PROPERTY" means, initially, each parcel of real property and
the improvements thereto owned by a Loan Party and identified on Schedule 3.05,
and includes each other parcel of real property and improvements thereto with
respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET PROCEEDS" means, with respect to any event, (a) the cash proceeds
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by the Company and the
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale or other disposition of an asset (including
pursuant to a casualty or condemnation), the amount of all payments required to
be made by the Company and the Subsidiaries as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by the Company and the
Subsidiaries, and the amount of any reserves established by the Company and the
Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
in each case during the year that such event occurred or the next succeeding
year and that are directly attributable to such event (as determined reasonably
and in good faith by the chief financial officer of the Company).
"OBLIGATIONS" has the meaning assigned to such term in the Collateral
Agreement.
"OTHER TAXES" means any and all present or future recording, stamp,
documentary excise, transfer, sales, property or similar taxes, charges or
levies arising
20
<PAGE>
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERFECTION CERTIFICATE" has the meaning set forth in the Collateral
Agreement.
"PERMITTED ACQUISITIONS" has the meaning set forth in Section 6.04.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article 7;
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Company or any Subsidiary; and
(g) with respect to each Mortgaged Property, those Liens and other
matters described on Exhibit B to the Mortgage for such Mortgaged Property;
21
<PAGE>
PROVIDED that the term "PERMITTED ENCUMBRANCES" shall not include any Lien
securing Indebtedness.
"PERMITTED HOLDERS" means all members of the board of directors of the
Company on the date hereof and all officers of the Company on the date hereof.
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing within one
year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 90 days from the
date of acquisition thereof and having, at such date of acquisition, a rating of
not less than A-2 from S&P and P-2 from Moody's (or the equivalent rating);
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 90 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any Lender or any other commercial bank
organized under the laws of the United States of America or any State thereof
which has a combined capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above.
"PERMITTED JOINT VENTURE" has the meaning set forth in Section 6.05.
"PERMITTED JOINT VENTURE DISPOSITIONS" has the meaning set forth in
Section 6.05.
"PERMITTED RECEIVABLES TRANSACTION" means a transaction or series of
transactions in which the Company or any Subsidiary sells or otherwise transfers
an interest in accounts receivable and assets incidental thereto to one or more
third party purchasers, or to a special purpose entity that borrows against such
accounts receivable or sells such accounts receivable to one or more third party
purchasers, but only to the extent that (i) amounts received in connection with
the sale or other transfer of such accounts receivable would not under GAAP be
accounted for as liabilities on a consolidated balance sheet of the Company, and
(ii) the documentation in respect of
22
<PAGE>
such transaction does not provide for financing of more than $75,000,000 at any
time outstanding.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLASTICS" means North America Plastics, LLC, a Delaware limited
liability company and a wholly owned Subsidiary of the Company.
"PRAXAIR PIK NOTE" means the 6.526% payable-in-kind note, dated as of
November 7, 1997, issued by the Company to Praxair, Inc., a Delaware
corporation, in an initial principal amount of $7,440,000 (interest on and
principal of which are payable in cash in 2012) and assumed by Vinyls pursuant
to the Consent Agreement dated as of November 12, 1999.
"PREPAYMENT EVENT" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction or the sale of the first $75,000,000 of
receivables under any Permitted Receivables Transaction) of any property or
asset of the Company or any Subsidiary, other than (i) dispositions described in
clauses (a) and (b) of Section 6.05 and (ii) other dispositions resulting in
aggregate Net Proceeds not exceeding $2,500,000 during any fiscal year of the
Company; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any property or
asset of the Company or any Subsidiary, or any payment under any indemnity
provision of the Asset Purchase Agreement, but only to the extent that the Net
Proceeds therefrom have not been applied to repair, restore or replace such
property or asset within 270 days after the receipt of such Net Proceeds; or
(c) the issuance by the Company or any Subsidiary of any Equity
Interests, or the receipt by the Company or any Subsidiary of any capital
contribution, other than (i) any such issuance of Equity Interests to, or
receipt of any such capital contribution from, the Company or a Subsidiary and
(ii) stock options granted from time to time to
23
<PAGE>
employees of the Company or any Subsidiary and common stock of the Company
issued upon exercise thereof, in an aggregate amount not to exceed $15,000,000;
or
(d) the incurrence by the Company or any Subsidiary of any
Indebtedness, other than Indebtedness described in clauses (i) through (xii),
inclusive, of Section 6.01(a).
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"REGISTER" has the meaning set forth in Section 10.04.
"REGULATED ACTIVITY" means any generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Materials.
"RELATED FUND" means, with respect to any Lender (or proposed assignee
which becomes a Lender pursuant to Section 10.04(b)) that is a fund that invests
in bank loans, any other fund that invests in bank loans and is advised or
managed by the same investment advisor as such Lender, or by an Affiliate of
such Lender or investment advisor.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"RELEASE" means any discharge, emission or release, including a
"Release" as defined in CERCLA at 42 U.S.C. Section 9601(22). The term
"Released" shall have a corresponding meaning.
"REPLACEMENT SUBORDINATED INDEBTEDNESS" means Indebtedness of the
Company that (a)(i) requires no payment of principal to be made prior to May 15,
2007, (ii) has an interest rate not in excess of the lower of (x) the rate
applicable to the Subordinated Debt or (y) 4% over the rate applicable at the
time of issuance to U.S. Treasury securities with a similar maturity, (iii) is
in an aggregate principal amount not in excess of $200,000,000 and (iv) is
governed by provisions relating to subordination, covenants, events of default
and remedies which (x) are no more favorable, taken as whole, to the holders
thereof than the provisions set forth in the Subordinated Debt Documents, and
(y) in the case of the provisions relating to subordination, have been reviewed
and approved by the Administrative Agent, or (b) is on terms and conditions
approved in writing by the Required Lenders; PROVIDED that the proceeds of any
such
24
<PAGE>
Replacement Subordinated Indebtedness are used to refinance the Subordinated
Debt and/or other existing Replacement Subordinated Indebtedness.
"REQUIRED LENDERS" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing at least 51% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
"RESTRICTED PAYMENT" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any shares of any class
of capital stock of the Company or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such shares of capital stock of the Company
or any Subsidiary or any option, warrant or other right to acquire any such
shares of capital stock of the Company or any Subsidiary (including any payment
in respect of Equity Interests under a Synthetic Purchase Agreement).
"REVOLVING AVAILABILITY PERIOD" means the period from and including the
First Borrowing Date to but excluding the earlier of (x) the Revolving Maturity
Date and (y) the date of termination of the Revolving Commitments.
"REVOLVING COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01 under the
heading "REVOLVING COMMITMENT", or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Revolving Commitment, as applicable.
The initial aggregate amount of the Lenders' Revolving Commitments is
$100,000,000.
"REVOLVING EXPOSURE" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure at such time.
"REVOLVING LENDER" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
25
<PAGE>
"REVOLVING LOAN" means a Loan made pursuant to clause (c) of Section
2.01.
"REVOLVING MATURITY DATE" means November 12, 2005.
"SALE-LEASEBACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of any property that,
or of any property similar to and used for substantially the same purposes as
any other property that, has been or is to be sold, assigned, transferred or
otherwise disposed of by the Company or any of its Subsidiaries to such Person
with the intention of entering into such a lease.
"S&P" means Standard & Poor's.
"SECURITY DOCUMENTS" means the Collateral Agreement, the Mortgages, the
Collateral Agreement Supplements (as defined in the Collateral Agreement), the
Issuer Control Agreements (as defined in the Collateral Agreement), the
Securities Account Control Agreements (as defined in the Collateral Agreement),
the Intellectual Property Security Agreements (as defined in the Collateral
Agreement) and each other pledge agreement, security agreement, mortgage or
other instrument, agreement or other instrument or document executed and
delivered pursuant to the Loan Documents (including, without limitation, Section
5.12 or 5.13) to secure any of the Obligations.
"SELLER" means CONDEA Vista Company, a Delaware corporation.
"STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject, with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "EUROCURRENCY LIABILITIES" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"SUBORDINATED DEBT" means the 103/8% Senior Subordinated Notes due 2007
to be issued by the Company on or prior to the Effective Date in an aggregate
principal amount not less than $200,000,000 and the Indebtedness represented
thereby.
26
<PAGE>
"SUBORDINATED DEBT DOCUMENTS" means the indenture under which the
Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Debt or providing for any
Guarantee or other right in respect thereof.
"SUBORDINATION AGREEMENT" means the Subordination Agreement dated as of
November 12, 1999 between the Company and the Seller with respect to the Delayed
Purchase Price, substantially in the form of Exhibit F.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"SUBSIDIARY" means any subsidiary of the Company. For purposes of the
representations and warranties made herein on the Effective Date, the term
"SUBSIDIARY" includes any Subsidiary of the Seller that comprises part of the
Acquired Assets.
"SUBSIDIARY LOAN PARTY" means (a) each Eligible Subsidiary, (b) any
other Subsidiary (other than GGRC Corp.) that is not a Foreign Subsidiary and
(c) any Foreign Subsidiary that the Required Lenders have requested to become a
party to the Collateral Agreement, and "Subsidiary Loan Parties" means any two
or more of them.
"SYNTHETIC PURCHASE AGREEMENT" means any agreement pursuant to which
the Company or a Subsidiary is or may become obligated to make any payment (i)
in connection with the purchase by any third party of any Equity Interests,
Subordinated Debt or Replacement Subordinated Indebtedness or (ii) the amount of
which is determined by reference to the price or value at any time of any Equity
Interests, Subordinated Debt or Replacement Subordinated Indebtedness; PROVIDED
that no phantom stock or similar plan providing for payments only to current or
former directors, officers or employees of the Company or the Subsidiaries (or
to their heirs or estates) shall be deemed to be a Synthetic Purchase Agreement.
27
<PAGE>
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERMINATION DATE" means December 15, 1999.
"TERM LOANS" means Tranche A Term Loans and Tranche B Term Loans.
"TRANCHE A COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche A Term Loan hereunder on
the First Borrowing Date, expressed as an amount representing the maximum
principal amount of the Tranche A Term Loan to be made by such Lender hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.04. The initial amount of each Lender's
Tranche A Commitment is set forth on Schedule 2.01 under the heading "TRANCHE A
COMMITMENT", or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Tranche A Commitment, as applicable. The initial
aggregate amount of the Lenders' Tranche A Commitments is $225,000,000.
"TRANCHE A LENDER" means a Lender with a Tranche A Commitment or an
outstanding Tranche A Term Loan.
"TRANCHE A MATURITY DATE" means November 12, 2005.
"TRANCHE A TERM LOAN" means a Loan made pursuant to clause (a) of
Section 2.01.
"TRANCHE B BORROWING PREPAYMENT NOTICE" has the meaning set forth
in Section 2.10(h).
"TRANCHE B BORROWING UNSCHEDULED PREPAYMENT" has the meaning set
forth in Section 2.10(h).
"TRANCHE B COMMITMENT" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche B Term Loan hereunder on
the First Borrowing Date, expressed as an amount representing the maximum
principal amount of the Tranche B Term Loan to be made by such Lender hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.07
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 10.04. The initial amount of each Lender's
Tranche B Commitment is set forth on Schedule 2.01 under the heading "TRANCHE B
COMMITMENT", or in the Assignment and Acceptance pursuant to which such Lender
28
<PAGE>
shall have assumed its Tranche B Commitment, as applicable. The initial
aggregate amount of the Lenders' Tranche B Commitments is $200,000,000.
"TRANCHE B LENDER" means a Lender with a Tranche B Commitment or an
outstanding Tranche B Term Loan.
"TRANCHE B MATURITY DATE" means November 12, 2006.
"TRANCHE B TERM LOAN" means a Loan made pursuant to clause (b) of
Section 2.01.
"TRANSACTIONS" means the Acquisition and the Financing Transactions.
"TYPE", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"UNSCHEDULED PREPAYMENT DATE" has the meaning set forth in Section
2.10(h).
"VINYLS" means Georgia Gulf Chemicals & Vinyls, LLC, a Delaware limited
liability company and a wholly owned Subsidiary of the Company.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of
this Agreement, Loans may be classified and referred to by Class (E.G., a
"REVOLVING LOAN") or by Type (E.G., a "EURODOLLAR LOAN") or by Class and Type
(E.G., a "EURODOLLAR REVOLVING LOAN"). Borrowings also may be classified and
referred to by Class (E.G., a "Revolving Borrowing") or by Type (E.G., a
"Eurodollar Borrowing") or by Class and Type (E.G., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time
29
<PAGE>
to time amended, supplemented or otherwise modified (subject to any restrictions
on such amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person's
successors and assigns, (c) the words "herein", "hereof" and "hereunder", and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e)
the words "asset" and "property" shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
SECTION 1.04. ACCOUNTING TERMS; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; PROVIDED
that, if the Company notifies the Administrative Agent that the Company requests
an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the Company
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE 2
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set
forth herein, each Lender agrees (a) to make Tranche A Term Loans to the
Borrowers on the First Borrowing Date in an aggregate principal amount not
exceeding its Tranche A Commitment, (b) to make Tranche B Term Loans to the
Borrowers on the First Borrowing Date in an aggregate principal amount not
exceeding its Tranche B Commitment and (c) to make Revolving Loans to the
Borrowers from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender's Revolving
Exposure exceeding such Lender's Revolving Commitment (and in the case of any
such Revolving Loans made on the First Borrowing Date, in an aggregate principal
amount for all Lenders not to exceed $30,000,000). Within the foregoing limits
and subject to the terms and conditions set forth herein, any Borrower may
borrow, prepay and reborrow Revolving Loans. Amounts repaid in respect of Term
Loans may not be reborrowed.
30
<PAGE>
SECTION 2.02. LOANS AND BORROWINGS. (a) Each Loan shall be made as part
of a Borrowing consisting of Loans of the same Class and Type made by the
Lenders ratably in accordance with their respective Commitments of the
applicable Class. The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; PROVIDED
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.13, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
relevant Borrower may request in accordance herewith. Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; PROVIDED that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $2,000,000; PROVIDED that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type and Class may be outstanding at the
same time; PROVIDED that there shall not at any time be more than a total of ten
Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, Tranche A Maturity Date or Tranche B Maturity
Date, as applicable.
SECTION 2.03. REQUESTS FOR BORROWINGS. To request a Revolving Borrowing
or Term Borrowing, the relevant Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
10:00 a.m., New York City time, on the date of the proposed Borrowing; PROVIDED
that any such notice of an ABR Revolving Borrowing to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.04(e) may be given not later
than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or
31
<PAGE>
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the relevant Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing,
Tranche A Term Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an Eurodollar Borrowing with an Interest Period of one
month's duration. If no Interest Period is specified with respect to any
requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms and
conditions set forth herein, any Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by a
Borrower to, or entered into by a Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
32
<PAGE>
(b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
CONDITIONS. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the relevant Borrower
shall hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the relevant
Borrower also shall submit a letter of credit application on the Issuing Bank's
standard form in connection with any request for a Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the relevant Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed
$30,000,000 and (ii) the total Revolving Exposures shall not exceed the total
Revolving Commitments.
(c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or
33
<PAGE>
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
(e) REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the relevant Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrower shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; PROVIDED that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 that such payment be financed with an
ABR Revolving Borrowing in an equivalent amount and, to the extent so financed,
the Borrower's obligation to make such payment shall be discharged and replaced
by the resulting ABR Revolving Borrowing. If the Borrower fails to make such
payment when due, the Administrative Agent shall notify each Revolving Lender of
the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender's Applicable Percentage thereof. Promptly
following receipt of such notice, each Revolving Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Borrower, in the same manner as provided in Section 2.05 with respect to Loans
made by such Lender (and Section 2.05 shall apply, MUTATIS MUTANDIS, to the
payment obligations of the Revolving Lenders), and the Administrative Agent
shall promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse the
Issuing Bank, then to such Lenders and the Issuing Bank as their interests may
appear. Any payment made by a Revolving Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans as contemplated above) shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such LC Disbursement.
(f) OBLIGATIONS ABSOLUTE. Each Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
34
<PAGE>
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, such Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of any Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; PROVIDED that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by each Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the relevant Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether the Issuing Bank
has made or will make an
35
<PAGE>
LC Disbursement thereunder; PROVIDED that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.
(h) INTERIM INTEREST. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
PROVIDED that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be replaced
at any time by written agreement among the Company, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Bank. At
the time any such replacement shall become effective, the Company shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) CASH COLLATERALIZATION. If any Event of Default shall occur and be
continuing, on the Business Day that any Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing at least
51% of the total LC Exposure) demanding the deposit of cash collateral pursuant
to this paragraph, such Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; PROVIDED that the obligation
to deposit such cash collateral shall become effective
36
<PAGE>
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to any Borrower described in clause (h) or (i) of Article 7. Each
such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrowers under this
Agreement. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrowers' risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing at least 51% of the total LC
Exposure), be applied to satisfy other obligations of the Borrowers under this
Agreement. If any Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to such Borrower promptly
(and in any event within three Business Days) after all Events of Default have
been cured or waived.
SECTION 2.05. FUNDING OF BORROWINGS. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
PROVIDED that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.04(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with
37
<PAGE>
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. INTEREST ELECTIONS. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the relevant
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the relevant Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
38
<PAGE>
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Company then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as a
Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
SECTION 2.07. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless
previously terminated, (i) the Tranche A Commitments and Tranche B Commitments
shall terminate at 5:00 p.m., New York City time, on the earlier of (x) the
First Borrowing Date and (y) the Termination Date and (ii) the Revolving
Commitments shall terminate on the Business Day immediately preceding the
Revolving Maturity Date.
39
<PAGE>
(b) The initial aggregate amount of the Lenders' Tranche B Commitment
shall be reduced by an amount equal to the excess of (i) the aggregate Net
Proceeds from the issuance of the Subordinated Debt over (ii) $200,000,000. Any
such reduction of the Tranche B Commitments shall be made ratably among the
Tranche B Lenders in accordance with their respective Tranche B Commitments.
(c) The Company may at any time terminate, or from time to time
reduce, the Commitments of any Class; PROVIDED that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Company shall not terminate
or reduce the Revolving Commitments if, after giving effect to any concurrent
prepayment of the Revolving Loans in accordance with Section 2.10, the sum of
the Revolving Exposures would exceed the total Revolving Commitments.
(d) The Company shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (c) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Company pursuant
to this Section shall be irrevocable; PROVIDED that a notice of termination of
the Revolving Commitments delivered by the Company may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Company (by notice to the Administrative Agent
on or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among the
Lenders in accordance with their respective Commitments of such Class.
SECTION 2.08. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) Each Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the then unpaid principal amount of each Revolving
Loan made to it by such Lender on the Revolving Maturity Date and (ii) the then
unpaid principal amount of each Term Loan made to it by such Lender as provided
in Section 2.09.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of each Borrower to such
Lender resulting from each Loan made to such Borrower by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the
40
<PAGE>
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be PRIMA FACIE evidence of the existence and
amounts of the obligations recorded therein; PROVIDED that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of any Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by such Lender
to any Borrower be evidenced by a promissory note of such Borrower. In such
event, each relevant Borrower shall prepare, execute and deliver to such Lender
a promissory note payable to the order of such Lender (or, if requested by such
Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 10.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).
SECTION 2.09. AMORTIZATION OF TERM LOANS. (a) Subject to adjustment
pursuant to paragraph (d) of this Section, on each date set forth below, each
Borrower shall repay its ratable share of an aggregate principal amount of the
Tranche A Term Borrowings equal to the amount set forth below opposite such
date:
<TABLE>
<CAPTION>
DATE AMOUNT
<S> <C>
March 31, 2000 $ 5,000,000
June 30, 2000 $ 5,000,000
September 30, 2000 $ 5,000,000
December 31, 2000 $ 5,000,000
March 31, 2001 $ 5,000,000
June 30, 2001 $ 5,000,000
September 30, 2001 $ 5,000,000
December 31, 2001 $ 5,000,000
March 31, 2002 $ 10,000,000
June 30, 2002 $ 10,000,000
September 30, 2002 $ 10,000,000
December 31, 2002 $ 10,000,000
March 31, 2003 $ 11,250,000
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
DATE AMOUNT
<S> <C>
June 30, 2003 $ 11,250,000
September 30, 2003 $ 11,250,000
December 31, 2003 $ 11,250,000
March 31, 2004 $ 12,500,000
June 30, 2004 $ 12,500,000
September 30, 2004 $ 12,500,000
December 31, 2004 $ 12,500,000
March 31, 2005 $ 12,500,000
June 30, 2005 $ 12,500,000
September 30, 2005 $ 12,500,000
Tranche A Maturity Date $ 12,500,000
</TABLE>
(b) Subject to adjustment pursuant to paragraph (d) of this Section,
on each date set forth below, each Borrower shall repay its ratable share of an
aggregate principal amount of the Tranche B Term Borrowings equal to the amount
set forth below opposite such date:
<TABLE>
<CAPTION>
DATE AMOUNT
<S> <C>
March 31, 2000 $ 500,000
June 30, 2000 $ 500,000
September 30, 2000 $ 500,000
December 31, 2000 $ 500,000
March 31, 2001 $ 500,000
June 30, 2001 $ 500,000
September 30, 2001 $ 500,000
December 31, 2001 $ 500,000
March 31, 2002 $ 500,000
June 30, 2002 $ 500,000
September 30, 2002 $ 500,000
December 31, 2002 $ 500,000
March 31, 2003 $ 500,000
June 30, 2003 $ 500,000
September 30, 2003 $ 500,000
December 31, 2003 $ 500,000
March 31, 2004 $ 500,000
June 30, 2004 $ 500,000
September 30, 2004 $ 500,000
December 31, 2004 $ 500,000
March 31, 2005 $ 500,000
June 30, 2005 $ 500,000
September 30, 2005 $ 500,000
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
DATE AMOUNT
<S> <C>
December 31, 2005 $ 500,000
March 31, 2006 $ 47,000,000
June 30, 2006 $ 47,000,000
September 30, 2006 $ 47,000,000
Tranche B Maturity Date $ 47,000,000
</TABLE>
(c) To the extent not previously paid, (i) all Tranche A Term Loans
shall be due and payable on the Tranche A Maturity Date and (ii) all Tranche B
Term Loans shall be due and payable on the Tranche B Maturity Date.
(d) Any mandatory or optional prepayment of a Term Borrowing of either
Class shall be applied to reduce ratably the subsequent scheduled repayments of
the Term Borrowings of such Class to be made pursuant to this Section. If the
initial aggregate amount of the Lenders' Term Commitments of either Class
exceeds the aggregate principal amount of Term Loans of such Class that are made
on the First Borrowing Date, then the scheduled repayments of Term Borrowings of
such Class to be made pursuant to this Section shall be reduced ratably by an
aggregate amount equal to such excess.
(e) Prior to any repayment of any Term Borrowings of either Class
hereunder, the Company shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment; PROVIDED that each repayment of Term Borrowings of either Class shall
be applied to repay any outstanding ABR Term Borrowings of such Class before any
other Borrowings of such Class. Each repayment of a Borrowing shall be applied
ratably to the Loans included in the repaid Borrowing. Repayments of Term
Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.10. PREPAYMENT OF LOANS. (a) The Borrowers shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Company or any Subsidiary in respect of any
Prepayment Event, the Borrowers shall, within three Business Days after such Net
Proceeds are received, prepay Borrowings in an aggregate amount equal to such
Net Proceeds (or, in the case of any event described in clause (c) of the
definition of the term Prepayment Event, 50% of such Net Proceeds).
43
<PAGE>
(c) Following the end of each fiscal year of the Company, commencing
with the fiscal year ending December 31, 2000, the Borrowers shall prepay
Borrowings in an aggregate amount equal to 75% of Excess Cash Flow for such
fiscal year; PROVIDED that if, on the last day of such fiscal year, the Leverage
Ratio is less than or equal to 3.5 to 1.0, the Borrowers shall prepay Borrowings
in an aggregate amount equal to 50% of Excess Cash Flow for such fiscal year.
Each prepayment pursuant to this paragraph shall be made on or before the date
on which financial statements are delivered pursuant to Section 5.01 with
respect to the fiscal year for which Excess Cash Flow is being calculated (and
in any event within 90 days after the end of such fiscal year).
(d) The amount of any mandatory prepayment of Borrowings pursuant to
paragraph (b) or (c) of this Section shall be applied, FIRST, to prepay Term
Borrowings (in accordance with paragraph (g) and subject to paragraph (h) of
this Section) until all Term Borrowings have been repaid in full and, SECOND, to
reduce Revolving Commitments.
(e) If, on the date of any reduction of the Revolving Commitments
pursuant to paragraph (d) of this Section, the sum of the Revolving Exposures on
such date exceeds the total Revolving Commitments on such date as then reduced
(or if the Revolving Commitments have terminated but there are still Revolving
Exposures), the Borrowers shall apply an amount equal to such excess, FIRST, to
prepay the Revolving Borrowings until all such Revolving Borrowings have been
repaid in full and, SECOND, to deposit cash collateral in an account with the
Administrative Agent in accordance with Section 2.04(j), so that after giving
effect thereto the Revolving Exposures of each Lender do not exceed its
Revolving Commitment as then reduced (or until there are no Revolving
Exposures). In determining Revolving Exposures for purposes of this clause, LC
Exposure shall be reduced to the extent that Letters of Credit have been cash
collateralized as contemplated by the previous sentence.
(f) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Company shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (g) of this Section; PROVIDED that each prepayment of Borrowings of
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class. In the event of any optional or mandatory
prepayment of Term Borrowings made at a time when Term Borrowings of both
Classes remain outstanding, the Company shall select Term Borrowings to be
prepaid so that the aggregate amount of such prepayment is allocated between the
Tranche A Term Borrowings and Tranche B Term Borrowings pro rata based on the
aggregate principal amount of outstanding Borrowings of each such Class;
PROVIDED that so long as any Tranche A Term Borrowings are outstanding, any such
prepayment of Term Borrowings shall be subject to the right of the Tranche B
Lenders to decline such prepayment in accordance with paragraph (h) of this
Section.
44
<PAGE>
The amount of any mandatory or optional prepayment of Term Borrowings hereunder
shall be applied to reduce pro rata the amount of the subsequent scheduled
repayments of such Term Borrowings pursuant to paragraph (a) or (b) of Section
2.09, as the case may be (subject to the right of the Tranche B Lenders to
decline such prepayment until the Tranche A Term Borrowings have been repaid in
full in accordance with paragraph (h) of this Section).
(g) The Company shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder not later than 11:00 a.m.,
New York City time, three Business Days before the date of prepayment. Each such
notice shall be irrevocable and shall specify the prepayment date, the principal
amount of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment; PROVIDED that, if a notice of optional prepayment is given in
connection with a conditional notice of termination of the Revolving Commitments
as contemplated by Section 2.07, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.07.
Promptly following receipt of any such notice, the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.12.
(h) So long as any Tranche A Term Borrowings are outstanding, each
mandatory and optional prepayment of the Tranche B Term Borrowings shall be
subject to the following clauses (i) through (iii):
(i) At least three Business Days prior to any date (an "UNSCHEDULED
PREPAYMENT DATE") on which any mandatory or optional prepayment of the
Tranche B Term Borrowings (a "TRANCHE B BORROWING UNSCHEDULED
PREPAYMENT") would, but for the provisions of this paragraph (h),
otherwise be made pursuant to this Section 2.10, the Company shall
deliver a notice (a "COMPANY TRANCHE B PREPAYMENT NOTICE") to the
Administrative Agent, which notice shall (x) indicate the intention of
the Company (or the relevant Borrower, if other than the Company) to
make a Tranche B Borrowing Unscheduled Prepayment, (y) the amount of
such Tranche B Borrowing Unscheduled Prepayment and (z) contain an offer
to prepay on a specified date (each such date, a "DEFERRED TRANCHE B
UNSCHEDULED PREPAYMENT DATE"), which shall be the tenth Business Day
after the date of the Company Tranche B Prepayment Notice, the Tranche B
Term Loans of each Tranche B Lender by
45
<PAGE>
an aggregate principal amount equal to such Tranche B Lender's
ratable share of such Tranche B Borrowing Unscheduled Prepayment
(determined by reference to the outstanding principal amount of such
Lender's Tranche B Term Loans as a proportion of the aggregate
outstanding principal amount of the Tranche B Term Loans of all of the
Tranche B Lenders). Each such Company Tranche B Prepayment Notice shall
be given by telecopy, confirmed hand delivery or overnight courier
service, in each case addressed to the Administrative Agent as provided
in Section 10.01. Upon receipt of any Company Tranche B Prepayment
Notice, the Administrative Agent shall promptly deliver a notice
conforming to the requirements of paragraph (h)(ii) (a "TRANCHE B
BORROWING PREPAYMENT NOTICE") to each Tranche B Lender, and such Tranche
B Borrowing Unscheduled Prepayment shall not occur on such Unscheduled
Prepayment Date, but shall instead be deferred as provided in subclause
(z) of this Section 2.10(h)(i);
(ii) Each Tranche B Borrowing Prepayment Notice shall be in writing,
shall refer to this Section 2.10 and shall (w) notify each Tranche B
Lenders of the contents and the date of the Company Tranche B Prepayment
Notice, (x) set forth the prepayment amount that the applicable Tranche
B Lender will be entitled to receive if it accepts prepayment of its
Tranche B Term Loans in accordance with this paragraph, (y) request such
Tranche B Lender to notify the Company, each relevant Borrower (if other
than the Company) and the Administrative Agent in writing, no later than
the third Business Day prior to the Deferred Tranche B Unscheduled
Prepayment Date, of such Tranche B Lender's acceptance or rejection (in
each case, in whole and not in part) of such offer of prepayment and (z)
inform such Tranche B Lender that the failure by such Tranche B Lender
to reject such offer in writing on or before the third Business Day
prior to such Deferred Tranche B Unscheduled Prepayment Date shall be
deemed an acceptance of such prepayment offer;
(iii) On each Deferred Tranche B Unscheduled Prepayment Date, each
relevant Borrower shall pay to the Administrative Agent an amount equal
to the amount that would otherwise have been payable by such Borrower
pursuant to paragraph (a), (b) or (c) of this Section on the related
Unscheduled Prepayment Date but for the provisions of this paragraph
(h). Of such amount, the Administrative Agent shall apply to the
prepayment of the outstanding Tranche B Term Loans of each of the
Tranche B Lenders that shall have accepted (or been deemed to have
accepted) prepayment (each, an "ACCEPTING TRANCHE B LENDER") its ratable
share (allocated pro rata among all Term Loan-B Lenders based on the
aggregate outstanding principal amount of the Tranche B Term Loans of
all of the Tranche B Lenders) of the amount so
46
<PAGE>
paid by the Borrowers, and shall apply the balance of the amount so paid
by the Borrowers to the ratable prepayment of the then outstanding
Tranche A Term Loans.
SECTION 2.11. FEES. (a) The Company agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee, which shall accrue at the
Applicable Rate on the average daily unused amount of each Commitment of such
Lender during the period from and including the date of this Agreement to but
excluding the date on which such Commitment terminates. Accrued commitment fees
shall be payable in arrears (i) in the case of commitment fees in respect of the
Revolving Commitments, on the last day of March, June, September and December of
each year and on the date on which the Revolving Commitments terminate,
commencing on the first such date to occur after the date hereof, and (ii) in
the case of commitment fees in respect of the Tranche A Term Commitments and
Tranche B Term Commitments, on the earlier of the First Borrowing Date and the
Termination Date or any earlier date on which such Commitments terminate. All
commitment fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). For purposes of computing commitment fees with respect
to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to
be used to the extent of the outstanding Revolving Loans and LC Exposure of such
Lender.
(b) The Company agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate or rates per annum separately agreed upon between the Company and
the Issuing Bank on the average daily amount of the LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period
from and including the Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank's standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date; PROVIDED
that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing
47
<PAGE>
after the date on which the Revolving Commitments terminate shall be payable on
demand. Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation fees and
fronting fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) The Company agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Company and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.12. INTEREST. (a) The Loans comprising each ABR Borrowing
shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by any Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; PROVIDED that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
48
<PAGE>
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.13. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their
Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Company and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Company and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.14. INCREASED COSTS. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
49
<PAGE>
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Company will pay(or cause the relevant Borrowers to pay) to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender's or the Issuing Bank's capital or on the capital
of such Lender's or the Issuing Bank's holding company, if any, as a consequence
of this Agreement or the Loans made by, or participations in Letters of Credit
held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time the Company will pay (or cause the
relevant Borrowers to pay) to such Lender or the Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Company and shall be conclusive absent
manifest error, PROVIDED that the determination of such amount or amounts is
made on a reasonable basis. The Company shall pay (or cause to be paid) to such
Lender or the Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; PROVIDED
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 90 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; PROVIDED
50
<PAGE>
FURTHER that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 90-day period referred to above shall be
extended to include the period of retroactive effect thereof.
SECTION 2.15. BREAK FUNDING PAYMENTS. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Revolving Loan or Term Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.10(g) and is revoked in accordance therewith), or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Company pursuant to
Section 2.18, then, in any such event, the relevant Borrower shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would
have been applicable to such Loan, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the relevant Borrower and shall be conclusive absent manifest error. The
relevant Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
SECTION 2.16. TAXES. (a) Any and all payments by or on account of any
obligation of any Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; PROVIDED that if any Borrower shall be required to deduct any Indemnified
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Borrower shall make such deductions and (iii) such Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
51
<PAGE>
(b) In addition, each Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The relevant Borrower shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of such Borrower
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the relevant Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by a Borrower to a Governmental Authority, such Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) To the extent permitted by then applicable law, any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Company is located, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Company (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Company as will permit such payments to be made without withholding or at a
reduced rate.
SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS. (a) Each Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.14,
2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative
52
<PAGE>
Agent at its offices at One Chase Manhattan Plaza, 8th Floor, New York, New York
10081, except payments to be made directly to the Issuing Bank as expressly
provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16
and 10.03 shall be made directly to the Persons entitled thereto and payments
pursuant to other Loan Documents shall be made to the Persons specified therein.
The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate principal of and interest then due on its Revolving Loans or
Term Loans made to any Borrower, or participations in LC Disbursements on behalf
of such Borrower, than the proportion received by any other Lender in respect of
the aggregate amount of principal and interest then due with respect to the
Revolving Loans, Term Loans and participations in LC Disbursements to the same
Borrower held by such Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Revolving Loans,
Term Loans and participations in LC Disbursements of such Borrower held by other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Revolving Loans and Term
Loans made to such Borrower and participations in LC Disbursements on behalf
such Borrower; PROVIDED that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by a Borrower pursuant to
and in accordance with the express terms of
53
<PAGE>
this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Company or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from a
Borrower prior to the date on which any payment is due from such Borrower to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that such Borrower will not make such payment, the Administrative
Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if such Borrower has not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(d) or (e), 2.05(b), 2.17(d) or 10.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid.
SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If
any Lender requests compensation under Section 2.14, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16, then such
Lender shall, at the request of the Company, use reasonable efforts to designate
a different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.14 or 2.16, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
54
<PAGE>
disadvantageous to such Lender as determined by such Lender in its sole
discretion. The Company hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.14, or if any
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee (x) shall be
selected by the Company and (y) may be another Lender, if a Lender accepts such
assignment); PROVIDED that (i) the Company shall have received the prior written
consent of the Administrative Agent (and, if a Revolving Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Company (in
the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.14 or payments required
to be made pursuant to Section 2.16, such assignment will result in a material
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Company to
require such assignment and delegation cease to apply.
SECTION 2.19. TERMINATION OF DESIGNATION OF ELIGIBLE SUBSIDIARY AS A
BORROWER. The Company may at any time terminate the status of any Subsidiary as
an Eligible Subsidiary for purposes of this Agreement by delivering to the
Administrative Agent an Election to Terminate duly executed on behalf of such
Subsidiary and the Company in such number of copies as the Administrative Agent
may request. The delivery of such an Election to Terminate shall not affect any
obligation of such Subsidiary theretofore incurred under this Agreement or the
other Loan Documents or any rights of the Lenders and the Administrative Agent
against such Subsidiary or against the Company in its capacity as guarantor of
the obligations of such Subsidiary. The Administrative Agent shall promptly
notify the Lenders of its receipt of any Election to Terminate.
55
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION; POWERS. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate or
limited liability company powers and have been duly authorized by all necessary
corporate or limited liability company and, if required, stockholder action.
This Agreement has been duly executed and delivered by each Borrower and
constitutes, and each other Loan Document to which any Loan Party is to be a
party, when executed and delivered by such Loan Party, will constitute, a legal,
valid and binding obligation of such Borrower or such Loan Party (as the case
may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Company or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture (including, without limitation, the Existing Indenture and the
Subordinated Debt Documents), agreement or other instrument binding upon the
Company or any of its Subsidiaries or its assets, or give rise to a right
thereunder to require any payment to be made by the Company or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries, except Liens created
under the Loan Documents.
SECTION 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a) The
Company has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders' equity and cash flows (i) as of and for
the
56
<PAGE>
fiscal years ended December 31, 1997 and December 31, 1998, reported on by
Arthur Andersen, LLP, independent public accountants, and (ii) as of and for the
fiscal quarters and each portion of the fiscal year ended March 31, 1999 and
June 30, 1999, in each case certified by a Financial Officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Company and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to normal year-end audit adjustments and the absence of footnotes in the
case of the statements referred to in clause (ii) above.
(b) The Company has heretofore furnished to the Lenders its pro forma
consolidated income statement and balance sheet as of September 30, 1999,
prepared giving effect to the Transactions as if the Transactions had occurred
on such date. Such pro forma consolidated income statement and balance sheet (i)
have been prepared in good faith based on the same assumptions used to prepare
the pro forma financial statements included in the Information Memorandum (which
assumptions are believed by the Company to be reasonable), (ii) is based on the
best information available to the Company after due inquiry, (iii) accurately
reflects all adjustments necessary to give effect to the Transactions and (iv)
presents fairly, in all material respects, the pro forma financial position of
the Company and its consolidated Subsidiaries as of September 30, 1999 as if the
Transactions had occurred on such date.
(c) The Company has heretofore furnished to the Lenders a consolidated
balance sheet and statements of income, stockholder's equity and cash flows of
the Acquired Assets for the fiscal year ended June 30, 1999, reported on by
PricewaterhouseCoopers, LLP, independent public accountants. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Acquired Assets as of such date in
accordance with GAAP, and are consistent in all material respects with the
forecasts and other information previously provided to the Lenders.
(d) Except as disclosed in the financial statements referred to above
or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of the Company
or its Subsidiaries has, as of the Effective Date, any material contingent
liabilities, long-term commitments outside the ordinary course of business or
material unrealized losses.
(e) Since December 31, 1998, there has been no Material Adverse
Change.
SECTION 3.05. PROPERTIES. (a) Each of the Company and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business (including its Mortgaged Properties), except
for minor defects in title that do
57
<PAGE>
not interfere with its ability to conduct its business as currently conducted or
to utilize such properties for their intended purposes.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Company and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.
(c) Schedule 3.05 sets forth the address of each parcel real property
that is owned or leased by the Company or any of its Subsidiaries as of the
Effective Date after giving effect to the Transactions, and on which the Company
or any of its Subsidiaries conducts a material amount of business or maintains
any material assets.
(d) As of the Effective Date, neither the Company nor any of its
Subsidiaries has received notice of, or has knowledge of, any pending or
contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein.
SECTION 3.06. LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Change (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.
(b) The Company and each of its Subsidiaries have obtained all permits,
certificates, licenses, approvals, registrations and other authorizations which
are required under all applicable Environmental Laws, except to the extent
failure to have any such permit, certificate, license, approval, registration or
authorization could not reasonably be expected to result in a Material Adverse
Change. The Company and each of its Subsidiaries are in compliance with the
terms and conditions of all such permits, certificates, licenses, approvals,
registrations and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any notice or demand letter from any regulatory authority
58
<PAGE>
issued, entered, promulgated or approved thereunder, except to the extent
failure to comply could not reasonably be expected to result in a Material
Adverse Change.
(c) Except for such matters, individually or in the aggregate, which
could not reasonably be expected to exceed $10,000,000 in liability to the
Company or any Subsidiary (after taking into consideration the existence of any
viable indemnification provided by any third party to the Company or any
Subsidiary),
(i) No notice, notification, demand, request for information,
citation, summons or order has been issued and remains pending, no
complaint has been filed and remains pending, no penalty has been
assessed which remains outstanding and, to the best knowledge of the
Company after due inquiry, no investigation or review is pending or
threatened by any governmental entity or other Person with respect to
(1) any alleged failure by the Company or any of its Subsidiaries to
have any environmental permit, certificate, license, approval,
registration or authorization required in connection with the conduct
of the business of the Company or any of its Subsidiaries, (2) any
alleged failure by the Company or any of its Subsidiaries to comply in
all material respects with the terms and conditions of any such permit,
certificate, license, approval, registration or authorization or of any
other limitation, restriction, condition, standard, prohibition,
requirement, obligation, schedule or timetable contained in any
applicable Environmental Law, (3) any Regulated Activity or (4) any
Release of any Hazardous Materials;
(ii) Neither the Company nor its Subsidiaries nor the
businesses conducted by such Persons nor, to the best knowledge of
the Company or any of its Subsidiaries after due inquiry, any other
Person, other than in compliance with applicable Environmental Laws,
has disposed of or placed, held, located or otherwise handled, any
Hazardous Materials on, under or at any property now or previously
owned, operated or leased by the Company or any of its Subsidiaries,
and none of such properties has been used (whether by the Company or
any of its Subsidiaries or, to the best knowledge of the Company or
any of its Subsidiaries after due inquiry, by any other Person) as a
dump site or storage (whether permanent or temporary) site for any
Hazardous Materials; and
(A) no polychlorinated biphenyls (PCBs), radioactive
material, urea formaldehyde or lead is nor in the prior five
years has been present at any property now or previously
owned, operated or leased by the Company or any of its
Subsidiaries, other than lead used in the manufacture of
certain products which is handled in compliance with law;
59
<PAGE>
(B) no asbestos is or has been present in airborne or
friable form at any property now or previously owned, operated
or leased by the Company or any of its Subsidiaries, and there
has been no asbestos present at previously owned or leased
properties which was not addressed in compliance with
applicable laws;
(C) there are no underground storage tanks, active or
abandoned for which the Company is legally responsible, which
have been used to store or which otherwise contain or have
contained any Hazardous Materials at any property now or
previously owned, operated or leased by the Company or any of
its Subsidiaries; and
(D) no Hazardous Materials have been Released in a
reportable quantity or are present at, on or under any
property now or previously owned, operated or leased by the
Company or any of its Subsidiaries.
(iii) None of the Company, any of its Subsidiaries, or any
of the businesses conducted by such Persons has transported or
arranged for the transportation (directly or indirectly) of any
Hazardous Materials to any location which is listed or, to the
knowledge of the Company, proposed for listing on the National
Priorities List promulgated pursuant to CERCLA ("NPL"), or the
Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") or on any similar federal, state,
foreign or local list or which is the subject of federal, state,
foreign or local enforcement actions or, to the best knowledge of
the Company after due inquiry, other investigations which may lead
to claims against the Company or any of its Subsidiaries for
clean-up costs, remedial work, damages to natural resources or for
personal injury claims, including, but not limited to, claims under
CERCLA;
(iv) All oral or written notifications of a Release of
Hazardous Materials required to be filed under any applicable
Environmental Law have been filed by or on behalf of the Company and
its Subsidiaries and no such Release would result in a liability of
the Company or any Subsidiary of the Company, and no property now or
previously owned, operated or leased by the Company or any of its
Subsidiaries is listed or, to the knowledge of the Company or any of
its Subsidiaries after due inquiry, proposed for listing, on the NPL
or on CERCLIS or any similar federal, state, foreign or local list
of sites requiring investigation or clean-up which may lead to
claims for clean-up
60
<PAGE>
costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA;
(v) No Hazardous Materials generated by the Company or any of
its Subsidiaries have been stored, recycled, treated or Released,
except in compliance with applicable Environmental Laws or as reported
under applicable Environmental Laws, or disposed of by the Company or
any of its Subsidiaries at any location;
(vi) There are no Liens arising under or pursuant to any
applicable Environmental Laws on property now owned, operated or leased
by the Company or any of its Subsidiaries, and no actions by any
governmental entity have been taken or are in process which could
subject any of such properties to such Liens, and no notice or
restriction relating to the presence of any Hazardous Materials at any
such property is required to be placed in any deed to such property;
and
(vii) There are no existing liabilities or potential
liabilities of the Company or any Subsidiary arising out of or relating
to Environmental Laws. The Company conducts and has conducted all such
environmental investigations, studies, audits, tests, reviews or other
analyses in relation to all properties and facilities now or previously
owned, operated or leased by the Company or any of its Subsidiaries
which are required under applicable Environmental Laws and maintains
such records and reports for the time periods prescribed under
applicable Environmental Laws.
(d) For purposes of subsection (c), representations given with respect
to the Company and its Subsidiaries shall be deemed given also with respect to
any matters which could result in Environmental Liabilities, to the extent
successor liability could be imposed on the Company or any of its Subsidiaries.
(e) The Seller has met in all material respects all of its obligations
under the Asset Purchase Agreement and the Site Access Cooperation and Remedial
Control Agreement dated as of August 30, 1999 between the Seller and the
Company, to indemnify, perform, reimburse, pay or otherwise fully comply with
the terms of such agreement, and neither the Company nor any Subsidiary has any
reasonable expectation that there will be a cessation or refusal of such
indemnification, performance, reimbursement or payment by such indemnifying
party in any material respect.
SECTION 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Company and its Subsidiaries is in compliance with all laws, regulations and
orders of
61
<PAGE>
any Governmental Authority applicable to it or its property and all indentures
(including, without limitation, the Existing Indenture and the Subordinated Debt
Documents), agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change. No Default has
occurred and is continuing.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither the
Company nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. TAXES. Each of the Company and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which the Company or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Change.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Change. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and there are no underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87).
SECTION 3.11. DISCLOSURE. The Company has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the Company
or any of its Subsidiaries is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Change. Neither the Information Memorandum nor any
of the other reports, financial statements, certificates or other information
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender in connection with the negotiation of this Agreement or any other Loan
Document or delivered hereunder or thereunder (as modified or supplemented by
other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, taken
as a whole, in the light of the circumstances under which they were made, not
misleading; PROVIDED that, with respect to projected financial
62
<PAGE>
information, the Company represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.12. SUBSIDIARIES. Schedule 3.12 sets forth the name of, and
the ownership interest of the Company in, each Subsidiary of the Company and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of
the Effective Date.
SECTION 3.13. INSURANCE. The Company and its Subsidiaries have paid
all premiums due in respect of all insurance maintained by or on behalf of the
Company and its Subsidiaries as of the Effective Date. The Company believes
that such insurance is adequate.
SECTION 3.14. LABOR MATTERS. As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Company or any Subsidiary pending or,
to the knowledge of the Company, threatened. The hours worked by and payments
made to employees of the Company and the Subsidiaries have not been in violation
of the Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from the Company or any
Subsidiary, or for which any claim may be made against the Company or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Company or such Subsidiary. The consummation of the Transactions will not give
rise to any right of termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which the Company or any
Subsidiary is bound.
SECTION 3.15. SOLVENCY. Immediately after the consummation of the
Transactions to occur on the Effective Date and, if later, the First Borrowing
Date, and immediately following the making of each Loan made on the Effective
Date or the First Borrowing Date and after giving effect to the application of
the proceeds of such Loans, (i) the fair value of the assets of each Loan Party,
at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the property of
each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured;
(iii) each Loan Party will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) each Loan Party will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following such date.
SECTION 3.16. SENIOR INDEBTEDNESS. The Obligations of the Company
constitute "Senior Indebtedness" and "Designated Senior Indebtedness", and the
63
<PAGE>
Obligations of each Subsidiary Loan Party constitute "Guarantor Senior
Indebtedness" and "Designated Guarantor Senior Indebtedness", in each case under
and as defined in (a) the Subordinated Debt Documents and (b) the documents
under which any Replacement Subordinated Indebtedness has been issued.
SECTION 3.17. YEAR 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the computer systems
of the Company and its Subsidiaries and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Company's systems interface) and the testing of all such systems and equipment,
as so reprogrammed, will be substantially completed by November 30, 1999. The
cost to the Company and its Subsidiaries of such reprogramming and testing and
of the reasonably foreseeable consequences of year 2000 to the Company and its
Subsidiaries (including reprogramming errors and the failure of others' systems
or equipment) will not result in a Default or a Material Adverse Change. Except
for such of the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Company and
its Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Company
to conduct its businesses without Material Adverse Change.
SECTION 3.18. REGULATIONS U AND X. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Borrowing
hereunder will be used to purchase or carry any such margin stock.
SECTION 3.19. NO BURDENSOME RESTRICTIONS. Except for the Disclosed
Matters, no contract, lease, agreement or other instrument to which the Company
or any of its Subsidiaries is a party or by which any of its property is bound
or affected, no charge, corporate restriction, judgment, decree or order and no
provision of applicable law or governmental regulation has resulted in or is
reasonably expected to result in a Material Adverse Change.
SECTION 3.20. ACQUISITION DOCUMENTS. As of the Effective Date (and, if
later, the First Borrowing Date), each of the representations and warranties
made in the Acquisition Documents by each of the Loan Parties party thereto is
true and correct in all material respects.
SECTION 3.21. SECURITY DOCUMENTS. Each of the representations and
warranties made by the Loan Parties in the Security Documents is true and
correct.
64
<PAGE>
ARTICLE 4
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of each of (i) Jones, Day, Reavis & Pogue, counsel for the Loan
Parties, substantially in the form of Exhibit B, (ii) local counsel in each
jurisdiction where a Mortgaged Property is located, substantially in the form of
Exhibit C, and (iii) Davis Polk & Wardwell, special counsel for the
Administrative Agent, substantially in the form of Exhibit D, and, in the case
of each such opinion required by this paragraph, covering such other matters
relating to the Loan Parties, the Loan Documents or the Transactions as the
Required Lenders shall reasonably request. The Company hereby requests each of
Jones, Day, Reavis & Pogue and such local counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Company, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
(including fees, charges and disbursements of counsel) required to be reimbursed
or paid by any Loan Party hereunder or under any other Loan Document.
65
<PAGE>
(f) The Collateral and Guarantee Requirement shall have been satisfied
and the Administrative Agent shall have received, with respect to each Loan
Party, a completed Perfection Certificate dated the Effective Date and signed by
an executive officer or Financial Officer of the Company, together with all
attachments contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to the Loan
Parties in the jurisdictions contemplated by the Perfection Certificate and
copies of the financing statements (or similar documents) disclosed by such
search and evidence reasonably satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or similar documents) are
permitted by Section 6.02 or have been released; PROVIDED that the Company shall
deliver, within ninety (90) days of the Effective Date, a survey in form and
substance reasonably satisfactory to the Administrative Agent for each Mortgaged
Property, together with the endorsements to the title insurance policies
referred to in the definition of "Collateral and Guarantee Requirement" that are
dependent on such survey.
(g) The Administrative Agent shall have received evidence satisfactory
to it that the insurance required by Section 5.07 is in effect.
(h) The Company shall have received gross cash proceeds of not less
than $200,000,000 from the issuance of the Subordinated Debt. The terms and
conditions of the Subordinated Debt (including, without limitation, interest
rate, maturity, amortization, subordination and call provisions and the terms
and conditions of any notes into which the Subordinated Debt may be
exchangeable) and the provisions of the Subordinated Debt Documents (including,
without limitation, the form of subordinated guarantees of the Subordinated Debt
to be issued by certain Subsidiaries in accordance with Section 6.04(f)) shall
be satisfactory to the Lenders. The Administrative Agent shall have received
copies of the Subordinated Debt Documents, certified by a Financial Officer as
complete and correct.
(i) All material consents and approvals required to be obtained from
any Governmental Authority or other Person in connection with the Acquisition
shall have been obtained, and all applicable waiting periods and appeal periods
(including, without limitation, all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) shall have
expired, in each case without the imposition of any burdensome conditions. The
Administrative Agent shall have received evidence satisfactory to it, which may
include a certificate of a Financial Officer, that the Acquisition shall have
been, or substantially simultaneously with any initial funding of Loans on the
Effective Date shall be, consummated in accordance with the Acquisition
Documents and applicable law, without any amendment to or waiver of any material
terms or conditions of the Acquisition Documents not approved by the
66
<PAGE>
Required Lenders. The Administrative Agent shall have received copies of the
Acquisition Documents and all certificates, opinions and other documents
delivered thereunder, certified by a Financial Officer as complete and correct.
(j) After giving effect to the Transactions, neither the Company nor
any of its Subsidiaries shall have outstanding any shares of preferred stock or
any Indebtedness, other than (i) Indebtedness incurred under the Loan Documents,
(ii) the Subordinated Debt, (iii) the Existing Notes in an aggregate principal
amount not in excess of $100,000,000, (iv) the Gallman Indebtedness, (v) the
Praxair PIK Note and (vi) other Indebtedness set forth on Schedule 6.01. The
aggregate amount of fees and expenses (including underwriting discounts and
commissions) payable or otherwise borne by the Company and its Subsidiaries in
connection with the Transactions shall not exceed $25,000,000.
(k) The Administrative Agent and the Lenders shall have received a
certificate, dated the Effective Date and signed by one or more Financial
Officers of the Company, in form and substance satisfactory to the
Administrative Agent and the Lenders, confirming that, after giving effect to
the Transactions, no Person liable to the Lenders (i) is insolvent or will be
rendered insolvent thereby, (ii) will be left with unreasonably small capital
with which to engage in its business or (iii) will have incurred Indebtedness
beyond its ability to pay such Indebtedness as it matures, in each case by a
margin satisfactory to the Administrative Agent in its sole discretion.
(l) The Lenders shall have received and be satisfied with the
Company's projected financial statements for each of the fiscal years ending
December 31, 1999 through December 31, 2006.
(m) There shall be no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or threatened against or
affecting the Company or any of its Subsidiaries (other than the Disclosed
Matters) (i) as to which there is a reasonable possibility of an adverse
determination that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Change or (ii)
that involve the Loan Documents or the Transactions.
(n) The Lenders shall have received an industry survey, prepared by a
Person, and in form and substance, satisfactory to the Administrative Agent in
its sole discretion, analyzing (i) industry supply, demand, operating rate,
pricing and profitability for the key products manufactured by the Company and
its Subsidiaries, and (ii) replacement cost for each real property owned or
leased by the Company or any of its Subsidiaries, in each case after giving
effect to the Acquisition.
67
<PAGE>
(o) The Administrative Agent shall have received such evidence as it
may reasonably require that (i) all Indebtedness of the Borrower under the
Existing Revolver, the Existing Term Facility and the Existing Lease Facility
has been retired, and all commitments with respect to the Existing Revolver
terminated, in each case on terms and conditions satisfactory to the
Administrative Agent, and (ii) all Guarantees of, and Liens securing,
Indebtedness under the Existing Lease Facility have been released and discharged
(or the rights of the secured parties thereunder shall have been assigned to the
Administrative Agent for the benefit of the Lenders in a manner satisfactory to
the Lenders).
(p) The Lenders shall (i) have received executed copies of each
Acquisition Document and each certificate, opinion of counsel or other material
writing delivered as a condition precedent to the consummation of the
Acquisition (and each such opinion of counsel to the Company shall be
accompanied by a letter from the Person delivering such opinion authorizing
reliance thereon by the Administrative Agents and the Lenders) and (ii) be
satisfied with the terms and conditions of the Acquisition Documents.
The Administrative Agent shall notify the Company and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., New York City time, on the
Termination Date (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to make
a Loan on the occasion of any Borrowing (including, without limitation, the
First Borrowing Date), and of the Issuing Bank to issue, amend, renew or extend
any Letter of Credit, is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct on and as of the date of such
Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a
Letter of Credit shall be deemed to constitute a representation and warranty by
the
68
<PAGE>
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Company covenants and agrees with
the Lenders that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
will furnish to the Administrative Agent and each Lender:
(a) as soon as available and in any event within 95 days after the end
of each fiscal year of the Company, its audited consolidated balance sheet and
related statements of income, stockholders' equity and cash flows as of the end
of and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by Arthur Andersen, LLP or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit or any other material qualification or
exception) to the effect that such consolidated financial statements present
fairly in all material respects the financial condition and results of
operations of the Company and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) as soon as available and in any event within 50 days after the end
of each of the first three fiscal quarters of each fiscal year of the Company,
its consolidated balance sheet and related statements of income, stockholders'
equity and cash flows, as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Company and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Company (i)
certifying as to
69
<PAGE>
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.14 to 6.16 inclusive, and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the date of the
Company's audited financial statements referred to in Section 3.04 and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Company or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as the case may be; and
(f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Company or any Subsidiary, or compliance with the terms of any Loan Document, as
the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Company will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the Company
or any Affiliate thereof that, if adversely determined, could reasonably be
expected to result in a Material Adverse Change;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Company and its Subsidiaries in an aggregate amount exceeding
$5,000,000;
(d) any complaint, order, citation, notice or other written
communication from any Person with respect to, or if the Company becomes aware
after due inquiry of, (i) the existence or alleged existence of any
Environmental Liability or other liability
70
<PAGE>
resulting from any air emission, water discharge, noise emission, asbestos, or
any other environmental, health or safety matter at, upon, under or within any
property now or previously owned, leased, operated or used by the Company or any
of its Subsidiaries or any part thereof, or due to the operations or activities
of the Company, any Subsidiary or any other Person on or in connection with such
property or any part thereof (including receipt by the Company or any Subsidiary
of any notice of the happening of any event involving the release or cleanup of
any Hazardous Materials), (ii) any release on such property or any part thereof
in a quantity that is reportable under any applicable Environmental Law, (iii)
the commencement of any cleanup pursuant to or in accordance with any applicable
Environmental Law of any Hazardous Materials on or about such property or any
part thereof and (iv) any pending or threatened proceeding for the termination,
suspension or non-renewal of any permit required under any applicable
Environmental Law, in each of cases (i), (ii), (iii) and (iv), which results in,
or could reasonably be expected to result in, liability of the Company or any
Subsidiary in excess of $10,000,000 individually or in the aggregate; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Change.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Company
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. INFORMATION REGARDING COLLATERAL. (a) The Company agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, on the anniversary of the Effective Date, the Company
shall deliver to the Administrative Agent a certificate of a Financial Officer
and the chief legal officer of the Company (i) setting forth, with respect to
each Loan Party, the information required pursuant to Section 1(a) and 2 of the
Perfection Certificate or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section and (ii) certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Collateral Agreement for a
period of not less than 18 months after
71
<PAGE>
the date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).
SECTION 5.04. EXISTENCE; CONDUCT OF BUSINESS. The Company will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business;
PROVIDED that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03.
SECTION 5.05. PAYMENT OF OBLIGATIONS. The Company will, and will cause
each of its Subsidiaries to, pay its Indebtedness and other obligations,
including Tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Company or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP, (c) such contest effectively suspends collection of the contested
obligation and the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Change.
SECTION 5.06. MAINTENANCE OF PROPERTIES. The Company will, and will
cause each of its Subsidiaries to, keep and maintain all property material to
the conduct of its business in good working order and condition (taking into
consideration the condition of such properties at the time such properties were
acquired by the Company or such Subsidiary), ordinary wear and tear excepted.
SECTION 5.07. INSURANCE. (a) The Company will, and will cause each of
its Subsidiaries to, maintain, with financially sound and reputable insurance
companies selected by the Company that customarily write insurance for the risks
covered thereby in the amounts contemplated thereby:
(i) fire and extended coverage insurance, on a replacement
cost basis, with respect to all personal property and improvements to
real property, in such amounts as are customarily maintained by
companies in the same or similar business operating in the same or
similar locations;
(ii) commercial general liability insurance against claims for
bodily injury, death or property damage occurring upon, about or in
connection with the use of any properties owned, occupied or controlled
by it, providing coverage on an occurrence basis with a combined single
limit of not less than $250,000,000 and including the broad form CGL
endorsement;
72
<PAGE>
(iii) business interruption insurance, insuring against loss
of gross earnings for a period of not less than 12 months arising from
any risks or occurrences required to be covered by insurance pursuant
to clause (i) above; and
(iv) such other insurance as may be required by law or as is
usually carried by companies of established repute engaged in the same
or similar business, owning similar properties, and located in the same
general areas as the Company and its Subsidiaries.
Deductibles or self-insured retention shall not exceed $2,500,000 for
fire and extended coverage policies, $2,000,000 for commercial general liability
policies or seven days for business interruption policies.
(b) Fire and extended coverage policies (and any policies required to
be maintained pursuant to paragraph (c) below) maintained with respect to any
Collateral shall be endorsed or otherwise amended to include (i) a
non-contributing mortgage clause (regarding improvements to real property) and
lenders' loss payable clause (regarding personal property), in each case in
favor of the Administrative Agent and providing for losses thereunder to be
payable to the Administrative Agent or its designee as sole loss payee, (ii) a
provision to the effect that neither the Company, the Administrative Agent nor
any other party shall be a coinsurer and (iii) such other provisions as the
Administrative Agent may reasonably require from time to time to protect the
interests of the Lenders. Commercial general liability policies shall be
endorsed to name the Administrative Agent as an additional insured. Business
interruption policies shall name the Administrative Agent as sole loss payee.
Each such policy referred to in this paragraph also shall provide that it shall
not be canceled, modified or not renewed (i) by reason of nonpayment of premium
except upon not less than 10 days' prior written notice thereof by the insurer
to the Administrative Agent (giving the Administrative Agent the right to cure
defaults in the payment of premiums) or (ii) for any other reason except upon
not less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent. The Company shall deliver to the Administrative Agent,
prior to the cancellation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously delivered to the Administrative Agent) together
with evidence satisfactory to the Administrative Agent of payment of the premium
therefor.
(c) If at any time the area in which any Mortgaged Property is located
is designated (i) a "flood hazard area" in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency (or any successor agency),
the Company shall obtain flood insurance in such total amount as the
Administrative Agent or the
73
<PAGE>
Required Lenders may from time to time require, and otherwise comply with the
National Flood Insurance Program as set forth in the Flood Disaster Protection
Act of 1973, as amended from time to time, or (ii) a "Zone 1" area, the Company
shall obtain earthquake insurance in such total amount as the Administrative
Agent or the Required Lenders may from time to time require.
SECTION 5.08. CASUALTY AND CONDEMNATION. (a) The Company will furnish
to the Administrative Agent and the Lenders prompt written notice of (i) any
casualty or other insured damage to any portion of any Collateral (x) having a
fair value in excess of $5,000,000 or (y) having, together with all other
Collateral that has been subject to any casualty or insured damage, an aggregate
fair value in excess of $25,000,000 or (ii) the commencement of any action or
proceeding for the taking of any Collateral or any part thereof or interest
therein under power of eminent domain or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section results in
Net Proceeds (whether in the form of insurance proceeds, condemnation award or
otherwise), such Net Proceeds shall be paid over to the Company unless a Default
has occurred and is continuing. If a Default has occurred and is continuing, the
Administrative Agent is authorized to collect such Net Proceeds, and if, during
the continuance of a Default, such Net Proceeds are received by the Company or
any Subsidiary, such Net Proceeds shall be paid over to the Administrative
Agent.
SECTION 5.09. BOOKS AND RECORDS; INSPECTION AND AUDIT RIGHTS. The
Company will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Company will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested; PROVIDED that if and for
so long as no Default shall have occurred and be continuing, the Company shall
not be required to permit more than one such examination or inspection by each
Lender during any fiscal year of the Company.
SECTION 5.10. COMPLIANCE WITH LAWS; MATERIAL CONTRACTS. (a) The Company
will, and will cause each of its Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority (including, without
limitation, all Environmental Laws and ERISA and the respective rules and
regulations thereunder) applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Change.
74
<PAGE>
(b) The Company will, and will cause each of its Subsidiaries to,
comply with all material provisions of all material contracts to which the
Company or such Subsidiary, as the case may be, is a party.
SECTION 5.11. USE OF PROCEEDS AND LETTERS OF CREDIT. The proceeds of
the Term Loans and of the Revolving Loans borrowed on the First Borrowing Date,
together with the proceeds of the Subordinated Debt, will be used only for the
payment by the Borrowers (either directly or by making intercompany loans to the
Company or Subsidiaries) of (a) amounts payable under the Acquisition Documents
as consideration for the Acquisition, (b) fees and expenses payable in
connection with the Transactions and (c) amounts required to refinance the
Existing Revolver, the Existing Term Facility and the Existing Lease Facility.
The proceeds of all other Revolving Loans will be used only to finance the
working capital needs and general corporate purposes of the Company and its
Subsidiaries, after giving effect to the Acquisition. No part of the proceeds of
any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations U and X. Letters of Credit will be issued only to finance the
working capital needs and general corporate purposes of the Company and its
Subsidiaries, after giving effect to the Acquisition, and will not be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.
SECTION 5.12. ADDITIONAL SUBSIDIARIES. If any additional Subsidiary is
formed or acquired after the Effective Date, the Company will, within three
Business Days after such Subsidiary is formed or acquired, notify the
Administrative Agent and the Lenders thereof and cause the Collateral and
Guarantee Requirement to be satisfied with respect to such Subsidiary (if it is
a Subsidiary Loan Party) and with respect to any Equity Interest in or
Indebtedness of such Subsidiary owned by or on behalf of any Loan Party.
SECTION 5.13. FURTHER ASSURANCES. (a) The Company will, and will cause
each Subsidiary Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents), which may be required under any
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to cause the Collateral and Guarantee Requirement to be and
remain satisfied, all at the expense of the Loan Parties. The Company also
agrees to provide to the Administrative Agent, from time to time upon request,
evidence reasonably satisfactory to the Administrative Agent as to the
perfection and priority of the Liens created or intended to be created by the
Security Documents.
75
<PAGE>
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Company or any
Subsidiary Loan Party after the Effective Date (other than assets constituting
Collateral under the Collateral Agreement that become subject to the Lien of the
Collateral Agreement upon acquisition thereof), the Company will notify the
Administrative Agent and the Lenders thereof, and, if requested by the
Administrative Agent or the Required Lenders, the Company will cause such assets
to be subjected to a Lien securing the Obligations and will take, and cause the
Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties.
(c) The Company shall use its best efforts to deliver as soon as
practicable after the Effective Date a consent of the landlord for the Aberdeen,
Mississippi Mortgaged Property in form and substance reasonably satisfactory to
the Administrative Agent.
SECTION 5.14. LANDLORD AND WAREHOUSEMAN WAIVERS. The Company shall use
its best efforts to deliver to the Administrative Agent waivers of contractual
and statutory landlord's, landlord's mortgagee's and warehouseman's Liens in
form and substance satisfactory to the Administrative Agent under each existing
lease, warehouse agreement or similar agreement to which the Company or any
Subsidiary is a party; PROVIDED that unless the Administrative Agent agrees
otherwise, such waivers will in any event be incorporated when the existing
lease, warehouse agreement or similar agreement is amended, renewed or extended
and the Company will use its best efforts to obtain waivers of both contractual
and statutory landlord's, landlord's mortgagee's and warehouseman's Liens in
form and substance satisfactory to the Administrative Agent in connection with
each new lease, warehouse agreement or similar agreement entered into by the
Company or any Subsidiary.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that:
76
<PAGE>
SECTION 6.01. INDEBTEDNESS; CERTAIN EQUITY SECURITIES. (a) The Company
will not, and will not permit any Subsidiary to, create, incur, assume or permit
to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Subordinated Debt and any Replacement Subordinated
Indebtedness;
(iii) the Existing Notes;
(iv) the Gallman Indebtedness;
(v) the Praxair PIK Note;
(vi) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness (a) that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted
average life thereof and (b) the material terms of which are at least
as favorable to the obligors thereunder as the material terms of the
refinanced Indebtedness;
(vii) Indebtedness of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary; PROVIDED that
Indebtedness of any Subsidiary that is not a Loan Party to the Company
or any Subsidiary Loan Party shall be subject to Section 6.04;
(viii) Guarantees by the Company of Indebtedness of any
Subsidiary and by any Subsidiary of Indebtedness of the Company or any
other Subsidiary; PROVIDED that Guarantees by the Company or any
Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a
Loan Party shall be subject to Section 6.04;
(ix) Indebtedness of the Company or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or
capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof or result in an earlier maturity date or decreased weighted
average life thereof; PROVIDED that (A) such Indebtedness is incurred
prior to or within 90 days after such acquisition or the completion of
such
77
<PAGE>
construction or improvement and (B) the aggregate principal amount of
Indebtedness permitted by this clause (ix) shall not exceed $15,000,000
at any time outstanding;
(x) customary obligations arising under any Permitted
Receivables Transaction;
(xi) the Company's obligation to pay the Delayed Purchase
Price pursuant to and in accordance with the Acquisition Documents; and
(xii) other unsecured Indebtedness; PROVIDED that, at the time
of the incurrence of such other Indebtedness, (a) no Default or Event
of Default has occurred and is continuing, or would result from such
incurrence, and (b) after giving effect to such incurrence, the Company
shall be in compliance on a pro forma basis with Sections 6.15 and 6.16
(assuming that such Indebtedness bears interest during any portion of
the applicable measurement period prior to the date of such incurrence
equal to the average interest rate applicable to the Revolving Loans
during such period).
(b) The Company will not permit any Subsidiary to issue any preferred
stock or other preferred Equity Interests.
SECTION 6.02. LIENS. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) Liens securing the Gallman Indebtedness in accordance
with the definition thereof;
(iv) any Lien on any property or asset of the Company or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
PROVIDED that (i) such Lien shall not apply to any other property or
asset of the Company or any Subsidiary and (ii) such Lien shall secure
only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
78
<PAGE>
(v) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the
date hereof prior to the time such Person becomes a Subsidiary;
PROVIDED that (A) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary,
as the case may be, (B) such Lien shall not apply to any other property
or assets of the Company or any Subsidiary and (C) such Lien shall
secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case
may be and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;
(vi) Liens on fixed or capital assets acquired, constructed or improved
by the Company or any Subsidiary; PROVIDED that (A) such security
interests secure Indebtedness permitted by clause (ix) of Section
6.01(a), (B) such security interests and the Indebtedness secured
thereby are incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (C) the
Indebtedness secured thereby does not exceed 80% of the cost of
acquiring, constructing or improving such fixed or capital assets and
(D) such security interests shall not apply to any other property or
assets of the Company or any Subsidiary; and
(vii) Liens on assets of the Company and its Subsidiaries in
connection with a Permitted Receivables Transaction.
SECTION 6.03. FUNDAMENTAL CHANGES. (a) The Company will not, and will
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default shall have occurred and be continuing (i) any Person
organized under the laws of the United States of America or one of its States
may merge into the Company in a transaction in which the Company is the
surviving corporation, (ii) any Person organized under the laws of the United
States of America or one of its States may merge into any Subsidiary in a
transaction in which the surviving entity is a Subsidiary and (if any party to
such merger is a Subsidiary Loan Party) is a Subsidiary Loan Party and (iii) any
Subsidiary (other than an Eligible Subsidiary) may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the
best interests of the Company and is not materially disadvantageous to the
Lenders; PROVIDED that any such merger involving a Person that is not a wholly
owned Subsidiary immediately prior to such merger shall not be permitted unless
also permitted by Section 6.04; and PROVIDED FURTHER that any Subsidiary may
merge with any other Person in connection with a disposition of such Subsidiary
permitted by Section 6.05.
79
<PAGE>
(b) The Company will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Company and its Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.
SECTION 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Company will not, and will not permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) the Acquisition and Permitted Acquisitions;
(b) Permitted Investments;
(c) investments existing on the date hereof and set forth on Schedule
6.04, to the extent such investments would not be permitted under any other
clause of this Section;
(d) investments by the Company and its Subsidiaries existing on the
date hereof in Equity Interests in (i) their respective wholly owned
Subsidiaries, (ii) PHH Monomers LLC, a Louisiana limited liability company and
(iii) Vinyl Solutions, LLC, a Delaware limited liability company; PROVIDED that
(x) any such Equity Interests held by a Loan Party shall be pledged pursuant to
the Collateral Agreement (subject to the limitations applicable to Equity
Interests of a Foreign Subsidiary referred to in Section 5.12) and (y) except as
set forth in paragraph (a) of this Section, the aggregate amount of investments
by Loan Parties in, and loans and advances by Loan Parties to, and Guarantees by
Loan Parties of Indebtedness of, Persons that are not Loan Parties shall not
exceed $5,000,000 at any time outstanding;
(e) loans or advances made by the Company to any Subsidiary and made
by any Subsidiary to the Company or any other Subsidiary; PROVIDED that (i) any
such loans and advances made by a Loan Party shall be evidenced by a promissory
note pledged pursuant to the Collateral Agreement and (ii) the aggregate
principal amount of investments in Subsidiaries that are not Loan Parties shall
be subject to the limitation set forth in clause (d) above;
80
<PAGE>
(f) Guarantees constituting Indebtedness permitted by Section 6.01;
PROVIDED that (i) a Subsidiary shall not Guarantee the Subordinated Debt or any
Replacement Subordinated Indebtedness unless (A) such Subsidiary also has
Guaranteed the Obligations pursuant to the Collateral Agreement and (B) such
Guarantee of the Subordinated Debt or Replacement Subordinated Indebtedness is
subordinated to such Guarantee of the Obligations on terms no less favorable to
the Lenders than the subordination provisions of the Subordinated Debt, and (ii)
the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan
Parties that is Guaranteed by any Loan Party shall be subject to the limitation
set forth in clause (d) above;
(g) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
(h) operating deposit accounts;
(i) prepaid expenses in the ordinary course of business;
(j) subject to Section 6.08 hereof, Investments in accounts and
chattel paper (in each case, as defined in the Uniform Commercial Code), and
notes receivable acquired in the ordinary course of business as presently
conducted; and
(k) Permitted Receivables Transactions.
For purposes of this Section 6.04, a "PERMITTED ACQUISITION" shall mean
any acquisition by the Company or any Subsidiary of any asset or Equity
Interests or other security of any other Person (including any acquisition by
way of merger); PROVIDED that (x) at the time of effecting such acquisition, the
Company is in compliance with Section 6.15 hereof, (y) after giving pro forma
effect to such acquisition, the Company would have been in compliance with
Sections 6.15 and 6.16 hereof on the last day of the period of four fiscal
quarters most recently ended prior to the date of such acquisition (calculated
on the assumption that such acquisition occurred at the beginning of such period
of four fiscal quarters), and (z) both before and immediately after giving
effect to such acquisition, no Default or Event of Default shall have occurred
and be continuing; and PROVIDED FURTHER that the term "PERMITTED ACQUISITION"
shall exclude any transaction in which the Company initiates or participates as
a member of a "group" (as that term is used for the purposes of Section 13(d)(3)
of the Exchange Act or the rules and regulations of the Securities and Exchange
Commission thereunder) or as a "participant" or a "participant in a
solicitation" (as defined in Rule 14a-11 under the
81
<PAGE>
Exchange Act) in (i) a tender offer for the Equity Interests of any Person if
the board of directors (or other similar body) of such Person recommends, in a
Schedule 14D-9 filed under the Exchange Act, or otherwise, that holders of
Equity Interests of such Person not tender their Equity Interests pursuant to
such tender offer or (ii) in any solicitation of any proxy, consent or
authorization for the purposes of opposing the board of directors (or other
similar body) of any Person.
SECTION 6.05. ASSET SALES. The Company will not, and will not permit
any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of any
asset, including any capital stock or other ownership interest of any
Subsidiary, nor will the Company permit any of its Subsidiaries to issue any
additional shares of such Subsidiary's capital stock or other ownership interest
in such Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Company or a Subsidiary
and Permitted Joint Venture Dispositions; PROVIDED that any such sales,
transfers or dispositions to a Person other than a Loan Party shall be made in
compliance with Section 6.08;
(c) dispositions of bonds issued in connection with the Gallman
Indebtedness;
(d) Permitted Receivables Transactions; and
(e) sales, transfers and dispositions of assets (other than Equity
Interests in a Subsidiary) that are not permitted by any other clause of this
Section; PROVIDED that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of after the Effective Date in reliance upon
this clause (e) shall not exceed $15,000,000 during any fiscal year of the
Company;
PROVIDED that, except in the case of any sale, transfer or disposition
to a Loan Party pursuant to subsection (b) above, all sales, transfers and other
dispositions permitted hereby shall be made for fair value; and
PROVIDED FURTHER that, except in the case of any sale, transfer or
disposition pursuant to subsection (b) above, all sales, transfers and other
dispositions permitted hereby shall be made for at least 80% cash consideration.
For purposes of this Section 6.05, "PERMITTED JOINT VENTURE
DISPOSITIONS" shall mean sales, transfers or dispositions of assets in an
aggregate amount not to
82
<PAGE>
exceed $50,000,000 during the term of this Agreement to Permitted Joint
Ventures; PROVIDED that (y) after giving pro forma effect to any such sale,
transfer or disposition, the Company would have been in compliance with Sections
6.15 and 6.16 hereof on the last day of the period of four fiscal quarters most
recently ended prior to the date of such sale, transfer or disposition
(calculated on the assumption that such sale, transfer or disposition occurred
at the beginning of such period of four fiscal quarters), and (z) both before
and immediately after giving effect to any such sale, transfer or disposition,
no Default or Event of Default shall have occurred and be continuing
For purposes of this Section 6.05, "PERMITTED JOINT VENTURE" shall mean
(a) any corporation, association or other business entity (other than a
partnership) of which 50% of the total voting power of Equity Interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
Controlled, directly or indirectly by the Company or one of more Subsidiary Loan
Parties or a combination thereof and (b) any partnership, joint venture, limited
liability company or similar entity of which (i) 50% of the capital accounts,
distribution rights, total Equity Interests and voting interests or general or
limited partnership interests, as applicable, are owned or Controlled, directly
or indirectly by the Company or one or more Subsidiary Loan Parties or a
combination thereof, whether in the form of membership, general, special or
limited partnership interests or otherwise and (ii) either the Company or a
Subsidiary Loan Party is a Controlling general partner or no other Person
Controls such entity; PROVIDED that no Person shall be a "Permitted Joint
Venture" unless and until (A) all Equity Interests in such Person held by a Loan
Party are pledged pursuant to the Collateral Agreement, (B) such Person does not
have any Indebtedness for borrowed money at any time (other than Indebtedness
owing to the owners of Equity Interests in such Permitted Joint Venture, the
Company or any Subsidiary Loan Party), (C) the organizational documents of such
Person and the other documentation governing such Person do not contain any
restriction on distributions to the Company or the Subsidiary Loan Parties and
(D) such Person is engaged only in a business of the type conducted by the
Company and its Subsidiaries on the date of execution of this Agreement and
businesses reasonably related thereto .
SECTION 6.06. HEDGING AGREEMENTS. The Company will not, and will not
permit any of its Subsidiaries to, enter into any Hedging Agreement, other than
Hedging Agreements entered into in the ordinary course of business to hedge or
mitigate risks to which the Company or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.
SECTION 6.07. RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS;
SYNTHETIC PURCHASE AGREEMENTS. (a) The Company will not, and will not permit any
Subsidiary to, declare or make, or agree to pay or make, directly or indirectly,
any
83
<PAGE>
Restricted Payment, except (i) Subsidiaries may declare and pay dividends
ratably with respect to their capital stock, (ii) Subsidiaries may make other
distributions to the Company exclusively for the purpose of making scheduled
interest and principal payments in respect of the Subordinated Debt and any
Replacement Subordinated Indebtedness, (iii) the Company may purchase shares of
Restricted Stock (as defined in any Incentive Equity Plan) from employees of the
Company or its Subsidiaries upon termination of such employees' employment, in
accordance with an Incentive Equity Plan in amounts not to exceed $2,000,000
during any fiscal year and $10,000,000 in the aggregate during the term of this
Agreement, and (iv) the Company may make Restricted Payments in addition to
those permitted pursuant to the foregoing clauses if (A) no Default shall have
occurred and be continuing and (B) after giving effect to any such payment, the
cumulative amount of all payments made in reliance on this clause (iv) does not
exceed the sum of $25,000,000 PLUS 50% of Cumulative Net Income calculated on
the date of such payment.
For purposes of this Section 6.07, "CUMULATIVE NET INCOME" means, on
any date of determination, the cumulative amount of net income, if any (less the
cumulative amount of net loss, if any) of the Company and its Subsidiaries,
determined on a consolidated basis, for each fiscal quarter of the Company from
and including the fiscal quarter ended March 31, 2000 to and including the
fiscal quarter of the Company most recently ended prior to such date of
determination for which financial statements are in existence.
(b) The Company will not, and will not permit any Subsidiary to, make
or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness
(including any payment in respect of Subordinated Debt or Replacement
Subordinated Indebtedness under a Synthetic Purchase Agreement), except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness, other than
payments in respect of the Subordinated Debt or Replacement
Subordinated Indebtedness prohibited by the subordination provisions
thereof;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01;
84
<PAGE>
(iv) payment of secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness; and
(v) subject to Section 1.06(c) of the Asset Purchase Agreement and
the Subordination Agreement entered into in connection therewith,
payment of the Delayed Purchase Price, to the extent that before and
after giving effect to such payment, no Default shall have occurred and
be continuing under the Loan Documents (including, without limitation,
as a result of a failure to comply with any covenant set forth in
Sections 6.14 through 6.16, inclusive, as of the most recently ended
fiscal quarter of the Company on a pro forma basis, after giving effect
to such payment of the Delayed Purchase Price.
(c) The Company will not, and will not permit any Subsidiary to, enter
into or be party to, or make any payment under, any Synthetic Purchase Agreement
unless (i) in the case of any Synthetic Purchase Agreement related to any Equity
Interests, (A) the payments required to be made thereunder are limited to the
amount permitted under paragraph (a) of this Section 6.07 and (B) the
obligations of the Company and the Subsidiaries thereunder are subordinated to
the Obligations on terms satisfactory to the Required Lenders; and (ii) in the
case of any Synthetic Purchase Agreement related to any Subordinated Debt or
Replacement Subordinated Indebtedness, (A) the payments required to be made
thereunder are limited to the amount permitted under paragraph (b) of this
Section 6.07 of this Agreement and (B) the obligations of the Company and the
Subsidiaries thereunder are subordinated to the Obligations to at least the same
extent as the Subordinated Debt or Replacement Subordinated Indebtedness to
which such Synthetic Purchase Agreement relates. The Company shall promptly
deliver to the Administrative Agent a copy of any Synthetic Purchase Agreement
to which it becomes party.
SECTION 6.08. TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, make any investment in, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) transactions in the
ordinary course of business that are at prices and on terms and conditions not
less favorable to the Company or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Company and the Subsidiary Loan Parties not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.07, and (d) any
investment permitted by Section 6.04; PROVIDED that (a) any Affiliate of the
Company who is an individual may serve as a director, officer or employee of the
Company and receive reasonable compensation or indemnification in connection
with his or her services in such capacity and (b) the Company may pay
commissions to Georgia Gulf Export
85
<PAGE>
Corporation on sales of qualified "Export Property" (as defined in Section 927
of the Code) in accordance with Section 925 of the Code and the rules and
regulations thereunder.
SECTION 6.09. RESTRICTIVE AGREEMENTS. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Company or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets,
(b) the ability of any Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or advances
to the Company or any other Subsidiary or to Guarantee Indebtedness of the
Company or any other Subsidiary or (c) the ability of the Company to repay loans
or advances to any Subsidiary or to Guarantee Indebtedness of any Subsidiary;
PROVIDED that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document, Subordinated Debt Document, document
under which any Replacement Subordinated Indebtedness is issued or document
evidencing any Permitted Receivables Transaction, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.09 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (iv) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof.
SECTION 6.10. AMENDMENT OF MATERIAL DOCUMENTS. The Company will not,
and will not permit any Subsidiary to, consent to any modification, supplement
or waiver of any of the provisions of (a) any Acquisition Document, (b) the
Praxair PIK Note or (c) promissory notes or other instruments evidencing
Indebtedness permitted to exist under Section 6.01 (each document and instrument
described in clauses (a)-(c) hereof, a "MATERIAL CONTRACT") in any respect to
the extent such modification, supplement or waiver would impair materially the
benefit to the Company or the Lenders of such Material Contract (it being
understood that any modification, supplement or waiver of any Material Contract
which adversely affects the rights of the Lenders under the Loan Documents or
could reasonably be expected to result in a Material Adverse Change shall be
deemed to impair materially the benefit of such Material Contract to the Company
or the Lenders for purposes hereof), without the prior written consent of the
Administrative Agent (with the approval of the Required
86
<PAGE>
Lenders). The Company will not, and will not permit any Subsidiary to, request
or consent to any amendment, modification or waiver of any of its rights under
any Subordinated Debt Document, any document under which any Replacement
Subordinated Indebtedness has been issued, the Existing Indenture or the
Existing Notes without the prior written consent of the Required Lenders.
SECTION 6.11. ACCOUNTING CHANGES. The Company will not change its
fiscal year from a fiscal year ending December 31. The Company will not adopt
any non-mandatory change in GAAP or the application thereof without 30 days'
prior notice to the Lenders, accompanied, in the case of any material change, by
evidence of concurrence in such change by the public accounting firm regularly
employed by the Company.
SECTION 6.12. SALE AND LEASEBACK. Neither the Company nor any of its
Subsidiaries will engage in any Sale-Leaseback Transactions which, considered in
the aggregate with all Sale-Leaseback Transactions engaged in by the Company and
its Subsidiaries during the term of this Agreement, involve properties having a
fair market value in excess of $10,000,000.
SECTION 6.13. BANK ACCOUNTS. Other than as set forth on Schedule 6.13,
the Company has no bank accounts or other deposit accounts. Neither the Company
nor any Subsidiary Loan Party will maintain any accounts with any bank or
financial institution having outstanding daily collected balances at any one
time exceeding $2,000,000 in the aggregate, other than (i) the Collateral
Account referred to in the Collateral Agreement, and (ii) any accounts (x)
maintained solely to collect amounts collected in connection with a Permitted
Receivables Transaction or (y) maintained solely to meet payroll disbursements
with respect to employees of the Company or the Subsidiary Loan Parties;
PROVIDED that the daily collected balances of such payroll accounts shall not,
when added together with the daily collected balances outstanding under any
other accounts of the Company and the Subsidiary Loan Parties (other than the
Collateral Account described above), exceed $4,000,000.
SECTION 6.14. CAPITAL EXPENDITURES. For any fiscal year of the Company,
Capital Expenditures shall not exceed the sum of:
(i) $40,000,000, PLUS
(ii) the amount of Excess Cash Flow not required to be applied to
prepay Term Borrowings or reduce Revolving Commitments during such fiscal year,
PLUS
(iii) an amount equal to the excess (if any) of (A) the aggregate
amount of Capital Expenditures permitted by clauses (i) and (ii) above for all
fiscal years of the
87
<PAGE>
Company ending prior to such fiscal year over (B) the aggregate amount of
Capital Expenditures made in such prior fiscal years.
SECTION 6.15. LEVERAGE RATIO. At the last day of any fiscal quarter of
the Company ending during any period set forth below, the Leverage Ratio will
not exceed the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ ------
<S> <C>
Effective Date - 9/30/00 5.25:1
10/1/00 - 9/30/01 4.50:1
Thereafter 3.50:1
</TABLE>
SECTION 6.16. INTEREST COVERAGE RATIO. At the last day of any fiscal
quarter of the Company ending during any period set forth below, the ratio of
(a) Consolidated EBITDA to (b) Consolidated Cash Interest Expense, in each case
for the period of four consecutive fiscal quarters ending on such date, will not
be less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date - 9/30/00 2.0:1
10/1/00 - 9/30/01 2.5:1
Thereafter 3.0:1
</TABLE>
ARTICLE 7
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) any Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise, and such failure shall continue unremedied
for a period of one Business Day;
(b) any Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and as
the same shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
88
<PAGE>
(c) any representation or warranty made or deemed made by or on behalf
of the Company or any Subsidiary in or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any material respect
when made or deemed made;
(d) any Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.04 (with respect to the
existence of such Borrower) or 5.11 or in Article 6;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Company (which notice will be given at the request
of any Lender);
(f) the Company or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness when due or within any applicable grace period for such
payment;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; PROVIDED that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Company or any Subsidiary or its debts, or of a substantial
part of its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Company or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered;
89
<PAGE>
(i) the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or any Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(j) the Company or any Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Company, any
Subsidiary or any combination thereof and the same shall remain undischarged
(and provision shall not be made for such discharge) for a period of 30
consecutive days during which execution shall not be effectively stayed, (ii)
the Company or such Subsidiary shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal, or
(iii) such judgment or judgments shall not be discharged (or provisions shall
not be made for such discharge) within 30 days after a decision has been reached
with respect to such appeal and the related stay has been lifted, or (iv) any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of the Company or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Company and
its Subsidiaries in an aggregate amount exceeding $10,000,000;
(m) any Lien purported to be created under any Security Document shall
cease to be, or shall be asserted by any Loan Party not to be, a valid and
perfected Lien on any Collateral, with the priority required by the applicable
Security Document, except (i) as a result of the sale or other disposition of
the applicable Collateral in a transaction permitted under the Loan Documents,
(ii) as a result of the Administrative Agent's failure to maintain possession of
any stock certificates, promissory notes or other instruments delivered to it
under the Collateral Agreement or (iii) as a result of the Collateral Agent's
failure to make any required filing of a continuation statement under
90
<PAGE>
the Uniform Commercial Code or, after a request in writing from the Company, any
other required filing with respect to such Lien;
(n) a Change in Control shall occur;
(o) the Guarantee of any Subsidiary Loan Party under the Collateral
Agreement shall at any time fail to constitute a valid and binding agreement of
such Subsidiary Loan Party, or any party shall so assert in writing; or
(p) any of the Acquisition Documents identified in clause (i), (ii),
(iv) or (vi) of the definition thereof in Section 1.01 shall be terminated prior
to the end of its stated term, or shall cease to be in full force and effect,
for whatever reason;
then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Company, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of each Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Borrower; and in case of any
event with respect to any Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of each Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower.
ARTICLE 8
THE AGENT
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Agent as its agent and authorizes the Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Agent by the terms of
the Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
91
<PAGE>
The bank serving as the Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not the Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Company or any Subsidiary or other Affiliate thereof as if it were not the
Agent hereunder.
The Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Agent shall not be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) the Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 10.02), and (c) except as expressly set forth in the Loan Documents, the
Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Company or any of its
Subsidiaries that is communicated to or obtained by the bank serving as Agent or
any of its Affiliates in any capacity. The Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 10.02) or in the
absence of its own gross negligence or wilful misconduct. The Agent shall not be
deemed to have knowledge of any Default unless and until written notice thereof
is given to the Agent by the Company or a Lender (or, in the case of the
Collateral Agent, until receipt of advice from the Administrative Agent), and
the Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
any Loan Document, (ii) the contents of any certificate, report or other
document delivered thereunder or in connection therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or genuineness of any Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article 4 or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the Agent.
The Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. The Agent may consult with legal counsel (who may be counsel for any
Loan Party), independent accountants and other experts selected by it,
92
<PAGE>
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.
The Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the Agent. The
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor the
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Company.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Company, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Company to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Company and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.
93
<PAGE>
Neither Bank of America, N.A. nor The Industrial Bank of Japan, Limited
shall have any responsibility, obligation or liability under the Loan Documents
in its capacity as Co-Documentation Agent.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES
Each Eligible Subsidiary represents and warrants to the Lenders that:
SECTION 9.01. ORGANIZATION; POWER. It is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, has all requisite power and authority to carry on its business as
now conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required. All of the Equity Interests
of such Eligible Subsidiary are directly or indirectly owned by the Company.
SECTION 9.02. AUTHORIZATION; ENFORCEABILITY; CONTRAVENTION. The
Transactions to be entered into by such Eligible Subsidiary are within its
limited liability company powers, have been duly authorized by all necessary
limited liability company action, require no action by or in respect of, or
filing with, any Governmental Authority and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of its
organizational documents or of any agreement or other instrument binding upon
the Company or such Eligible Subsidiary, or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries, except Liens
created under the Loan Documents. This Agreement has been duly executed and
delivered by such Eligible Subsidiary and constitutes, and each other Loan
Document to which such Eligible Subsidiary is to be a party, when executed and
delivered by it, will constitute, a legal, valid and binding obligation of such
Eligible Subsidiary, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
94
<PAGE>
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Company, to it at 400 Perimeter Center Terrace, Suite
595, Atlanta, Georgia 30346, Attention of Joel I. Beerman, Vice President and
General Counsel (Telecopy No. (770) 390-9673), with a copy to the same address,
Attention of Samuel M. Hensley, Corporate Controller (Telecopy No. (770) 395-
4572);
(b) if to any Eligible Subsidiary, to it c/o the Company at 400
Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346, Attention of Joel
I. Beerman, Vice President and General Counsel (Telecopy No. (770) 390-9673),
with a copy to the same address, Attention of Samuel M. Hensley, Corporate
Controller (Telecopy No. (770) 395-4572);
(c) if to the Administrative Agent, to The Chase Manhattan Bank, Loan
and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New
York 10081, Attention of LuAnn DeStefano (Telecopy No. (212) 552-5777), with a
copy to The Chase Manhattan Bank, 38th Floor, 270 Park Avenue, New York, New
York 10017, Attention of Lawrence Palumbo (Telecopy No. (212) 270-7939);
(d) if to the Issuing Bank, to it at 4 Chase Metrotech Center, 8th
Floor, Brooklyn, New York 11428, Attention of R. Bridghal (Telecopy No. (718)
242- 6501); and
(e) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 10.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power
95
<PAGE>
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of any Loan Document or consent to any departure by
any Loan Party therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Company and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders; PROVIDED
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the maturity of any Loan, or any scheduled date of payment of the
principal amount of any Term Loan under Section 2.09, or the required date of
reimbursement of any or LC Disbursement, or any date for the payment of any
interest or fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section
2.17(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change any of
the provisions of this Section or the percentage set forth in the definition of
"Required Lenders" or any other provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Lender
of such Class, as the case may be), (vi) release the Company or any Subsidiary
Loan Party from its Guarantee under the Collateral Agreement (except as
expressly provided in the Collateral Agreement), or limit its liability in
respect of such Guarantee, without the written consent of each Lender, (vii)
release all or substantially all of the Collateral from the
96
<PAGE>
Liens of the Security Documents, without the written consent of each Lender
affected thereby, (viii) change any provisions of any Loan Document in a manner
that by its terms adversely affects the rights in respect of payments due to
Lenders holding Loans of any Class differently than those holding Loans of any
other Class, without the written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each affected Class,
(ix) change the rights of the Tranche B Lenders to decline mandatory or optional
prepayments as provided in Section 2.10, without the written consent of Tranche
B Lenders holding a majority of the outstanding Tranche B Loans, (x) amend or
modify the provisions of Section 2.10(b), (c), (d), (f) or (g) or waive any
prepayment required under such Section 2.10, without the written consent of
Lenders holding a majority in interest of the outstanding Loans and unused
Commitments of each affected Class, or (xi) amend the definition of "Interest
Period" such that an Interest Period applicable to any Borrowing could exceed
six months (before giving effect to the provisions set forth in the proviso to
the definition of "Interest Period") without the agreement of each Lender
participating in such Borrowing; PROVIDED FURTHER that no such agreement shall,
unless signed by an Eligible Subsidiary, (i) subject such Eligible Subsidiary to
any additional obligation, (ii) increase the principal of or rate of interest on
any outstanding Loan made to such Eligible Subsidiary, (iii) accelerate the
stated maturity of any outstanding Loan to such Eligible Subsidiary or (iv)
change any provisions of this Section; PROVIDED FURTHER that (A) no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Issuing Bank without the prior written consent of
the Administrative Agent or the Issuing Bank, as the case may be, and (B) any
waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of the Revolving Lenders (but not the
Tranche A Lenders and Tranche B Lenders), the Tranche A Lenders (but not the
Revolving Lenders and Tranche B Lenders) or the Tranche B Lenders (but not the
Revolving Lenders and Tranche A Lenders) may be effected by an agreement or
agreements in writing entered into by the Company and the requisite percentage
in interest of the affected Class of Lenders that would be required to consent
thereto under this Section if such Class of Lenders were the only Class of
Lenders hereunder at the time. Notwithstanding the foregoing provisions relating
to amendments requiring Lender consent (but subject to the second proviso in
this paragraph (b) relating to Eligible Subsidiaries), any provision of this
Agreement may be amended by an agreement in writing entered into by the Company,
the Required Lenders and the Administrative Agent (and, (x) if its rights or
obligations are affected thereby, the Issuing Bank and (y) if required pursuant
to the second proviso of this paragraph, the Eligible Subsidiaries) if (i) by
the terms of such agreement the Commitment of each Lender not consenting to the
amendment provided for therein shall terminate upon the effectiveness of such
amendment and (ii) at the time such amendment becomes effective, each Lender not
consenting thereto receives payment in full of the principal of and interest
accrued on each Loan made by it and all
97
<PAGE>
other amounts owing to it or accrued for its account under this Agreement and
the other Loan Documents.
SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Company
shall pay (i) all reasonable out-of-pocket expenses incurred by the Agent and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for the Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder, (iii) all fees (if any) payable by the Agent
to third parties in connection with satisfaction of the conditions set forth in
Article 4 hereof and (iv) all out-of-pocket expenses incurred by the Agent, the
Issuing Bank or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents, including its rights under this Section, or in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Company shall indemnify the Agent, the Issuing Bank and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "INDEMNITEE") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or release of Hazardous Materials on or from any Mortgaged
Property or any other property owned or operated by the Company or any of its
Subsidiaries, or any Environmental Liability related in any way to the Company
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such
98
<PAGE>
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Company fails to pay any amount required to
be paid by it to the Agent or the Issuing Bank under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to the Agent or the Issuing
Bank, as the case may be, such Lender's pro rata share (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; PROVIDED that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Agent in its capacity as Administrative Agent,
Syndication Agent or Collateral Agent, or against the Issuing Bank in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposures,
outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, no Borrower shall
assert, and each Borrower hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the use
of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than
five days after written demand therefor.
SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that no
Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by any Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Bank and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment
99
<PAGE>
and the Loans at the time owing to it); PROVIDED that (i) except in the case of
an assignment to a Lender, an Affiliate of a Lender or a Related Fund of a
Lender, the Administrative Agent and the Company (and, in the case of an
assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure, the Issuing Bank) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) except in the case of an assignment to a
Lender, an Affiliate of a Lender or a Related Fund of a Lender or an assignment
of the entire remaining amount of the assigning Lender's Commitment or Loans,
the amount of the Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Company and the Administrative Agent
otherwise consent, (iii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender's rights and obligations
under this Agreement, except that this clause (iii) shall not be construed to
prohibit the assignment of a proportionate part of all the assigning Lender's
rights and obligations in respect of one Class of Commitments or Loans, (iv) the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500; PROVIDED that only one such fee shall be due in respect of a
simultaneous assignment to more than one Related Fund, and (v) the assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and PROVIDED FURTHER that (x) any consent of the
Company otherwise required under clause (i) of this paragraph shall not be
required if an Event of Default has occurred and is continuing and (y) any
consent of the Company otherwise required under clause (ii) of this paragraph
shall not be required if an Event of Default under clause (h) or (i) of Article
7 has occurred and is continuing. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of New York a
copy of each
100
<PAGE>
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the "REGISTER"). The entries in the Register
shall be conclusive, and the Borrowers, the Administrative Agent, the Issuing
Bank and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent any of the Borrowers, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); PROVIDED that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce the Loan Documents and to approve any amendment, modification or waiver
of any provision of the Loan Documents; PROVIDED that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
first proviso to Section 10.02(b) that affects such Participant. Subject to
paragraph (f) of this Section, each Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 10.08 as though it were
101
<PAGE>
a Lender, provided such Participant agrees to be subject to Section 2.17(c) as
though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.14 or 2.16 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Company's
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.16 unless the Company
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrowers, to comply with Section 2.16(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and any Lender that is a fund that invests in bank loans
may, without the consent of the Administrative Agent or the Company, pledge all
or a portion of its rights under this Agreement and any notes issues pursuant
hereto to its trustee in support of its obligations to its trustee or its
noteholders; PROVIDED that any foreclosure or exercise of remedies by such
trustee shall be subject in all respects to the provisions of this Section
regarding assignments. This Section shall not apply to any such pledge or
assignment of a security interest; PROVIDED that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
SECTION 10.05. SURVIVAL. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 10.03 and Article 8 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
102
<PAGE>
SECTION 10.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 10.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Borrower against any of and all the obligations of such Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the
103
<PAGE>
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against any Borrower or its properties
in the courts of any jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
104
<PAGE>
SECTION 10.11. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. CONFIDENTIALITY. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by (i) any regulatory authority, (ii)
the National Association of Insurance Commissioners or similar organization or
(iii) any nationally recognized agency that requires access to information about
a Lender's investment portfolio in connection with ratings issued with respect
to such Lender, (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
(i) to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii) to
any direct or indirect contractual counterparty to swap agreements or such
contractual counterparty's professional advisor, (g) with the consent of the
Company or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Company. For the purposes of this Section,
"INFORMATION" means all information received from the Company relating to the
Company or its business, other than any such information that is available to
the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Company; PROVIDED that, in the case of
information received from the Company after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 10.13. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the
105
<PAGE>
"MAXIMUM RATE") which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and, to
the extent lawful, the interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to such Lender
in respect of other Loans or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of repayment, shall have
been received by such Lender.
106
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GEORGIA GULF CORPORATION
By: /s/ RICHARD B. MARCHESE
---------------------------------------
Title: Vice President and Chief
Financial Officer
GEORGIA GULF CHEMICALS &
VINYLS, LLC
By: /s/ RICHARD B. MARCHESE
----------------------------------------
Title: Vice President and Chief
Financial Officer
NORTH AMERICA PLASTICS, LLC
By: /s/ RICHARD B. MARCHESE
----------------------------------------
Title: Vice President and Chief
Financial Officer
GEORGIA GULF LAKE CHARLES, LLC
By: /s/ RICHARD B. MARCHESE
----------------------------------------
Title: Vice President and Chief
Financial Officer
<PAGE>
THE CHASE MANHATTAN BANK,
individually as Lender and as
Administrative Agent,
Syndication Agent and
Collateral Agent
By: /s/ LAURIE B. PERPER
----------------------------------------
Title: Vice President
<PAGE>
BANK OF AMERICA, N.A.
By: /S/ WENDY J. GORMAN
----------------------------------------
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /S/ MINAMI MIURA
----------------------------------------
Title: Vice President
WACHOVIA BANK, N.A.
By: /S/ WILLIAM J. DARBY
----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /S/ F.C.H. ASHBY
----------------------------------------
Title: Senior Manager Loan Operations
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /S/ M.R. MARRON
----------------------------------------
Title: Vice President and Manager
THE FUJI BANK, LIMITED
By: /S/ TEIJI TERAMOTO
----------------------------------------
Title: Vice President and Manager
<PAGE>
SUNTRUST BANK, ATLANTA
By: /S/ J. CHRISTOPHER DEISLEY
----------------------------------------
Title: Director
By: /S/ SUSAN R. CARROLL
----------------------------------------
Title: Bank Officer
BANK UNITED
By: /S/ PHIL GREEN
----------------------------------------
Title: Director Commercial Syndications
THE DAI-ICHI KANGYO BANK, LIMITED
(NEW YORK BRANCH)
By: /S/ MATTHEW G. MURPHY
----------------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK
By: /S/ JORGE A. GONZALEZ
----------------------------------------
Title: Senior Vice President
THE BANK OF NEW YORK
By: /S/ DAVID C. SIEGEL
----------------------------------------
Title: Vice President
<PAGE>
IKB DEUTSCHE INDUSTRIEBANK AG
LUXEMBOURG BRANCH
By: /S/ EDWIN BRECHT
----------------------------------------
Title: Executive Director
By: /S/ MANFRED ZIWEY
----------------------------------------
Title: Director
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /S/ TOSHIHIRO HAYASHI
----------------------------------------
Title: Senior Vice President
THE CIT GROUP/EQUIPMENT FINANCING,
INC.
By: /S/ MIKE HAMPTON
----------------------------------------
Title: Assistant Vice President
MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST
By: /S/ SHEILA A. FINNERTY
----------------------------------------
Title: Vice President
VAN KAMPEN SENIOR FLOATING RATE
FUND
By: Van Kampen Investment Advisory
Corporation
By: /S/ DARVIN D. PIERCE
----------------------------------------
Title: Vice President
<PAGE>
HELLER FINANCIAL, INC.
By: /S/ K. CRAIG GALLEHUGH
----------------------------------------
Title: Vice President
METROPOLITAN LIFE INSURANCE
COMPANY
By: /S/ JAMES R. DINGLER
----------------------------------------
Title: Director
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By: /S/ STEPHEN J. BLEWITT
----------------------------------------
Title: Senior Investment Officer
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: /S/ STEPHEN J. BLEWITT
----------------------------------------
Title: Authorized Officer
FRANKLIN FLOATING RATE TRUST
By: /S/ CHAUNCEY LUFKIN
----------------------------------------
Title: Vice President
<PAGE>
OPPENHEIMER SENIOR FLOATING
RATE FUND
By: /S/ SCOTT FARRAR
----------------------------------------
Title: Vice President
PPM SPYGLASS FUNDING TRUST
By: /S/ KELLY C. WALKER
----------------------------------------
Title: Authorized Agent
TORONTO DOMINION (NEW YORK), INC.
By: /S/ SONJA R. JORDAN
----------------------------------------
Title: Vice President
WINGED FOOT FUNDING TRUST
By: /S/ KELLY C. WALKER
----------------------------------------
Title: Authorized Agent
TRAVELERS CORPORATE LOAN FUND INC.
By: Travelers Asset Management International
Corporation
By: /S/ ALLEN R. CANTRELL
----------------------------------------
Title: Investment Officer
<PAGE>
NORSE CBO, LTD.
By: Regiment Capital Management, LLC
as its Investment Advisor
By: Regiment Capital Advisors, LLC
its manager and pursuant to delegated
authority
By: /S/ TIMOTHY S. PETERSON
----------------------------------------
Title: President
PACIFICA PARTNERS I, L.P.
By: Imperial Credit Asset Management
as its Investment Manager
By: /S/ SEAN R. WALKER
----------------------------------------
Title: Vice President
KZH CRESCENT-2 LLC
By: /S/ PETER CHIN
----------------------------------------
Title: Authorized Agent
THE TRAVELERS INSURANCE COMPANY
By: /S/ ALLEN R. CANTRELL
----------------------------------------
Title: Investment Officer
KZH CRESCENT LLC
By: /S/ PETER CHIN
----------------------------------------
Title: Authorized Agent
<PAGE>
KZH CRESCENT-3 LLC
By: /S/ PETER CHIN
----------------------------------------
Title: Authorized Agent
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By: /S/ JUSTIN L. DRISCOLL
----------------------------------------
Title: Senior Vice President
KZH ING-3 LLC
By: /S/ PETER CHIN
----------------------------------------
Title: Authorized Agent
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: /S/ STEPHEN J. BLEWITT
----------------------------------------
Title: Senior Investment Officer
INVESTORS PARTNER LIFE INSURANCE
COMPANY
By: /S/ STEPHEN J. BLEWITT
----------------------------------------
Title: Authorized Officer
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 8-K, into Georgia Gulf's previously filed
Registration Statements on Form S-3, File No. 333-57301, and Form S-8, File
No. 333-59433, File No. 33-14696, File No. 33-42008, and File No. 33-64749.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
November 17, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 333-57301) and Form S-8 (Nos. 33-14696, 33-42008,
33-64749, 333-59433) of Georgia Gulf Corporation of our report dated
September 29, 1999 relating to the financial statements of CONDEA Vista
Company Vinyls Group, which appears in the Current Report on Form 8-K of
Georgia Gulf Corporation dated November 18, 1999.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
November 18, 1999
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
GEORGIA GULF COMPLETES CONDEA VISTA ACQUISITION
- -----------------------------------------------
ATLANTA, Nov. 15, 1999 - Georgia Gulf Corporation (NYSE: GGC) today
announced it has completed the previously announced acquisition of CONDEA
Vista's vinyl business for $270 million effective November 12, 1999. Georgia
Gulf's vinyls business now has annual production capacity of 3.1 billion
pounds of vinyl chloride monomer (VCM), 2.7 billion pounds of vinyl resin and
875 million pounds of flexible and rigid compounds.
Edward A. Schmitt, president and chief executive officer of Georgia Gulf
said, "This acquisition is an important step in our strategy to become a more
integrated manufacturer of chlorovinyl products. We believe we have completed
this transaction at the right time in the cycle and at the right price. We
are looking forward to a smooth transition as well as the opportunity to
serve an even broader market with more products and the flexibility of
shipping from multiple locations."
The CONDEA Vista plants Georgia Gulf has acquired include: the VCM plant
in Lake Charles, Louisiana; a 50% joint venture interest in a VCM plant also
in Lake Charles; two vinyl resin plants located in Aberdeen, Mississippi and
Oklahoma City, Oklahoma; and three vinyl compound plants located in Aberdeen,
Mississippi; Jeffersontown, Kentucky; and Mansfield, Massachusetts.
- MORE -
<PAGE>
Georgia Gulf's chlorovinyls and aromatics businesses will now have
operations in 12 locations encompassing 22 plants and will employ about 1,500
people.
Georgia Gulf financed the acquisition, with the refinancing of certain
of its existing credit facilities, the proceeds from $200 million Senior
Subordinated 10 3/8% Notes due November 1, 2007, and a new $525 million
Senior Credit Facility. Proceeds from these financing facilities were also
used to purchase a cogeneration facility which was previously leased by the
Company. The new Senior Credit Facility is comprised of a $100 million
six-year revolving credit facility, a $225 million six-year term loan, and a
$200 seven-year term loan.
Georgia Gulf Corporation, headquartered in Atlanta and listed on the
NYSE (GGC), is a major manufacturer and marketer of two highly integrated
lines, chlorovinyls and aromatics. Georgia Gulf's chlorovinyls products
include chlorine, caustic soda, sodium chlorate, vinyl chloride monomer and
polyvinyl chloride resins and compounds. Georgia Gulf's primary aromatic
chemical products include cumene, phenol and acetone.
This news release contains forward-looking statements subject to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management's assumptions
regarding business conditions, and actual results may be materially
different. Risks and uncertainties inherent in these assumptions include, but
are not limited to, future global economic conditions, industry production
capacity, and other factors discussed in the Securities and Exchange
Commission filings of Georgia Gulf Corporation, including the annual report
on form 10K for the year ended December 31, 1998 and the quarterly report on
form 10Q for the quarter ended September 30, 1999.
# # #
<PAGE>
EXHIBIT 99.2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder and Board of Directors of
CONDEA Vista Company:
In our opinion, the accompanying balance sheets and the related statements of
income and changes in owner's investment and of cash flows present fairly, in
all material respects, the financial position of the CONDEA Vista Company Vinyls
Group at June 30, 1999 and 1998, and the results of its operations and its cash
flows for each of the three years in the period ended June 30, 1999 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
September 29, 1999
Houston, Texas
1
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1999 1998
-------- --------
<S> <C> <C>
IN THOUSANDS
ASSETS
Current assets:
Cash...................................................... $ 18 $ 13
Accounts receivable....................................... 70,430 54,016
Inventories............................................... 43,881 42,544
Other current assets...................................... 484 642
-------- --------
Total current assets...................................... 114,813 97,215
Property, plant and equipment, net.......................... 223,910 237,854
Other assets................................................ 1,259 1,613
-------- --------
Total assets.............................................. $339,982 $336,682
======== ========
LIABILITIES AND OWNER'S INVESTMENT
Current liabilities:
Accounts payable.......................................... $ 35,185 $ 26,950
Accrued liabilities....................................... 13,981 13,163
-------- --------
Total current liabilities................................. 49,166 40,113
Deferred income taxes....................................... 46,356 29,496
Other liabilities and deferred credits...................... 6,178 19,765
Commitments and contingencies............................... -- --
Owner's investment.......................................... 238,282 247,308
-------- --------
Total liabilities and owner's investment.................. $339,982 $336,682
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
STATEMENTS OF INCOME AND CHANGES IN OWNER'S INVESTMENT
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Net sales................................................... $344,907 $403,129 $394,393
Costs and expenses:
Cost of sales............................................. 318,520 400,289 380,627
Depreciation and amortization............................. 29,408 25,151 22,909
Impairment of long-lived assets........................... -- -- 1,571
Litigation................................................ (7,000) 42,100 5,000
Selling, general and administrative....................... 26,956 30,127 26,052
-------- -------- --------
367,884 497,667 436,159
-------- -------- --------
Loss from operations........................................ (22,977) (94,538) (41,766)
Interest expense............................................ (10,335) (10,196) (8,890)
-------- -------- --------
Loss before income taxes.................................... (33,312) (104,734) (50,656)
Income tax benefit:
Current................................................... (29,685) (48,283) (18,100)
Deferred.................................................. 16,860 7,960 (1,403)
-------- -------- --------
(12,825) (40,323) (19,503)
Net loss.................................................... (20,487) (64,411) (31,153)
Net transfers from owner.................................... 11,461 27,683 56,688
Owner's investment, beginning of period..................... 247,308 284,036 258,501
-------- -------- --------
Owner's investment, end of period........................... $238,282 $247,308 $284,036
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Cash flows from operating activities
Net loss.................................................. $(20,487) $(64,411) $(31,153)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation and amortization........................... 29,408 25,151 22,909
Impairment of long-lived assets......................... -- -- 1,571
Gain on disposal of assets.............................. -- (1,106) --
Loss on retirement of assets............................ 6 83 --
Deferred income taxes................................... 16,860 7,960 (1,403)
(Increase) decrease in accounts receivable.............. (16,414) 13,270 (11,007)
(Increase) decrease in inventories...................... (1,337) 6,190 (7,254)
Decrease in other current assets........................ 158 800 21
Increase (decrease) in accounts payable and accrued
liabilities........................................... 9,053 (14,890) 16,949
(Decrease) increase in other liabilities and deferred
credits............................................... (13,587) 14,337 --
-------- -------- --------
Net cash provided (used) by operating activities........ $ 3,660 $(12,616) $ (9,367)
Cash flows from investing activities
Capital expenditures...................................... (15,116) (21,606) (47,321)
Proceeds from sale of assets.............................. -- 6,534 --
-------- -------- --------
Net cash used by investing activities..................... $(15,116) $(15,072) $(47,321)
Cash flows from financing activities
Net transfers from owner.................................. 11,461 27,683 56,688
-------- -------- --------
Net cash provided by financing activities................. $ 11,461 $ 27,683 $ 56,688
Net change in cash.......................................... 5 (5) --
Cash at beginning of period................................. 13 18 18
-------- -------- --------
Cash at end of period....................................... $ 18 $ 13 $ 18
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The financial statements, prepared in accordance with U.S. generally
accepted accounting principles, include the accounts of CONDEA Vista Company's
(the "Company") Vinyls chain (the "Vinyls Group"). The Vinyls Group includes the
Aberdeen, Mississippi, Jeffersontown, Kentucky and Mansfield, Massachusetts
polyvinyl chloride ("PVC") compound plants; the Aberdeen, Mississippi and
Oklahoma City, Oklahoma PVC resin plants; the Lake Charles, Louisiana Vinyl
Chloride Monomer ("VCM") plant; as well as the Vinyls Group's investment in PHH
Monomers, LLC joint venture VCM facility located at the PPG Industries facility
in Lake Charles, Louisiana. The Vinyls Group's financial statements have been
derived from the historical books and records of the Company. Therefore, certain
financial amounts have been allocated by the Company in order to present the
financial results of the Vinyls Group on a stand-alone basis (See Note 9).
Management believes such allocations are reasonable, however, the costs
allocated to the Vinyls Group may not necessarily be indicative of the costs
that would have been incurred if the Vinyls Group had operated on a stand-alone
basis.
The Company utilizes a centralized cash management function for all
operations. Cash provided or used by the Vinyls Group is transferred to or from
the Company resulting in reductions or additions to Owner's Investment. The net
transfers are reflected as financing activities on the Statement of Cash Flows.
The Vinyls Group has a permanent petty cash fund of approximately $18,000 and
$13,000 at June 30, 1999 and 1998, respectively.
On August 30, 1999 the Company executed an Asset Purchase Agreement to
divest the Vinyls Group to a third party for a cash purchase price of
approximately $270,000,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Vinyls Group engages in the manufacture of PVC resins and compounds,
which are sold mainly in the United States. Revenues are recognized in the
period the goods are shipped.
INVENTORIES
Inventories are stated at the lower of cost or market; cost is determined on
the last-in, first-out ("LIFO") basis except for materials and supplies which
are valued at average cost.
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, including capitalized interest, are carried
at cost net of accumulated depreciation and amortization. Major additions are
capitalized while repairs and maintenance costs are charged to operations as
incurred. Property, plant and equipment are depreciated generally on the
straight-line basis over their estimated useful lives. The estimated useful
lives of assets range from three to fifteen years. Upon disposition of an asset,
the accumulated depreciation is deducted from the original cost and any gain or
loss is credited or charged to income.
EXCHANGES
The Vinyls Group has entered into raw material and finished product exchange
agreements with other chemical producers. These exchange transactions are not
accounted for as purchases and sales since the transactions are of a
non-monetary nature and involve commodity chemicals in the same line of
business.
5
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Taxes on income are accounted for using the asset and liability method
wherein deferred tax assets and liabilities are recognized for the future tax
consequences of temporary differences between the carrying amounts and tax bases
of assets and liabilities using enacted rates. The Vinyls Group is included in
the Company's consolidated federal and state income tax returns. Income and
deferred taxes are calculated for the Vinyls Group on a stand-alone basis.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the dates of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
3. INVENTORIES
The components of inventory at June 30, 1999 and 1998 are summarized as
follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Feedstocks, intermediates and finished products under
LIFO.................................................... $31,092 $30,688
Materials and supplies at average cost.................... 12,789 11,856
------- -------
$43,881 $42,544
======= =======
</TABLE>
Replacement cost exceeds LIFO cost by approximately $3,590,000 and
$2,720,000 at June 30, 1999 and 1998, respectively.
4. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment at June 30, 1999 and 1998
and their respective estimated useful lives are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Machinery and equipment (10 years)...................... $364,819 $352,184
Buildings (15 years).................................... 17,704 16,714
Lab equipment (5 years)................................. 2,618 2,333
Land.................................................... 3,244 2,044
-------- --------
388,385 373,275
Less accumulated depreciation........................... 164,475 135,421
-------- --------
$223,910 $237,854
======== ========
</TABLE>
Repairs and maintenance expense charged to operations was approximately
$13,413,000, $12,455,000 and $11,166,000 for the twelve months ended June 30,
1999, 1998 and 1997, respectively.
6
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Total interest capitalized was approximately $166,000, $1,984,000 and
$1,204,000 for the twelve months ended June 30, 1999, 1998 and 1997,
respectively.
In December 1997 the Company entered into a sale leaseback agreement. As a
result of the agreement, the owned railcar fleet associated with the Vinyls
Group was sold and the fleet is being leased back based on contractual rates and
terms which vary by the type of railcar. The pre-tax gain on the sale of the
Vinyls Group railcars was approximately $6,534,000 of which approximately
$3,478,000 and $4,764,000 of the gain was deferred at June 30, 1999 and 1998,
respectively. The balance of the deferred gain is being amortized as a direct
reduction of railcar lease expense over the remaining terms of the lease
agreement. Amounts related to the sale leaseback transaction are allocated by
the Company based on the percentage of railcars identified as being directly
associated with the Vinyls Group.
Effective July 1, 1996, the Company adopted SFAS No. 121 which requires that
long-lived assets held and used by an entity be reviewed for impairment,
whenever events or changes indicate that the net book value of the asset may not
be recoverable. An impairment loss is recognized if the sum of expected future
cash flows from the use of the asset is less than the book value of the asset.
Under SFAS No. 121, the Company evaluates its properties on a
location-by-location basis. Based on estimated future cash flows, the Company
adjusted the net book values of long-lived assets to their estimated fair value
in fiscal year 1997. As a result, the Vinyls Group recognized a noncash, pretax
charge to earnings of approximately $1,571,000.
5. ACCRUED LIABILITIES
The components of accrued liabilities at June 30, 1999 and 1998 are
summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Accrued customer rebates.................................. $ 5,567 $ 5,617
Property tax.............................................. 1,051 1,036
Freight................................................... 2,346 1,592
Employee related liabilities other than retirement
benefits................................................ 3,033 2,800
Other..................................................... 1,984 2,118
------- -------
$13,981 $13,163
======= =======
</TABLE>
6. INCOME TAXES
An analysis of the Vinyls Group effective income tax rate for the twelve
months ended June 30, 1999, 1998 and 1997 is as follows:
<TABLE>
<S> <C>
Income tax benefit:
Federal statutory rate.................................... 35.0%
State income tax net of federal benefit................... 3.5
----
38.5%
====
</TABLE>
7
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
The deferred income tax assets and liabilities recorded on the balance sheet
at June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
TEMPORARY DIFFERENCES
Assets:
Accrued liabilities..................................... $ 1,483 $ 6,514
------- -------
Liabilities:
Depreciation............................................ $47,839 $36,010
------- -------
Net deferred liability.................................... $46,356 $29,496
======= =======
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
LEASE OBLIGATIONS
The Vinyls Group leases plant and office equipment, storage/transfer
facilities, land and railcars under long-term and short-term operating leases.
Total rental expense was approximately $8,162,000, $7,736,000 and $5,532,000 for
the twelve months ended June 30, 1999, 1998 and 1997, respectively.
Future minimum lease commitments for noncancelable operating leases at
June 30, 1999 are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR TOTAL
- ----------- --------------
(IN THOUSANDS)
<S> <C>
2000........................................................ $10,211
2001........................................................ 7,890
2002........................................................ 6,192
2003........................................................ 5,036
2004........................................................ 3,177
2005 and thereafter......................................... 20,352
-------
Total....................................................... $52,858
=======
</TABLE>
PURCHASE COMMITMENTS
The Vinyls Group has various purchase commitments for materials, supplies
and services incident to the ordinary conduct of business. Such commitments are
not at prices in excess of current market. The major raw materials consumed in
the manufacture of PVC are produced by the Vinyls Group, purchased from the
Company and purchased from third party manufacturers. Ethylene and alcohol is
purchased from the Company and chlorine is purchased from third party
manufacturers.
LEGAL PROCEEDINGS
The Company currently has numerous separate pending cases which originated
as a result of a 1994 rupture of the Conoco Ethylene Dichloride (EDC) pipeline
connecting Conoco's dock to the Vinyls Group's VCM plant. Plaintiffs are seeking
compensatory and punitive damages as a result of
8
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
alleged exposure to EDC while employed for contractors hired by Conoco to clean
up the EDC. On October 13, 1997, a jury in the 14(th) Judicial District Court,
Calcasieu Parish, Louisiana, returned a verdict against the Company in lawsuits
brought by two of Conoco's contractor's employees who were not working on the
cleanup. The Company appealed the verdict and, along with Conoco, settled with
the plaintiffs for an undisclosed amount. The Company does not believe that the
rulings related to the two above cases adversely affects the majority of the
other cases. The remaining EDC pipeline cases relate to workers specifically
hired by Conoco to clean up the spill. The Company has not completed discovery
on these suits.
Also, the Company has filed a suit against Conoco for indemnification for
the pending and future cases related to the above EDC pipeline cleanup, as well
as declaratory judgement that the Company is not responsible for the costs of
the EDC pipeline spill. Conoco has since filed a counter suit against the
Company. Conoco has also filed suit against the Company seeking recovery of
cleanup costs incurred by Conoco related to the rupture of the EDC pipeline.
Pursuant to the contract between the Company and Conoco, Conoco was responsible
for operation and maintenance of the pipeline and all liabilities resulting
therefrom.
In 1998, the Company settled a class action suit styled SALLY COMEAUX ET AL.
V. VISTA CHEMICAL COMPANY ET AL. ("COMEAUX). This class action was brought by
the residents of Mossville, Louisiana, a community adjacent to the Vinyls' Group
VCM Plant, alleging groundwater contamination caused by EDC. As a result of the
settlement, the litigation accrual was adjusted resulting in a credit to
earnings of $7,000,000 for the twelve months ended June 30, 1999. Five
plaintiffs have opted out of the original settlement and are pursuing individual
claims for unspecified damages. The Company is currently in the discovery phase
of the five suits.
Conoco/DuPont filed suit against the Company alleging bad faith in its
dealings in the COMEAUX litigation discussed above. Conoco/DuPont are seeking
reimbursement of the settlement amount they paid to the COMEAUX plaintiffs plus
additional unspecified damages. Since the basis of the COMEAUX class action is
EDC groundwater contamination, which primarily occurred prior to the Company's
formation in 1984, Conoco/DuPont retained liability for this contamination
pursuant to an agreement between the parties.
In addition to the above claims, the Company is a named defendant in
numerous other lawsuits and named parties in governmental proceedings arising in
the ordinary course of business. The Company does not believe that the Vinyls
Group will incur any additional material litigation liability related to any of
the above claims. Additionally, pursuant to the Asset Purchase Agreement, the
Company has indemnified the third party purchaser of the Vinyls Group for any
liabilities and obligations relating to any litigation, action, suit, claim,
investigation or proceeding against the Vinyls Group pending on the closing date
of the sale.
8. EMPLOYEE BENEFIT PLANS
The Vinyls Group participates in benefit plans in which assets and
liabilities are controlled by the Company and are the responsibility of the
Company. The benefit plan assets and liabilities associated with the Vinyls
Group's employees are reflected on the Company's balance sheet and are not
included in the balance sheet presentation of the Vinyls Group. However, the
expenses associated with personnel identified as Vinyls Group's employees are
included in cost of sales in the accompanying Statement
9
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. EMPLOYEE BENEFIT PLANS (CONTINUED)
of Income and Changes in Owner's Investment and amounted to approximately
$6,331,000, $5,022,000 and $5,108,000 for the twelve months ended June 30, 1999,
1998 and 1997, respectively.
9. RELATED PARTY TRANSACTIONS
The Vinyls Group purchases ethylene and alcohol from the Company at prices
that approximate market. The costs of these raw materials for the twelve months
ended June 30, 1999, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Alcohol........................................ $ 6,904 $ 6,039 $ 5,415
Ethylene....................................... 103,735 92,559 96,899
-------- ------- --------
$110,639 $98,598 $102,314
======== ======= ========
</TABLE>
The Vinyls Group has been charged for financial and operational support
services provided by the Company. Marketing, business management, customer
service/logistics and other support service costs are allocated based on
budgeted manhours, services and other costs incurred on behalf of the Vinyls
Group. These costs comprise the selling, general and administrative expenses in
the Statement of Income and Changes in Owner's Investment for twelve months
ended June 30, 1999, 1998 and 1997.
For the purpose of providing stand-alone financial statements for the Vinyls
Group, interest expense has been calculated on a basis derived from the
June 30, 1997 ratio of gross fixed assets applied to the outstanding debt of the
Company and additions to the basis are based on accumulated net additions to
Owner's Investment for the twelve months ended June 30, 1999 and 1998. Rates are
based on effective interest rates associated with the Company's long-term debt
which were 6.0%, 6.1% and 6.1% for the fiscal years ended June 30, 1999, 1998
and 1997, respectively.
10. GEOGRAPHIC INFORMATION
Export sales for the twelve months ended June 30, 1999, 1998 and 1997 were
$38.6 million, $80.2 million, and $52.4 million, respectively. All long-lived
assets of the Vinyls Group are located in the United States.
10
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1999 1999
------------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 15 $ 18
Accounts receivable....................................... 74,037 70,430
Inventories............................................... 41,544 43,881
Other current assets...................................... 888 484
-------- --------
Total current assets...................................... 116,484 114,813
Property, plant and equipment, net.......................... 218,400 223,910
Other assets................................................ 1,173 1,259
-------- --------
Total assets.............................................. $336,057 $339,982
======== ========
LIABILITIES AND OWNER'S INVESTMENT
Current liabilities:
Accounts payable.......................................... $ 34,289 $ 35,185
Accrued liabilities....................................... 15,133 13,981
-------- --------
Total current liabilities................................. 49,422 49,166
Deferred income taxes....................................... 48,285 46,356
Other liabilities and deferred credits...................... 5,875 6,178
Commitments and contingencies............................... -- --
Owner's investment.......................................... 232,475 238,282
-------- --------
Total liabilities and owner's investment.................. $336,057 $339,982
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
CONDENSED STATEMENTS OF INCOME AND CHANGES IN OWNER'S INVESTMENT (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
---------------------
1999 1998
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Net sales................................................... $111,958 $ 82,546
Costs and expenses:
Cost of sales............................................. 98,669 80,065
Depreciation and amortization............................. 7,304 7,151
Selling, general and administrative....................... 6,114 7,876
-------- --------
112,087 95,092
-------- --------
Loss from operations........................................ (129) (12,546)
Interest expense............................................ (2,498) (2,515)
-------- --------
Loss before income taxes.................................... (2,627) (15,061)
Income tax benefit:
Current................................................... (2,940) (10,038)
Deferred.................................................. 1,929 4,240
-------- --------
(1,011) (5,798)
Net loss.................................................... (1,616) (9,263)
Net transfers (to) from owner............................... (4,191) 953
Owner's investment, beginning of period..................... 238,282 247,308
-------- --------
Owner's investment, end of period........................... $232,475 $238,998
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
-------------------------
1999 1998
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities
Net loss.................................................. $(1,616) $(9,263)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation and amortization........................... 7,304 7,151
Deferred income taxes................................... 1,929 4,240
(Increase) decrease in accounts receivable.............. (3,607) 1,551
Decrease in inventories................................. 2,337 3,482
Increase in other current assets........................ (404) (151)
Increase (decrease) in accounts payable and accrued
liabilities........................................... 256 (3,338)
Decrease in other liabilities and deferred credits...... (303) (772)
------- -------
Net cash provided by operating activities................. $ 5,896 $ 2,900
Cash flows from investing activities
Capital expenditures...................................... (1,708) (3,850)
------- -------
Net cash used by investing activities..................... $(1,708) $(3,850)
Cash flows from financing activities
Net transfers (to) from owners............................ (4,191) 953
------- -------
Net cash (used) provided by financing activities.......... $(4,191) $ 953
Net change in cash.......................................... (3) 3
Cash at beginning of period................................. 18 13
------- -------
Cash at end of period....................................... $ 15 $ 16
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
'
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PREPARATION
The financial statements for Condea Vista Company's (the "Company") Vinyls
chain (the "Vinyls Group") with respect to the interim three month period ended
September 30, 1999 and 1998 are unaudited. The financial statements have been
prepared in accordance with U.S. generally accepted accounting principles and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The Vinyls
Group's financial statements have been derived from the historical books and
records of the Company. Therefore, certain financial amounts have been allocated
by the Company in order to present the financial results of the Vinyls Group on
a stand-alone basis. Management believes such allocations are reasonable,
however, the costs allocated to the Vinyls Group may not necessarily be
indicative of the costs that would have been incurred if the Vinyls Group had
operated on a stand-alone basis. In addition, it is the opinion of management
that all adjustments, consisting only of normal, recurring adjustments
considered for fair presentation, have been included. For further information,
refer to the Condea Vista Company Vinyls Group financial statements and the
accompanying notes for June 30, 1999 and 1998 and for each of the three years in
the period ended June 30, 1999.
2. ORGANIZATION
On August 30, 1999 the Company executed an Asset Purchase Agreement to
divest the Vinyls Group to a third party for a cash purchase price of
approximately $270,000,000.
3. INVENTORIES
The components of inventory at September 30, 1999 and June 30, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER JUNE
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Feedstocks, intermediates and finished products under
LIFO................................................... $28,066 $31,092
Materials and supplies at average cost................... 13,478 12,789
------- -------
$41,544 $43,881
======= =======
</TABLE>
4. CONTINGENCIES
LEGAL PROCEEDINGS
The Company currently has numerous separate pending cases which originated
as a result of a 1994 rupture of the Conoco Ethylene Dichloride (EDC) pipeline
connecting Conoco's dock to the Vinyls Group's VCM plant. Plaintiffs are seeking
compensatory and punitive damages as a result of alleged exposure to EDC while
employed for contractors hired by Conoco to clean up the EDC. On October 13,
1997, a jury in the 14(th) Judicial District Court, Calcasieu Parish, Louisiana,
returned a verdict against the Company in lawsuits brought by two of Conoco's
contractors' employees who were not working on the cleanup. The Company appealed
the verdict and, along with Conoco, settled with the plaintiffs for an
undisclosed amount. The Company does not believe that the rulings relate to the
two above cases adversely affects the majority of the other cases. The remaining
EDC pipeline cases relate to workers specifically hired by Conoco to clean up
the spill. The Company has not completed discovery on these suits.
14
<PAGE>
CONDEA VISTA COMPANY VINYLS GROUP
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. CONTINGENCIES (CONTINUED)
Also, the Company has filed a suit against Conoco for indemnification for
the pending and future cases related to the above EDC pipeline cleanup, as well
as declaratory judgement that the Company is not responsible for the costs of
the EDC pipeline spill. Conoco has since filed a counter suit against the
Company. Conoco has also filed suit against the Company seeking recovery of
cleanup costs incurred by Conoco related to the rupture of the EDC pipeline.
Pursuant to the contract between the Company and Conoco, Conoco was responsible
for operation and maintenance of the pipeline and all liabilities resulting
therefrom.
In 1998, the Company settled a class action suit styled SALLY COMEAUX ET AL.
V. VISTA CHEMICAL COMPANY ET AL. ("COMEAUX"). This class action was brought by
the residents of Mossville, Louisiana, a community adjacent to the Vinyls
Group's VCM plant, alleging groundwater contamination caused by EDC. As a result
of the settlement, the litigation accrual was adjusted resulting in a credit to
earnings of $7,000,000 for the twelve months ended June 30, 1999. Five
plaintiffs have opted out of the original settlement and are pursuing individual
claims for unspecified damages. The Company is currently in the discovery phase
of the five suits.
Conoco/DuPont filed suit against the Company alleging bad faith in its
dealings in the COMEAUX litigation discussed above. Conoco/DuPont are seeking
reimbursement of the settlement amount they paid to the COMEAUX plaintiffs plus
additional unspecified damages. Since the basis of the COMEAUX class action is
EDC groundwater contamination, which primarily occurred prior to the Company's
formation in 1984, Conoco/DuPont retained liability for this contamination
pursuant to an agreement between the parties.
In addition to the above claims, the Company is a named defendant in
numerous other lawsuits and named parties in governmental proceedings arising in
the ordinary course of business. The Company does not believe that the Vinyls
Group will incur any additional material litigation liability related to any of
the above claims. Additionally, pursuant to the Asset Purchase Agreement, the
Company has indemnified the third party purchaser of the Vinyls Group for any
liabilities and obligations relating to any litigation action, suit, claim,
investigation or proceeding against the Vinyls Group pending on the closing date
of the sale.
5. RELATED PARTY TRANSACTIONS
The Vinyls Group purchases ethylene and alcohol from the Company at prices
that approximate market. The costs of these raw materials for the three months
ended September 30, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(THOUSANDS)
<S> <C> <C>
Alcohol................................................... $ 1,806 $ 1,650
Ethylene.................................................. 33,024 20,834
------- -------
$34,830 $22,484
======= =======
</TABLE>
15
<PAGE>
EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following unaudited pro forma combined, condensed financial statements
have been derived by the application of pro forma adjustments to the historical
financial statements of Georgia Gulf and the vinyls business of CONDEA Vista
included as exhibits to this Form 8-K. The pro forma balance sheet gives effect
to the offering of the 10 3/8% notes, the refinancing of Georgia Gulf's senior
credit facility, the purchase of the co-generation facility under the terms of
the operating lease and the acquisition of the vinyls business of CONDEA Vista
as if these transactions occurred on September 30, 1999. The pro forma statement
of income for the fiscal year ended December 31, 1998 and the nine months ended
September 30, 1999 gives effect to the offering of the 10 3/8% notes, the
refinancing of Georgia Gulf's senior credit facility, the purchase of the
co-generation facility under the terms of the operating lease and the
acquisition of the vinyls business of CONDEA Vista as if these transactions had
occurred on January 1, 1998. The pro forma statement of income for the twelve
months ended September 30, 1999 gives effect to the offering of the 10 3/8%
notes, the refinancing of Georgia Gulf's senior credit facility, the purchase of
the co-generation facility under the terms of the operating lease and the
acquisition of the vinyls business of CONDEA Vista as if these transactions
occurred on October 1, 1998. The pro forma balance sheet and the pro forma
statements of income should not be considered indicative of actual results that
would have been achieved had the transactions described above been consummated
on the dates or for the periods indicated. Also, the pro forma balance sheet
data and statements of income should not be viewed as indicative of Georgia
Gulf's balance sheet data or results of operations as of any future date or for
any future period. The pro forma combined financial statements should be read in
conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Georgia Gulf Corporation", "Management's
Discussion and Analysis of Financial Condition and Results of Operations of the
Vinyls Business of CONDEA Vista Company" and the financial statements and
related notes included elsewhere in this Form 8-K to which this exhibit is
attached.
1
<PAGE>
GEORGIA GULF
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-----------------------------------------------------------------
ADJUSTMENTS ADJUSTED
VINYLS TO VINYLS VINYLS
BUSINESS(1) BUSINESS BUSINESS GEORGIA GULF(5)
----------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C>
NET SALES............................ $341,668 $ -- $341,668 $825,292
-------- -------- -------- --------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 330,166 -- 330,166 652,347
Certain litigation settlements..... 15,600 (15,600) (2) -- --
Other operating costs and
expenses......................... 59,282 (6,000) (2) 53,282 42,455
-------- -------- -------- --------
Total operating expenses......... 405,048 (21,600) 383,448 694,802
-------- -------- -------- --------
OPERATING INCOME (LOSS).............. (63,380) 21,600 (41,780) 130,490
-------- -------- -------- --------
OTHER EXPENSE (INCOME)
Interest expense................... 10,333 (10,333) (3) -- 30,867
Interest income.................... -- -- -- (49)
Other expense, net................. -- -- -- 9,500
-------- -------- -------- --------
10,333 (10,333) -- 40,318
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES.... (73,713) 31,933 (41,780) 90,172
INCOME TAX PROVISION (BENEFIT)....... (28,380) 11,815 (4) (16,565) 33,587
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS......................... $(45,333) $ 20,118 $(25,215) $ 56,585
======== ======== ======== ========
PER COMMON SHARE:
Income from continuing
operations....................... $ 1.80
========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING........................ 31,474
========
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-------------------------------------
PRO FORMA CONSOLIDATED
ADJUSTMENTS PRO FORMA
----------- ------------
<S> <C> <C> <C>
NET SALES............................ $ -- $1,166,960
-------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 4,311 (6) 973,914
(11,700) (7)
9,312 (8)
(10,522) (9)
Certain litigation settlements..... -- --
Other operating costs and
expenses......................... -- 95,737
-------- ----------
Total operating expenses......... (8,599) 1,069,651
-------- ----------
OPERATING INCOME (LOSS).............. 8,599 97,309
-------- ----------
OTHER EXPENSE (INCOME)
Interest expense................... 41,616 (10) 72,483
Interest income.................... -- (49)
Other expense, net................. -- 9,500
-------- ----------
41,616 81,934
-------- ----------
INCOME (LOSS) BEFORE INCOME TAXES.... (33,017) 15,375
INCOME TAX PROVISION (BENEFIT)....... (12,216) (4) 4,806
-------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS......................... $(20,801) $ 10,569
======== ==========
PER COMMON SHARE:
Income from continuing
operations....................... $ 0.34
==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING........................ 31,474
==========
</TABLE>
2
<PAGE>
GEORGIA GULF
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------------
ADJUSTMENTS ADJUSTED
VINYLS TO VINYLS VINYLS
BUSINESS(1) BUSINESS BUSINESS
----------- ----------- --------
<S> <C> <C> <C> <C>
NET SALES............................. $374,319 $ -- $374,319
-------- ------- --------
OPERATING COSTS AND EXPENSES
Cost of sales....................... 337,124 -- 337,124
Certain litigation settlements...... (7,000) 7,000 (2) --
Other operating costs and
expenses.......................... 54,755 (2,000) (2) 52,755
-------- ------- --------
Total operating expenses.......... 384,879 5,000 389,879
-------- ------- --------
OPERATING INCOME (LOSS)............... (10,560) (5,000) (15,560)
-------- ------- --------
OTHER EXPENSE (INCOME)
Interest expense.................... 10,318 (10,318) (3) --
Interest income..................... -- -- --
-------- ------- --------
10,318 (10,318) --
-------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES..... (20,878) 5,318 (15,560)
INCOME TAX PROVISION (BENEFIT)........ (8,038) 1,968 (4) (6,070)
-------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS.......................... $(12,840) $ 3,350 $(9,490)
======== ======= ========
PER COMMON SHARE:
Income from continuing operations...
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING.........................
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------------------------
PRO FORMA CONSOLIDATED
GEORGIA GULF(5) ADJUSTMENTS PRO FORMA
--------------- ----------- ------------
<S> <C> <C> <C> <C>
NET SALES............................. $759,832 $ -- $1,134,151
-------- -------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales....................... 635,771 4,311 (6) 947,456
(11,700) (7)
(5,635) (8)
(12,415) (9)
Certain litigation settlements...... -- -- --
Other operating costs and
expenses.......................... 38,602 -- 91,357
-------- -------- ----------
Total operating expenses.......... 674,373 (25,439) 1,038,813
-------- -------- ----------
OPERATING INCOME (LOSS)............... 85,459 25,439 95,338
-------- -------- ----------
OTHER EXPENSE (INCOME)
Interest expense.................... 29,763 41,754 (10) 71,517
Interest income..................... (108) -- (108)
-------- -------- ----------
29,655 41,754 71,409
-------- -------- ----------
INCOME (LOSS) BEFORE INCOME TAXES..... 55,804 (16,315) 23,929
INCOME TAX PROVISION (BENEFIT)........ 20,473 (6,037) (4) 8,366
-------- -------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS.......................... $ 35,331 $(10,278) $ 15,563
======== ======== ==========
PER COMMON SHARE:
Income from continuing operations... $ 1.14 $ 0.50
======== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING......................... 30,897 30,897
======== ==========
</TABLE>
3
<PAGE>
GEORGIA GULF
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------------------------------
ADJUSTMENTS ADJUSTED
VINYLS TO VINYLS VINYLS
BUSINESS(1) BUSINESS BUSINESS GEORGIA GULF(5)
----------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C>
NET SALES............................ $295,192 $ -- $295,192 $573,253
-------- -------- -------- --------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 265,677 -- 265,677 487,122
Certain litigation settlements..... -- -- -- --
Other operating costs and
expenses......................... 40,072 (1,500) (2) 38,572 29,206
-------- -------- -------- --------
Total operating expenses......... 305,749 (1,500) 304,249 516,328
-------- -------- -------- --------
OPERATING INCOME (LOSS).............. (10,557) 1,500 (9,057) 56,925
-------- -------- -------- --------
OTHER EXPENSE (INCOME)
Interest expense................... 7,598 (7,598) (3) -- 21,827
Interest income.................... -- -- -- (108)
-------- -------- -------- --------
7,598 (7,598) -- 21,719
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES.... (18,155) 9,098 (9,057) 35,206
INCOME TAX PROVISION (BENEFIT)....... (6,989) 3,366 (4) (3,623) 12,850
-------- -------- -------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS......................... $(11,166) $ 5,732 $(5,434) $ 22,356
======== ======== ======== ========
PER COMMON SHARE:
Income from continuing
operations....................... $ 0.72
========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING........................ 30,919
========
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------
PRO FORMA CONSOLIDATED
ADJUSTMENTS PRO FORMA
----------- ------------
<S> <C> <C> <C>
NET SALES............................ $ -- $868,445
-------- --------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 3,233 (6) 730,821
(8,775) (7)
(6,880) (8)
(9,556) (9)
Certain litigation settlements..... -- --
Other operating costs and
expenses......................... -- 67,778
-------- --------
Total operating expenses......... (21,978) 798,599
-------- --------
OPERATING INCOME (LOSS).............. 21,978 69,846
-------- --------
OTHER EXPENSE (INCOME)
Interest expense................... 31,381 (10) 53,208
Interest income.................... -- (108)
-------- --------
31,381 53,100
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES.... (9,403) 16,746
INCOME TAX PROVISION (BENEFIT)....... (3,479) (4) 5,748
-------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS......................... $ (5,924) $ 10,998
======== ========
PER COMMON SHARE:
Income from continuing
operations....................... $ 0.36
========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING........................ 30,919
========
</TABLE>
4
<PAGE>
GEORGIA GULF
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
-------------------------------------------------------------------
ADJUSTMENTS ADJUSTED
VINYLS TO VINYLS VINYLS
BUSINESS(11) BUSINESS BUSINESS GEORGIA GULF(11)
------------ ----------- -------- ----------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........ $ 15 $ -- $ 15 $ 3,213
Receivables, net of allowance for
doubtful accounts.............. 74,037 -- 74,037 64,076
Inventories...................... 41,544 -- 41,544 67,755
Other current assets............. 888 -- 888 9,276
-------- -------- -------- --------
Total current assets........... 116,484 -- 116,484 144,320
-------- -------- -------- --------
PROPERTY, PLANT AND EQUIPMENT,
net.............................. 218,400 (2,219) (12) 216,181 365,924
-------- -------- -------- --------
OTHER ASSETS....................... 1,173 1,173 116,428
NET ASSETS FROM DISCONTINUED
OPERATIONS....................... -- -- -- 3,532
-------- -------- -------- --------
Total other assets............. 1,173 -- 1,173 119,960
-------- -------- -------- --------
Total assets................... $336,057 $ (2,219) $333,838 $630,204
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term
debt........................... $ -- $ -- $ -- $ --
Accounts payable................. 34,289 34,289 78,963
Accrued liabilities.............. 15,133 -- 15,133 29,594
-------- -------- -------- --------
Total current liabilities...... 49,422 -- 49,422 108,557
-------- -------- -------- --------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current
maturities....................... -- -- -- 396,525
DEFERRED INCOME TAXES.............. 48,285 (48,285) (12) -- 90,861
OTHER LONG-TERM LIABILITIES........ 5,875 (5,875) (12) -- --
STOCKHOLDERS' EQUITY............... 232,475 51,941 (12) 284,416 34,261
-------- -------- -------- --------
Total liabilities and
stockholders' equity......... $336,057 $ (2,219) $333,838 $630,204
======== ======== ======== ========
<CAPTION>
AS OF SEPTEMBER 30, 1999
-------------------------------------
PRO FORMA CONSOLIDATED
ADJUSTMENTS PRO FORMA
----------- ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........ $ (3,228) (16) $ --
Receivables, net of allowance for
doubtful accounts.............. -- 138,113
Inventories...................... 6,880 (13) 116,179
Other current assets............. -- 10,164
--------- ----------
Total current assets........... 3,652 264,456
--------- ----------
PROPERTY, PLANT AND EQUIPMENT,
net.............................. (10,431) (13) 679,454
107,780 (14)
--------- ----------
OTHER ASSETS....................... (1,173) (13) 131,928
15,500 (15)
NET ASSETS FROM DISCONTINUED
OPERATIONS....................... -- 3,532
--------- ----------
Total other assets............. 14,327 135,460
--------- ----------
Total assets................... $ 115,328 $1,079,370
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUIT
CURRENT LIABILITIES
Current maturities of long-term
debt........................... $ 22,000 $ 22,000
Accounts payable................. -- 113,252
Accrued liabilities.............. -- 44,727
--------- ----------
Total current liabilities...... 22,000 179,979
--------- ----------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current
maturities....................... 649,344 (16) 774,269
(271,600) (17)
DEFERRED INCOME TAXES.............. -- 90,861
OTHER LONG-TERM LIABILITIES........ -- --
STOCKHOLDERS' EQUITY............... (284,416) (18) 34,261
--------- ----------
Total liabilities and
stockholders' equity......... $ 115,328 $1,079,370
========= ==========
</TABLE>
5
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL DATA
(UNAUDITED)
(1) Represents the results of operations of the vinyls business of CONDEA Vista
for the periods presented. CONDEA Vista's fiscal year end is June 30;
therefore, all periods presented have been conformed with Georgia Gulf's
year-end of December 31.
(2) Represents elimination of litigation settlements relating to environmental
contamination and other environmental matters relating to the Lake Charles
VCM facility and other related costs and income items pertaining to specific
legal actions that Georgia Gulf did not assume as part of the acquisition of
the vinyls business of CONDEA Vista.
(3) Represents elimination of interest expense allocated to the vinyls business
of CONDEA Vista.
(4) Reflects the income tax effect of the adjustments, applying a combined
federal and state statutory tax rate of 37%.
(5) Represents the results of operations of Georgia Gulf for the periods
presented.
(6) Reflects depreciation on the co-generation facility acquired through
termination of the co-generation operating lease agreement, based on a
purchase price of $107.8 million and a 25 year useful life. Interest expense
related to the acquisition of the co-generation facility is reflected in
note 10.
(7) Reflects the elimination of lease expense related to the co-generation
facility discussed in note 6.
(8) Reflects changes to cost of sales to restate the inventory of the vinyls
business of CONDEA Vista to a first-in-first-out ("FIFO") basis.
(9) Reflects net reduction in depreciation and amortization expense based on
the purchase price allocation of the vinyls business of CONDEA Vista to
property, plant and equipment ("PP&E").
<TABLE>
<CAPTION>
TWELVE MONTHS
NINE MONTHS ENDED ENDED YEAR ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Historical depreciation and
amortization expense of
the vinyls business of
CONDEA Vista.............. $(22,415) $(29,561) $(27,668)
Depreciation expense on
amounts allocated to PP&E
(see note 14)............. $205,750
12 yrs 12,859 17,146 17,146
-------- -------- -------- --------
$ (9,556) $(12,415) $(10,522)
======== ======== ========
</TABLE>
6
<PAGE>
(10) Pro forma interest expense reflects the following:
<TABLE>
<CAPTION>
TWELVE MONTHS
NINE MONTHS ENDED ENDED YEAR ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ ------------------- ------------------
<S> <C> <C> <C>
Revolving Credit Facility ($38,594 at
7.8%, 7.9% and 8.3%, respectively)... $ 2,257 $ 3,049 $ 3,203
Term Loan A ($225,000 at 7.8%, 7.9% and
8.3%, respectively).................. 13,163 17,775 18,675
Term Loan B ($200,000 at 7.8%, 7.9% and
8.3%, respectively).................. 11,700 15,800 16,600
Notes ($200,000 at 10.4%).............. 15,563 20,750 20,750
Deferred seller payment ($7,750 at
10%)................................. 581 775 775
Amortization of debt acquisition costs
incurred in connection with the
issuance of the new debt............. 1,550 2,067 2,067
-------- -------- --------
44,814 60,216 62,070
Less: interest expense of existing
indebtedness to be repaid with new
debt issuances....................... (13,433) (18,462) (20,454)
-------- -------- --------
$ 31,381 $ 41,754 $ 41,616
======== ======== ========
</TABLE>
A 0.125% increase or decrease in the weighted average interest rate
would change interest expense by $451 for the nine months ended
September 30, 1999 and $601 for the twelve months ended September 30,
1999 and the year ended December 31, 1998.
(11) Represents the historical assets and liabilities of the vinyls business of
CONDEA Vista and Georgia Gulf as of September 30, 1999.
(12) Reflects elimination of assets and liabilities not acquired from the vinyls
business of CONDEA Vista and the net impact on stockholders' equity.
(13) Reflects the preliminary allocation of the purchase price of the vinyls
business of CONDEA Vista including a purchase price adjustment of $8,942 for
excess working capital based on working capital of the vinyls business as of
September 30, 1999. The purchase price is subject to a working capital
adjustment as of the closing date. Adjustments to allocate the vinyls
business of CONDEA Vista purchase price include the following:
<TABLE>
<CAPTION>
<S> <C> <C>
Adjust vinyls business of CONDEA Vista valuation of
inventory (LIFO) to be in accordance with Georgia Gulf
accounting policies (FIFO)................................ $ 6,880
========
Removal of other assets of vinyls business of CONDEA
Vista..................................................... $ (1,173)
========
Allocation of remaining purchase price to property, plant
and equipment ("PP&E") as follows:
Purchase price allocation to PP&E......................... $ 202,750
Transaction costs allocated to PP&E....................... 3,000
Net book value of PP&E acquired........................... (216,181)
---------
$(10,431)
========
</TABLE>
(14) Reflects the acquisition of the co-generation facility acquired through
termination of the co-generation operating lease agreement.
(15) Reflects estimated debt acquisition costs of $15,500 to be deferred and
amortized over the life of the related debt.
7
<PAGE>
(16) Reflects the issuance of debt related to the acquisition of the vinyls
business of CONDEA Vista.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Revolving Credit Facility, net of reduction in cash......... $ 38,594
Term Loan A................................................. 225,000
Term Loan B................................................. 200,000
10 3/8% notes............................................... 200,000
Deferred seller payment..................................... $ 10,000
less discount, as deferred seller payment is
noninterest-bearing..................................... (2,250)
7,750
---------
$ 671,344
=========
</TABLE>
(17) Reflects repayment of existing revolving credit facility ($171,600) and
existing term loan agreement ($100,000).
(18) Reflects elimination of existing stockholders' equity of the vinyls
business of CONDEA Vista.
8
<PAGE>
EXHIBIT 99.4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Georgia Gulf Corporation:
We have audited the accompanying consolidated balance sheets of Georgia Gulf
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1997 and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Georgia Gulf Corporation and
subsidiaries as of December 31, 1998 and 1997 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
October 26, 1999
1
<PAGE>
GEORGIA GULF CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS,
EXCEPT SHARE DATA
ASSETS
Cash and cash equivalents................................... $ 1,244 $ 1,621
Receivables, net of allowance for doubtful accounts of
$2,400 in 1998 and 1997................................... 69,994 61,453
Inventories................................................. 69,339 87,890
Prepaid expenses............................................ 2,227 6,508
Deferred income taxes....................................... 6,492 7,409
-------- --------
Total current assets...................................... 149,296 164,881
-------- --------
Property, plant and equipment, at cost...................... 656,527 624,532
Less accumulated depreciation............................. 268,334 227,791
-------- --------
Property, plant and equipment, net...................... 388,193 396,741
-------- --------
Goodwill.................................................... 85,154 --
-------- --------
Other assets................................................ 29,626 25,831
-------- --------
Net assets of discontinued operations....................... 13,319 14,107
-------- --------
Total assets................................................ $665,588 $601,560
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 65,270 $ 85,184
Interest payable............................................ 2,272 2,218
Accrued compensation........................................ 6,814 7,281
Accrued pension............................................. 378 2,257
Other accrued liabilities................................... 12,833 13,632
-------- --------
Total current liabilities................................. 87,567 110,572
-------- --------
Long-term debt.............................................. 459,475 393,040
-------- --------
Deferred income taxes....................................... 89,665 62,345
-------- --------
Stockholders' equity
Preferred stock--$0.01 par value; 75,000,000 shares
Authorized; no shares issued............................ -- --
Common stock--$0.01 par value; 75,000,000 shares
Authorized; shares issued and outstanding:
30,883,754 in 1998 and 32,781,439 in 1997............... 309 328
Retained earnings......................................... 28,572 35,275
-------- --------
Total stockholders' equity.............................. 28,881 35,603
-------- --------
Total liabilities and stockholders' equity.................. $665,588 $601,560
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
GEORGIA GULF CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
IN THOUSANDS, EXCEPT PER SHARE DATA
Net sales................................................ $ 825,292 $ 871,384 $ 829,374
Operating costs and expenses
Cost of sales.......................................... 652,347 710,114 666,176
Selling and administrative expense..................... 42,455 45,401 41,305
---------- ---------- ----------
Total operating costs and expenses................... 694,802 755,515 707,481
---------- ---------- ----------
Operating income......................................... 130,490 115,869 121,893
Other income (expense)
Gain on sale of assets................................. -- 8,600 --
Loss on interest rate hedge agreement.................. (9,500) -- --
Interest expense....................................... (30,867) (24,693) (20,833)
Interest income........................................ 49 60 67
---------- ---------- ----------
Income from continuing operations before income taxes.... 90,172 99,836 101,127
Provision for income taxes............................... 33,587 37,813 38,423
---------- ---------- ----------
Income from continuing operations........................ 56,585 62,023 62,704
Discontinued operations,
(Loss)/earnings from discontinued operations, net...... (306) 19,178 8,916
---------- ---------- ----------
Net income............................................... $ 56,279 $ 81,201 $ 71,620
========== ========== ==========
Earnings/(loss) per share
Basic
Continuing operations................................ $ 1.80 $ 1.84 $ 1.75
Discontinued operations.............................. (0.01) 0.57 0.25
---------- ---------- ----------
$ 1.79 $ 2.41 $ 2.00
========== ========== ==========
Diluted
Continuing operations.................................. $ 1.78 $ 1.83 $ 1.73
Discontinuing operations............................... (0.01) 0.56 0.25
---------- ---------- ----------
$ 1.77 $ 2.39 $ 1.98
========== ========== ==========
Weighted average common shares........................... 31,474 33,629 35,759
---------- ---------- ----------
Weighted average common shares and equivalents........... 31,787 33,947 36,248
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
GEORGIA GULF CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
IN THOUSANDS
Cash flows from operating activities:
Net income.................................................. $ 56,279 $ 81,201 $ 71,620
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 44,023 36,318 37,495
Gain on sale of assets.................................... -- (8,600) --
Provision for deferred income taxes....................... 28,237 11,306 3,405
Tax benefit related to stock plans........................ 1,406 1,252 2,210
Loss (gain) from discontinued operations.................. 306 (19,178) (8,916)
Change in operating assets and liabilities, net of effects
of acquisition:
Receivables............................................. 2,575 (1,167) 26,281
Inventories............................................. 23,347 (5,158) (15,333)
Prepaid expenses........................................ 4,361 3,426 2,174
Accounts payable........................................ (27,764) (1,534) 13,542
Interest payable........................................ 54 (692) 173
Accrued income taxes.................................... 0 (704) (1,944)
Accrued compensation.................................... (2,664) 1,644 (9,078)
Accrued pension......................................... (1,879) 118 (168)
Accrued liabilities..................................... (1,995) 150 1,552
Other................................................... (3,397) (8,218) (19,851)
--------- --------- ---------
Net cash provided by continuing operations.................. 122,889 90,164 103,162
--------- --------- ---------
Net cash provided by discontinued operations................ 482 18,807 10,338
--------- --------- ---------
Net cash provided by operating activities................... 123,371 108,971 113,500
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures...................................... (25,374) (56,545) (118,706)
Proceeds from sales of assets............................. -- 16,477 6,062
Acquisition, net of cash acquired......................... (99,902) -- --
--------- --------- ---------
Net cash used in investing activities....................... (125,276) (40,068) (112,644)
--------- --------- ---------
Cash flows form financing activities:
Long-term debt proceeds................................... 207,485 187,440 268,500
Long-term debt payments................................... (141,550) (190,000) (165,300)
Proceeds from issuance of common stock.................... 4,497 4,598 5,084
Repurchase and retirement of common stock................. (58,880) (59,307) (99,586)
Dividends paid............................................ (10,024) (10,711) (11,386)
--------- --------- ---------
Net cash provided by (used in) financing activities......... 1,528 (67,980) (2,688)
--------- --------- ---------
Net change in cash and cash equivalents..................... (377) 923 (1,832)
Cash and cash equivalents at beginning of year.............. 1,621 698 2,530
--------- --------- ---------
Cash and cash equivalents at end of year.................... $ 1,244 $ 1,621 $ 698
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
GEORGIA GULF CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
---------- -------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C>
IN THOUSANDS, EXCEPT SHARE DATA
Balance, December 31, 1995..... 37,240,252 $ 372 $ 31,312 $ 18,944 $ 50,628
Net income..................... -- -- -- 71,620 71,620
Dividends paid................. -- -- -- (11,386) (11,386)
Tax benefit realized from stock
option plans................. -- -- 2,210 -- 2,210
Common stock issued upon
exercise of stock options.... 340,770 3 1,662 -- 1,665
Common stock issued under stock
purchase plan................ 152,178 2 3,417 -- 3,419
Repurchase and retirement of
common stock................. (3,148,400) (31) (38,601) (60,954) (99,586)
---------- ------ -------- -------- --------
Balance, December 31, 1996..... 34,584,800 346 -- 18,224 18,570
Net income..................... -- -- -- 81,201 81,201
Dividends paid................. -- -- -- (10,711) (10,711)
Tax benefit realized from stock
option plans................. -- -- 1,252 -- 1,252
Common stock issued upon
exercise of stock options.... 185,045 2 1,435 -- 1,437
Common stock issued under stock
purchase plan................ 140,694 1 3,160 -- 3,161
Repurchase and retirement of
common stock................. (2,129,100) (21) (5,847) (53,439) (59,307)
---------- ------ -------- -------- --------
Balance, December 31, 1997..... 32,781,439 328 -- 35,275 35,603
Net income..................... -- -- -- 56,279 56,279
Dividends paid................. -- -- -- (10,024) (10,024)
Tax benefit realized from stock
option plans................. -- -- 1,406 -- 1,406
Common stock issued upon
exercise of stock options.... 169,830 2 1,440 -- 1,442
Common stock issued under stock
purchase plan................ 228,585 2 3,053 -- 3,055
Repurchase and retirement of
common stock................. (2,296,100) (23) (5,899) (52,958) (58,880)
---------- ------ -------- -------- --------
Balance, December 31, 1998..... 30,883,754 $ 309 $ -- $ 28,572 $ 28,881
========== ====== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include the
accounts of Georgia Gulf Corporation and its subsidiaries (the "Company"). All
significant intercompany balances and transactions are eliminated in
consolidation.
NATURE OF OPERATIONS--The Company is a manufacturer and international marketer
of chemical products. The Company's products are primarily intermediate
chemicals sold for further processing into a wide variety of end-use
applications including plastic pipe and pipe fittings, siding and window frames,
bonding agents for wood products, high-quality plastics, acrylic sheeting and
gasoline additives.
USE OF ESTIMATES--Management of the Company is required to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes prepared in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS--The Company considers all highly liquid investments
with an original maturity of three months or less to be the equivalent of cash
for the purposes of financial statement presentation.
INVENTORIES--Inventories are valued at the lower of cost (first-in, first-out)
or market. Costs include raw materials, direct labor and manufacturing overhead.
Market is based on current replacement cost for raw materials and supplies and
on net realizable value for finished goods.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at cost.
Maintenance and repairs are charged to expense as incurred, and major renewals
and improvements are capitalized. Interest expense attributable to funds used in
financing the construction of major plant and equipment is capitalized. Interest
expense capitalized during 1998, 1997 and 1996 was $667,000, $2,802,000 and
$4,826,000, respectively. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets for book purposes, with
accelerated methods being used for income tax purposes.
The estimated useful lives of the assets are as follows:
<TABLE>
<S> <C>
Buildings and land improvements............................. 20-30 years
Machinery and equipment..................................... 3-15 years
</TABLE>
GOODWILL--Goodwill of $86,725,000 was capitalized in connection with the
acquisition of North American Plastics, Inc. in 1998 (See Note 18). The goodwill
is being amortized over a 35-year period. Goodwill amortized to cost of sales
was $1,571,000 during 1998. The Company periodically evaluates goodwill for
impairment. In completing this evaluation, the Company estimates the future
undiscounted cash flows of the businesses to which goodwill relates in order to
ensure that the carrying amount of goodwill has not been impaired.
OTHER ASSETS--Other assets comprised primarily deposits for long-term raw
material purchase contracts and debt issuance costs. Deposits are being
amortized as additional raw material cost over the remaining 16-year life of the
related contracts in proportion to raw material delivery. Debt issuance costs
are amortized to expense using the effective interest rate method over the term
of the related indebtedness.
FINANCIAL INSTRUMENTS--The Company does not use derivatives for trading
purposes. Interest rate swap and cap agreements, forms of derivatives, are used
by the Company to manage interest costs on certain portions of the Company's
long-term debt (see Note 15). These financial statements do not reflect
6
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
temporary market gains and losses on derivative financial instruments, although
the estimated fair value is disclosed in Note 15. If subsequent to being hedged,
underlying transactions are no longer likely to occur, the related derivative
gains and losses are recognized currently as income or expense. Amounts paid or
received on the interest rate swap agreements are recorded to interest expense
as incurred. As of December 31, 1998 and 1997, interest rate swap agreements
were the only form of derivative financial instrument outstanding.
ENVIRONMENTAL EXPENDITURES--Environmental expenditures related to current
operations or future revenues are expensed or capitalized consistent with the
Company's capitalization policy. Expenditures that relate to an existing
condition caused by past operations and that do not contribute to future
revenues are expensed. Liabilities are recognized when environmental assessments
or cleanups are probable and the costs can be reasonably estimated.
EARNINGS PER SHARE--Basic earnings per share is computed based on the weighted
average number of common shares outstanding during the respective periods.
Diluted earnings per share is computed based on the weighted average number of
common shares outstanding, adjusted for dilutive potential issuances of common
stock.
STOCK-BASED COMPENSATION--Stock-based compensation is recognized using the
intrinsic value method. Pro forma net income and earnings per share impacts are
presented in Note 10 as if the fair value method had been applied.
NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which
requires additional disclosure and presentation of amounts comprising
comprehensive income beyond net income. The Company had no comprehensive income
amounts for the periods presented. As a result, the adoption had no impact on
the Company's reporting under generally accepted accounting principles.
During June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement establishes accounting and reporting standards requiring that every
derivative instrument be recorded in the balance sheet as either an asset or
liability measured at its fair value and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows derivative
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. In June
1999, the FASB issued SFAS No. 137 which deferred the effective date of SFAS
No. 133 for fiscal quarters of all fiscal years beginning after June 15, 2000,
although earlier adoption is permitted. SFAS No. 133 cannot be applied
retroactively. Management has not yet quantified the impacts of adopting SFAS
No. 133 on the Company's financial statements.
NOTE 3: DISCONTINUED OPERATIONS
On September 2, 1999, the Company announced its decision to exit the
methanol business at the end of 1999. In connection with the discontinuance of
the methanol business, Georgia Gulf incurred a one-time charge of $7.6 million
(net of taxes) related to the write-off of the methanol plant assets, net
7
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3: DISCONTINUED OPERATIONS (CONTINUED)
of expected proceeds, and an accrual for estimated losses during the phase-out
period. Georgia Gulf will fulfill customer contracts with purchased methanol
until December 31, 1999. The methanol plant remains idle and management intends
to dismantle the facility at some time in the future. A number of methanol sales
contracts have been assigned and Georgia Gulf's customer list has been sold.
Proceeds from the sale of the methanol railcars, customer list and other
discontinued plant assets are estimated at $2.9 million. The disposition of the
methanol operations represents the disposal of a business segment under APB
Opinion No. 30. Accordingly, results of these operations have been classified as
discontinued and prior periods have been restated, including the reallocation of
fixed overhead charges to other business segments. For business segment
reporting purposes, the methanol business results were previously classified as
the segment "Gas Chemicals."
Net sales and income from discontinued operations are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net sales....................................... $49,726 $ 94,266 $66,812
======= ======== =======
Pretax (loss) income from discontinued
operations.................................... $ (487) $ 30,932 $14,380
Income tax benefit (expense).................... 181 (11,754) (5,464)
------- -------- -------
Net (loss) income from discontinued
operations.................................... $ (306) $ 19,178 $ 8,916
======= ======== =======
</TABLE>
Net assets and liabilities of discontinued operations were as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Current assets...................................... $ 4,536 $11,131
Property, plant, and equipment, net................. 12,956 14,119
Current liabilities................................. (1,189) (7,968)
Long term liabilities............................... (2,984) (3,175)
------- -------
Net assets of discontinued operations............... $13,319 $14,107
======= =======
</TABLE>
NOTE 4: RECEIVABLES
The Company has entered into an agreement pursuant to which it sold a
percentage ownership interest in a defined pool of the Company's trade
receivables. As collections reduce accounts receivable included in the pool, the
Company sells participating interests in new receivables to bring the amount
sold up to the $50,000,000 permitted by the agreement. The receivables are sold
at a discount, which approximates the purchaser's financing cost of issuing its
own commercial paper backed by these accounts receivable. The ongoing costs of
this program of $2,807,000, $3,045,000 and $2,882,000 for 1998, 1997 and 1996,
respectively, were charged to selling and administrative expense in the
accompanying consolidated statements of income.
8
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5: INVENTORIES
The major classes of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Raw materials and supplies................................ $26,462 $34,451
Finished goods............................................ 42,877 53,439
------- -------
Inventories............................................... $69,339 $87,890
======= =======
</TABLE>
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Machinery and equipment................................. $583,561 $570,642
Land improvements....................................... 23,760 23,009
Buildings............................................... 23,937 20,771
Construction in progress................................ 25,269 10,110
-------- --------
Property, plant and equipment, at cost.................. $656,527 $624,532
======== ========
</TABLE>
NOTE 7: OTHER ASSETS
Other assets, net of accumulated amortization, consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Deposits for long-term purchase contracts................. $23,635 $20,684
Debt issuance costs....................................... 2,613 3,035
Other..................................................... 3,378 2,112
------- -------
Other assets.............................................. $29,626 $25,831
======= =======
</TABLE>
Debt issuance costs amortized as interest expense during 1998, 1997 and 1996
were $527,000, $448,000 and $440,000, respectively.
9
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8: LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Revolving credit loan................................... $223,000 $155,000
Term loan............................................... 100,000 100,000
7 5/8% notes due 2005................................... 100,000 100,000
Other................................................... 36,475 38,040
-------- --------
Long-term debt.......................................... $459,475 $393,040
======== ========
</TABLE>
The Company's credit agreement provides for an unsecured revolving credit
facility which permits borrowings of up to $350,000,000. The revolving credit
facility terminates and related outstanding loans, if any, are due in
March 2000. As of December 31, 1998, the Company had availability to borrow up
to $127,000,000 under the terms of the revolving credit facility. An annual
commitment fee, which ranges from 0.10 percent to 0.25 percent (currently at
0.25 percent), is required to be paid on the revolving credit facility
commitment. The interest rate on the revolving credit facility is based on LIBOR
and averaged 5.97 percent and 5.98 percent for 1998 and 1997, respectively.
The Company has $100,000,000 principal amount of unsecured 7 5/8 percent
notes outstanding, which are due in November 2005. Interest on the Notes is
payable semiannually on May 15 and November 15 of each year. The Notes are not
redeemable prior to maturity.
Under the credit agreement, term loan and notes, the Company is subject to
certain restrictive covenants, the most significant of which require the Company
to maintain certain financial ratios and to limit the amount of dividends and
repurchases of common stock. The Company's limit for dividends and repurchases
of common stock was $62,476,000 as of December 31, 1998.
Cash payments for interest during 1998, 1997 and 1996 were $30,398,000,
$27,739,000 and $22,945,000, respectively.
NOTE 9: STOCKHOLDERS' EQUITY
During 1998 and 1997, the Company repurchased 2,296,100 shares of its common
stock for $58,880,000 and 2,129,100 shares for $59,307,000, respectively. As of
December 31, 1998, the Company had authorization to repurchase up to 5,225,600
additional shares under the current common stock repurchase program, subject to
certain restrictions as described in Note 8.
Each outstanding share of common stock is accompanied by a preferred stock
purchase right, which entitles the holder to purchase from the Company 1/100th
of a share of Junior Participating Preferred Stock for $45.00, subject to
adjustment in certain circumstances. The rights expire on April 27, 2000 and may
be redeemed by the Company for $0.01 per right until ten days following the
earlier to occur of the announcement that a person or group beneficially owns
15 percent or more of the Company's outstanding shares of common stock, or the
commencement of or announcement by any person or group of an intent to commence
a tender or exchange offer that would result in such person or group
beneficially owning 15 percent or more of the Company's outstanding shares of
common stock (the earliest of any such date, the "Distribution Date"). The
rights first become exercisable on the
10
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9: STOCKHOLDERS' EQUITY (CONTINUED)
Distribution Date. Subject to certain conditions, if a person or group becomes
the beneficial owner of 15 percent or more of the Company's outstanding shares
of common stock, each right will entitle its holder (other than certain
acquiring persons) to receive, upon exercise, common stock having a value equal
to two times the right's exercise price. In addition, subject to certain
conditions, if the Company is involved in a merger or certain other business
combination transactions, each right will entitle its holder (other than certain
acquiring persons) to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the right's exercise price.
In connection with the stock purchase rights described above, 30,000,000 of
the authorized shares of preferred stock are designated Junior Participating
Preferred Stock. If issued, the Junior Participating Preferred Stock would be
entitled, subject to the prior rights of any senior preferred stock, to a
dividend equal to the greater of $0.01 or that which is paid on the common
shares.
NOTE 10: STOCK OPTION AND PURCHASE PLANS
Options to purchase common stock of the Company have been granted to
employees under plans adopted in 1990 and 1998. Under the 1998 Equity and
Performance Incentive Plan approved by the Company's stockholders, the Company
may grant options to purchase up to 2,000,000 shares to employees and
non-employee directors. Option prices are equal to the closing price of the
Company's stock on the date of grant. Options vest ratably over a five-year
period for the 1990 option plan and vest over a one- or three-year period for
the 1998 Equity and Performance Incentive Plan from the date of grant and expire
no more than ten years after grant.
The following is a summary of all stock option information:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Options outstanding at beginning of year............. 768,116 956,561 1,299,031
Granted at $17.75-$35.25 per share................. 440,000 -- --
Exercised.......................................... (168,830) (185,045) (340,770)
Forfeited or canceled.............................. (85,900) (3,400) (1,700)
------------ ------------ ------------
Outstanding at year end.............................. 952,386 768,116 956,561
============ ============ ============
Option exercise price per share range................ $7.75-$36.50 $7.75-$36.50 $6.36-$36.50
Weighted average exercise price...................... $25.75 $16.13 $14.54
Weighted average remaining contractual life (in
years)............................................. 5.4 3.6 4.4
Options exercisable.................................. 519,386 684,116 830,561
Options available for grant.......................... 1,664,827 18,927 15,527
</TABLE>
The Company's stockholders have approved a qualified, non-compensatory
employee stock purchase plan, which allows employees to acquire shares of common
stock through payroll deductions over a twelve-month period. The purchase price
is equal to 85 percent of the fair market value of the common stock on either
the first or last day of the subscription period, whichever is lower. Purchases
under the plan are limited to 15 percent of an employee's base salary. In
connection with this stock purchase plan, 278,543 shares of common stock are
reserved for future issuances. Under this plan and similar plans, 228,585,
140,694 and 152,178 shares of common stock were issued at $13.36, $22.47 and
$22.47 per share during 1998, 1997 and 1996, respectively.
11
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10: STOCK OPTION AND PURCHASE PLANS (CONTINUED)
The Company accounts for its stock-based compensation plans in accordance
with Accounting Principles Board opinion No. 25, "Accounting for Stock Issued to
Employees," and complies with SFAS No. 123, "Accounting for Stock-Based
Compensation," for disclosure purposes. Under these provisions, no compensation
was recognized in 1998, 1997 and 1996 for the Company's stock option plans or
its stock purchase plans.
In accordance with the disclosure requirements of SFAS No. 123, the Company
is required to calculate the pro forma compensation cost of all stock options
and purchase rights granted after December 31, 1994, using an option pricing
model. Stock options granted in 1998 and stock purchase rights granted in
connection with the Company's stock purchase plan are subject to this
calculation.
For SFAS No. 123 purposes, the fair value of each stock option and stock
purchase right for 1998, 1997 and 1996 has been estimated as of the date of the
grant using the Black-Scholes option pricing model with the following weighted
average assumptions for 1998, 1997 and 1996, respectively: risk-free interest
rates of 5.44 percent, 5.66 percent and 5.09 percent; dividend yields of
1.00 percent, 1.20 percent and 1.04 percent; and expected volatilities of 0.32,
0.23 and 0.30. The expected life of a right and option was assumed to be one
year and three years, respectively, for all years. Using these assumptions, the
fair market value of the stock option grants for 1998 was $3,493,000. Also using
these assumptions, the fair values of the stock purchase plan rights for 1998,
1997 and 1996 were $1,224,000, $977,000 and $1,062,000, respectively. Had
compensation cost been determined consistently with SFAS No. 123, utilizing the
assumptions detailed above, the Company's net income and earnings per common
share would have been the following pro forma amounts:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS, EXCEPT PER SHARE
DATA
Net income
As reported.................................... $56,279 $81,201 $71,620
Pro forma...................................... 53,317 80,594 70,962
Basic earnings per share
As reported.................................... $ 1.79 2.41 2.00
Pro forma...................................... 1.69 2.40 1.98
Diluted earnings per share
As reported.................................... $ 1.77 2.39 1.98
Pro forma...................................... 1.68 2.37 1.96
</TABLE>
NOTE 11: EMPLOYEE BENEFIT PLANS
The Company has certain pension, savings and profit sharing plans that cover
substantially all of its employees. The expense incurred for these plans was
approximately $2,434,000, $3,798,000 and $4,522,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.
Most employees are covered by defined contribution plans under which the
Company makes contributions to individual employee accounts and by defined
benefit plans for which the benefits are based on years of service and the
employee's compensation or for which the benefit is a specific monthly amount
for each year of service. The Company's policy on funding the defined benefit
plans is
12
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11: EMPLOYEE BENEFIT PLANS (CONTINUED)
to contribute an amount within the range of the minimum required and the maximum
tax-deductible contribution.
During 1998, the Company restructured several of its executive benefit plans
whereby certain plan benefits were replaced by new retirement agreements funded
by life insurance contracts. The elimination of the benefits under the previous
plans resulted in a reduction to pension expense for 1998 of $1,520,000. The
total expense related to the new agreements for 1998 was $693,000, which
represented the current year cost of the insurance contracts, net of the
increase in the cash surrender value of the contracts.
In 1998, the Company adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Post-retirement Benefits." The Statement standardizes the
disclosure requirements for pensions and other post-retirement benefits to the
extent practicable.
On a weighted average basis, the following assumptions were used in the
accounting for the net periodic benefit costs and for the defined benefit plans:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Discount rate......................................... 7.00% 7.25% 7.50%
Expected return on plan assets........................ 9.00% 9.00% 9.00%
Rate of compensation increase......................... 5.50% 5.50% 5.50%
</TABLE>
The amount of net periodic benefit cost recognized includes the following
components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Components of periodic benefit cost:
Service cost.................................... $ 1,946 $ 1,765 $ 2,060
Interest cost................................... 3,156 2,867 2,730
Expected return on assets....................... (4,808) (4,034) (3,503)
Amortization of:
Transition obligation......................... 343 343 343
Prior service cost............................ 103 103 103
Actuarial gain................................ (634) (478) (185)
------- ------- -------
106 566 1,548
Settlement benefit................................ (1,520) -- --
------- ------- -------
Total net periodic benefit (income) cost.......... $(1,414) $ 566 $ 1,548
======= ======= =======
</TABLE>
13
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11: EMPLOYEE BENEFIT PLANS (CONTINUED)
The reconciliation of the beginning and ending balances of the benefit
obligation for the Company's defined benefit plans and the fair value of plan
assets were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Change in benefit obligation:
Net benefit obligation at beginning of year............. $42,590 $37,729
Service cost............................................ 1,946 1,765
Interest cost........................................... 3,156 2,867
Actuarial loss.......................................... 721 1,220
Settlements............................................. (2,410) --
Gross benefits paid..................................... (918) (991)
------- -------
Net benefit obligation at end of year..................... $45,085 $42,590
======= =======
Change in plan assets:
Fair value of plan assets at beginning of year.......... $53,705 $45,093
Actual return on plan assets............................ 8,567 9,369
Employer contributions.................................. 282 234
Gross benefits paid..................................... (918) (991)
------- -------
Fair value of plan assets at end of year.................. $61,636 $53,705
======= =======
</TABLE>
The funded status of the Company's defined benefit plans and the amounts
recognized in the statement of financial position were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Reconciliation of funded status:
Funded status at end of year.......................... $ 16,551 $ 11,115
Unrecognized net actuarial gain....................... (18,847) (15,941)
Unrecognized prior service cost....................... 264 754
Unrecognized net transition obligation................ 2,227 2,571
-------- --------
Net amount recognized at end of year.................... $ 195 $ (1,501)
======== ========
Amounts recognized in the statement of financial
position:
Prepaid benefit cost.................................. $ 4,702 $ 4,047
Accrued benefit cost.................................. (4,507) (5,548)
Additional minimum liability.......................... (574) (672)
Intangible asset...................................... 574 672
-------- --------
Net amount recognized at end of year.................... $ 195 $ (1,501)
======== ========
</TABLE>
14
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12: INCOME TAXES
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Current:
Federal........................................ $ 6,046 $24,015 $31,586
State.......................................... (696) 2,492 3,432
------- ------- -------
5,350 26,507 35,018
------- ------- -------
Deferred:
Federal........................................ 24,651 9,825 2,394
State.......................................... 3,586 1,481 1,011
------- ------- -------
28,237 11,306 3,405
------- ------- -------
Provision for income taxes....................... $33,587 $37,813 $38,423
======= ======= =======
</TABLE>
The difference between the statutory federal income tax rate and the
Company's effective income tax rate is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Statutory federal income tax rate..................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit............ 2.1 2.5 2.9
Other................................................. 0.1 0.4 0.1
---- ---- ----
Effective income tax rate............................. 37.2% 37.9% 38.0%
==== ==== ====
</TABLE>
Cash payments for income taxes during 1998, 1997 and 1996 were $11,004,000,
$38,124,000 and $28,685,000, respectively.
15
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12: INCOME TAXES (CONTINUED)
The Company's net deferred tax liability consisted of the following major
items:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
IN THOUSANDS
Deferred tax assets:
Receivables........................................... $ 710 $ 858
Inventories........................................... 1,316 1,691
Vacation accruals..................................... 1,403 1,393
Other................................................. 3,063 3,467
-------- --------
Total deferred tax assets........................... 6,492 7,409
Deferred tax liability:
Property, plant and equipment......................... (86,363) (62,345)
Other................................................. (3,302) --
-------- --------
Net deferred tax liability.............................. $(83,173) $(54,936)
======== ========
</TABLE>
Management believes, based on its history of operating earnings and
expectations for the future, that future taxable income will be sufficient to
fully utilize the deferred tax assets at December 31, 1998.
NOTE 13: COMMITMENTS AND CONTINGENCIES
LEASES--The Company leases railcars, storage terminals, computer equipment,
manufacturing facilities and warehouse and office space under noncancelable
operating leases with varying maturities through the year 2010. Future minimum
payments under these noncancelable operating leases as of December 31, 1998 were
$23,301,000 for 1999, $16,735,000 for 2000, $6,575,000 for 2001, $5,469,000 for
2002, $4,317,000 for 2003 and $14,086,000 thereafter. Total lease expense was
approximately $25,734,000, $16,414,000 and $13,275,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.
The Company makes lease payments under an operating lease agreement for a
250-megawatt cogeneration facility at the Company's Plaquemine, Louisiana
complex. The total cost of assets covered by the lease is $115,000,000. The
initial lease term, which began in October 1997, is three years with options to
renew the lease for two one-year periods and to purchase the facility at its
estimated fair market value at any time during the lease term. The lease
provides for substantial residual value guarantees by the Company at the
termination of the lease if the then estimated fair value of the facility is not
recovered by the owner via sale to a third party.
PURCHASE COMMITMENTS--The Company has certain take-or-pay raw material purchase
agreements with various terms extending through 2014. The aggregate amount of
the fixed and determinable portion of the required payments under these
agreements as of December 31, 1998 was $7,143,000 for each of the years 1999
through 2007 and $4,648,000 for the year 2008.
LEGAL PROCEEDINGS--The Company is a party to numerous individual and several
class-action lawsuits filed against the Company, among other parties, arising
out of an incident that occurred in September 1996 in which workers were exposed
to a chemical substance on the Company's premises in Plaquemine, Louisiana. The
substance was later identified to be a form of mustard agent, a chemical
16
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13: COMMITMENTS AND CONTINGENCIES (CONTINUED)
which is not manufactured as part of the Company's ordinary operations, but
instead occurred as a result of an unforseen chemical reaction. The Company
presently believes there are approximately 2,000 plaintiffs, of which
approximately 650 are workers claiming to have been on-site at the time of the
incident. All of the actions claim one or more forms of compensable damages,
including past and future wages, past and future physical and emotional pain and
suffering, and medical monitoring. The lawsuits were originally filed in
Louisiana State Court in Iberville Parish.
Discovery has been occurring in these cases. The Company continues to
develop information relating to the extent of damages suffered, as well as
evaluating the merit of such claims, defenses available and liability of other
persons.
In September 1998, the plaintiffs filed amended petitions that added the
additional allegations that the Company had engaged in intentional conduct
against the plaintiffs. These additional allegations raised a coverage issue
under the Company's general liability insurance policies. In December 1998, as
required by the terms of the insurance policies, the insurers demanded
arbitration to determine whether coverage is required for the alleged
intentional conduct in addition to the coverage applicable to the other
allegations of the case. The date for the arbitration has not yet been
established.
As a result of the arbitration relating to the insurance issue, as permitted
by federal statute, the insurers removed the cases to United States District
Court in December, 1998. By order entered March 2, 1999, the federal court
denied the plaintiff's motion to remand the cases back to state court and
retained federal jurisdiction.
Settlements have been reached with a majority of the original workers,
including the majority of those claimants believed to be the most severely
injured. The majority of cases have been dismissed or are pending dismissal
before the court. Additionally, settlements have been reached or are being
negotiated with other parties named as defendants whereby such parties have
made, or are being requested to make, contributions to the recoveries made by
the plaintiffs. Negotiations for the resolution of the remaining claims are
continuing.
Notwithstanding the foregoing, the Company is asserting and pursuing
defenses to the claims. Based on the present status of the proceedings, the
Company believes the liability ultimately imposed will not have a material
effect on the financial position or on results of operations of the Company.
In addition, the Company is subject to other claims and legal actions that
may arise in the ordinary course of business. Management believes that the
ultimate liability, if any, with respect to these other claims and legal
actions, will not have a material effect on the financial position or on results
of operations of the Company.
NOTE 14: SIGNIFICANT CUSTOMER AND EXPORT SALES
SIGNIFICANT CUSTOMER--The Company has supply contracts, subject to certain
limitations, for a substantial percentage of Georgia-Pacific Corporation's
requirements for certain chemicals at prices approximating market. These supply
contracts have various expiration dates (depending on the product) from 1999
through 2003 and may be extended year-to-year upon expiration. The sales to
Georgia-Pacific Corporation under these supply contracts for the years ended
December 31, 1998, 1997 and 1996 amounted to approximately 9 percent, 9 percent
and 13 percent of net sales, respectively. Receivables
17
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14: SIGNIFICANT CUSTOMER AND EXPORT SALES (CONTINUED)
outstanding from these sales were $66,501,000 and $113,619,000 at December 31,
1998 and 1997, respectively.
EXPORT SALES--Export sales were approximately 18 percent, 17 percent and
13 percent of the Company's net sales for the years ended December 31, 1998,
1997 and 1996, respectively. The principal international markets served by the
Company include Canada, Mexico, Latin America, Europe and Asia.
NOTE 15: DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
The Company entered into two interest rate swap agreements in June 1995, for
a total notional amount of $100,000,000 maturing in June 2002, to fix the
interest rate on a term loan. The fixed interest rate paid on the two interest
rate swap agreements was 6.31 percent, while the floating interest rate received
averaged 5.68 percent for 1998 and 1997. The Company also entered into an
interest rate swap agreement for a notional amount of $100,000,000 as a cash
flow hedge for the cogeneration facility operating lease agreement. This
interest rate swap agreement became effective in August 1997 and will mature in
August 2002 with a fixed interest rate to be paid of 5.88 percent. The floating
interest rate received averaged 5.62 percent and 5.73 percent for 1998 and 1997,
respectively.
In June 1998, the Company filed a shelf registration with the Securities and
Exchange Commission for the issuance of $200,000,000 of long-term bonds. Shortly
after the filing, the Company entered into an agreement to lock in interest
rates on a portion of the long-term bonds. During the third quarter of 1998,
treasury yields dropped to their lowest levels in 30 years, while at the same
time, investors' preference for treasury bonds and weakened demand for corporate
bonds limited the Company's ability to issue longer term bonds. As a result, the
Company's plans to issue long-term bonds were postponed indefinitely and the
interest rate lock agreements were terminated, resulting in a pre-tax loss of
$9,500,000 in the third quarter of 1998.
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:
DEBT--The fair value of the 7 5/8% notes was based on quoted market prices. The
carrying amounts of the revolving credit loan and the term loan were assumed to
approximate fair value due to the floating market interest rates to which the
respective agreements are subject.
INTEREST RATE SWAP AGREEMENTS--The fair value of the interest rate swap
agreements was estimated by obtaining quotes from brokers.
18
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15: DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS (CONTINUED)
The estimated fair value of financial instruments was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1998 1997
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
IN THOUSANDS
Debt:
Revolving credit loan............................. $223,000 $223,000 $155,000 $155,000
Term loan......................................... 100,000 100,000 100,000 100,000
7 5/8% notes due 2005............................. 100,000 99,700 100,000 102,419
Other............................................. 36,475 36,475 38,040 38,040
Interest rate swap agreements in payable position... -- (6,412) -- (971)
</TABLE>
NOTE 16: EARNINGS PER SHARE
There are no adjustments to "Net income" or "Income from continuing
operations" for the diluted earnings per share computations.
The following table reconciles the denominator for the basic and diluted
earnings per share computations shown on the consolidated statements of income:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Weighted average common shares...................... 31,474 33,629 35,759
Plus incremental shares from assumed conversions:
Options........................................... 217 289 446
Employee stock purchase plan rights............... 96 29 43
------ ------ ------
Weighted average common shares and equivalents...... 31,787 33,947 36,248
====== ====== ======
</TABLE>
NOTE 17. DISPOSITION
In July 1997, the Company completed the sale of certain oil and gas
properties representing substantially all of the assets of Great River Oil & Gas
Corporation, a subsidiary of the Company. Net proceeds from this sale were
$16,477,000, on which the Company recorded a pretax gain of $8,600,000
($5,300,000, net of income taxes). Historically, the operating results for this
subsidiary have not been material to the financial statements of the Company.
NOTE 18. ACQUISITION
On May 11, 1998, the Company acquired all the issued and outstanding common
stock of North American Plastics, Inc., a privately held manufacturer of
flexible vinyl compounds with a production capacity of 190,000,000 pounds. North
American Plastics has two manufacturing locations in Mississippi and generated
approximately $90,000,000 in revenue in 1997. Its vinyl compounds are used in
wire and cable for construction, automobiles and appliances, as well as various
other consumer and industrial products.
19
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 18. ACQUISITION (CONTINUED)
The stock of North American Plastics was acquired in exchange for net cash
consideration of $99,902,000 plus the assumption of $500,000 in debt. The cash
portion of the acquisition was financed with proceeds from the Company's
existing revolving credit facility. The transaction was accounted for as a
purchase, and the consideration exchanged exceeded the fair market value of the
net tangible assets of North American Plastics by $86,725,000. This excess was
allocated to goodwill and is being amortized on a straight-line basis over a
period of 35 years. The results of operations of the acquired business have been
included in the Company's consolidated financial statements from the date of
acquisition. Pro forma results of operations have not been presented because the
effect of this acquisition was not significant.
NOTE 19. SEGMENT INFORMATION
SFAS No. 131--"Disclosures about Segments of an Enterprise and Related
Information" became effective for fiscal year 1998 and for all succeeding
interim reporting periods. In accordance with the requirements of SFAS No. 131,
the Company has identified two reportable segments through which it conducts its
operating activities: chlorovinyls and aromatics. These two segments reflect the
organization used by Company management for internal reporting. The chlorovinyls
segment is a highly integrated chain of products which includes chlorine,
caustic soda, vinyl chloride monomer and vinyl resins and compounds. The
aromatics segment is also vertically integrated and includes cumene and the
co-products phenol and acetone. A third product segment, gas chemicals, which
included methanol and, prior to July 1997, the Company's oil and gas exploration
activities, was discontinued in the third quarter of 1999. See Note 17 for a
description of the Company's disposition of its oil and gas operations and
Note 3 for a description of the disposal of the methanol operations.
Earnings of industry segments exclude interest income and expense,
unallocated corporate expenses and general plant services, provision for income
taxes, and income and expense items reflected as "other income (expense)" on the
Company's consolidated statements of income. Intersegment sales and transfers
are insignificant.
Identifiable assets consist of plant and equipment used in the operations of
the segment, as well as inventory, receivables and other assets directly related
to the segment. Corporate and general plant service assets include cash, certain
corporate receivables, data processing equipment and spare parts
20
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 19. SEGMENT INFORMATION (CONTINUED)
inventory as well as property (i.e., land) on which the manufacturing plants are
located. The Company has no significant assets located outside of the United
States.
<TABLE>
<CAPTION>
CORPORATE
AND GENERAL
GAS PLANT
INDUSTRY SEGMENTS CHLOROVINYLS AROMATICS CHEMICALS SERVICES TOTAL
- ----------------- ------------ --------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
IN THOUSANDS
Year Ended December 31, 1998:
Net sales............................. $515,411 $309,881 $ 0 $ 0 $825,292
Operating income (loss)............... 73,737 71,377 0 (14,624)(1) 130,490
Depreciation and amortization......... 26,488 13,724 0 3,811 44,023
Capital expenditures.................. 18,694 3,312 0 3,368 25,374
Total Assets.......................... 429,757 144,154 13,319 78,367 665,597
Year Ended December 31, 1997:
Net sales............................. $492,651 $373,698 $ 5,035 $ 0 $871,384
Operating income (loss)............... 65,711 69,055 (499) (18,398)(1) 115,869
Depreciation and amortization......... 21,544 10,751 835 3,188 36,318
Capital expenditures.................. 23,282 20,431 2,813 10,019 56,545
Total Assets.......................... 349,810 172,782 16,211 62,757 601,560
Year Ended December 31, 1996:
Net sales............................. $510,924 $306,385 $12,065 $ 0 $829,374
Operating income (loss)............... 77,583 53,997 3,146 (12,833)(1) 121,893
Depreciation and amortization......... 16,253 11,744 7,099 2,399 37,495
Capital expenditures.................. 88,301 27,937 1,745 723 118,706
</TABLE>
- ------------------------
(1) Includes shared services, administrative and legal expense, along with the
cost of the Company's receivables program.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
GEOGRAPHIC AREAS 1998 1997 1996
- ---------------- -------- -------- --------
<S> <C> <C> <C>
IN THOUSANDS
Net sales:
Domestic...................................... $678,245 $726,426 $720,828
Foreign....................................... 147,047 144,958 108,546
-------- -------- --------
Total......................................... $825,292 $871,384 $829,374
======== ======== ========
</TABLE>
21
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 20. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth certain quarterly financial data for the
periods indicated:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
IN THOUSANDS, EXCEPT PER SHARE DATA
1998
Net sales......................................... $215,386 $214,810 $208,517 $186,579
Gross margin...................................... 41,233 47,146 46,636 37,930
Operating income.................................. 30,545 36,740 34,672 28,535
Earnings from continuing operations............... 14,596 18,172 10,840 12,976
Net earnings (loss) from discontinued
operations...................................... 2,360 (1,666) (665) (334)
Net income........................................ 16,956 16,506 10,175 12,642
Basic earnings (loss) per share
Continuing operations........................... 0.45 0.57 0.35 0.42
Discontinued operations......................... 0.07 (0.05) (0.02) (0.01)
-------- -------- -------- --------
Total......................................... 0.52 0.52 0.33 0.41
Diluted earnings (loss) per share
Continuing operations........................... 0.45 0.57 0.35 0.42
Discontinued operations......................... 0.07 (0.05) (0.02) (0.01)
-------- -------- -------- --------
Total......................................... 0.52 0.52 0.33 0.41
Dividends per common share........................ 0.08 0.08 0.08 0.08
1997
Net sales......................................... $215,313 $232,864 $212,272 $210,935
Gross margin...................................... 29,745 41,096 44,513 45,916
Operating income.................................. 18,727 29,302 33,257 34,583
Earnings from continuing operations............... 8,378 14,007 22,115 17,523
Net earnings from discontinued operations......... 3,683 6,573 5,609 3,313
Net income........................................ 12,061 20,580 27,724 20,836
Basic earnings per share
Continuing operations........................... 0.24 0.41 0.66 0.53
Discontinued operations......................... 0.11 0.19 0.17 0.10
-------- -------- -------- --------
Total......................................... 0.35 0.61 0.83 0.63
Diluted earnings per share
Continuing operations........................... 0.24 0.41 0.66 0.53
Discontinued operations......................... 0.11 0.19 0.17 0.10
-------- -------- -------- --------
Total......................................... 0.35 0.60 0.83 0.63
Dividends per common share........................ 0.08 0.08 0.08 0.08
</TABLE>
- ------------------------
(1) Includes a loss on an interest rate hedge agreement, which resulted in a
decrease to net income of $6,014,000.
22
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 20. QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)
(2) Includes adjustments to reduce maintenance expense by $3,200,000 after-tax
for the deferment of certain plant turnarounds and a reduction of pension
expense by $1,345,000 after-tax primarily for a restructuring of the
executive benefit plan.
(3) Includes a gain from the sale of certain oil and gas properties, which
resulted in an increase to net income of $5,300,000.
NOTE 21. SUBSEQUENT EVENTS (UNAUDITED)
ACQUISITION OF THE VINYLS BUSINESS OF CONDEA VISTA COMPANY
On August 30, 1999, the Company signed a definitive agreement to acquire the
assets of the vinyls business of CONDEA Vista Company ("VISTA") for
approximately $270 million (the "Acquisition"). The purchase includes
substantially all of the assets and the net working capital of the vinyls
business as of the closing date. The Acquisition will be accounted for by the
purchase method of accounting for business combinations, and accordingly, the
operating results of VISTA's vinyls business will be included in the Company's
consolidated results of operations commencing on the closing date of the
Acquisition.
THE OFFERING
The Company plans to proceed with an offering (the "Offering") of
$200 million of senior subordinated notes (the "Notes"). The Notes are expected
to mature in 2007. The Company plans to raise $194.3 million, net of discounts
and estimated expenses, through the issuance of the Notes. The Company
anticipates using the net proceeds to fund the Acquisition, refinance certain of
its existing indebtedness, and to pay related fees and expenses. Available
proceeds will also be used to purchase assets leased pursuant to a cogeneration
facility lease.
NEW SENIOR CREDIT FACILITY
The new senior credit facility (the "New Senior Credit Facility") will
provide for a $100.0 million revolving credit facility, a $225.0 million term
loan A, and a $200.0 million term loan B. The term loans will be fully drawn at
closing and borrowings under the revolving credit facility will be, subject to
applicable borrowing conditions, available for general corporate purposes,
including working capital, capital expenditures, and acquisitions. The New
Senior Credit Facility, the indenture related to the existing 7 5/8% notes and
the Notes will impose certain restrictions, including restrictions on the
Company's ability to incur indebtedness, pay dividends, make investments, grant
liens, sell our assets and engage in certain other activities. In addition, the
New Senior Credit Facility will require us to maintain certain financial ratios.
Debt under the New Senior Credit Facility and the existing 7 5/8% notes will be
secured by substantially all of the Company's assets, including the Company's
real and personal property, inventory, accounts receivable and other
intangibles. Georgia Gulf anticipates using the net proceeds to fund the
Acquisition, refinance certain of its existing indebtedness, and to pay related
fees and expenses. Available proceeds will also be used to purchase assets
leased pursuant a cogeneration facility lease.
23
<PAGE>
GEORGIA GULF CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 21. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)
PRO FORMA INFORMATION
The unaudited pro forma combined information below presents the combined
results of operations as if the Acquisition, the New Senior Credit Facility, the
Offering and the purchase of the co-generation facility under the terms of our
operating lease had occurred on January 1, 1998 and balance sheet information as
if the Acquisition, the New Senior Credit Facility and the Offering had occurred
as of September 30, 1999. The unaudited pro forma combined information, based
upon the historical consolidated financial statements of the Company and the
vinyls business of VISTA, assumes an acquisition cost of $270 million, resulting
in approximately $19 million in negative goodwill being allocated to property,
plant and equipment.
The unaudited pro forma combined information is not necessarily indicative
of the results of operations of the combined company had the Acquisition
occurred on January 1, 1998 or the financial position had the Acquisition
occurred on September 30, 1999, nor is it necessarily indicative of future
results or financial position.
The following pro forma data is unaudited and is in thousands, except per
share data:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -----------------
<S> <C> <C>
Statement of Income Data:
Net sales..................................... $1,166,960 $868,445
Income from continuing operations............. 10,569 10,998
Earnings per share:
Continuing operations....................... 0.34 0.36
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30,
1999
-------------
<S> <C>
Balance Sheet Data:
Total assets................................. $1,079,370
Borrowings................................... 796,269
Stockholders' equity......................... 34,261
</TABLE>
24
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 3,213 $ 1,244
Receivables................................................. 63,657 60,964
Insurance receivable........................................ 419 9,030
Inventories................................................. 67,755 69,339
Prepaid expenses............................................ 2,785 2,227
Deferred income taxes....................................... 6,492 6,492
----------- -----------
Total current assets...................................... 144,321 149,296
----------- -----------
Property, plant and equipment, at cost...................... 666,261 656,527
Less accumulated depreciation............................. (300,337) (268,334)
----------- -----------
Property, plant and equipment, net...................... 365,924 388,193
----------- -----------
Goodwill.................................................... 83,295 85,154
----------- -----------
Other assets................................................ 33,133 29,626
----------- -----------
Net assets of discontinued operations....................... 3,532 13,319
----------- -----------
Total assets................................................ $ 630,205 $ 665,588
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 78,963 65,270
Interest payable............................................ 4,316 2,272
Accrued taxes, other than income............................ 8,896 2,355
Accrued compensation........................................ 4,962 6,814
Other accrued liabilities................................... 11,421 10,856
----------- -----------
Total current liabilities................................. 108,558 87,567
----------- -----------
Long-term debt.............................................. 396,525 459,475
----------- -----------
Deferred income taxes....................................... 90,861 89,665
----------- -----------
Stockholders' equity
Common stock--$0.01 par value............................. 309 309
Additional paid-in capital................................ 602 --
Retained earnings......................................... 33,350 28,572
----------- -----------
Total stockholders' equity.............................. 34,261 28,881
----------- -----------
Total liabilities and stockholders' equity.................. $ 630,205 $ 665,588
=========== ===========
Common shares outstanding................................... 30,944,574 30,883,754
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
25
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales................................. $ 213,277 $ 208,517 $ 573,253 $ 638,713
----------- ----------- ----------- -----------
Operating costs and expenses
Cost of sales........................... 175,302 161,883 487,122 503,698
Selling and administrative.............. 9,288 11,964 29,206 33,059
----------- ----------- ----------- -----------
Total operating costs and expenses.... 184,590 173,847 516,328 536,757
----------- ----------- ----------- -----------
Operating income.......................... 28,687 34,670 56,925 101,956
Other expense
Loss on interest rate hedge agreement... -- 9,500 -- 9,500
Interest, net........................... 7,037 8,053 21,719 22,882
----------- ----------- ----------- -----------
Income from continuing operations before
income taxes............................ 21,650 17,117 35,206 69,574
Provision for income taxes................ 7,903 6,278 12,850 25,965
----------- ----------- ----------- -----------
Income from continuing operations......... $ 13,747 $ 10,839 $ 22,356 $ 43,609
----------- ----------- ----------- -----------
Discontinued Operations
(Loss) earnings from discontinued
operations, net of tax................ $ (520) $ (664) $ (2,525) $ 28
Loss on disposal of discontinued
operations, net of tax................ (7,631) -- (7,631) --
----------- ----------- ----------- -----------
Net income................................ $ 5,596 $ 10,175 $ 12,200 $ 43,637
=========== =========== =========== ===========
Earnings (loss) per share:
Basic
Continuing operations................. $ 0.44 $ 0.35 $ 0.72 $ 1.38
Discontinued operations............... (0.26) (0.02) (0.33) --
----------- ----------- ----------- -----------
$ 0.18 $ 0.33 $ 0.39 $ 1.38
=========== =========== =========== ===========
Diluted
Continuing operations................. $ 0.44 $ 0.35 $ 0.72 $ 1.36
Discontinued operations............... (0.26) (0.02) (0.33) --
----------- ----------- ----------- -----------
$ 0.18 $ 0.33 0.39 $ 1.36
=========== =========== =========== ===========
Weighted average common shares
Basic................................... 30,936,764 31,047,468 30,919,368 31,691,501
Diluted................................. 31,068,452 31,287,379 31,004,457 32,044,014
</TABLE>
See notes to condensed consolidated financial statements.
26
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 12,200 $ 43,637
Adjustments to reconcile net income to net cash provided
by operating activities, net of acquired amounts:
Depreciation and amortization......................... 34,392 32,594
Provision for deferred income taxes................... 1,196 10,916
Loss on disposal of discontinued operations, net...... 7,631 --
Loss (earnings) on discontinued operations, net....... 2,525 (28)
Change in operating assets, liabilities and other..... 24,053 22,756
--------- ---------
Net cash provided by continuing operations.................. 81,997 109,875
Net cash (used in) provided by discontinued operations...... (369) 2,934
--------- ---------
Net cash provided by operating activities................... 81,628 112,809
--------- ---------
Cash flows from financing activities:
Long-term debt proceeds................................... 115,000 180,300
Long-term debt payments................................... (177,950) (110,000)
Proceeds from issuance of common stock.................... 471 1,377
Purchase and retirement of common stock................... -- (55,002)
Dividends paid............................................ (7,422) (7,561)
--------- ---------
Net cash (used in) provided by financing activities......... (69,901) 9,114
--------- ---------
Cash flows from investing activities:
Capital expenditures...................................... (9,758) (20,148)
Acquisition, net of cash acquired......................... -- (99,902)
--------- ---------
Net cash used in investing activities....................... (9,758) (120,050)
--------- ---------
Net change in cash and cash equivalents..................... 1,969 1,873
Cash and cash equivalents at beginning of period............ 1,244 1,621
--------- ---------
Cash and cash equivalents at end of period.................. $ 3,213 $ 3,494
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
27
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
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. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included in the annual
report for the year ended December 31, 1998 for Georgia Gulf Corporation and its
subsidiaries (the "Company" or "Georgia Gulf").
Operating results for Georgia Gulf for the three- and nine-month periods
ended September 30, 1999, are not necessarily indicative of the results that may
be expected for the year ending December 31, 1999.
NOTE 2: NEW ACCOUNTING PRONOUNCEMENT
During June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value and
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows derivative gains and losses to offset related results
on the hedged item in the income statement, and requires that a company must
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting. In June 1999, the FASB issued SFAS No. 137 which
deferred the effective date of SFAS No. 133 for fiscal quarters of all fiscal
years beginning after June 15, 2000, although earlier adoption is permitted.
SFAS No. 133 cannot be applied retroactively. Management has not yet quantified
the impacts of adopting SFAS No. 133 on the Company's financial statements.
NOTE 3: DISCONTINUED OPERATIONS
On September 2, 1999, the Company announced its decision to exit the
methanol business at the end of 1999. In connection with the discontinuance of
the methanol business, Georgia Gulf incurred a one-time charge of $7.6 million
(net of taxes) related to the write-off of the methanol plant assets, net of
expected proceeds, and an accrual for estimated losses during the phase-out
period. Georgia Gulf will fulfill customer contracts with purchased methanol
until December 31, 1999. The methanol plant remains idle and management intends
to dismantle the facility at some time in the future. A number of methanol sales
contracts have been assigned and Georgia Gulf's customer list has been sold. Net
proceeds from the sale of the methanol railcars, customer list and other
discontinued plant assets are estimated at $2.9 million. The disposition of the
methanol operations represents the disposal of a business segment under APB
Opinion No. 30. Accordingly, results of these operations have been classified as
discontinued and prior periods have been restated, including the reallocation of
fixed overhead charges to other business segments. For business segment
reporting purposes, the methanol business results were previously classified as
the segment "Gas Chemicals".
28
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3: DISCONTINUED OPERATIONS (CONTINUED)
Net sales and income from discontinued operations are as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.............................. $ 9,710 $11,948 $ 26,181 $40,012
======== ======= ======== =======
Pretax (loss) income from discontinued
operations........................... $ (819) $(1,048) $ (3,976) $ 45
Loss on disposal of business segment... (12,017) -- (12,017) --
Income tax benefit (expense)........... 4,685 384 5,837 (17)
-------- ------- -------- -------
Net (loss) income from discontinued
operations........................... $ (8,151) $ (664) $(10,156) $ 28
======== ======= ======== =======
</TABLE>
Net assets of discontinued operations were as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Current assets...................................... $ 9,023 $ 4,536
Property, plant, and equipment, net................. -- 12,956
Current liabilities................................. (2,576) (1,189)
Long term liabilities............................... (2,915) (2,984)
------- -------
Net assets of discontinued operations............... $ 3,532 $13,319
======= =======
</TABLE>
NOTE 4: INVENTORIES
The major classes of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
Raw materials and supplies.......................... $37,074 $26,462
Finished goods...................................... 30,681 42,877
------- -------
$67,755 $69,339
======= =======
</TABLE>
NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS
Georgia Gulf has two interest rate swap agreements for a total notional
amount of $100,000,000 maturing in June 2002 to fix the interest rate on a term
loan. Also, the Company has an interest rate swap agreement for a notional
amount of $100,000,000 as a cash flow hedge for a cogeneration facility
operating lease agreement. This interest rate swap agreement will mature
August 2002.
In June 1998, the Company filed a shelf registration with the Securities and
Exchange Commission for the issuance of $200,000,000 of long-term bonds. Shortly
after the filing, the Company entered into an agreement to lock-in interest
rates on a portion of the long-term bonds. During the third quarter, treasury
yields plunged to their lowest levels in thirty years, while at the same time,
investors' preference for treasury bonds and reluctance to buy corporate bonds
limited the Company's ability to issue
29
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
longer-term bonds. As a result, the Company's plans to issue long-term bonds
were postponed indefinitely and the interest rate lock agreements were
terminated, resulting in a pre-tax loss of $9,500,000 in the third quarter of
1998.
Georgia Gulf does not use derivatives for trading purposes. Interest rate
swap agreements, a form of derivative, are used by the Company to manage
interest costs on certain portions of the Company's long-term debt. These
financial statements do not reflect temporary market gains and losses on
derivative financial instruments. Amounts paid or received on the interest rate
swap agreements are recorded to interest expense as incurred. As of
September 30, 1999, and December 31, 1998, interest rate swap agreements were
the only form of derivative financial instruments outstanding. The fair value
position of these swap agreements as of September 30, 1999 and December 31, 1998
was a receivable of $410,000 and a payable of $6,412,000, respectively.
NOTE 6: EARNINGS PER SHARE
The numerator in basic and diluted earnings per share computations is
reported net income and income from continuing and discontinued operations.
The following table reconciles the denominator for the basic and diluted
earnings per share computations shown on the condensed consolidated statements
of income (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average common shares--basic....... 30,936 31,047 30,919 31,692
Plus incremental shares from assumed
conversions:
Options................................... 99 165 61 242
Employee stock purchase plan rights....... 33 75 24 110
------ ------ ------ ------
Weighted average common shares--diluted..... 31,068 31,287 31,004 32,044
====== ====== ====== ======
</TABLE>
NOTE 7: SEGMENT INFORMATION
SFAS No. 131--"Disclosures about Segments of an Enterprise and Related
Information" became effective for fiscal year 1998 and for all succeeding
interim reporting periods. In accordance with the requirements of SFAS No. 131,
the Company has identified two reportable segments through which it conducts its
operating activities: chlorovinyls and aromatics. These two segments reflect the
organization used by Company management for internal reporting. The chlorovinyls
segment is a highly integrated chain of products which includes chlorine,
caustic soda, vinyl chloride monomer and vinyl resins and compounds. The
aromatics segment is also vertically integrated and includes cumene and the
co-products phenol and acetone. A third product segment, gas chemicals, which
included methanol, was discontinued in the third quarter of 1999.
Earnings of industry segments exclude interest income and expense,
unallocated corporate expenses and general plant services, provision for income
taxes, and income and expense items
30
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7: SEGMENT INFORMATION (CONTINUED)
reflected as "other income (expense)" on the Company's consolidated statements
of income. Intersegment sales and transfers are insignificant.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Segment net sales:
Chlorovinyls...................... $155,121 $130,636 $408,391 $390,936
Aromatics......................... 58,156 77,881 164,862 247,777
-------- -------- -------- --------
Net sales........................... $213,277 $208,517 $573,253 $638,713
======== ======== ======== ========
Segment operating income:
Chlorovinyls...................... $ 28,414 $ 18,832 $ 52,796 $ 54,591
Aromatics......................... 3,682 19,842 12,899 59,278
Corporate and general plant
services........................ (3,409) (4,004) (8,770) (11,913)
-------- -------- -------- --------
Total operating income.............. $ 28,687 $ 34,670 $ 56,925 $101,956
======== ======== ======== ========
</TABLE>
NOTE 8: ACQUISITION OF NORTH AMERICAN PLASTICS, INC.
On May 11, 1998, the Company acquired all the issued and outstanding common
stock (the "Stock") of North American Plastics, Inc. ("North American
Plastics"), a privately-held manufacturer of flexible polyvinyl chloride ("PVC")
compounds with a production capacity of 190,000,000 pounds. North American
Plastics has two manufacturing locations in Mississippi, with revenues for 1997
of approximately $90,000,000. Its PVC compounds are used in wire and cable for
construction, automobiles and appliances, as well as various other consumer and
industrial products.
The Stock was acquired in exchange for net cash consideration of $99,902,000
plus the assumption of $500,000 in debt. The cash portion of the acquisition was
financed with proceeds from the Company's existing revolving credit facility.
The transaction was accounted for as a purchase and the consideration exchanged
exceeded the fair market value of the net tangible assets of North American
Plastics by approximately $86,725,000. This excess was allocated to goodwill and
is being amortized on a straight-line basis over a period of 35 years. The
results of operations of the acquired business have been included in Georgia
Gulf's condensed consolidated financial statements from the date of acquisition.
Pro forma results of operations have not been presented because the effect of
this acquisition was not significant.
NOTE 9: ACQUISITION OF VINYLS BUSINESS OF CONDEA VISTA
On August 30, 1999, the Company announced that it signed a definitive
agreement to acquire the assets of the vinyls business of CONDEA Vista Company
for approximately $270 million. The purchase includes substantially all of the
assets and the net working capital of the vinyls business as of the closing
date. The Company will finance the acquisition with a combination of new debt
and a refinancing of certain existing credit facilities and expects to complete
the transaction in the fourth quarter of 1999. The acquisition will be accounted
for by the purchase method of accounting for business combinations as of the
closing date.
31
