SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended July 30, 1994
Transition Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-10218
COLLINS & AIKMAN CORPORATION
(formerly Collins & Aikman Holdings Corporation)
<TABLE>
<S> <C>
A Delaware Corporation (IRS Employer Identification
No. 13-3489233)
</TABLE>
8320 University Executive Park, Suite 102
Charlotte, North Carolina 28262
Telephone (704) 548-2350
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
As of September 12, 1994, the number of outstanding shares of the Registrant's
common stock, $.01 par value, was 70,520,900 shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . $ 359,749 $ 289,694 $ 750,195 $ 628,737
Cost of goods sold . . . . . . . . . . . . . 272,392 228,464 561,884 488,559
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . 47,671 49,711 103,063 101,582
Goodwill amortization . . . . . . . . . . . . - 925 - 1,850
320,063 279,100 664,947 591,991
Operating income . . . . . . . . . . . . . . 39,686 10,594 85,248 36,746
Interest expense, net . . . . . . . . . . . . (25,554) (27,809) (54,615) (55,034)
Loss on sale of receivables . . . . . . . . . (2,710) - (2,710) -
Dividends on preferred stock of subsidiary . (1,129) (1,128) (2,258) (2,257)
Income (loss) from continuing
operations before income taxes . . . . . . 10,293 (18,343) 25,665 (20,545)
Income taxes . . . . . . . . . . . . . . . . 2,970 2,285 5,588 5,556
Income (loss) from continuing operations . . 7,323 (20,628) 20,077 (26,101)
Discontinued operations:
Loss from operations, net of income taxes - (3,366) - (4,725)
Loss on disposal, net of income taxes . . - (125,436) - (127,673)
Income (loss) before extraordinary item . . . 7,323 (149,430) 20,077 (158,499)
Extraordinary item, net of income taxes . . . (106,528) - (106,528) -
Net loss . . . . . . . . . . . . . . . . . . $ (99,205) $(149,430) $ (86,451) $(158,499)
Dividends and accretion on preferred stock (7,322) (5,822) (14,408) (11,442)
Excess of redemption cost over book value
of preferred stock . . . . . . . . . . . . (82,022) - (82,022) -
Loss applicable to common shareholders . . . $(188,549) $(155,252) $(182,881) $(169,941)
Per primary and fully diluted common share:
Continuing operations . . . . . . . . . . $ (2.17) $ (.97) $ (2.26) $ (1.38)
Discontinued operations . . . . . . . . . - (4.73) - (4.86)
Extraordinary item . . . . . . . . . . . . (2.82) - (3.15) -
Net loss . . . . . . . . . . . . . . . . . . $ (4.99) $ (5.70) $ (5.41) $ (6.24)
Average common shares outstanding . . . . . . 37,813 27,260 33,821 27,260
</TABLE>
See accompanying notes.
I-1
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
July 30, January 29,
1994 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . $ 13,729 $ 81,373
Accounts and notes receivable, net. . . . . . 62,439 200,368
Inventories . . . . . . . . . . . . . . . . . . 195,639 176,062
Receivable from sale of business . . . . . . . - 70,000
Other . . . . . . . . . . . . . . . . . . . . . 47,575 48,397
Total current assets . . . . . . . . . . . . 319,382 576,200
Property, plant and equipment, at cost less
accumulated depreciation and amortization of
$263,224 and $240,514 . . . . . . . . . . . . . 301,229 292,600
Other assets. . . . . . . . . . . . . . . . . . . 58,700 50,025
$ 679,311 $ 918,825
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable . . . . . . . . . . . . . . . . . $ 1,744 $ 3,789
Current maturities of long-term debt . . . . . 4,202 25,895
Accounts payable . . . . . . . . . . . . . . . 72,631 85,591
Accrued expenses . . . . . . . . . . . . . . . 133,290 145,022
Total current liabilities . . . . . . . . . 211,867 260,297
Long-term debt . . . . . . . . . . . . . . . . . . 607,293 897,659
Deferred income taxes . . . . . . . . . . . . . . . 607 640
Other, including postretirement benefit obligation 319,009 339,768
Commitments and contingencies . . . . . . . . . . .
Redeemable preferred stock of subsidiary, at
carrying value . . . . . . . . . . . . . . . . - 132
Preferred stock of subsidiary, at carrying value. - 181
Redeemable preferred stock, at carrying value . . . - 122,368
Common stock (70,521 and 28,164 shares issued and
outstanding) . . . . . . . . . . . . . . . . . 705 282
Other paid-in capital . . . . . . . . . . . . . . . 587,328 160,317
Accumulated deficit . . . . . . . . . . . . . . . . (1,032,218) (849,337)
Foreign currency translation adjustments . . . . . (7,533) (5,735)
Pension equity adjustment . . . . . . . . . . . . . (7,747) (7,747)
Total common stockholders' deficit . . . . . (459,465) (702,220)
$ 679,311 $ 918,825
</TABLE>
See accompanying notes.
I-2
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Income (loss) from continuing operations . . $ 7,323 $ (20,628) $ 20,077 $ (26,101)
Adjustments to derive cash flow from
continuing operating activities:
Depreciation and amortization of
goodwill . . . . . . . . . . . . . . . 12,105 12,635 23,232 25,282
Amortization of other assets &
liabilities . . . . . . . . . . . . . 2,046 3,698 4,380 6,858
Decrease in accounts and notes
receivable . . . . . . . . . . . . . . 25,269 36,413 12,929 11,666
Decrease (increase) in inventories . . . (5,930) 2,102 (19,577) 2,791
Decrease in accounts payable . . . . . . (5,557) (8,816) (12,960) (8,190)
Decrease in interest and dividends
payable (31,790) (13,974) (18,003) (3,733)
Other, net . . . . . . . . . . . . . . . (17,342) 10,908 (5,971) 13,067
Net cash provided by (used in)
continuing operating activities . . (13,876) 22,338 4,107 21,640
Cash used in discontinued operations . . . . (6,617) (19,325) (15,157) (57,095)
INVESTING ACTIVITIES
Additions to property, plant and equipment . (18,845) (14,565) (34,131) (21,832)
Sales of property, plant and equipment . . . 60 (264) 71 551
Net proceeds from (used in) disposition of
discontinued operations . . . . . . . . . (3,678) - 67,767 49,243
Other, net . . . . . . . . . . . . . . . . . (2,749) (1,425) (69) (4,046)
Net cash provided by (used in)
investing activities . . . . . . . . (25,212) (16,254) 33,638 23,916
FINANCING ACTIVITIES
Issuance of common stock . . . . . . . . . . 232,436 - 232,436 -
Issuance of long-term debt . . . . . . . . . 669,841 30,720 670,878 67,409
Proceeds from sales of a participating
interest in accounts receivable, net of
redemptions. . . . . . . . . . . . . . . 125,000 - 125,000 -
Redemption of preferred stock . . . . . . . . (219,110) - (219,110) -
Repayment and defeasance of long-term debt . (886,841) (44,678) (897,176) (68,478)
Net reduction of short-term borrowings . . . (1,299) (1,742) (2,120) (8,042)
Other, net . . . . . . . . . . . . . . . . . 125 (282) (140) (7,272)
Net cash used in financing activities (79,848) (15,982) (90,232) (16,383)
Net decrease in cash and cash equivalents . . (125,553) (29,223) (67,644) (27,922)
Cash and cash equivalents at beginning of
period . . . . . . . . . . . . . . . . . . 139,282 84,989 81,373 83,688
Cash and cash equivalents at end of period . $ 13,729 $ 55,766 $ 13,729 $ 55,766
</TABLE>
See accompanying notes.
I-3
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT
(Unaudited)
A. Organization:
Collins & Aikman Corporation (the "Company") (formerly Collins & Aikman
Holdings Corporation and before that WCI Holdings Corporation) is a Delaware
corporation. Prior to July 13, 1994, the Company was a wholly-owned
subsidiary of Collins & Aikman Holdings II Corporation ("Holdings II")
(formerly WCI Holdings II Corporation). In connection with an initial public
offering of common stock and a recapitalization (described below), Holdings
II was merged into the Company. Concurrently, Collins & Aikman Group, Inc.,
a wholly-owned subsidiary of the Company ("Group") (formerly Wickes Companies,
Inc.), was merged into its wholly-owned subsidiary, Collins & Aikman
Corporation. On July 7, 1994, the Company changed its name from Collins &
Aikman Holdings Corporation to Collins & Aikman Corporation and Collins &
Aikman Corporation changed its name to Collins & Aikman Products Co.
("C&A Products").
B. Basis of Presentation:
The condensed consolidated financial statements include the accounts
of the Company and its subsidiaries. In the opinion of management, the
accompanying condensed consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments) necessary for a
fair presentation of financial position and results of operations. Results
of operations for interim periods are not necessarily indicative of results
for the full year. Certain reclassifications have been made to the statements
of operations for the quarter and six months ended July 31, 1993 and the
statement of cash flows for the quarter and six months ended July 31, 1993 to
conform to the fiscal 1994 presentation.
C. Initial Public Offering and Recapitalization:
On July 13, 1994, the Company completed an initial public offering (the
"Offering") of 15.0 million shares of common stock of the Company ("Common
Stock") at an initial public offering price of $10.50 per share. The net
proceeds to the Company from the Offering and from the sale by the Company of
an aggregate of approximately 8.8 million shares of Common Stock to affiliates
of the Company's principal shareholders, Wasserstein Perella Partners, L.P.
("WP Partners") and Blackstone Capital Partners L.P. ("Blackstone Partners"),
together with proceeds under certain new credit facilities aggregating $775
million (the "New Credit Facilities") and available cash, were used to effect
a defeasance and redemption or repayment of virtually all outstanding
indebtedness and all outstanding preferred stock of the Company and its
subsidiaries (the "Recapitalization"). In addition, the Company's $204.5
million of Subordinated PIK Bridge Notes were extinguished with approximately
$9.7 million redeemed in cash and approximately $194.8 million exchanged for
approximately 18.5 million shares of Common Stock. After the Offering and
Recapitalization, approximately 70.5 million shares of Common Stock were
outstanding at July 30, 1994.
The New Credit Facilities consist of (i) term loans in an aggregate
principal amount of $475 million (including a $45 million Canadian loan)
with a term of eight years, which were drawn in full on the closing date
(the "Term Loan Facilities"), (ii) a revolving credit facility in an aggregate
principal amount of up to $150 million with a term of seven years (the
"Revolving Facility") and (iii) a receivables facility in an aggregate face
amount of up to $150 million with a term of seven years (the "Receivables
Facility"). The New Credit Facilities contain restrictive covenants including
maintenance of EBITDA (i.e. earnings before interest, taxes, depreciation and
amortization) and interest coverage ratios, leverage and liquidity tests,
dividend restrictions and various other restrictive covenants which are
typical for such facilities.
I-4
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
D. Receivables Facility:
In connection with the Recapitalization, on July 13, 1994, C&A Products
and certain of its subsidiaries (the "Sellers") transferred $190 million of
customer receivables to Carcorp, Inc., a wholly-owned, bankruptcy remote
subsidiary of C&A Products ("Carcorp"), which, in turn, on July 13, 1994,
sold an undivided senior interest in the receivables pool for $136.8 million
to Chemical Bank ("Chemical" and, together with a syndicate of financial
institutions if Chemical so elects at any time, the "Buyers") pursuant to a
Receivables Transfer and Servicing Agreement ("RTA") with Chemical, as
administrative agent. The Company recognized a loss of approximately $2.7
million related to the transaction. Carcorp will continue to purchase, on a
revolving basis, all trade receivables generated by the Sellers. The Sellers
will continue to service the receivables for Carcorp. Carcorp may sell to
the Buyers undivided senior interests of up to $150 million in receivables at
any time, subject to among other things the sufficiency of the underlying
receivables and the qualification of the underlying receivables as "Eligible
Receivables" under the RTA. The Receivables Facility terminates July 13, 2001
or earlier if a defined liquidation event occurs.
As of July 30, 1994, Carcorp's total receivables pool was $187.2 million.
As of July 30, 1994, Chemical possessed a $125 million undivided senior
interest in Carcorp's receivables pool and accordingly, such receivables
were not reflected in the Company's accounts receivable balance as of that
date. Carcorp owns a subordinated interest in the receivables pool.
E. Discontinued Operations:
As of the end of fiscal 1992, the Company reclassified its Builders
Emporium home improvement retail chain and the Engineering Group as
discontinued operations. In March 1993, the Engineering Group was sold for
approximately $51 million. Builders Emporium's inventory was sold during the
third and fourth quarters of fiscal 1993 and substantially all accounts
receivable and accounts payable balances were settled as of January 29, 1994.
Remaining assets and liabilities of Builders Emporium relate primarily to ten
owned and four leased real estate properties and self-insured workers
compensation liabilities, which continue to be liquidated.
The Company's former Kayser-Roth Corporation subsidiary ("Kayser-Roth")
was reclassified as a discontinued operation at the end of the quarter ended
October 30, 1993 and was sold on January 28, 1994 for a total price of $170
million, subject to a post-closing purchase price adjustment of $5.1 million,
which was paid to the purchaser of Kayser-Roth on September 1, 1994. A
portion of the proceeds was used to repay $66 million of borrowings under a
Kayser-Roth credit facility. In connection with the sale, the Company received
a 90-day $70 million senior unsecured bridge note from the purchaser, which
was collected with accrued interest on April 27, 1994. Kayser-Roth has been
reclassified as a discontinued operation for the quarter and six months ended
July 31, 1993.
In the quarter and six months ended July 31, 1993, revenues derived from
discontinued operations were $218.0 million and $437.3 million, respectively.
The majority of Builders Emporium's leased properties have been assigned
to third parties. In addition, C&A Products has assigned leases in connection
with the divestiture of Kayser-Roth, the Engineering Group, Wickes Manufacturing
Company and other divested businesses. Although C&A Products has obtained
releases from the lessors of certain properties, C&A Products remains
contingently liable under most of the leases. C&A Products'
I-5
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
future liability for these leases, in management's opinion, based on the facts
presently known to it, will not have a material effect on the Company's
consolidated financial condition or future results of operations.
During the first quarter of 1994, the Company incurred expenses of $2.5
million for services performed by affiliates of Blackstone Partners and WP
Partners in connection with a comprehensive review of the Company's
liabilities associated with discontinued operations, including surplus real
estate, postretirement and workers compensation liabilities. These fees are
included in accrued liabilities at July 30, 1994. In addition, the Company
incurred a $100,000 fee during the first quarter of 1994 for advisory services
performed by an affiliate of Blackstone Partners in connection with the sale of
Builders Emporium's inventory, real estate and other assets.
F. Inventories:
Inventory balances are summarized as follows (in thousands):
July 30, January 29,
1994 1994
Raw materials . . . . . . . . . . . . . . . $ 80,261 $ 70,762
Work in process . . . . . . . . . . . . . . 25,482 24,739
Finished goods . . . . . . . . . . . . . . 89,896 80,561
$ 195,639 $ 176,062
G. Interest Expense, Net:
Interest expense for the quarters ended July 30, 1994 and July 31, 1993
is net of interest income of $2.6 million and $1.6 million, respectively.
Interest expense for the six months ended July 30, 1994 and July 31, 1993 is
net of interest income of $4.9 million and $2.6 million, respectively.
Interest expense has been allocated to discontinued operations based on
the ratio of net book value (including reserves for loss on disposal) of
discontinued operations to C&A Products' consolidated invested capital.
Interest allocated to discontinued operations was $3.8 million and $8.8
million for the quarter and six months ended July 31, 1993. No interest was
allocated to discontinued operations for the quarter and six months ended
July 30, 1994.
H. Related Party Transactions:
During the first quarter of 1994, the Company incurred expenses of $2.75
million for services performed by affiliates of WP Partners and $3.25 million
for services performed by affiliates of Blackstone Partners in connection with
the Company's review of refinancing and strategic alternatives as well as
certain other advisory services. These fees are included in "selling, general
and administrative expenses" for the first quarter of 1994 and are included in
accrued liabilities at July 30, 1994.
For additional information, including information regarding the Offering
and Recapitalization, see Note C to Condensed Consolidated Financial Report
and "PART I - FINANCIAL INFORMATION, Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations" elsewhere herein.
I-6
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
I. Information About Segments of the Company's Operations:
Information about the Company's segments for the second quarter and
first six months of fiscal 1994 and 1993 follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Net Gross Operating Capital
July 30, 1994 Sales Margin Income Expenditures
<S> <C> <C> <C> <C>
Automotive Products . . . $ 206,873 $ 40,911 $ 27,739 $ 12,076
Interior Furnishings . . 102,769 31,690 14,463 5,053
Wallcoverings . . . . . . 50,107 14,756 867 1,607
359,749 87,357 43,069 18,736
Corporate items . . . . . - - (3,383) 109
$ 359,749 $ 87,357 $ 39,686 $ 18,845
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended Net Gross Operating Capital
July 31, 1993 Sales Margin Income Expenditures
<S> <C> <C> <C> <C>
Automotive Products . . . $ 143,817 $ 21,715 $ 7,372 $ 7,385
Interior Furnishings . . 94,054 23,537 6,522 2,466
Wallcoverings . . . . . . 51,823 15,978 1,427 1,170
289,694 61,230 15,321 11,021
Corporate items . . . . . - - (4,727) 308
$ 289,694 $ 61,230 $ 10,594 $ 11,329
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Net Gross Operating Capital
July 30, 1994 Sales Margin Income Expenditures
<S> <C> <C> <C> <C>
Automotive Products . . . $ 429,864 $ 89,060 $ 63,129 $ 23,310
Interior Furnishings . . 209,898 63,570 28,137 7,626
Wallcoverings . . . . . . 110,433 35,681 6,004 2,893
750,195 188,311 97,270 33,829
Corporate items . . . . . - - (12,022) (a) 302
$ 750,195 $ 188,311 $ 85,248 $ 34,131
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Net Gross Operating Capital
July 31, 1993 Sales Margin Income Expenditures
<S> <C> <C> <C> <C>
Automotive Products . . . $ 318,512 $ 52,893 $ 23,894 $ 10,066
Interior Furnishings . . 197,052 51,248 16,364 3,726
Wallcoverings . . . . . . 113,173 36,037 5,668 2,053
628,737 140,178 45,926 15,845
Corporate items . . . . . - - (9,180) 468
$ 628,737 $ 140,178 $ 36,746 $ 16,313
</TABLE>
a) Corporate items for the six months ended July 30, 1994 include $6.0
million related to services performed by affiliates of WP Partners and
of Blackstone Partners in connection with the Company's review of
refinancing and strategic alternatives as well as certain other
advisory services.
I-7
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Concluded)
(Unaudited)
J. Commitments and Contingencies:
See "PART II - OTHER INFORMATION, Item 1. Legal Proceedings." The
ultimate outcome of the legal proceedings to which the Company is a party
will not, in the opinion of the Company's management based on the facts
presently known to it, have a material effect on the Company's consolidated
financial condition or future results of operations.
See also "PART I - FINANCIAL INFORMATION, Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations - Environmental
Matters" and Note E to Condensed Consolidated Financial Report elsewhere herein.
K. Earnings Per Share:
Income (loss) per common share is based on the weighted average number
of shares of Common Stock outstanding during each period and the assumed
exercise of all employee stock options less the number of treasury shares
assumed to be purchased from the proceeds, including applicable compensation
expense. In connection with the merger of Holdings II into the Company, the
35,035,000 shares of Common Stock of the Company outstanding prior
to the Recapitalization were canceled and approximately 28,164,000 shares of
Common Stock were issued in exchange for the common stock of Holdings II. All
historical amounts and earnings per share computations have been adjusted to
reflect the merger. Net loss has been adjusted by dividends and accretion
requirements on preferred stock and the excess of redemption cost over book
value of preferred stock to compute loss applicable to common shareholders.
I-8
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
INITIAL PUBLIC OFFERING AND RECAPITALIZATION
On July 13, 1994, the Company completed an initial public offering of
15.0 million shares of Common Stock at an initial public offering price of
$10.50 per share. The net proceeds to the Company from the Offering and
from the sale by the Company of an aggregate of approximately 8.8 million
shares of Common Stock to affiliates of the Company's principal shareholders,
WP Partners and Blackstone Partners, together with proceeds under the New
Credit Facilities and available cash, were used to effect a defeasance and
redemption or repayment of virtually all outstanding indebtedness and all
outstanding preferred stock of the Company and its subsidiaries. In
addition, the Company's $204.5 million of Subordinated PIK Bridge Notes were
extinguished with approximately $9.7 million redeemed in cash and approximately
$194.8 million exchanged for approximately 18.5 million shares of Common Stock.
After the Offering and Recapitalization, approximately 70.5 million shares of
Common Stock were outstanding at July 30, 1994.
The following table sets forth a summary of sources and uses of funds in
the Recapitalization (in millions) after giving effect to transactions through
July 30, 1994:
<TABLE>
<S> <C>
Sources of funds
Sale of Common Stock in the Offering, net of expenses related to the
initial public offering $ 145.4
Sale of Common Stock to principal shareholders 87.0
Proceeds from borrowings under the Term Loan Facilities and Revolving
Facility 595.0
Proceeds from sale of an interest in accounts receivable under
Receivables Facility 125.0
Available cash 99.7
Total 1,052.1
Uses of Funds
Repayment and defeasance of indebtedness 997.9
Accrued interest and dividends through redemption dates 17.1
Redemption premiums 13.0
Defeasance costs 9.3
Fees and expenses related to New Credit Facilities 14.8
Total $ 1,052.1
</TABLE>
The Recapitalization was designed to reduce the Company's indebtedness,
significantly lower interest expense, improve operating and financial
flexibility and provide liquidity for operations and other general corporate
purposes. In connection with the Recapitalization, Holdings II, formerly the
sole common stockholder of the Company, was merged into the Company and the
Company changed its name to Collins & Aikman Corporation. Concurrently,
Group was merged into its wholly-owned subsidiary, Collins & Aikman
Corporation, which changed its name to Collins & Aikman Products Co.
I-9
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
GENERAL
The Company's continuing business segments consist of Automotive
Products, which supplies interior trim products to the North American
automotive industry; Interior Furnishings, which manufactures residential
upholstery and commercial floorcoverings in the United States; and
Wallcoverings, which produces residential wallcoverings in the United States.
The Company's net sales in the second quarter of fiscal 1994 were $359.7
million, with approximately $206.9 million (57.5%) in Automotive Products,
$102.8 million (28.6%) in Interior Furnishings, and $50.1 million (13.9%) in
Wallcoverings. All references to a year with respect to the Company refer to
the fiscal year of the Company which ends on the last Saturday of January of
the following year.
The industries in which the Company competes are cyclical. Automotive
Products is influenced by the level of North American vehicle production.
Interior Furnishings is primarily influenced by the level of residential,
institutional and commercial construction and renovation. Wallcoverings is
also influenced by levels of construction and renovation and by trends in
home remodeling.
RESULTS OF OPERATIONS
Discussion of results of each of the Company's operating segments follows:
Automotive Products
Quarter Ended
July 30, 1994 July 31, 1993
Amount Percent Amount Percent
(in millions)
Net sales $ 206.9 100.0% $ 143.8 100.0%
Cost of goods sold 166.0 80.2 122.1 84.9
Gross margin 40.9 19.8 21.7 15.1
Selling, general & administrative
expenses 13.2 6.4 13.9 9.7
Goodwill amortization - 0.0 0.5 0.3
Operating income $ 27.7 13.4% $ 7.3 5.1%
I-10
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Six Months Ended
July 30, 1994 July 31, 1993
Amount Percent Amount Percent
(in millions)
Net sales $ 429.9 100.0% $ 318.5 100.0%
Cost of goods sold 340.8 79.3 265.6 83.4
Gross margin 89.1 20.7 52.9 16.6
Selling, general & administrative
expenses 25.9 6.0 28.0 8.8
Goodwill amortization - 0.0 1.0 0.3
Operating income $ 63.2 14.7% $ 23.9 7.5%
Net Sales: Automotive Products' net sales increased 44% to $206.9 million in
the second quarter of 1994, up $63.1 million over the second quarter of 1993.
The overall increase is attributable to increased sales volume and reflects
the impact of a 9.4% increase in North American automobile and light truck
build in the second quarter of 1994 from the second quarter of 1993. Of the
sales increase, 49% related to automotive bodycloth and 17% related to molded
floor carpet. The remainder primarily related to increased convertible top
and topstack sales.
The bodycloth increase was due primarily to the Company's jacquard velvets
product line currently utilized in such high volume models as the General
Motors C/K Truck Line and the Chevrolet Cavalier. Additional product
placements, which contributed to the overall increase in bodycloth volume,
were the Ford Escort and F-Series Truck and Chrysler Minivans.
The molded floor carpet increase was due to a 19% increase in unit shipments
principally related to increased production of high volume lines including
Cadillac Deville, Chevrolet Camaro, General Motors C/K Truck Line, Chrysler
Minivans, Ford Mustang and the Dodge T-300 and Dakota Trucks.
The convertible top stack increase resulted from Ford's full production of the
Mustang convertible.
For the first six months Automotive Products' net sales of $429.9 million was
$111.4 million higher than the comparable period in 1993. For the first six
month period the North American automobile and light truck build increased
9.0% from the comparable period of fiscal 1993. Of Automotive Products' sales
increase, 48% related to automotive bodycloth and 16% related to molded floor
carpet. The remainder primarily related to increased convertible top and
topstack sales.
These increases primarily related to the vehicle lines discussed above as
well as increased volume during the first quarter of such vehicles as the
Chrysler full size van and the Honda Accord, which resumed full production.
These factors resulted in the Company's average
I-11
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
revenue per North American-produced vehicle of approximately $52 for the six
month period ended July 30, 1994 compared to approximately
$43 for all of fiscal 1993.
Gross Margin: For the second quarter ended July 30, 1994, gross margin was
19.8%, up from 15.1% in the comparable period in 1993, and for the first six
months of 1994 Automotive Products' gross margin rose to 20.7% of sales from
16.6% in 1993. The improvement in gross margin resulted from spreading fixed
costs over higher production volume in both the bodycloth and automotive
carpet product lines and continued benefits of reducing costs of nonconforming
products.
Selling, General and Administrative Expenses: Automotive Products' selling,
general and administrative expenses decreased 5% to $13.2 million in the
second quarter of 1994, down $.7 million from the second quarter of 1993. For
the first six months selling, general and administrative expenses of $25.9
million was $2.1 million lower than the comparable period in 1993. The
reduction is attributable to lower styling and product development costs in
the segment's automotive carpet product line and reduced administrative
expenses resulting from reductions in administrative head count and changes
in postretirement plan provisions.
Interior Furnishings
Quarter Ended
July 30, 1994 July 31, 1993
Amount Percent Amount Percent
(in millions)
Net sales $ 102.8 100.0% $ 94.0 100.0%
Cost of goods sold 71.1 69.2 70.5 75.0
Gross margin 31.7 30.8 23.5 25.0
Selling, general & administrative
expenses 17.2 16.7 16.6 17.7
Goodwill amortization - 0.0 0.4 0.4
Operating income $ 14.5 14.1% $ 6.5 6.9%
I-12
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Six Months Ended
July 30, 1994 July 31, 1993
Amount Percent Amount Percent
(in millions)
Net sales $ 209.9 100.0% $ 197.1 100.0%
Cost of goods sold 146.3 69.7 145.8 74.0
Gross margin 63.6 30.3 51.3 26.0
Selling, general & administrative
expenses 35.4 16.9 34.3 17.4
Goodwill amortization - 0.0 0.6 0.3
Operating income $ 28.0 13.4% $ 16.4 8.3%
Net Sales: Interior Furnishings' net sales increased 9% to $102.8 million in
the second quarter of 1994, up $8.8 million over the second quarter of 1993.
For the first six months net sales of $209.9 million was $12.8 million higher
than the comparable period in 1993. Overall, approximately 60% of the sales
increases related to increased sales volume and the remainder related to
increases in the average selling prices in the decorative fabrics group.
Within the segment the Company's floorcoverings and decorative fabrics groups
both experienced sales increases in 1994 over the comparable 1993 periods.
The floorcoverings group increase is primarily attributable to a 16% increase
in volume related to increases in the education and corporate markets. The
decorative fabrics group sales increases continued to reflect modest volume
increases and shifts in product mix toward higher priced jacquard fabrics,
particularly in the group's Mastercraft division. During the second quarter,
the Company introduced its "Advantage Fabrics" line with initial wholesale
selling prices ranging from $3.75 to $3.95 per yard. The Advantage Fabrics
line is specifically designed to penetrate the promotional furniture lines in
which the Company did not previously compete.
Gross Margin: For the second quarter ended July 30, 1994, gross margin was
30.8%, up from 25.0% in the comparable period, and for the first six months
of 1994 Interior Furnishings' gross margin rose to 30.3% of sales from 26.0%
in 1993. The increase reflects improvements in manufacturing efficiencies in
both the floorcoverings and decorative fabrics groups as well as product mix
shifts in the decorative fabrics group towards higher margin jacquard fabrics.
Selling, General and Administrative Expenses: Interior Furnishings' selling,
general and administrative expenses increased 4% to $17.2 million in the
second quarter of 1994, up $.6 million over the second quarter of 1993. For
the first six months selling, general and administrative expenses of $35.4
million were $1.1 million higher than the comparable period in 1993. The
increases are primarily due to increased selling expenses related to sales
volume increases in the floorcoverings group as well as planned expansion of
the group's sales staff.
I-13
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Wallcoverings
Quarter Ended
July 30, 1994 July 31, 1993
Amount Percent Amount Percent
(in millions)
Net sales $ 50.1 100.0% $ 51.8 100.0%
Cost of goods sold 35.4 70.6 35.8 69.2
Gross margin 14.7 29.4 16.0 30.8
Selling, general & administrative
expenses 13.9 27.7 14.5 27.9
Goodwill amortization - 0.0 0.1 0.1
Operating income $ 0.8 1.7% $ 1.4 2.8%
Six Months Ended
July 30, 1994 July 31, 1993
Amount Percent Amount Percent
(in millions)
Net sales $ 110.4 100.0% $ 113.2 100.0%
Cost of goods sold 74.8 67.7 77.1 68.2
Gross margin 35.6 32.3 36.1 31.8
Selling, general & administrative
expenses 29.7 26.9 30.1 26.6
Goodwill amortization - 0.0 0.3 0.2
Operating income $ 5.9 5.4% $ 5.7 5.0%
Net Sales: Wallcoverings' net sales decreased 3% to $50.1 million in the
second quarter of 1994, down $1.7 million over the second quarter of 1993.
For the first six months net sales of $110.4 million was $2.8 million lower
than the comparable period in 1993. The overall decrease in net sales
continues to reflect a modest increase in the independent retailer ("dealer")
and converter businesses offset by a planned decrease in sales to independent
distributors and by a decrease in chain business. The Company believes that
the decrease in the chain business reflects delayed product replenishment by
the chain stores.
Gross Margin: For the second quarter ended July 30, 1994, gross margin of
29.4% was down from 30.8% in the comparable period. The decrease is
primarily attributable to changes in product mix. For the first six months
of 1994 Wallcoverings' gross margin rose to 32.3% of sales
I-14
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
from 31.8% in 1993. The increase reflects improved absorption of fixed
manufacturing costs over increased production of new product lines and
reductions in the costs of product close-outs.
Selling, General and Administrative Expenses: Wallcoverings' selling, general
and administrative expenses decreased 4% to $13.9 million in the second
quarter of 1994, down $.6 million over the second quarter of 1993. For the
first six months selling, general and administrative expenses of $29.7 million
was $.4 million lower than the comparable period in 1993. The decrease was
due to planned second quarter increases in sample and product development
costs offset by lower administrative and selling expenses.
Company As A Whole
Net Sales: Net sales increased 24% to $359.7 million in the second quarter of
1994, up $70 million over the second quarter of 1993. For the first six
months net sales of $750.2 million was $121.5 million higher than the
comparable period in 1993. The overall net sales increases reflect continued
sales increases in the Company's Automotive Products and Interior Furnishings
segments offset by slight sales decreases in the Wallcoverings segment as
discussed above.
Gross Margin: Gross margin increased to $87.4 million in the second quarter of
1994 or 24.3% of sales, up from $61.2 million or 21.1% of sales in the second
quarter of 1993. For the first six months of 1994 gross margin rose to 25.1%
from 22.3% in 1993. The increases in the gross margin result primarily from
increased volume in the Company's Automotive Products segment which resulted
in lower fixed costs per unit and from manufacturing efficiencies in the
Interior Furnishings segment.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses decreased in the second quarter of 1994 to $47.7
million and was $2.0 million lower than the comparable period in 1993.
The improvement is primarily attributed to the $1.3 million or 28% reduction
in unallocated corporate expenses to $3.4 million in the second quarter of
1994 compared to the second quarter of 1993. For the first six months of 1994
selling, general and administrative expenses of $103.1 million was $1.5
million higher than the comparable period in 1993. For the first six months
of 1994, unallocated corporate expenses of $12.0 million was $2.8 million
higher than the comparable period in 1993 and was offset by the $1.4 million
improvement in the segments' selling, general and administrative expenses.
The increase in the unallocated corporate expenses resulted from services
performed by affiliates of Blackstone Partners and of WP Partners in connection
with the Company's evaluation of refinancing and strategic alternatives and
certain other advisory services as well as an increase in second quarter
compensation expense related to options issued under the 1994 Employee Stock
Option Plan during the first quarter of 1994.
Goodwill Amortization: Goodwill amortization was $.9 million and $1.8 million
in the quarter and six months ended July 31, 1993, respectively. No goodwill
amortization was recorded in the quarter and six months ended July 30, 1994 as
a result of the write-off of goodwill at October 30, 1993.
I-15
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Interest Expense: Interest expense allocated to continuing operations, net of
interest income of $4.9 million in the first six months of 1994 and $2.6
million in the first six months of 1993, decreased to $54.6 million from $55.0
million in the comparable 1993 period. For the first six months of 1994
interest expense, including amounts allocated to discontinued operations and
excluding interest income, decreased to $59.5 million from $68.8 million for
the first six months of 1993. The overall decrease in interest expense was
due to a decrease in average borrowings over the comparable period offset by
higher interest rates on the Company s floating rate indebtedness.
Loss on the Sale of Receivables: On July 13, 1994, the Company, as part of the
Recapitalization, sold through its Carcorp subsidiary an undivided senior
interest in a pool of accounts receivable to Chemical. In connection with the
receivables sale, a loss of $2.7 million was incurred in the second quarter of
1994. Of this loss, $1.3 million related to fees and expenses related to the
sales and $1.4 million related to discounts on the receivables sold.
Income Taxes: In the first quarter and six months ended July 30, 1994, income
taxes were $3.0 million and $5.6 million compared with $2.3 million and $5.6
million, respectively. In all periods income tax expense consisted of foreign,
state and franchise taxes.
Discontinued Operations: The Company's loss from discontinued operations,
including loss on disposals, was $132.4 million for the first six months of
1993. This loss principally related to the accrual of additional reserves
(i) for the significant reduction in estimated proceeds from disposition and
other costs in connection with the sale or disposition of Builders Emporium's
inventory, real estate and other assets and (ii) to provide for employee
severance and other costs.
Extraordinary Loss on the Extinguishment of Debt: On July 13, 1994 the Company
as part of the Recapitalization recognized a loss on the extinguishment of
debt of $106.5 million. The second quarter 1994 loss consisted of $9.6 million
of premiums paid to redeem indebtedness and $96.9 million of unamortized
discounts, deferred financing charges and defeasance costs.
Net Income: The combined effect of the foregoing resulted in net loss of
$99.2 million in the second quarter of 1994 compared to a net loss of $149.4
million for the comparable period of 1993 and a net loss of $86.5 million for
the first six months of 1994 compared to a net loss of $158.5 million for the
comparable period of 1993.
I-16
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Earnings before interest, taxes, depreciation and amortization ("EBITDA"): For
the quarter and six month periods ended July 30, 1994 and July 31, 1993,
EBITDA for the Company is as follows (in thousands):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Automotive Products $ 34,666 $ 14,307 $ 76,024 $ 37,894
Interior Furnishings 17,905 10,095 35,030 23,281
Wallcoverings 2,253 3,030 8,759 8,967
Corporate (3,033) (4,203) (11,333) (8,114)
$ 51,791 $ 23,229 $108,480 $ 62,028
</TABLE>
EBITDA reflects the Company's ability to satisfy principal and interest
obligations with respect to its indebtedness and to utilize cash for other
purposes. In addition, certain covenants in the New Credit Facilities are
based upon calculations using EBITDA. EBITDA does not represent and should
not be considered as an alternative to net income or cash flow from operations
as determined by generally accepted accounting principles.
I-17
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
Pro Forma Results: The following unaudited pro forma results (in thousands
except for per share data) assume the Recapitalization had occurred at the
beginning of each fiscal year.
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $359,749 $289,694 $750,195 $628,737
Cost of goods sold 272,392 228,464 561,884 488,559
Selling, general and administrative
expenses 46,921 48,961 101,563 100,083
319,313 277,425 663,447 588,642
Operating income 40,436 12,269 86,748 40,095
Interest expense, net (10,244) (6,574) (18,088) (13,338)
Loss on sale of receivables (1,761) (1,289) (4,849) (3,921)
Income from continuing operations
before income taxes 28,431 4,406 63,811 22,836
Income taxes 2,850 2,165 5,348 5,316
Income from continuing operations $ 25,581 $ 2,241 $ 58,463 $ 17,520
Per primary and fully diluted common
share:
Continuing operations $ 0.35 $ 0.03 $ 0.81 $ 0.25
Average common shares outstanding 72,166 69,617 72,166 69,617
EBITDA $ 52,541 $ 24,904 $109,980 $ 65,379
</TABLE>
The pro forma results do not purport to represent what the Company's results of
operations would actually have been if the Recapitalization had occurred as of
the beginning of each period presented, or to project the Company's results of
operations at any future date or for any future period.
I-18
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company and its subsidiaries had cash and cash equivalents totalling
$13.7 million and $81.4 million at July 30, 1994 and January 29, 1994,
respectively. The decrease in the Company's cash balance is primarily due
to the Recapitalization which occurred in July 1994.
During the fourth quarter of 1993, the Company sold Kayser-Roth for
approximately $170 million (before the post-closing purchase price adjustment
described below) including a $70 million note. A portion of the proceeds
was used to repay $66 million of borrowings under a Kayser-Roth credit
facility. The Company's Engineering Group, which was discontinued in 1992,
was sold during the first quarter of 1993 for approximately $51 million.
Additionally, the Company has nearly completed the disposition of the real
estate, inventory and other assets of Builders Emporium, which the Company
discontinued as of the end of 1992. On April 27, 1994, the Kayser-Roth note
was paid with accrued interest resulting in cash proceeds of $71.2 million to
the Company. A post-closing purchase price adjustment of $5.1 million was
paid to the purchaser of Kayser-Roth on September 1, 1994.
As part of the Recapitalization, the Company entered into the New Credit
Facilities on July 13, 1994. The New Credit Facilities consist of (i) the
Term Loan Facilities, comprised of term loans in an aggregate principal amount
of $475 million (including a $45 million Canadian loan) and having a term of
eight years, which were drawn in full on the closing date (the "Term Loan
Facilities"), (ii) the Revolving Facility, which is in an aggregate principal
amount of up to $150 million and has a term of seven years and (iii) the
Receivables Facility, which is in an aggregate face amount of up to $150
million and has a term of seven years. The New Credit Facilities contain
restrictive covenants including maintenance of EBITDA (i.e. earnings before
interest, taxes, depreciation and amortization) and interest coverage ratios,
leverage and liquidity tests, dividend restrictions on the Common Stock
and various other restrictive covenants which are
typical for such facilities. In addition, C&A Products is prohibited from
paying dividends or making other distributions to the Company except to the
extent necessary to allow the Company to pay taxes, ordinary expenses,
permitted dividends on the Common Stock, the repurchase price for shares or
options pursuant to contractual obligations and permitted investments in
finance, foreign or acquired subsidiaries. The Company does not believe such
prohibition will have a material adverse impact on the Company because all the
Company's operations are conducted, and all the Company's debt obligations are
issued, by C&A Products and its subsidiaries.
The Company's principal sources of funds are cash generated from
continuing operating activities, borrowings under the Revolving Facility
and the sale of receivables under the Receivables Facility. Net cash used by
the operating activities of the Company's continuing operations was $13.9
million for the quarter ended July 30, 1994. The Company had a total of $47.7
million of borrowing availability under its available credit arrangements as
of July 30, 1994. The total is comprised of approximately $24.0 million under
the Revolving Facility, approximately $15.4 million under the Receivables
Facility and approximately $8.3 million under a bank demand line of credit in
Canada.
The Company's principal uses of funds for the next several years will be
to fund interest and principal payments on its indebtedness, net working
capital increases and capital expenditures. At July 30, 1994, the Company
had total outstanding long-term indebtedness of $607.3 million (excluding
$11.0 million of outstanding letters of credit) at an average interest rate
of 6.38% per annum. Of the total outstanding long term indebtedness,
I-19
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
$590 million relates to the Term Loan Facilities and the Revolving Facility.
Indebtedness under the Term Loan Facilities and Revolving Facility bears
interest at a per annum rate equal to the Company's choice of (i) Chemical's
Alternate Base Rate (which is the highest of Chemical's announced prime rate,
the Federal Funds Rate plus .5% and Chemical's base certificate of deposit
rate plus 1%) ("ABR") plus the ABR Margin per annum or (ii) the offered rates
for Eurodollar deposits of one, two, three, six, nine or twelve months, as
selected by the Company plus LIBOR margin. Pursuant to the terms of the Term
Loan Facilities and the Revolving Facility, "ABR Margin" is initially .75%
and the "LIBOR Margin" is initially 1.75%. The weighted average rate of
interest on the Term Loan Facilities and the Revolving Facility at July 30,
1994 is 6.38%. The purchases by the Buyers of participating interests in
the receivables under the Receivables Facility are made at an initial interest
cost (for the first 270 days) equal, at Carcorp's election, to LIBOR plus
.625% per annum or ABR. After the first 270 days, the interest cost under the
Receivables Facility, if it is not replaced with another receivables facility,
will match the interest rate on the other New Credit Facilities. The weighted
average interest rate on the sold interests at July 30, 1994 is 5.56%. Cash
interest paid during the quarters ended July 30, 1994 and July 31, 1993 was
$50.9 million ($16.0 million of which was paid in connection with the
Recapitalization), and $38.8 million, respectively. Cash interest paid during
the first half of 1994 and 1993 aggregated approximately $59.4 million and
$53.5 million, respectively.
The current maturities of long-term debt primarily consist of vendor
financing, industrial revenue bonds and other miscellaneous debt. Repayments
of indebtedness under the New Credit Facilities commence in the third fiscal
quarter of 1995. The maturities of long-term debt of the Company during the
remainder of fiscal 1994 and for 1995, 1996, 1997 and 1998 are $2.2 million,
$17.4 million, $42.8 million, $60.8 million and $75.8 million, respectively.
In addition, the New Credit Facilities provide for mandatory prepayments
with certain excess cash flow of the Company, net cash proceeds of certain
asset sales or other dispositions by the Company, net cash proceeds of
sale/leaseback transactions and net cash proceeds of certain issuances of
debt obligations.
The Company makes capital expenditures on a recurring basis for
replacements and improvements. As of July 30, 1994, the Company had
approximately $50 million in outstanding capital expenditure commitments.
During 1994, the Company anticipates capital expenditures will aggregate
approximately $84 million as compared to $44.9 million in 1993. The increase
is due primarily to the acquisition of additional machinery and equipment at
Decorative Fabrics' Mastercraft division as part of an $85 million five year
capital investment plan that was initiated this year for the purpose of
expanding production capacity at Mastercraft to accommodate anticipated
growth. Secondarily, this increase is due to the planned completion of an
Automotive Products facility in Mexico for approximately $6 million. The
Company's capital expenditures in future years will depend upon demand for
the Company's products and changes in technology. The Company currently
estimates that capital expenditures in 1995 will exceed $60 million.
The Company has significant obligations relating to postretirement,
casualty, environmental, lease and other liabilities of discontinued
operations. In connection with the sale and acquisition of certain
businesses, the Company has indemnified the purchasers and sellers for
certain environmental liabilities, lease obligations and other matters.
In addition, the Company is contingently liable with respect to certain
lease and other obligations assumed by certain purchasers and may be required
to honor such obligations if such purchasers are unable or unwilling to do
so. Management anticipates that the net cash
I-20
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
requirements of its discontinued operations (excluding the post-closing
purchase price adjustment related to the sale of Kayser-Roth and the
anticipated net proceeds from the disposition of the remaining Builders
Emporium real estate) will be approximately $20.9 million for 1994. However,
because the requirements of the Company's discontinued operations are largely
a function of contingencies, it is possible that the actual net cash
requirements of the Company's discontinued operations could differ materially
from management's estimates. Management believes that the Company's needs
relating to discontinued operations can be adequately funded in 1994 by net
cash provided by operating activities from continuing operations and by
borrowings under existing bank credit facilities.
From time to time, the Company evaluates acquisitions. The Company
expects to fund any future acquisitions with net cash provided by operating
activities from continuing operations, borrowings under bank credit facilities
or the issuance of securities.
Tax Matters
As of January 29, 1994, the Company had NOLs (net operating loss
carryforwards) of approximately $434.0 million for Federal income tax
purposes, which expire over the period from 1996 to 2008. The Company also
has unused Federal tax credits of approximately $18.9 million, $11.9 million
of which expire during 1994 to 2003. The Company anticipates that additional
Federal income tax deductions of approximately $37.7 million will be generated
during 1994 as a result of write-offs of unamortized debt discounts and
deferred financing costs relating to debt repaid in connection with the
Recapitalization. In addition, the Company estimates that it will generate
tax deductions of approximately $75.4 million in connection with the ultimate
disposition of assets and liabilities of its discontinued businesses during
the period 1994 to 1996, which were previously accrued for financial reporting
purposes prior to January 29, 1994. The Company anticipates that utilization
of these NOLs, tax credits and deductions will result in minimal Federal
income taxes until these NOLs and tax credits are exhausted.
Approximately $134.0 million of the Company's NOLs and $11.9 million of
the Company's unused Federal tax credits may be used only against the income
and apportioned tax liability of the specific corporate entity that generated
such losses or credits or its successors. Because of the merger of Group and
C&A Products, such NOLs and credits may be used against the income and
apportioned tax liability of C&A Products, which the Company believes will
have sufficient taxable income and apportioned tax liability to fully use such
NOLs and to use a substantial portion of such tax credits. The
Recapitalization will not constitute a "change in control" that would
result in annual limitations on the Company's use of its NOLs and unused
tax credits. However, future sales of Common Stock by the Company or the
principal shareholders, or changes in the composition of the principal
shareholders, could constitute such a "change in control". Management cannot
predict whether such a "change in control" will occur. If such a change
of control were to occur, the resulting annual limitations on the use of NOLs
and tax credits will depend on the value of the equity of the Company and
the amount of "built-in gain" or "built-in loss" in the Company's assets
at the time of the "change in control", which cannot be known at this time.
In the course of an examination of the Company's Federal income tax
returns, the IRS has challenged the availability of $176.6 million of the
Company's approximately $434.0 million of NOLs. The examination is at a
preliminary stage and management believes that the basis for the IRS' position
is unclear. Management disputes the IRS' challenge and believes
I-21
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Continued)
that substantially all the NOLs should be available (subject to the potential
limitations noted above) to offset its income, if any, in the future. If the
IRS were to maintain its position and all or a major portion of such position
were to be upheld in litigation, the amount of NOLs available to the Company
in future years would be materially reduced.
ENVIRONMENTAL MATTERS
The Company is subject to increasingly stringent Federal, state and local
environmental laws and regulations that (i) affect ongoing operations and may
increase capital costs and operating expenses and (ii) impose liability for
the costs of investigation and remediation and otherwise related to on-site
and off-site soil and groundwater contamination. The Company's management
believes that it has obtained, and is in material compliance with, all
material environmental permits and approvals necessary to conduct its various
businesses. Environmental compliance costs for continuing businesses
currently are accounted for as normal operating expenses or capital
expenditures of such business units. In the opinion of management, based on
the facts presently known to it, such environmental compliance costs will not
have a material adverse effect on the Company's consolidated financial
condition or results of operations.
The Company is legally or contractually responsible or alleged to be
responsible for the investigation and remediation of contamination at various
sites. It also has received notices that it is a potentially responsible party
("PRP") in a number of proceedings. The Company may be named as a PRP at
other sites in the future, including with respect to divested and acquired
businesses. It is a normal risk of operating a manufacturing business that
liability may be incurred for investigating and remediating on-site and off-
site contamination. The Company is currently engaged in investigation or
remediation at certain sites. In estimating the total cost of investigation
and remediation, the Company has considered, among other things, the Company's
prior experience in remediating contaminated sites, remediation efforts by
other parties, data released by the Environmental Protection Agency, the
professional judgment of the Company's environmental experts, outside
environmental specialists and other experts, and the likelihood that other
parties which have been named as PRPs will have the financial resources to
fulfill their obligations at sites where they and the Company may be jointly
and severally liable. Under the scheme of joint and several liability, the
Company could be liable for the full costs of investigation and remediation
even if additional parties are found to be responsible under the applicable
laws. It is difficult to estimate the total cost of investigation and
remediation due to various factors including incomplete information regarding
particular sites and other PRP's, uncertainty regarding the extent of
environmental problems and the Company's share, if any, of liability for
such problems, the selection of alternative compliance approaches, the
complexity of environmental laws and regulations and changes in cleanup
standards and techniques. When it has been possible to provide reasonable
estimates of the Company's liability with respect to environmental sites,
provisions have been made in accordance with generally accepted accounting
principles. Excluding sites at which the Company's participation is
anticipated to be de minimis or otherwise insignificant or where the Company
is being indemnified by a third party for the liability, there are 15 sites
where the Company is participating in the investigation or remediation of the
site, either directly or through financial contribution, and eight additional
sites where the Company is alleged to be responsible for costs of investigation
or remediation. As of July 30, 1994, the Company's estimate of its liability
for these 23 sites is approximately $28.5 million. As of July 30, 1994, the
Company has established reserves of approximately $29.8 million for
the estimated
I-22
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Concluded)
future costs related to all its known environmental sites. In the opinion of
management, based on the facts presently known to it, the environmental costs
and contingencies will not have a material adverse effect on the Company's
consolidated financial condition or results of operations. However, there can
be no assurance that the Company has identified or properly assessed all
potential environmental liability arising from the activities or properties
of the Company, its present and former subsidiaries and their corporate
predecessors.
For additional information regarding the foregoing, see "PART II -
OTHER INFORMATION, Item 1. Legal Proceedings" elsewhere herein.
I-23
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material developments in legal proceedings involving
the Company or its subsidiaries since those reported in the Company's Annual
Report on Form 10-K for the fiscal year ended January 29, 1994, except as
described below.
Derivative Litigation. On June 29, 1994, the Court issued an opinion
declining to approve the settlement and declining to approve the payment of
any fees to plaintiff's counsel. On July 26, 1994, in light of the issuance
of notices or redemption for all classes of the preferred stock, the parties
to this litigation entered into a stipulation of discontinuance with prejudice
and without costs to any party, which was submitted to the Court for
approval. On July 29, 1994, the Court directed the appointment of a Special
Master to review the stipulation. The matter is now being considered by the
Special Master.
Environmental Proceedings.
On or about July 20, 1994, the Company received a complaint naming it and
approximately 100 others as defendants in a suit filed on or about June 30,
1994 by Waste Management, Inc. and certain affiliated corporations in the
United States District Court for the Eastern District of Michigan, captioned
Waste Management, Inc., et al. v. Aerospace America, Inc., et al., to recover
past and future response costs relating to the alleged disposal or treatment
of hazardous substances at the Hartley & Hartley landfill site in Kawkawlin,
Michigan.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Please note that in the following description of exhibits, the title of
any document entered into, or filing made, prior to July 7, 1994 reflects the
name of the entity a party thereto or filing, as the case may be, at such time.
Accordingly, documents and filings described below may refer to Collins &
Aikman Holdings Corporation, Collins & Aikman Group, Inc., WCI Holdings II
Corporation, WCI Holdings Corporation or Wickes Companies, Inc., if such
documents and filings were made prior to July 7, 1994.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
4.1 - Restated Certificate of Incorporation of the Company.
4.2 - By-laws of the Company, as amended.
4.3 - Specimen Stock Certificate for the Common Stock is hereby incorporated by
reference to Exhibit 4.3 of Amendment No. 3 to Collins & Aikman Holdings
Corporation's Registration Statement on Form S-2 (Registration No. 33-53179)
filed June 21, 1994.
4.4 - Indenture dated as of May 1, 1985, pursuant to which 11 3/8% Usable
Subordinated Debentures due 1997 of Collins & Aikman Products Co. (the
successor by merger to Collins & Aikman Group, Inc. and Wickes Companies,
Inc.) were issued is hereby incorporated by reference to Exhibit 4(f) of
Wickes Companies, Inc.'s Current Report on Form 8-K dated May 21, 1985 (SEC
File No. 1-6761).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
4.5 - Credit Agreement dated as of June 22, 1994 between Collins & Aikman Products
Co. (formerly Collins & Aikman Corporation) as Borrower, WCA Canada, Inc., as
Canadian Borrower, the Company as Guarantor, the lenders named therein,
Continental Bank, N.A., and NationsBank, N.A. as Managing Agents, and Chemical
Bank as Administrative Agent.
Collins & Aikman Corporation agrees to furnish to the Commission upon request
in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K copies of
instruments defining the rights of holders of long-term debt of Collins &
Aikman Corporation or any of its subsidiaries, which debt does not exceed 10%
of the total assets of Collins & Aikman Corporation and its subsidiaries on a
consolidated basis.
10.1 - Amended and Restated Stockholders Agreement dated as of June 29, 1994 among
the Company, Collins & Aikman Group, Inc., Blackstone Capital Partners L.P.
and Wasserstein Perella Partners, L.P.
10.2 - Employment Agreement dated as of June 16, 1989 between Wickes Companies, Inc.
and a former executive officer is hereby incorporated by reference to Exhibit
10.1 of Wickes Companies, Inc.'s Report on Form 10-K for the fiscal year ended
January 27, 1990.
10.3 - First Amendment to Employment Agreement dated as of March 20, 1990 between
Wickes Companies, Inc. and a former executive officer is hereby incorporated
by reference to Exhibit 10.2 of Wickes Companies, Inc.'s Report on Form 10-K
for the fiscal year ended January 27, 1990.
10.4 - Employment Agreement dated as of July 18, 1990 between Wickes Companies, Inc.
and an executive officer is hereby incorporated by reference to Exhibit 10.3
of Wickes Companies, Inc.'s Report on Form 10-K for the fiscal year ended
January 26, 1991.
10.5 - Agreement dated as of February 25, 1993 and Amendment dated as of March 29,
1993 between Collins & Aikman Group, Inc. and a former executive officer are
hereby incorporated by reference to Exhibit 10.10 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year ended January 30, 1993.
10.6 - Employment Agreement dated as of May 1, 1991 between Kayser-Roth Corporation
and a former executive officer is hereby incorporated by reference to Exhibit
10.8 of Collins & Aikman Holdings Corporation's Report on Form 10-K for the
fiscal year ended January 30, 1993.
10.7 - First Amendment to Employment Agreement dated as of May 1, 1991 between
Kayser-Roth Corporation and a former executive officer is hereby incorporated
by reference to Exhibit 10.9 of Collins & Aikman Holdings Corporation's Report
on Form 10-Q for the fiscal quarter ended July 31, 1993.
10.8 - Letter Agreement dated as of May 16, 1991 and Employment Agreement dated as of
July 22, 1992 between Collins & Aikman Corporation and an executive officer is
hereby incorporated by reference to Exhibit 10.7 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year ended January 30, 1993.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
10.9 - First Amendment to Employment Agreement dated as of February 24, 1994 between
Collins & Aikman Corporation and an executive officer is hereby incorporated
by reference to Exhibit 10.7 of Collins & Aikman Holdings Corporation's
Registration Statement on Form S-2 (Registration No. 33-53179) filed April 19,
1994.
10.10 - Letter Agreements dated as of May 16, 1991 between Collins & Aikman
Corporation and certain executive officers are hereby incorporated by
reference to Exhibit 10.14 of Collins & Aikman Holdings Corporation's
Registration Statement on Form S-2 (Registration No. 33-53179) filed April 19,
1994.
10.11 - Employment Agreement dated as of March 23, 1992 between Collins & Aikman
Group, Inc. and a former executive officer is hereby incorporated by reference
to Exhibit 10.6 of Collins & Aikman Holdings Corporation's Report on Form 10-K
for the fiscal year ended January 30, 1993.
10.12 - First Amendment dated as of April 4, 1994 to Agreement dated as of March 23,
1992 between Collins & Aikman Group, Inc. and a former executive officer is
hereby incorporated by reference to Exhibit 10.14 of Collins & Aikman Holdings
Corporation's Report on Form 10-K for the fiscal year ended January 29, 1994.
10.13 - Employment Agreement dated as of April 27, 1992 between Collins & Aikman
Corporation and an executive officer is hereby incorporated by reference to
Exhibit 10.16 of Collins & Aikman Holdings Corporation's Registration
Statement on Form S-2 (Registration No. 33-53179) filed April 19, 1994.
10.14 - Letter Agreement dated as of August 12, 1992 between Collins & Aikman Group,
Inc. and an executive officer is hereby incorporated by reference to Exhibit
10.9 of Collins & Aikman Holdings Corporation's Report on Form 10-K for the
fiscal year ended January 30, 1993.
10.15 - Employment Agreement dated as of March 1, 1993 between Imperial Wallcoverings,
Inc. and an executive officer is hereby incorporated by reference to Exhibit
10.17 of Collins & Aikman Holdings Corporation's Registration Statement on
Form S-2 (Registration No.33-53179) filed April 19, 1994.
10.16 - Employment Agreement dated as of October 1, 1993 between Collins & Aikman
Corporation and an executive officer is hereby incorporated by reference to
Exhibit 10.18 of Collins & Aikman Holdings Corporation's Registration
Statement on Form S-2 (Registration No. 33-53179) filed April 19, 1994.
10.17 - The Wickes Equity Share Plan is hereby incorporated by reference to Exhibit
10.11 of Collins & Aikman Holdings Corporation's Report on Form 10-K for the
fiscal year ended January 30, 1993.
10.18 - Collins & Aikman Corporation 1994 Executive Incentive Compensation Plan is
hereby incorporated by reference to Exhibit 10.22 of Amendment No. 4 to
Collins & Aikman Holdings Corporation's Registration Statement on Form S-2
(Registration No. 33-53179) filed June 27, 1994.
10.19 - Collins & Aikman Corporation Supplemental Retirement Income Plan is hereby
incorporated by reference to Exhibit 10.23 of Amendment No. 5 to Collins &
Aikman Holdings Corporation's Registration Statement on Form S-2 (Registration
No. 33-53179) filed July 6, 1994.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
10.20 - 1993 Employee Stock Option Plan is hereby incorporated by reference to Exhibit
10.12 of the Registration Statement on Form S-2 of Collins & Aikman Holdings
Corporation (File No. 33-53179) filed April 19, 1994.
10.21 - 1994 Employee Stock Option Plan is hereby incorporated by reference to Exhibit
10.13 of the Registration Statement on Form S-2 of Collins & Aikman Holdings
Corporation (File No. 33-53179) filed April 19, 1994.
10.22 - Acquisition Agreement dated as of November 22, 1993 as amended and restated as
of January 28, 1994, among Collins & Aikman Group, Inc., Kayser-Roth
Corporation and Legwear Acquisition Corporation is hereby incorporated by
reference to Exhibit 2.1 of Collins & Aikman Holdings Corporation's Current
Report on Form 8-K dated February 10, 1994.
10.23 - Warrant Agreement dated as of January 28, 1994 by and between Collins & Aikman
Group, Inc. and Legwear Acquisition corporation is hereby incorporated by
reference to Exhibit 10.20 of Collins & Aikman Holdings Corporation's Report
on Form 10-K for the fiscal year ended January 29, 1994.
10.24 - Receivables Sale Agreement dated as of July 13, 1994 among Collins & Aikman
Products Co., Ack-Ti-Lining, Inc., WCA Canada, Inc., Imperial Wallcoverings
(Canada), Inc., Imperial Wallcoverings, Inc., The Akro Corporation, Dura
Acquisition Corp., each of the other subsidiaries of Collins & Aikman Products
Co. from time to time parties thereto and Carcorp, Inc.
10.25 - Receivables Transfer and Servicing Agreement dated as of July 13, 1994 among
Carcorp, Inc., Collins & Aikman Products Co., each of the subsidiaries of
Collins & Aikman Products Co. from time to time parties thereto, the several
financial institutions from time to time parties thereto and Chemical Bank.
10.26 - Lease, executed as of the 1st day of June 1987, between Dura Corporation and
Dura Acquisition Corp. is hereby incorporated by reference to Exhibit 10.24 of
Amendment No.5 to Collins & Aikman Holdings Corporation's Registration
Statement on Form S-2 (Registration No. 33-53179) filed July 6, 1994.
11. - Computation of Earnings Per Share.
27. - Financial Data Schedule.
99. - Voting Agreement between Blackstone Capital Partners L.P. and Wasserstein
Perella Partners, L.P. is hereby incorporated by reference to Exhibit 99 of
Amendment No. 4 to Collins & Aikman Holdings Corporation's Registration
Statement on Form S-2 (Registration No. 33-53179) filed June 27, 1994.
</TABLE>
(b) Reports on Form 8-K.
No current reports on Form 8-K were filed during the quarter for
which this report on Form 10-Q is filed.
II-4
<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 thereunto duly authorized.
COLLINS & AIKMAN CORPORATION
(Registrant)
Dated: September 12, 1994 By: /s/ MARK O. REMISSONG
Mark O. Remissong
Senior Vice President and
Chief Financial Officer
(On behalf of the Registrant
and as Principal Financial
Officer)
By: /s/ ANTHONY HARDWICK
Anthony Hardwick
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
of
COLLINS & AIKMAN CORPORATION
Under Section 245 of the General Corporation Law
of the State of Delaware
This Restated Certificate of Incorporation of
Collins & Aikman Corporation (originally incorporated under
the name WCI Holdings Corporation) amends and restates such
corporation's Certificate of Incorporation, as amended,
which was originally filed with the Secretary of State of
the State of Delaware on September 21, 1988, and was duly
adopted in the manner and by the vote prescribed by
Section 242, in accordance with the provisions of
Section 245 and Section 228 of the General Corporation Law
of the State of Delaware.
FIRST: The name of the Corporation is Collins &
Aikman Corporation (the "Corporation").
SECOND: The address of the registered office of
the Corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, in the City of Dover, County of Kent.
The name of the registered agent at such registered office
is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to
engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of stock
which the Corporation shall have authority to issue is
166,000,000, consisting of:
(a) 150,000,000 shares of Common Stock, par value
$0.01 per share, which shall be designated "Common Stock".
Each share of Common Stock shall be entitled to one vote per
share; and
(b) 16,000,000 shares of Preferred Stock, par
value $0.01 per share ("Preferred Stock"). The Board of
Directors of the Corporation is hereby expressly authorized
to provide for the issuance of shares of Preferred Stock in
one or more series, by resolution or resolutions and by
<PAGE>
2
filing a certificate pursuant to the applicable laws of the
State of Delaware (any such certificate a "Preferred Stock
Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of
each series and the qualifications, limitations or
restrictions thereof. Before any shares of any such series
are issued, the Board of Directors shall fix, and hereby is
expressly empowered to fix, the provisions of the shares
thereof including, but not limited to, the following:
(1) the distinctive designation of such series,
the number of shares to constitute such series and the
stated value thereof if different from the par value
thereof;
(2) whether the shares of such series shall have
voting rights, in addition to any voting rights
provided by law, and, if so, the terms of such voting
rights, which may be general or limited;
(3) the dividends, if any, payable on such
series, whether any such dividends shall be cumulative,
and, if so, from what dates, the conditions and dates
upon which such dividends shall be payable, the
preference or relation which such dividends shall bear
to the dividends payable on any shares of stock of any
other class or any other series of this class;
(4) whether the shares of such series shall be
subject to redemption by the Corporation and, if so,
the times, prices and other conditions of such
redemption;
(5) the amount or amounts payable upon shares of
such series upon, and the rights of the holders of such
series in, the voluntary or involuntary liquidation,
dissolution or winding-up, or upon any distribution of
the assets, of the Corporation;
(6) whether the shares of such series shall be
subject to the operation of a retirement or sinking
fund and, if so, the extent to and manner in which any
such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for
retirement or other corporate purposes and the terms
and provisions relative to the operation thereof;
<PAGE>
3
(7) whether the shares of such series shall be
convertible into, or exchangeable for, shares of stock
of any other class or any other series of this class or
any other securities and, if so, the price or prices or
the rate or rates of conversion or exchange and the
method, if any, of adjusting the same, and any other
terms and conditions of conversion or exchange;
(8) the limitations and restrictions, if any, to
be effective while any shares of such series are
outstanding upon the payment of dividends or the making
of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation of,
the Common Stock or shares of stock of any other class
or any other series of this class;
(9) the conditions or restrictions, if any, upon
the creation of indebtedness of the Corporation or upon
the issue of any additional stock, including additional
shares of such series or of any other series of this
class or of any other class; and
(10) any other powers, preferences and relative,
participating, optional and other special rights, and
any qualifications, limitations and restrictions
thereof.
The powers, preferences and relative, partici-
pating, optional and other special rights of each series of
Preferred Stock, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any
and all other series at any time outstanding. All shares of
any one series of Preferred Stock shall be identical in all
respects with all other shares of such series, except that
shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be
cumulative.
* * * *
Rights, Preferences, Privileges and Restrictions
of 15-1/2% Cumulative Exchangeable Redeemable
Preferred Stock
RESOLVED that, pursuant to authority conferred
upon the Board of Directors by the Certificate of
Incorporation of the Company, as amended (hereinafter
called the "Certificate of Incorporation"), the Board
<PAGE>
4
of Directors hereby provides for the issuance of a
series of Preferred Stock (as such term is defined in
the Certificate of Incorporation) of the Company to
consist of 16,000,000 shares, and fixes the powers,
designation, preferences and relative, participating,
optional or other rights, and the qualifications,
limitations or restrictions of the shares of such
series of Preferred Stock, in addition to those set
forth in the Certificate of Incorporation, as follows:
1. Designation. There is hereby designated
a series of Preferred Stock known as the 15 1/2%
Cumulative Exchangeable Redeemable Preferred
Stock, par value $0.01 per share (the "Merger
Preferred Stock"), consisting of 16,000,000
shares, issuable by the Company pursuant to
authority granted to the Board of Directors in
Article FOURTH of the Certificate of Incorpora-
tion, which authorizes the issuance of Preferred
Stock having such rights and other terms as may be
determined by the Board of Directors.
2. Rank. The Merger Preferred Stock shall,
with respect to dividend rights and rights on
liquidation, winding-up and dissolution of the
Company, rank senior to the Company's Common
Stock, and to all other classes and series of
stock of the Company now or hereafter authorized,
issued or outstanding, other than any stock of the
Company ranking senior to or pari passu with the
Merger Preferred Stock as to dividend rights or
rights upon liquidation, winding-up or dissolution
of the Company either authorized after the date
hereof in compliance with paragraph 10(c)(i) or
issued after the date hereof in compliance with
paragraph (10)(c)(i) (the Common Stock and such
other classes and series of stock collectively
referred to herein as the "Junior Securities").
The Merger Preferred Stock shall be subject to the
creation of such senior stock, such pari passu
stock and Junior Securities to the extent not
expressly prohibited by this Certificate.
3. Dividends. (a) The holders of shares of
the Merger Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of
Directors of the Company and out of the assets of
the Company available for the payment of dividends
<PAGE>
5
under the provisions of the General Corporation
Law of the State of Delaware, dividends payable at
the rate of $3.875 per share per annum (subject to
increase as provided below). Such dividends shall
be payable quarterly on the first day of February,
May, August, and November in each year (each of
such dates a "Dividend Payment Date") commencing
with the later of (i) August 1, 1989 and (ii) the
first such date after the time the merger of WCI
Acquisition Corporation, a Delaware corporation,
into Wickes Companies, Inc., a Delaware
corporation ("Wickes"), shall become effective
(the "Merger Effective Time"); except that if such
first day is not a business day then such
dividends shall be payable on the next succeeding
business day. (As used herein, the term "business
day" shall mean any day except a Saturday, a
Sunday or a day on which banking institutions are
authorized or required by law to close in the City
of New York.) Dividends on each share of Merger
Preferred Stock shall begin to accrue and be
cumulative on outstanding shares of the Merger
Preferred Stock (whether or not in any quarterly
period there shall be assets of the Company
legally available for the payment of such
dividends) from and including the date of initial
issuance of such share. The amount of any
dividends "accrued" on any share of Merger
Preferred Stock at any Dividend Payment Date shall
be deemed to be the amount of any unpaid dividends
accumulated thereon to and excluding such Dividend
Payment Date, whether or not earned or declared,
and the amount of dividends "accrued" on any share
of Merger Preferred Stock at any date other than a
Dividend Payment Date shall be calculated as the
amount of any unpaid dividends accumulated to and
excluding the last preceding Dividend Payment
Date, whether or not earned or declared, plus an
amount calculated on the basis of the annual
dividend rate for the period from and including
such last preceding Dividend Payment Date to and
excluding the date as of which the calculation is
made.
All dividends on the Merger Preferred Stock
shall be computed on the basis of the number of
days elapsed in a 360-day year consisting of
12 months of 30 days each. Such dividends shall
<PAGE>
6
be paid to the holders of record of shares of the
Merger Preferred Stock as they appear on the stock
register of the Company on such date as shall be
fixed by the Board of Directors of the Company;
provided, however, that such date shall not be
less than 10 days nor more than 60 days prior to
the date of payment.
Dividend arrearage for any past dividend
periods may be declared and paid at any time to
holders of record on such date as may be fixed by
the Board of Directors of the Company; provided,
however, that such date shall not be less than
10 days nor more than 60 days prior to the date of
payment.
(b) All dividends on the Merger Preferred
Stock shall be payable in cash, except that
dividend payments with respect to quarterly
dividends accruing on or prior to February 1, 1995
(whenever such dividends are actually paid), may
be paid in whole or in part in additional shares
of the Merger Preferred Stock if the Board of
Directors of the Company so directs. All such
dividends paid in additional shares of Merger
Preferred Stock shall be paid at a rate of
0.04 shares of Merger Preferred Stock for each $1
of such dividends not paid in cash. The issuance
of Merger Preferred Stock at the prescribed rate
shall constitute full payment of the portion of
such dividends payable in kind. Except as
described below with respect to fractional shares
of Merger Preferred Stock, all dividends paid with
respect to shares of the Merger Preferred Stock,
whether and to the extent in cash or in kind,
shall be paid pro rata to the holders entitled
thereto. No interest or sum of money in lieu of
interest or additional shares of Merger Preferred
Stock shall be payable in respect of any
accumulated unpaid dividends on the Merger
Preferred Stock (whether such unpaid dividends are
subsequently paid in kind or in cash).
(c) Only whole shares of Merger Preferred
Stock will be issued upon the payment of dividends
in kind on the Merger Preferred Stock. In lieu of
the fractional portion of the aggregate number of
shares of Merger Preferred Stock otherwise payable
<PAGE>
7
to a record holder of Merger Preferred Stock at
any time as dividends in kind ("Fractional
Shares"), such record holder will receive a
payment in cash equal to such record holder's
proportionate interest in the net proceeds from
the sale or sales in the open market of the
aggregate of all Fractional Shares otherwise
payable as a dividend. Such sale or sales shall
be effected promptly after the record date fixed
for determining the holders entitled to payment of
the dividend.
(d) (i) Holders of shares of the Merger
Preferred Stock shall be entitled to receive the
dividends provided for in paragraph 3(a) in
preference to and in priority over any dividends
upon any of the Junior Securities.
(ii) The Company shall not (x) declare,
pay or set apart funds for payment of any
cash dividends on shares of Common Stock or
any other shares of Junior Securities,
(y) purchase, redeem or otherwise retire any
Junior Securities or warrants, rights or
options exercisable for shares of Junior
Securities (and shall not set apart funds for
such payment with respect thereto), or
(z) make any distributions with respect to
Junior Securities or any warrants, rights or
options exercisable for any Junior Securities
(except dividends or distributions on shares
of Junior Securities in shares of any Junior
Securities), unless (I) full cumulative
dividends on the Merger Preferred Stock shall
have been paid prior to, or shall be paid
concurrently with, the time of such
declaration, payment, setting apart,
purchase, redemption, retirement or
distribution for each Dividend Payment Date
on or prior to such time and (II) any
redemption required to have been made on or
prior to such time pursuant to paragraph 4(b)
and, if such time is on or after the
10th anniversary of the Merger Effective
Time, the redemption of Merger Preferred
Stock set forth in paragraph 4(a) shall have
been made prior to, or shall be made
concurrently with, such time (it being
<PAGE>
8
understood that the failure of the Company to
effect such a redemption as a result of the
absence of assets legally available therefor
shall not constitute compliance with this
clause (II)).
(iii) Notwithstanding anything contained
in this Certificate to the contrary, no
dividends on shares of the Merger Preferred
Stock shall be declared by the Board of
Directors of the Company or paid or set apart
for payment by the Company at such time as
the terms and provisions of any contract or
other agreement of the Company or any of its
subsidiaries entered into or assumed at or
prior to the Merger Effective Time, or any
refinancings (including multiple
refinancings) of such contracts or
agreements, prohibit such declaration,
payment or setting apart for payment or
provide that such declaration, payment or
setting apart for payment would constitute a
breach thereof or a default thereunder;
provided, however, that nothing contained in
this Certificate shall in any way or under
any circumstances be construed or deemed to
require the Board of Directors of the Company
to declare or the Company to set apart for
payment any dividends on shares of the Merger
Preferred Stock, whether or not permitted by
any of such agreements. The failure of the
Board of Directors of the Company to declare
a dividend in reliance upon the immediately
preceding sentence shall not be construed or
deemed to prevent the accrual of such
undeclared dividend.
(e) Subject to the foregoing provisions of
this paragraph 3 and to the provisions of para-
graph 9, the Board of Directors may declare, and
the Company may pay, make or set apart for
payment, dividends and other distributions on, and
the Company may purchase, redeem or otherwise
retire, any Junior Securities or any warrants,
rights or options exercisable for shares of Junior
Securities, and the holders of shares of Merger
Preferred Stock shall not be entitled to share
therein.
<PAGE>
9
(f) If, at any time on or after the second
anniversary of the Merger Effective Time, the
Affiliated Common Equity Interest shall be less
than $75,000,000, from and after such time the
dividend rate for all outstanding Merger Preferred
Stock shall be increased to $3.9375 per share per
annum. "Affiliated Common Equity Interest" means
from time to time the amount of the aggregate of
all equity contributions to WCI Holdings II
Corporation, a Delaware corporation ("Parent"), on
or before such time by Blackstone Capital Partners
L.P., a Delaware limited partnership, or any
successor thereto ("Blackstone Partners"),
Wasserstein, Perella Partners, L.P., a Delaware
limited partnership, or any successor thereto ("WP
Partners"), and all owners of a limited
partnership interest in, or employees of
Blackstone Partners or WP Partners who had co-
investment rights or a similar opportunity to
invest in investments made by Blackstone Partners
or WP Partners at the time of their equity
contribution to Parent (Blackstone Partners, WP
Partners and all such persons who on or before
such time shall have made such equity
contributions, or any successor thereto,
collectively, the "Affiliated Investors") minus
any amounts received by Affiliated Investors as
dividends on, redemptions of or sales of equity
interests in Parent (other than sales by an
Affiliated Investor to another Affiliated
Investor), it being understood that payments to an
Affiliated Investor of amounts characterized for
this purpose by Parent (in its sole discretion and
notwithstanding the characterization of such
payments for any other purpose) as fees or
expenses shall not constitute dividends. As used
in this Certificate, a "Person" shall include any
individual, corporation, partnership, joint
venture, association, joint-stock company, trust,
unincorporated organization or government or
political subdivision thereof. The Company will
by first-class mail send to each record holder a
written notice of any such change in the dividend
rate on the Merger Preferred Stock within 15 days
of such change.
4. Scheduled Redemption. (a) Subject to
the Company having funds legally available
<PAGE>
10
therefor, the Company shall be obligated to redeem
all outstanding shares of Merger Preferred Stock
on the 10th anniversary of the Merger Effective
Time. Such redemption of shares of Merger
Preferred Stock pursuant to this paragraph 4(a)
shall be at a redemption price equal to the
Liquidation Preference (as defined below) per
share together with accrued but unpaid dividends
(whether or not declared) through the date fixed
for redemption.
(b) To the extent the Company shall have
funds legally available therefor, if at any time
prior to the second anniversary of the Merger
Effective Time, the Affiliate Common Equity
Interest is less than $75,000,000, the Company
will be obligated within 45 days (or the next
following business day if the 45th following day
is not a business day) to set apart out of funds
legally available therefor, funds sufficient to
redeem all shares of Merger Preferred Stock then
outstanding. Such a redemption shall be at the
Optional Redemption Price (as defined below) plus
all accrued and unpaid dividends (whether or not
declared) to the date fixed for redemption.
(c) If the funds of the Company legally
available for any redemption pursuant to this
paragraph 4 at the redemption date are
insufficient to redeem such Merger Preferred
Stock, funds to the extent legally available for
the purpose will be used to redeem the number of
shares of Merger Preferred Stock that legally may
be redeemed. If the Company at any time shall
fail to discharge any obligation to redeem shares
of Merger Preferred Stock pursuant to this
paragraph 4, such obligation shall be discharged
as soon as the Company is able to do so.
5. Optional Redemption. All or any part of
the Merger Preferred Stock may be redeemed by the
Company at its election at any time and from time
to time in whole or in part, by resolution of the
Board of Directors, at a cash price per share
equal to the sum of (i) the Optional Redemption
Price plus (ii) any accrued and unpaid dividends
thereon, whether or not declared, to the date
fixed for the redemption; provided, however, that,
<PAGE>
11
if and when any quarterly dividend shall have
accrued on the Merger Preferred Stock and shall
not have been paid or declared and a sufficient
sum set apart for payment for any Dividend Payment
Date on or prior to the date fixed for redemption,
the Company may not redeem any shares of the
Merger Preferred Stock unless all shares of the
Merger Preferred Stock then outstanding are
redeemed. The Optional Redemption Price shall
equal for redemptions with a date fixed for
redemption (a) that is on or prior to the first
anniversary of the Merger Effective Time, 101% of
the Liquidation Preference per share, (b) after
the first anniversary of the Merger Effective Time
to and including the second anniversary of the
Merger Effective Time, 101.5% of the Liquidation
Preference per share, and (c) thereafter, 102% of
the Liquidation Preference per share.
6. Selection of the Merger Preferred Stock
To Be Redeemed. If fewer than all the outstanding
shares of the Merger Preferred Stock not
previously called for redemption or exchange are
to be redeemed pursuant to paragraph 5, the Board
of Directors of the Company shall select the
shares of the Merger Preferred Stock to be
redeemed from outstanding shares not previously
called for redemption by lot or pro rata as
determined by the Board of Directors of the
Company, in its sole discretion; provided,
however, that the Board of Directors of the
Company may in selecting shares for redemption
choose to redeem all shares of Merger Preferred
Stock held by holders of a number of such shares
not to exceed 99 as may be specified by the Board
of Directors (with all other shares to be
redeemed, if any, so selected by lot or pro rata).
7. Notice of Redemption. At least 30 days
but not more than 60 days prior to the date fixed
for any redemption of shares of the Merger
Preferred Stock, written notice of such redemption
shall be mailed to each holder of record of shares
of Merger Preferred Stock to be redeemed at the
address shown on the stock transfer books of the
Company or, if no such address appears or is
given, at the place where the principal executive
office of the Company is located; provided,
<PAGE>
12
however, that no failure to give such notice or
any defect therein or in the mailing thereof shall
affect the validity of the proceedings for such
redemption. Each such notice shall specify
(i) the number of shares to be redeemed from such
holder, (ii) the numbers of the certificates of
the shares being redeemed, (iii) the date fixed
for redemption, (iv) the redemption price, (v) the
place or places at which payment may be obtained,
(vi) the provision of this Certificate pursuant to
which the shares are to be redeemed and (vii) that
dividends on the shares to be redeemed shall cease
to accrue on the date fixed for such redemption.
8. Status of Shares of Merger Preferred
Stock upon Redemption. (a) Upon due surrender of
the certificates for any shares of Merger
Preferred Stock to be redeemed, such shares of
Merger Preferred Stock shall be redeemed by the
Company at the applicable redemption price. In
case fewer than all the shares of Merger Preferred
Stock represented by any such certificate are
redeemed, a new certificate or certificates shall
be issued representing the unredeemed shares of
Merger Preferred Stock without cost to the holder
thereof. Unless there shall have been a default
in payment of the redemption price, from and after
any date fixed for redemption, dividends on the
shares of Merger Preferred Stock so called for
redemption shall cease to accrue, such shares of
Merger Preferred Stock shall no longer be deemed
to be outstanding and shall not have the status of
shares of Merger Preferred Stock and all rights of
the holders thereof as stockholders of the Company
(except the right to receive from the Company the
redemption price without interest) shall cease
with respect to such shares. From and after any
date fixed for redemption, shares of the Merger
Preferred Stock redeemed by the Company shall be
restored to the status of authorized but unissued
shares of Preferred Stock, without designation as
to series until such shares are once more
designated as part of a particular series by the
Board of Directors of the Company.
(b) If at any time the Company shall have
irrevocably deposited in trust with a trustee for
the benefit of the holders of all shares of Merger
<PAGE>
13
Preferred Stock money or direct noncallable
obligations of the United States maturing as to
principal and interest in such amounts and at such
times as are sufficient to pay all future
dividends on all shares of Merger Preferred Stock
at the scheduled Dividend Payment Dates through
the 10th anniversary of the Merger Effective Time
(or any earlier date duly fixed for an optional
redemption thereof), and the redemption price
thereof, then, from and after the date on which
such provision has been made, such Merger
Preferred Stock shall no longer be deemed to be
outstanding except for purposes of accruals of
quarterly dividends and shall not have the status
of shares of Merger Preferred Stock, and all
rights of the holders thereof as stockholders of
the Company (except the right to receive from the
Company quarterly dividends and the applicable
redemption price without interest) shall cease
with respect to such shares. Without limiting the
foregoing, any shares deemed not to be outstanding
pursuant to this paragraph 8(b) shall not be
subject to the provisions of paragraphs 3(f) and
4(b).
(c) All moneys so deposited with or held by
such trustee which remain unclaimed by the holders
of shares of Merger Preferred Stock 730 days after
the date such moneys are payable to holders of
shares of such Merger Preferred Stock shall be
paid by such trustee to the Company, and
thereafter the holders of such shares of Merger
Preferred Stock shall look only to the Company for
payment.
9. Liquidation, Dissolution or Winding-
Up. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the
Company, holders of the Merger Preferred Stock
shall be entitled to be paid out of the assets of
the Company available for distribution to its
stockholders, whether from capital, surplus or
earnings, an amount in cash equal to $25.00 per
share (the "Liquidation Preference") plus any
accrued and unpaid dividends to the date fixed for
liquidation, dissolution or winding-up, whether or
not declared, before any distribution is made on
any Junior Securities, including the Common Stock.
<PAGE>
14
If upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the
assets of the Company available for distribution
to holders of the Merger Preferred Stock shall be
insufficient to pay the holders of outstanding
Merger Preferred Stock the full amounts to which
they shall be entitled under this paragraph 9, the
holders of the Merger Preferred Stock shall share
equally and ratably in any distribution of assets
of the Company in proportion to the full amount to
which they would otherwise be respectively
entitled. After payment of the full amount of
Liquidation Preference to which they are entitled
plus all accrued and unpaid dividends, whether or
not declared, the holders of the Merger Preferred
Stock shall not be entitled to any further
participation in any distribution of assets of the
Company. However, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares
of stock, securities or other consideration) of
all or any part of the property or assets of the
Company, nor the consolidation or merger or other
business combination of the Company with or into
any other corporation or corporations, shall be
deemed to be a voluntary or involuntary
liquidation, dissolution or winding-up of the
Company, unless such voluntary sale, conveyance,
exchange or transfer shall be in connection with a
plan of liquidation, dissolution or winding-up of
the Company.
10. Voting Rights. (a) The holders of
shares of Merger Preferred Stock shall not be
entitled to any voting rights except as expressly
provided in this paragraph 10 or as otherwise
provided by law.
(b) (i) If at any time or times dividends
payable on the then outstanding Merger Preferred
Stock shall be in arrears and unpaid in an
aggregate amount equal to the amount of five
consecutive quarterly dividends on the then
outstanding Merger Preferred Stock, the then
number of directors constituting the Board of
Directors of the Company, without further action,
shall be increased by two and the holders of
Merger Preferred Stock shall have the exclusive
right, voting separately as a class, to elect the
<PAGE>
15
directors of the Company to fill such newly
created directorships, the remaining directors to
be elected by the other class or classes of stock
entitled to vote therefor, at each meeting of
stockholders held for the purpose of electing
directors.
(ii) Whenever such voting right shall
have vested, such right may be initially
exercised at a special meeting of the holders
of Merger Preferred Stock called as
hereinafter provided, at any annual meeting
of stockholders held for the purpose of
electing directors or by the written consent
of the holders of Merger Preferred Stock
pursuant to Section 228 of the General
Corporation Law of the State of Delaware.
Such voting right shall continue until such
time as all cumulative dividends on Merger
Preferred Stock accrued through the latest
Dividend Payment Date on or before such time
shall have been paid in full, at which time
such voting right of the holders of Merger
Preferred Stock shall terminate, but such
voting right shall again vest in the event of
each and every subsequent arrearage in
dividends in the requisite amount as
described above.
(iii) At any time when such voting right
shall have vested in the holders of Merger
Preferred Stock and if such right shall not
already have been initially exercised, a
proper officer of the Company shall, upon the
written request of any holder of record of
Merger Preferred Stock then outstanding, call
a special meeting of holders of Merger
Preferred Stock; provided, however, no such
special meeting shall be called during a
period within 90 days immediately preceding
the date fixed for the next annual meeting of
stockholders. Such meeting shall be held at
the earliest practicable date upon the notice
required for annual meetings of stockholders.
Any holder of Merger Preferred Stock which
would be entitled to vote at such meeting
shall have access to the stock books of the
Company for the purpose of causing a meeting
<PAGE>
16
of stockholders to be called pursuant to the
provisions of this paragraph 10(b)(iii).
(iv) At any meeting at which the holders
of Merger Preferred Stock shall have the
right to elect directors as provided in this
paragraph 10(b), the presence in person or by
proxy of the holders of at least a majority
of the then outstanding shares of Merger
Preferred Stock shall be required and be
sufficient to constitute a quorum. At any
such meeting or adjournment thereof, the
absence of a quorum of the holders of Merger
Preferred Stock shall not prevent the
election of directors other than those to be
elected by the holders of Merger Preferred
Stock and the absence of a quorum or quorums
of the holders of capital stock entitled to
elect such other directors shall not prevent
the election of directors to be elected by
the holders of Merger Preferred Stock.
(v) For so long as the aforesaid voting
rights are vested in the holders of Merger
Preferred Stock, the term of office of all
directors elected by the holders of Merger
Preferred Stock shall terminate upon the
election of their successors by the holders
of Merger Preferred Stock; provided, however,
that any director who shall have been elected
by holders of the Merger Preferred Stock may
be removed at any time, either with or
without cause, only by the affirmative vote
of the holders of record of a majority of the
outstanding shares of the Merger Preferred
Stock at a duly called stockholders meeting.
Upon any termination of such voting rights in
accordance with paragraph 10(b)(ii), the term
of office of all directors elected by the
holders of Merger Preferred Stock shall
thereupon terminate and upon such termination
the number of directors constituting the
Board of Directors shall, without further
action, be reduced by two.
(vi) In case of any vacancy occurring
among the directors so elected by holders of
Merger Preferred Stock, the remaining
<PAGE>
17
director who shall have been so elected may
appoint a successor to hold office for the
unexpired term of the director whose place
shall be vacant. If both directors so
elected by the holders of Merger Preferred
Stock shall cease to serve as directors
before their terms shall expire, the holders
of Merger Preferred Stock then outstanding
may, in the manner provided in
paragraph 10(b)(ii), elect successors to hold
office for the unexpired terms of the
directors whose places shall be vacant.
(c) (i) Subject to paragraph 10(c)(ii), so
long as any shares of Merger Preferred Stock are
outstanding, the Company will not, without the
affirmative vote, or the written consent pursuant
to Section 228 of the General Corporation Law of
the State of Delaware, of the holders of at least
the Required Majority of the outstanding shares of
Merger Preferred Stock (or such greater number as
may be required by law), voting separately as a
class:
(I) increase the authorized number
of shares of Merger Preferred Stock or
create, authorize or issue any class or
series of stock of the Company (other
than the shares of the Merger Preferred
Stock) ranking pari passu with the
Merger Preferred Stock as to dividend
rights or rights upon liquidation,
winding-up or dissolution of the
Company;
(II) make any amendment, alteration
or repeal of any of the provisions of
the Certificate of Incorporation or of
any certificate amendatory thereof or
supplemental thereto so as to change the
terms of the Merger Preferred Stock to
affect adversely the rights, powers,
preferences or privileges of the Merger
Preferred Stock; or
(III) create, authorize or issue any
class or series of stock of the Company
ranking senior to the Merger Preferred
<PAGE>
18
Stock as to dividend rights or rights
upon liquidation, winding-up or
dissolution of the Company.
The "Required Majority" for any action
referred to in clause (II) and (III) shall be
two-thirds, and for any other action referred
to in this paragraph 10(c)(i) shall be a
simple majority.
(ii) Notwithstanding paragraph 10(a) or
paragraph 10(c)(i), holders of the Merger
Preferred Stock will have no voting rights in
connection with a merger or consolidation of
the Company with or into Wickes, as the
surviving corporation in the merger referred
to above, in which the Merger Preferred Stock
is converted into stock of Wickes with
substantially the same terms as those set
forth in this Certificate (as determined in
good faith by the Board of Directors of the
Company).
(d) In connection with any matter on which
holders of the Merger Preferred Stock are entitled
to vote including, without limitation, the
election of directors as set forth in this
paragraph 10 or any matter on which the holders of
the Merger Preferred Stock are entitled to vote as
a class or otherwise pursuant to the General
Corporation Law of the State of Delaware or the
provisions of the Certificate of Incorporation of
the Company, each holder of the Merger Preferred
Stock shall be entitled to one vote for each share
of Merger Preferred Stock held by such holder.
11. Exchange Provisions. (a) On any
Dividend Payment Date, the Company, at its sole
option, may require the exchange of all or any
part of the shares of the Merger Preferred Stock
then outstanding for the Company's 15 1/2% Junior
Subordinated Exchange Debentures (the "Exchange
Debentures") on the notice set forth below.
Holders of record of outstanding shares of the
Merger Preferred Stock as they appear on the stock
register of the Company at the close of business
on the record date for such exchange shall be
entitled to receive Exchange Debentures having a
<PAGE>
19
principal amount equal to the sum of the
Liquidation Preference plus any accrued and unpaid
dividends, whether or not declared, on the Merger
Preferred Stock to the date of such exchange in
exchange for each share of Merger Preferred Stock
held by them. At the time of such exchange (an
"Exchange Date"), the rights of the holders of the
Merger Preferred Stock then outstanding as
stockholders of the Company shall cease (except
for the right to receive the Exchange Debentures)
and the persons entitled to receive the Exchange
Debentures issuable upon exchange shall be treated
for all purposes as the holders of record of such
Exchange Debentures. In the event such exchange
would result in the issuance of any Exchange
Debenture in a principal amount which is less than
$1,000 or which is not an integral multiple of
$1,000 (such principal amount less than $1,000 or
the difference between such principal amount and
the highest integral multiple of $1,000 that is
less than such principal amount, as the case may
be, being hereinafter referred to as a "Fractional
Principal Amount"), each holder of Merger
Preferred Stock otherwise entitled to a Fractional
Principal Amount shall be entitled to receive a
cash payment in lieu thereof equal to such
holder's proportionate interest in the net
proceeds by the Company or any agent appointed for
the purpose from the sale or sales on the open
market of the aggregate amount of such Exchange
Debentures. The person or persons entitled to
receive the Exchange Debentures issuable upon
exchange shall be treated for all purposes as the
registered holder or holders of such Exchange
Debentures as of the related Exchange Date. The
Exchange Debentures will be issued under an
Indenture (the "Indenture") between the Company
and United States Trust Company of New York, as
trustee, substantially in the form filed as an
Exhibit to the Company's and Wickes' Registration
Statement on Form S-4 as filed with the Securities
and Exchange Commission (File No. 33-27143), as
amended pursuant to the terms of the Indenture.
When no Exchange Debentures are outstanding, the
Indenture may be changed as may be required by
law, stock exchange rules or usage, or as may
otherwise be agreed to by the Company and holders
of a majority of the then outstanding shares of
<PAGE>
20
Merger Preferred Stock. The Exchange Debentures
shall have the terms and benefits provided in the
Indenture.
(b) If fewer than all the outstanding shares
of the Merger Preferred Stock are to be exchanged,
the Board of Directors of the Company shall select
the shares of the Merger Preferred Stock to be
exchanged from the outstanding shares by lot or
pro rata as determined by the Board of Directors
of the Company, in their sole discretion;
provided, however, that the Board of Directors of
the Company may in selecting shares to be
exchanged choose to exchange all shares of the
Merger Preferred Stock held by holders of a number
of such shares not to exceed 100 as may be
specified by the Board of Directors.
(c) At least 30 days but not more than
60 days prior to the Exchange Date, written notice
of such exchange shall be mailed to each holder of
record of shares of the Merger Preferred Stock to
be exchanged at the address shown on the stock
transfer books of the Company or, if no such
address appears or is given, at the place where
the principal executive office of the Company is
located; provided, however, that no failure to
give such notice or any defect therein or in the
mailing thereof shall affect the validity of the
proceedings for such exchange. Each such notice
shall specify (i) the number of shares of Merger
Preferred Stock to be received in the exchange
from such holder, (ii) the numbers of the
certificates of the shares of Merger Preferred
Stock being exchanged, (iii) the principal amount
of Exchange Debentures to be issued in exchange
for such shares, (iv) the Exchange Date, (v) the
place or places at which the shares of the Merger
Preferred Stock shall be exchanged for Exchange
Debentures and (vi) that dividends on the shares
to be exchanged shall cease to accrue on the
Exchange Date.
(d) Upon surrender of the certificates for
any of the Merger Preferred Stock so exchanged,
such shares of Merger Preferred Stock shall be
exchanged by the Company at the required exchange
rate. In case fewer than all the shares of Merger
<PAGE>
21
Preferred Stock represented by any such
certificate are exchanged, a new certificate or
certificates shall be issued representing the
unexchanged shares of Merger Preferred Stock
without cost to the holder thereof. From and
after the Exchange Date, dividends on the shares
of the Merger Preferred Stock so called for
exchange shall cease to accrue, such shares of
Merger Preferred Stock shall no longer be deemed
to be outstanding and shall not have the status of
shares of Merger Preferred Stock, and all rights
of the holders thereof as stockholders of the
Company (except the right to receive from the
Company the Exchange Debentures upon exchange and
the right to receive cash payments in lieu of
Fractional Principal Amounts) shall cease with
respect to such shares. From and after the
related Exchange Date, shares of Merger Preferred
Stock exchanged for the Exchange Debentures shall
be restored to the status of authorized but
unissued shares of Preferred Stock, without
designation as to series until such shares are
once more designated as part of a particular
series by the Board of Directors of the Company.
FIFTH: (a) The business of the Corporation shall
be managed by or under the direction of the Board of
Directors, except as may be otherwise provided by statute or
by this Certificate of Incorporation. The number of
directors of the Corporation shall be fixed by, or in the
manner provided in, the By-laws of the Corporation;
provided, however, that such number of directors shall not
exceed nine. The directors of the Corporation, other than
those who may be elected pursuant to any Preferred Stock
Designation, shall be divided into three classes (Class I,
Class II and Class III), with the term of office of one
class expiring each year. Each class shall consist, as
nearly as may be possible, of one-third of the total number
of directors constituting the entire Board of Directors.
The membership of each class initially shall be as set forth
in a resolution adopted by the Board of Directors of the
Corporation on or prior to June 30, 1994 (the "Effective
Date"). The initial term of Class I directors shall expire
at the first annual meeting of stockholders following the
Effective Date; the initial term of Class II directors shall
expire at the second annual meeting of stockholders
following the Effective Date; and the initial term of Class
III directors shall expire at the third annual meeting of
<PAGE>
22
stockholders following the Effective Date. At each annual
meeting of stockholders, each class of directors whose term
shall then expire shall be elected to hold office for a
three year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes
so as to maintain the number of directors in each class as
nearly equal as possible, but in no case shall a decrease in
the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual
meeting for the year in which such director's term expires
and until such director's successor shall be elected and
shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from
office.
(b) There shall be a nominating committee of the
Board of Directors (the "Nominating Committee") consisting
of all directors serving on the Board of Directors,
excluding directors that are salaried employees of the
Corporation. The Nominating Committee shall be authorized
to nominate, by a majority vote thereof and subject only to
the restrictions set forth in this paragraph (b) of this
Article FIFTH, persons for election to the Board of
Directors at any annual meeting of stockholders or at any
special meeting of stockholders called for the purpose of
electing directors; provided, however, that if the
Nominating Committee does not nominate a person by majority
vote with respect to any directorship to be voted upon at
such meeting and the incumbent director holding such
directorship is affiliated with Blackstone Capital Partners
L.P. ("Blackstone Partners"), Wasserstein Perella Partners,
L.P. ("WP Partners") or a Transferee (as defined in Section
3.01 of that certain Voting Agreement dated as of June 29,
1994 between Blackstone Partners and WP Partners, as the
same may be amended from time to time) of either, in lieu of
any Nominating Committee nomination, the Corporation shall
place in nomination the name of the incumbent director or a
similarly affiliated person designated by the party with
whom such incumbent director is affiliated (i.e., Blackstone
Partners, WP Partners or a Transferee, as the case may be)
for election to the Board of Directors at such meeting, and
the Corporation shall nominate no other person for election
to such director position. For purposes of the preceding
sentence and paragraph (d) of this Article FIFTH, a person
shall be affiliated with Blackstone Partners, WP Partners or
a Transferee if such person is a general partner, limited
partner, director or officer of such entity or any affiliate
of such entity or is otherwise an "affiliate" of such entity
<PAGE>
23
as defined in the rules and regulations under the Securities
Act of 1933. Except as provided herein, the Board of
Directors, or any committee thereof, shall not be authorized
to nominate persons for election to the Board of Directors.
(c) Unless and except to the extent that the By-
laws of the Corporation shall so require, the election of
directors of the Corporation need not be by written ballot.
(d) Newly created directorships resulting from
any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification or removal from
office shall be filled solely by the Nominating Committee,
by a majority vote thereof, and not by the stockholders;
provided, however, that if a vacancy in the Board of
Directors results from the death, resignation, retirement,
disqualification or removal from office of a director
affiliated with (as defined in paragraph (b) of this Article
FIFTH) Blackstone Partners, WP Partners or a Transferee
(excluding, however, a resignation by a director affiliated
with Blackstone Partners or WP Partners pursuant to Section
3.01 of the Voting Agreement referred to in paragraph (b) of
this Article FIFTH), such vacancy shall automatically be
filled with a similarly affiliated person designated by the
party with whom such incumbent director was affiliated
(i.e., Blackstone Partners, WP Partners or a Transferee, as
the case may be), such affiliation being a qualification for
election to such directorship. Any director elected to fill
a newly created directorship or any vacancy on the Board of
Directors resulting from death, resignation, retirement,
disqualification or removal from office, shall hold office
for the remainder of the full term of the class of directors
in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been
elected and qualified. Directors shall continue in office
until others are chosen and qualified in their stead.
(e) Notwithstanding the foregoing, whenever the
holders of any one or more classes or series of Preferred
Stock issued by the Corporation, if any, shall have the
right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the
terms of the applicable resolution or resolutions of the
Board of Directors adopted pursuant to Article FOURTH.
<PAGE>
24
(f) Any director or the entire Board of Directors
of the Corporation may be removed from office only for cause
and only by the affirmative vote of the holders of a
majority of the shares of capital stock of the Corporation
then entitled to vote in the election of such director or
directors. For purposes of this paragraph and to the extent
permitted by law, "cause" shall be limited to (i) action by
a director involving wilful malfeasance, which conduct has a
material adverse effect on the Corporation, (ii) conviction
of a director of a felony or (iii) the wilful and continuous
failure of a director substantially to perform such director's
duties to the Corporation (including any such failure resulting
from incapacity due to physical or mental illness).
(g) In furtherance and not in limitation of the
powers conferred upon it by law, the Board of Directors is
expressly authorized to adopt, alter, amend or repeal any
provision of the By-laws of the Corporation (including,
without limitation, By-laws governing the conduct of, and
the matters which may properly be brought before, meetings
of the stockholders and By-laws specifying the manner and
extent to which prior notice shall be given of the
submission of proposals to be submitted at any meeting of
stockholders or of nominations of elections of directors to
be held at any such meeting) by the vote of a majority of
the entire Board of Directors.
(h) In addition to the powers and authorities
herein or by statute expressly conferred upon it, the Board
of Directors may exercise all such powers and do all such
acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the
laws of the State of Delaware, this Restated Certificate of
Incorporation and the By-laws of the Corporation; provided,
however, that no By-laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors
which would have been valid if such By-laws had not been
adopted.
SIXTH: Any action required or permitted to be
taken by the stockholders of the Corporation may be effected
only at a duly called annual or special meeting of such
stockholders and may not be effected by consent in writing
by such stockholders. Except as otherwise provided by any
Preferred Stock Designation, special meetings of
stockholders for any purpose or purposes may be called only
by the Chairman or a Co-Chairman of the Board, if there be
one, or by resolution of the Board of Directors, acting by
<PAGE>
25
not less than a majority of the entire Board, and the power
of stockholders to call a special meeting is specifically
denied. No business shall be transacted and no corporate
action shall be taken at a special meeting of stockholders
other than that stated in the notice of such meeting.
SEVENTH: (a) In addition to any requirements of
law and any other provision of this Restated Certificate of
Incorporation or any resolution or resolutions of the Board
of Directors adopted pursuant to Article FOURTH of this
Restated Certificate of Incorporation (and notwithstanding
the fact that a lesser percentage may be specified by law,
this Restated Certificate of Incorporation or any such
resolution or resolutions), a Business Combination (as
hereinafter defined) shall require the affirmative vote of
the holders of 66-2/3% or more of the combined voting power
of the then outstanding shares of Voting Stock, voting
together as a single class.
(b) For the purposes of this Article SEVENTH,
"Business Combination" shall mean:
(1) any merger or consolidation of the
Corporation (whether or not the Corporation is the
surviving corporation);
(2) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of related transactions) of all or substantially
all the assets of the Corporation;
(3) the adoption of any plan or proposal for the
liquidation, dissolution, spinoff, splitup, splitoff,
or winding up of the affairs of the Corporation
(whether voluntary or involuntary); or
(4) any agreement, contract or other arrangement
providing for any of the transactions described in this
definition of Business Combination.
EIGHTH: To the fullest extent that the General
Corporation Law of the State of Delaware as it exists on the
date hereof or as it may hereafter be amended permits the
limitation or elimination of the liability of directors, no
director of the Corporation shall be liable to the Corpora-
tion or its stockholders for monetary damages for breach of
fiduciary duty as a director. No amendment to or repeal of
this Article EIGHTH shall apply to or have any effect on the
liability or alleged liability of any director of the
<PAGE>
26
Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
NINTH: The Corporation reserves the right at any
time and from time to time to amend, alter or repeal any
provision contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by
law. In addition to any requirements of law and any other
provision of this Restated Certificate of Incorporation or
any resolution or resolutions of the Board of Directors
adopted pursuant to Article FOURTH of this Restated Certifi-
cate of Incorporation (and notwithstanding the fact that a
lesser percentage may be specified by law, this Restated
Certificate of Incorporation or any such resolution or
resolutions), the affirmative vote of the holders of 66-2/3%
or more of the combined voting power of the then outstanding
shares of Voting Stock, voting together as a single class,
shall be required to adopt, amend, alter or repeal any
provision of this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, the Corporation has caused
this Restated Certificate of Incorporation to be signed in
the name and on behalf of the Corporation, and attested to,
by the duly elected officers of the Corporation as indicated
below this 13th day of July, 1994.
COLLINS & AIKMAN CORPORATION
by Paul W. Meeks
________________________
Name: Paul W. Meeks
Title: VP/Treasurer
Attest:
Elizabeth Philipp
____________________________
Name: Elizabeth Philipp
Title: Secretary
EXHIBIT 4.2
BY-LAWS
(as amended through June 21, 1994)
OF
COLLINS & AIKMAN CORPORATION
ARTICLE I
Offices
SECTION 1. Registered Office. The registered
office of Collins and Aikman Corporation (the "Corporation")
shall be in the City of Dover, County of Kent, State of
Delaware and the registered agent shall be The Prentice-Hall
Corporation System, Inc., or such other office or agent as
the Board of Directors shall from time to time select.
SECTION 2. Other Offices. The Corporation may
also have offices at such other places both within and
without the State of Delaware as the Board of Directors may
from time to time determine.
ARTICLE II
Meetings of Stockholders
SECTION 1. Place of Meeting. Meetings of the
stockholders shall be held at such time and place, either
within or without the State of Delaware, as shall be
designated from time to time by the Board of Directors.
SECTION 2. Annual Meetings. The annual meeting
of stockholders shall be held on such date and at such time
as shall be designated from time to time by the Board of
Directors, at which meetings the stockholders shall elect,
in accordance with Section 1 and Section 2 of Article III of
these By-laws, by a plurality vote those Directors belonging
to the class or classes of directors to be elected at such
meeting, and transact such other business as may properly be
brought before the meeting.
SECTION 3. Special Meetings. Unless otherwise
prescribed by law or by the Restated Certificate of
Incorporation (the "Certificate of Incorporation"), special
meetings of stockholders may be called only by the Chairman
<PAGE>
2
or a Co-Chairman of the Board, if there be one, or pursuant
to a resolution adopted by a majority of the entire Board of
Directors. Business transacted at all special meetings
shall be confined to the matters specified in the notice of
the meeting.
SECTION 4. Notice of Meetings. Except as
otherwise provided by law, written notice of each meeting of
the stockholders, whether annual or special, shall be given,
either by personal delivery or by mail, not less than 10 nor
more than 60 days before the date of the meeting to each
stockholder of record entitled to notice of the meeting. If
mailed, such notice shall be deemed given when deposited in
the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on
the records of the Corporation. Each such notice shall
state the place, date and hour of the meeting, and the
purpose or purposes for which the meeting is called. Notice
of any meeting of stockholders shall not be required to be
given to any stockholder who shall attend such meeting in
person or by proxy without protesting, prior to or at the
commencement of the meeting, the lack of proper notice to
such stockholder, or who shall in writing waive notice
thereof. Notice of adjournment of a meeting of stockholders
need not be given if the time and place to which it is
adjourned are announced at such meeting, unless the
adjournment is for more than 30 days or, after adjournment,
a new record date is fixed for the adjourned meeting.
SECTION 5. Quorum. Except as otherwise provided
by law or by the Certificate of Incorporation, the holders
of a majority of the capital stock issued and outstanding
and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of
business. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be
presented or represented. At such adjourned meeting at
which a quorum shall be presented or represented, any
business may be transacted which might have been transacted
at the meeting as originally noticed. If the adjournment is
for more than 30 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of
<PAGE>
3
the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
SECTION 6. Voting. Unless otherwise provided by
law or by the Certificate of Incorporation, each stockholder
of record of Common Stock shall be entitled at each meeting
of stockholders to one vote for each share of such stock, in
each case, registered in such stockholder's name on the
books of the Corporation (1) on the date fixed pursuant to
Section 5 of Article V of these By-laws as the record date
for the determination of stockholders entitled to notice of
and to vote at such meeting; or (2) if no such record date
shall have been so fixed, then at the close of business on
the day next preceding the day on which notice of such
meeting is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the
meeting is held. At each meeting of the stockholders, all
corporate actions to be taken by vote of the stockholders
(except as otherwise required by law and except as otherwise
provided in the Certificate of Incorporation or these
By-laws) shall be authorized by a majority of the votes cast
affirmatively or negatively by the stockholders entitled to
vote thereon who are present in person or represented by
proxy, and where a separate vote by class is required, a
majority of the votes cast affirmatively or negatively by
the stockholders of such class who are present in person or
represented by proxy shall be the act of such class. Unless
required by law or determined by the Chairman of the meeting
to be advisable, the vote on any matter, including the
election of directors, need not be by written ballot. In
the case of a vote by written ballot, each ballot shall be
signed by the stockholder voting, or by such stockholder's
proxy, and shall state the number of shares voted.
SECTION 7. List of Stockholders Entitled to Vote.
The officer of the Corporation who has charge of the stock
ledger of the Corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of
at least 10 days prior to the meeting, either at a place
within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held.
<PAGE>
4
The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may
be inspected by any stockholder of the Corporation who is
present.
SECTION 8. Stock Ledger. The stock ledger of the
Corporation shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list
required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting
of stockholders.
SECTION 9. Notice of Business. No business may
be transacted at an annual meeting of stockholders, other
than business that is either (a) specified in the notice of
meeting (or any supplement thereto) given by or at the
direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before
the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or
(c) otherwise properly brought before the annual meeting by
any stockholder of the Corporation (i) who is a stockholder
of record on the date of the giving of the notice provided
for in this Section 9 of this Article II and on the record
date for the determination of stockholders entitled to vote
at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 9.
In addition to any other applicable requirements,
for business to be properly brought before an annual meeting
by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the
Secretary must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than
90 days nor more than 120 days prior to the anniversary date
of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting
is called for a date that is not within 30 days before or
after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the
close of the business on the tenth day following the day on
which such notice of the date of the annual meeting was
mailed or public disclosure of the date of the annual
meeting was made, whichever first occurs.
<PAGE>
5
To be in proper written form, a stockholder's
notice to the Secretary must set forth as to each matter
such stockholder proposes to bring before the annual meeting
(i) a brief description of the business proposed to be
brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the
name and record address of such stockholder, (iii) the class
or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by
such stockholder, (iv) a description of all arrangements or
understandings between such stockholder and any other person
or persons (including their names) in connection with the
proposal of such business by such stockholder and any
material interest of such stockholder in such business and
(v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such
business before the meeting.
No business shall be conducted at the annual
meeting of stockholders except business brought before the
annual meeting in accordance with the procedures set forth
in this Section 9 of this Article II; provided, however,
that, once business has been properly brought before the
annual meeting in accordance with such procedures, nothing
in this Section 9 of this Article II shall be deemed to
preclude discussion by any stockholder of any such business.
If the Chairman of an annual meeting determines that
business was not properly brought before the annual meeting
in accordance with the foregoing procedures, the Chairman
shall declare to the meeting that the business was not
properly brought before the meeting and such business shall
not be transacted or discussed.
ARTICLE III
Directors
SECTION 1. Number of Directors. The business and
affairs of the Corporation shall be managed by or under the
direction of a Board of Directors consisting of a number of
directors, divided into such classes and subject to such
other provisions as are set forth in the Certificate of
Incorporation. Except as otherwise provided in the
Certificate of Incorporation, the exact number of directors
shall be fixed from time to time by the Board of Directors.
<PAGE>
6
SECTION 2. Nomination of Directors. Only persons
who are nominated in accordance with the following
procedures shall be eligible for election as directors of
the Corporation, except as may be otherwise provided in the
Certificate of Incorporation of the Corporation.
Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders
or at any special meeting of stockholders called for the
purpose of electing directors, (a) by or at the direction of
the Nominating Committee of the Board of Directors or (b) by
any stockholder of the Corporation (i) who is a stockholder
of record on the date of the giving of the notice provided
for in this Section 2 of this Article III and on the record
date for the determination of stockholders entitled to vote
at such meeting and (ii) who complies with the notice
procedures set forth in this Section 2 of this Article III.
In addition to any other applicable requirements,
for a nomination to be made by a stockholder, such
stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the
Secretary must be delivered to or mailed and received at the
principal executive offices of the Corporation (a) in the
case of an annual meeting, not less than 90 days nor more
than 120 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting
is called for a date that is not within 30 days before or
after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the
close of business on the tenth day following the day on
which such notice of the date of the annual meeting was
mailed or public disclosure of the date of the annual
meeting was made, whichever first occurs; and (b) in the
case of a special meeting of stockholders called for the
purpose of electing directors, not later than the close of
business on the tenth day following the day on which public
disclosure of the date of the special meeting was made.
To be in proper written form, a stockholder's
notice to the Secretary must set forth (a) as to each person
whom the stockholder proposes to nominate for election as a
director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and
number of shares of capital stock of the Corporation which
<PAGE>
7
are owned beneficially or of record by the person and
(iv) any other information relating to the person that would
be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the stockholder giving the notice
(i) the name and record address of such stockholder,
(ii) the class or series and number of shares of capital
stock of the Corporation which are owned beneficially or of
record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and
each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation
that such stockholder intends to appear in person or by
proxy at the meeting to nominate the persons named in its
notice and (v) any other information relating to such
stockholder that would be required to be disclosed in a
proxy statement or other filings required to be made in
connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed
nominee to being named as a nominee and to serve as a
director if elected.
Subject to Section 4 of this Article III, no
person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the
procedures set forth in this Section 2 of this Article III.
If the Chairman of the meeting determines that a nomination
was not made in accordance with the foregoing procedures,
the Chairman shall declare to the meeting that the
nomination was defective and such defective nomination shall
be disregarded.
SECTION 3. Removal of Directors. Directors of
the Corporation may be removed only as provided in
Paragraph (e) of Article FIFTH of the Certificate of
Incorporation.
SECTION 4. Vacancies and Newly Created
Directorships. Any newly created directorship resulting
from an increase in the number of directors or any other
vacancy occurring in the Board of Directors may be filled by
a majority vote of the Nominating Committee, except as may
<PAGE>
8
be otherwise provided in the Certificate of Incorporation of
the Corporation. Any director of any class elected to fill
a vacancy resulting from an increase in the number of
directors in such class shall hold office for a term that
shall coincide with the remaining term of that class. Any
director elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same
remaining term as that of the director's predecessor.
SECTION 5. Duties and Powers. The business of
the Corporation shall be managed by or under the direction
of the Board of Directors, except as may be otherwise
provided by statute or by the Certificate of Incorporation.
SECTION 6. Meetings. The Board of Directors of
the Corporation may hold meetings, both regular and special,
either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to
time be determined by the Board of Directors. Special
meetings of the Board of Directors may be called by the
Chairman or any Co-Chairman, if there be one, the Chief
Executive Officer, the President or any two directors.
Notice thereof stating the place, date and hour of the
meeting shall be given to each director either by mail not
less than 48 hours before the date of the meeting, by
telephone, electronic facsimile or telegram on 24 hours'
notice, or on such shorter notice as the person or persons
calling such meeting may deem necessary or appropriate in
the circumstances, provided that notice need not be given to
any director who shall, either before or after the meeting,
submit a signed waiver of such notice or who shall attend
such meeting without protesting, prior to or at its
commencement, the lack of notice to such director.
SECTION 7. Quorum. Except as may be otherwise
specifically provided by law, the Certificate of
Incorporation or these By-laws, at all meetings of the Board
of Directors, one-half of the entire Board of Directors
shall constitute a quorum for the transaction of business,
and the act of a majority of the directors present at any
meeting at which there is a quorum shall be the act of the
Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a
quorum shall be present.
<PAGE>
9
SECTION 8. Actions of Board. Unless otherwise
provided by the Certificate of Incorporation or these By-
laws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee
thereof may be taken without a meeting if all the members of
the Board of Directors or committee, as the case may be,
consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the Board of
Directors or committee.
SECTION 9. Meetings by Means of Conference
Telephone. Unless otherwise provided by the Certificate of
Incorporation or these By-laws, members of the Board of
Directors of the Corporation, or any committee designated by
the Board of Directors, may participate in a meeting of the
Board of Directors or such committee by means of a
conference telephone or similar communications equipment by
means of which all persons participating in the meeting can
hear each other, and participation in a meeting pursuant to
this Section 9 shall constitute presence in person at such
meeting.
SECTION 10. Committees. The Board of Directors
may, by resolution passed by a majority of the entire Board
of Directors, designate one or more committees, each
committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting
of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member
to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified
from voting, whether or nor such member or members
constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place
of any absent or disqualified member. Any committee, to the
extent allowed by law and provided in the resolution
establishing such committee, shall have and may exercise all
the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation.
Each committee shall keep regular minutes and report to the
Board of Directors when required.
SECTION 11. Compensation. The directors may be
paid their expenses, if any, of attendance at each meeting
of the Board of Directors and may be paid a fixed sum for
<PAGE>
10
attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude
any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like
compensation for attending committee meetings.
SECTION 12. Interested Directors. No contract or
transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any
other corporation, partnership, association, or other
organization in which one or more of its directors or
officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason,
or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or
committee thereof which authorized the contract or
transaction, or solely because the vote or votes of such
person or persons are counted for such purpose if (i) the
material facts as to the relationship or interest of such
person or persons and as to the contract or transaction are
disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less
than a quorum; or (ii) the material facts as to the
relationship or interest of such persons or persons and as
to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract
or transaction is specifically approved in good faith by
vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it
is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common
or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors
or of a committee which authorizes the contract or
transaction.
SECTION 13. Meaning of "entire Board of
Directors". As used in this Article III and in these By-
laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would
have if there were no vacancies.
SECTION 14. Chairman and Co-Chairman of the Board
of Directors. The Board of Directors may appoint one of its
<PAGE>
11
members as Chairman and one or more of its members as Co-
Chairmen of the Board of Directors. The Chairman or a Co-
Chairman of the Board of Directors, if there be one, shall
preside at all meetings of the stockholders and of the Board
of Directors and shall have such other powers and perform
such other duties as may be prescribed by the Board of
Directors or as provided in these By-laws or as otherwise
may normally be incident to such office.
SECTION 15. Vice Chairman. The Board of
Directors may also appoint one or more of its members as
Vice Chairman of the Board of Directors, who shall preside
at all meetings of the stockholders and of the Board of
Directors in the absence of the Chairman or Co-Chairman, and
shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors or as
provided in these By-laws or as otherwise may normally be
incident to such office (including, without limitation, the
power and authority to exercise the authority of the
Chairman or the Co-Chairmen in the absence or disability of
such person or persons).
ARTICLE IV
Officers
SECTION 1. General. The officers of the
Corporation shall be a Chief Executive Officer, a Secretary
and a Treasurer. The officers of the Corporation may also
include, at the discretion of the Board of Directors, a
Chief Financial Officer and one or more business unit
Presidents, Vice Presidents (including, without limitation,
Assistant, Executive and Senior), Vice Chairmen, Assistant
Secretaries, Assistant Treasurers and other officers. The
officers of the Corporation shall be chosen by the Board of
Directors, except that the Board may from time to time
authorize any officer to appoint and remove any other
officer or agent and to prescribe such person's authority
and duties. Any number of offices may be held by the same
person, unless otherwise prohibited by law, the Certificate
of Incorporation or these By-laws. The officers of the
Corporation need not be stockholders of the Corporation nor
need such officers be directors of the Corporation.
SECTION 2. Election. Each Officer shall hold
office for the term for which elected or appointed by the
Board of Directors and shall exercise such powers and
<PAGE>
12
perform such duties as are provided in these By-laws or as
shall be determined from time to time by the Board of
Directors; and all officers of the Corporation shall hold
office until their successors are chosen and qualified, or
until their earlier death, resignation or removal. Any
officer may be removed, either with or without cause, by the
Board of Directors, at any regular or special meeting
thereof, or by any officer upon whom such power of removal
may be conferred by the Board of Directors, except that an
officer chosen by the Board of Directors may be removed only
by the Board of Directors. A vacancy occurring in any
office of the Corporation shall be filled in the manner
prescribed in these By-laws for regular appointments to such
office. The salaries and other compensation of all officers
of the Corporation shall be fixed by the Board of Directors.
SECTION 3. Voting Securities Owned by the
Corporation. Powers of attorney, proxies, waivers of notice
of meeting, consents and other instruments relating to
securities owned by the Corporation may be executed in the
name of and on behalf of the Corporation by the Chief
Executive Officer, the President or any Vice President and
any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting
of security holders of any corporation in which the
Corporation may own securities and at any such meeting shall
possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and
possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any
other person or persons.
SECTION 4. Chief Executive Officer. The chief
executive officer shall be the Chief Executive Officer of
the Corporation and shall have the powers and perform the
duties incident to that position. Subject to the Board of
Directors, the Chief Executive Officer shall be in general
and active charge of the entire business and affairs of the
Corporation, and shall be its chief policy-making officer.
The Chief Executive Officer shall see to it that all orders
and resolutions of the Board of Directors are carried into
effect. The Chief Executive Officer shall execute all
bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be
otherwise signed and executed and except that the other
<PAGE>
13
officers of the Corporation may sign and execute documents
when so authorized by these By-laws, the Board of Directors
or the Chief Executive Officer. In the absence or
disability of the Chairman of the Board of Directors or any
Co-Chairman or Vice Chairman, or if there be none, the Chief
Executive Officer shall preside at all meetings of the
stockholders and the Board of Directors. The Chief
Executive Officer shall also perform such other duties and
may exercise such other powers as from time to time may be
assigned to the Chief Executive Officer by these By-laws or
by the Board of Directors.
SECTION 5. President. The President shall
perform such duties and exercise such powers as are incident
to that position, and shall perform such other duties and
exercise such other powers as may from time to time be
prescribed by the Board of Directors.
SECTION 6. Vice Presidents. At the request of
the Chief Executive Officer or in the absence of the Chief
Executive Officer or in the event of the inability or
refusal to act of the Chief Executive Officer (and if there
be no Chairman or Co-Chairman or any Vice Chairman of the
Board of Directors), the Vice President or the Vice
Presidents, if there is more than one (in the order
designated by the Board of Directors) shall perform the
duties of the Chief Executive Officer, and when so acting,
shall have all the powers of and be subject to all the
restrictions upon the Chief Executive Officer. Each Vice
President shall perform such other duties and have such
other powers as the Board of Directors from time to time may
prescribe. If there be no Chairman or Co-Chairman or any
Vice Chairman of the Board of Directors and no Vice
President, the Board of Directors shall designate the
officer of the Corporation who, in the absence of the Chief
Executive Officer or in the event of the inability or
refusal of the Chief Executive Officer to act, shall perform
the duties of the Chief Executive Officer, and when so
acting, shall have all the powers of and be subject to all
the restrictions upon the Chief Executive Officer.
SECTION 7. Secretary. The Secretary shall attend
all meetings of the Board of Directors and all meetings of
stockholders and record all the proceedings thereat in a
book or books to be kept for that purpose; the Secretary
shall also perform like duties for the standing committees
when required. The Secretary shall give, or cause to be
given, notice of all meetings of the stockholders and
<PAGE>
14
special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board
of Directors or Chief Executive Officer, under whose
supervision the Secretary shall be. If the Secretary shall
be unable or shall refuse to cause to be given notice of all
meetings of the stockholders and special meetings of the
Board of Directors, and if there be no Assistant Secretary,
then either the Board of Directors or the Chief Executive
Officer may choose another officer to cause such notice to
be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix
the same to any instrument requiring it and when so affixed,
it may be attested by the signature of the Secretary or by
the signature of any such Assistant Secretary. The Board of
Directors may give general authority to any other officer to
affix the seal of the Corporation and to attest the affixing
by his or her signature. The Secretary shall see that all
books, reports, statements, certificates and other documents
and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. Chief Financial Officer. The Chief
Financial Officer shall be the principal officer of the
Corporation having responsibility for financial matters and
shall perform such duties as may be assigned to him by the
Board of Directors or the Chairman or any Co-Chairman.
SECTION 9. Treasurer. The Treasurer shall have
the custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the
Chief Executive Officer and the Board of Directors, at its
regular meetings, or when the Board of Directors so
requires, an account of all the Treasurer's transactions as
Treasurer and of the financial condition of the Corporation.
SECTION 10. Assistant Secretaries. Except as may
be otherwise provided in these By-laws, Assistant
Secretaries, if there be any, shall perform such duties and
have such powers as from time to time may be assigned to
them by the Board of Directors, the Chief Executive Officer,
<PAGE>
15
the President, any Vice Chairman, if there be one, or the
Secretary, and in the absence of the Secretary or in the
event of the disability of the Secretary or refusal of the
Secretary to act, shall perform the duties of the Secretary,
and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Secretary.
SECTION 11. Assistant Treasurers. Assistant
Treasurers, if there be any, shall perform such duties and
have such powers as from time to time may be assigned to
them by the Board of Directors, the Chief Executive Officer,
any Vice President, if there be one, or the Treasurer, and
in the absence of the Treasurer or in the event of the
disability of the Treasurer or refusal of the Treasurer to
act, shall perform the duties of the Treasurer, and when so
acting, shall have all the powers of and be subject to all
the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the
Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of such office
and for the restoration to the Corporation, in case of such
Assistant Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money
and other property of whatever kind in the possession or
under the control of such Assistant Treasurer belonging to
the Corporation.
SECTION 12. Other Officers. Such other officers
as the Board of Directors may choose shall perform such
duties and have such powers as from time to time may be
assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the
Corporation the power to choose such other officers and to
prescribe their respective duties and powers.
ARTICLE V
Stock
SECTION 1. Form of Certificates. Every holder of
stock in the Corporation shall be entitled to have a
certificate signed, in the name of the Corporation (i) by
the Chairman of the Board of Directors, the Co-Chairman of
the Board of Directors, the Chief Executive Officer or a
Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the
<PAGE>
16
Corporation, certifying the number of shares in the
Corporation owned by such holder.
SECTION 2. Signatures. Any or all the signatures
on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such
officer, transfer agent or registrar at the date of issue.
SECTION 3. Lost Certificates. The Board of
Directors may direct a new certificate to be issued in place
of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate, the Board
of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate, or the legal
representative of such person, to advertise the same in such
manner as the Board of Directors shall require and/or to
give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
SECTION 4. Transfers. Stock of the Corporation
shall be transferable in the manner prescribed by law and in
these By-laws. Transfers of stock shall be made on the
books of the Corporation only by the person named in the
certificate or by the person's attorney lawfully constituted
in writing and upon the surrender of the certificate
therefor, which shall be canceled before a new certificate
shall be issued.
SECTION 5. Record Date. In order that the
Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any
other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than 60 days
nor less than 10 days before the date of such meeting, nor
<PAGE>
17
more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 6. Beneficial Owners. The Corporation
shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its
books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in
such share or shares on the part of any other person,
whether or not it shall have express or other notice
thereof, except as otherwise required by law.
ARTICLE VI
Notices
SECTION 1. Notices. Whenever written notice is
required by law, the Certificate of Incorporation or these
By-laws, to be given to any director, member of a committee
or stockholder, such notice may be given by mail, addressed
to such director, member of a committee or stockholder, at
the address of such person as it appears on the records of
the corporation, with postage thereon prepaid, and such
notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written
notice may also be given personally or by electronic
facsimile, telegram, telex, cable or overnight courier.
SECTION 2. Waivers of Notice. Whenever any
notice is required by law, the Certificate of Incorporation
or these By-laws, to be given to any director, member of a
committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be
deemed equivalent thereto.
<PAGE>
18
ARTICLE VII
General Provisions
SECTION 1. Dividends. Dividends upon the capital
stock of the Corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, and
may be paid in cash, in property, or in shares of the
capital stock. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for
dividends such sum or sums as the Board of Directors from
time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of
the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
SECTION 2. Disbursements. All checks or demands
for money and notes of the Corporation shall be signed by
such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
SECTION 3. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
SECTION 4. Corporate Seal. The corporate seal
shall have inscribed thereon the name of the Corporation,
the year of its organization and the words "Corporate Seal
Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced
or otherwise.
ARTICLE VIII
Indemnification of Directors and Officers
SECTION 1. Right to Indemnification. Each person
who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director or an officer of
the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture,
<PAGE>
19
trust or other enterprise, including service with respect to
an employee benefit plan (hereinafter an "indemnitee"),
whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists
or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights
than such law permitted the Corporation to provide prior to
such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in
connection therewith; provided, however, that, except as
provided in Section 3 of this ARTICLE VIII with respect to
proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by
such indemnitee only if such proceedings (or part thereof)
was authorized by the Board of Directors of the Corporation.
SECTION 2. Right to Advancement of Expenses. The
right to indemnification conferred in Section 1 of this
ARTICLE VIII shall include the right to be paid by the
Corporation the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its
final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf
of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision
from which there is no further right to appeal (hereinafter
a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under this Section 2 or
otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of
this ARTICLE VIII shall be contract rights and such rights
shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the
<PAGE>
20
benefit of the indemnitee's heirs, executors and
administrators.
SECTION 3. Right of Indemnitee to Bring Suit. If
a claim under Section 1 or 2 of this ARTICLE VIII is not
paid in full by the Corporation within sixty (60) days after
a written claim has been received by the Corporation, except
in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty (20) days,
the indemnitee may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim.
If successful in whole or in part in any such suit, or in a
suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought
by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the
Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel
or its stockholders) to have made a determination prior to
the commencement of such suit that indemnification of the
indemnitee is proper in the circumstances because the
indemnitee has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders)
that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has
not met the applicable standard of conduct or, in the case
of such a suit brought by the indemnitee, be a defense to
such suit. In any suit brought by the indemnitee to enforce
a right to indemnification or to an advancement of expenses
hereunder, or brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is
not entitled to be indemnified, or to such advancement of
expenses, under this ARTICLE VIII or otherwise shall be on
the Corporation.
<PAGE>
21
SECTION 4. Non-Exclusivity of Rights. The rights
to indemnification and to the advancement of expenses
conferred in this ARTICLE VIII shall not be exclusive of any
other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of
Incorporation, By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
SECTION 5. Insurance. The Corporation may
maintain insurance, at its expense, to protect itself and
any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to
indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
SECTION 6. Indemnification of Employees and
Agents of the Corporation. The Corporation may, to the
extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the
Corporation to the fullest extent of the provisions of this
Article with respect to the indemnification and advancement
of expenses of directors and officers of the Corporation.
ARTICLE IX
Amendments
Except as otherwise provided in the Certificate of
Incorporation, these By-laws may be altered, amended or
repealed, in whole or in part, or new By-laws may be adopted
(i) upon a vote of a majority of the entire Board of
Directors or (ii) by the affirmative vote of the holders of
a majority of the combined voting power of the then
outstanding shares of stock of all classes and series of
stock the holders of which are entitled to vote generally in
the election of directors, voting together as a single
class.
Execution Copy
CREDIT AGREEMENT
Dated as of June 22, 1994
Among
COLLINS & AIKMAN PRODUCTS CO.,
as Borrower,
WCA CANADA INC.,
as Canadian Borrower,
COLLINS & AIKMAN CORPORATION,
as Guarantor,
THE LENDERS NAMED HEREIN,
CONTINENTAL BANK, N.A.,
NATIONSBANK, N.A.,
as Managing Agents,
And
CHEMICAL BANK,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Article Section Page
I. DEFINITIONS
SECTION 1.01. Defined Terms. . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Terms Generally . . . . . . . . . . . . . . . . . 20
II. THE CREDITS
SECTION 2.01. Commitments. . . . . . . . . . . . . . . . . . . 20
SECTION 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.03. Notice of Borrowings . . . . . . . . . . . . . . 24
SECTION 2.04. Notes; Repayment of Loans . . . . . . . . . . . . 24
SECTION 2.05. Fees. . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.06. Interest on Loans . . . . . . . . . . . . . . . . 26
SECTION 2.07. Default Interest . . . . . . . . . . . . . . . . 26
SECTION 2.08. Alternate Rate of Interest . . . . . . . . . . . 26
SECTION 2.09. Termination and Reduction of Commitments . . . . 27
SECTION 2.10. Conversion and Continuation of Delayed Draw Term,
Term and Canadian Term Borrowings . . . . . . . 27
SECTION 2.11. Repayment of Term and Delayed Draw Term
Borrowings . . . . . . . . . . . . . . . . . . . 28
SECTION 2.12. Prepayment . . . . . . . . . . . . . . . . . . . 29
SECTION 2.13. Reserve Requirements; Change in Circumstances . . 31
SECTION 2.14. Change in Legality . . . . . . . . . . . . . . . 32
SECTION 2.15. Indemnity . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.16. Pro Rata Treatment . . . . . . . . . . . . . . . 33
SECTION 2.17. Payments . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.18. Taxes . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.19. Issuance of Letters of Credit . . . . . . . . . . 36
SECTION 2.20. Participations; Unconditional Obligations . . . . 36
SECTION 2.21. Letter of Credit Fee . . . . . . . . . . . . . . 37
SECTION 2.22. Agreement To Repay Letter of Credit
Disbursements. . . . . . . . . . . . . . . . . . 37
SECTION 2.23. Letter of Credit Operations . . . . . . . . . . . 38
SECTION 2.24. Cash Collateralization . . . . . . . . . . . . . 38
SECTION 2.25. Termination and Reduction of Letter of Credit
Commitment . . . . . . . . . . . . . . . . . . . 38
III. REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization, Corporate Powers . . . . . . . . . 39
SECTION 3.02. Authorization . . . . . . . . . . . . . . . . . . 39
SECTION 3.03. Enforceability . . . . . . . . . . . . . . . . . 40
SECTION 3.04. Recapitalization . . . . . . . . . . . . . . . . 40
SECTION 3.05. Use of Proceeds . . . . . . . . . . . . . . . . . 40
SECTION 3.06. Federal Reserve Regulations . . . . . . . . . . . 40
SECTION 3.07. Capitalization of the Borrower and Holdings . . . 40
SECTION 3.08. Pledge Agreement . . . . . . . . . . . . . . . . 41
SECTION 3.09. Financial Statements . . . . . . . . . . . . . . 41
SECTION 3.10. No Material Adverse Change . . . . . . . . . . . 42
SECTION 3.11. Title to Properties; Possession Under Leases . . 42
SECTION 3.12. Subsidiaries . . . . . . . . . . . . . . . . . . 42
SECTION 3.13. Litigation; Compliance with Laws . . . . . . . . 42
<PAGE>
Article Section Page
SECTION 3.14. Agreements . . . . . . . . . . . . . . . . . . . 42
SECTION 3.15. Investment Company Act . . . . . . . . . . . . . 43
SECTION 3.16. Public Utility Holding Company Act . . . . . . . 43
SECTION 3.17. Tax Returns . . . . . . . . . . . . . . . . . . . 43
SECTION 3.18. No Material Misstatements . . . . . . . . . . . . 43
SECTION 3.19. Employee Benefit Plans . . . . . . . . . . . . . 43
SECTION 3.20. Labor Matters . . . . . . . . . . . . . . . . . . 44
SECTION 3.21. Environmental Matters . . . . . . . . . . . . . . 44
SECTION 3.22. Solvency . . . . . . . . . . . . . . . . . . . . 45
SECTION 3.23. Absence of Certain Restrictions . . . . . . . . . 46
SECTION 3.24. No Foreign Assets Control Regulation
Violation. . . . . . . . . . . . . . . . . . . . 46
SECTION 3.25. Insurance . . . . . . . . . . . . . . . . . . . . 46
SECTION 3.26. Certain Other Representations . . . . . . . . . . 46
IV. CONDITIONS
SECTION 4.01. All Credit Events . . . . . . . . . . . . . . . . 46
SECTION 4.02. First Borrowing . . . . . . . . . . . . . . . . . 47
V. AFFIRMATIVE COVENANTS
SECTION 5.01. Existence; Businesses and Properties . . . . . . 51
SECTION 5.02. Insurance . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.03. Taxes . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.04. Financial Statements, Reports, Amendments, etc. . 52
SECTION 5.05. Litigation and Other Notices . . . . . . . . . . 53
SECTION 5.06. ERISA . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. . . . . . . . . . . . . . . . . . . 54
SECTION 5.08. Use of Proceeds . . . . . . . . . . . . . . . . . 54
SECTION 5.09. Further Assurances . . . . . . . . . . . . . . . 54
SECTION 5.10. Change in Ownership . . . . . . . . . . . . . . . 55
SECTION 5.11. Fiscal Year; Accounting . . . . . . . . . . . . . 55
SECTION 5.12. Dividends . . . . . . . . . . . . . . . . . . . . 55
SECTION 5.13. Rate Protection Agreements . . . . . . . . . . . 55
SECTION 5.14. Corporate Separateness . . . . . . . . . . . . . 55
SECTION 5.15. Business of Restricted Subsidiaries. . . . . . . 55
VI. NEGATIVE COVENANTS
SECTION 6.01. Indebtedness . . . . . . . . . . . . . . . . . . 56
SECTION 6.02. Dividends and Distributions . . . . . . . . . . . 58
SECTION 6.03. Capital Expenditures . . . . . . . . . . . . . . 59
SECTION 6.04. Liens . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.05. Priority of Loan Payments . . . . . . . . . . . . 61
SECTION 6.06. Sale and Lease-Back Transactions . . . . . . . . 61
SECTION 6.07. Investments, Loans and Advances . . . . . . . . . 62
SECTION 6.08. Mergers, Consolidations, Sales of Assets and
Acquisitions . . . . . . . . . . . . . . . . . . 63
SECTION 6.09. Transactions with Affiliates and Stockholders . . 64
SECTION 6.10. Subordinated Indebtedness . . . . . . . . . . . . 64
SECTION 6.11. Amendment of Constitutive Documents; Change
in Corporate Structure . . . . . . . . . . . . . 64
SECTION 6.12. Business of Holdings and Restricted
Subsidiaries . . . . . . . . . . . . . . . . . . 64
SECTION 6.13. Restrictive Agreements . . . . . . . . . . . . . 65
<PAGE>
Article Section Page
SECTION 6.14. Interest Coverage Ratio . . . . . . . . . . . . . 65
SECTION 6.15. EBITDA . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.16. Leverage Ratio . . . . . . . . . . . . . . . . . 65
SECTION 6.17. Current Ratio . . . . . . . . . . . . . . . . . . 65
SECTION 6.18. Tax Sharing . . . . . . . . . . . . . . . . . . . 65
SECTION 6.19. Significant Subsidiaries . . . . . . . . . . . . 66
SECTION 6.20. Inactive Subsidiaries . . . . . . . . . . . . . . 66
VII. EVENTS OF DEFAULT
VIII. THE ADMINISTRATIVE AGENT
IX. MISCELLANEOUS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.02. Survival of Agreement . . . . . . . . . . . . . . 71
SECTION 9.03. Binding Effect . . . . . . . . . . . . . . . . . 72
SECTION 9.04. Successors and Assigns . . . . . . . . . . . . . 72
SECTION 9.05. Expenses; Indemnity . . . . . . . . . . . . . . . 74
SECTION 9.06. Right of Setoff; Sharing . . . . . . . . . . . . 76
SECTION 9.07. Applicable Law . . . . . . . . . . . . . . . . . 76
SECTION 9.08. Waivers; Amendment . . . . . . . . . . . . . . . 76
SECTION 9.09. Interest Rate Limitation . . . . . . . . . . . . 77
SECTION 9.10. Entire Agreement . . . . . . . . . . . . . . . . 77
SECTION 9.11. Waiver of Jury Trial . . . . . . . . . . . . . . 77
SECTION 9.12. Severability . . . . . . . . . . . . . . . . . . 78
SECTION 9.13. Counterparts . . . . . . . . . . . . . . . . . . 78
SECTION 9.14. Headings . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.15. Jurisdiction; Consent to Service of Process . . . 78
SECTION 9.16. Conversion of Currencies . . . . . . . . . . . . 78
SECTION 9.17. Confidentiality . . . . . . . . . . . . . . . . . 79
<PAGE>
Exhibits
Exhibit A-1 Revolving Credit Note
Exhibit A-2 Delayed Draw Term Note
Exhibit A-3 Term Note
Exhibit A-4 Swingline Note
Exhibit A-5 Canadian Term Note
Exhibit A-6 Intercompany Note
Exhibit B Assignment and Acceptance
Exhibit C Administrative Questionnaire
Exhibit D Form of Guarantee Agreement
Exhibit E Form of Pledge Agreement
Exhibit F Form of Opinion of Cravath, Swaine & Moore,
Elizabeth R. Philipp, Esq. and Stikeman, Elliott
Exhibit G Form of Compliance Certificate
Exhibit H Form of Intercreditor Agreement
Schedules
1.01(A) Applicable Margin
1.01(B) Applicable Prepayment Percentage
1.01(C) Additional Designated Persons
1.01(D) Subordination Terms
2.01 Commitments
2.11(a) Term Loan Amortization Schedule; Canadian Term Loan
Amortization Schedule
3.07(b)(1) Holdings Common Stock By Designated Persons
3.07(b)(2) Options and Rights Regarding Holdings
Capital Stock
3.12(a) Subsidiaries of Holdings
3.12(b) Outstanding Commitments Relating to Capital Stock
3.17 Tax Matters
4.02(o) Indebtedness to be repaid on Closing Date
6.01 Existing Indebtedness
6.04 Existing Liens
6.07 Existing Investments
<PAGE>
CREDIT AGREEMENT dated as of June 22, 1994, among COLLINS &
AIKMAN PRODUCTS CO., a Delaware corporation (the "Borrower"), WCA
CANADA INC., a Canadian corporation (the "Canadian Borrower"),
COLLINS & AIKMAN CORPORATION, a Delaware corporation ("Holdings"),
the financial institutions listed in Schedule 2.01 hereto (the
"Lenders"), and CHEMICAL BANK, a New York banking corporation
("Chemical"), as administrative agent for the Lenders and the
Issuing Banks (in such capacity, the "Administrative Agent").
The Borrower has requested the Lenders to extend credit in order to
enable (a) the Borrower, subject to the terms and conditions of this
Agreement, to borrow (i) on a term basis, on the Closing Date (as defined
herein), an aggregate principal amount not in excess of $405,000,000, (ii) on
a term basis, at any time during the Delayed Draw Availability Period (as
defined herein), an aggregate principal amount not in excess of $25,000,000
and (iii) on a revolving basis, at any time and from time to time prior to the
Revolving Credit Maturity Date (as defined herein), an aggregate principal
amount at any time outstanding not in excess of $150,000,000 and (b) the
Canadian Borrower, subject to the terms and conditions of this Agreement, to
borrow on a term basis, on the Closing Date, an aggregate principal amount not
in excess of $45,000,000. The Borrower also has requested the Issuing Banks
to issue letters of credit for the account of the Borrower (with the exposure
on such letters of credit being limited to $50,000,000 and resulting in a
reduction to the availability of borrowings on a revolving basis). The
proceeds of such borrowings and such letters of credit are to be used as
described herein. The Lenders are willing to extend such credit to the
Borrower and the Canadian Borrower on the terms and subject to the conditions
set forth herein.
Accordingly, the Borrower, the Canadian Borrower, Holdings, the Lenders,
the Issuing Banks and the Administrative Agent agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Defined Terms. In addition to the terms defined above,
as used in this Agreement the following terms shall have the meanings
specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Canadian Term Loan" shall mean any Canadian Term Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Delayed Draw Term Loan" shall mean any Delayed Draw Term Loan
bearing interest at a rate determined by reference to the Alternate Base
Rate in accordance with the provisions of Article II.
"ABR Loan" shall mean any ABR Term Loan, ABR Delayed Draw Term Loan,
ABR Revolving Loan, ABR Canadian Term Loan or Swingline Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"Adjusted LIBO Rate" shall mean, 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 the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory
Reserves. For purposes hereof, (a) if at least two offered rates for
deposits in dollars for a period comparable to the applicable Interest
Period appear on page 3750 (or any successor page) of the Dow Jones
Telerate Screen as of
<PAGE>
2
11:00 a.m., London time, on the day that is two
Business Days prior to the first day of such Interest Period, the term
"LIBO Rate" shall mean the arithmetic mean of all such offered rates and
(b) if fewer than two such offered rates so appear on page 3750 (or any
successor page) of the Dow Jones Telerate Screen, the term "LIBO Rate"
shall mean the rate (rounded upwards, if necessary, to the next 1/16 of
1%) at which dollar deposits approximately equal in principal amount to
Chemical's portion (or, if Chemical shall not have any portion, the
portion of the Lender having the largest applicable Type of Loan) of the
applicable Eurodollar Borrowing and for a period comparable to the
applicable Interest Period are offered to Chemical's office in which its
eurodollar operations in respect of eurodollar loans are being conducted
in immediately available funds in the eurodollar market at approximately
11:00 a.m., New York time, on the day that is two Business Days prior to
the first day of such Interest Period.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire substantially in the form of Exhibit C.
"Affiliate" shall mean, when used 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.
"Agency Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Agents" shall mean the collective reference to the Administrative
Agent and the Managing Agents.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime
Rate" shall mean the rate of interest per annum publicly announced from
time to time by Chemical as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being
effective. "Base CD Rate" shall mean the sum of (a) the product of (i)
the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b)
the Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for
any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit
of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Federal Funds
Effective Rate" shall mean, for any day, the weighted average 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 which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate or both
for any reason, including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the terms
thereof, the Alternate Base Rate shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime
Rate, the Base CD Rate or the FederalFunds Effective Rate, respectively.
3
<PAGE>
"Applicable Level" shall mean at any time the highest of Level I,
Level II, Level III and Level IV in effect determined in accordance with
Schedule 1.01(A).
"Applicable Margin" means (i) for any date on or after the Closing
Date to but excluding the first day of the second full fiscal quarter
commencing after the Closing Date, with respect to Eurodollar Loans,
1-3/4%, and with respect to ABR Loans, 3/4 of 1%, and (ii) for any date
on or after the first day of the second full fiscal quarter
commencing after the Closing Date, with respect to any Eurodollar Loans
or ABR Loans, as the case may be, the applicable margin set forth on
Schedule 1.01(A) opposite the Applicable Level, in each case as of the
last day of the Borrower's fiscal quarter most recently ended as of such
date. Notwithstanding anything herein to the contrary, from and after
the fifth anniversary of the Closing Date the Applicable Margin shall be
1/4 of 1% higher than the rate otherwise determined pursuant to this
definition.
"Applicable Percentage" shall mean, with respect to any Revolving
Lender, the percentage of the aggregate Revolving Credit Commitments
represented by such Revolving Lender's Revolving Credit Commitment.
"Applicable Prepayment Percentage" shall mean at any time 75% or, if
the Applicable Level is higher than Level I, the percentage set forth in
Part I of Schedule 1.01(B) opposite the Applicable Level in effect at
such time. Notwithstanding the foregoing, if the Term Loans and
Canadian Term Loans have been repaid in the amounts set forth in Part II
of Schedule 1.01(B), the Applicable Prepayment Percentage shall be the
percentage set forth in Part I of Schedule 1.01(B) opposite the
Applicable Level determined by increasing the current Applicable Level
by the number of additional Levels set forth opposite such amount of
Term Loans and Canadian Term Loans so repaid in Part II of Schedule
1.01(B).
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Administrative Agent as the then current net annual assessment
rate that will be employed in determining amounts payable by Chemical to
the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made
in dollars at Chemical's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the
Administrative Agent, substantially in the form of Exhibit B or such
other form as shall be approved by the Administrative Agent.
"Blackstone" shall mean Blackstone Capital Partners L.P., a Delaware
limited partnership.
"Blackstone Entities" shall mean Blackstone, Blackstone Group,
Blackstone Management Partners, L.P., Blackstone Management Associates,
L.P. or any of their Affiliates.
"Blackstone Group" shall mean The Blackstone Group L.P., a Delaware
limited partnership.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower Common Stock" shall have the meaning assigned to that term
in Section 3.07(a).
"Borrowing" shall mean a group of Loans of a single Type made to the
Borrower or the Canadian Borrower on a single date and as to which a
single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which
banks are open for business in New York City; provided, however,
<PAGE>
4
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.
"Canadian Term Borrowing" shall mean a Borrowing comprised of
Canadian Term Loans.
"Canadian Term Loan Commitment" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Canadian Term
Loans hereunder as set forth in Schedule 2.01, as the same may be
reduced from time to time pursuant to Section 2.09.
"Canadian Term Loan Maturity Date" shall mean the eighth anniversary
of the Closing Date.
"Canadian Term Loan Repayment Date" shall have the meaning assigned
to such term in Section 2.11.
"Canadian Term Loans" shall mean the term loans made to the Canadian
Borrower pursuant to Section 2.01(e). Each Canadian Term Loan shall be
a Eurodollar Canadian Term Loan or an ABR Canadian Term Loan.
"Canadian Term Note" shall mean a promissory note of the Canadian
Borrower, substantially in the form of Exhibit A-5, evidencing Canadian
Term Loans.
"Capital Expenditures" shall mean, for any person in any period, the
aggregate amount of all capital expenditures of such person during such
period (but not including Permitted Business Acquisitions). For the
purposes hereof, the amount of any Capital Expenditure shall not include
(i) an amount equal to that portion of the proceeds received upon any
sale, transfer or other disposition of assets or properties pursuant to
Section 6.08(a), (g) or (i) which is applied to the purchase of
replacement assets or properties used for the same purpose as the assets
or properties disposed of within 12 months of the receipt thereof, (ii)
expenditures that are accounted for as capital expenditures of such
person and that actually are paid for by a third party (excluding
Holdings or any subsidiary thereof) and for which neither Holdings nor
any subsidiary thereof has provided or is required to provide, directly
or indirectly, any consideration to such third party or any other person
(whether before, during or after such period), (iii) the book value of
any asset owned by such person prior to or during such period to the
extent that such book value is included as a capital expenditure during
such period as a result of such person reusing or beginning to reuse
such asset during such period without a corresponding expenditure
actually having been made in such period, provided that any expenditure
necessary in order to permit such asset to be reused shall be included
as a Capital Expenditure during the period that such expenditure
actually is made or (iv) expenditures of insurance proceeds or
condemnation awards received in connection with the loss, damage,
destruction or condemnation of property of Holdings or its subsidiaries.
"Capital Lease Obligations" of any person shall mean 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, for the purposes hereof, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"Cash Interest Expense" shall mean Interest Expense paid or required
to be paid in cash (but excluding any amortization of debt discounts and
fees included in the calculation of Interest Expense).
A "Change in Control" shall be deemed to have occurred if (a)
Holdings shall cease to directly own, beneficially and of record, free
and clear of any and all Liens (other than Liens in favor of the
Collateral Agent pursuant to the Pledge Agreement), 100% of the issued
and outstanding capital stock of the Borrower; (b) any person or group
(within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) (other than (i) any
Designated Person or (ii) any
<PAGE>
5
combination of Designated Persons) shall
own beneficially, directly or indirectly, shares representing more than
25% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of Holdings at a time when Designated Persons
or any combination of Designated Persons do not beneficially own shares
representing at least 50% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Holdings; or
(c) the Continuing Directors shall cease to occupy a majority of the
seats (excluding vacant seats) on the Board of Directors of Holdings.
For purposes of clause (b) of this definition, the term "Designated
Person" shall be deemed to include any other holder or holders of shares
of Holdings having ordinary voting power if any Blackstone Entity or WP
Entity shall hold the irrevocable general proxy of each such holder in
respect of the shares held by such holder.
"Charges" shall have the meaning assigned to that term in Section
9.09.
"Closing Date" shall mean the date on which the first Loan is made
pursuant to this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral Agent" shall mean Chemical, as Collateral Agent under
the Pledge Agreement and the Guarantee Agreement.
"Commitment" shall mean, with respect to any Lender, such Lender's
Term Loan Commitment, Delayed Draw Term Loan Commitment, Swingline Loan
Commitment, Canadian Term Loan Commitment and Revolving Credit
Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Compliance Certificate" shall have the meaning assigned to such
term in Section 5.04(c).
"Contaminants" means those substances which are regulated by or form
the basis of liability under any Environmental Law, including asbestos,
polychlorinated biphenyls, Hazardous Materials, pollutants or solid
wastes.
"Continuing Directors" shall mean the collective reference to (i)
all members of the Board of Directors of Holdings who have held office
continuously since the Closing Date and (ii) all members of the Board of
Directors of Holdings who assumed office after the Closing Date and
whose election and nomination for election by Holdings' shareholders was
approved by a vote of a majority of the then Continuing Directors.
"Control" shall mean 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 ownership of voting securities, by
contract or otherwise, and "Controlling" and "Controlled" shall have
meanings correlative thereto.
"Credit Agreement Creditors" shall mean the Administrative Agent,
the Issuing Banks and the Lenders.
"Current Assets" shall mean, with respect to any person at any date,
the consolidated aggregate amount of all assets of such person which
would be classified as current assets at such date, other than cash and
cash equivalents.
"Current Liabilities" shall mean, with respect to any person at any
date, the consolidated aggregate amount of all liabilities of such
person (including tax and other proper accruals) which would be
classified as current liabilities at such date, other than (without
duplication) (i) the current portion of long-term debt, (ii) accruals of
Interest Expense (excluding Interest Expense which is due and unpaid)
and losses or expenses on the sale of receivables to the Finance
Subsidiary, (iii) Revolving Loans
<PAGE>
6
classified as current, (iv) accruals
of transaction costs resulting from the Recapitalization Transactions
and (v) accruals of any costs or expenses related to severance or
termination of employees accrued prior to the date hereof.
"Current Ratio" shall mean, with respect to Holdings on any date,
the ratio of (a) Current Assets plus (without duplication) the accounts
receivable owned by any Finance Subsidiary to (b) Current Liabilities.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Delayed Draw Availability Period" shall mean the period from and
including the Closing Date to and including the first anniversary of the
Closing Date.
"Delayed Draw Borrowing" shall mean a Borrowing comprised of Delayed
Draw Term Loans.
"Delayed Draw Term Loan Commitment" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Delayed Draw Term
Loans hereunder as set forth in Schedule 2.01, as the same may be
reduced from time to time pursuant to Section 2.09.
"Delayed Draw Term Loan Maturity Date" shall mean the eighth
anniversary of the Closing Date.
"Delayed Draw Term Loan Repayment Date" shall have the meaning
assigned to such term in Section 2.11.
"Delayed Draw Term Loans" shall mean the delayed draw term loans
made to the Borrower pursuant to Section 2.01(b). Each Delayed Draw
Term Loan shall be a Eurodollar Delayed Draw Term Loan or an ABR Delayed
Draw Term Loan.
"Delayed Draw Term Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-2, evidencing Delayed
Draw Term Loans.
"Designated Persons" shall mean any one or more of the Blackstone
Entities, the WP Entities and the persons listed on Schedule 1.01(C).
"Dividend Condition" shall mean that the Applicable Level is at
least Level II and the outstanding principal amount of the Term Loans
and Canadian Term Loans is less than $350,000,000.
"dollars" or "$" shall mean lawful money of the United States of
America. All Loans and Letters of Credit shall be denominated in
dollars and all payment obligations of the Borrower and the Canadian
Borrower under the Loan Documents shall be in dollars.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary
incorporated or organized under the laws of the United States of America
or any state thereof at least 90% of the capital stock of which is owned
directly or indirectly by the Borrower.
"EBITDA" shall mean, without duplication, for any fiscal period, the
sum of the amounts for such fiscal period of (i) Net Income, (ii)
provision for taxes based on income, (iii) depreciation expense, (iv)
total interest expense (whether shown as interest expense or as loss and
expenses on sales of receivables), (v) amortization expense and (vi)
other non-cash items reducing Net Income, all as determined on a
consolidated basis for Holdings and its Restricted Subsidiaries in
conformity with GAAP.
<PAGE>
7
"Environmental Claim" means any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery
action or proceeding by any Governmental Authority or, if any
Responsible Officer of Holdings has knowledge of it, by any person for
damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), remedial action costs, tangible or
intangible property damage, damage to the environment or natural
resources, nuisance, pollution, contamination or other adverse effects
on the environment, or for fines, penalties or restrictions, resulting
from or based upon (i) the existence, or the continuation of the
existence, of a Release (including sudden or non-sudden, accidental or
non-accidental Releases) of, or exposure to, any Contaminant or odor,
(ii) the presence, use, handling, transportation, storage, treatment or
the disposal of Contaminants in connection with the operation of the
facilities to which such Release relates or (iii) the violation or
alleged violation of any Environmental Law.
"Environmental Law" means any and all applicable treaties, laws,
regulations, enforceable requirements, binding determinations, orders,
decrees, judgments, injunctions, permits, approvals, authorizations,
licenses, variances, permissions, notices or binding agreements issued,
promulgated or entered by any Governmental Authority, relating to the
environment, preservation or reclamation of natural resources or to the
management, Release or threatened Release of Contaminants or noxious
odor, including the Hazardous Materials Transportation Act, 49 U.S.C.
(sect.)(sect.) 1801 et seq., Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C.
(sect.)(sect.) 9601 et seq., Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. (sect.)(sect.) 6901, et
seq., Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 U.S.C. (sect.)(sect.) 1251 et seq., Clean Air Act of
1970, as amended 42. U.S.C. (sect.)(sect.) 7401 et seq., Toxic
Substances Control Act of 1976, 15 U.S.C. (sect.)(sect.) 2601 et seq.,
Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. (sect.)(sect.) 11001 et seq., National Environmental Policy
Act of 1975, 42 U.S.C. (sect.)(sect.) 4321 et seq., Safe
Drinking Water Act of 1974, as amended, 42 U.S.C. (sect.)(sect.) 300(f)
et seq., and any similar or implementing state or foreign law, and all
amendments or regulations promulgated thereunder.
"Environmental Permit" means any permit, approval, authorization,
license, variance, or permission required from any Governmental
Authority pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" with respect to any person shall mean any trade or
business (whether or not incorporated) that is a member of a group of
which such person is a member and which is treated as a single employer
under Section 414 of the Code.
"ESOP" shall mean any employee stock ownership plan to be
established by the Borrower or a subsidiary Guarantor thereof to make
the ESOP Investment.
"ESOP Investment" shall mean the issuance and sale of shares of
Holdings Common Stock to, or the purchase of shares of Holdings Common
Stock in open market or privately negotiated transactions by, the ESOP
from time to time.
"ESOP Loans" shall mean a loan or loans to be made from time to time
by the Borrower to the ESOP in an aggregate amount not to exceed
$25,000,000, solely to enable the ESOP to effect the ESOP Investment.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Canadian Term Loan" shall mean any Canadian Term Loan
bearing interest at a rate determined by reference to the Adjusted LIBO
Rate in accordance with the provisions of Article II.
<PAGE>
8
"Eurodollar Delayed Draw Term Loan" shall mean any Delayed Draw Term
Loan bearing interest at a rate determined by reference to the Adjusted
LIBO Rate in accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Term Loan, Eurodollar
Delayed Draw Term Loan, Eurodollar Canadian Term Loan or Eurodollar
Revolving Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at
a rate determined by reference to the Adjusted LIBO Rate in accordance
with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean for any period (i) the Net Income for
such period plus (minus) (ii) the amount of depreciation, depletion,
amortization of intangibles, deferred taxes, accreted and zero coupon
bond interest and other noncash expenses (revenues) which, pursuant to
GAAP, were deducted (added) in determining such Net Income minus (plus)
(iii) additions (reductions, other than reductions attributable solely
to Specified Asset Sales) to working capital for such period (i.e., the
increase or decrease in Current Assets of Holdings and the Restricted
Subsidiaries minus Current Liabilities of Holdings and the Restricted
Subsidiaries from the beginning to the end of such period, as adjusted
to exclude reductions attributable solely to Specified Asset Sales)
minus (iv) the amount of Capital Expenditures for such period paid by
Holdings and the Restricted Subsidiaries in cash from funds other than
from the proceeds of Borrowings minus (v) the sum of (a) scheduled Term
Loan, Canadian Term Loan and Delayed Draw Term Loan repayments made
during such period pursuant to Section 2.11, (b) optional prepayments of
the Term Loans, the Canadian Term Loans and the Delayed Draw Term Loans
made during such period pursuant to Section 2.12(a) and (c) Revolving
Loan repayments made during such period that were required to be made as
a result of voluntary reductions of the Revolving Commitment pursuant to
Section 2.09(b) minus (vi) scheduled mandatory payments of principal of
Indebtedness of Holdings and the Restricted Subsidiaries other than the
Loans made during such period minus (vii) fees and expenses paid in cash
in connection with the Recapitalization Transactions to the extent not
deducted in determining Net Income and provided that such amounts are
paid from reserves established therefor by the Borrower on the Closing
Date minus (viii) amounts paid in cash for liabilities relating to
discontinued operations which were discontinued prior to the Closing
Date to the extent not deducted in determining Net Income, provided that
such amounts are paid from reserves established by the Borrower for such
liabilities prior to the Closing Date.
"Executive Officer" of any corporation shall mean the president, any
senior vice president or any vice president of such person.
"Existing Credit Agreement" shall mean the Credit Agreement dated as
of May 15, 1991, as amended, among the Borrower and certain of its
subsidiaries and the financial institutions named therein.
"Fees" shall mean the Agency Fees, the Participation Fees, the
Fronting Fees, the Commitment Fees and the Letter of Credit Fees.
"Finance Subsidiary" shall mean any wholly-owned subsidiary of the
Borrower that is formed for the sole purpose of engaging in Permitted
Receivables Financings.
"Financial Officer" of any corporation shall mean the chief
financial officer, Senior Vice President-Finance and Accounting, Vice
President-Finance, Controller, or Treasurer of such corporation.
"Fronting Fees" shall have the meaning assigned to such term in
Section 2.05(d).
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9
"Funded Debt" shall mean, as applied to any person, all Indebtedness
for borrowed money (including, without limitation, Capital Lease
Obligations and unreimbursed drawings under letters of credit) or
evidenced by a note, bond, debenture or similar instrument of that
person (it being understood that all Loans shall at all times constitute
"Funded Debt" for all purposes hereunder).
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean any international, Federal,
state, regional, local or foreign court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantors" shall mean Holdings and each Restricted Subsidiary
(other than Inactive Subsidiaries) incorporated or organized under the
laws of the United States or any State thereof.
"Guarantee" of or by any person shall mean (i) any obligation,
contingent or otherwise, of such person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other person
(the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation of such person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness (whether arising by virtue of partnership
arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay or otherwise) or to purchase (or
to advance or supply funds for the purchase of) any security for the
payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of
the payment of such Indebtedness, (c) to maintain working capital,
equity capital or other financial statement conditions or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or (d) entered into for the purpose of assuring in any
other manner the holders of such Indebtedness of the payment thereof or
to protect such holders against loss in respect thereof (in whole or in
part), or (ii) any Lien on any assets of such person securing any
Indebtedness of any other person, whether or not such Indebtedness is
assumed by such person; provided, however, that the term Guarantee shall
not include endorsements for collection or deposit, in either case in
the ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement
substantially in the form attached as Exhibit D, as amended and in
effect from time to time.
"Hazardous Materials" means all explosive or regulated radioactive
materials or substances, hazardous or toxic wastes or substances,
petroleum (including crude oil or any fraction thereof) or petroleum
distillates, asbestos or material containing asbestos and all materials
regulated pursuant to any Environmental Law, including materials listed
in 49 C.F.R. Section 172.101 and materials defined as hazardous pursuant
to Section 101(14) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Holdings Common Stock" shall mean the Common Stock, par value $.01
per Share, of Holdings.
"Holdings Underwriting Agreement" shall mean the Underwriting
Agreement to be entered into among Holdings and Goldman, Sachs & Co.,
Merrill Lynch & Co., Wasserstein Perella Securities, Inc. and The Nikko
Securities Co., as Representatives of the several underwriters listed
therein, relating to the Public Offering, in substantially the form
filed with the Securities and Exchange Commission prior to the date of
this Agreement or in such other form as shall be satisfactory to the
Agents.
"Inactive Subsidiary" shall mean the Restricted Subsidiaries listed
as Inactive Subsidiaries on Schedule 3.12(a) and which Restricted
Subsidiaries (i) individually and in the aggregate have no material net
assets and (ii) do not engage in any operating activity (other than
payroll or the leasing of immaterial property).
<PAGE>
10
"Indebtedness" of any person shall mean, without duplication, (a)
all indebtedness of such person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business), (b) any other
indebtedness of such person which is evidenced by a note, bond,
debenture or similar instrument, (c) all Capital Lease Obligations of
such person, (d) all obligations of such person in respect of bankers'
acceptances issued or created for the account of such person, (e) 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 any property owned or acquired by such person
even though such person has not assumed or otherwise become liable for
the payment thereof, (f) all obligations of such person in respect of
Interest Rate Agreements which, in accordance with the definition of
Interest Rate Agreement, constitute (or would upon early termination
constitute) Indebtedness and (g) all Guarantees by such person of
Indebtedness of others. The Indebtedness of any person shall include
the Indebtedness of any partnership in which such person is a general
partner; provided that, if the sole asset of such person is its general
partnership interest in such partnership, the amount of such
Indebtedness shall be deemed equal to the value of such general
partnership interest and the amount of any Indebtedness in respect of
any Guarantee of such partnership Indebtedness shall be limited to the
same extent as such Guarantee may be limited.
"Indemnitee" shall have the meaning assigned to that term in Section
9.05(b).
"Intercompany Loan" shall mean a loan made by any subsidiary of the
Borrower to the Borrower or any Domestic Restricted Subsidiary or by any
Restricted Subsidiary to any Domestic Restricted Subsidiary, evidenced
by an Intercompany Note pledged pursuant to the Pledge Agreement in the
case of such loans from any such person to another such person
aggregating more than $10,000,000.
"Intercreditor Agreement" shall mean the Master Collateral and
Intercreditor Agreement substantially in the form attached as Exhibit H,
as amended in effect from time to time.
"Intercompany Note" shall mean an intercompany note evidencing
Indebtedness owed by the Borrower or any of its wholly-owned
subsidiaries to the Borrower or any of its wholly-owned subsidiaries and
pledged pursuant to the Pledge Agreement in accordance with Section
6.01(d), in substantially the form of Exhibit A-6 annexed hereto.
"Interest Coverage Ratio" shall mean, for any period of four (or, if
less, the number of full fiscal quarters ending after the Closing Date)
consecutive fiscal quarters, the ratio of (a) EBITDA on a consolidated
basis for such period to (b) the sum of Cash Interest Expense of
Holdings and the Restricted Subsidiaries on a consolidated basis for
such period and losses or expenses on the sale of receivables to the
Finance Subsidiary.
"Interest Expense" shall mean, with respect to any person for any
period, the gross interest expense of such person for such period
determined on a consolidated basis in accordance with GAAP consistently
applied, including (a) the amortization of debt discounts, (b) the
amortization of all fees (including fees with respect to interest rate
protection agreements) payable in connection with the incurrence of
Indebtedness to the extent included in interest expense and (c) the
portion of any payments or accruals with respect to Capital Lease
Obligations allocable to interest expense, net of all interest income
for such period (except for purposes of the definition of Cash Interest
Expense, in which case only interest income paid or required to be paid
in cash shall be netted against cash interest expense). For purposes of
the foregoing, gross interest expense shall be determined after giving
effect to any net payments made or received by such person with respect
to interest rate protection agreements entered into as a hedge against
interest rate exposure.
"Interest Payment Date" shall mean, (a)(i) 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 that would have been an Interest Payment Date had successive
Interest Periods of three months' duration been
<PAGE>
11
applicable to such
Borrowing, and, in addition, the date of any prepayment, refinancing or
conversion of such Borrowing with or to a Borrowing of a different Type
and (ii) with respect to any ABR Loan or Swingline Loan, the last day of
each March, June, September and December, commencing September 30, 1994
and (b) the Revolving Credit Maturity Date, the Delayed Draw Term Loan
Maturity Date, the Canadian Term Loan Maturity Date or the Term Loan
Maturity Date, as applicable.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of
the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the numerically corresponding day (or,
if there is no numerically corresponding day, on the last day) in the
calendar month that is 1, 2, 3 or 6 (or, subject to availability (as
determined by all applicable Lenders), 9 or 12) months thereafter, as
the Borrower or the Canadian Borrower, as the case may be, may elect and
(b) as to any ABR Borrowing or Swingline Loan, the period commencing on
the date of such Borrowing or Loan or on the last day of the immediately
preceding Interest Period applicable to such Borrowing or Loan, as the
case may be, and ending on the earliest of (i) the next succeeding March
31, June 30, September 30 or December 31, (ii) the Revolving Credit
Maturity Date, the Delayed Draw Term Loan Maturity Date, the Canadian
Term Loan Maturity Date or the Term Loan Maturity Date, as applicable,
and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.10 or repaid or prepaid in
accordance with Section 2.01(d), 2.11 or 2.12; provided, however, that
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, in the case of a Eurodollar Borrowing only, 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.
Interest shall accrue from and including the first day of an Interest
Period to but excluding the last day of such Interest Period.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
currency hedge agreement or other similar agreement or arrangement
designed to protect the Borrower or any of its Restricted Subsidiaries
against fluctuations in interest rates or currency exchange rates;
provided that the calculation of payments for early termination shall be
made on a reasonable basis in accordance with customary industry
practices; provided further that all obligations to make such payments
for early termination (guaranteed or unguaranteed) shall, to the extent
matured, constitute Indebtedness.
"Issuing Bank" shall mean, with respect to any Letter of Credit, the
Revolving Lender which has agreed to issue such Letter of Credit.
"Letter of Credit" shall mean any letter of credit issued by an
Issuing Bank pursuant to Section 2.19(a).
"Letter of Credit Commitment" shall mean $50,000,000, as the same
may be reduced from time to time pursuant to Section 2.25.
"Letter of Credit Disbursement" shall mean a payment or disbursement
made by an Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" shall mean at any time the sum of (a)
the aggregate undrawn amount of all outstanding Letters of Credit and
(b) the aggregate amount of all Letter of Credit Disbursements not yet
reimbursed by the Borrower as provided in Section 2.22.
"Letter of Credit Fee" shall have the meaning assigned to such term
in Section 2.21.
<PAGE>
12
"Leverage Ratio" shall mean, with respect to Holdings and the
Restricted Subsidiaries on any date, the ratio of (a) Funded Debt of
Holdings and the Restricted Subsidiaries as of such date to (b) the
product of (i) EBITDA for the period of twelve (or, if less, the number
of full consecutive fiscal months ending after the Closing Date)
consecutive fiscal months then ended and (ii) twelve divided by the
number of months in such period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or
on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement
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.
"Loans" shall mean the Revolving Loans, the Delayed Draw Term Loans,
the Swingline Loans, the Canadian Term Loans and the Term Loans.
"Loan Documents" shall mean this Agreement and the Notes, the
Letters of Credit (and any instrument or document executed by the
Borrower relating to any Letter of Credit), the Pledge Agreement, the
Guarantee Agreement and, if and when executed and delivered, the
Intercreditor Agreement.
"Managing Agents" shall mean NationsBank, N.A. and Continental Bank,
N.A.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect
on the business, assets, properties, operations or financial condition
of Holdings and the Restricted Subsidiaries, taken as a whole, (b) a
material impairment of the ability of Holdings or any Subsidiary of
Holdings to perform any of its material obligations under any Loan
Document to which it is or will be a party or to consummate the
Recapitalization Transactions or (c) an impairment of the validity or
enforceability of, or material impairment of the rights, remedies or
benefits available to the Credit Agreement Creditors under, any Loan
Document.
"Maximum Rate" shall have the meaning assigned to such term in
Section 9.09.
"Multiemployer Plan" with respect to any person shall mean a
multiemployer plan as defined in Section 4001(a)(3) of ERISA to which
such person or any ERISA Affiliate of such person (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Net Income" shall mean, for any fiscal period, the net income (or
loss) of Holdings and its Restricted Subsidiaries and the Finance
Subsidiary on a consolidated basis for such fiscal period taken as a
single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any
Unrestricted Subsidiary (other than the Finance Subsidiary) or any
person (other than a Restricted Subsidiary) in which any other person
(other than Holdings or any of the Restricted Subsidiaries) has a joint
interest, but shall include the amount of dividends or other
distributions (including return of capital or any other cash receipt in
respect of ownership or beneficial interest) actually paid to Holdings
or any of the Restricted Subsidiaries by such Unrestricted Subsidiary or
such person during such period, (ii) the income (or loss) of any person
accrued prior to the date it becomes a Restricted Subsidiary of Holdings
or is merged into or consolidated with Holdings or any of the Restricted
Subsidiaries or that person's assets are acquired by Holdings or any of
the Restricted Subsidiaries and (iii) the income of any Restricted
Subsidiary of Holdings to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that
income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument,
<PAGE>
13
judgment, decree, order, statute,
rule or governmental regulation after tax gains or losses attributable
to Specified Asset Sales; provided further, that, solely for the
purposes of determining EBITDA, there shall be excluded any charges,
losses, fees or expenses to Net Income incurred in connection with the
consummation of the Recapitalization Transactions.
"Net Proceeds" shall mean with respect to any sale, transfer or
other disposition (including by casualty, loss or condemnation) of any
assets or properties or any other Prepayment Event (a "Proceeds
Transaction") (i) the gross amount of any cash paid to or received by
Holdings or any of the Restricted Subsidiaries in respect of such
Proceeds Transaction (including insurance proceeds, condemnation awards
and payments from time to time in respect of installment obligations, if
applicable), less (ii) the amount, if any, of (a) Holdings' good faith
best estimate of all taxes attributable to such Proceeds Transaction
which it in good faith expects to be paid in the taxable year in which
such Proceeds Transaction shall occur or in the next taxable year, (b)
reasonable and customary fees, discounts, commissions, costs and other
expenses (other than those payable to Holdings or any Affiliate of
Holdings, except that Blackstone and WP and their respective Affiliates
may receive customary fees on terms no less favorable to Holdings or any
of the Restricted Subsidiaries than would be obtained in a comparable
arm's-length transaction for acting as financial advisor in connection
with such Proceeds Transaction) which are incurred in connection with
such Proceeds Transaction and are payable by Holdings or any of the
Restricted Subsidiaries and (c) in the case of a Proceeds Transaction
that is a sale, transfer or other disposition of assets or properties,
proceeds required to discharge Liens in respect of such assets or
properties permitted by Section 6.04; provided, however, that Net
Proceeds shall not include (1) any amount that otherwise would
constitute Net Proceeds to the extent such amount is excluded from the
definition of the term "Capital Expenditures" pursuant to clause (i) or
(iv) of the second sentence thereof; or (2) any amount being reserved
for application as contemplated in clause (i) or (iv) of such second
sentence, except that in the event any amount so reserved is not in fact
so applied or contractually committed to be applied within the permitted
12-month period, such amount shall be deemed for all purposes (including
the definition of Excess Cash Flow and Section 2.12(f)) to be Net
Proceeds of a Proceeds Transaction received upon such Proceeds
Transaction.
"Notes" shall mean the Term Notes, the Delayed Draw Term Notes, the
Canadian Term Notes, the Swingline Note and the Revolving Credit Notes.
"Obligations" shall mean all obligations defined as "Guaranteed
Obligations" in the Guarantee Agreement and "Secured Obligations" in the
Pledge Agreement in each case owing by the Borrower, the Canadian
Borrower and the other Guarantors, or any of them, as the context may
require, to any Credit Agreement Creditor.
"Operating Lease" shall mean a lease which is not required to be
accounted for or classified as a capital lease under GAAP. The "amount"
of any Operating Lease shall be the amount that, if such Operating Lease
were accounted for as a Capital Lease Obligation, would be recorded as a
liability in accordance with GAAP.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.18.
"Overallotment Option" shall mean the option granted to the
underwriters in connection with the Public Offering pursuant to which
the underwriters may elect to purchase pursuant to the Holdings
Underwriting Agreement up to 2,250,000 additional shares of Holdings
Common Stock to cover overallotments.
"Participation Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA (or any such successor).
<PAGE>
14
"Permitted Acquisition Indebtedness" shall mean Indebtedness of the
Borrower permitted by Section 6.01(l).
"Permitted Business Acquisitions" shall mean acquisitions of all or
substantially all of the assets of, or shares or other equity interests
in, a person or division or line of business of a person engaged in the
same business as Holdings and the Restricted Subsidiaries or in a
related business if immediately after giving effect thereto: (i) no
Default or Event of Default shall have occurred and be continuing, (ii)
all transactions related thereto shall be consummated in accordance with
applicable laws, (iii) at least 90% of the outstanding capital stock or
other ownership interests of any acquired or newly formed corporation or
other entity must be owned directly by the Borrower or a Domestic
Restricted Subsidiary and such corporation or entity shall become a
Restricted Subsidiary and a Guarantor and execute a counterpart to the
Guarantee Agreement, and all capital stock or other equity interest
created or acquired in connection with such acquisition shall be duly
and validly pledged to the Collateral Agent for the ratable benefit of
the Lenders, and (iv) (A) Holdings shall be in compliance, on a pro
forma basis, with the covenants contained in Sections 6.14, 6.16 and
6.17 recomputed as at the last day of the most recently ended fiscal
quarter of Holdings, and the Borrower shall have delivered to the
Administrative Agent an officers' certificate to such effect, together
with all relevant financial information for such acquired corporation,
entity or assets, and (B) the acquired corporation or entity shall not
be liable for any Indebtedness (except for Indebtedness permitted by
Section 6.01 and the Guarantee Agreement). For purposes of Section 6,
any Restricted Subsidiary satisfying the requirements of clause (iii)
above shall be deemed to be a "wholly owned subsidiary".
"Permitted Debt Redemption Price" shall have the meaning ascribed
thereto in Section 5.08(a).
"Permitted Investments" shall mean:
(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) 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 six months from
the date of acquisition thereof and, at the time of acquisition, having
one of the two highest ratings generally obtainable from either Standard
& Poor's Ratings Group or Moody's Investors Service, Inc.;
(c) investments in commercial paper maturing no more than six
months from the date of acquisition thereof and having, at such date of
acquisition, a credit rating of A-1 or higher from Standard & Poor's
Ratings Group or P-1 or higher from Moody's Investors Service, Inc.;
(d) investments in domestic and Eurodollar certificates of
deposit, banker's acceptances and time deposits maturing within six
months from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by (w)
any domestic office of any commercial bank organized or licensed 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, (x) any Lender, (y) any branch of any Lender or any
commercial bank organized under the laws of the United Kingdom, Canada,
France or Japan having combined capital, surplus and undivided profits
(less any undivided losses) of not less than $500,000,000 or (z) other
than in the case of banker's acceptances, any domestic commercial bank
whose deposits are guaranteed by the Federal Deposit Insurance
Corporation (or any successor) and with whom deposits maintained by
Holdings or any of its subsidiaries do not exceed the amount so
guaranteed; and
(e) investments in money market funds or other mutual funds that
invest in the types of Permitted Investments described in clauses (a)
through (d) above.
<PAGE>
15
"Permitted Preferred Stock Redemption Price" shall have the meaning
ascribed thereto in Section 5.08(a).
"Permitted Receivables Financing" shall mean any sale by the
Borrower or a Restricted Subsidiary of accounts receivable to a Finance
Subsidiary in a true sale transaction with customary limited recourse
based upon the collectibility of the receivables sold and the
corresponding sale or pledge of such accounts receivable (or an interest
therein) by the Finance Subsidiary, in each case without any Guarantee
by Holdings or any other subsidiary thereof; provided, however, that the
terms, conditions and structure (including the legal and organizational
structure of the Finance Subsidiary and the restrictions imposed on its
activities) of and the documentation incident to such transactions must
be reasonably acceptable to the Administrative Agent.
"Permitted Subordinated Indebtedness" shall mean unsecured
subordinated indebtedness of the Borrower or Holdings having no
amortization of principal and a scheduled final maturity no earlier than
June 30, 2003 and having subordination terms at least as favorable to
the Lenders as set forth on Schedule 1.01(D) and other terms and
conditions (including, covenants, events of default, interest rate) as
shall be reasonably satisfactory to the Required Lenders in the exercise
of their sole discretion.
"Permitted Tax Payment" means for any taxable year of the Borrower
in which it joins in filing a consolidated federal income tax return
with Holdings, a payment by the Borrower to Holdings in an amount not in
excess of the amount required to be paid by the Borrower under the Tax
Sharing Agreement, dated as of November 1, 1989, between Holdings and
the Borrower, as in effect on the date hereof, as amended solely to
reflect the mergers described in clauses (iii) of the definition of
Recapitalization Transactions; provided that within 20 days of receipt
of such payment Holdings applies the amount thereof to satisfy such tax
liability or its obligations under the Tax Sharing Agreement.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Plan" with respect to any person shall mean any pension plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code which is maintained for employees of
such person or any ERISA Affiliate of such person.
"Pledge Agreement" shall mean the Pledge Agreement substantially in
the form of Exhibit E, as amended and in effect from time to time.
"Pledged Securities" shall have the meaning assigned to such term in
the Pledge Agreement.
"Preliminary Prospectus" shall mean the preliminary prospectus of
Holdings dated June 2, 1994, filed with the Securities and Exchange
Commission in connection with the Public Offering, as amended or
supplemented from time to time.
"Prepayment Event" shall mean (i) any Specified Asset Sale, (ii) any
Sale and Lease-Back Transaction deemed to be a Prepayment Event pursuant
to Section 6.06, and (iii) the incurrence by Holdings or any Restricted
Subsidiary of any Indebtedness (other than Indebtedness permitted by
Section 6.01), provided, however, that for purposes of Section 2.12(e)
(a) a Prepayment Event shall not be deemed to occur until the aggregate
Net Proceeds from Prepayment Events not yet applied pursuant to Section
2.12(e) by reason of this proviso equals or exceeds $5,000,000, at which
time a Prepayment Event shall, except as set forth in clause (b) below,
be deemed to occur having Net Proceeds equal to the aggregate Net
Proceeds from Prepayment Events not yet so applied and (b) with respect
to Specified Asset Sales, a Prepayment Event shall be deemed to occur
only with respect to that portion of the Net Proceeds thereof required
to be repaid pursuant to Section 6.08(i).
<PAGE>
16
"Private Placement" shall mean the sale of shares of Holdings Common
Stock pursuant to one or more private placements in connection with the
Public Offering. Gross proceeds received by Holdings in connection with
the Private Placement shall be deemed to include an amount equal to an
underwriters' commission on shares of Holdings Common Stock purchased in
the Private Placement at the rate charged in the Public Offering.
"Public Offering" shall mean the underwritten public offering of
shares of Holdings Common Stock contemplated by the Preliminary
Prospectus.
"Purchase Money Indebtedness" shall mean Indebtedness incurred for
capital expenditures, which may be secured in compliance with Section
6.04(i).
"Recapitalization Transactions" shall mean:
(i) the execution, delivery and performance of each Loan
Document;
(ii) the borrowings under this Agreement and the issuance of
Letters of Credit pursuant to this Agreement;
(iii) the merger of Collins & Aikman Holdings II Corporation into
Holdings with Holdings as the surviving corporation and the merger
of Collins & Aikman Group, Inc. into Collins & Aikman Corporation
with the Borrower as the surviving corporation;
(iv) the grant of security interests and other Liens pursuant to
the Pledge Agreement;
(v) the conversion of approximately $191,500,000 of the 14%
Subordinated Pay-in-Kind Bridge Notes of Holdings (the "Holdings
Subordinated PIK Notes") held by WP and Blackstone to Holdings
Common Stock and the conversion to Holdings Common Stock or
redemption of the remaining approximately $9,400,000 of Holdings
Subordinated PIK Notes;
(vi) the issuance and sale of Holdings Common Stock pursuant to
the Holdings Underwriting Agreement;
(vii) the consummation of the Public Offering and the sale, if
any, of Holdings Common Stock pursuant to the Overallotment Option,
all as contemplated by the Preliminary Prospectus and the
consummation of the other transactions contemplated by the
Preliminary Prospectus, and the sale of Holdings Common Stock
pursuant to the Private Placement;
(viii) the entering into a Permitted Receivables Financing
providing commitments of at least $150,000,000 and the initial
funding thereunder;
(ix) the repayment in full of all amounts owed under and in
respect of the Existing Credit Agreement, the release of all Liens
in respect thereof and the termination of the Existing Credit
Agreement;
(x) irrevocable notice of the redemption of all outstanding
shares of preferred stock of Holdings and the Borrower shall have
been given to each holder of preferred stock of Holdings and the
Borrower at an aggregate redemption price not greater than the
Permitted Preferred Stock Redemption Price;
(xi) the redemption or defeasance of all public senior and
subordinated debt of Holdings, the Borrower and their subsidiaries
set forth on Schedule 4.02(o) at a redemption price not greater than
the Permitted Debt Redemption Price; and
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17
(xii) the consummation of the other transactions contemplated by
the Loan Documents, the Preliminary Prospectus and the Holdings
Underwriting Agreement.
"Register" shall have the meaning given such term in Section
9.04(d).
Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder
or thereof.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, emanation
or migration in, into, onto or through the environment (including
ambient air, surface water, ground water, land surface, subsurface
strata or workplace), including the movement of any Contaminant through
or in the air, soil, surface water or ground water.
"Remedial Action" means (i) "remedial action" as such term is
defined in 42 U.S.C. Section 9601(24) and (ii) all other actions
required or voluntarily undertaken to (x) clean up, remove, treat, abate
or in any other way address any Contaminant in the environment or
workplace, (y) prevent the Release or threat of Release, or minimize the
further Release of any Contaminant so it does not migrate or endanger or
threaten to endanger public health or welfare of the environment or
workplace, or (z) perform studies and investigations in connection with
(x) or (y) above.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with
respect to a Plan (other than a Plan maintained by an ERISA Affiliate
which is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Code).
"Required Lenders" shall mean, at any time, Lenders with Loans
(other than Swingline Loans), Letter of Credit Exposure and unused
Commitments representing at least a majority of the sum of the aggregate
principal amount of the Loans (other than Swingline Loans) outstanding,
the aggregate amount of the Letter of Credit Exposure and unused
Commitments at such time.
"Responsible Officer" of any corporation shall mean any Executive
Officer or Financial Officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement. Unless
the context otherwise requires, Responsible Officer shall mean a
Responsible Officer of Holdings.
"Restricted Subsidiary" shall mean each Subsidiary in existence as
of the Closing Date and any direct or indirect Subsidiary formed or
acquired after the Closing Date, in each case, other than Unrestricted
Subsidiaries.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
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18
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Revolving Loans
hereunder as set forth in Schedule 2.01, as the same may be reduced from
time to time pursuant to Section 2.09.
"Revolving Credit Maturity Date" shall mean the seventh anniversary
of the Closing Date.
"Revolving Credit Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-1, evidencing Revolving
Loans.
"Revolving Lender" shall mean any Lender with a Revolving Credit
Commitment.
"Revolving Loans" shall mean the revolving loans made to the
Borrower pursuant to Section 2.01(c). Each Revolving Loan shall be a
Eurodollar Revolving Loan or an ABR Revolving Loan.
"Sale and Lease-Back Transaction" shall have the meaning assigned to
that term in Section 6.06.
"Secured Parties" shall mean the Credit Agreement Creditors and any
holders, if any, of any Permitted Acquisition Indebtedness which have
executed and delivered to the Collateral Agent an Acknowledgement to the
Intercreditor Agreement in the form of Exhibit A thereto.
"Significant Subsidiary" shall mean the Borrower, the Canadian
Borrower and any subsidiary of Holdings that at the date of any
determination (i) accounts for 5% or more of the consolidated assets of
Holdings, (ii) has accounted for 5% or more of the consolidated EBITDA
of Holdings for each of the two consecutive periods of four fiscal
quarters immediately preceding the date of determination or (iii) has
been designated by the Borrower in writing to the Administrative Agent
as a Significant Subsidiary.
"Specified Asset Sale" shall mean any sale, lease, transfer,
assignment or other disposition of assets, business units or property of
Holdings or any of its subsidiaries for Net Proceeds in excess of
$100,000 in any transaction or series of related transactions described
in paragraph (i) of Section 6.08.
"Statutory Reserves" shall mean 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 and any other banking
authority to which the Administrative Agent is subject (a) with respect
to the Base CD Rate (as such term is used in the definition of
"Alternate Base Rate"), for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three
months, and (b) with respect to the Adjusted LIBO Rate, for Eurocurrency
Liabilities (as defined 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 Liabilities
and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets which may be available from
time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other
business 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 more than 50% of the general partnership
interests are, at the time any determination is being made, owned,
controlled or held, or (b) which is, at the time any determination is
made, 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" shall mean any subsidiary of Holdings.
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19
"Swingline Lender" shall mean Chemical, in its capacity as Swingline
Lender hereunder and under the other Loan Documents.
"Swingline Loan Commitment" shall mean the commitment of the
Swingline Lender to make Swingline Loans as set forth in Section
2.01(d).
"Swingline Loans" shall mean the swingline loans made by the
Swingline Lender to the Borrower pursuant to Section 2.01(d).
"Swingline Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit A-4, evidencing the Swingline
Loans.
"Taxes" shall have the meaning assigned to such term in Section
2.18.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment, if any, of such Lender to make Term Loans hereunder as set
forth in Schedule 2.01, as the same may be reduced from time to time
pursuant to Section 2.09.
"Term Loan Maturity Date" shall mean the 30th quarterly anniversary
of the Closing Date.
"Term Loan Repayment Date" shall have the meaning assigned to such
term in Section 2.11.
"Term Loans" shall mean the term loans made to the Borrower pursuant
to Section 2.01(a). Each Term Loan shall be a Eurodollar Term Loan or
an ABR Term Loan.
"Term Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit A-3, evidencing Term Loans.
"Total Indebtedness" shall mean, without duplication, all
outstanding Indebtedness of Holdings and its subsidiaries, on a
consolidated basis.
"Transactions" shall have the meanings assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate"
shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"UCC" shall mean the Uniform Commercial Code of New York.
"Unrestricted Subsidiary" shall mean (i) each Finance Subsidiary,
Collins & Aikman de Mexico, S.A. de C.V. and Warner Fabrics plc, (ii)
any Subsidiary of Holdings (other than the Borrower) none of the Capital
Stock or other ownership interest of which is owned by the Borrower or
any of its Subsidiaries, provided that Holdings has notified the
Administrative Agent of its acquisition or creation of such Subsidiary
and its ownership interest therein concurrently with such acquisition or
creation and the intended purposes of such Subsidiary and (iii) any
Subsidiary of an Unrestricted Subsidiary. Each Unrestricted Subsidiary,
other than a non-U.S. Unrestricted Subsidiary, shall have entered into
the existing Tax Sharing Agreement with Holdings and the Borrower (or
another tax sharing agreement containing terms which, in the reasonable
judgment of the Administrative Agent, are customary in similar
circumstances to provide an appropriate allocation of tax liabilities
and benefits).
The Unrestricted Subsidiaries shall be capitalized solely from
the following sources: (a) any Investment in such Unrestricted
Subsidiary by any Person other than Holdings and the Restricted
<PAGE>
20
Subsidiaries; (b) Indebtedness issued by such Unrestricted Subsidiary,
or proceeds thereof; (c) capital stock of any Unrestricted Subsidiary,
or proceeds thereof; (d) capital stock of Holdings issued by Holdings
after the Closing Date, or proceeds thereof; and (e) Investments
permitted to be made in Unrestricted Subsidiaries pursuant to Section
6.07(l).
"Withdrawal Liability" shall mean 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.
"WP" shall mean Wasserstein Perella Partners, L.P.
"WP Entities" shall mean WP, WPMP or any of their Affiliates.
"WPMP" shall mean Wasserstein Perella Management Partners, Inc.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both 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".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. For all purposes
of this Agreement (other than preparation of the financial statements to be
delivered pursuant to Section 5.04), all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect on the date of
this Agreement applied on a basis consistent with the application used in
preparing Holdings' audited financial statements for its fiscal year ended
January 29, 1994 referred to in Section 3.09.
ARTICLE II.
THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and conditions
and relying upon the representations and warranties set forth herein, each
Lender with a Term Loan Commitment agrees, severally and not jointly, to make
a Term Loan to the Borrower on the Closing Date in a principal amount not to
exceed its Term Loan Commitment set forth opposite its name in Schedule 2.01,
as the same may be reduced from time to time pursuant to Section 2.09.
Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
(b) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein, each Lender with a Delayed
Draw Term Loan Commitment agrees, severally and not jointly, to make Delayed
Draw Term Loans to the Borrower at any time and from time to time during the
Delayed Draw Availability Period or until the earlier termination of its
Delayed Draw Term Loan Commitment in accordance with the terms hereof, in an
aggregate principal amount not to exceed its Delayed Draw Term Loan Commitment
set forth opposite its name in Schedule 2.01, as the same may be reduced from
time to time pursuant to Section 2.09. Amounts paid or prepaid in respect of
Delayed Draw Term Loans may not be reborrowed.
(c) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein, each Revolving Lender agrees,
severally and not jointly, to make Revolving Loans to the Borrower, at any
time and from time to time on or after the Closing Date and until the earlier
of the Revolving Credit Maturity Date and the termination of the Revolving
Credit Commitment of such Lender in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding not to exceed the excess of
(i) its Revolving Credit Commitment set forth opposite its name in Schedule
2.01, as the same may be reduced from time to time pursuant to Section 2.09,
minus (ii) its Applicable Percentage of the Letter of Credit Exposure and
Swingline Loans at such time. Within the foregoing limits, the Borrower may
borrow, pay or prepay and
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21
reborrow Revolving Loans on or after the Closing
Date and prior to the Revolving Credit Maturity Date, subject to the terms,
conditions and limitations set forth herein. As provided in Section 2.19, up
to $50,000,000 of the Revolving Credit Commitment may be utilized for the
issuance of Letters of Credit.
(d) (i) The Swingline Lender hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swingline
Loans permitted to be outstanding from time to time, to make a portion of the
Revolving Credit Commitments available to the Borrower from time to time
during the period from the Closing Date through and excluding the earlier of
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitments in an aggregate principal amount not to exceed the Swingline Loan
Commitment, by making Swingline Loans to the Borrower. Swingline Loans may be
made notwithstanding the fact that such Swingline Loans, when aggregated with
the Swingline Lender's outstanding Revolving Loans and outstanding Swingline
Loans, may exceed the Swingline Lender's Revolving Credit Commitment. The
Swingline Lender's commitment to make Swingline Loans to the Borrower pursuant
to this Section 2.01(d) is herein called its "Swingline Loan Commitment." The
original amount of the Swingline Lender's Swingline Loan Commitment is
$10,000,000. The Swingline Lender's Swingline Loan Commitment shall expire on
the date the Revolving Credit Commitments are terminated and all Swingline
Loans and all other amounts owed hereunder with respect to Swingline Loans
shall be paid in full no later than that date. Amounts borrowed under this
Section 2.01(d) may be repaid and reborrowed to but excluding the date of
termination of the Revolving Credit Commitments.
(ii) In no event shall (a) the aggregate principal amount of
Swingline Loans outstanding at any time exceed the aggregate Swingline Loan
Commitment in effect at such time, (b) the aggregate principal amount of
Revolving Loans and Swingline Loans outstanding at any time exceed the
Revolving Credit Commitments as reduced by the aggregate Letter of Credit
Exposure at such time or (c) the aggregate Swingline Loan Commitment exceed at
any time the aggregate Revolving Loan Commitments in effect at such time.
Swingline Loans may only be made as ABR Loans.
(iii) With respect to any Swingline Loans which have not been
voluntarily prepaid by the Borrower, the Swingline Lender (by request to the
Administrative Agent) or Administrative Agent at any time may, on one Business
Day's notice, require each Lender, including the Swingline Lender, and each
Lender hereby agrees, subject to the provisions of this Section 2.01(d), to
make a Revolving Loan (which shall be funded as an ABR Loan) in an amount
equal to such Lender's Applicable Percentage of the amount of the Swingline
Loans ("Refunded Swingline Loans") outstanding on the date notice is given
which Swingline Lender requests the Lenders to prepay; provided that so long
as no Default or Event of Default shall have occurred and be continuing,
Lenders shall not be required to make such Revolving Loans if the aggregate
principal amount of Swingline Loans outstanding as of any Tuesday of each week
(or the first Business Day occurring after any such Tuesday if such Tuesday is
not a Business Day) is less than $1,000,000.
(iv) In the case of Revolving Loans made by Lenders other than the
Swingline Lender under the immediately preceding paragraph (iii), each such
Lender shall make the amount of its Revolving Loan available to the
Administrative Agent, in same day funds, at the office of the Administrative
Agent located at 270 Park Avenue, New York, New York, not later than 1:00 P.M.
(New York time) on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Loans shall be immediately delivered to
the Swingline Lender (and not to the Borrower) and applied to repay the
Refunded Swingline Loans. On the day such Revolving Loans are made, the
Swingline Lender's Applicable Percentage of the Refunded Swingline Loans shall
be deemed to be paid with the proceeds of a Revolving Loan made by the
Swingline Lender and such portion of Swingline Loans deemed to be so paid
shall no longer be outstanding as Swingline Loans and shall be outstanding as
Revolving Loans of Lenders. The Borrower authorizes the Administrative Agent
and the Swingline Lender to charge the Borrower's account with Administrative
Agent (up to the amount available in such account) in order to pay immediately
to the Swingline Lender the amount of such Refunded Swingline Loans to the
extent amounts received from Lenders, including amounts deemed to be received
from the Swingline Lender, are not sufficient to repay in full such Refunded
Swingline Loans. If any portion of any such amount paid (or deemed to be
paid) to the Swingline Lender should be recovered by or on behalf of the
Borrower from the Swingline Lender in bankruptcy, by assignment for the
benefit of creditors or otherwise, the loss of the amount so recovered shall
be ratably shared among all Lenders in the manner contemplated by
<PAGE>
22
Section 9.06(b). Subject to the proviso contained in the first sentence of the
preceding paragraph and to the compliance by the Swingline Lender with the
provisions of Section 2.01(d)(vii), each Lender's obligation to make the
Revolving Loans referred to in this paragraph shall be absolute and
unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any setoff, counterclaim, recoupment, defense or other
right which such Lender may have against the Swingline Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of an Event of Default or a Default; (iii) any adverse change in the condition
(financial or otherwise) of Holdings or any of its subsidiaries; (iv) any
breach of this Agreement by Holdings, the Borrower or any other Lender; or (v)
any other circumstance, happening or event whatsoever, whether or not similar
to any of the foregoing. Nothing in this Section 2.01(d) shall be deemed to
relieve any Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
(v) A copy of each notice given by the Swingline Lender or the
Administrative Agent pursuant to this Section 2.01(d) shall be promptly
delivered by the Swingline Lender to the Administrative Agent and the
Borrower. Upon the making of a Revolving Loan by a Lender pursuant to this
Section 2.01(d), the amount so funded shall no longer be owed in respect of
Swingline Loans.
(vi) If as a result of any bankruptcy or similar proceeding,
Revolving Loans are not made pursuant to this Section 2.01(d) sufficient to
repay any amounts owed to the Swingline Lender as a result of a nonpayment of
outstanding Swingline Loans, each Lender agrees to purchase, and shall be
deemed to have purchased, a participation in such outstanding Swingline Loans
in an amount equal to its Applicable Percentage of the unpaid amount together
with accrued interest thereon. Upon one Business Day's notice from the
Swingline Lender, each Lender shall deliver to the Swingline Lender an amount
equal to its respective participation in same day funds at the office of the
Swingline Lender in New York, New York. In order to evidence such
participation each Lender agrees to enter into a participation agreement at
the request of the Swingline Lender in form and substance reasonably
satisfactory to all parties. In the event any Lender fails to make available
to the Swingline Lender the amount of such Lender's participation as provided
in this Section 2.01(d), the Swingline Lender shall be entitled to recover
such amount on demand from such Lender together with interest at the customary
rate set by the Swingline Lender for correction of errors among banks in
New York City for one Business Day and thereafter at the Alternate Base Rate
plus the Applicable Margin then in effect.
(vii) Notwithstanding anything herein to the contrary, the Swingline
Lender shall not make any Swingline Loans after the occurrence and during the
continuation of a Default or Event of Default of which it is aware unless the
Required Lenders have consented thereto.
(e) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein, each Lender with a Canadian
Term Loan Commitment agrees, severally and not jointly, to make a Canadian
Term Loan to the Canadian Borrower on the Closing Date in a principal amount
not to exceed its Canadian Term Loan Commitment set forth opposite its name in
Schedule 2.01, as the same may be reduced from time to time pursuant to
Section 2.09. Amounts paid or prepaid in respect of Canadian Term Loans may
not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Term Loan Commitments, Delayed Draw Term Loan Commitments,
Revolving Credit Commitments, Canadian Term Loan Commitments or Swingline
Commitment, as the case may be; provided, however, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender). The Loans comprising each ABR
Borrowing shall be in an aggregate principal amount which is an integral
multiple of $1,000,000 (or, in the case of Swingline Loans, $500,000) and not
less than $5,000,000 (or, in the case of Swingline Loans, $500,000) (or an
aggregate principal amount equal to the remaining balance of the Term Loan
Commitments, Canadian Term Loan Commitments, Delayed Draw Term Loan
Commitments or Revolving Credit Commitments, as the case may be); provided
that the aggregate amount of any Loans comprising a
<PAGE>
23
Eurodollar Borrowing shall be subject to a minimum principal amount of
$5,000,000 and shall be an integral multiple of $1,000,000.
(b) Each Borrowing shall be comprised of ABR Loans, or (except in the
case of Swingline Loans) Eurodollar Loans, as the Borrower or the Canadian
Borrower, as the case may be, may request pursuant to Section 2.03. Each
Lender may at its option fulfill its Commitment with respect to 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 or the Canadian Borrower, as the case may be, to
repay such Loan in accordance with the terms of this Agreement and the
applicable Note. Borrowings of more than one Type may be outstanding at the
same time; provided, however, that (except in the case of Swingline Loans) the
Borrower or the Canadian Borrower, as the case may be, shall not be entitled
to request any Borrowing which, if made, would result in an aggregate of more
than 15 separate Loans of any Lender being outstanding hereunder at any one
time. For purposes of the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Loans.
(c) Subject to paragraph (e) below, each Lender shall make a Loan in
the amount of its pro rata portion, as determined under Section 2.16, of each
Borrowing hereunder on the proposed date thereof by wire transfer of
immediately available funds to the Administrative Agent in New York, New York,
not later than 11:00 a.m., New York City time, and the Administrative Agent
shall credit the amounts so received to the general deposit account of the
Borrower or the Canadian Borrower, as the case may be, with the Administrative
Agent or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Lenders. Unless the Administrative Agent shall
have received notice from a Lender prior to the date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the date
of such Borrowing in accordance with this paragraph (c) and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower or
the Canadian Borrower, as the case may be, on such date a corresponding
amount. If and to the extent that such Lender shall not have made such
portion available to the Administrative Agent, such Lender and the Borrower or
the Canadian Borrower, as the case may be, severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrower or the Canadian Borrower, as the case may be, until
the date such amount is repaid by either the Borrower or the Canadian
Borrower, as the case may be, or such Lender to the Administrative Agent at
(i) in the case of the Borrower or the Canadian Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount together with the
applicable interest thereon, such amount shall constitute such Lender's Loan
as part of such Borrowing for purposes of this Agreement and the Borrower's or
the Canadian Borrower's obligations under the preceding sentence shall
terminate. If the Borrower or the Canadian Borrower, as the case may be,
shall repay to the Administrative Agent such corresponding amount together
with the applicable interest thereon, then such amount shall not constitute a
Loan hereunder and the Borrower or the Canadian Borrower shall have no further
obligations hereunder in respect thereof.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing if
the Interest Period requested with respect thereto would end after the
Revolving Credit Maturity Date.
(e) The Borrower may refinance all or any part of any Revolving
Credit Borrowing with a Revolving Credit Borrowing of the same or a different
Type, subject to the conditions and limitations set forth in this Agreement.
Any Revolving Credit Borrowing or part thereof so refinanced shall be deemed
to be repaid or prepaid in accordance with Section 2.04 or 2.12, as
applicable, with the proceeds of a new Revolving Credit Borrowing, and the
proceeds of the new Revolving Credit Borrowing, to the extent they do not
exceed the principal amount of the Revolving Credit Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to the Borrower pursuant to paragraph (c) above.
<PAGE>
24
(f) If the Administrative Agent has not received from the Borrower
the payment required by Section 2.22(a) by 12:00 noon, New York City time, on
the date on which an Issuing Bank has notified the Borrower and the
Administrative Agent that payment of a draft presented under any Letter of
Credit will be made (or such later time permitted by Section 2.22(a)), as
provided in Section 2.22, the Administrative Agent will promptly notify such
Issuing Bank and each Revolving Lender of the Letter of Credit Disbursement
and, in the case of each such Lender, its Applicable Percentage of such Letter
of Credit Disbursement. Each Revolving Lender (other than the applicable
Issuing Bank) will pay to the Administrative Agent not later than 2:00 p.m.,
New York City time, on such date (or, if payment by the Borrower is not
required until after 11:00 a.m., New York City time, on such date, by 10:00
a.m. on the immediately following Business Day) such Lender's Applicable
Percentage of such Letter of Credit Disbursement, which the Administrative
Agent will promptly pay to such Issuing Bank. The Administrative Agent will
promptly remit to each Revolving Lender its Applicable Percentage of any
amounts subsequently received by the Administrative Agent from the Borrower in
respect of such Letter of Credit Disbursement.
SECTION 2.03. Notice of Borrowings. The Borrower or the Canadian
Borrower, as the case may be, shall give the Administrative Agent written
notice (or telephone notice promptly confirmed in writing) (a) in the case of
a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three
Business Days before a proposed borrowing and (b) in the case of an ABR
Borrowing, not later than 12:00 noon, New York City time, one Business Day
before a proposed borrowing. Such notice shall be irrevocable and shall in
each case refer to this Agreement and specify (i) whether the Borrowing then
being requested is to be a Term Borrowing, a Delayed Draw Borrowing, a
Canadian Term Borrowing or a Revolving Credit Borrowing, and whether such
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date
of such Borrowing (which shall be a Business Day) and the amount thereof; and
(iii) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period
with respect thereto. If no election as to the Type of Borrowing is specified
in any such notice, then the requested Borrowing shall be an ABR Borrowing.
If no Interest Period with respect to any Eurodollar Borrowing is specified in
any such notice, then the Borrower or the Canadian Borrower, as the case may
be, shall be deemed to have selected an Interest Period of one month's
duration. If the Borrower shall not have given notice in accordance with this
Section 2.03 of its election to refinance a Revolving Credit Borrowing prior
to the end of the Interest Period in effect for such Borrowing, then the
Borrower shall (unless such Borrowing is repaid at the end of such Interest
Period) be deemed to have given notice of an election to refinance such
Borrowing with an ABR Borrowing. The Administrative Agent shall promptly
advise the Lenders of any notice given pursuant to this Section 2.03 and of
each Lender's portion of the requested Borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) The 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 and
Swingline Loan of such Lender on the Revolving Credit Maturity Date (or such
earlier date on which the Revolving Loans and Swing Line Loans become due and
payable pursuant to Article VII), and (ii) the principal amount of the Term
Loan and Delayed Draw Term Loan of such Lender, in 26 and 28 consecutive
quarterly installments, respectively, payable on each quarterly anniversary of
the Closing Date, commencing on the fifth quarterly anniversary of the Closing
Date in accordance with Section 2.11 (or the then unpaid principal amount of
such Term Loan and Delayed Draw Term Loan, on the date that the Term Loans and
the Delayed Draw Term Loans become due and payable pursuant to Article VII).
The Canadian Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the principal amount of
the Canadian Term Loan of such Lender, in 3 consecutive quarterly
installments, payable on each quarterly anniversary of the Closing Date,
commencing on the 30th quarterly anniversary of the Closing Date (or the then
unpaid principal amount of such Canadian Term Loan on the date that the
Canadian Term Loans become due and payable pursuant to Article VII). Each of
the Borrower and the Canadian Borrower hereby further agrees to pay interest
on the unpaid principal amount of the Loans made to it from time to time
outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in Section 2.06.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower and
the Canadian Borrower to such Lender resulting from each Loan of such Lender
from time to time, including the amounts of principal and interest payable and
paid to such Lender from time to time under this Agreement.
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25
(c) The Administrative Agent shall maintain the Register pursuant
to Section 9.04(d), and a subaccount therein for each Lender, in which shall
be recorded (i) the amount of each Revolving Credit Loan, Swingline Loan,
Delayed Draw Term Loan, Canadian Term Loan and Term Loan made hereunder, the
Type thereof and each Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from
the Borrower or the Canadian Borrower to each Lender hereunder and (iii) both
the amount of any sum received by the Administrative Agent hereunder from the
Borrower or the Canadian Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.04(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower and the Canadian Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent
to maintain the Register or any such account, or any error therein, shall not
in any manner affect the obligation of the Borrower or the Canadian Borrower
to repay (with applicable interest) the Loans made to the Borrower or the
Canadian Borrower by such Lender in accordance with the terms of this
Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender (i) a Revolving Credit Note with appropriate insertions as to date
and principal amount, and/or (ii) a Delayed Draw Term Note with appropriate
insertions as to date and principal amount, and/or (iii) a Term Note with
appropriate insertions as to date and principal amount, and/or (iv) in the
case of the Swingline Lender, a Swingline Note with appropriate insertions as
to date and principal amount. The Canadian Borrower agrees that, upon the
request to the Administrative Agent by any Lender, the Canadian Borrower will
execute and deliver to such Lender a Canadian Term Note with appropriate
insertions as to date and principal amount.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the Closing Date, thereafter on the last
day of March, June, September and December in each year, and on the date on
which the Commitment of such Lender shall be terminated as provided herein, a
commitment fee (a "Commitment Fee") of 1/2 of 1% per annum on the average
daily unused amount of the Term Loan Commitment, the Canadian Term Loan
Commitment and the Revolving Commitment of such Lender, and 5/8 (or, prior to
the Closing Date, 1/2) of 1% per annum on the average daily unused amount of
the Delayed Draw Term Loan Commitment of such Lender, in each case during the
preceding quarter (or shorter period ending with the Closing Date, the
Revolving Credit Maturity Date or the date on which the Commitment of such
Lender shall be terminated). All Commitment Fees shall be computed on the
basis of the actual number of days elapsed in a year of 365 or 366 days. For
purposes of calculating any Lender's Commitment Fee, the outstanding Swingline
Loans during the period for which such Lender's Commitment Fee is calculated
shall be deemed to be zero. The Commitment Fee due to each Lender commenced
on an allocation date agreed to among such Lender, the Borrower and Chemical,
or, if later, the date such entity becomes a Lender pursuant to Section 9.04,
and shall cease to accrue on the date on which the Commitment of such Lender
shall be terminated as provided herein.
(b) The Borrower agrees to pay to the Lenders, through the
Administrative Agent, on the Closing Date, the participation fees (the
"Participation Fees") in the amounts previously agreed to be payable to the
Lenders.
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, on the Closing Date and thereafter at the times previously
agreed, the fees (the "Agency Fees") in the amounts previously agreed to be
payable to the Administrative Agent for its own account in accordance with the
fee letter between Chemical and Holdings.
(d) The Borrower agrees to pay to each Issuing Bank, for its own
account, a fronting fee for each Letter of Credit issued by such Issuing Bank,
in the amount agreed upon between the Borrower and such Issuing Bank, payable
as agreed to by the Borrower and such Issuing Bank for such Letter of Credit,
and negotiation,
<PAGE>
26
amendment, issuing, payment and other customary fees (collectively, the
"Fronting Fees") in the amounts separately agreed to by such Issuing
Bank and the Borrower.
(e) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders or to the applicable Issuing Banks, as the case
may be. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing and Swingline Loans
shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when determined by
reference to the Prime Rate and over a year of 360 days at all other times) at
a rate per annum equal to the Alternate Base Rate plus the Applicable Margin.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum
equal to the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Margin.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan and as otherwise provided in this Agreement.
The applicable Alternate Base Rate and Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
(d) For purposes of the Interest Act (Canada) (i) whenever any
interest or fee under this Agreement with respect to the Canadian Term Loan
Commitments, or credit extended thereunder, is calculated using a rate based
on a year of 360 days, such rate determined pursuant to such calculation, when
expressed as an annual rate, is equivalent to (x) the applicable rate based on
a year of 360 days multiplied by (y) the actual number of days in the calendar
year in which the period for which such interest or fee is payable (or
compounded) ends, and (z) divided by 360 and (ii) the principle of deemed
reinvestment of interest does not apply to any such interest calculation under
this Agreement, and (iii) the rates of interest stipulated in this Agreement
are intended to be nominal rates and not effective rates or yields.
SECTION 2.07. Default Interest. If the Borrower or the Canadian
Borrower, as the case may be, shall default in the payment of the principal of
or interest on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, the Borrower or the Canadian Borrower, as the case
may be, shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount up to (but not including) the date
of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime
Rate and over a year of 360 days at all other times) equal to the Alternate
Base Rate plus the Applicable Margin plus 2% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the interbank
eurodollar market, or that the rates at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to any Lender of
making or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telex or telecopy notice of such determination to the Borrower, the Canadian
Borrower and the Lenders. In the event of any such determination, any request
by the Borrower or the Canadian Borrower, as the case may be, for a Eurodollar
Borrowing pursuant to Section 2.03 or 2.10 shall, until the Administrative
Agent shall have advised the Borrower, the Canadian Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, be deemed
to be a request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest error.
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27
SECTION 2.09. Termination and Reduction of Commitments. (a) All
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
September 15, 1994, unless the Closing Date occurs on or prior to such date.
The Term Loan Commitments and the Canadian Term Loan Commitments shall be
automatically terminated at 5:00 p.m., New York City time, on the Closing
Date. The Delayed Draw Term Loan Commitments shall be automatically
terminated at 5:00 p.m., New York City time, on the last day of the Delayed
Draw Availability Period. The Revolving Credit Commitments shall be
automatically terminated on the Revolving Credit Maturity Date. The Letter of
Credit Commitment shall be automatically terminated at 5:00 p.m., New York
City time, on the date that is five Business Days prior to the Revolving
Credit Maturity Date.
(b) Upon at least three Business Days' prior irrevocable written
notice to the Administrative Agent, the Borrower or the Canadian Borrower, as
the case may be, may at any time in whole permanently terminate, or from time
to time in part permanently reduce, any of the Term Loan Commitments, the
Delayed Draw Term Loan Commitments, the Canadian Term Loan Commitments or the
Revolving Credit Commitments; provided, however, that (i) each partial reduc-
tion of any such Commitments shall be in an integral multiple of $1,000,000
and in a minimum principal amount of $5,000,000 and (ii) the Revolving Credit
Commitments shall not be reduced to an amount which is less than the Letter of
Credit Exposure and the outstanding Revolving Credit Loans and Swingline Loans
at such time.
(c) Each reduction in the Commitments hereunder shall be made ratably
among the applicable Lenders in accordance with their respective applicable
Commitments. The Borrower shall pay to the Administrative Agent for the
account of the applicable Lenders, on the date of each termination or
reduction, the Commitment Fees on the amount of the Commitments so terminated
or reduced accrued through the date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Delayed Draw Term, Term
and Canadian Term Borrowings. The Borrower or the Canadian Borrower, as the
case may be, shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (i) not later than 12:00 (noon), New York City time,
one Business Day prior to conversion, to convert any Eurodollar Term Borrowing
into an ABR Term Borrowing, or to convert any Eurodollar Delayed Draw Term
Borrowing into an ABR Delayed Draw Term Borrowing, or to convert any
Eurodollar Canadian Term Borrowing into an ABR Canadian Term Borrowing, (ii)
not later than 10:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Term Borrowing into a
Eurodollar Term Borrowing, or convert any ABR Delayed Draw Term Borrowing into
a Eurodollar Delayed Draw Term Borrowing, or convert any ABR Canadian Term
Borrowing to a Eurodollar Canadian Term Borrowing or to continue any
Eurodollar Term Borrowing or Eurodollar Delayed Draw Term Borrowing or
Eurodollar Canadian Term Borrowing as a Eurodollar Term Borrowing or
Eurodollar Delayed Draw Term Borrowing or Eurodollar Canadian Term Borrowing,
as applicable, for an additional Interest Period and (iii) not later than
10:00 a.m., New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Term Borrowing or
Eurodollar Delayed Draw Term Borrowing or Eurodollar Canadian Term Borrowing
to another permissible Interest Period, subject to the following conditions:
(a) each conversion or continuation shall be made pro rata among
the applicable Lenders in accordance with the respective principal
amounts of the Loans comprising the converted or continued Borrowing;
(b) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, the aggregate principal
amount of such Borrowing converted or continued shall be an integral
multiple of $1,000,000 and not less than $5,000,000; provided that the
aggregate principal amount of each Eurodollar Borrowing resulting from
any such conversion or continuation shall not be less than $5,000,000
and shall be an integral multiple of $1,000,000;
(c) each conversion shall be effected by each applicable Lender
by such Lender converting its applicable Loan (or portion thereof), and
accrued interest on a Loan (or portion thereof) being
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converted shall be paid by the Borrower or the Canadian Borrower, as
the case may be, at the time of conversion;
(d) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the applicable Lenders pursuant to
Section 2.15;
(e) any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Borrowing;
(f) any portion of a Eurodollar Borrowing which cannot be
converted into or continued as a Eurodollar Borrowing by reason of
clause (e) above shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing;
(g) no Interest Period may be selected for any Eurodollar
Borrowing that would end later than a Term Loan Repayment Date, Canadian
Term Loan Repayment Date or Delayed Draw Term Loan Repayment Date, as
applicable, occurring on or after the first day of such Interest Period
if, after giving effect to such selection, the aggregate outstanding
amount of (i) the Eurodollar Term Borrowings, the Eurodollar Canadian
Term Borrowings or the Eurodollar Delayed Draw Term Borrowings, as the
case may be, with Interest Periods ending on or prior to such Term Loan
Repayment Date, Canadian Term Loan Repayment Date or Delayed Draw Term
Loan Repayment Date and (ii) the ABR Term Borrowings, ABR Canadian Term
Borrowings or ABR Delayed Draw Term Borrowings, as the case may be,
would not be at least equal to the principal amount of Term Borrowings,
Canadian Term Borrowings or Delayed Draw Borrowings to be paid on such
Term Loan Repayment Date, Canadian Term Loan Repayment Date or Delayed
Draw Term Loan Repayment Date; and
(h) a Borrowing may not be converted into or continued as a
Eurodollar Borrowing if a Default or an Event of Default has occurred
and is continuing and the Required Lenders have determined such
conversion or continuation is not appropriate.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower or the Canadian Borrower, as the case may be,
requests be converted or continued, (ii) whether such Borrowing is to be
converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii)
if such notice requests a conversion, the date of such conversion (which shall
be a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto.
If no Interest Period is specified in any such notice with respect to any
conversion to or continuation as a Eurodollar Borrowing, the Borrower shall be
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall promptly advise the other Lenders of any notice
given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If the Borrower or the Canadian Borrower,
as the case may be, shall not have given notice in accordance with this
Section 2.10 to continue any Borrowing into a subsequent Interest Period (and
shall not otherwise have given notice in accordance with this Section 2.10 to
convert such Borrowing), such Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term and Delayed Draw Term Borrowings. (a)
The Term Borrowings shall be payable as to principal in such number of
consecutive installments, payable on such dates (each a "Term Loan Repayment
Date") and in such amounts as set forth on Schedule 2.11(a), based upon the
aggregate principal amount of Term Loans advanced on the Closing Date.
(b) The Delayed Draw Term Borrowings shall be payable as to principal
on each Term Loan Repayment Date and Canadian Term Loan Repayment Date (each a
"Delayed Draw Term Loan Repayment Date") and in such amounts (expressed as a
percentage of the aggregate principal amount of Delayed Draw Term Borrowings
outstanding on the last day of the Delayed Draw Availability Period) equal to
the same percentage
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as the percentage of the original aggregate Term Loans and
Canadian Term Loans required to be repaid on such Delayed Draw Term Loan
Repayment Date.
(c) The Canadian Term Borrowings shall be payable as to principal in
such number of consecutive installments, payable on such dates (each a
"Canadian Term Loan Repayment Date") and in such amounts as set forth on
Schedule 2.11(a), based upon the aggregate principal amount of Canadian Term
Loans advanced on the Closing Date.
(d) To the extent not previously paid, all Term Borrowings shall be
due and payable on the Term Loan Maturity Date, all Canadian Term Borrowings
shall be due and payable on the Canadian Term Loan Maturity Date and all
Delayed Draw Term Borrowings shall be due and payable on the Delayed Draw Term
Loan Maturity Date. Each payment of Eurodollar Term Borrowings, Canadian
Eurodollar Term Borrowings or Delayed Draw Eurodollar Term Borrowings repaid
pursuant to this Section 2.11 shall be accompanied by accrued interest on the
principal amount paid to but excluding the date of payment.
SECTION 2.12. Prepayment. (a) The Borrower or the Canadian Borrower,
as the case may be, shall have the right at any time and from time to time to
prepay any Borrowing, in whole or in part, upon, in the case of Eurodollar
Borrowings, at least three Business Days', and in the case of ABR Borrowings,
at least one Business Day's, prior written notice (or telephone notice
promptly confirmed by written notice) to the Administrative Agent; provided,
however, that (i) each partial prepayment (other than of a Swingline Loan) of
ABR Loans shall be in a minimum principal amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof and of Eurodollar Loans shall be in a
minimum principal amount of $5,000,000 or an integral multiple of $1,000,000
in excess thereof and (ii) any prepayment by the Borrower (other than of a
Revolving Credit Borrowing or Swingline Loan) shall be applied to the Term
Loans and the Delayed Draw Term Loans ratably according to the respective
outstanding principal amounts thereof.
(b) On the date of any termination or reduction of the Revolving
Credit Commitments pursuant to Section 2.09, the Borrower shall pay or prepay
so much of, first, the Swingline Loans and, second, the Revolving Credit
Borrowings as shall be necessary in order that the aggregate principal amount
of the Revolving Loans and Swingline Loans outstanding will not exceed the
excess, if any, of (i) the aggregate Revolving Credit Commitments after giving
effect to such termination or reduction, minus (ii) the Letter of Credit
Exposure at the time.
(c) The Borrower and the Canadian Borrower shall prepay the
Borrowings at the times and in the amounts required pursuant to Section
2.12(e) and 2.12(f). Each prepayment of the Borrowings required to be made
pursuant to Section 2.12(e) and 2.12(f) shall be applied, first, to prepay in
full outstanding Term Borrowings and Delayed Draw Borrowings pro rata in
accordance with the respective outstanding principal amounts of such
Borrowings and, second, to prepay in full outstanding Canadian Term
Borrowings.
(d) The Borrower's and the Canadian Borrower's prepayment obligations
under any paragraph of this Section 2.12 shall be in addition to, and shall
not be discharged by the performance of, its obligations under any other such
paragraph. Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid,
shall be irrevocable and shall commit the Borrower or the Canadian Borrower,
as the case may be, to prepay such Borrowing by the amount stated therein on
the date stated therein. All prepayments under this Section 2.12 shall be
subject to Section 2.15 but otherwise without premium or penalty. All
prepayments under this Section 2.12 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
(e) In the event and on each occasion that a Prepayment Event occurs,
the Borrower or the Canadian Borrower, as the case may be, shall apply an
amount equal to the Applicable Prepayment Percentage of the Net Proceeds
therefrom to prepay the Loans in accordance with this Section 2.12(e) and
Section 2.12(g) below. Substantially simultaneously with (and in any event
not later than the Business Day next following) the occurrence of a Prepayment
Event, the Borrower or the Canadian Borrower, as the case may be, shall pay to
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the Administrative Agent (for application to the prepayment of Loans in
accordance with Section 2.12(g)) an amount equal to the Applicable Prepayment
Percentage of the Net Proceeds from such Prepayment Event.
(f) Not later than 90 days after the end of each fiscal year, the
Borrower or the Canadian Borrower, as the case may be, shall pay to the
Administrative Agent (for application to the prepayment of Loans in accordance
with Section 2.12(g)) an amount equal to the Applicable Prepayment Percentage
(as of the last day for the fiscal year for which Excess Cash Flow is
calculated) of the amount of the Excess Cash Flow for such fiscal year.
(g) Each prepayment of principal of the Term Borrowings or the
Delayed Draw Term Borrowings pursuant to this Section 2.12 shall be applied to
reduce scheduled payments of principal of the applicable Borrowings due under
paragraph (a) or (b), as applicable, of Section 2.11 after the date of such
prepayment pro rata in accordance with the remaining scheduled amount of each
such payment; provided, however, that in the case of any prepayment of the
Term Borrowings and the Delayed Draw Term Borrowings pursuant to Section
2.12(c) that is required pursuant to Section 2.12(f) or pursuant to Section
2.12(a), the principal amount of such prepayment shall be applied to reduce
scheduled payments of principal due under Section 2.11 after the date of such
prepayment in the chronological order of maturity. Each prepayment of
principal of the Canadian Term Borrowings pursuant to this Section 2.12 shall
be applied to reduce scheduled payments of principal of the Canadian Term
Borrowings due under paragraph (c) of Section 2.11 after the date of such
prepayment pro rata in accordance with the remaining scheduled amount of each
such payment; provided, however, that in the case of any prepayment of the
Canadian Term Borrowings pursuant to Section 2.12(c) that is required pursuant
to Section 2.12(f) or pursuant to Section 2.12(a), the principal amount of
such prepayment shall be applied to reduce scheduled payments of principal due
under Section 2.11 after the date of such prepayment in the chronological
order of maturity.
(h) Notwithstanding anything herein to the contrary, the Canadian
Borrower shall not have any mandatory obligation under this Section 2.12 (i)
to prepay any Canadian Term Loans until such time as the Delayed Draw Term
Loans and Term Loans have been repaid in full or (ii) to prepay more than 25%
of the original principal amount of the Canadian Term Loans prior to the fifth
anniversary of the Closing Date. Any mandatory prepayment of the Canadian
Term Loans which would be made but for the provisions of clause (ii) of the
preceding sentence shall be due and payable on the first Business Day
following the fifth anniversary of the Closing Date.
(i) In the event the amount of any prepayment required to be made above
shall exceed the aggregate principal amount of the applicable outstanding ABR
Loans (the amount of any such excess being called the "Excess Amount"), the
Borrower or the Canadian Borrower, as the case may be, shall have the right,
in lieu of making such prepayment in full, to prepay all the outstanding
applicable ABR Loans and to deposit an amount equal to the Excess Amount with
the Collateral Agent in a cash collateral account maintained (pursuant to
documentation satisfactory to the Administrative Agent) by and in the sole
dominion and control of the Collateral Agent. Any amounts so deposited shall
be held by the Collateral Agent as collateral for the Obligations and applied
to the prepayment of the applicable Eurodollar Loans at the end of the current
Interest Periods applicable thereto. On any Business Day on which (x)
collected amounts remain on deposit in or to the credit of such cash
collateral account after giving effect to the payments made on such day
pursuant to this Section 2.12(i) and (y) the Borrower or the Canadian
Borrower, as the case may be, shall have delivered to the Collateral Agent a
written request or a telephonic request (which shall be promptly confirmed in
writing) that such remaining collected amounts be invested in the Permitted
Investments specified in such request, the Collateral Agent shall use its
reasonable efforts to invest such remaining collected amounts in such
Permitted Investments; provided, however, that the Collateral Agent shall have
continuous dominion and full control over any such investments (and over any
interest that accrues thereon) to the same extent that it has dominion and
control over such cash collateral account and no Permitted Investment shall
mature after the end of the Interest Period for which it is to be applied.
Neither the Borrower nor the Canadian Borrower shall have the right to
withdraw any amount from such cash collateral account until the applicable
Eurodollar Loans and accrued interest thereon are paid in full or if a Default
or Event of Default then exists or would result.
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31
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation
or administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or any
Issuing Bank in respect of any Letter of Credit or of the principal of or
interest on any Eurodollar Loan made by such Lender or any Fees or other
amounts payable hereunder (other than changes in respect of (i) taxes imposed
on the overall net income of such Lender or such Issuing Bank by the
jurisdiction in which such Lender or such Issuing Bank has its principal
office or by any political subdivision or taxing authority therein and (ii)
any Taxes described in Section 2.18), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against assets
or deposits with or for the account of or credit extended by or, in the case
of the Letters of Credit, participated in by such Lender (except any such
reserve requirement which is reflected in the Adjusted LIBO Rate) or such
Issuing Bank or shall impose on such Lender or such Issuing Bank or the
interbank eurodollar market any other condition affecting this Agreement, any
Letter of Credit (or any participation with respect thereto), the Letter of
Credit Exposure, the Letter of Credit Commitment or Eurodollar Loans made by
such Lender, and the result of any of the foregoing shall be to increase the
cost to such Lender or such Issuing Bank of making or maintaining the Letter
of Credit Exposure, the Letter of Credit Commitment or any Eurodollar Loan
(or, in the case of such Issuing Bank, of making any payment or maintaining
the Letter of Credit Commitment) or to reduce the amount of any sum received
or receivable by such Lender or such Issuing Bank hereunder or under the Notes
(whether of principal, interest or otherwise) by an amount deemed by such
Lender or such Issuing Bank to be material, then the Borrower will pay to such
Lender or such Issuing Bank upon demand such additional amount or amounts as
will compensate such Lender or such Issuing Bank for such additional costs
incurred or reduction suffered.
(b) If any Lender or Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in any of the
foregoing or in the interpretation or administration of any of the foregoing
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender (or
any lending office of such Lender) or Issuing Bank or any Lender's or Issuing
Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) made or issued after the
date hereof by any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's or
Issuing Bank's capital or on the capital of such Lender's or Issuing Bank's
holding company, if any, as a consequence of this Agreement or its obligations
pursuant hereto to a level below that which such Lender or Issuing Bank or
such Lender's or Issuing Bank's holding company would have achieved but for
such adoption, change or compliance (taking into consideration such Lender's
or Issuing Bank's policies and the policies of such Lender's or Issuing Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Lender or Issuing Bank to be material, then from time to time the Borrower
shall pay to such Lender or Issuing Bank such additional amount or amounts as
will compensate such Lender or Issuing Bank or such Lender's or Issuing Bank's
holding company for any such reduction suffered.
(c) A certificate of each Lender or Issuing Bank setting forth such
amount or amounts as shall be necessary to compensate such Lender or Issuing
Bank or its holding company as specified in paragraph (a) or (b) above, as the
case may be, shall be delivered to the Borrower through the Administrative
Agent and shall be conclusive absent manifest error. The Borrower shall pay
each Lender or Issuing Bank the amount shown as due on any such certificate
delivered by it within 10 days after its receipt of the same.
(d) In the event any Lender or Issuing Bank delivers a notice
pursuant to paragraph (e) below, the Borrower may require, at the Borrower's
expense and subject to Section 2.15, such Lender or Issuing Bank to assign, at
par plus accrued interest and fees, without recourse (in accordance with
Section 9.04) all its interests, rights and obligations hereunder (including,
in the case of a Lender, all of its Commitment and the Loans at the time owing
to it and its Notes and participations in Letters of Credit held by it and its
obligations to acquire such participations) to a financial institution
specified by the Borrower provided that (i) such assignment shall not conflict
with or violate any law, rule or regulation or order of any court or other
Governmental Authority, (ii) the Borrower shall have received the written
consent of the Administrative Agent, which consent shall not
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32
unreasonably be
withheld, to such assignment, (iii) the Borrower shall have paid to the
assigning Lender or Issuing Bank all monies accrued and owing hereunder to it
(including pursuant to this Section) and (iv) in the case of a required
assignment by an Issuing Bank, all outstanding Letters of Credit issued by
such Issuing Bank shall be canceled and returned to such Issuing Bank.
(e) Promptly after any Lender or Issuing Bank has determined, in its
sole judgment, that it will make a request for increased compensation pursuant
to this Section, such Lender or Issuing Bank will notify the Borrower thereof.
Failure on the part of any Lender or Issuing Bank so to notify the Borrower or
to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's or Issuing Bank's right
to demand compensation with respect to such period or any other period;
provided that the Borrower shall not be under any obligation to compensate any
Lender or Issuing Bank under Section 2.13(b) with respect to increased costs
or reductions with respect to any period prior to the date that is six months
prior to such request if such Lender or the Issuing Bank knew or could
reasonably have been expected to be aware of the circumstances giving rise to
such increased costs or reductions and of the fact that such circumstances
would in fact result in such increased costs or reduction; provided, further,
that, the foregoing limitation shall not apply to any increased costs or
reductions arising out of the retroactive application of any law, regulation,
rule, guideline or directive as aforesaid within such six month period. The
protection of this Section shall be available to each Lender and Issuing Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, rule, regulation, guideline or other change or condition which shall
have occurred or been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
provision herein, if the adoption of or any change in any law or regulation or
in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations
as contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon any request by the Borrower for a
Eurodollar Borrowing shall, as to such Lender only, be deemed a request
for an ABR Loan unless such declaration shall be subsequently withdrawn;
and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall
be automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay
the ABR Loans made by such Lender in lieu of, or resulting from the conversion
of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the
last day of the Interest Period currently applicable to such Eurodollar Loan;
in all other cases such notice shall be effective on the date of receipt by
the Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense (other than taxes) which such Lender may sustain
or incur as a consequence of (a) any failure by the Borrower or the Canadian
Borrower to fulfill on the date of any Borrowing or proposed Borrowing
hereunder the applicable conditions set forth in Article IV, (b) any failure
by the Borrower or the Canadian Borrower to borrow or to refinance, convert or
continue any Loan hereunder after irrevocable notice of such Borrowing,
refinancing, conversion or continuation has been given pursuant to Section
2.03 or 2.10, (c) any payment, prepayment or conversion of a Eurodollar Loan
required by any other provision of this Agreement or otherwise made or deemed
made on a date other than the last day of the Interest Period applicable
thereto, (d) any default in payment or prepayment of the principal amount of
any Loan or any part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, whether by scheduled maturity, acceleration,
irrevocable
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33
notice of prepayment or otherwise) or (e) the occurrence of any
Event of Default, including, in each such case, any loss or reasonable expense
sustained or incurred or to be sustained or incurred in liquidating or
employing deposits from third parties acquired to effect or maintain such Loan
or any part thereof as a Eurodollar Loan. Such loss or reasonable expense
shall exclude loss of margin hereunder but shall include an amount equal to
the excess, if any, as reasonably determined by such Lender, of (i) its cost
of obtaining the funds for the Loan being paid, prepaid, converted or not
borrowed, converted or continued (assumed to be the Adjusted LIBO Rate
applicable thereto) for the period from the date of such payment, prepayment,
conversion or failure to borrow, convert or continue to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or continue, the Interest Period for such Loan which would have commenced on
the date of such failure) over (ii) the amount of interest (as reasonably
determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, converted or not borrowed, converted
or continued for such period or Interest Period, as the case may be. A
certificate of any Lender setting forth any amount or amounts which such
Lender is entitled to receive pursuant to this Section (and the reasons
therefor) shall be delivered to the Borrower through the Administrative Agent
and shall be conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under Section
2.14, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees or Letter of Credit Fees, each reduction of the Term Loan
Commitments, the Delayed Draw Term Loan Commitments, the Canadian Term Loan
Commitments or the Revolving Credit Commitments and each refinancing of any
Borrowing with, conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated (except in the case of
Swingline Loans) pro rata among the Lenders in accordance with their
respective applicable Commitments (or, if such Commitments shall have expired
or been terminated, in accordance with the respective principal amounts of
their applicable outstanding Loans). Each Lender agrees that in computing
such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing, computed in accordance with Section 2.01, to the next higher
or lower whole dollar amount.
SECTION 2.17. Payments. (a) Each of the Borrower and the Canadian
Borrower shall make each payment without set-off or counterclaim (including
principal of or interest on any Borrowing or any Fees or other amounts)
required to be made by it hereunder and under any other Loan Document not
later than 12:00 noon, New York City time, on the date when due in dollars to
the Administrative Agent at its offices at 270 Park Avenue, New York, New
York, Attention of Wholesale Loan Services, in immediately available funds,
for credit to Chemical Bank, ABA Number 021000128, Account Number 323-5-02059.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day
(except in the case of payment of principal of a Eurodollar Borrowing if the
effect of such extension would be to extend such payment into the next
succeeding month, in which event such payment shall be due on the immediately
preceding Business Day), and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.
SECTION 2.18. Taxes. (a) Any and all payments by the Borrower and the
Canadian Borrower to the Administrative Agent, the Issuing Banks or the
Lenders hereunder or under the other Loan Documents shall be made, in
accordance with Section 2.17 free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of each Lender, each Issuing Bank and the Administrative Agent, taxes
that would not be imposed but for a connection between such Lender, such
Issuing Bank or the Administrative Agent (as the case may be) and the
jurisdiction imposing such tax, other than a connection arising solely by
virtue of the activities of such Lender, such Issuing Bank or the
Administrative Agent (as the case may be) pursuant to or in respect of this
Agreement or under any other Loan Document, including, without limitation,
entering into, lending money or extending credit pursuant to, receiving
payments under, or enforcing, this Agreement or any other Loan Document, and
(ii) in the case of each Lender, each Issuing Bank and the Administrative
Agent, any United States withholding taxes payable with respect to payments
hereunder or under the other Loan Documents under
<PAGE>
34
laws (including, without
limitation, any statute, treaty, ruling, determination or regulation) in
effect on the Initial Date (as hereinafter defined) for such Lender, such
Issuing Bank or the Administrative Agent, as the case may be, but not
excluding any United States withholding taxes payable solely as a result of
any change in such laws occurring after the Initial Date (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). For purposes of this
Section 2.18, the term "Initial Date" shall mean (i) in the case of the
Administrative Agent, any Issuing Bank or any Lender, the date on which such
person became a party to this Agreement and (ii) in the case of any assignment
including any assignment by a Lender or an Issuing Bank to a new lending
office, the date of such assignment. If any Taxes shall be required by law to
be deducted from or in respect of any sum payable hereunder or under any other
Loan Document to any Lender, any Issuing Bank or the Administrative Agent (i)
the sum payable by the Borrower or the Canadian Borrower, as the case may be,
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.18) such Lender, such Issuing Bank or the Administrative Agent
(as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower or the Canadian
Borrower, as the case may be, shall make such deductions and (iii) the
Borrower or the Canadian Borrower, as the case may be, shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. The Borrower and the Canadian Borrower shall
not, however, be required to pay any amounts pursuant to clause (i) of the
preceding sentence to any Lender, any Issuing Bank or the Administrative Agent
(in the case of payments to be made by the Borrower) not organized under the
laws of the United States of America or a state thereof (or, in the case of
payments to be made by the Canadian Borrower, not organized under the laws of
Canada) if such Lender, such Issuing Bank or the Administrative Agent fails to
comply with the requirements of paragraphs (f) or (g), as the case may be, and
paragraph (h) of this Section 2.18.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender, each Issuing Bank and
the Administrative Agent for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.18) paid by such Lender, such Issuing Bank or the
Administrative Agent, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within 10 days after the date any Lender,
any Issuing Bank or the Administrative Agent, as the case may be, makes
written demand therefor. If a Lender, an Issuing Bank or the Administrative
Agent shall become aware that it is entitled to receive a refund or is
reasonably requested by the Borrower to pursue a claim for a refund in respect
of Taxes or Other Taxes, it shall promptly notify the Borrower of the
availability of such refund (unless instructed to pursue a claim by the
Borrower) and shall, within 30 days after receipt of a request by the
Borrower, pursue or timely claim such refund at the Borrower's expense. If
any Lender, any Issuing Bank or the Administrative Agent receives a refund in
respect of any Taxes or Other Taxes for which such Lender, such Issuing Bank
or the Administrative Agent has received payment from the Borrower hereunder,
it shall promptly notify the Borrower of such refund and shall, within 30 days
after receipt of a request by the Borrower (or promptly upon receipt, if the
Borrower has requested application for such refund pursuant hereto), repay
such refund (plus any interest received) to the Borrower, provided that the
Borrower, upon the request of such Lender, such Issuing Bank or the
Administrative Agent, agrees to return such refund (plus any penalties,
interest or other charges required to be paid) to such Lender, such Issuing
Bank or the Administrative Agent in the event such Lender, such Issuing Bank
or the Administrative Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower or the Canadian Borrower, as the case may be,
in respect of any payment to any Lender, any Issuing Bank or the
Administrative Agent, the Borrower or the Canadian Borrower, as the case may
be, will furnish to the Administrative Agent, at its address referred to in
Schedule 2.01, the original or a certified copy of a receipt evidencing
payment thereof.
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35
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section
2.18 shall survive the payment in full of principal and interest hereunder and
the termination of the Commitments.
(f) In the case of any Borrowing by the Borrower, this paragraph (f)
shall apply. Each Lender, each Issuing Bank and the Administrative Agent that
is not organized under the laws of the United States of America or a state
thereof agrees that at least 10 days prior to the first Interest Payment Date
following the Initial Date in respect of such Issuing Bank or such Lender, it
will deliver to the Borrower and the Administrative Agent (if appropriate) two
duly completed copies of either (i) United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, certifying
in each case that the Issuing Bank or such Lender or the Administrative Agent,
as the case may be, is entitled to receive payments under this Agreement and
the Notes payable to it without deduction or withholding of any United States
federal income taxes and backup withholding taxes or is entitled to receive
such payments at a reduced rate pursuant to a treaty provision or (ii) in the
case of a Lender that is not a "bank" within the meaning of Section 881(c)(3)
of the Code, United States Internal Revenue Service Form W-8 or successor
applicable form and a statement from such Lender certifying to the fact that
interest payable to it hereunder (A) will not be described in Section
871(h)(3)(A) or Section 881(c)(3)(A), (B) or (C) of the Code and (B) will not
be effectively connected with a trade or business carried on in the United
States by such Lender. Each Lender, each Issuing Bank and the Administrative
Agent required to deliver to the Borrower and the Administrative Agent a Form
1001, 4224 or W-8 pursuant to the preceding sentence further undertakes to
deliver to the Borrower and the Administrative Agent (if appropriate) two
further copies of Form 1001, 4224 or W-8, or successor forms, or other similar
manner of certification and such extensions or renewals thereof as may
reasonably be requested by the Borrower and, in the case where a Form W-8 has
been delivered, a further statement certifying to the fact set forth in clause
(B) of the preceding sentence (i) at the times reasonably requested by the
Borrower, (ii) after the occurrence of an event requiring a change in the most
recent form or statement previously delivered by it to the Borrower or (iii)
in the case of Form 1001, 4224 or W-8, on or before the date that any such
form expires or becomes obsolete, and, in the case of Form 1001 or 4224,
certifying that such Issuing Bank or such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and backup withholding taxes or is entitled to
receive such payments at a reduced rate pursuant to a treaty provision, unless
such Issuing Bank or such Lender advises the Borrower that it is unable
lawfully to provide such forms and other certifications and notifies the
Borrower to such effect. Unless the Borrower and the Administrative Agent
have received forms, certificates and other documents satisfactory to them
indicating that payments hereunder or under or in respect of the Notes or the
Letters of Credit to or for any Issuing Bank or Lender not incorporated under
the laws of the United States or a state thereof are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Administrative Agent shall withhold
such taxes from such payments at the applicable statutory rate.
(g) In the event the Canadian Borrower is required to pay additional
amounts pursuant to this Section 2.18, this paragraph (g) shall apply. Each
Lender, each Issuing Bank and the Administrative Agent that is not
incorporated within or under the laws of Canada and that is claiming such
additional amounts agrees that within a reasonable period of time following
the request of the Canadian Borrower, it will, to the extent it is legally
entitled to a reduction in the rate of or exemption from Canadian withholding
taxes, deliver to the Canadian Borrower and the Administrative Agent (if
appropriate) any form or document required under the laws, regulations,
official interpretations or treaties enacted by, made or entered into with
Canada properly completed and duly executed by such Issuing Bank, such Lender
or Administrative Agent establishing that any payments hereunder are exempt
from Canadian withholding tax or subject to a reduced rate of Canadian
withholding tax, as the case may be; provided that, in the sole determination
of such Lender, such Issuing Bank or the Administrative Agent, such form or
document shall not be otherwise disadvantageous to such Lender, such Issuing
Bank or the Administrative Agent.
(h) Any Issuing Bank and any Lender claiming any additional amounts
payable pursuant to this Section 2.18 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Canadian Borrower to change the jurisdiction
of its applicable lending office if the making of such a filing or change
would avoid the need for or reduce the amount of any such
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36
additional amounts which may thereafter accrue and would not, in the sole
determination of such Issuing Bank or such Lender, be otherwise
disadvantageous to such Issuing Bank or such Lender.
SECTION 2.19. Issuance of Letters of Credit.
(a) Each Issuing Bank agrees, upon the terms and subject to the
conditions herein set forth, to issue Letters of Credit, in a form reasonably
acceptable to the Administrative Agent and such Issuing Bank, appropriately
completed, for the account of the Borrower, at any time and from time to time
on and after the Closing Date until the earlier of the date five Business Days
prior to the Revolving Credit Maturity Date and the termination of the Letter
of Credit Commitment in accordance with the terms hereof; provided, however,
that any Letter of Credit shall be issued by an Issuing Bank only if, and each
request by the Borrower for the issuance of any Letter of Credit shall be
deemed a representation and warranty of the Borrower that, immediately
following the issuance of any such Letter of Credit, (i) the Letter of Credit
Exposure shall not exceed the Letter of Credit Commitment in effect at the
time and (ii) the sum of the Letter of Credit Exposure and the aggregate
principal amount of outstanding Revolving Loans and Swingline Loans shall not
exceed the aggregate Revolving Credit Commitments in effect at the time. In
determining whether the issuance of a Letter of Credit will comply with
clauses (i) and (ii) of the preceding sentence, each Issuing Bank may rely
conclusively on information obtained from the Administrative Agent regarding
the aggregate principal amount of outstanding Revolving Loans and the
aggregate Revolving Credit Commitments, Letter of Credit Exposure and
Swingline Loans.
(b) Each Letter of Credit shall expire no later than the fifth
Business Day preceding the Revolving Credit Maturity Date, unless such Letter
of Credit expires by its terms on an earlier date. Each Letter of Credit
shall provide for payments of drawings in dollars. Each Letter of Credit
shall reduce availability under the Revolving Credit Commitments.
(c) Each issuance of any Letter of Credit shall be made on at least
three Business Days' prior written notice from the Borrower to the applicable
Issuing Bank and the Administrative Agent (which shall give prompt notice
thereof to each Revolving Lender) specifying the date of issuance, the date on
which such Letter of Credit is to expire (which shall not be later than the
earlier of (i) the fifth Business Day preceding the Revolving Credit Maturity
Date and (ii) subject to extension, two years after the date of any such
Letter of Credit), the amount of such Letter of Credit, the name and address
of the beneficiary of such Letter of Credit and such other information as may
be necessary or desirable to complete such Letter of Credit. Such Issuing
Bank will give the Administrative Agent and the Administrative Agent shall
give each Revolving Lender prompt notice of the issuance and amount of each
Letter of Credit and the expiration of each Letter of Credit.
(d) No Issuing bank shall be required to issue a Letter of Credit
unless it has agreed with the Borrower upon the Fronting Fees to be paid by
the Borrower in connection with such Letter of Credit and the form of such
Letter of Credit is reasonably acceptable to such Issuing Bank.
(e) Holdings has identified to the Administrative Agent certain
letters of credit aggregating not more than $11,000,000 (the "Existing Letters
of Credit") which were issued for the account of Holdings or certain of its
subsidiaries prior to the Closing Date by financial institutions which are
Lenders under this Agreement. The parties hereto wish to treat the Existing
Letters of Credit as if they had been issued under this Agreement. Therefore,
the Existing Letters of Credit shall be deemed to be Letters of Credit issued
on the Closing Date for all purposes of this Agreement, including, without
limitation, Section 2.20. The Borrower agrees to take any action reasonably
requested by the applicable Issuing Bank (including delivering new letter of
credit applications) in order to implement this paragraph (e) and make the
Borrower the account party of record for the Existing Letters of Credit.
SECTION 2.20. Participations; Unconditional Obligations. (a) By the
issuance of a Letter of Credit and without any further action on the part of
the applicable Issuing Bank or the Revolving Lenders in respect thereof, each
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby agrees to acquire from such Issuing Bank, a participation in such
Letter of Credit equal to such Revolving Lender's Applicable Percentage of the
face amount of such Letter of Credit, effective upon the issuance of such
Letter
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37
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 such Issuing Bank, in accordance with
Section 2.02(f), such Revolving Lender's Applicable Percentage of each Letter
of Credit Disbursement made by such Issuing Bank; provided, however, that the
Revolving Lenders shall not be obligated to make any such payment to an
Issuing Bank with respect to any wrongful payment or disbursement made as a
result of the gross negligence or willful misconduct of such Issuing Bank in
determining whether documents presented in connection with such Letter of
Credit Disbursement conform to the requirements of the applicable Letter of
Credit.
(b) Each Revolving Lender acknowledges and agrees that its obligation
to acquire participations pursuant to paragraph (a) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of an Event
of Default or Default hereunder, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever other than
in the case of any wrongful payment made as a result of the gross negligence
or willful misconduct of the Issuing Bank in determining whether documents
presented in connection with such Letter of Credit conform to the requirements
of the applicable Letter of Credit.
SECTION 2.21. Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent for the account of the Revolving Lenders for each
calendar quarter (or shorter period commencing with the Closing Date or ending
with the first date on which the Letter of Credit Commitment shall have
expired or been terminated and there shall be no outstanding Letters of
Credit) a fee (the "Letter of Credit Fee") on the average daily amount of the
outstanding Letters of Credit at a per annum rate equal to the Applicable
Margin at such time for Eurodollar Borrowings; provided that with respect to
any Letter of Credit as to which the Borrower has failed to make a payment
required by Section 2.22, interest calculated at the rate set forth in Section
2.07 from the date such payment was due through the date such payment is made
shall be paid by the Borrower in lieu of the Letter of Credit Fee on the date
such payment is made. The Letter of Credit Fee shall be computed on the basis
of the actual number of days elapsed over a year of 360 days. The
Administrative Agent agrees to disburse to each Revolving Lender its pro rata
portion of such Letter of Credit Fee promptly upon receipt. The Letter of
Credit Fee shall be paid in arrears on the last day of March, June, September
and December of each year and on the Revolving Credit Maturity Date (or the
first date on which the Letter of Credit Commitment shall have expired or been
terminated and there shall be no outstanding Letters of Credit, if earlier),
commencing on the first such date following the Closing Date. Once paid the
Letter of Credit Fee paid or payable shall not be refundable in any circum-
stances whatsoever, absent manifest error.
SECTION 2.22. Agreement To Repay Letter of Credit Disbursements. (a)
If an Issuing Bank shall pay any draft presented under a Letter of Credit, the
Borrower shall pay to the Administrative Agent, on behalf of such Issuing
Bank, an amount equal to the amount of such draft before 11:00 a.m., New York
City time, on the Business Day on which such Issuing Bank shall have notified
the Borrower that payment of such draft will be made (or such later time as is
not later than one hour after the Borrower shall have received such notice or,
if the Borrower shall have received such notice later than 4:00 p.m., New York
City time, on any Business Day, not later than 10:00 a.m., New York City time,
on the immediately following Business Day). The Administrative Agent will
promptly pay any such amounts received by it to such Issuing Bank.
(b) The Borrower's obligation to repay each Issuing Bank for payments
and disbursements made by such Issuing Bank under the outstanding Letters of
Credit shall be absolute, unconditional and irrevocable under any and all
circumstances and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any other person may at any time have against the
beneficiary under any Letter of Credit, any Issuing Bank, the
Administrative Agent or any Lender (other than the defense of payment in
accordance with the terms of this Agreement or a defense based on the
gross negligence or wilful misconduct of any Issuing Bank) or any other
person in connection with this Agreement or any other agreement or
transaction;
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(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
provided that payment by an Issuing Bank under such Letter of Credit
against presentation of such draft or document shall not have
constituted gross negligence or wilful misconduct of such Issuing Bank;
(iv) payment by an Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit; provided that such payment shall not
have constituted gross negligence or wilful misconduct of such Issuing
Bank; and
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance
or event shall not have been the result of gross negligence or wilful
misconduct of the applicable Issuing Bank.
It is understood that in making any payment under a Letter of Credit (x)
each Issuing Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein, including
reliance on the amount of any draft presented under such Letter of Credit,
whether or not the amount due to the beneficiary equals the amount of such
draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (y) any noncompliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
each case, not be deemed willful misconduct or gross negligence of such
Issuing Bank.
SECTION 2.23. Letter of Credit Operations. Each Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under an outstanding Letter of Credit to
ascertain that the same appear on their face to be in substantial conformity
with the terms and conditions of such outstanding Letter of Credit. Such
Issuing Bank shall (i) as promptly as possible after such demand for payment
give oral notification, confirmed by telecopy, to the Administrative Agent and
the Borrower of such demand for payment and (ii) as promptly as possible after
such Issuing Bank determines whether such demand for payment was in accordance
with the terms and conditions of such outstanding Letter of Credit, give
notice in the same manner to the Administrative Agent and the Borrower as to
such determination and as to whether such Issuing Bank has made or will make a
Letter of Credit Disbursement thereunder, provided that the failure to give
such notices shall not relieve the Borrower of its obligation to reimburse
such Issuing Bank with respect to any such Letter of Credit Disbursement, and
the Administrative Agent shall promptly give each Revolving Lender notice
thereof.
SECTION 2.24. Cash Collateralization. If any Event of Default shall
occur and be continuing, the Borrower shall, on the Business Day it receives
notice from the Administrative Agent or the Required Lenders therefor, deposit
in an account with the Collateral Agent, for the benefit of the Lenders, an
amount in cash equal to its Letter of Credit Exposure as of such date. Such
deposit shall be held by the Collateral Agent as collateral for the payment
and performance of the Obligations. So long as such Event of Default is
continuing, the Collateral 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 in Permitted
Investments, which investments shall be made at the option and sole discretion
of the Collateral Agent, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall automatically be applied by the Collateral Agent to
reimburse the applicable Issuing Bank and the Revolving Lenders for Letter of
Credit Disbursements and, if the maturity of the Loans has been accelerated,
to satisfy the Obligations. All remaining amounts on deposit shall be
returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
SECTION 2.25. Termination and Reduction of Letter of Credit Commitment.
(a) Notwithstanding any other provision hereof, in the event that any
restrictions or limitations are imposed upon or determined or held
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39
to be applicable to any Issuing Bank, any Revolving Lender or the Borrower by,
under or pursuant to any law or regulation (Federal, state or local) now or
hereafter in effect or by reason of any interpretation thereof by any court or
Governmental Authority (including any interpretation by the Comptroller of the
Currency as to the applicability of 12 U.S.C. (section mark) 84 or any
substitute statute, as now or hereafter in effect, to the transactions
contemplated hereby), which would prevent such Revolving Lender from legally
incurring liability under or in connection with a Letter of Credit issued or
to be issued pursuant hereto, then such Revolving Lender shall give prompt
written notice thereof to the Administrative Agent (which shall notify the
Borrower, each Issuing Bank and each other Revolving Lender thereof as
soon as reasonably practicable), whereupon the obligation of each Issuing
Bank to issue additional Letters of Credit pursuant hereto shall be reduced
by the Applicable Percentage of such Revolving Lender (and, as to any
Letter of Credit thereafter issued, the Applicable Percentages of the
other Revolving Lenders shall be determined as though such Revolving Lender
does not have a Revolving Credit Commitment) until the Administrative Agent
shall be advised that such event is no longer continuing or until such
Revolving Lender shall have assigned its Commitment pursuant to the
provisions of this Agreement.
(b) The Borrower may permanently terminate, or from time to time in
part permanently reduce, the Letter of Credit Commitment, in each case upon at
least three Business Days' prior written or telex notice to the Administrative
Agent; provided that the Letter of Credit Commitment shall not be reduced to
an amount that is less than the Letter of Credit Exposure at the time.
(c) In the event that the Revolving Credit Commitments are at any
time reduced pursuant to Section 2.09 to an amount that is less than the
Letter of Credit Commitment, the Letter of Credit Commitment shall be
permanently reduced to an amount equal to the Revolving Credit Commitments.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Each of Holdings, the Canadian Borrower and the Borrower represents and
warrants to each of the Lenders and each Issuing Bank that:
SECTION 3.01. Organization, Corporate Powers. Each of Holdings and
each Restricted Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it
is incorporated, (ii) has all requisite corporate power and authority, and all
material licenses, permits, franchises, consents and approvals, to own or
lease its property and assets and to carry on its business as now conducted
and as proposed to be conducted, (iii) is qualified and in good standing as a
foreign corporation to do business in every jurisdiction where such
qualification is necessary, except where the failure so to qualify would not
have a Material Adverse Effect and (iv) has the corporate power and authority
to execute, deliver and perform each of the Loan Documents and each agreement
or instrument contemplated hereby or thereby to which it is or will be a
party. None of Holdings or any Restricted Subsidiary of Holdings has any
assets or business, or is a party to any material contract within the meaning
of Item 6.01(b)(10) of Regulation S-K of the Securities and Exchange
Commission, other than as disclosed or referred to in the registration
statement of which the Preliminary Prospectus is a part or as contemplated
hereby and thereby.
SECTION 3.02. Authorization. The execution, delivery and performance
of each of the Loan Documents, the borrowings hereunder and the consummation
of the Recapitalization Transactions and the other transactions contemplated
by any of the foregoing (collectively, the "Transactions") (i) have been duly
authorized by all requisite corporate and, if required, stockholder action and
(ii) will not (x) violate (A) any provision of law, statute, rule or
regulation (including, without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar governing documents) of
any of Holdings and the Restricted Subsidiaries, (B) any applicable order of
any court or any rule, regulation or order of any Governmental Authority or
(C) any indenture, certificate of designation for preferred stock, agreement
or other instrument to which any of Holdings or any Restricted Subsidiary is a
party or by which any of them or any of their property is bound, (y) be in
conflict with, result in a breach of or constitute (with notice or lapse of
time or both) a default under any such
<PAGE>
40
indenture, agreement or other
instrument where any such conflict, violation, breach or default referred to
in clause (ii)(x) or (ii)(y) of this Section, individually or in the
aggregate, would have a Material Adverse Effect or (z) result in the creation
or imposition of any Lien upon any property or assets of Holdings or any
subsidiary of Holdings, except for Liens created by the Pledge Agreement.
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by each of Holdings, the Canadian Borrower and the Borrower and
constitutes, and each other Loan Document when executed and delivered by any
of Holdings, the Borrower, the Canadian Borrower or the Subsidiary Guarantors
that is or is to be a party thereto will constitute, a legal, valid and
binding obligation of such party enforceable against such party in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may be limited by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.04. Recapitalization. (a) All consents and approvals of,
filings and registrations with, and other actions in respect of, all
Governmental Authorities required in order to make or consummate the
Recapitalization Transactions have been obtained, given, filed or taken and
are in full force and effect, other than (i) filings and other actions
required pursuant to the Securities Act of 1933, the Securities Exchange Act
of 1934 and the respective rules and regulations thereunder, and filings and
other actions required pursuant to state securities or blue sky laws, in each
case to the extent that such filings and other actions are not required to
have been made or taken prior to the date hereof, and (ii) any such consents,
approvals, filings or other actions, the failure to obtain or make which could
not reasonably be expected to result in a Material Adverse Effect.
(b) The Preliminary Prospectus at the time of its dissemination to
the public did not and on the Closing Date will not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. Copies of the Preliminary Prospectus
have been delivered to the Lenders.
(c) The final prospectus filed with the Securities and Exchange
Commission in connection with the Public Offering and any amendments or
supplements thereto will not at the time of its dissemination to the public or
on the Closing Date contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
Copies of such final prospectus and any amendments or supplements thereto will
be delivered to the Lenders promptly following the time they are made
available to the public or filed with the Securities and Exchange Commission.
SECTION 3.05. Use of Proceeds. The Borrower and the Canadian Borrower
will use the proceeds of the Loans only for the purposes set forth in Section
5.08.
SECTION 3.06. Federal Reserve Regulations. (a) None of Holdings or
any subsidiary of Holdings 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.
(b) The making of the Loans hereunder and the use of the proceeds
thereof as contemplated hereby and the other Transactions will not violate or
be inconsistent with the provisions of the Regulations of the Board, including
Regulations G, T, U and X.
SECTION 3.07. Capitalization of the Borrower and Holdings. (a) The
authorized capital stock of the Borrower consists of 2,000 shares of common
stock, par value $1.00 per share ("Borrower Common Stock"), of which 1,000
shares will be issued and outstanding as of the Closing Date (after giving
effect to the Recapitalization Transactions). All such outstanding shares of
Borrower Common Stock are fully paid and nonassessable and, on and after the
Closing Date (after giving effect to the Recapitalization Transactions), will
be owned beneficially and of record by Holdings and, on and after the Closing
Date, shall be free and clear of all Liens and encumbrances whatsoever (other
than the Lien of the Pledge Agreement). Except for the Pledge
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41
Agreement, there are no outstanding subscriptions, options, warrants, calls,
rights (including preemptive rights) or other agreements or commitments of any
nature relating to any capital stock of the Borrower.
(b) The authorized capital stock of Holdings consists of (i)
150,000,000 shares of Holdings Common Stock, of which approximately 68,000,000
shares will be issued and outstanding as of the Closing Date (assuming no
exercise of the Overallotment Option) and (ii) 16,000,000 shares of preferred
stock, par value $0.01 per share, of which no shares will be outstanding as of
the Closing Date (after giving effect to the Recapitalization Transactions).
On the Closing Date, all such outstanding shares of Holdings Common Stock will
be fully paid and nonassessable. On the Closing Date, after giving effect to
the Recapitalization Transactions (but assuming no exercise of the
Overallotment Option), each Designated Person (or group of Designated Persons)
will be the owner, beneficially and of record, of the number of shares of
Holdings Common Stock specified on Schedule 3.07(b)(1). Except as provided in
Schedule 3.07(b)(2) hereto, neither Holdings nor any Subsidiary is a party to
any outstanding subscriptions, options, warrants, calls, rights (including
preemptive rights) or other agreements or commitments (other than stock
options granted to employees, consultants or directors and directors'
qualifying shares) of any nature relating to any capital stock of Holdings.
(c) The authorized capital stock of the Canadian Borrower consists
of an unlimited number of common shares without par value ("Canadian Borrower
Common Stock"), of which 3,694 shares will be issued and outstanding as of the
Closing Date and an unlimited number of 5% non-cumulative, redeemable
preferred shares, without par value, no shares of which will be issued and
outstanding as of the Closing Date. All such outstanding shares of Canadian
Borrower Common Stock are fully paid and nonassessable and, on and after the
Closing Date, will be owned directly or indirectly, beneficially and of record
by the Borrower and, on and after the Closing Date, shall be free and clear of
all Liens and encumbrances whatsoever.
SECTION 3.08. Pledge Agreement. The security interests created in
favor of the Collateral Agent, for the benefit of the Lenders, under the
Pledge Agreement will at all times constitute first-priority, perfected
security interests in the Pledged Securities, and such Pledged Securities will
be subject to no Liens or security interests of any other person. No filings
or recordings are or will be required in order to perfect the security
interests in the Pledged Securities created under the Pledge Agreement.
SECTION 3.09. Financial Statements. (a) (i) Holdings has heretofore
furnished to each of the Lenders consolidated balance sheets and consolidated
statements of income and cash flow of Holdings and its consolidated
subsidiaries as of and for the fiscal years ended January 29, 1994 and January
30, 1993, certified by Arthur Andersen & Co., independent public accountants
for Holdings and (ii) Holdings has heretofore furnished to each of the Lenders
consolidated balance sheets and consolidated statements of income and cash
flow of Holdings and its consolidated subsidiaries as of and for the thirteen
weeks ended April 30, 1994. Such balance sheets and statements of income and
cash flows present fairly the financial condition and results of operations of
Holdings and its consolidated subsidiaries on a consolidated basis as of the
dates and for the periods indicated. Except as disclosed in the Preliminary
Prospectus, neither Holdings nor any of its Subsidiaries had, at the date of
the most recent balance sheet referred to above, any material Guarantee,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected
in the foregoing statements or in the notes thereto. The financial statements
referred to in this Section 3.09(a) have been prepared in accordance with GAAP
applied on a consistent basis.
(b) The pro forma consolidated balance sheet of Holdings as of
April 30, 1994 included in the Preliminary Prospectus is the unaudited
consolidated balance sheet of Holdings as of such date, adjusted to give
effect (as if such events had occurred on such date) to all the
Recapitalization Transactions and other identified pro forma adjustments set
forth in the Preliminary Prospectus, including the payment of all fees and
expenses expected to be incurred in connection therewith (as estimated at the
time of the preparation of such balance sheet), based upon the assumptions
specified therein. Such pro forma consolidated balance sheet presents fairly,
on a pro forma basis, the consolidated financial position of Holdings as of
such date assuming that the events specified in the preceding sentence had
actually occurred or are true, as the case may be, on such date and has been
prepared based upon reasonable assumptions and in accordance with GAAP applied
on a consistent basis.
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42
SECTION 3.10. No Material Adverse Change. There has been no material
adverse change in the business, properties, assets, operations or financial
condition of Holdings and its Restricted Subsidiaries, taken as a whole, since
January 29, 1994.
SECTION 3.11. Title to Properties; Possession Under Leases. (a) Each
of Holdings, the Borrower and the Significant Subsidiaries has good and
marketable title to, or valid leasehold interests in, or easements on or other
limited property interests in, all their respective material properties and
assets, except for minor defects in title and limitations on property
interests that do not interfere with their respective ability to conduct their
respective business as currently conducted or to utilize such properties and
assets for their intended purposes. All such material properties and assets
are free and clear of Liens, other than Liens expressly permitted by Section
6.04.
(b) Each of Holdings, the Borrower and the Significant Subsidiaries
has complied with all obligations under all material leases to which it is a
party, except where the failure to comply would not have a Material Adverse
Effect, and all such leases are in full force and effect, except leases in
respect of which the failure to be in full force and effect would not have a
Material Adverse Effect. Each of Holdings, the Borrower and the Significant
Subsidiaries enjoys peaceful and undisturbed possession under all such
material leases.
(c) Each of Holdings, the Borrower and the Significant Subsidiaries
owns or possesses, or could obtain ownership or possession of, on terms not
materially adverse to it, all patents, trademarks, service marks, trade names,
copyrights, licenses and rights with respect thereto necessary for the present
conduct of its business, without any known conflict with the rights of others,
and free from any burdensome restrictions, except where such conflicts and
restrictions would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.12. Subsidiaries. (a) Schedule 3.12(a) sets forth as of the
Closing Date a list of all Subsidiaries of Holdings and the percentage
ownership interest of Holdings therein and whether such Subsidiaries are
Significant Subsidiaries.
(b) There are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees, consultants or directors and directors' qualifying shares) of any
nature relating to any capital stock of any subsidiary of Holdings, except for
the Pledge Agreement or as provided in Schedule 3.12(b).
SECTION 3.13. Litigation; Compliance with Laws. (a) Except as
described in the registration statement of which the Preliminary Prospectus is
a part, there are not any actions, suits or proceedings at law or in equity or
by or before any court or Governmental Authority now pending or, to the
knowledge of Holdings, the Borrower or the Canadian Borrower, threatened
against or affecting Holdings or any of its subsidiaries or any property or
rights of Holdings or any of its subsidiaries as to which there is a
reasonable possibility of an adverse determination and which (i) if adversely
determined, could individually or in the aggregate result in a Material
Adverse Effect or (ii) involve the Loan Documents or (iii) if adversely
determined could materially adversely affect the Recapitalization
Transactions.
(b) None of Holdings or any of its Subsidiaries is in default with
respect to any law, order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default could have a
Material Adverse Effect. The Borrowings hereunder, the use of the proceeds
thereof as described in Section 5.08 and the other Recapitalization
Transactions will not violate any applicable law or regulation or violate or
be prohibited by any judgment, writ, injunction, decree or order of any court
or Governmental Authority or subject Holdings or any of its subsidiaries to
any civil or criminal penalty or fine.
SECTION 3.14. Agreements. (a) None of Holdings or any of its
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
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(b) None of Holdings or any of its Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, in either case where such default could result in a Material Adverse
Effect. After giving effect to the Recapitalization Transactions, no Default
or Event of Default shall have occurred and be continuing.
SECTION 3.15. Investment Company Act. None of Holdings or any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.16. Public Utility Holding Company Act. None of Holdings or
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 3.17. Tax Returns. Each of Holdings and its Subsidiaries has
filed or caused to be filed all Federal, and all material state and local, tax
returns required to have been filed by it and has paid or caused to be paid
all taxes shown thereon to be due and payable, and any assessments in excess
of $2,000,000 in the aggregate received by it, except taxes that are being
contested in accordance with Section 5.03 and taxes, assessments, charges,
levies or claims in respect of property taxes for property that Holdings or
one of its Subsidiaries has determined to abandon where the sole recourse for
such tax, assessment, charge, levy or claim is to such property. Each of
Holdings and its Subsidiaries has paid in full or made adequate provision (in
accordance with GAAP) for the payment of all taxes due with respect to the
periods ending on or before January 29, 1994, which taxes, if not paid or
adequately provided for, would have a Material Adverse Effect. The tax
returns of Holdings and its Subsidiaries have been examined by relevant
Federal tax authorities for all periods through January 26, 1985, and all
deficiencies asserted as a result of such examinations have been paid. Except
as set forth on Schedule 3.17 or in the Preliminary Prospectus, as of the
Closing Date, with respect to each of Holdings and its Subsidiaries, (i) no
material claims are being asserted in writing with respect to any taxes, (ii)
no presently effective waivers or extensions of statutes of limitation with
respect to taxes have been given or requested, (iii) no tax returns are being
examined by, and no written notification of intention to examine has been
received from, the Internal Revenue Service or any other taxing authority and
(iv) no currently pending issues have been raised in writing by the Internal
Revenue Service or any other taxing authority. For purposes hereof, "taxes"
shall mean any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto)
that is imposed by any Governmental Authority.
SECTION 3.18. No Material Misstatements. (a) The information,
reports, financial statements, exhibits and schedules furnished by or on
behalf of Holdings or any of its Subsidiaries or Affiliates to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto (including the
Preliminary Prospectus), when taken as a whole, did not contain, and as they
may be amended, supplemented or modified from time to time, will not contain,
as of the Closing Date any material misstatement of fact and did not omit, and
as they may be amended, supplemented or modified from time to time, will not
omit, to state as of the Closing Date any material fact necessary to make the
statements therein, in the light of the circumstances under which they were,
are or will be made, not materially misleading in their presentation of the
Recapitalization Transactions or of Holdings and its Subsidiaries taken as a
whole.
(b) All financial projections concerning Holdings and its
Subsidiaries that are or have been made available to the Administrative Agent
or any Lender by Holdings or any of its Subsidiaries or Affiliates, unless
otherwise disclosed, have been or will be prepared in good faith based upon
assumptions believed by Holdings and the Borrower to be reasonable.
SECTION 3.19. Employee Benefit Plans. Each of Holdings and the
Restricted Subsidiaries and each of their ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder except for such
noncompliance which would not be expected to result in a Material Adverse
Effect. No Reportable Event has occurred as to which Holdings or any
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of the Restricted Subsidiaries or any of their ERISA Affiliates was required
to file a report with the PBGC, other than reports for which the 30 day notice
requirement is waived, reports that have been filed and reports the failure of
which to file would not result in a Material Adverse Effect and as of the
Closing Date, the present value of all benefit liabilities under each Plan of
Holdings and the Restricted Subsidiaries or any of their ERISA Affiliates (on
a termination basis and based on those assumptions used to fund such Plan) did
not, as of the last annual valuation report applicable thereto, exceed by more
than $7,500,000 the value of the assets of such Plan. None of Holdings or any
of the Restricted Subsidiaries or any of their ERISA Affiliates has incurred
or could reasonably be expected to incur any Withdrawal Liability that could
result in a Material Adverse Effect. None of Holdings or any of the
Restricted Subsidiaries or any of their ERISA Affiliates has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan
is reasonably expected to be in reorganization or to be terminated where such
reorganization or termination has resulted or could reasonably be expected to
result, through increases in the contributions required to be made to such
Plan or otherwise, in a Material Adverse Effect.
SECTION 3.20. Labor Matters. There are no strikes against Holdings or
any of its Subsidiaries pending, other than any strikes which, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The hours worked and payment made to employees of Holdings
and each of its Subsidiaries have not been in violation in any material
respect of the Fair Labor Standards Act or any other applicable law dealing
with such matters. All material payments due from Holdings or any of its
Subsidiaries, or for which any claim may be made against Holdings or any of
its Subsidiaries, 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 Holdings or such subsidiary to the extent required by GAAP. The
consummation of the Recapitalization Transactions will not give rise to a
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which Holdings or any of its
Subsidiaries (or any predecessor) is a party or by which Holdings or any of
its subsidiaries (or any predecessor) is bound, other than collective
bargaining agreements which, individually or in the aggregate, are not
material to Holdings and its Subsidiaries taken as a whole.
SECTION 3.21. Environmental Matters. (a) Except as disclosed in
writing to the Administrative Agent, each Lender and the Issuing Bank prior to
the date of this Agreement, which disclosed matters individually and in the
aggregate are not reasonably expected by Holdings or the Borrower to have a
Material Adverse Effect, (i) Holdings and each of its Subsidiaries has
complied in all respects with all applicable Federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental regulation or control, except to
the extent of any failure so to comply which alone and together with other
such failures is not reasonably expected to result in a Material Adverse
Effect; (ii) none of Holdings or any Subsidiary of Holdings has received
notice of any failure so to comply which alone or together with other such
failures is reasonably expected to result in a Material Adverse Effect; and
(iii) none of Holdings or any of its Subsidiaries manages, transports or
stores any hazardous wastes, hazardous substances, hazardous materials, toxic
substances or toxic pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act,
the Toxic Substance Control Act, the Clean Air Act or the Clean Water Act, in
violation of any applicable regulations promulgated pursuant thereto or of any
other applicable law where such violation is reasonably likely to result,
individually or together with other violations, in a Material Adverse Effect.
(b) Except with respect to matters that, individually and in the
aggregate, Holdings and the Borrower reasonably believe would not have a
Material Adverse Effect, as of the Closing Date: (i) the operations of
Holdings and each of its Subsidiaries comply in all respects with all
Environmental Laws and, to the knowledge of Holdings, the Canadian Borrower or
the Borrower after inquiry, no conditions exist (including at properties
leased or subleased to third persons) which would subject Holdings or its
Subsidiaries to damages, liabilities, penalties, injunctive relief or clean-up
costs under any Environmental Law or which require or are reasonably likely to
require any Remedial Action under any Environmental Law; (ii) each of Holdings
and its Subsidiaries has obtained all Environmental Permits necessary for its
operation or required by any Environmental Law, and all such Environmental
Permits are in good standing, and none of Holdings or its Subsidiaries has
been cited by a Governmental Authority for violating any terms or conditions
of such Environmental Permits within the
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five-year period prior to the Closing
Date; (iii) none of Holdings or its Subsidiaries is subject or a party to any
Environmental Claim; (iv) with respect to present facilities and operations,
none of Holdings or its Subsidiaries, or, to the knowledge of Holdings, the
Canadian Borrower or the Borrower, any predecessor of such persons, is subject
to any outstanding written order or agreement with any Governmental Authority
or private party respecting (A) any Environmental Law, (B) any Remedial Action
under any Environmental Law, or (C) any Environmental Claim; (v) to the
knowledge of Holdings, the Canadian Borrower or the Borrower, none of the
operations of any of Holdings or its Subsidiaries is the subject of any
investigation by a Governmental Authority evaluating whether any Remedial
Action under any Environmental Law is needed; (vi) none of Holdings or its
Subsidiaries or, to the knowledge of Holdings, the Canadian Borrower or the
Borrower, any predecessor of such persons has filed any notice under any
Environmental Law indicating past or present treatment, storage or disposal of
a hazardous waste as defined under 40 C.F.R. Parts 260 through 270 (in effect
as of the Closing Date) or any state equivalent, or reporting a Release of a
Contaminant; (vii) to the knowledge of Holdings, the Canadian Borrower or the
Borrower except as permitted under any Environmental Law, none of Holdings or
its Subsidiaries has experienced a Release of any Contaminant, and there has
been no voluntary disposal, use, storage, recycling or treatment on, under or
at any property of such person (or in tanks or other facilities thereon) of
any Contaminant which, if known to be present on such property, or present in
soils or groundwater, would require Remedial Action under any Environmental
Law; and (viii) no Lien in favor of any Governmental Authority for (A) any
liability under any Environmental Law or (B) damages arising from or costs
incurred by such Governmental Authority in response to a Release of a
Contaminant into the environment has been recorded with respect to any
property of Holdings or any of its Subsidiaries. For purposes of this Section
3.21(b), "knowledge" means the actual knowledge of any Responsible Officer of
Holdings or any Restricted Subsidiary, any officer of Holdings or any
Restricted Subsidiary with responsibility for environmental compliance, or any
plant or facilities manager with responsibility for overall management of such
plant or facility of Holdings or any of its Subsidiaries.
(c) Each of Holdings and its Subsidiaries reasonably believes that
Holdings and its Subsidiaries on a consolidated basis have made adequate
provision (in accordance with GAAP) for all damages, liabilities, penalties or
costs that they reasonably expect to incur in connection with any
Environmental Claim or any Remedial Action existing or, to the knowledge of
Holdings or the Borrower, reasonably anticipated as of the date of this
Agreement.
SECTION 3.22. Solvency. (a) The fair salable value of the assets of
each of the Borrower and, as of the Closing Date, the Canadian Borrower
exceeds the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Borrower and, as of the Closing Date, the Canadian Borrower, respectively, as
they mature. The assets of each of the Borrower and, as of the Closing Date,
the Canadian Borrower do not constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Neither the
Borrower nor, as of the Closing Date, the Canadian Borrower intends to, or
believes that it will, incur debts beyond its ability to pay such debts as
they mature (taking into account the Recapitalization Transactions but
assuming that the Overallotment Option is not exercised).
(b) Upon consummation of the Recapitalization Transactions
(irrespective of whether the Overallotment Option is exercised), the fair
salable value of the assets of each of the Borrower and its subsidiaries taken
as a whole and, as of the Closing Date, of the Canadian Borrower and its
subsidiaries taken as a whole will exceed the amount that will be required to
be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Borrower and its subsidiaries and,
as of the Closing Date, of the Canadian Borrower and its subsidiaries,
respectively.
(c) The assets of each of the Borrower and its subsidiaries taken
as a whole and, as of the Closing Date, the Canadian Borrower and its
subsidiaries taken as a whole do not, and upon consummation of the
Recapitalization Transactions (but assuming that the Overallotment Option is
not exercised) will not, constitute unreasonably small capital for the
Borrower and its subsidiaries and, as of the Closing Date, the Canadian
Borrower and its subsidiaries, respectively, to carry out their respective
businesses as now conducted and as proposed to be conducted including the
capital needs of the Borrower and its subsidiaries and, as of the Closing
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46
Date, the Canadian Borrower and its subsidiaries taking into account the
particular capital requirements of the business conducted by the Borrower and
each of its subsidiaries, and projected capital requirements and capital
availability thereof.
(d) Neither the Borrower nor, as of the Closing Date, the Canadian
Borrower intends to, or intends to permit any of its subsidiaries to, incur
debts beyond their respective ability to pay such debts as they mature, taking
into account the timing and amounts of cash to be received by the Borrower and
each of such subsidiaries, and of amounts to be payable on or in respect of
debt of the Borrower and each of such subsidiaries.
SECTION 3.23. Absence of Certain Restrictions. No indenture,
certificate of designation for preferred stock, agreement or other instrument
to which Holdings or any Restricted Subsidiary is a party will prohibit or
materially restrain, or have the effect of prohibiting or materially
restraining, or imposing materially adverse conditions upon, the incurrence of
Indebtedness, the granting of Liens, the provision of Guarantees or the
payment of dividends by subsidiaries of Holdings except for restrictions (a)
on the granting of Liens on assets that are encumbered by Liens permitted
under clause (a), (b), (i), (k), (l) or (r) of Section 6.04, to the extent
that such restrictions apply only to the assets so encumbered and are imposed
by the agreements under which such Liens were granted or (b) contained in
agreements relating to Indebtedness not in excess of $10,000,000 in the
aggregate.
SECTION 3.24. No Foreign Assets Control Regulation Violation. None of
the Recapitalization Transactions will result in a violation of any of the
foreign assets control regulations of the United States Treasury Department,
31 C.F.R., Subtitle B, Chapter V, as amended (including the Foreign Assets
Control Regulations, the Transaction Control Regulations, the Cuban Assets
Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets
Control Regulations, the Nicaraguan Trade Control Regulations, the South
African Transactions Regulations, the Libyan Sanctions Regulations, the Soviet
Gold Coin Regulations, the Panamanian Transactions Regulations, the Kuwaiti
Assets Control Regulations and the Iraqi Sanctions Regulations contained in
said Chapter V), or any ruling issued thereunder or any enabling legislation
or Presidential Executive Order granting authority therefor, nor will the
proceeds of the Loans be used by the Borrower in a manner that would violate
any thereof.
SECTION 3.25. Insurance. Each of Holdings and the Restricted
Subsidiaries carries and maintains with respect to its insurable properties
insurance (including self insurance) with financially sound and reputable
insurers of the types, to such extent and against such risks as is customary
with companies in the same or similar businesses, including fire and other
risks insured against by extended coverage and public liability insurance
against claims for personal injury or death or property damages occurring
upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it.
SECTION 3.26. Certain Other Representations. All representations and
warranties contained in any other Loan Document and made by any of Holdings or
any of its Subsidiaries are true and correct as of the date made or deemed to
have been made.
ARTICLE IV.
CONDITIONS
The obligations of the Lenders to make Loans hereunder and the
obligation of the Issuing Bank to issue Letters of Credit hereunder are
subject to the satisfaction of the following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing, other
than a Borrowing in which Revolving Credit Loans are refinanced with new
Revolving Credit Loans (without any increase in the aggregate principal amount
of Revolving Credit Loans outstanding) as contemplated by Section 2.02(e), and
on the date of each issuance or renewal of a Letter of Credit:
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47
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03, or the Administrative Agent and
the applicable Issuing Bank shall have received a notice regarding the
issuance or renewal of such Letter of Credit as required by Section
2.19(c), as applicable.
(b) The representations and warranties set forth in each Loan
Document shall be true and correct in all material respects on and as of
the date of such Borrowing, issuance or renewal with the same effect as
though made on and as of such date, except to the extent such repre-
sentations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing, issuance
or renewal no Event of Default or Default shall have occurred and be
continuing.
(d) If such Borrowing is of Delayed Draw Term Loans (i) the gross
proceeds received by Holdings from the Public Offering and the Private
Placement (after giving effect to the arrangements described in Section
4.02(s)) shall have been as described in Section 4.02(c), and (ii) if
the proceeds of such Borrowing will be used to fund an ESOP Loan, the
Agents shall be reasonably satisfied with the loan documentation
executed in connection therewith (which loan documentation shall provide
that the ESOP shall, to the extent permitted by law, repay the ESOP Loan
upon receipt by the ESOP of cash distributions in respect of the ESOP
Investment).
Each Borrowing and each issuance or renewal of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date
of such Borrowing as to the matters specified in paragraphs (b) and (c) of
this Section 4.01.
SECTION 4.02. First Borrowing. On the Closing Date (except as provided
in paragraph (c) below):
(a) Each Lender, if it so requests in accordance with subsection
2.04(e), shall have received a duly executed Revolving Credit Note,
Delayed Draw Term Note and Term Note and the Swingline Lender, if it so
requests in accordance with subsection 2.04(e), shall have received a
Swingline Note, in each case, complying with the provisions of Section
2.04. Each Lender, if it so requests in accordance with subsection
2.04(a), shall have received a duly executed Canadian Term Note,
complying with the provisions of Section 2.04.
(b) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date, including
reimbursement of any out-of-pocket expenses referred to in Section 9.05
(to the extent that notice thereof is given to the Borrower prior to the
Closing Date).
(c) The issuance by Holdings of its Common Stock in the Public
Offering and the Private Placement for aggregate gross proceeds of not
less than $250,000,000 (which may include up to $30,000,000 of gross
proceeds received by Holdings after the Closing Date as described in
paragraph (q) of Article VII) shall have occurred or shall occur
simultaneously with the initial Borrowing hereunder. The Lenders shall
have received copies of the Holdings Underwriting Agreement and the
Agents shall be satisfied with the terms and conditions thereof.
(d) The Administrative Agent shall have received the favorable
written opinions of (i) Cravath, Swaine & Moore, special counsel for
Holdings and its subsidiaries, (ii) Elizabeth R. Philipp, Esq., general
counsel for Holdings and its subsidiaries, and (iii) Stikeman, Elliott
special Canadian Counsel for the Canadian Borrower, each dated the
Closing Date and addressed to the Lenders, and in form and substance
satisfactory to the Administrative Agent and covering the matters set
forth in Exhibit F. In addition, the Administrative Agent shall have
received the favorable written opinions of such local counsel (including
Canadian counsel) with respect to legal matters relating hereto as the
Administrative Agent may reasonably have requested, in such form and to
such effect as shall be satisfactory to the Lenders and to Simpson
Thacher & Bartlett, special counsel for the Administrative Agent.
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48
(e) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of each of the Borrower, the Canadian Borrower and each
Guarantor, certified as of a recent date by the Secretary of State of
the state of its organization (or, in the case of the Canadian Borrower,
the Ministry of Consumer and Commercial Relations of the Province of
Ontario), and a certificate as to the good standing of each of the
Borrower, the Canadian Borrower and each Guarantor as of a recent date,
from such Secretary of State (or, in the case of the Canadian Borrower,
the Ministry of Consumer and Commercial Relations of the Province of
Ontario); (ii) a certificate of the Secretary or Assistant Secretary of
each of the Borrower, the Canadian Borrower and each Guarantor dated
the Closing Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of such entity as in effect on the Closing
Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of
such entity authorizing the execution, delivery and performance of the
Loan Documents to which it is a party, the granting of the Liens
thereunder and, in the case of the Borrower and the Canadian Borrower,
the borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C)
that the certificate or articles of incorporation of such entity have
not been amended since the date of the last amendment thereto shown on
the certificate of good standing furnished pursuant to clause (i) above,
and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of such entity; (iii) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
(ii) above; (iv) a certificate or equivalent documentation from the
Secretary of State of each state (or, in the case of the Canadian
Borrower, the Ministry of Consumer and Commercial Relations of the
Province of Ontario and the Inspector General of Financial Institutions
of the Province of Quebec) in which any of the Borrower , the Canadian
Borrower or the Guarantors conducts material business or owns material
assets as to the qualification of such entity to do business and its
good standing in such state; and (v) such other documents as the Lenders
or their counsel or Simpson Thacher & Bartlett, special counsel for the
Administrative Agent, may reasonably request.
(f) The Administrative Agent shall have received a certificate,
dated the Closing Date and signed by a Financial Officer of Holdings and
the Borrower, confirming compliance with the conditions precedent set
forth in paragraphs (b) and (c) of Section 4.01 and those set forth in
paragraphs (c), (h), (k), (l), (m), (n), and (o) of this Section 4.02
(disregarding, for this purpose, the provisions of any such paragraph
that refer to the satisfaction of the Administrative Agent, its counsel
or the Lenders with any matter).
(g) The Pledge Agreement shall have been duly executed by
Holdings and each Restricted Subsidiary listed therein and delivered to
the Collateral Agent and shall be in full force and effect, all
outstanding shares of capital stock of the Borrower and each domestic
subsidiary thereof, 65% of the outstanding shares of capital stock of
each foreign subsidiary owned directly by the Borrower or a domestic
subsidiary of the Borrower and all inter-company obligations in excess
of $10,000,000 held by Holdings, the Borrower or any subsidiary of the
Borrower and evidenced by notes, bonds or other instruments shall have
been duly and validly pledged to the Collateral Agent for the benefit of
the Secured Parties and certificates representing all such shares and
the instruments representing all such obligations shall be in the actual
possession of the Collateral Agent.
(h) A Permitted Receivables Financing providing commitments of at
least $150,000,000 shall have become effective and the initial funding
thereunder shall have been consummated.
(i) The Collateral Agent shall have received each document
(including Uniform Commercial Code financing statements) required by law
or reasonably requested by the Collateral Agent to be filed, registered
or recorded in order to create in favor of the Collateral Agent for the
benefit of the Secured Parties a valid, legal and perfected first
priority security interest in or lien on the Collateral that is the
subject of the Pledge Agreement.
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49
(j) The Guarantee Agreement shall have been duly executed by
Holdings and each other Guarantor and delivered to the Collateral Agent
and shall be in full force and effect on such date.
(k) Except as contemplated by the Recapitalization Transactions,
there shall not have occurred any material change in the capitalization
(whether in debt or equity), corporate structure or assets of Holdings
or any of its subsidiaries, or any changes in the certificate of
incorporation or by-laws of Holdings or any of its Subsidiaries.
(l) The Recapitalization Transactions, including the extensions
of credit (including in particular the incurrence of the Loans),
Guarantees, Liens and ability to make dividend payments contemplated
hereby (including the unsubordinated ranking of all obligations under
the Loan Documents and the Liens created by the Pledge Agreement), and
the consummation of the Public Offering and repayment, redemption or
defeasance of the Indebtedness and preferred stock contemplated by the
Recapitalization Transactions and the Preliminary Prospectus, shall have
been approved or exempted by all requisite Governmental Authorities, and
all such approvals or exemptions, including any conditions imposed
thereby, shall be in form and substance acceptable to the Required
Lenders in their sole discretion. No action shall have been taken by
any Governmental Authority which restrains or prevents or seeks to
restrain or prevent, or imposes or seeks to impose materially adverse
conditions upon, any of the Recapitalization Transactions. Without
limiting the generality of the foregoing, the Required Lenders shall be
satisfied, in their sole discretion, that all governmental approvals
have been obtained which, if not obtained, could render the obligations
to the Lenders under the Loan Documents either void or voidable or
subordinate them to other claims or obligations or could impair or
subject to subordination the security interests of, or the exercise of
remedies by, the Lenders.
(m) No action, suit, litigation or similar proceeding at law or
in equity or by or before any court or Governmental Authority shall
exist or, in the case of litigation by a Governmental Authority, be
threatened, with respect to any of the Recapitalization Transactions
which would in the reasonable opinion of the Required Lenders be likely
to have a Material Adverse Effect.
(n) The exchange of at least $191,400,000 principal amount
(including all amounts owned by the WP Entities and the Blackstone
Entities) of Holdings' 14% Subordinated Pay-in-Kind Bridge Notes for
shares of Holdings Common Stock shall have occurred or shall occur
simultaneously with the initial Borrowing hereunder.
(o) Holdings and the Borrower shall, on a basis that is
reasonably satisfactory to the Administrative Agent and is substantially
contemporaneous with the first Borrowing hereunder on the Closing Date
(i)(A) have repaid in full the principal of and accrued interest on all
loans and other amounts outstanding under the Existing Credit Agreement,
(B) have terminated the Existing Credit Agreement and all commitments
thereunder and (C) have obtained the release and termination (or
assignment to the Collateral Agent) of all liens securing obligations
thereunder (including the execution, delivery and filing of all
necessary releases and termination or assignment statements, in form and
substance satisfactory to the Administrative Agent), (ii)(A) have called
all outstanding shares of Holdings preferred stock for redemption at an
aggregate redemption price not to exceed the Permitted Preferred Stock
Redemption Price at the earliest practical date following the Closing
Date, (B) have deposited with the Collateral Agent on the Closing Date,
pursuant to arrangements satisfactory to the Administrative Agent, an
amount equal to such redemption price in order to provide for payment of
such redemption price and (C) have made arrangements satisfactory to the
Administrative Agent for the cancellation of all such shares when so
redeemed and (iii)(A) have called all outstanding Indebtedness of
Holdings and its subsidiaries listed on Schedule 4.02(o) for redemption
at an aggregate redemption price not to exceed the Permitted Debt
Redemption Price at the earliest practical date following the Closing
Date, (B) have deposited with the trustees for such Indebtedness or the
Collateral Agent, acting as trustee, and on competitive terms on the
Closing Date, pursuant to arrangements satisfactory to the
Administrative Agent, an amount equal to the redemption price in order
to provide
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50
for payment of such redemption price and (C) have made
arrangements satisfactory to the Administrative Agent for the
cancellation of all such Indebtedness when so redeemed.
(p) The Closing Date shall occur prior to September 15, 1994.
(q) The Agents shall be satisfied that the Revolving Credit
Commitments will be sufficient to fund the ongoing working capital
requirements of the Borrower and the other Restricted Subsidiaries.
(r) Each Lender and the Administrative Agent shall have received
the pro forma consolidated balance sheet of Holdings described in
Section 3.09(b) and the same shall be satisfactory to the Required
Lenders.
(s) The Administrative Agent shall have received copies of
arrangements in form and substance satisfactory to it and Simpson
Thacher & Bartlett, special counsel for the Administrative Agent,
between Holdings and the Selling Stockholders (as defined in the
Preliminary Prospectus) providing that, if Holdings raises less than
$300,000,000 in gross proceeds from the issuance of common stock in the
Public Offering and the Private Placement and the Overallotment Option
is exercised, the Selling Stockholders will assign (without cost to
Holdings) to Holdings their obligation to deliver to the underwriters
pursuant to the Holdings Underwriting Agreement, and the related right
to receive payment therefor, shares of Holdings Common Stock, so that
after giving effect thereto Holdings will have received the lesser of
(A) the amount of net proceeds attributable to gross Public Offering and
Private Placement proceeds of $300,000,000 and (B) the aggregate net
proceeds from the Public Offering (including the Overallotment Option
but excluding the proceeds of up to 5,000,000 shares of Holdings Common
Stock which may be sold by the Selling Stockholders (other than pursuant
to the Overallotment Option)), and such arrangements shall be in full
force and effect.
(t) The Administrative Agent shall be reasonably satisfied with the
existing cash management procedures for Holdings and its subsidiaries
and the proposed cash management procedures for Holdings and its
subsidiaries following the Closing Date.
(u) All aspects of the structure and documentation of the
Recapitalization Transactions and all corporate and other proceedings
taken or to be taken in connection therewith and all documents
incidental thereto shall be reasonably satisfactory in form and
substance to the Administrative Agent and to Simpson Thacher & Bartlett,
special counsel for the Administrative Agent, and each Lender shall have
received copies of all such documents as such Lender, acting through the
Administrative Agent, may reasonably request. All legal matters
incident to this Agreement and the borrowings hereunder shall be
reasonably satisfactory to the Agents and to Simpson Thacher & Bartlett,
special counsel for the Administrative Agent.
Each of Holdings, the Borrower and the Canadian Borrower hereby directs
its counsel referred to in clause (d) above to deliver the opinions to be
delivered by such counsel pursuant to such paragraph, it being understood that
the Lenders will and may rely thereon.
ARTICLE V.
AFFIRMATIVE COVENANTS
Each of Holdings, the Canadian Borrower and the Borrower covenants and
agrees that from and after the Closing Date, so long as this Agreement or any
Letter of Credit shall remain in effect or the principal of or interest on any
Loan, any Fees or any other expenses or amounts payable under or in respect of
any Loan Document or Letter of Credit shall be unpaid, unless the Required
Lenders shall otherwise consent in writing, Holdings, the Canadian Borrower
and the Borrower will, and will cause each of the Restricted Subsidiaries to:
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51
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.08 and except for the liquidation or dissolution of Restricted
Subsidiaries (other than Significant Subsidiaries) if the assets of such
corporations to the extent they exceed estimated liabilities are acquired by a
wholly owned Restricted Subsidiary in such liquidation or dissolution;
provided that Subsidiaries which are Guarantors may not be liquidated into
Subsidiaries that are not Guarantors and domestic Subsidiaries may not be
liquidated into foreign Subsidiaries.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; comply in all material respects with
all applicable laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted; and at all times
maintain and preserve all property material to the conduct of such business
and keep such property in good repair, working order and condition and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith, if any, may be properly
conducted at all times.
(c) Without limiting the generality of the provisions of Section
5.01(b), each of Holdings, the Canadian Borrower and the Borrower shall
(i)(A) undertake reasonable efforts to comply, and to cause each Subsidiary to
comply, in all material respects with all Environmental Laws and any order,
decree or similar requirements of any Governmental Authority concerning (1) a
material violation of any Environmental Law, (2) a financial contribution by
Holdings or any of its Subsidiaries under any Environmental Law or (3) a
Remedial Action by or on the part of Holdings or any of its Subsidiaries under
any Environmental Law and (B) undertake reasonable efforts to remedy and to
cause each of its Subsidiaries to remedy, as soon as reasonably practicable,
any material violation of Environmental Laws, except in any case that
compliance or remedy shall not be required insofar as any failure to undertake
such efforts cannot reasonably be expected by Holdings, the Canadian Borrower
or the Borrower to have a Material Adverse Effect, or so long as (x) the
validity of the same shall be contested diligently and in good faith, (y) the
subject property does not contain a material plant or other facility or shall
then be in no danger of being sold, forfeited or lost pursuant to such contest
and (z) reserves have been established in accordance with GAAP by Holdings or
such subsidiary in connection therewith; and (ii) undertake reasonable efforts
to require and to cause each of its subsidiaries to require, to the extent
practicable and appropriate, that a lease for any renewing or new tenant
contain terms substantially equivalent to those of clause (i) above.
SECTION 5.02. Insurance. Keep its insurable properties insured
(including through self-insurance) at all times by financially sound and
reputable insurers in such amounts as shall be customary for similar
businesses and maintain such other insurance, of such types, to such extent
and against such risks, as is customary with companies in the same or similar
businesses, including insurance against fire and other risks insured against
by extended coverage and public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by it;
and maintain such other insurance as may be required by law.
SECTION 5.03. Taxes. Pay and discharge promptly all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits or in respect of its property, before the same shall become delinquent
or in default, as well as all lawful claims for labor, materials and supplies
or otherwise which, if unpaid, might give rise to a Lien upon such properties
or any part thereof; provided, however, that such payment and discharge shall
not be required with respect to any such tax, assessment, charge, levy or
claim so long as (a) the validity or amount thereof shall be contested in good
faith by appropriate proceedings and Holdings or any Restricted Subsidiary, as
applicable, shall set aside on its books adequate reserves as required by GAAP
with respect thereto, (b) such tax, assessment, charge, levy or claim is in
respect of property taxes for property that Holdings or one of the Restricted
Subsidiaries has determined to abandon and the sole recourse for such tax,
assessment, charge, levy or claim is to such property or (c) the amount of
such taxes assessments, charges, levies and claims and interest and penalties
thereon does not exceed $1,000,000 in the aggregate.
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52
SECTION 5.04. Financial Statements, Reports, Amendments, etc. In the
case of Holdings, furnish to each Credit Agreement Creditor:
(a) within 90 (or, in the case of clause (ii) below, 105) days
after the end of each fiscal year (x) consolidated balance sheets and
related statements of income and cash flows, showing the consolidated
financial condition of each of (i) Holdings and its Subsidiaries and
(ii) Holdings and the Restricted Subsidiaries, in each case as of the
close of such fiscal year and the results of their operations during
such year, audited in the case of clause (i) above by Arthur Andersen &
Co. or other independent public accountants of recognized national
standing (who shall be reasonably acceptable to the Administrative
Agent) and accompanied by (1) in the case of clause (i), an opinion of
such accountants (which shall not be qualified in any material respect)
to the effect that such consolidated financial statements fairly present
the financial condition and results of operations of Holdings and its
consolidated subsidiaries and Holdings and the Restricted Subsidiaries,
respectively, in accordance with GAAP and (2) a certificate of a Finan-
cial Officer certifying that such consolidated financial statements
fairly present the financial condition and results of operations of
Holdings and its consolidated subsidiaries and Holdings and the
Restricted Subsidiaries, respectively, in accordance with GAAP
consistently applied (except as disclosed in such certificate, in
reasonable detail, which detail shall be reasonably acceptable to the
Administrative Agent) and (y) a statement of stockholders' equity of
Holdings, presented on a basis consistent with the financial statements
furnished pursuant to clause (x) above, and certified by one of
Holdings' Financial Officers as fairly presenting the stockholders'
equity of Holdings in accordance with GAAP consistently applied (except
as disclosed in such certificate in reasonable detail, which detail
shall be reasonably acceptable to the Administrative Agent);
(b) within 45 (or, in the case of clause (ii) below, 60) days
after the end of each of the first three fiscal quarters of each fiscal
year, the consolidated balance sheets and related statements of income
and cash flows, showing the consolidated financial condition of each of
(i) Holdings and its Subsidiaries and (ii) Holdings and the Restricted
Subsidiaries, in each case as of the close of such fiscal quarter and
the results of their operations during such fiscal quarter and the then
elapsed portion of the fiscal year, together with the balance sheets and
related statements of income and cash flows as of the corresponding
dates and for the corresponding periods in the prior year, all certified
by one of its Financial Officers as fairly presenting the consolidated
financial condition and results of operations of Holdings and its
consolidated subsidiaries and Holdings and the Restricted Subsidiaries,
respectively, in accordance with GAAP (other than the absence of
footnotes in accordance with GAAP) consistently applied (except as
disclosed in such certificate in reasonable detail, which detail shall
be reasonably acceptable to the Administrative Agent), subject to normal
year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
(a) or (b) above, a certificate (a "Compliance Certificate") of the
accounting firm or Financial Officer (which certificate shall be in the
form of Exhibit G if delivered by a Financial Officer) opining on or
certifying such statements (which certificate, when furnished by an
accounting firm, may be limited to accounting matters and disclaim
responsibility for legal interpretations) (i) certifying that no Default
or Event of Default has occurred or, if such Default or Event of Default
has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and
(ii) setting forth computations in reasonable detail (which detail shall
be reasonably satisfactory to the Administrative Agent) demonstrating
compliance with the covenants contained in Sections 6.14, 6.15, 6.16 and
6.17 and showing the Applicable Level;
(d) if, as a result of any change in accounting principles and
policies from those as in effect on the date of this Agreement, the
consolidated financial statements of Holdings and the Subsidiaries or
Holdings and the Restricted Subsidiaries, as the case may be, delivered
pursuant to clauses (a) and (b) above will differ in any material
respect from the consolidated financial statements that would have been
delivered pursuant to such clauses had no such change in accounting
principles and policies been made, then, together with the first
delivery of financial statements pursuant to clauses (a) and (b) above
<PAGE>
53
following such change, a schedule prepared by a Financial Officer
reconciling such changes to what the financial statements would have
been without such changes;
(e) promptly after the same become publicly available, copies of
all periodic reports and proxy statements and, to the extent requested
by the Administrative Agent, any other materials filed by Holdings or
any of its Subsidiaries with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or any Governmental Authority
succeeding to any of or all the functions of said Commission, or with
any national securities exchange, or distributed to its shareholders
generally, as the case may be;
(f) within 90 days after the beginning of each fiscal year, a
copy of the annual income and capital expenditure budget for such fiscal
year;
(g) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of Holdings or
any of its Restricted Subsidiaries, or compliance with the terms of any
Loan Document, as any Credit Agreement Creditor, acting through the
Administrative Agent, may reasonably request;
(h) promptly, a copy of any amendment or waiver of any provisions
of any agreement which amendment or waiver is described in Section 6.10
or 6.11;
(i) promptly following the creation or acquisition of any
Subsidiary, a certificate from a Responsible Officer, identifying such
new Subsidiary and the ownership interest of Holdings and its
Subsidiaries therein; and promptly following any Investment in an
Unrestricted Subsidiary, a description of such Investment and the amount
thereof;
(j) if requested by the Administrative Agent, within 105 days
following the end of any fiscal year of any Unrestricted Subsidiary, a
balance sheet and related statements of income and cash flow for such
Unrestricted Subsidiary at the end of and for such fiscal year; and
(k) promptly, a copy of all reports submitted in connection with
any interim or special audit made by independent accountants of the
books of Holdings or any of its Subsidiaries.
SECTION 5.05. Litigation and Other Notices. Furnish to each Credit
Agreement Creditor prompt written notice of the following:
(a) any Default or Event of Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority,
against Holdings or any Subsidiary in respect of which there is a
reasonable possibility of an adverse determination and which, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
(c) any development specific to Holdings and its Subsidiaries and
not otherwise publicly disclosed known to a Responsible Officer that has
resulted in, or could reasonably be anticipated to result in, a Material
Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and (b) furnish to each Credit Agreement
Creditor (i) as soon as possible, and in any event within 30 days after any
Responsible Officer of the Borrower, any Guarantor or any ERISA Affiliate of
any of them knows or has reason to know that any Reportable Event has occurred
that alone or together with any other Reportable Event could reasonably be
expected to result in liability of the Borrower, any Guarantor or any of their
ERISA Affiliates to the PBGC in an aggregate amount exceeding $10,000,000, a
statement of a Financial Officer setting
<PAGE>
54
forth details as to such Reportable
Event and the action proposed to be taken with respect thereto, together with
a copy of the notice, if any, of such Reportable Event given to the PBGC, (ii)
promptly after any Responsible Officer learns of receipt thereof, a copy of
any notice the Borrower or any Guarantor or any of their ERISA Affiliates may
receive from the PBGC relating to the intention of the PBGC to terminate any
Plan or Plans (other than a Plan maintained by any of their ERISA Affiliates
which is considered an ERISA Affiliate only pursuant to subsection (m) or (o)
of Section 414 of the Code) or to appoint a trustee to administer any Plan or
Plans, (iii) within 20 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a
Financial Officer setting forth details as to such failure and the action
proposed to be taken with respect thereto, together with a copy of such notice
given to the PBGC and (iv) promptly after any Responsible Officer learns
thereof and in any event within 30 days after receipt thereof by the Borrower,
any Guarantor or any ERISA Affiliate from the sponsor of a Multiemployer Plan,
a copy of each notice received by the Borrower, any Guarantor or such ERISA
Affiliate concerning (A) the imposition of Withdrawal Liability or (B) a
determination that a Multiemployer Plan is, or is expected to be, terminated
or in reorganization, in each case within the meaning of Title IV of ERISA.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with GAAP and
permit any persons designated by the Administrative Agent (or, during the
continuance of an Event of Default, any Lender) to visit and inspect the
financial records and the properties of Holdings or any Restricted Subsidiary
at reasonable times, upon reasonable notice and as often as reasonably
requested and to make extracts from and copies of such financial records, and
permit any persons designated by the Administrative Agent (or, during the
continuance of an Event of Default, any Lender) to discuss the affairs,
finances and condition of Holdings or any Restricted Subsidiary with the
officers thereof and independent accountants therefor (subject to reasonable
requirements of confidentiality, including requirements imposed by law or by
contract).
SECTION 5.08. Use of Proceeds. (a) Use the proceeds of the Term
Loans, the Canadian Term Loans, the Public Offering and the Private Placement
solely (i) to repay the principal of and accrued interest on all loans and all
other amounts outstanding under the Existing Credit Agreement, (ii) to redeem
Holdings, Group and Borrower outstanding preferred stock at an aggregate
redemption price not greater than its face value plus any premium payable upon
redemption plus accrued and unpaid dividends to the date of redemption (the
"Permitted Preferred Stock Redemption Price"), which is approximately
$220,000,000 as of June 30, 1994, (iii) to redeem or defease outstanding
Indebtedness of Holdings and its Subsidiaries listed on Schedule 4.02(o) at an
aggregate redemption price not greater than the principal amount thereof plus
accrued and unpaid interest to the date of redemption plus any required
redemption premium (the "Permitted Debt Redemption Price"), which is
approximately $821,000,000 as of June 30, 1994 (excluding the Holdings
Subordinated PIK Notes to be converted to Holdings Common Stock) and (iv) to
fund transaction costs related to the Recapitalization Transactions.
(b) Use the proceeds of Delayed Draw Term Loans solely (i) to make
ESOP Loans, (ii) to the extent not used to make ESOP Loans, to finance
Permitted Business Acquisitions and (iii) for the purposes described in clause
(a) above.
(c) Use the proceeds of Revolving Loans made on the Closing Date
solely for the purposes set forth in Section 5.08(a) and thereafter for
general corporate purposes (including to make Permitted Business
Acquisitions).
(d) Use Letters of Credit solely for general corporate purposes in
the ordinary course of business of the Borrower and its subsidiaries.
(e) Use the proceeds of the Canadian Term Loans only to pay a
dividend to the Borrower, which proceeds will be used for the purposes
described in clause (a) above.
SECTION 5.09. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing UCC financing statements, mortgages
<PAGE>
55
and deeds
of trust), which may be required under applicable law, or which the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents, in order to release the security interests
securing obligations in respect of the Existing Credit Agreement and in order
to grant, preserve, protect and perfect the validity and first priority
(subject to Liens permitted by Section 6.04) of the security interests created
or intended to be created pursuant to the Pledge Agreement. In addition, from
time to time, Holdings and the Restricted Subsidiaries will, at their cost and
expense, subject to the obtaining of any required regulatory authorizations
(which Holdings and Borrower agree to use their best efforts to obtain)
promptly secure the Obligations by causing the following to occur: (i)
promptly upon creating or acquiring any additional subsidiary, the stock of
such subsidiary will (unless such subsidiary is a subsidiary of an
Unrestricted Subsidiary) be pledged pursuant to the Pledge Agreement, provided
that no more than 65% of the capital stock of any foreign subsidiary shall be
required to be pledged pursuant to this Section 5.09, and (ii) such subsidiary
will (unless such subsidiary is an Unrestricted Subsidiary or a foreign
subsidiary) become a party to the Guarantee Agreement. All such security
interests and Liens will be created under the Pledge Agreement and other
security agreements and other instruments and documents in form and substance
reasonably satisfactory to the Collateral Agent, and Holdings and the
Restricted Subsidiaries shall deliver or cause to be delivered to the
Administrative Agent all such instruments and documents (including legal
opinions and lien searches) as the Required Lenders shall reasonably request
to evidence compliance with this Section 5.09. Holdings and the Restricted
Subsidiaries agree to provide such evidence as the Administrative Agent shall
reasonably request as to the perfection and priority status of each such
security interest and Lien.
SECTION 5.10. Change in Ownership. In the case of Holdings, own
directly at all times, legally and beneficially, 100% of the capital stock of
the Borrower, free of Liens except Liens in favor of the Collateral Agent;
and, in the case of Borrower, own (a) directly at all times, legally and
beneficially, 100% of the capital stock of the Finance Subsidiary free of
Liens except Liens in favor of the Collateral Agent and (b) directly or
indirectly at all times, legally and beneficially, 100% of the capital stock
of the Canadian Borrower free of Liens except Liens, if any, in favor of the
Collateral Agent.
SECTION 5.11. Fiscal Year; Accounting. In the case of each of Holdings
and its subsidiaries, cause its respective fiscal year to end on the last
Saturday in January.
SECTION 5.12. Dividends. In the case of the Borrower, permit its
subsidiaries to pay dividends and cause such dividends to be paid to the
extent required to pay the monetary Obligations.
SECTION 5.13. Rate Protection Agreements. As promptly as practicable
and in any event within 90 days after the Closing Date, enter into, and
thereafter maintain in effect, one or more interest rate protection agreements
(including interest rate swaps, caps, collars and other interest rate hedging
transactions) with any of the Lenders or other financial institutions
reasonably satisfactory to the Administrative Agent, the effect of which shall
be to limit for at least two years the interest payable by the Borrower in
connection with Indebtedness under this Agreement having an aggregate
outstanding principal amount not less than an amount equal to 40% of the
aggregate principal amount of the Loans projected to be outstanding during
such period on terms and conditions reasonably acceptable, taking into account
current market conditions, to the Administrative Agent and deliver evidence of
the execution and delivery thereof to the Administrative Agent.
SECTION 5.14. Corporate Separateness. Cause the management, business
and affairs of each of Holdings and the Subsidiaries to be conducted in such a
manner so that each of Holdings and the Unrestricted Subsidiaries will be
perceived as a legal entity separate and distinct from each other and the
Restricted Subsidiaries.
SECTION 5.15. Business of Restricted Subsidiaries. Cause all of the
business and activities of the Restricted Subsidiaries to be performed and
conducted by the Borrower and Restricted Subsidiaries which are subsidiaries
of the Borrower.
<PAGE>
56
ARTICLE VI.
NEGATIVE COVENANTS
Each of Holdings, the Canadian Borrower and the Borrower covenants and
agrees that from and after the Closing Date, so long as this Agreement or any
Letter of Credit shall remain in effect or any monetary Obligation shall be
unpaid, unless the Required Lenders shall otherwise consent in writing,
Holdings, the Canadian Borrower and the Borrower will not, and will not cause
or permit any Restricted Subsidiary to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness of the Borrower and the Restricted Subsidiaries
for borrowed money in an amount not to exceed $23,000,000 under
agreements existing on the date of this Agreement and set forth in
Schedule 6.01 and other Indebtedness existing on the Closing Date, but
not any extensions, renewals or refinancings of such Indebtedness except
(i) renewals and extensions expressly provided for in the agreements
evidencing any such Indebtedness as the same are in effect on the date
of this Agreement and (ii) refinancings and extensions of any such
Indebtedness if the interest rate with respect thereto and other terms
thereof are no less favorable than the Indebtedness being refinanced or
extended and the average life to maturity thereof is greater than or
equal to the Indebtedness being refinanced or extended (provided that
such Indebtedness permitted under clause (i) or clause (ii) above shall
not be (A) Indebtedness of an obligor that was not an obligor with
respect to the Indebtedness being extended, renewed or refinanced, (B)
in a principal amount which exceeds the Indebtedness being renewed,
extended or refinanced or (C) incurred, created or assumed if any
Default or Event of Default has occurred and is continuing or would
result therefrom);
(b) Indebtedness of the Borrower consisting of contingent
liabilities arising from indemnities and other contractual obligations
of the Borrower existing on the date hereof from the sale of properties
prior to the date hereof by Holdings and the Borrower and their
predecessors;
(c) So long as immediately after giving effect to the incurrence
thereof: (i) no Default or Event of Default shall have occurred and be
continuing and (ii) the outstanding principal amount of the Term Loans
and Canadian Term Loans is less than $350,000,000, Permitted
Subordinated Indebtedness;
(d) Indebtedness of (i) the Borrower to any subsidiary of the
Borrower evidenced, if the amount of such Indebtedness exceeds
$10,000,000, by an Intercompany Note pledged to the Collateral Agent
under the Pledge Agreement, (ii) any Domestic Restricted Subsidiary to
the Borrower evidenced, if the amount of such Indebtedness exceeds
$10,000,000, by an Intercompany Note pledged to the Collateral Agent
under the Pledge Agreement and (iii) any Domestic Restricted Subsidiary
to any other Restricted Subsidiary evidenced, if the amount of such
Indebtedness exceeds $10,000,000, by an Intercompany Note pledged to the
Collateral Agent under the Pledge Agreement; provided that no
Indebtedness may be incurred under this paragraph (d) by any subsidiary
of the Borrower that is not a Guarantor;
(e) Capital Lease Obligations and Purchase Money Indebtedness
incurred by the Borrower prior to or within 270 days after a Capital
Expenditure permitted under Section 6.03 in order to finance such
Capital Expenditure, and extensions, renewals and refinancings thereof
if the interest rate with respect thereto and other terms thereof are no
less favorable than the Indebtedness being refinanced and the average
life to maturity thereof is greater than or equal to the Indebtedness
being refinanced (provided that such Indebtedness shall not be (A)
Indebtedness of an obligor that was not an obligor with respect to the
Indebtedness being extended, renewed or refinanced, (B) in a principal
amount which exceeds the Indebtedness being renewed, extended or
refinanced or (C) incurred, created or assumed if any Default or Event
of Default has occurred and is continuing or would result therefrom);
(f) Capital Lease Obligations incurred by the Borrower or any
Restricted Subsidiary in respect of any Sale and Leaseback Transaction
that is permitted under Section 6.06;
<PAGE>
57
(g) Indebtedness of the Borrower and its subsidiaries in the
nature of Interest Rate Agreements and other interest rate and foreign
currency hedging transactions entered into in order to fix the effective
rate of interest, or to hedge against currency fluctuations, on the
Loans and other Indebtedness (it being understood that such transactions
shall be entered into for business purposes and not for the purpose of
speculation);
(h) Indebtedness of a Domestic Restricted Subsidiary which
represents the assumption by such Domestic Restricted Subsidiary of
Indebtedness of a Restricted Subsidiary in connection with the merger of
such Restricted Subsidiary with or into the assuming Domestic Restricted
Subsidiary or the purchase of all or substantially all the assets of
such other Restricted Subsidiary;
(i) Indebtedness of the Restricted Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, bankers acceptances, letters
of credit and surety bonds provided in the ordinary course of business,
and any extension, renewal or refinancing thereof to the extent not
provided to secure the repayment of other Indebtedness and to the extent
that the amount of refinancing Indebtedness is not greater than the
amount of Indebtedness being refinanced;
(j) Indebtedness arising from the honoring by a bank or other
financial institutions of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business; provided
that such Indebtedness is extinguished within two Business Days of its
incurrence;
(k) Indebtedness of a Restricted Subsidiary acquired after the
date hereof and Indebtedness of a corporation merged or consolidated
with or into a Restricted Subsidiary after the date hereof, which
Indebtedness exists at the time of such acquisition, merger or
consolidation and is not created in contemplation of such event and such
acquisition, merger or consolidation is permitted by this Agreement,
provided that the aggregate principal amount of Indebtedness under this
clause (k) shall not exceed $50,000,000;
(l) Indebtedness of the Borrower incurred after the date hereof,
which Indebtedness is created or incurred at the time of any Permitted
Business Acquisition to finance such acquisition; provided that the
aggregate principal amount of Indebtedness which may be created or
incurred under this paragraph (l) together with Indebtedness permitted
by paragraph (k) above shall not exceed $150,000,000;
(m) Indebtedness owed to (including obligations in respect of
letters of credit for the benefit of) any person providing worker's
compensation, health, disability or other employee benefits, property,
casualty, liability or other insurance to Holdings or any Subsidiary,
pursuant to reimbursement or indemnification obligations to such person;
(n) (i) Indebtedness represented by the Loans, the Letters of
Credit and the Guarantees thereof by the Guarantors pursuant to the
Guarantee Agreement and (ii) Indebtedness represented by the Guarantees
of Indebtedness permitted under clause (l) above by the Guarantors
pursuant to the Guarantee Agreement;
(o) other Capital Lease Obligations of the Restricted
Subsidiaries in an aggregate principal amount at any time outstanding
not in excess of $10,000,000;
(p) other unsecured Indebtedness of the Borrower and the Canadian
Borrower in an aggregate principal amount at any time outstanding not in
excess of $40,000,000 and unsecured Guarantees by the Borrower of any
Indebtedness of the Canadian Borrower incurred in accordance with this
clause (p);
(q) other Indebtedness of the Borrower together with Indebtedness
listed on Schedule 6.01 (as such Indebtedness may be refinanced as
permitted by Section 6.01(a)) in an aggregate principal amount
outstanding at any time not to exceed $35,000,000; and
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58
(r) all premium (if any), interest (including post-petition
interest), fees, expenses, indemnities, charges and additional or
contingent interest on obligations described in clauses (a) through (q)
above.
SECTION 6.02. Dividends and Distributions. Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, with respect to any shares of its capital stock (other than dividends
and distributions on Holdings Common Stock payable solely by the issuance of
additional shares of Holdings Common Stock) or directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Restricted
Subsidiary to purchase or acquire) any shares of any class of its capital
stock or any option, warrant or other right to acquire shares of such stock or
set aside any amount for any such purpose; provided, however, that:
(a) the foregoing shall not prohibit the Recapitalization
Transactions;
(b) any Subsidiary may declare and pay dividends or make other
distributions to the Borrower or to wholly owned Restricted
Subsidiaries;
(c) if at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing,
Holdings may, commencing with the fifth full fiscal quarter following
the Closing Date, pay dividends in cash on its common stock or any
preferred stock in any fiscal quarter in an amount not to exceed
$3,000,000;
(d) if at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing and
the Dividend Condition shall have been met, Holdings may pay dividends
in cash on its common stock or any preferred stock in any fiscal year in
an amount not to exceed in the aggregate 25% of Net Income for the prior
fiscal year less the amount of dividends paid in such current fiscal
year pursuant to clause (c) above;
(e) if at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing,
Holdings may repurchase director's qualifying shares of Holdings and
capital stock of Holdings and options therefor of employees and
directors of Holdings and the Restricted Subsidiaries provided that (i)
no such repurchase may be made unless Holdings is obligated to do so at
the time of repurchase pursuant to contractual agreements between
Holdings and the applicable officer or director and (ii) the aggregate
amount paid by Holdings in connection with such repurchases at any time
shall not exceed $3,000,000 plus the aggregate amount (but only to the
extent such amount is simultaneously contributed by Holdings to the
Borrower) received by Holdings from the sale or issuance of its capital
stock or options therefor to officers and directors of Holdings and the
Restricted Subsidiaries after the Closing Date;
(f) the Borrower may pay dividends or make other distributions to
Holdings in amounts sufficient to allow Holdings to pay (i) expenses
incurred in connection with the Recapitalization Transactions, Permitted
Tax Payments and state and local taxes and other governmental charges,
and administrative and routine expenses required to be paid by Holdings
in the ordinary course of its business, (ii) the dividends and other
amounts contemplated by clauses (c) and (d) above; provided that such
dividends pursuant to clause (ii) are used by Holdings for such purposes
within 20 days of the receipt of such dividends by Holdings, (iii) the
repurchase price for the capital stock and options therefor of Holdings
contemplated by clause (e) above provided that such dividends pursuant
to clause (iii) are used by Holdings for such purpose within 20 days of
the receipt of such dividends by Holdings and (iv) the amount of any
Investment in an Unrestricted Subsidiary if the Borrower and the
Restricted Subsidiaries could have made such Investment in Unrestricted
Subsidiaries pursuant to Section 6.07 (l) (but on the assumption that
the Borrower could otherwise invest in such Unrestricted Subsidiary);
provided that such dividends pursuant to clause (iv) are used by
Holdings for such purpose within 20 days of receipt of such dividends by
Holdings; provided further that no dividend may be paid to Holdings
pursuant to clause (ii) or (iii) or (iv) if at the time of such dividend
or after giving effect thereto a Default or Event of Default shall have
occurred and be continuing; and
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59
(g) the foregoing shall not prohibit the ESOP Investment.
SECTION 6.03. Capital Expenditures. Permit Capital Expenditures of the
Restricted Subsidiaries on a consolidated basis during any calendar year to be
greater than the amount set forth below for such year:
Calendar Year Amount
1994 $85,000,000
1995 85,000,000
1996 80,000,000
1997 80,000,000
1998 80,000,000
1999 80,000,000
2000 80,000,000
2001 80,000,000
2002 80,000,000
provided, however, that (i) to the extent Capital Expenditures made in any
year are less than the amount set forth above opposite such year, Restricted
Subsidiaries shall be permitted to carry forward the unused amount to the
succeeding calendar years so long as such aggregate Capital Expenditures in
any fiscal year do not exceed $130,000,000; and (ii) Capital Expenditures may
not be made by Holdings.
SECTION 6.04. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities) now owned or
hereafter acquired by it or on any income or rights in respect of any thereof,
except:
(a) Liens on property or assets of the Restricted Subsidiaries
existing on the date of this Agreement and, in the case of Liens
securing Indebtedness for borrowed money, set forth in Schedule 6.04;
provided that such Liens shall secure only those obligations which they
secure on such date (and extensions, renewals and refinancings of such
obligations permitted by Section 6.01(a)) and do not subsequently apply
to any other property or assets of Holdings or any Restricted
Subsidiary;
(b) any Lien on any property or asset used by a Restricted
Subsidiary in the ordinary course of business, which Lien existed prior
to the acquisition thereof by such subsidiary; provided that (i) such
Lien is not created in contemplation of or in connection with such
acquisition and (ii) such Lien does not apply to any other property or
assets of any other Restricted Subsidiary;
(c) any Lien on any property or asset of a Restricted Subsidiary
securing Indebtedness permitted by Section 6.01(k), provided that such
Lien does not apply to any other property or assets of Holdings or any
Restricted Subsidiary not securing such Indebtedness at the date of
acquisition of such property or asset;
(d) Liens for taxes, assessments or other governmental charges or
levies not yet due, or which are for less than $1,000,000 in the
aggregate, or which are being contested in compliance with Section 5.03
or for property taxes for property that the Borrower or one of its
Restricted Subsidiaries has determined to abandon if the sole recourse
for such tax, assessment, charge, levy or claim is to such property;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations which are not due or which are being
contested in good faith by appropriate proceedings and in respect of
which, if applicable, Holdings or the relevant Restricted Subsidiary
shall have set aside on its books reserves in accordance with GAAP;
(f) pledges and deposits made in the ordinary course of business
in compliance with the Federal Employers Liability Act or any other
workmen's compensation, unemployment insurance and other
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60
social security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements;
(g) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(h) zoning restrictions, easements, trackage rights, leases
(other than Capital Lease Obligations), licenses, special assessments,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract
from the value of the property subject thereto or interfere in any
material respect with the ordinary conduct of the business of any
Restricted Subsidiary;
(i) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case of
improvements, constructed) by any Restricted Subsidiary (including
without limitation, the interests of vendors and lessors under
conditional sale and title retention agreements); provided that (i) such
security interests secure Indebtedness permitted by Section 6.01, (ii)
such security interests are incurred, and the Indebtedness secured
thereby is created, within 270 days after such acquisition (or
construction), (iii) the Indebtedness secured thereby does not exceed
100% of the cost of such real property, improvements or equipment at the
time of such acquisition (or construction), (iv) such expenditures are
Capital Expenditures permitted under Section 6.03 and (v) such security
interests do not apply to any other property or assets of any Restricted
Subsidiary (other than to accessions to such real property, improvements
or equipment and provided that individual financings of equipment
provided by a single lender may be cross-collateralized to other
financings of equipment provided solely by such lender);
(j) Liens created in favor of the Collateral Agent for the
benefit of the Secured Parties;
(k) Liens securing reimbursement obligations in respect of
commercial letters of credit permitted under Section 6.01 and covering
the goods (or the documents of title in respect of such goods) financed
by such letters of credit;
(l) Liens arising out of capitalized or operating lease
transactions permitted under Section 6.06, so long as such Liens (i)
attach only to the property sold in such transaction and any accessions
thereto and (ii) do not interfere with the business of Holdings and the
Restricted Subsidiaries in any material respect;
(m) any Lien on assets of a person securing Indebtedness of such
person permitted by Section 6.01(q);
(n) any Lien arising by operation of law pursuant to Section
107(1) of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. (sect.) 9607(l), or pursuant to analogous
state law, for costs or damages which are not yet due (by virtue of
a written demand for payment by a Governmental Authority) or which
are being contested in compliance with Section 5.03, or on property that a
Restricted Subsidiary has determined to abandon if the sole recourse for
such costs or damages is to such property, provided that the liability
of Holdings and the Restricted Subsidiaries with respect to the matter
giving rise to such Lien shall not, in the reasonable estimate of the
Borrower (in light of all attendant circumstances, including the
likelihood of contribution by third parties), exceed $7,500,000;
(o) any leases or subleases to other persons of properties or
assets owned or leased by a Restricted Subsidiary;
(p) Liens consisting of interests of lessors under capital leases
permitted by Section 6.01;
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61
(q) Liens securing judgements for the payment of money in an
aggregate amount not in excess of $7,500,000 (to the extent not covered
by insurance) which judgements shall not be undischarged or stayed for a
period of more than 30 consecutive days;
(r) the replacement, extension or renewal of any Lien permitted
by clause (b), (c) or (i) above, provided that such replacement,
extension or renewal Lien shall not cover any property other than the
property that was subject to such Lien prior to such replacement,
extension or renewal and provided further that the Indebtedness and
other obligations secured by such replacement, extension or renewal Lien
are permitted by this Agreement; and
(s) other Liens with respect to property or assets not
constituting collateral for the Obligations with an aggregate fair
market value of not more than $25,000,000 at any time.
SECTION 6.05. Priority of Loan Payments. (a) Until the Commitments
have been terminated and the Obligations have been indefeasibly paid in full,
directly or indirectly, make any payment, retirement, repurchase or redemption
on account of the principal of any Permitted Subordinated Indebtedness or
directly or indirectly prepay any Permitted Subordinated Indebtedness prior to
the stated maturity date of such Permitted Subordinated Indebtedness, make any
payment or prepayment of any Permitted Subordinated Indebtedness which would
violate the terms of this Agreement or of such Permitted Subordinated
Indebtedness, any agreement or document evidencing, related to or securing the
payment or performance of the Permitted Subordinated Indebtedness or any
subordination agreement applicable to such Permitted Subordinated
Indebtedness.
(b) Until the Commitments have been terminated and the Obligations
have been indefeasibly paid in full, repay any Funded Debt of Holdings and the
Restricted Subsidiaries except:
(i) the Obligations;
(ii) payments of Funded Debt made in conformity with the regularly
scheduled maturity thereof or mandatory prepayment provisions thereof;
(iii) if no Default or Event of Default has occurred and is
continuing or would result therefrom, refinancings permitted by Section
6.01;
(iv) if no Default or Event of Default has occurred and is
continuing or would result therefrom, prepayments by a Restricted
Subsidiary of its Funded Debt acquired in connection with a Permitted
Business Acquisition; and
(v) if no Default or Event of Default has occurred and is
continuing or would result therefrom, prepayments of up to $10,000,000
in the aggregate of other Funded Debt of the Restricted Subsidiaries.
SECTION 6.06. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby Holdings or any
Restricted Subsidiary shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which it intends to
use for substantially the same purpose or purposes as the property being sold
or transferred (a "Sale and Lease-Back Transaction"), other than any Sale and
Lease-Back Transaction which involves a sale by the Borrower or a Restricted
Subsidiary solely for cash consideration on terms not less favorable than
would prevail in an arms'-length transaction and which (a) results in a
Capital Lease Obligation or an Operating Lease, in either case entered into to
finance a Capital Expenditure permitted by Section 6.03 consisting of the
initial acquisition by such subsidiary of the property sold or transferred in
such Sale and Lease-Back Transaction, provided that such Sale and Lease-Back
Transaction occurs within 270 days after such acquisition or (b) results in a
Capital Lease Obligation or an Operating Lease entered into for any other
purpose (provided that any such Sale and Lease-Back Transaction in reliance
upon this clause (b) shall be deemed to be a Prepayment Event).
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62
SECTION 6.07. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in (collectively, an "Investment"), any
other person, except:
(a) Permitted Investments and Investments that were Permitted
Investments when made;
(b) Investments by Holdings in the Borrower and Investments by a
Restricted Subsidiary in another Domestic Restricted Subsidiary;
(c) Investments arising out of the receipt by the Borrower of
noncash consideration for the sale of assets permitted under Section
6.08 provided that such consideration (if the stated amount or value
thereof is in excess of $1,000,000) is pledged upon receipt pursuant to
the Pledge Agreement;
(d) Intercompany Loans permitted to be incurred as Indebtedness
under Section 6.01(d);
(e) Investments by a wholly-owned Restricted Subsidiary
constituting Permitted Business Acquisitions;
(f) (i) loans and advances to employees of any Restricted
Subsidiary not to exceed $300,000 at any time outstanding to any one
employee and not to exceed $2,000,000 in the aggregate at any time
outstanding and (ii) advances of payroll payments and expenses to
employees in the ordinary course of business;
(g) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction
or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit
loss;
(h) an Investment by the Borrower or any of the Restricted
Subsidiaries in any Finance Subsidiary that the Borrower is
incorporating, but only to the extent necessary to incorporate such
Finance Subsidiary and acquire its capital stock and subordinated
indebtedness in connection with sales of receivables, all with the
minimum capitalization necessary;
(i) investments, other than investments listed in clauses (a)
through (h) of this Section, existing on the Closing Date and set forth
on Schedule 6.07;
(j) the ESOP Loans;
(k) Investments the sole consideration for which by Holdings and
the Restricted Subsidiaries is capital stock of Holdings provided that,
after giving effect thereto, no Default or Event of Default under
paragraph (m) of Article VII shall have occurred;
(l) if no Default or Event of Default exists immediately before
or after giving effect to such Investment, other Investments, including
joint ventures, currency hedges and Investments in Unrestricted
Subsidiaries, provided that (i) the consideration for Investments other
than Investments in Unrestricted Subsidiaries (whether cash or property,
as valued at the time of such Investment) does not exceed (net of any
return representing return of capital of (but not return on) any such
Investment) at any time $75,000,000 in the aggregate less one half of
the amount of all Investments pursuant to clause (ii) below in
Unrestricted Subsidiaries and (ii) the consideration for Investments in
Unrestricted Subsidiaries (whether cash or property, as valued at the
time of such Investment) does not exceed (net of any return representing
return of capital of (but not return on) any such Investment) at any
time $50,000,000 in the aggregate; and
(m) Investments resulting from pledges and deposits referred to
in Section 6.04(f).
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63
None of Holdings and the Restricted Subsidiaries may make any Investment in
Unrestricted Subsidiaries except as described in the definition of
"Unrestricted Subsidiaries" set forth in Section 1.01.
SECTION 6.08. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all
or any part of its assets (whether now owned or hereafter acquired) or any
capital stock of any subsidiary, or purchase, lease or otherwise acquire (in
one transaction or a series of transactions) all or any substantial part of
the assets of any other person, except that this Section 6.08 shall not
prohibit:
(a) the purchase and sale of property and assets in the ordinary
course of business by any Restricted Subsidiary;
(b) Sale and Lease-Back Transactions permitted by Section 6.06;
(c) Permitted Business Acquisitions;
(d) sales, leases or transfers from one Restricted Subsidiary of
the Borrower to the Borrower or to a Domestic Restricted Subsidiary;
(e) sales, leases or other dispositions of (i) inventory of the
Restricted Subsidiaries determined by the Board of Directors of the
Borrower to be no longer useful or necessary in the operation of the
businesses of the Restricted Subsidiaries and (ii) assets of operations
that were discontinued prior to the Closing Date;
(f) any Permitted Receivables Financing;
(g) sales, leases or other dispositions of equipment or real
property of the Restricted Subsidiaries determined by the Board of
Directors of the Borrower to be no longer useful or necessary in the
operation of the business of the Restricted Subsidiaries, provided that
the Net Proceeds thereof in excess of $1,000,000 shall be used to prepay
the Term Loans, Delayed Draw Term Loans and the Canadian Term Loans in
accordance with Section 2.12(e) or used to purchase replacement assets
or properties used for the same purpose as the equipment or real
property disposed of within 12 months of the receipt thereof;
(h) any Restricted Subsidiary may merge with any other Restricted
Subsidiary, provided that (i) at the time of and immediately after
giving effect to any such merger no Default or Event of Default shall
have occurred, (ii) the Borrower shall be the surviving corporation of
any merger involving the Borrower, and the Canadian Borrower shall be
the surviving corporation of any merger involving the Canadian Borrower
and (iii) no Restricted Subsidiary organized under the laws of a
jurisdiction outside the United States may merge with a Domestic
Restricted Subsidiary unless the Domestic Restricted Subsidiary is the
surviving corporation; and
(i) the Restricted Subsidiaries may sell or otherwise dispose of
assets having a fair market value, for all such transactions, not in
excess of 25% of the fair market value as determined by the Board of
Directors of the Borrower of the assets of the Restricted Subsidiaries
at the Closing Date, provided that (i) each such sale shall be for a
consideration determined in good faith by the Board of Directors of the
Borrower to be at least equal to the fair market value (if any) of the
asset sold, (ii) the aggregate amount of all noncash consideration
included in such sale proceeds may not exceed 15% of the fair market
value of the aggregate amount of all such sale proceeds; provided,
however, that obligations of the type referred to in clauses (a) and (b)
of the definition of "Permitted Investments" (without regard to the
maturity or the credit rating thereof) shall not be deemed non-cash
proceeds if such obligations are promptly sold for cash and the proceeds
of such sale are included in the calculation of Net Proceeds from such
sale, (iii) the aggregate Net Proceeds of all such sales and
dispositions under this clause (i)
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64
in excess of $50,000,000 are applied
to repay the Term Loans, the Canadian Term Loans and the Delayed Draw
Term Loans in accordance with Section 2.12(e) and the first $50,000,000
of such aggregate Net Proceeds are either applied to the purchase of
assets or properties used in the business of the Borrower and its
Restricted Subsidiaries as permitted by Section 6.12 within 12 months of
the receipt thereof or are applied to repay the Term Loans, the Canadian
Term Loans and the Delayed Draw Term Loans in accordance with Section
2.12(e) and (iv) no Default or Event of Default shall have occurred and
be continuing immediately prior to or after such sale. Upon receipt by
Holdings or any Restricted Subsidiary of Net Proceeds of any Specified
Asset Sale occurring after the Closing Date, Borrower shall promptly
deliver a certificate of a Responsible Officer to the Administrative
Agent setting forth the amount of the Net Proceeds which Borrower
expects to reinvest in replacement assets or property during the
subsequent 12-month period which are not required to be applied to the
repayment of the Term Loans, the Canadian Term Loans and the Delayed
Draw Term Loans. On the first anniversary of the receipt of such Net
Proceeds, Borrower shall (i) deliver a certificate of a Responsible
Officer to the Administrative Agent certifying as to the amount and use
of such Net Proceeds actually reinvested in replacement assets or
property during the preceding 12-month period and (ii) deliver to the
Administrative Agent, for application in accordance with Section
2.12(e), an amount equal to the remaining uninvested Net Proceeds; and
(j) Investments permitted by Section 6.07.
SECTION 6.09. Transactions with Affiliates and Stockholders. Sell or
transfer any property or assets to, or purchase or acquire any property or
assets of, or otherwise engage in any other transactions with, any of its
Affiliates (including Unrestricted Subsidiaries but excluding Domestic
Restricted Subsidiaries) or any known holder of 10% or more of any class of
capital stock of Holdings or any Unrestricted Subsidiary, except that Holdings
or any of the Restricted Subsidiaries may engage in any of the foregoing
transactions at prices and on terms and conditions not less favorable to each
than would prevail on an arm's-length basis from unrelated third parties;
provided that Holdings and the Restricted Subsidiaries may not pay any fees to
an Affiliate (including an Unrestricted Subsidiary) for the provision of
financial or advisory services if after giving effect thereto a Default or
Event of Default shall have occurred and is continuing.
SECTION 6.10. Subordinated Indebtedness. Amend or modify any
instruments, agreements or documents evidencing or related to any Permitted
Subordinated Indebtedness, unless, in the judgement of the Required Lenders,
any such amendment or modification does not substantially affect either the
rights or security interests granted to the Credit Agreement Creditors or the
Collateral Agent or the first and superior position of the Obligations owed to
the Credit Agreement Creditors relative to the second and inferior position of
the holders of the notes or other instruments evidencing the Permitted
Subordinated Indebtedness (without limiting the generality of the foregoing,
it is understood that any increase in interest, fees or other amounts payable
in connection therewith, or any amendment that imposes additional covenants or
events of default or makes more restrictive the covenants or events of default
contained therein, shall require the consent of the Required Lenders).
SECTION 6.11. Amendment of Constitutive Documents; Change in Corporate
Structure. (i) Permit any amendment or modification to be made to the
certificate of incorporation or By-laws of Holdings or of any Restricted
Subsidiary if such amendment or modification is materially adverse to the
interests of the Lenders or (ii) permit any Restricted Subsidiary to issue
any capital stock or other equity interest to any person other than the
Borrower or its wholly owned subsidiaries.
SECTION 6.12. Business of Holdings and Restricted Subsidiaries. (a)
Engage at any time in any business or business activity other than the
business currently conducted by it and business activities reasonably
incidental or related thereto or (b) fail to maintain and operate such
business in substantially the manner in which it is presently conducted and
operated (other than as contemplated herein) if such failure would materially
adversely affect the Credit Agreement Creditors; provided, however, that the
activities of Holdings shall be limited to (i) the ownership of the stock of
the Borrower together with activities directly related thereto, (ii) the
ownership of the stock of Unrestricted Subsidiaries described in clause (ii)
of the definition of such term set forth
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65
in Section 1.01 together with
activities directly related thereto, (iii) performance of its obligations
under the Loans Documents and (iv) actions required by law to maintain its
status as a public company.
SECTION 6.13. Restrictive Agreements. Enter into any indenture,
agreement, instrument or other arrangement which, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining, or
imposes materially adverse conditions upon, the granting of Liens, the provi-
sion of Guarantees or the payment of dividends or the making of loans or
advances or transfers of property or assets by Holdings or any of the
Restricted Subsidiaries other than restrictions (i) on the granting of Liens
on assets that are encumbered by Liens permitted under clauses (b), (i), (k),
(l) or (r) of Section 6.04 or (ii) contained in agreements relating to
Indebtedness not in excess of $10,000,000 in the aggregate.
SECTION 6.14. Interest Coverage Ratio. In the case of Holdings, permit
the Interest Coverage Ratio for any period of four (or, if less, the number of
full fiscal quarters ending after the Closing Date) consecutive fiscal
quarters to be less than the ratio set forth below opposite the period which
includes the last day of such period of consecutive fiscal quarters:
Period: Amount:
August 1, 1994 - April 30, 1995 3.00 to 1.00
May 1, 1995 - January 31, 1996 3.25 to 1.00
February 1, 1996 - January 31, 1997 3.75 to 1.00
February 1, 1997 - January 31, 1998 4.25 to 1.00
Thereafter 4.75 to 1.00
SECTION 6.15. EBITDA. In the case of Holdings, until such time as
$175,000,000 of the Term Loans and Canadian Term Loans have permanently and
irrevocably been repaid, permit its EBITDA for any fiscal year to be less than
$175,000,000.
SECTION 6.16. Leverage Ratio. In the case of Holdings, permit the
Leverage Ratio as of the last day of any fiscal quarter occurring during any
period set forth below to be greater than the ratio set forth below for such
period:
Quarter Ending: Ratio:
October 31, 1994 3.75 to 1.00
January 31, 1995 3.50 to 1.00
April 30, 1995 3.50 to 1.00
July 31, 1995 3.50 to 1.00
October 31, 1995 3.25 to 1.00
January 31, 1996 3.25 to 1.00
February 1, 1996 - January 31, 1997 3.00 to 1.00
February 1, 1997 - January 31, 1998 2.75 to 1.00
February 1, 1998 - January 31, 1999 2.50 to 1.00
Thereafter 2.25 to 1.00
SECTION 6.17. Current Ratio. In the case of Holdings, permit the
Current Ratio to be less than 1.25:1.00 on the last day of any fiscal quarter.
SECTION 6.18. Tax Sharing. File or consent to the filing of any
consolidated income tax return with any person (other than Holdings, the
Restricted Subsidiaries and Unrestricted Subsidiaries that have entered into
the existing Tax Sharing Agreements).
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66
SECTION 6.19. Significant Subsidiaries. Permit the Significant
Subsidiaries to account for less than 85% of the consolidated assets of
Holdings at any time or 90% of the consolidated EBITDA of Holdings for any two
consecutive periods of four fiscal quarters.
SECTION 6.20. Inactive Subsidiaries. Permit any Inactive Subsidiary, at
any time, to fail to satisfy any of the criteria set forth in the definition
of Inactive Subsidiary in Section 1.01.
ARTICLE VII.
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in any
Loan Document, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to any Loan Docu-
ment, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan 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 by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Loan or reimbursement of any Letter of Credit Disbursement or any Fee or
any other amount (other than an amount referred to in (b) above) due
under any Loan Document, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of five
Business Days;
(d) default shall be made in the due observance or performance by
the Borrower, the Canadian Borrower or Holdings or any subsidiary
thereof of any covenant, condition or agreement contained in Section
2.12(e), 5.01(a), 5.05(a), 5.08 or 5.10 or in Article VI;
(e) default shall be made in the due observance or performance by
the Borrower, the Canadian Borrower or Holdings or subsidiary thereof of
any covenant, condition or agreement contained in any Loan Document
(other than those specified in (b), (c) or (d) above) and such default
shall continue unremedied for a period of 30 days in the case of
Sections 5.01(b), 5.02, 5.09 and 5.13 and 15 days in the case of all
others, in each case after notice thereof from the Administrative Agent
or any Lender to Holdings, the Canadian Borrower or the Borrower;
(f) Holdings, any Restricted Subsidiary or any Significant
Subsidiary shall (i) fail to pay any principal or interest, regardless
of amount, due in respect of Indebtedness having an aggregate principal
or notional amount in excess of $7,500,000, when and as the same shall
become due and payable, or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreements or
instruments evidencing or governing any Indebtedness having an aggregate
principal amount in excess of $7,500,000 if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee on its or their behalf to
cause, such Indebtedness to become due prior to its stated maturity; or
a termination event or comparable event shall occur under the documents
governing the Permitted Receivables Financing entitling the persons
financing the receivables owned by the Finance Subsidiary to stop
funding the purchase of receivables of all sellers of receivables to the
Finance Subsidiary;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of the Borrower or Holdings or any
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67
Significant Subsidiary, or of a substantial part of the property or
assets of the Borrower or Holdings or any Significant Subsidiary, under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law or comparable foreign law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or Holdings or any Significant
Subsidiary or for a substantial part of the property or assets of the
Borrower or Holdings or any Significant Subsidiary or (iii) the
winding-up or liquidation of the Borrower or Holdings or any Significant
Subsidiary; and 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;
(h) the Borrower or Holdings or any Significant Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law or comparable foreign law, (ii) consent to
the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in (g)
above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Borrower or Holdings or any Significant Subsidiary or for a
substantial part of the property or assets of the Borrower or Holdings
or any Significant Subsidiary, (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,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $7,500,000 (to the extent not covered by
insurance) shall be rendered against Holdings, any Restricted Subsidiary
or any Significant Subsidiary or any combination thereof and the same
shall remain undischarged or stayed for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to levy upon assets or
properties of Holdings or any Restricted Subsidiary to enforce any such
judgment;
(j) a Reportable Event or Reportable Events, or a failure to make
a required installment or other payment (within the meaning of Section
412(n)(1) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrower, any Guarantor or any of their ERISA Affiliates to the PBGC or
to a Plan in an aggregate amount exceeding $5,000,000 and, within 30
days after the reporting of any such Reportable Event to the
Administrative Agent or after the receipt by the Administrative Agent of
the statement required pursuant to Section 5.06(b)(iii), the
Administrative Agent shall have notified the Borrower in writing that
(i) the Required Lenders have made a determination that, on the basis of
such Reportable Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for the termination
of such Plan or Plans by the PBGC, (B) for the appointment by the
appropriate United States District Court of a trustee to administer such
Plan or Plans or (C) for the imposition of a lien in favor of a Plan and
(ii) as a result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court to adminis-
ter any such Plan or Plans; or the PBGC shall institute proceedings to
terminate any Plan or Plans;
(k) (i) the Borrower, any Guarantor or any of their ERISA
Affiliates shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred Withdrawal Liability to such Multiemployer
Plan, (ii) the Borrower, any Guarantor or such ERISA Affiliate does not
have reasonable grounds for contesting such Withdrawal Liability or is
not in fact contesting such Withdrawal Liability in a timely and
appropriate manner and (iii) the amount of the Withdrawal Liability
specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with Withdrawal
Liabilities (determined as of the date or dates of such notification),
exceeds $7,500,000 or requires payments exceeding $7,500,000 in any
year;
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(l) the Borrower, any Guarantor or any of their ERISA Affiliates
shall have been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination the aggregate annual contributions of the
Borrower, the Guarantors and their ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or have been or are being
terminated have been or will be increased over the amounts required to
be contributed to such Multiemployer Plans for their most recently
completed plan years by an amount exceeding $7,500,000;
(m) there shall have occurred a Change in Control;
(n) (i) any Loan Document shall for any reason be asserted by
Holdings or any of its subsidiaries not to be a legal, valid and binding
obligation of the respective parties thereto, (ii) any security interest
or Lien purported to be created by the Pledge Agreement and to extend to
assets which are not immaterial to Holdings and its subsidiaries on a
consolidated basis shall for any reason (except to the extent resulting
from the negligent or wilful failure of the Collateral Agent to retain
possession of the applicable collateral) cease to be, or any security
interest or Lien purported to be created by the Pledge Agreement and to
extend to any assets of Holdings or its subsidiaries shall for any
reason be asserted by Holdings or any of its subsidiaries not to be, a
valid, first priority perfected security interest (subject to no Liens
other than Liens not prohibited by any applicable provision of the Loan
Documents) in such collateral (other than cash proceeds which are not
identifiable proceeds) or (iii) the Obligations and the guarantees
thereof pursuant to the Guarantee Agreement shall cease to constitute
senior indebtedness under the subordination provisions of any document
or instrument evidencing any Permitted Subordinated Indebtedness or such
subordination provisions shall be invalidated or otherwise cease to be a
legal, valid and binding obligation of the parties thereto, enforceable
in accordance with its terms;
(o) any Selling Stockholder shall fail to comply with any
provision of the arrangements described in Section 4.02(s);
(p) the Finance Subsidiary shall engage in any business or
activity other than the purchase of receivables from the Restricted
Subsidiaries and the sale of such receivables and activities incidental
thereto; or
(q) on or prior to the date which is 35 days after the Closing
Date Holdings shall not have received as gross proceeds from the sale of
Holdings Common Stock after the Closing Date to Blackstone and WP or to
other persons an amount equal to the excess, if any, of (i) $250,000,000
over (ii) the aggregate gross proceeds from the issuance by Holdings of
its Common Stock in the Public Offering and the Private Placement (with
the result that the gross proceeds received by Holdings from the
issuance of its Common Stock in the Public Offering and the Private
Placement equal at least $250,000,000);
then, and in every such event (other than an event with respect to the
Borrower or the Canadian Borrower described in paragraph (g) or (h) above),
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 Borrower and the Canadian Borrower, take either or both of
the following actions, at the same or different times: (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
and the Canadian Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by
the Borrower and the Canadian Borrower, anything contained herein or in any
other Loan Document to the contrary notwithstanding; and in any event with
respect to the Borrower or the Canadian Borrower described in paragraph (g) or
(h) above, the Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower and the Canadian
Borrower accrued hereunder and under any other Loan Document, shall
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69
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower and the Canadian Borrower, anything contained herein or in any other
Loan Document to the contrary notwithstanding.
ARTICLE VIII.
THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this Agreement,
Chemical Bank is hereby appointed to act as Administrative Agent and
Collateral Agent on behalf of the Lenders and the Issuing Banks. Each of the
Lenders, and each subsequent holder of any Note by its acceptance thereof, and
each Issuing Bank hereby irrevocably authorizes the Administrative Agent to
take such actions on behalf of such Lender or holder or the Issuing Bank, as
applicable, and to exercise such powers as are specifically delegated to the
Administrative Agent by the terms and provisions hereof and of the other Loan
Documents (including the power to execute and deliver the Intercreditor
Agreement if and when requested to do so by any holders of any Permitted
Acquisition Indebtedness), together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders and the Issuing Banks, without hereby limiting any
implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender its proper share
of each payment so received; (b) to give notice on behalf of each of the
Lenders to the Borrower or the Canadian Borrower of any Event of Default
specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender and Issuing Bank copies of all notices, financial
statements and other materials delivered by the Borrower or the Canadian
Borrower pursuant to this Agreement as received by the Administrative Agent.
In acting as Collateral Agent Chemical Bank shall be entitled to the rights
and benefits, and subject to the obligations, set forth for the Administrative
Agent under this Article VIII, mutatis mutandis, which Article is hereby
incorporated by reference, mutatis mutandis, in each of the Guarantee
Agreement and the Pledge Agreement.
Neither the Administrative Agent nor any Issuing Bank nor any of their
respective affiliates, directors, officers, employees or agents shall be
liable as such for any action taken or omitted by any of them except for its
or his own gross negligence or wilful misconduct, or be responsible for any
statement, warranty or representation herein or the contents of any document
delivered in connection herewith, or be required to ascertain or to make any
inquiry concerning the performance or observance by the Borrower or the
Canadian Borrower or any Guarantor of any of the terms, conditions, covenants
or agreements contained in any Loan Documents. The Administrative Agent shall
not be responsible to the Lenders or the holders of the Notes or the Issuing
Bank for the due execution (other than by the Administrative Agent),
genuineness, validity, enforceability (other than against the Administrative
Agent) or effectiveness of this Agreement, the Notes or any other Loan
Documents or other instruments or agreements. The Administrative Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof until it shall have received from the payee of such Note notice, given
as provided herein, of the transfer thereof in compliance with Section 9.04.
The Administrative Agent shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders (and the Issuing Banks, with respect to Letters of Credit)
and, except as otherwise specifically provided herein, such instructions and
any action or inaction pursuant thereto shall be binding on all the Lenders
and each subsequent holder of any Note and the Issuing Banks. The
Administrative Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Administrative Agent nor the Issuing Banks nor any of
their respective directors, officers, employees or agents shall have any
responsibility to the Borrower or the Canadian Borrower on account of the
failure of or delay in performance or breach by any Lender (or, in the case of
the Administrative Agent, by any Issuing Bank) of any of its obligations
hereunder or to any Lender (or, in the case of the Administrative Agent, to
any Issuing Bank) on account of the failure of or delay in performance or
breach by any other Lender or the Borrower, the Canadian Borrower or any
Guarantor of any of their respective obligations hereunder or under any other
Loan Document or in connection herewith or therewith. Each of the
Administrative Agent and
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each Issuing Bank may execute any and all duties
hereunder by or through agents or affiliates and shall be entitled to rely
upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither the Administrative Agent nor
any Issuing Bank shall be under any duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement
unless it shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank, the Canadian Borrower and the
Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor, with the consent of the Borrower (not to be
unreasonably withheld). 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, appoint a
successor Administrative Agent, with the consent of the Borrower (not to be
unreasonably withheld), which shall be a bank with an office in New York, New
York, having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank which is also a bank. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor bank, 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. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
With respect to the Loans made by it hereunder and the Notes issued to
it and the Letter of Credit participations acquired by it, each of the
Administrative Agent and each Issuing Bank in its individual capacity and not
as Administrative Agent or Issuing Bank, as the case may be, shall have the
same rights and powers as any other Lender and may exercise the same as though
it were not the Administrative Agent or an Issuing Bank, as the case may be,
and the Administrative Agent and its Affiliates and each Issuing Bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower, the Canadian Borrower or any subsidiary or
other Affiliate thereof as if it were not the Administrative Agent or an
Issuing Bank, as the case may be.
Each Lender recognizes that applicable laws, rules, regulations or
guidelines of Governmental Authorities may require the Administrative Agent to
determine whether the transactions contemplated hereby should be classified as
"highly leveraged" or assigned any similar or successor classification, and
that such determination may be binding upon the other Lenders. Each Lender
understands that any such determination shall be made solely by the
Administrative Agent based upon such factors (which may include, without
limitation, the Administrative Agent's internal policies and prevailing market
practices) as the Administrative Agent shall deem relevant and agrees that the
Administrative Agent shall have no liability for the consequences of any such
determination.
Each Lender agrees (i) to reimburse each of the Administrative Agent
and, if such Lender is a Revolving Lender, each Issuing Bank, on demand, in
the amount of its pro rata share (based on its Commitments hereunder or its
Revolving Credit Commitment, if any, in the case of reimbursement of any
Issuing Bank) of any reasonable expenses incurred for the benefit of the
Lenders by the Administrative Agent or, if applicable, such Issuing Bank,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrower and (ii) to indemnify and hold harmless each of the
Administrative Agent and, if such Lender is a Revolving Lender, each Issuing
Bank and any of their respective directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against it in its capacity as the
Administrative Agent or an Issuing Bank, as the case may be, or any of them in
any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted
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by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have
been reimbursed by the Borrower or the Canadian Borrower; provided that no
Lender shall be liable to the Administrative Agent or any Issuing Bank for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or wilful misconduct of the Administrative Agent or such Issuing
Bank, as the case may be, or any of their directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent, any Issuing Bank 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
Administrative Agent, any Issuing Bank 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 or any other Loan Document, any related agreement or
any document furnished hereunder or thereunder.
The Managing Agents shall have no rights or duties except as expressly
set forth in this Agreement. The Lead Managers shall have no rights or duties
under the Loan Documents.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telex or telecopy, as follows:
(a) if to Holdings or to the Borrower, to it at 701 McCullough
Drive, Charlotte, North Carolina 28262, Attention of Chief Financial
Officer (Telecopy No. 704-548-2330) with copies to 210 Madison Avenue,
6th Floor, New York, New York 10016, Attention of General Counsel
(Telecopy No. 212-578-1269);
(b) if to the Canadian Borrower, to it at 150 Collins Street,
Farnham, Quebec, J2N 2R6, Canada, Attention Controller (Telecopy No.
514-293-6657) with copies to the Borrower, Attention of Chief Financial
Officer (Telecopy No. 704-548-2330) and Elizabeth R. Philipp (Telecopy
No. 212-578-1269);
(c) if to the Administrative Agent, to it at 270 Park Avenue
(10th Floor), New York, New York 10017, Attention of Susan Kjorlien
(Telecopy No. 212-270-3277);
(d) if to a Lender, to it at its address (or telecopy number) set
forth in Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party 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 if delivered by hand or overnight courier service or sent
by telex or telecopy, or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower, the Canadian Borrower and
the Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans, and the execution and delivery
to the Lenders of the Notes evidencing such Loans, and the issuance of the
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Letters of Credit, regardless of any investigation made by the Lenders or on
their behalf, 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 or any other Loan Document is outstanding
and unpaid and so long as the Commitments have not been terminated. Without
prejudice to the survival of any other agreements contained herein,
indemnification and reimbursement obligations contained herein (including
pursuant to Sections 2.13, 2.15 and 9.05) shall survive the payment in full of
the principal and interest hereunder and the termination of the Commitments or
this Agreement.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Canadian Borrower,
Holdings and the Administrative Agent and when the Administrative Agent shall
have received copies hereof which, when taken together, bear the signatures of
each Lender, and thereafter shall be binding upon and inure to the benefit of
the Borrower, Holdings, each Issuing Bank, the Administrative Agent and each
Lender and their respective successors and assigns, except that none of the
Borrower, the Canadian Borrower or Holdings shall have the right to assign its
rights hereunder or any interest herein without the prior consent of all the
Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrower, the Canadian Borrower,
Holdings, the Administrative Agent, the Issuing Banks or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans at the time owing to it and the
Notes and participations in Letters of Credit held by it, it being understood
that Lenders shall not be required to assign pro rata amounts of their
Revolving Credit Commitments, Delayed Draw Term Commitments, Canadian Term
Commitments and Term Commitments); provided, however, that (i) except in the
case of an assignment to a Lender or an Affiliate of such Lender, the Borrower
and the Administrative Agent must give their prior written consent to such
assignment (which consents shall not be unreasonably withheld or delayed),
(ii) after giving effect to such assignment, the aggregate amount of the Loans
owing to, and the Letter of Credit Exposure and unused Commitments of, the
assignee and its Affiliates and of the assignor (unless the assignor ceases to
be a Lender) and its Affiliates shall not be less than 10/625ths of the sum of
the aggregate amount of outstanding Loans, the Letter of Credit Exposure and
the unused Commitments at such time, (iii) the parties to each such assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with the Note or Notes subject to such assignment and a
processing and recordation fee of $3,500 and (iv) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of
this Section 9.04, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof unless agreed otherwise by the
Administrative Agent, (A) 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 (B) 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 or
the remaining portion of an 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 2.13, 2.15, 2.18 and 9.05,
as well as to any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner
of the interest being assigned thereby free and clear of any adverse claim and
that its Term Loan Commitment, Delayed Draw Term Loan Commitment, Canadian
Term Commitment and Revolving Credit Commitment, and the outstanding balances
of its Term Loans, Delayed Draw Term Loans, Canadian Term Loans and Revolving
Loans, in each case without giving effect to assignments thereof which have
not become effective, are as set forth in such
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Assignment and Acceptance, (ii)
except as set forth in (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition
of the Borrower, the Canadian Borrower or any Guarantor or the performance or
observance by the Borrower, the Canadian Borrower or any Guarantor of any of
its obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received
copies of this Agreement, together with copies of the most recent financial
statements delivered pursuant to this Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Administrative Agent, any Issuing
Bank, such assigning Lender or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (vi)
such assignee appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Agreement are required to be performed by it as a
Lender.
(d) The Administrative Agent shall maintain at its address referred
to in subsection 9.01 a copy of each Assignment and Acceptance delivered to it
and a register (the "Register") for the recordation of the names and addresses
of the Lenders and the Commitments of, and principal amount of the Loans owing
to, each Lender from time to time. The Administrative Agent shall separately
record the names and addresses of each Lender that holds Notes in the
Register. The Administrative Agent shall also record the amount of the
Commitments of, and the aggregate principal amount of Loans owing to, and the
Letter of Credit Exposure of, such Lender in the Register. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Canadian Borrower, the Administrative Agent and the Lenders
shall treat each person whose name is recorded in the Register as the owner of
the Notes, the Commitments and the Loans and Letter of Credit Exposures
recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower, the Canadian Borrower the Issuing
Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or
Notes subject to such assignment, an Administrative Questionnaire completed in
respect of the assignee (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
above and, if required, the written consent of the Borrower and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders.
Within five Business Days after receipt of notice, the Borrower or the
Canadian Borrower, as the case may be, at its own expense, shall execute and
deliver to the Administrative Agent, in exchange for the surrendered Note or
Notes, a new Note or Notes to the order of such assignee in a principal amount
equal to the applicable Commitment assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Commitment, a new
Note to the order of such assigning Lender in a principal amount equal to the
applicable Commitment retained by it. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note; such new Notes shall be dated the date of the surrendered
Notes which they replace and shall otherwise be in substantially the form of
Exhibit A-1, A-2, A-3, A-4 or A-5 hereto, as appropriate. Canceled Notes
shall be returned to the Borrower or the Canadian Borrower, as the case may
be. Notwithstanding anything to the contrary contained herein, no assignment
under Section 9.04(b) of any rights or obligations under or in respect of the
Notes or Loans evidenced by the Notes shall be effective unless and until the
Administrative Agent shall have recorded such assignment in the Register. The
Administrative Agent shall record the name of the transferor, the name of the
transferee, and the amount of the transfer in the Register after receipt of
all documents required pursuant to this Section 9.04, including,
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without limitation, the Notes being assigned in connection with such transfer,
and such other documents as the Administrative Agent may reasonably request.
(f) Each Lender may without the consent of the Borrower, the Canadian
Borrower, any Issuing Bank or the Administrative Agent sell participations to
one or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it and the Notes and participations in Letters of
Credit held by it); provided, however, 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, (iii) the participating banks or other entities shall be entitled
to the benefit of the cost protection provisions contained in Sections 2.13,
2.15, 2.18 and 9.06(a) to the same extent as if they were Lenders, provided,
that no such participating bank or entity shall be entitled to receive any
greater amount pursuant to such Sections than a Lender would have been
entitled to receive in respect of the amount of the participation sold by such
Lender to such participating bank or entity had no sale occurred, and (iv) the
Borrower, the Canadian Borrower, the Administrative Agent, the Issuing Banks
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, and such Lender shall retain the sole right to enforce the
obligations of the Borrower or the Canadian Borrower, as the case may be,
relating to the Loans and participations in Letters of Credit and to approve
any amendment, modification or waiver of any provision of this Agreement or
any other Loan Document (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the
rate at which interest is payable on the Loans, extending any final maturity
date, in each case in respect of an Obligation in which the relevant
participating bank or entity is participating, or releasing all or
substantially all of the Pledged Securities or any Guarantor from the
Guarantee Agreement unless all or substantially all of the capital stock of
such subsidiary is sold in a transaction permitted by this Agreement). Each
Lender will disclose the identity of its participants to the Borrower and
Administrative Agent if requested by the Borrower or the Administrative Agent.
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or the Canadian Borrower
furnished to such Lender by or on behalf of the Borrower or the Canadian
Borrower; provided that, prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree to be bound by Section 9.17.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement and the Notes issued to it to a Federal Reserve
Bank; provided that no such assignment shall release a Lender from any of its
obligations hereunder.
(i) None of the Borrower, Holdings or the Canadian Borrower shall
assign or delegate any of its rights or duties hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation of this Agreement and the other Loan Docu-
ments, or by the Administrative Agent in connection with the syndication of
the Commitments or the administration of this Agreement, or in connection with
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Administrative Agent or any Lender in connection with the
enforcement or protection of their rights in connection with this Agreement
and the other Loan Documents or in connection with the Loans made or the Notes
issued hereunder, including the reasonable fees, charges and disbursements of
Simpson Thacher & Bartlett, counsel for the Administrative Agent, and, in
connection with any such enforcement or protection, the reasonable fees,
charges and disbursements of any other counsel (including the reasonable
allocated costs of internal counsel if a Lender elects to use internal counsel
in lieu of outside counsel) for the Administrative Agent, any Issuing Bank or
any Lender (but no more than one such counsel for any Lender).
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(b) The Borrower agrees to indemnify the Administrative Agent, each
Issuing Bank, each Lender and each of their respective directors, officers,
employees and agents (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the parties thereto of
their respective obligations thereunder or the consummation of the
Recapitalization Transactions and the other transactions contemplated thereby,
(ii) the use of the proceeds of the Loans or the use of any Letter of Credit
or (iii) any claim, litigation, investigation or proceeding relating to any of
the foregoing, whether or not any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent
that such 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 (treating, for this purpose only, any Lender and its
directors, officers, employees and agents as a single Indemnitee). Subject to
and without limiting the generality of the foregoing sentence, the Borrower
agrees to indemnify each Indemnitee against, and hold each Indemnitee harmless
from, any Environmental Claim, and any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel or consultant
fees, charges and disbursements, incurred by or asserted against any
Indemnitee (and arising out of, or in any way connected with or as a result
of, any of the events described in clause (i), (ii) or (iii) of the preceding
sentence) arising out of, in any way connected with, or as a result of (i) any
Environmental Claim, (ii) any violation of any Environmental Law, or (iii) any
act, omission, event or circumstance (including the actual, proposed or
threatened, release, removal, disposition, discharge or transportation,
storage, holding, existence, generation, processing, abatement, handling or
presence on, into, from or under any present, past or future property of
Holdings or any of its subsidiaries of any Contaminant), regardless of whether
the act, omission, event or circumstance constituted a violation of
Environmental Law at the time of its existence or occurrence; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent
that such Environmental Claim is, or such, 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 or any of its
employers, officers, directors, employees or agents.
(c) The Borrower shall be entitled to assume the defense of any
action for which indemnification is sought hereunder with counsel of its
choice at its expense (in which case the Borrower shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by an
Indemnitee except as set forth below); provided, however, that such counsel
shall be reasonably satisfactory to each such Indemnitee. Notwithstanding the
Borrower's election to assume the defense of such action, each Indemnitee
shall have the right to employ separate counsel and to participate in the
defense of such action, and the Borrower shall bear the reasonable fees,
costs, and expenses of such separate counsel, if (i) the use of counsel chosen
by the Borrower to represent such Indemnitee would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in, or targets
of, any such action include both the Borrower and such Indemnitee and such
Indemnitee shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those available to
the Borrower (in which case the Borrower shall not have the right to assume
the defense or such action on behalf of such Indemnitee); (iii) the Borrower
shall not have employed counsel reasonably satisfactory to such Indemnitee to
represent it within a reasonable time after notice of the institution of such
action; or (iv) the Borrower shall authorize such Indemnitee to employ
separate counsel at the Borrower's expense. The Borrower will not be liable
under this Agreement for any amount paid by an Indemnitee to settle any claims
or actions if the settlement is entered into without the Borrower's consent,
which consent may not be withheld unless such settlement is unreasonable in
light of such claims or actions against, and defenses available to, such
Indemnitee.
(d) Holdings, the Canadian Borrower and the Borrower shall not, and
shall not permit any of their subsidiaries to, bring any demand, claim, cost
recovery or other action they may now or hereafter have against any Indemnitee
resulting from any Environmental Claim; provided that this paragraph (d) shall
not, as to any Indemnitee, apply to the extent that such Environmental Claim
has been determined by a court of competent
<PAGE>
76
jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee or any of its employers, directors, officers,
employees or agents.
(e) Notwithstanding anything to the contrary in this Section 9.05,
this Section 9.05 shall not apply to taxes, it being understood that the
Borrower's only obligations with respect to taxes shall arise under Sections
2.13 and 2.18 and Section 19 of the Guarantee Agreement.
(f) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, any Issuing
Bank or any Lender. All amounts due under this Section 9.05 shall be payable
on written demand therefor.
SECTION 9.06. Right of Setoff; Sharing. (a) If an Event of Default
shall have occurred and be continuing, each Lender (including each Issuing
Bank) 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
indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower or the Canadian Borrower against any of and all the
obligations of the Borrower or the Canadian Borrower now or hereafter existing
under this Agreement and other Loan Documents held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement or such other Loan Document 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.
(b) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of its Loans or interest in Letters of Credit, or
interest thereon, then due, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in paragraph (g) or (h) of Article VII,
or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans
and interests in Letters of Credit, or interest thereon, then due, such
benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans and
interests in Letters of Credit, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Issuing Bank or any Lender in exercising any power
or right hereunder 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 Banks and the
Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies which they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or
consent to any departure by the Borrower, the Canadian Borrower or Holdings
therefrom shall in any event be effective unless the same shall be permitted
by paragraph (b) below, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice
or demand on the Borrower, the Canadian Borrower or Holdings in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
<PAGE>
77
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, the Canadian Borrower and the Required Lenders;
provided, however, that no such agreement shall (i) decrease the principal
amount of, or extend the final maturity of, or waive or excuse any such
payment or any part thereof, or decrease the rate of interest on any Loan or
any Letter of Credit Disbursement, without the prior written consent of each
Lender affected thereby, (ii) extend any Term Loan Repayment Date or Delayed
Draw Term Loan Repayment Date or Canadian Term Loan Repayment Date (other
than, in each case, final maturity) or any other date on which principal of
the Loans is due, or extend any date on which payment of interest on any Loan
or reimbursement of any Letter of Credit Disbursement is due, without the
prior written consent of (A) in the case of Term Loans, Canadian Term Loans or
Delayed Draw Terms Loans, Lenders with Term Loans, Canadian Term Loans or
Delayed Draw Term Loans, as the case may be, representing at least 80% of the
aggregate principal amount of the Term Loans, Canadian Term Loans and Delayed
Draw Term Loans then outstanding or (B) in the case of Loans under the
Revolving Credit Commitments and Letter of Credit Disbursements, Lenders with
Revolving Credit Commitments representing at least 80% of the aggregate
Revolving Credit Commitments then in effect, (iii) increase or extend the
Commitment or decrease the Commitment Fees or Letter of Credit Fees or other
fees of any Lender without the prior written consent of such Lender,
(iv) amend or modify the provisions of Section 2.09(c) or 2.16, the provisions
of this Section or the definition of "Required Lenders", or release
substantially all the Pledged Securities from the Lien of the Pledge Agreement
or release any Guarantor from the Guarantee Agreement unless all or
substantially all of the capital stock of such subsidiary is sold in a
transaction permitted by this Agreement, without the prior written consent of
each Lender or (v) waive, amend or modify paragraph (q) of Article VII without
the prior written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Issuing Banks hereunder without the prior written
consent of the Administrative Agent or the Issuing Banks acting as such at the
effective date of such agreement, as the case may be. Each Lender and each
holder of a Note shall be bound by any waiver, amendment or modification
authorized by this Section regardless of whether its Note shall have been
marked to make reference thereto, and any consent by any Lender or holder of a
Note pursuant to this Section shall bind any person subsequently acquiring a
Note from it, whether or not such Note shall have been so marked.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein or in the Notes to the contrary, if at any time the applicable interest
rate, together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by such Lender in accordance with applicable law, the
rate of interest payable under the Note held by such Lender, together with all
Charges payable to such Lender, shall be limited to the Maximum Rate, provided
that such excess amount shall be paid to such Lender on the subsequent payment
dates to the extent not exceeding the legal limitation.
SECTION 9.10. Entire Agreement. This Agreement, the other Loan
Documents and the agreements regarding certain Fees referred to herein
constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among or representations from the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other
Loan Documents.
SECTION 9.11. 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 respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any of the other Loan
Documents. 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 and the
<PAGE>
78
other Loan Documents, as applicable, by, among other things, the mutual
waivers and certifications in this Section 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become effec-
tive as provided in Section 9.03.
SECTION 9.14. 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 are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each
of the Borrower, the Canadian Borrower and Holdings hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or
the other Loan Documents, 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 shall affect any right that any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against the Borrower or Holdings or their properties in the
courts of any jurisdiction.
(b) Each of the Borrower, the Canadian Borrower and Holdings hereby
irrevocably and unconditionally waives, to the fullest extent they 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 the other Loan Documents in any New York State or Federal
court. 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.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due
hereunder or under any other Loan Document in dollars into another currency,
the parties hereto agree, to the fullest extent that they may legally and
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase dollars with such other currency in New York, New York, on the
Business Day immediately preceding the day on which final judgment is given.
(b) The obligation of each of the Borrower and the Canadian Borrower
in respect of any sum due to the Administrative Agent, any Lender or any
Issuing Bank hereunder or under any other Loan Document in US dollars shall,
to the extent permitted by applicable law, notwithstanding any judgment in a
currency other than US dollars, be discharged only to the extent that on the
Business Day following receipt of any sum adjudged to be so due in the
judgment currency the Administrative Agent, such Lender or such Issuing Bank
may in accor-
<PAGE>
79
dance with normal banking procedures purchase US dollars in the
amount originally due to the Administrative Agent, such Lender or such Issuing
Bank with the judgment currency. If the amount of US dollars so purchased is
less than the sum originally due to the Administrative Agent, such Lender or
such Issuing Bank, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent, such
Lender or such Issuing Bank against the resulting loss.
SECTION 9.17. Confidentiality. Each of the Lenders, the Issuing Banks
and the Administrative Agent agrees that it shall maintain in confidence any
information relating to the Borrower and the Canadian Borrower furnished to it
by or on behalf of the Borrower or the Canadian Borrower (other than
information that (x) has become generally available to the public other than
as a result of a disclosure by such party, (y) has been independently
developed by such party without violating this Section or (z) was available to
such party from a third party having, to such party's knowledge, no obligation
of confidentiality to the Borrower or the Canadian Borrower) and shall not
reveal the same other than (i) to its directors, officers, employees and
advisors with a need to know and (ii) as contemplated by Section 9.04(g),
except: (a) to the extent necessary to comply with law or any legal process
or the requirements of any Governmental Authority or of any securities
exchange on which securities of the disclosing party or any Affiliate of the
disclosing party are listed or traded, (b) as part of normal reporting or
review procedures to Governmental Authorities or its parent companies,
Affiliates or auditors and (c) in order to enforce its rights under any Loan
Document in a legal proceeding.
IN WITNESS WHEREOF, the Borrower, the Canadian Borrower Holdings, the
Administrative Agent, and the Lenders have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
COLLINS & AIKMAN PRODUCTS CO.
by Mark Remissong
Name: Mark Remissong
Title: Senior Vice President
COLLINS & AIKMAN CORPORATION
by Mark Remissong
Name: Mark Remissong
Title: Senior Vice President
WCA CANADA INC.
by Mark Remissong
Name: Mark Remissong
Title: Senior Vice President
<PAGE>
80
CHEMICAL BANK, as Administrative
Agent and Collateral Agent and as a
Lender
by Suzanne Kjorlien
Name: Suzanne Kjorlien
Title: Vice President
CONTINENTAL BANK, N.A., as Managing
Agent and as a Lender
by L. Dustin Vincent, III
Name: L. Dustin Vincent, III
Title: Vice President
NATIONSBANK, N.A., as Managing Agent
and as a Lender
by J. Timothy Martin
Name: J. Timothy Martin
Title: Senior Vice President
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, as Lead
Manager and as a Lender
by Laura Ann Marshall
Name: Laura Ann Marshall
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, as Lead Manager and as a
Lender
by Frederick S. Haddad
Name: Frederick S. Haddad
Title: Authorized Signature
THE INDUSTRIAL BANK OF JAPAN, LTD.,
as Lead Manager and as a Lender
by Naoaki Nakatsugawa
Name: Naoaki Nakatsugawa
Title: Joint General Manager
<PAGE>
81
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as Lead Manager and as a
Lender
by Mitsuo Matsunaga
Name: Mitsuo Matsunaga
Title: Vice President
THE TORONTO-DOMINION BANK,
as Lead Manager and as a Lender
by Horace J. Zona, III
Name: Horace J. Zona, III
Title: Director
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
by William C. Purington
Name: William C. Purington
Title: Vice President
BANK OF SCOTLAND, as a Lender
by Catherine M. Onnifrey
Name: Catherine M. Onnifrey
Title:
THE BANK OF TOKYO TRUST COMPANY,
as a Lender
by Charles S. Poer
Name: Charles S. Poer
Title: Vice President
BANQUE PARIBAS, as a Lender
by David Buseck/Gary A. Binning
Name: David Buseck/Gary A. Binning
Title: Vice President/Vice President
<PAGE>
82
BARCLAYS BANK PLC, as a Lender
by Philip S. A. Capparis
Name: Philip S. A. Capparis
Title: Associate Director
BRANCH BANKING AND TRUST COMPANY,
as a Lender
by Robert A. Wentworth
Name: Robert A. Wentworth
Title: Senior Vice President
CIBC Inc., as a Lender
by Charles J. Klenk
Name: Charles J. Klenk
Title: Vice President,
Corporate Finance
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENE, as a Lender
by Sean Mounier Marcus Edward
Name: Sean Mounier Marcus Edward
Title: Vice President
THE NIPPON CREDIT BANK, LTD., as a
Lender
by Clifford Abramsky
Name: Clifford Abramsky
Title: Vice President & Manager
SOCIETE GENERALE, as a Lender
by Cathrine Scaillier-Loiseau
Name: Cathrine Scaillier-Loiseau
Title: Vice President
<PAGE>
83
SOCIETY NATIONAL BANK, as a Lender
by Lawrence A. Mack
Name: Lawrence A. Mack
Title: Vice President
THE TRAVELERS INSURANCE COMPANY,
as a Lender
by Craig Farnsworth
Name: Craig Farnsworth
Title: Investment Officer
THE TRAVELERS INDEMNITY COMPANY
by Craig H. Farnsworth
Name: Craig H. Farnsworth
Title: Investment Officer
WACHOVIA BANK OF NORTH CAROLINA,
N.A., as a Lender
by Joanne M. Starnes
Name: Joanne M. Starnes
Title: Vice President
WELLS FARGO BANK, as a Lender
by Brian S. O'Melveny
Name: Brian S. O'Melveny
Title: Assistant Vice President
VAN KAMPEN MERRIT PRIME RATE INCOME
TRUST, as a Lender
by Jeffrey W. Maillet
Name: Jeffrey W. Maillet
Title: Vice President &
Portfolio Mgr.
<PAGE>
84
ARAB BANKING CORPORATION, as a
Lender
by Sheldon Tilney
Name: Sheldon Tilney
Title: Deputy General Manager
BANK OF IRELAND
Cayman Branch, as a Lender
by Roger M. Burns
Name: Roger M. Burns
Title: Vice President
THE BANK OF NEW YORK, as a Lender
by Gregory L. Batson
Name: Gregory L. Batson
Title: Assistant Vice President
CREDITANSTALT CORPORATE FINANCE,
INC.,
as a Lender
by Robert M. Biringer
Name: Robert M. Biringer
Title: Senior Vice President
by Gregory F. Mathis
Name: Gregory F. Mathis
Title: Vice President
CRESTAR BANK, as a Lender
by T. Patrick Collins
Name: T. Patrick Collins
Title: Vice President
<PAGE>
85
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as a Lender
by Bert M. Corum
Name: Bert M. Corum
Title: Vice President
FUJI BANK, as a Lender
by Katsunori Nozawa
Name: Katsunori Nozawa
Title: Vice President & Manager
GIROCREDIT BANK, as a Lender
by John P. Redding/Dhuan G. Stephens
Name: John P. Redding/Dhuan G. Stephens
Title: Vice President /Vice President
MIDLAND BANK, as a Lender
by T. D. Reid
Name: T. D. Reid
Title: Director
THE MITSUBISHI TRUST AND BANKING
CORPORATION, as a Lender
by Masataka Ushio
Name: Masataka Ushio
Title: Senior Vice President
and Chief Manager
NATIONAL CITY BANK, as a Lender
by Gerald L. Kopp
Name: Gerald L. Kopp
Title: Vice President
<PAGE>
86
NBD BANK, N.A., as a Lender
by Larry E. Schuster
Name: Larry E. Schuster
Title: Vice President
THE SUMITOMO TRUST & BANKING CO.,
LTD.
New York Branch, as a Lender
by Suraj P. Bhatia
Name: Suraj P. Bhatia
Title: Senior Vice President
Manager, Corporate
Finance II Dept.
UNITED STATES NATIONAL BANK OF
OREGON, as a
Lender
by David Wynde
Name: David Wynde
Title: Vice President
THE YASUDA TRUST & BANKING CO.,
LTD.,
as a Lender
by Neil T. Chau
Name: Neil T. Chau
Title: First Vice President
CRESCENT/MACH 1 PARTNERS, L.P.
By its General Partner
CRESCENT MACH 1 G.P. CORPORATION
By its attorney-in-fact
CRESCENT CAPITAL CORPORATION
by Justin Driscoll
Name: Justin Driscoll
Title: Vice President
<PAGE>
EXHIBIT A-1
TO CREDIT AGREEMENT
[FORM OF REVOLVING CREDIT NOTE]
New York, New York
June __, 1994
FOR VALUE RECEIVED, the undersigned, COLLINS & AIKMAN PRODUCTS
CO., a Delaware corporation (the "Borrower"), hereby promises to pay to the
order of __________________ (the "Lender"), at the office of CHEMICAL BANK
(the "Administrative Agent") at 270 Park Avenue, New York, New York 10017, on
the Revolving Credit Maturity Date, as defined in the Credit Agreement dated
as of June __, 1994 (as amended, supplemented or otherwise modified from time
to time, the "Agreement"), among the Borrower, WCA Canada Inc., Collins &
Aikman Corporation, the Lenders named therein and Chemical Bank, as
Administrative Agent, the lesser of the principal sum of _____________ Dollars
($________) and the aggregate unpaid principal amount of all Revolving Loans
(as defined in the Agreement) to the Borrower from the Lender pursuant to the
Agreement, in lawful money of the United States of America in immediately
available funds, and to pay interest from the date hereof on the principal
amount hereof from time to time outstanding, in like funds, at said office, at
a rate or rates per annum and payable on the dates determined pursuant to the
Agreement. The principal amount of this Note shall be payable on the dates
and in the amounts set forth in the Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Agreement.
The Borrower hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The nonexercise by the holder of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedules attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not
affect the obligations of the Borrower under the Agreement or this Note.
This Note is one of the Revolving Credit Notes referred to in the
Agreement, which, among other things, contains provisions for the acceleration
of the maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof and
for the amendment or waiver of certain provisions of the Agreement, all upon
the terms and conditions therein specified. The obligations of the Borrower
hereunder are secured and guaranteed as provided pursuant to the Agreement.
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
TERMS OF THE AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
AGREEMENT.
COLLINS & AIKMAN PRODUCTS CO.
By: ________________________
Title:
<PAGE>
LOANS AND PAYMENTS
Unpaid Name of
Amount Payments Principal Person
and Maturity Balance Making
Date Type of Date Principal Interest of Note Notation
Loan
<PAGE>
EXHIBIT A-2
TO CREDIT AGREEMENT
[FORM OF DELAYED DRAW TERM NOTE]
New York, New York
June __, 1994
FOR VALUE RECEIVED, the undersigned, COLLINS & AIKMAN PRODUCTS
CO., a Delaware corporation (the "Borrower"), hereby promises to pay to the
order of ___________________ (the "Lender"), at the office of CHEMICAL BANK
(the "Administrative Agent") at 270 Park Avenue, New York, New York 10017, on
the Delayed Draw Term Loan Maturity Date, as defined in the Credit Agreement
dated as of June __, 1994 (as amended, supplemented or other modified from
time to time, the "Agreement"), among the Borrower, WCA Canada Inc., Collins &
Aikman Corporation, the Lenders named therein and Chemical Bank, as
Administrative Agent, the lesser of the principal sum of ______________
Dollars ($_________) and the aggregate unpaid principal amount of all Delayed
Draw Term Loans (as defined in the Agreement) to the Borrower from the Lender
pursuant to the Agreement, in lawful money of the United States of America in
immediately available funds, and to pay interest from the date hereof on the
principal amount hereof from time to time outstanding, in like funds, at said
office, at a rate or rates per annum and payable on the dates determined
pursuant to the Agreement. The principal amount of this Note shall be payable
on the dates and in the amounts set forth in the Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Agreement.
The Borrower hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The nonexercise by the holder of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not
affect the obligations of the Borrower under the Agreement or this Note.
This Note is one of the Delayed Draw Term Notes referred to in the
Agreement, which, among other things, contains provisions for the acceleration
of the maturity hereof upon the happening of certain events, for the scheduled
repayment and the optional and mandatory prepayment of the principal hereof
prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Agreement, all upon the terms and conditions therein
specified. The obligations of the Borrower hereunder are secured and
guaranteed as provided pursuant to the Agreement. This Note shall be
construed in accordance with and governed by the laws of the State of New York
and any applicable laws of the United States of America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE LOANS AND PAYMENTS TERMS OF THE AGREEMENT. TRANSFERS OF THIS NOTE MUST
BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT
TO THE TERMS OF THE AGREEMENT.
COLLINS & AIKMAN PRODUCTS CO.
By: ________________________
Title:
<PAGE>
2
LOANS AND PAYMENTS
Unpaid Name of
Amount Payments Principal Person
and Maturity Balance Making
Date Type of Date Principal Interest of Note Notation
Loan
<PAGE>
EXHIBIT A-3
TO CREDIT AGREEMENT
[FORM OF TERM NOTE]
New York, New York
June __, 1994
FOR VALUE RECEIVED, the undersigned, COLLINS & AIKMAN PRODUCTS
CO., a Delaware corporation (the "Borrower"), hereby promises to pay to the
order of ___________________ (the "Lender"), at the office of CHEMICAL BANK
(the "Administrative Agent") at 270 Park Avenue, New York, New York 10017, on
the Term Loan Maturity Date, as defined in the Credit Agreement dated as of
June __, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Agreement"), among the Borrower, WCA Canada Inc., Collins & Aikman
Corporation, the Lenders named therein and Chemical Bank, as Administrative
Agent, the lesser of the principal sum of ________________ Dollars ($______)
and the aggregate unpaid principal amount of all Term Loans (as defined in the
Agreement) to the Borrower from the Lender pursuant to the Agreement, in
lawful money of the United States of America in immediately available funds,
and to pay interest from the date hereof on the principal amount hereof from
time to time outstanding, in like funds, at said office, at a rate or rates
per annum and payable on the dates determined pursuant to the Agreement. The
principal amount of this Note shall be payable on the dates and in the amounts
set forth in the Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Agreement.
The Borrower hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The nonexercise by the holder of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not
affect the obligations of the Borrower under the Agreement or this Note.
This Note is one of the Term Notes referred to in the Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for the scheduled
repayment and the optional and mandatory prepayment of the principal hereof
prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Agreement, all upon the terms and conditions therein
specified. The obligations of the Borrower hereunder are secured and
guaranteed as provided pursuant to the Agreement. This Note shall be
construed in accordance with and governed by the laws of the State of New York
and any applicable laws of the United States of America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
TERMS OF THE AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
AGREEMENT.
COLLINS & AIKMAN PRODUCTS CO.
By: ________________________
Title:
<PAGE>
2
LOANS AND PAYMENTS
Unpaid Name of
Amount Payments Principal Person
and Maturity Balance Making
Date Type of Date Principal Interest of Note Notation
Loan
<PAGE>
EXHIBIT A-4
TO CREDIT AGREEMENT
SWINGLINE NOTE
New York, New York
July __, 1994
FOR VALUE RECEIVED, the undersigned, COLLINS & AIKMAN PRODUCTS
CO., a Delaware corporation (the "Borrower"), hereby promises to pay to the
order of Chemical Bank (the "Lender"), at the office of CHEMICAL BANK (the
"Administrative Agent") at 270 Park Avenue, New York, New York 10017, on the
Revolving Credit Maturity Date, as defined in the Credit Agreement dated as of
June 22, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Agreement"), among the Borrower, WCA Canada Inc., Collins & Aikman
Corporation, the Lenders named therein and Chemical Bank, as Administrative
Agent, the lesser of the principal sum of Ten Million Dollars ($10,000,000)
and the aggregate unpaid principal amount of all Swingline Loans (as defined
in the Agreement) to the Borrower from the Lender pursuant to the Agreement,
in lawful money of the United States of America in immediately available
funds, and to pay interest from the date hereof on the principal amount hereof
from time to time outstanding, in like funds, at said office, at a rate or
rates per annum and payable on the dates determined pursuant to the Agreement.
The principal amount of this Note shall be payable on the dates and in the
amounts set forth in the Agreement.
The Borrower promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Agreement.
The Borrower hereby waives diligence, presentment, demand, protest
and notice of any kind whatsoever. The nonexercise by the holder of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not
affect the obligations of the Borrower under the Agreement or this Note.
This Note is the Swingline Note referred to in the Agreement,
which, among other things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for optional and
mandatory prepayment of the principal hereof prior to the maturity hereof and
for the amendment or waiver of certain provisions of the Agreement, all upon
the terms and conditions therein specified. The obligations of the Borrower
hereunder are secured and guaranteed as provided pursuant to the Agreement.
This Note shall be construed in accordance with and governed by the laws of
the State of New York and any applicable laws of the United States of America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THELOANS AND PAYMENTS TERMS OF THE AGREEMENT. TRANSFERS OF THIS NOTE MUST
BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT
TO THE TERMS OF THE AGREEMENT.
COLLINS & AIKMAN PRODUCTS CO.
By: ________________________
Title:
<PAGE>
2
LOANS AND PAYMENTS
Unpaid Name of
Amount Payments Principal Person
and Type Maturity Balance Making
Date of Loan Date Principal Interest of Note Notation
<PAGE>
EXHIBIT A-5
TO CREDIT AGREEMENT
[FORM OF CANADIAN TERM NOTE]
New York, New York
June __, 1994
FOR VALUE RECEIVED, the undersigned, WCA CANADA INC., a Canadian
corporation (the "Canadian Borrower"), hereby promises to pay to the order of
___________________ (the "Lender"), at the office of CHEMICAL BANK (the
"Administrative Agent") at 270 Park Avenue, New York, New York 10017, on the
Canadian Term Loan Maturity Date, as defined in the Credit Agreement dated as
of June __, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Agreement"), among the Canadian Borrower, Collins & Aikman Products
Co., Collins & Aikman Corporation, the Lenders named therein and Chemical
Bank, as Administrative Agent, the lesser of the principal sum of
________________ Dollars ($______) and the aggregate unpaid principal amount
of all Canadian Term Loans (as defined in the Agreement) to the Canadian
Borrower from the Lender pursuant to the Agreement, in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date hereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and
payable on the dates determined pursuant to the Agreement. The principal
amount of this Note shall be payable on the dates and in the amounts set forth
in the Agreement.
The Canadian Borrower promises to pay interest, on demand, on any
overdue principal and, to the extent permitted by law, overdue interest from
their due dates at a rate or rates determined as set forth in the Agreement.
The Canadian Borrower hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The nonexercise by the
holder of any of its rights hereunder in any particular instance shall not
constitute a waiver thereof in that or any subsequent instance.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not
affect the obligations of the Canadian Borrower under the Agreement or this
Note.
This Note is one of the Canadian Term Notes referred to in the
Agreement, which, among other things, contains provisions for the acceleration
of the maturity hereof upon the happening of certain events, for the scheduled
repayment and the optional and mandatory prepayment of the principal hereof
prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Agreement, all upon the terms and conditions therein
specified. The obligations of the Canadian Borrower hereunder are secured and
guaranteed as provided pursuant to the Agreement. This Note shall be
construed in accordance with and governed by the laws of the State of New York
and any applicable laws of the United States of America.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
TERMS OF THE AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
AGREEMENT.
WCA CANADA INC.
By: ________________________
Title:
<PAGE>
2
LOANS AND PAYMENTS
Unpaid Name of
Amount Payments Principal Person
and Maturity Balance Making
Date Type of Date Principal Interest of Note Notation
Loan
<PAGE>
EXHIBIT A-6 TO
CREDIT AGREEMENT
[FORM OF INTERCOMPANY NOTE]
New York, New York
_______ __, ____
FOR VALUE RECEIVED, the undersigned, ____________, a ___________
corporation (the "Payor"), hereby unconditionally promises to pay on demand to
the order of __________________ (the "Payee"), at its office located at
_________________, or at such other place as the Payee may direct in writing,
in lawful money of the United States of America and in immediately available
funds, the lesser of ________________________ DOLLARS ($__________) (the
"Maximum Amount") and the principal amount of all loans made to the Payor by
the Payee. Amounts repaid by Payor hereunder may be reloaned by the Payee
provided that the aggregate outstanding principal amount of all loans made
hereunder may not exceed the Maximum Amount at any time. The undersigned
further agrees to pay interest on the unpaid principal amount hereof in like
money at such office from the date hereof until paid in full at the rate
agreed to by the Payor and the Payee from time to time. Such interest shall
be payable on the date of any payment of principal hereof on the amount so
paid.
The Payor agrees that the accounts of the Payee shall be prima
facie evidence of the amounts loaned by the Payee to the undersigned and the
amounts repaid by the undersigned to the Payee. All loans made by the Payee
to the Payor hereunder, and all payments made on account of principal hereof,
shall be recorded by the Payee in its accounts, provided that the failure by
the Payee to make any such recording shall not affect the liability of the
Payor hereunder. The obligations of the Payor under this Note shall be
absolute and the Payor hereby irrevocably waives any right (whether arising by
operation of law or otherwise) to any setoff, counterclaim or reduction of its
obligations with respect to any amounts payable under this Note based on any
claims that the Payor has against the Payee, its affiliates or any other
person.
All payments in respect of this Note shall be made not later than
12:00 Noon (New York time) on the date on which any such payment is due in
immediately available funds to account #___________ with CHEMICAL BANK;
provided that following delivery of a Demand (as defined below), all payments
shall be made in accordance with instructions in the Demand (as defined
below). If payment hereunder is due on a day that is not a Business Day, the
date for such payment shall be the immediately succeeding Business Day.
This Note is one of the Intercompany Notes referred to in the
Credit Agreement dated as of June __, 1994 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among Collins &
Aikman Products Co. (the "Borrower"), Collins & Aikman Corporation
("Holdings"), WCA Canada Inc. (the "Canadian Borrower"), the Lenders named
therein and Chemical Bank, as Administrative Agent. Capitalized terms used in
this Note have the respective meanings assigned to them in the Credit
Agreement.
Loans hereunder may be prepaid at the option of the Payor. This
Note shall be payable in full on or prior to ________ __, 199_ , and in full
or in part pursuant to a written demand (a "Demand") from the Collateral Agent
or the Payee to the Payor, at which time the Payor shall make all payments of
the amounts so demanded to the account designated in the Demand on the date
specified in the Demand.
The Payor hereby waives presentment for payment, demands, notice
of dishonor and protest of this Note and further agrees that none of its terms
or provisions may be waived, altered, modified or amended except as the Payee
may consent in a writing duly signed for and on its behalf. No failure or
delay on the part of the Payee in exercising any of its rights, powers or
privileges hereunder shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.
<PAGE>
2
The Payor also agrees to pay on demand all costs and expenses
(including fees and expenses of counsel) incurred by the Payee or its
successors and assigns in enforcing this Note.
This Note is binding upon the Payor and its successors and assigns
and is for the benefit of the Payee and its successors and assigns, except
that the Payor may not assign or otherwise transfer its rights or obligations
under this Note. The Payor hereby acknowledges and consents to the assignment
by the Payee to the Collateral Agent of all of its right, title and interest
in this Note and all collateral security herefor in accordance with the Pledge
Agreement, dated as of June __, 1994, among the Borrower, Holdings, the Payee,
the Subsidiary Pledgors named therein and the Collateral Agent, as amended,
modified or supplemented from time to time.
The Payor and the Payee, by its acceptance hereof, agree for the
benefit of the Collateral Agent not to amend, modify or terminate the
provisions of, or assign any of their respective rights or obligations under,
this Note without the prior written consent of the Collateral Agent as long as
any amounts are payable to the Administrative Agent, the Lenders or the
Issuing Banks under the Loan Documents.
THE PAYOR (A) AGREES THAT ANY CLAIM BROUGHT BY THE PAYEE ARISING
OUT OF THIS NOTE SHALL BE SUBJECT TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT LOCATED IN
THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND APPELLATE COURTS THEREFROM (AND
IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO SUCH JURISDICTION) AND
(B) IRREVOCABLY WAIVES ANY OBJECTION IT MAY HAVE AT ANY TIME TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH
RESPECT TO SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT,
THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER IT. THE PAYOR FURTHER AGREES
THAT A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY A SUIT ON THE
JUDGMENT OR IN ANY MANNER PROVIDED BY LAW. FOR THE PURPOSE OF PROCEEDINGS IN
THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURTS FOR THE
SOUTHERN DISTRICT OF NEW YORK, THE PAYOR HEREBY IRREVOCABLY DESIGNATES
_____________________ WITH OFFICES ON THE DATE HEREOF AT _______________, NEW
YORK, NEW YORK _____, AS ITS AGENT TO ACCEPT ON ITS BEHALF SERVICE OF ANY AND
ALL PROCESS OR OTHER DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING
IN ANY OF SUCH COURTS AND FURTHER AGREES THAT (1) SERVICE UPON SUCH AGENT
SHALL CONSTITUTE VALID AND EFFECTIVE SERVICE UPON THE PAYOR AND THAT FAILURE
OF ANY SUCH AGENT TO GIVE ANY NOTICE OF SUCH SERVICE TO THE PAYOR SHALL NOT
AFFECT THE VALIDITY OF SUCH SERVICE OR ANY JUDGMENT RENDERED IN ANY ACTION OR
PROCEEDING BASED THEREON AND (2) THAT SERVICE OF ANY AND ALL SUCH PROCESS OR
OTHER DOCUMENTS ON THE PAYOR MAY ALSO BE EFFECTED BY REGISTERED MAIL TO ITS
ADDRESS AS SET FORTH BELOW.
All payments made under this Note shall be made in United States
Dollars, and, if for any reason any payment made hereunder is made in a
currency (the "Other Currency") other than United States Dollars, then to the
extent that the payment actually received by the Payee when converted into
United States Dollars at the Rate of Exchange (as defined below) on the date
of payment (or as soon thereafter as it is practicable for the Payee to
purchase United States Dollars, or, in the case of the liquidation,
insolvency, bankruptcy or analogous process of the Payor, at the Rate of
Exchange on the latest date permitted by applicable law for the determination
of liabilities in such liquidation, insolvency, bankruptcy or analogous
process) falls short of the amount due hereunder, the Payor shall, as a
separate and independent obligation of the Payor, indemnify the Payee and hold
the Payee harmless against the amount of such shortfall. As used in this
Note, the term "Rate of Exchange" means the rate at which the Payee is able on
the relevant date to purchase United States
<PAGE>
3
Dollars with the Other Currency
and shall include any premiums and costs of exchange payable in connection
with the purchase of, or conversion into, United States Dollars.
THE PAYOR AND BY ITS ACCEPTANCE HEREOF, THE PAYEE, EACH HEREBY
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS NOTE AND FOR ANY COUNTERCLAIM THEREIN.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
AND THE LAWS OF THE STATE OF NEW YORK.
[PAYOR]
By:
________________________________________
Name:
Title:
Address: ________________________________
__________________________________
__________________________________
Telecopy:
Attention:
PAY TO THE ORDER OF __________________________________
[PAYEE]
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT B
TO CREDIT AGREEMENT
[FORM OF ASSIGNMENT AND ACCEPTANCE]
Reference is made to the Credit Agreement dated as of June __,
1994 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Collins & Aikman Products Co., a Delaware
corporation (the "Borrower"), WCA Canada Inc., a Canadian corporation (the
"Canadian Borrower"), Collins & Aikman Corporation, the Lenders listed in
Schedule 2.01 thereto (the "Lenders") and Chemical Bank, as Administrative
Agent (in such capacity, the "Administrative Agent"). Terms defined in the
Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date set forth below, the
interests set forth below (the "Assigned Interest") in the Assignor's rights
and obligations under the Credit Agreement, including, without limitation, the
Term Loan Commitment, Delayed Draw Term Loan Commitment, Swingline Commitment,
Revolving Credit Commitment and Canadian Term Loan Commitment of the Assignor
on the Effective Date and the Term Loans, Delayed Draw Term Loans, Swingline
Loans, Revolving Loans and Canadian Term Loans owing to the Assignor which are
outstanding on the Effective Date, together with unpaid interest accrued on
the assigned Loans to the Effective Date, the Assignor's participations in all
Letters of Credit and the amount, if any, set forth below of the Fees accrued
to the Effective Date for the account of the Assignor. Each of the Assignor
and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 9.04(c) of the
Credit Agreement, a copy of which has been received by each such party. From
and after the Effective Date (i) the Assignee shall be a party to and be bound
by the provisions of the Credit Agreement and, to the extent of the interests
assigned by this Assignment and Acceptance, have the rights and obligations of
a Lender thereunder and under the Loan Documents (including, without
limitation, the Intercreditor Agreement) and (ii) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) the Notes evidencing the Loans included
in the Assigned Interest, (ii) if the Assignee is organized under the laws of
a jurisdiction outside the United States, the forms specified in Section
2.18(f) of the Credit Agreement, duly completed and executed by such Assignee,
(iii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form of Exhibit C to the Credit Agreement
and (iv) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment unless
a shorter time is consented to by
Administrative Agent):
<PAGE>
2
Facility Principal Amount Percentage Assigned of
Assigned Facility and Commitment
Thereunder (set forth, to
at least 8 decimals, as a
percentage of the Facility
and the aggregate
Commitments of Lender
thereunder)
Revolving Credit $ %
Facility:
Swingline Facility: $ %
Term Loan Facility: $ %
Delayed Draw Term $ %
Loan Facility:
Canadian Term Loan $ %
Facility:
Fees Assigned (if $ %
any):
After giving effect to this assignment, the aggregate amount of the Revolving
Credit Commitment, unutilized Delayed Draw Term Loan Commitment and Swingline
Commitment of and Term Loans, Delayed Draw Term Loans and Canadian Term Loans
at the time owing to the Assignor (or, prior to the Closing Date, such
Assignor's unutilized Term Loan Commitment, Delayed Draw Term Loan Commitment
and Canadian Term Loan Commitment) is $______.
The terms set forth herein
are hereby agreed to:
________________, as Assignor
By:___________________
Name:
Title:
________________, as Assignee
By:___________________
Name:
Title:
Accepted:
CHEMICAL BANK, as Administrative Agent
By:___________________
Name:
Title:
<PAGE>
3
COLLINS & AIKMAN PRODUCTS CO.
(if required)
By:___________________
Name:
Title:
<PAGE>
EXHIBIT C
TO CREDIT AGREEMENT
Administrative Questionnaire
Collins & Aikman Products Co.
Credit Agreement dated as of June __, 1994
Please accurately complete the following information and return via FAX to the
attention of ___________ at Chemical Bank Agency Services Corporation no later
than __________, June __, 1994 at
FAX Number (212) ___-____.
BANK LEGAL NAME TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name:
Street Address:
City, State, Zip Code:
POST CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact:
Street Address:
City, State, Zip Code:
Phone Number:
FAX Number:
Backup Contact:
Street Address:
City, State, Zip Code:
Phone Number:
<PAGE>
2
FAX Number:
TAX WITHHOLDING:
Non Resident Alien Y* N
* Form 4224 Enclosed
Tax ID Number
POST CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION
METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.
Contact:
Street Address:
City, State, Zip Code;
Phone Number:
FAX Number:
PAYMENT INSTRUCTIONS:
Name of Bank where funds are to be transferred:
Routing Transit/ABA number of Bank where funds are to be transferred:
Name of Account, if applicable:
Account Number:
Additional information:
MAILINGS:
Please specify who, subsequent to closing, the Borrower should send financial
and compliance information to (if different from primary credit contact):
Name:
Street Address:
<PAGE>
3
City, State, Zip Code:
It is very important that all of the above information is accurately filled in
and returned no later than ___________, June __, 1994. If there is someone
other than yourself who should receive this questionnaire, please notify us of
their name and FAX number and we will FAX them a copy of the questionnaire.
If you have any questions on this form, please call _______________ at (212)
___-____.
<PAGE>
EXHIBIT D TO
CREDIT AGREEMENT
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of July 13, 1994, among COLLINS &
AIKMAN CORPORATION, a Delaware corporation ("Holdings"), each of the
subsidiaries of Holdings listed on the signature pages hereto and each
subsidiary of Holdings executing a Supplement in the form of Annex I hereto
(individually, a "Subsidiary Guarantor" and collectively, the "Subsidiary
Guarantors"; the Subsidiary Guarantors together with Holdings are referred to
individually as a "Guarantor" and collectively as the "Guarantors") and
CHEMICAL BANK ("Chemical"), as collateral agent (in such capacity, herein
called the "Collateral Agent"), in favor of the Secured Parties (as defined
herein).
RECITALS
WHEREAS, Collins & Aikman Products Co., a wholly owned Subsidiary
of Holdings (the "Borrower"), WCA Canada Inc., an indirect wholly owned
Subsidiary of Holdings (the "Canadian Borrower"), Holdings, certain financial
institutions (the "Lenders") and Chemical Bank, as administrative agent (in
such capacity, the "Administrative Agent"), are parties to the Credit
Agreement dated as of June 22, 1994 (such agreement as it may be amended,
restated, supplemented, or otherwise modified from time to time, referred to
herein as the "Credit Agreement"; capitalized terms used herein without
definition shall have the meanings set forth in the Credit Agreement),
pursuant to which the Lenders have agreed, subject to the terms and conditions
set forth in the Credit Agreement, to make available certain credit facilities
to the Borrower and the Canadian Borrower;
WHEREAS, the Borrower may from time to time incur Permitted
Acquisition Indebtedness permitted by (and as defined in) the Credit
Agreement, which, at the option of the Borrower, may be guaranteed and secured
on a pari passu basis with the Loans and other obligations of the Borrower
under the Credit Agreement;
WHEREAS, the Borrower may from time to time enter into interest
rate protection agreements (including interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements or other similar
agreements or arrangements designed to protect the Borrower and the Canadian
Borrower against fluctuations in interest rate) and currency hedge agreements
with one or more Lenders;
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement that the Guarantors shall have executed and delivered this
Guarantee Agreement to the Collateral Agent; and
WHEREAS, each Guarantor will obtain benefits as a result of
extensions of credit to the Borrower and the Canadian Borrower under the
Credit Agreement and any Permitted Acquisition Indebtedness Agreement (as
herein defined) and the entering into of the Interest Rate Agreements with any
Lenders, which benefits are hereby acknowledged, and each Guarantor,
accordingly, desires to enter into this Guarantee Agreement in order to
satisfy the condition precedent described in the foregoing paragraph;
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Lenders and the Administrative Agent
to enter into the Credit Agreement and to make the Loans and other extensions
of credit thereunder, and the Permitted Acquisition Indebtedness Creditors to
enter into the Permitted Acquisition Indebtedness Agreements and to provide
the Permitted Acquisition Indebtedness, each Guarantor hereby agrees as
follows:
SECTION 1
Definitions
SECTION 1.1. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings unless the context
otherwise requires:
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2
"Credit Transaction Documents" has the meaning set forth in the
Intercreditor Agreement.
"Event of Default" means each of the events set forth in Article
VII of the Credit Agreement and each of the comparable events set forth in the
analogous provisions of any Permitted Acquisition Indebtedness Agreement.
"Guaranteed Obligations" has the meaning assigned to that term in
subsection 2.1.
"Payment in full", "paid in full" or any similar term means
payment in full of the Guaranteed Obligations including, without limitation,
all principal, interest, costs, fees and reasonable expenses (including,
without limitation, reasonable legal fees and expenses) of the Secured Parties
and the Collateral Agent as required under the Credit Transaction Documents.
"Permitted Acquisition Indebtedness Creditors" has the meaning set
forth in the Intercreditor Agreement.
"Permitted Acquisition Indebtedness Agreement" has the meaning set
forth in the Intercreditor Agreement.
"Required Creditors" has the meaning set forth in the
Intercreditor Agreement.
"Secured Parties" means (a) the Lenders (including in their
capacities as counterparties to Interest Rate Agreements), (b) the Issuing
Banks, (c) the Administrative Agent, (d) the Collateral Agent and (e) any
Permitted Acquisition Indebtedness Creditors.
SECTION 1.2 Interpretation. (a) References to "Sections" and
"subsections" shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided.
(b) In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Agreement and the terms, conditions
and provisions of the Credit Agreement or any Permitted Acquisition
Indebtedness Agreement, the terms, conditions and provisions of this Agreement
shall prevail.
SECTION 2
Guarantee
SECTION 2.1. Guarantee of the Guaranteed Obligations. Subject to
the provisions of subsection 2.2(a), the Guarantors hereby jointly and
severally irrevocably and unconditionally guarantee, as
primary obligors and not merely as sureties, the due and punctual payment in
full of all Guaranteed Obligations when the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including, without limitation, amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. (sect.) 362(a) or any successor provision thereto). The term
"Guaranteed Obligations" is used herein in its most comprehensive sense and
includes:
(a) any and all obligations of (i) each of the Borrower and the
Canadian Borrower under the Credit Agreement, the Notes, the Letters of
Credit, the other Loan Documents and any Permitted Acquisition
Indebtedness Agreement, including, without limitation, the principal of,
and premium, if any, and interest (including without limitation,
interest that, but for the filing of a petition in bankruptcy with
respect to the Borrower or the Canadian Borrower would accrue on such
obligations, whether a claim is allowed against the Borrower or the
Canadian Borrower for interest in any such proceeding) on, all Loans,
drawings under the Letters of Credit and Permitted Acquisition
Indebtedness and payments for early termination and the fees, costs,
expenses (including, without limitation, reasonable legal fees and
expenses of counsel), indemnities and liabilities of whatsoever nature
now or hereafter made, incurred
<PAGE>
3
or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not due, and
however arising of Borrower or the Canadian Borrower under or in
connection with the Credit Transaction Documents, including those
arising under successive borrowing transactions under the Credit
Agreement which shall either continue such obligations of the Borrower
or the Canadian Borrower or from time to time renew them after they have
been satisfied and (ii) the Borrower and the Canadian Borrower under
Interest Rate Agreements entered into by the Borrower or the Canadian
Borrower with a counterparty that is a Lender; and
(b) those expenses set forth in subsection 2.8 hereof.
Each Guarantor further agrees that the Guaranteed Obligations may be modified,
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
such modification, extension or renewal of any Guaranteed Obligation.
Notwithstanding any other provision of this Agreement to the
contrary, the only Guaranteed Obligations which the Borrower is guaranteeing
are those the payment or performance of which is owed by the Canadian
Borrower.
SECTION 2.2. Limitation on Amount Guaranteed; Contribution by
Guarantor. (a) Anything contained in this Agreement or any other Credit
Transaction Document to the contrary notwithstanding, the maximum liability of
each Subsidiary Guarantor (other than the Borrower) hereunder and under the
other Credit Transaction Documents shall in no event exceed the maximum amount
that can be guaranteed by such Guarantor under applicable federal and state
laws relating to the insolvency of debtors.
(b) The Guarantors under this Agreement together desire to
allocate among themselves, in a fair and equitable manner, their obligations
arising under this Agreement. Accordingly, in the event any payment or
distribution is made by any Guarantor under this Agreement (a "Funding
Guarantor") that exceeds its Fair Share (as defined below), that Funding
Guarantor shall be entitled to a contribution from each of the other
Guarantors in the amount of such other Guarantor's Fair Share Shortfall (as
defined below), with the result that all such contributions will cause each
Guarantor's Aggregate Payments (as defined below) to equal its Fair Share.
"Fair Share" means, with respect to a Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Guarantor to (y) the aggregate
of the Adjusted Maximum Amounts with respect to all Guarantors, multiplied by
(ii) the aggregate amount paid or distributed on or before such date by all
Funding Guarantors under this Agreement in respect of the obligations
guaranteed. "Fair Share Shortfall" means, with respect to a Guarantor as of
any date of determination, the excess, if any, of the Fair Share of such
Guarantor over the Aggregate Payments of such Guarantor. "Adjusted Maximum
Amount" means, with respect to a Guarantor as of any date of determination,
the maximum aggregate amount of the obligations of such Guarantor under this
Agreement, determined in accordance with subsection 2.2(a); provided that,
solely for purposes of calculating the "Adjusted Maximum Amount" with respect
to any Guarantor for purposes of this subsection 2.2(b), the assets or
liabilities arising by virtue of any rights to or obligations of contribution
hereunder shall not be considered as assets or liabilities of such Guarantor.
"Aggregate Payments" means, with respect to a Guarantor as of any date of
determination, the aggregate amount of all payments and distributions made on
or before such date by such Guarantor in respect of this Agreement (including,
without limitation, in respect of this subsection 2.2(b)). The amounts payable
as contributions hereunder shall be determined as of the date on which the
related payment or distribution is made by the applicable Funding Guarantor.
The allocation among Guarantors of their obligations as set forth in this
subsection 2.2(b) shall not be construed in any way to limit the liability of
any Guarantor hereunder.
SECTION 2.3. Liability of Guarantors Absolute. Each Guarantor
agrees that its obligations hereunder are irrevocable, absolute, independent
and unconditional and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
indefeasible payment in full of the Guaranteed Obligations. In furtherance of
the foregoing and without limiting the generality thereof, each Guarantor
agrees as follows:
(a) This Agreement is a guarantee of payment when due and not of
collection.
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4
(b) The Collateral Agent may enforce this Agreement upon the
occurrence of a Default or an Event of Default notwithstanding the
existence of any dispute between the Secured Parties and the Borrower or
the Canadian Borrower with respect to the existence of such Default or
Event of Default.
(c) The obligations of the Guarantors hereunder are independent
of the obligations of the Borrower and the Canadian Borrower under the
Credit Transaction Documents, and a separate action or actions may be
brought and prosecuted against any Guarantor whether or not any action
is brought against the Borrower or the Canadian Borrower and whether or
not the Borrower or the Canadian Borrower is joined in any such action
or actions.
(d) Each Guarantor's payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge
such Guarantor's liability for any portion of the Guaranteed Obligations
which has not been paid. Without limiting the generality of the
foregoing, if the Collateral Agent is awarded a judgment in any suit
brought to enforce any Guarantor's covenant to pay a portion of the
Guaranteed Obligations, such judgment shall not be deemed to release
such Guarantor from its covenant to pay the portion of the Guaranteed
Obligations that is not the subject of such suit.
(e) The Collateral Agent or any other Secured Party, upon such
terms as it deems appropriate, without notice or demand and without
affecting the validity or enforceability of this Agreement or giving
rise to any reduction, limitation, impairment, discharge or termination
of any Guarantor's liability hereunder, from time to time may (i) renew,
extend, accelerate, increase the rate of interest on, or otherwise
change the time, place, manner or terms of payment of the Guaranteed
Obligations; (ii) settle, compromise, release or discharge, or accept or
refuse any offer of performance with respect to, or substitutions for,
the Guaranteed Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guarantees of the Guaranteed
Obligations and take and hold security for the payment of this Agreement
or the Guaranteed Obligations; (iv) release, surrender, exchange,
substitute, compromise, settle, rescind, waive, alter, subordinate or
modify, with or without consideration, any security for payment of the
Guaranteed Obligations, any other guarantees of the Guaranteed
Obligations, or any other obligation of any person with respect to the
Guaranteed Obligations; (v) enforce and apply any security now or
hereafter held by or for the benefit of the Collateral Agent or any
other Secured Party in respect of this Agreement or the Guaranteed
Obligations and direct the order or manner of sale thereof, or exercise
any other right or remedy that the Collateral Agent or other Secured
Parties, or any of them, may have against any such security, as the
Collateral Agent in its discretion may determine consistent with the
Credit Transaction Documents and any applicable security agreement,
including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, and even though such action operates to
impair or extinguish any right of reimbursement or subrogation or other
right or remedy of any Guarantor against the Borrower or the Canadian
Borrower or any other person or any security for the Guaranteed
Obligations; and (vi) exercise any other rights available to it under
the Credit Transaction Documents.
(f) This Agreement and the obligations of the Guarantors
hereunder shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any
reason (other than indefeasible payment in full of the Guaranteed
Obligations), including without limitation the occurrence of any of the
following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the stay
or enjoining, by order of court, by operation of law or otherwise, of
the exercise or enforcement of, any claim or demand or any right, power
or remedy
<PAGE>
5
(whether arising under the Credit Transaction Documents, at
law, in equity or otherwise) with respect to the Guaranteed Obligations
or any agreement relating thereto, or with respect to any other
guarantee of or security for the payment of the Guaranteed Obligations;
(ii) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including
without limitation provisions relating to events of default) of the
Credit Agreement, any Permitted Acquisition Indebtedness Agreement, any
of the other Credit Transaction Documents or any agreement or instrument
executed pursuant thereto, or of any other guarantee or security for the
Guaranteed Obligations; (iii) the Guaranteed Obligations, or any
agreement relating thereto, at any time being found to be illegal,
invalid or unenforceable in any respect; (iv) the application of
payments received from any source (other than payments received pursuant
to the other Credit Transaction Documents or from the proceeds of any
security for the Guaranteed Obligations, except to the extent such
security also serves as collateral for indebtedness other than the
Guaranteed Obligations) to the payment of indebtedness other than the
Guaranteed Obligations, even though the Collateral Agent or other
Secured Parties, or any of them, might have elected to apply such
payment to any part or all of the Guaranteed Obligations; (v) any
Secured Party's or the Collateral Agent's consent to the change,
reorganization or termination of the corporate structure or existence of
Holdings, the Borrower or any of Subsidiaries of Holdings and to any
corresponding restructuring of the Guaranteed Obligations; (vi) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guaranteed Obligations; (vii) any
defenses, set-offs or counterclaims which the Borrower or the Canadian
Borrower may allege or assert against the Collateral Agent or any other
Secured Party in respect of the Guaranteed Obligations, including but
not limited to failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and
usury; and (viii) 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 Guarantor as an obligor in respect of the
Guaranteed Obligations.
SECTION 2.4. Waivers by Guarantor. Each Guarantor hereby waives,
for the benefit of Secured Parties and the Collateral Agent:
(a) any right to require the Collateral Agent or any other Secured
Party, as a condition of payment or performance by such Guarantor, to
(i) proceed against the Borrower, the Canadian Borrower, any other
guarantor (including any other Guarantor) of the Guaranteed Obligations
or any other person, (ii) proceed against or exhaust any security held
from the Borrower, the Canadian Borrower, any other guarantor (including
any other Guarantor) of the Guaranteed Obligations or any other person,
(iii) proceed against or have resort to any balance of any deposit
account or credit on the books of the Collateral Agent or any other
Secured Party in favor of the Borrower, the Canadian Borrower, any other
guarantor (including any other Guarantor) of the Guaranteed Obligations
or any other person or (iv) pursue any other remedy in the power of the
Collateral Agent or any other Secured Party whatsoever;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of the Borrower or the
Canadian Borrower including, without limitation, any defense based on or
arising out of the lack of validity or the unenforceability of the
Guaranteed Obligations or any agreement or instrument relating thereto
or by reason of the cessation of the liability of the Borrower or the
Canadian Borrower from any cause other than indefeasible payment in full
of the Guaranteed Obligations;
(c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the principal;
(d) any defense based upon the Collateral Agent's or any other
Secured Party's errors or omissions in the administration of the
Guaranteed Obligations, except behavior which amounts to gross
negligence or willful misconduct (including any willful violation of
law);
<PAGE>
6
(e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this
Agreement and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) any rights to set-offs, recoupments and
counterclaims, and (iii) promptness, diligence and any requirement that
the Collateral Agent or any other Secured Party protect, secure, perfect
or insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including
acceptance of this Agreement, notices of default under the Credit
Agreement, any Permitted Acquisition Indebtedness Agreement or any
agreement or instrument related thereto, notices of any renewal,
extension or modification of the Guaranteed Obligations or any agreement
related thereto, notices of any extension of credit to the Borrower or
the Canadian Borrower and notices of any of the matters referred to in
subsection 2.3 and any right to consent to any thereof;
(g) any defenses or benefits that may be derived from or afforded
by law which limit the liability of or exonerate guarantors or sureties,
or which may conflict with the terms of this Agreement; and
(h) subject to the provisions of subsection 2.6, any and all
claims, rights or remedies to which it may be entitled or may hereafter
acquire, that arise hereunder or upon the making of any payment
hereunder, including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, indemnification, or
participation in any claim, right or remedy against the Borrower or the
Canadian Borrower or any security which the Secured Parties now have or
hereafter acquire, whether such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise, to be
subrogated to the rights of the Collateral Agent or any other Secured
Party with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by the Borrower or the Canadian Borrower in
respect thereof.
SECTION 2.5. Payment by Guarantors; Application of
Payments. Subject to the provisions of subsection 2.2(a), each Guarantor
hereby agrees, in furtherance of the foregoing and not in limitation of any
other right which the Collateral Agent, any other Secured Party or any other
person may have at law or in equity against such Guarantor by virtue hereof,
that upon the failure of the Borrower or the Canadian Borrower, as the case
may be, to pay any of the Guaranteed Obligations when and as the same shall
become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including, without limitation, amounts that
would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (section mark) 362(a) or any
successor provision thereto), such Guarantor will forthwith pay, or cause to
be paid, in cash, to the Collateral Agent for the ratable benefit of Secured
Parties, an amount equal to the sum of the unpaid principal amount of all
Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on
such Guaranteed Obligations (including, without limitation, interest which,
but for the filing of a petition in bankruptcy with respect to the Borrower or
the Canadian Borrower, would have accrued on such Guaranteed Obligations,
whether or not a claim is allowed against Borrower or the Canadian Borrower
for such interest in any such proceeding) and all other Guaranteed
Obligations then owed to the Collateral Agent and/or Secured Parties as
aforesaid. All such payments shall be applied promptly from time to time by
the Collateral Agent:
First, to the payment of the costs and expenses of any collection
or other realization under this Agreement, including reasonable
compensation to the Collateral Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith;
Second, to the payment or collateralization of all other
Guaranteed Obligations, as provided in the Intercreditor Agreement or in
any other manner agreed upon by the Secured Parties; and
Third, after payment or collateralization in full of all
Guaranteed Obligations, to the payment to such Guarantor, or its
successors or assigns, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct, of
any surplus then remaining from such payments.
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7
SECTION 2.6. Subrogation. Until the Guaranteed Obligations shall
have been indefeasibly paid in full in the case of each Guarantor other than
Holdings and at all times in the case of Holdings, each Guarantor shall
withhold exercise of (a) any right of subrogation, (b) any right of
contribution such Guarantor may have against any other guarantor (including
any other Guarantor) of the Guaranteed Obligations, (c) any right to enforce
any remedy which the Collateral Agent or any other Secured Party now has or
may hereafter have against the Borrower or the Canadian Borrower or (d) any
benefit of, and any right to participate in, any security now or hereafter
held by the Collateral Agent or any other Secured Party. Each Guarantor
further agrees that, to the extent the waiver of its rights of subrogation and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation such
Guarantor may have against the Borrower or the Canadian Borrower or against
any collateral or security, and any rights of contribution such Guarantor may
have against any other guarantor (including any other Guarantor), shall be
junior and subordinate to any rights the Collateral Agent or any other Secured
Party may have against the Borrower or the Canadian Borrower, to all right,
title and interest the Collateral Agent or any other Secured Party may have in
any such collateral or security, and to any right the Collateral Agent or any
other Secured Party may have against such other guarantor. The Collateral
Agent, on behalf of Secured Parties, may use, sell or dispose of any item of
collateral or security as it sees fit without regard to any subrogation rights
any Guarantor may have, and upon any such disposition or sale any rights of
subrogation any Guarantor may have shall terminate. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when
all Guaranteed Obligations shall not have been paid in full in the case of
Guarantors other than Holdings or at any time in the case of Holdings, such
amount shall be held in trust for the Collateral Agent on behalf of the
Secured Parties and shall forthwith be paid over to the Collateral Agent for
the benefit of the Secured Parties to be credited and applied against the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of (i) in the event that there is no outstanding Permitted Acquisition
Indebtedness, the Credit Agreement and (ii) in the event that there is any
outstanding Permitted Acquisition Indebtedness, the Intercreditor Agreement.
SECTION 2.7. Subordination of Other Obligations. Any
indebtedness of the Borrower and the Canadian Borrower now or hereafter held
by any Guarantor is hereby subordinated in right of payment to the Guaranteed
Obligations, and any such indebtedness of the Borrower and the Canadian
Borrower to such Guarantor collected or received by such Guarantor after an
Event of Default has occurred and is continuing shall be held in trust for the
Collateral Agent on behalf of the Secured Parties and shall forthwith be paid
over to the Collateral Agent for the benefit of the Secured Parties to be
credited and applied against the Guaranteed Obligations but without affecting,
impairing or limiting in any manner the liability of such Guarantor under any
other provision of this Agreement.
SECTION 2.8. Expenses. The Guarantors jointly and severally
agree to pay, or cause to be paid, and to save the Collateral Agent, the
Administrative Agent and Lenders harmless against liability for, any and all
costs and expenses (including reasonable fees and disbursements of counsel)
incurred or expended by the Collateral Agent or any other Secured Party in
connection with the enforcement of or preservation of any rights under this
Agreement.
SECTION 2.9. Continuing Guarantee; Termination of
Guarantee. This Agreement is a continuing guarantee and shall remain in
effect until all of the Guaranteed Obligations shall have been indefeasibly
paid in full and the Commitments shall have terminated.
SECTION 2.11. Authority of Guarantors, Borrower or Canadian
Borrower. It is not necessary for the Secured Parties or the Collateral Agent
to inquire into the capacity or powers of any Guarantor, the Borrower or the
Canadian Borrower or the officers, directors or any agents acting or
purporting to act on behalf of any of them.
SECTION 2.12. Financial Condition and Ownership of Borrower and
Canadian Borrower. Any Loans or Permitted Acquisition Indebtedness may be
granted to, or Letters of Credit issued for the account of, the Borrower or
the Canadian Borrower or continued from time to time without notice to or
authorization from any Guarantor regardless of the financial or other
condition of the Borrower or the Canadian Borrower at the
<PAGE>
8
time of any such
grant or continuation. The Secured Parties and the Collateral Agent shall
have no obligation to disclose or discuss with any Guarantor their assessment,
or such Guarantor's assessment, of the financial condition of the Borrower or
the Canadian Borrower. Each Guarantor has adequate means to obtain
information from the Borrower and the Canadian Borrower on a continuing basis
concerning the financial condition of the Borrower and the Canadian Borrower
and their ability to perform their obligations under the Credit Transaction
Documents, and each Guarantor assumes the responsibility for being and keeping
itself, and shall keep itself, informed of the financial condition of the
Borrower and the Canadian Borrower and of all circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the risk of the
Borrower's and the Canadian Borrower's inability to perform its other
obligations under the Credit Transaction Documents. Each Guarantor hereby
waives and relinquishes any duty on the part of the Collateral Agent or any
other Secured Party to disclose any matter, fact or thing relating to the
business, operations or conditions of the Borrower or the Canadian Borrower
now known or hereafter known by the Collateral Agent or any other Secured
Party.
SECTION 2.13. Rights Cumulative. The rights, powers and remedies
given to the Secured Parties and the Collateral Agent by this Agreement are
cumulative and shall be in addition to and independent of all rights, powers
and remedies given to the Secured Parties and the Collateral Agent by virtue
of any statute or rule of law or in any of the other Credit Transaction
Documents or any agreement between any Guarantor and the Secured Parties
and/or the Collateral Agent or between Borrower, the Canadian Borrower and
Secured Parties and/or the Collateral Agent. Any forbearance or failure to
exercise, and any delay by any Secured Party or the Collateral Agent in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
SECTION 2.14. Bankruptcy; Post-Petition Interest; Reinstatement
of Guarantee (a) So long as any Guaranteed Obligations remain outstanding,
each Guarantor shall not, without the prior written consent of the Collateral
Agent in accordance with the terms of the Credit Transaction Documents,
commence or join with any other person in commencing any bankruptcy,
reorganization or insolvency proceedings of or against the Borrower or the
Canadian Borrower. The obligations of each Guarantor under this Agreement
shall not be reduced, limited, impaired, discharged, deferred, suspended or
terminated by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of the Borrower or the Canadian Borrower or by any defense which
the Borrower or the Canadian Borrower may have by reason of the order, decree
or decision of any court or administrative body resulting from any such
proceeding.
(b) Each Guarantor acknowledges and agrees that any interest on
any portion of the Guaranteed Obligations which accrues after the commencement
of any proceeding referred to in clause (a) above (or, if interest on any
portion of the Guaranteed Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guaranteed Obligations if said proceedings had
not been commenced) shall be included in the Guaranteed Obligations because it
is the intention of the Guarantors and the Collateral Agent that the
Guaranteed Obligations which are guaranteed by the Guarantors pursuant to this
Agreement should be determined without regard to any rule of law or order
which may relieve the Borrower or the Canadian Borrower of any portion of such
Guaranteed Obligations. Each Guarantor will permit any trustee in bankruptcy,
receiver, debtor in possession, assignee for the benefit of creditors or
similar person to pay the Collateral Agent, or allow the claim of the
Collateral Agent in respect of, any such interest accruing after the date on
which such proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed
Obligations are paid by the Borrower or the Canadian Borrower, as the case may
be, the obligations of the Guarantors hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) are rescinded or recovered directly or
indirectly from the Collateral Agent or any other Secured Party as a
preference, fraudulent transfer or otherwise, and any such payments which are
so rescinded or recovered shall constitute Guaranteed Obligations for all
purposes under this Agreement.
<PAGE>
9
SECTION 2.15. Notice of Events. As soon as any Guarantor obtains
knowledge thereof, such Guarantor shall give the Collateral Agent written
notice of any condition or event which has resulted or might reasonably be
expected to result in a breach of or noncompliance with any term, condition or
covenant contained herein or in the Credit Agreement, any Permitted
Acquisition Indebtedness Agreement, any other Credit Transaction Document or
in any document delivered pursuant hereto or thereto.
SECTION 2.16. Set-Off. In addition to any other rights any
Secured Party may have under law or in equity, upon the occurrence and during
the continuance of any Event of Default, if any amount shall at any time be
due and owing by any Guarantor to any Secured Party under this Agreement, such
Secured Party is authorized at any time or from time to time, without notice
(any such notice being hereby expressly waived), to set off and to appropriate
and to apply any and all deposits (general or special, including but not
limited to indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness of any Secured Party owing to such
Guarantor and any other property of such Guarantor held by any Secured Party
to or for the credit or the account of such Guarantor against and on account
of the Guaranteed Obligations and liabilities of such Guarantor to any Secured
Party under this Agreement.
SECTION 2.17. Discharge of Guarantee Upon Sale of any Guarantor.
If all of the stock of any Guarantor or any of its successors in interest
under this Agreement shall be sold or otherwise disposed of (including by
merger or consolidation) in an asset sale not prohibited by the Credit
Agreement or otherwise consented to by (i) in the event that there is no
outstanding Permitted Acquisition Indebtedness, Lenders pursuant to Section
9.08 of the Credit Agreement, or (ii) in the event that there is any
outstanding Permitted Acquisition Indebtedness, Required Creditors (as defined
in the Intercreditor Agreement), the guarantee of such Guarantor or such
successor in interest, as the case may be, hereunder shall automatically be
discharged and released without any further action by the Collateral Agent or
any other Secured Party or any other person effective as of the time of such
asset sale.
SECTION 3
Representations and Warranties
In order to induce the Secured Parties and the Collateral Agent
to accept this Agreement and to enter into the Credit Transaction Documents
and to extend credit thereunder, each Guarantor hereby represents and warrants
to the Secured Parties that the representations and warranties of Holdings,
the Borrower and the Canadian Borrower contained in any Credit Transaction
Documents that relate to such Guarantor are true and correct and that the
following statements are true and correct:
SECTION 3.1. Corporate Existence, etc. Such Guarantor is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the requisite corporate power to own
its assets and to transact the business in which it is now engaged and is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except for failures to be so qualified,
authorized or licensed that would not in the aggregate have a material adverse
effect on the business, operations, assets or financial condition of such
Guarantor.
SECTION 3.2. Corporate Power; Authorization: Enforceable
Obligations. Such Guarantor has the corporate power, authority and legal
right to execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to authorize
its guarantee hereunder on the terms and conditions hereof and its execution,
delivery and performance of this Agreement and all obligations required
hereunder. No consent of any other person, including, without limitation,
stockholders and creditors of any Guarantor, and no license, permit, approval
or authorization of, exemption by, notice or report to, or registration,
filing or declaration with, any Governmental Authority is required by any
Guarantor in connection with this Agreement or the execution, delivery,
performance, validity or enforceability of this Agreement and all obligations
required hereunder. This Agreement has been, and each instrument or document
required hereunder
<PAGE>
10
will be, executed and delivered by a duly authorized
officer of such Guarantor, and this Agreement constitutes, and each instrument
or document required hereunder when executed and delivered hereunder will
constitute, the legally valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
relating to or limiting creditors' rights generally.
SECTION 3.3. No Legal Bar to this Agreement. The execution,
delivery and performance of this Agreement and the documents or instruments
required hereunder, and the use of the proceeds of the borrowings under the
Credit Agreement and any Permitted Acquisition Indebtedness Agreement, will
not violate any provision of any existing law or regulation binding on such
Guarantor, or any order, judgment, award or decree of any court, arbitrator or
governmental authority binding on such Guarantor, or the certificate of
incorporation or by-laws of such Guarantor or any securities issued by such
Guarantor, or any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which such Guarantor is a party or by which such
Guarantor or any of its assets may be bound, the violation of which would have
a material adverse effect on the business, operations, assets or financial
condition of such Guarantor and will not result in, or require, the creation
or imposition of any Lien on any of its property, assets or revenues pursuant
to the provisions of any such mortgage, indenture, lease, contract or other
agreement, instrument or undertaking.
SECTION 4
Affirmative Covenants
Each Guarantor agrees to comply with all covenants of Holdings and
Borrower contained in the Credit Transaction Documents that relate to such
Guarantor and covenants and agrees that, unless and until all of the
Guaranteed Obligations shall have been indefeasibly paid in full and the
Commitments shall have terminated, unless (i) in the event that there is no
outstanding Permitted Acquisition Indebtedness, Lenders pursuant to Section
9.08 of the Credit Agreement, or (ii) in the event that there is any
outstanding Permitted Acquisition Indebtedness, Required Creditors, shall
otherwise consent in writing:
SECTION 4.1. Corporate Existence, Etc. Such Guarantor shall at
all times preserve and keep in full force and effect its corporate existence
and all rights and franchises material to its business, except as otherwise
permitted under the Credit Transaction Documents.
SECTION 4.2. Compliance with Laws, Etc. Such Guarantor shall
comply in all material respects with all applicable laws, rules, regulations
and orders, if noncompliance would have a Material Adverse Effect.
SECTION 4.3. Books and Records. Such Guarantor shall keep and
maintain books of record and account with respect to its operations in
accordance with United States generally accepted accounting principles and
shall permit the Collateral Agent or any other Secured Party and their
respective officers, employees and authorized agents, to the extent the
Collateral Agent in good faith deems necessary for the proper administration
of this Agreement, to examine, copy and make excerpts from the books and
records of such Guarantor and its Subsidiaries and to inspect the properties
of such Guarantor and its Subsidiaries, both real and personal, at such
reasonable times as the Collateral Agent may request.
SECTION 5
Miscellaneous
SECTION 5.1. Survival of Agreement. All covenants, agreements,
representations, warranties and guarantees made by the Guarantors hereunder
and in any certificates or other instruments prepared or
<PAGE>
11
delivered in
connection with or pursuant to this Agreement or any other Credit Transaction
Document shall be considered to have been relied upon by the Secured Parties
and shall survive the making by the Lenders of the Loans and other extensions
of credit under the Credit Agreement, the incurrence by the Borrower of any
Permitted Acquisition Indebtedness, the execution and delivery to any Lenders
of any Notes evidencing such Loans and the issuance by the Issuing Banks of
any Letters of Credit, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect as
long as the principal of or any accrued interest on, or any other fee or
amount payable under or in respect of, any Guaranteed Obligation or this
Agreement or, without duplication of the foregoing, under any of the other
Credit Transaction Documents is outstanding and unpaid and so long as the
Commitments have not been terminated.
SECTION 5.2. Notices. Any communications between the Collateral
Agent and any Guarantor and any notices or requests provided herein to be
given shall be in writing and may be personally served, sent by U.S. mail,
postage prepaid, or by telex, facsimile transmission or cable, to each such
party at its address set forth on the signature pages hereof or to such other
addresses as each such party may in writing hereafter indicate. Any notice,
request or demand to or upon the Collateral Agent or any other Secured Party
or any Guarantor shall be deemed received in accordance with the provisions of
Section 9.01 of the Credit Agreement.
SECTION 5.3. Severability. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 5.4. Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Guarantor therefrom, shall in any event be effective without
the written concurrence of (i) in the event that there is no outstanding
Permitted Acquisition Indebtedness, Lenders as provided by Section 9.08 of the
Credit Agreement or (ii) in the event that there is any outstanding Permitted
Acquisition Indebtedness, Required Creditors; provided, however, that no
consent of any party shall be required in connection with the execution of a
counterpart to this Agreement by any Subsidiary pursuant to Section 5.09 of
the Credit Agreement and Section 5.13 of this Agreement. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 5.5. Enforcement. Each Secured Party agrees that this
Agreement may be enforced only by the action of the Collateral Agent acting
upon the instructions of (i) in the event that there is no outstanding
Permitted Acquisition Indebtedness, Lenders pursuant to Section 9.08 of the
Credit Agreement or (ii) in the event that there is any outstanding Permitted
Acquisition Indebtedness, Required Creditors, and that no Secured Party shall
have any right individually to seek to enforce or to enforce this Agreement or
to realize upon the security to be granted by the Pledge Agreement, it being
understood and agreed that such rights and remedies may be exercised by the
Collateral Agent for the benefit of the Secured Parties upon the terms of this
Agreement and the Pledge Agreement.
SECTION 5.6. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 5.7. Applicable Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE GUARANTORS, THE COLLATERAL AGENT AND OTHER SECURED PARTIES
HEREUNDER AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO BE MADE UNDER, SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
SECTION 5.8. Successors and Assigns. This Agreement is a
continuing guarantee and shall be binding upon each Guarantor and its
successors and assigns. This Agreement shall inure to the benefit of the
Secured Parties and their respective successors and assigns. No Guarantor
shall assign this Agreement or any of the rights or obligations of such
Guarantor hereunder without the prior written consent of all Secured
<PAGE>
12
Parties. Any Secured Party may, without notice or consent, assign its interest
in this Agreement in whole or in part. The terms and provisions of this
Agreement shall inure to the benefit of any assignee or transferee of any Note
or obligations under the Credit Agreement or any instrument evidencing Permitted
Acquisition Indebtedness, and in the event of such transfer or assignment the
rights and privileges herein conferred upon Secured Parties and the Collateral
Agent shall extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof and of the Intercreditor Agreement.
SECTION 5.9. Consent to Jurisdiction and Service of Process.
(a) Each of the Guarantors hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Credit
Transaction Documents, 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 shall affect any right that the Collateral Agent,
the Administrative Agent, any Lender or any Issuing Bank may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against the Borrower, the Canadian Borrower, any Guarantor or any of
their subsidiaries or their properties in the courts of any jurisdiction.
(b) Each of the Guarantors 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 the
other Loan Documents in any New York State or Federal court. 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.
(c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 5.2. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 5.10. Waiver of Jury Trial. Each party hereto and by its
acceptance hereof the Collateral Agent (on its own behalf and behalf of the
Secured Parties) hereby waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this
Agreement or any of the other Credit Transaction Documents. 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 and the other Credit Transaction Documents, as applicable, by, among
other things, the mutual waivers and certifications in this Section 5.10.
SECTION 5.11. No Other Writing. This writing is intended by each
Guarantor and the Collateral Agent as the final expression of this Agreement
and is also intended as a complete and exclusive statement of the terms of
their agreement with respect to the matters covered hereby. No course of
dealing, course of performance or trade usage, and no parol evidence of any
nature, shall be used to supplement or modify any terms of this Agreement.
There are no conditions to the full effectiveness of this Agreement.
SECTION 5.12. Further Assurances. At any time or from time to
time, upon the reasonable request of Collateral Agent, each Guarantor shall
execute and deliver such further documents and do such other acts and things
as the Collateral Agent may reasonably request in order to effect fully the
purposes of this Agreement.
<PAGE>
13
SECTION 5.13. Additional Guarantors. Upon execution and
delivery, after the date hereof, by the Collateral Agent and a Subsidiary of
Holdings of an instrument in the form of Annex I attached hereto, such
Subsidiary of Holdings shall become a Guarantor hereunder with the same force
and effect as if originally named as a Guarantor herein. The execution and
delivery of any such instrument shall not require the consent of any Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall
remain in force and effect notwithstanding the addition of any new Guarantor
as a party to this Agreement.
SECTION 5.14. Taxes. Any and all payments by any Guarantor
hereunder shall be made in accordance with Section 2.18 of the Credit
Agreement as if set forth herein, mutatis mutandis.
SECTION 5.15 (a) If, for the purpose of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or under any other Loan
Document in dollars into another currency, the parties hereto agree, to the
fullest extent that they may legally and effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Collateral Agent would purchase dollars with such other
currency in New York, New York on the Business Day immediately preceding the
day on which final judgment is given.
(b) The obligation of each Guarantor in respect of any sum due
to the Collateral Agent or any other Secured Party hereunder or under any
other Loan Document in dollars shall, to the extent permitted by applicable
law, notwithstanding any judgment in a currency other than dollars, be
discharged only to the extent that on the Business Day following receipt of
any sum adjudged to be so due in the judgment currency, the Collateral Agent
or such other Secured Party may in accordance with normal banking procedures
purchase dollars in the amount originally due to the Collateral Agent or such
other Secured Party with the judgment currency. If the amount of dollars so
purchased is less than the sum originally due to the Collateral Agent or such
other Secured Party each Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Collateral Agent or such
Secured Party, case may be, against the resulting loss.
IN WITNESS WHEREOF, each Guarantor and the Collateral Agent have
executed this Agreement by its duly authorized officer as of the date first
above written.
COLLINS & AIKMAN CORPORATION
by _____________________________
Name:
Title:
Notice Address:
Collins & Aikman Corporation
______________________
______________________
______________________
COLLINS & AIKMAN PRODUCTS CO.
by ___________________________________
Name:
Title:
<PAGE>
14
Notice Address:
Collins & Aikman Products Co.
_____________________
_____________________
_____________________
[GUARANTOR]
by ________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
[GUARANTOR]
by ________________________________
Name:
Title:
Notice Address:
_____________________
_____________________
_____________________
CHEMICAL BANK,
as Collateral Agent
by ________________________________
Name:
Title:
Notice Address:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Susan Kjorlien
<PAGE>
Annex I to
Guarantee Agreement
SUPPLEMENT NO. __, dated as of ________ __, ___, to the
Guarantee Agreement dated as of June __, 1994, as amended (the
"Guarantee Agreement"), among COLLINS & AIKMAN CORPORATION, a
Delaware corporation ("Holdings"), each of the subsidiaries of
Holdings listed on the signature pages thereto and CHEMICAL BANK,
a New York banking corporation, as Collateral Agent (the
"Collateral Agent"), in favor of the Secured Parties.
A. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Guarantee
Agreement and the Credit Agreement.
B. Certain subsidiaries of Holdings have entered into the
Guarantee Agreement in order to induce the Lenders to make Loans, to induce
the Issuing Banks to issue Letters of Credit and to induce the Permitted
Acquisition Indebtedness Creditors to extend Permitted Acquisition
Indebtedness. The Credit Agreement requires each subsidiary of Holdings that
was not in existence or not a subsidiary of Holdings on the date thereof to
enter into the Guarantee Agreement as a guarantor, except as otherwise
provided in the Credit Agreement. Section 5.13 of the Guarantee Agreement
provides that additional subsidiaries of Holdings may become Guarantors under
the Guarantee Agreement by execution and delivery of an instrument in the form
of this Supplement. The undersigned (the "New Guarantor") is a subsidiary of
Holdings and is executing this Supplement in accordance with the requirements
of the Credit Agreement in order to become a Guarantor under the Guarantee
Agreement, to induce the Lenders to make additional Loans and to induce the
Issuing Banks to issue additional Letters of Credit and to induce the
Permitted Acquisition Indebtedness Creditors to extend Permitted Acquisition
Indebtedness, and as consideration for Loans previously made and Letters of
Credit previously issued and Permitted Acquisition Indebtedness previously
extended.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 5.13 of the Guarantee
Agreement, the New Guarantor by its signature hereto shall become a Guarantor
under the Guarantee Agreement with the same force and effect as if originally
named therein as a Guarantor and the New Guarantor hereby (i) agrees to all
the terms and provisions of the Guarantee Agreement applicable to it as a
Guarantor thereunder and (ii) represents and warrants that the representations
and warranties made by it as a Guarantor thereunder are true and correct on
and as of the date hereof. Each reference to a "Guarantor" in the Guarantee
Agreement shall be deemed to include the New Guarantor. The Guarantee
Agreement is hereby incorporated herein by reference.
SECTION 2. This Supplement has been duly authorized, executed and
delivered by the New Guarantor and constitutes a legal, valid and binding
obligation of the New Guarantor, enforceable against it in accordance with its
terms (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights generally and to general equitable principles).
SECTION 3. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement which,
when taken together, bear the signatures of the New Guarantor and the
Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Guarantee Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions
herein with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
2
<PAGE>
SECTION 7. All communications to the New Guarantor shall be given
to it at the address set forth under its signature hereto, with a copy to the
Borrower.
SECTION 8. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.
SECTION 9. The New Guarantor agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees and expenses of counsel for the
Collateral Agent.
3
<PAGE>
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent
have duly executed this Supplement to the Guarantee Agreement as of the day
and year first above written.
[NAME OF NEW GUARANTOR]
By: ________________________
Name:
Title:
Address:
CHEMICAL BANK,
as Collateral Agent
By: ________________________
Name:
Title:
<PAGE>
EXHIBIT E TO
CREDIT AGREEMENT
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of July 13, 1994, among COLLINS & AIKMAN
PRODUCTS CO., a Delaware corporation (the "Borrower"), COLLINS & AIKMAN
CORPORATION, a Delaware corporation ("Holdings"), each of the subsidiaries of
Holdings listed on the signature pages hereto and each subsidiary of Holdings
executing a Supplement in the form of Annex I hereto (individually, a
"Subsidiary Pledgor" and collectively, the "Subsidiary Pledgors"; the
Subsidiary Pledgors together with the Borrower and Holdings are referred to
individually as a "Pledgor" and collectively as the "Pledgors"), and CHEMICAL
BANK, as collateral agent (in such capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Guarantee Agreement referred to below).
PRELIMINARY STATEMENTS
WHEREAS, each Pledgor is the legal and beneficial owner of (i) the
shares of stock (collectively, the "Pledged Shares") described in Part A of
Schedule I annexed hereto and issued by the corporations named therein and
(ii) the intercompany indebtedness owed by the Borrower or any of the other
Restricted Subsidiaries to any such Pledgor to the extent required to be
pledged by such Pledgor pursuant to by Section 6.01(d) of the Credit Agreement
(collectively, the "Pledged Debt"; and together with the Pledged Shares, the
"Pledged Securities"), including, without limitation, the indebtedness
described in Part B of said Schedule I and issued by the obligors named
therein;
WHEREAS, Holdings, the Borrower, WCA Canada Inc. (the "Canadian
Borrower"), certain financial institutions (the "Lenders") and Chemical Bank,
as administrative agent (in such capacity the "Administrative Agent") have
entered into the Credit Agreement dated as June 22, 1994 (such agreement as it
may be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined), pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Borrower and the Canadian Borrower;
WHEREAS, the Borrower may from time to time incur Permitted
Acquisition Indebtedness (as defined in the Credit Agreement);
WHEREAS, Holdings, the Borrower and certain subsidiaries of the
Borrower have executed and delivered the Guarantee Agreement dated as of July
13, 1994 (such Guarantee Agreement as it may be amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement") in favor of
the Collateral Agent for the benefit of the Secured Parties (including Lenders
in their respective capacities as counterparties to Interest Rate Agreements,
if any), pursuant to which Holdings, the Borrower and such subsidiaries have
guaranteed the prompt payment and performance when due of all Guaranteed
Obligations (as defined in the Guarantee Agreement);
WHEREAS, the Collateral Agent and the Administrative Agent, inter
alia, are parties to the Master Collateral and Intercreditor Agreement dated
as of July 13, 1994 (as amended, modified and supplemented form time to time,
the "Intercreditor Agreement") which governs, among other things, certain
relationships among the Secured Parties under this Agreement; and
WHEREAS, it is a condition precedent to the initial extensions of
credit by Lenders under the Credit Agreement that the Pledgors shall have
granted the security interests and undertaken the obligations contemplated by
this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and in
order to induce Lenders to make Loans and other extensions of credit under the
Credit Agreement, and any Permitted Acquisition Indebtedness Creditors (as
defined in the Intercreditor Agreement) to enter into the Permitted
2
<PAGE>
Acquisition Indebtedness Agreements (as defined in the Intercreditor
Agreement) and to provide the Permitted Acquisition Indebtedness and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Pledgor hereby agrees with the Collateral Agent as follows:
SECTION 1. Pledge of Security. To the extent of its interest
therein and as security for its respective Secured Obligations (as defined in
Section 2 hereof), each Pledgor hereby pledges to the Collateral Agent for the
benefit of the Secured Parties, and hereby grants to the Collateral Agent a
first priority security interest in the following (the "Pledged Collateral")
to secure the Secured Obligations of such Pledgor:
(a) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of any Pledgor in the entries on the books of
any financial intermediary pertaining to the Pledged Shares, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Pledged Shares and all rights related to
the foregoing;
(b) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Debt and all rights related to the
foregoing, provided that no Pledgor shall be required to pledge any Pledged
Debt owed by any person unless the amount of such Pledged Debt is equal to or
greater than $10,000,000;
(c) all additional shares of, and all securities convertible into
and all warrants, options and other rights to purchase or otherwise acquire,
capital stock of any issuer of the Pledged Shares from time to time acquired
by any Pledgor in any manner (which shares shall be deemed to be part of the
Pledged Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and any
interest of any Pledgor in the entries on the books of any financial
intermediary pertaining to such additional shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such additional shares, securities, warrants, options or other
rights; provided that no Pledgor shall be required to pledge more than 65% of
the total combined voting power of all classes of stock of any Subsidiary not
incorporated in the United States or any state thereof (a "Foreign
Subsidiary");
(d) all additional Indebtedness from time to time owed to any
Pledgor by any obligor on the Pledged Debt or any indebtedness from time to
time owed to any Pledgor by the Borrower or any other Restricted Subsidiary,
and the instruments evidencing such indebtedness (including, without
limitation, the Intercompany Notes), and all interest, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Indebtedness,
provided that no Pledgor shall be required to pledge any Pledged Debt owed by
any person unless the amount of such Pledged Debt is equal to or greater than
$10,000,000;
(e) all shares of, and all securities convertible into and
warrants, options and other rights to purchase or otherwise acquire, capital
stock of any person that, after the date of this Agreement, becomes, as a
result of any occurrence, a direct Subsidiary of any Pledgor (which shares
shall be deemed to be part of the Pledged Shares), the certificates or other
instruments representing such shares, securities, warrants, options or other
rights and any interest of any Pledgor in the entries on the books of any
financial intermediary pertaining to such shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares, securities, warrants, options or other rights;
(f) all Indebtedness from time to time owed to any Pledgor by any
person that, after the date of this Agreement, becomes, as a result of any
occurrence, a Restricted Subsidiary, and all interest, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Indebtedness,
provided that no Pledgor shall be required to pledge any Pledged Debt owed by
any person unless the amount of such Pledged Debt is equal to or greater than
$10,000,000; and
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(g) to the extent not covered by clauses (a) through (f) above,
all proceeds of any or all of the foregoing Pledged Collateral. For purposes
of this Agreement, the term "proceeds" includes whatever is receivable or
received when Pledged Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty
payable to any Pledgor or Secured Party from time to time with respect to any
of the Pledged Collateral and "proceeds" as defined in the Uniform Commercial
Code of the State of New York as in effect on the date hereof.
SECTION 2. Security for Obligations. This Agreement secures, and
the Pledged Collateral of each Pledgor is collateral security for, the prompt
payment or performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
(section mark)362(a)), of all obligations and liabilities of every nature of
such Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement, any Permitted Acquisition Indebtedness
Agreement, the Guarantee Agreement, the Interest Rate Agreements and the
other Credit Transaction Documents and all extensions or renewals thereof,
whether for principal, interest (including, without limitation, interest that,
but for the filing of a petition in bankruptcy with respect to such Pledgor,
would accrue on such obligations, whether or not a claim is allowed against
the Borrower, the Canadian Borrower or any Guarantor for any interest
in any such proceedings), reimbursement of amounts drawn under Letters of
Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Collateral Agent or any other Secured Party
as a preference, fraudulent transfer or otherwise (all such obligations and
liabilities of the Pledgors, collectively, being the "Underlying Debt"), and
all obligations of every nature of such Pledgor now or hereafter existing
under this Agreement (all such obligations of the Pledgors, collectively,
together with the Underlying Debt, being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery or, as applicable,
shall be accompanied by the related Pledgor's endorsement, where necessary, or
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Each Pledgor shall cause the
name of the Collateral Agent or its nominee, as pledgee, to be noted in the
books and records of the respective issuers of all of the Pledged Shares and
the Collateral Agent shall have the right, at any time in its discretion and
without notice to any Pledgor, to transfer to or to register in the name of
the Collateral Agent or any of its nominees any or all of the other Pledged
Collateral, subject only to the revocable rights specified in Section 7(a).
In addition, upon the occurrence and during the continuance of an Actionable
Default, (as defined in the Intercreditor Agreement), the Collateral Agent
shall have the right at any time to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or instruments
of smaller or larger denominations.
SECTION 4. Representations and Warranties. Each Pledgor
represents and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the
Pledged Shares have been duly authorized and validly issued and are fully paid
and non-assessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered (to the extent required to be delivered
by this Agreement and the Credit Agreement) and is the legal, valid and
binding obligation of the issuers thereof and is not in default.
(b) Ownership of Pledged Collateral. Such Pledgor is the legal,
record and beneficial owner of the Pledged Collateral, free and clear of any
Lien except for the security interest created by this Agreement.
(c) Governmental Authorizations. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority
or regulatory body is required for either (i) the pledge by such Pledgor of
the Pledged Collateral pursuant to this Agreement and the grant by such
Pledgor of the security
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interest granted hereby or for the execution, delivery
or performance of this Agreement by such Pledgor or (ii) the exercise by the
Collateral Agent of the voting or other rights, or the remedies in respect of
the Pledged Collateral, provided for in this Agreement (except as may be
required in connection with a disposition of Pledged Collateral by laws
affecting the offering and sale of securities generally).
(d) Perfection. The pledge of the Pledged Collateral pursuant to
this Agreement creates a valid and perfected first priority security interest
of the Collateral Agent in the Pledged Collateral of such Pledgor, securing
the payment of the Secured Obligations.
(e) Description of Pledged Collateral. The Pledged Shares
pledged hereunder by such Pledgor constitute all of the issued and outstanding
shares of stock of each issuer thereof, except as otherwise set forth in
Schedule II annexed hereto, and, except as otherwise permitted by Article VI
of the Credit Agreement, there are no outstanding warrants, options or other
rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares. The Pledged Debt pledged hereunder
by such Pledgor constitutes all of the issued and outstanding intercompany
indebtedness owed to such Pledgor by Borrower or any Restricted Subsidiary,
required to be pledged hereunder pursuant to Section 6.01(d) of the Credit
Agreement.
(f) Margin Regulations. The pledge of the Pledged Collateral
pursuant to this Agreement does not violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
(g) Other Information. All information heretofore, herein or
hereafter supplied to the Collateral Agent by or on behalf of such Pledgor
with respect to the Pledged Collateral is accurate and complete in all
respects.
SECTION 5. Transfers and Other Liens; Additional Pledged
Collateral; etc. Each Pledgor shall:
(a) not, except as permitted by Section 6 of the Credit Agreement
and any analogous provisions of any Permitted Acquisition Indebtedness
Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged
Collateral, (ii) create or suffer to exist any Lien upon or with respect to
any of the Pledged Collateral, except for the security interest under this
Agreement, or (iii) permit any issuer of Pledged Shares to merge or
consolidate unless all the outstanding capital stock of the surviving or
resulting corporation is, upon such merger or consolidation, pledged hereunder
and no cash, securities or other property is distributed in respect of the
outstanding shares of any other constituent corporation; provided that in the
event a Pledgor makes an asset sale or transfer of Pledged Shares permitted by
the Credit Agreement and any Permitted Acquisition Indebtedness Agreement and
the assets subject to such Asset Sale or transfer are Pledged Shares, the
Collateral Agent shall release the Pledged Shares that are the subject of such
Asset Sale to the Pledgor free and clear of the lien and security interest
under this Agreement concurrently with the consummation of such asset sale;
(b) (i) except as otherwise permitted by Article VI of the Credit
Agreement, cause each issuer of Pledged Shares not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to any Pledgor, (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities of each issuer of Pledged Shares, and
(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock of any person that, after the
date of this Agreement, becomes, as a result of any occurrence, Subsidiary of
such Pledgor; provided that the Pledgors shall not be required to pledge more
than 65% of the total combined voting power of all classes of stock of any
Foreign Subsidiary;
(c) (i) pledge hereunder, immediately upon their issuance, any
and all instruments or other evidences of additional indebtedness from time to
time owed to any Pledgor by any obligor on the Pledged Debt and (ii) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to Pledgor by any person that
after the date of this Agreement becomes,
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as a result of any occurrence, a
Restricted Subsidiary, in each case only to the extent required by Section
6.01(d) of the Credit Agreement;
(d) promptly notify the Collateral Agent of any event of which
such Pledgor becomes aware causing material loss or depreciation in the value
of the Pledged Collateral taken as a whole;
(e) promptly deliver to the Collateral Agent all written notices
received by it with respect to the Pledged Collateral; and
(f) pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon, and all claims against, the Pledged
Collateral, except to the extent the validity thereof is being contested in
good faith in appropriate proceedings; provided that any Pledgor shall in any
event pay such taxes, assessments, charges, levies or claims not later than
five days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment entered or filed against any Pledgor or any of the
Pledged Collateral as a result of the failure to make such payment.
SECTION 6. Further Assurances: Pledge Amendments. (a) Each
Pledgor agrees that from time to time, at the expense of such Pledgor, such
Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Collateral Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, each Pledgor will: (i) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral
Agent may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (ii) at the Collateral Agent's
request, appear in and defend any action or proceeding that may affect
Pledgor's title to or the Collateral Agent's security interest in all or any
part of the Pledged Collateral.
(b) Each Pledgor further agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged
hereunder as provided in Section 5, promptly (and in any event within five
Business Days) deliver to the Collateral Agent a Pledge Amendment, duly
executed by such Pledgor, in substantially the form of Schedule III annexed
hereto (a "Pledge Amendment"), in respect of the additional Pledged Shares or
Pledged Debt to be pledged pursuant to this Agreement. The Pledgors hereby
authorize the Collateral Agent to attach each Pledge Amendment to this
Agreement and agree that all Pledged Shares or Pledged Debt listed on any
Pledge Amendment delivered to the Collateral Agent shall for all purposes
hereunder be considered Pledged Collateral; provided that the failure of any
Pledgor to execute a Pledge Amendment with respect to any additional Pledged
Shares or Pledged Debt pledged pursuant to this Agreement shall not impair the
security interest of the Collateral Agent therein or otherwise adversely
affect the rights and remedies of the Collateral Agent hereunder with respect
thereto. Any Pledge Amendment pursuant to this Section 6(b) shall not require
the consent of any Secured Party.
SECTION 7. Voting Rights; Dividends: Etc. (a) So long as no
Actionable Default shall have occurred and be continuing:
(i) the Pledgors shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this
Agreement, the Credit Agreement or any Permitted Acquisition
Indebtedness Agreement; provided, however, that the Pledgors shall not
exercise or refrain from exercising any such right if the Collateral
Agent shall have notified any Pledgor that, in the Collateral Agent's
judgment, such action would have a material adverse effect on the value
of the Pledged Collateral or any part thereof; provided, further, that
the Pledgors shall give the Collateral Agent at least five Business
Days' prior written notice of the manner in which any of them intends to
exercise, or the reasons for refraining from exercising, any such right.
It is understood, however, that neither (A) the voting by any Pledgor of
any Pledged Shares for or any Pledgor's consent to the election of
directors at a regularly scheduled annual or other meeting of
stockholders or with respect to incidental matters at any such meeting
nor (B) any
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Pledgor's consent to or approval of any action otherwise
permitted under this Agreement, the Credit Agreement or any Permitted
Acquisition Indebtedness Agreement shall be deemed inconsistent with the
terms of this Agreement, the Credit Agreement or any Permitted
Acquisition Indebtedness Agreement within the meaning of this
Section 7(a)(i), and no notice of any such voting or consent need be
given to the Collateral Agent;
(ii) the Pledgors shall be entitled to receive and retain, and to
utilize free and clear of the Lien of this Agreement, any and all
dividends and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral pledged by such Pledgor hereunder,
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection with
a reduction of capital, capital surplus or paid-in-surplus cash
dividends in respect of any Pledged Collateral pledged by such
Pledgor hereunder that are determined by the Collateral Agent in
its absolute discretion to represent in whole an extraordinary,
liquidating or other distribution or return of capital, and
(C) cash paid, payable or otherwise distributed in respect
of principal or in redemption of or in exchange for any Pledged
Collateral (other than principal of any Pledged Debt) pledged by
such Pledgor hereunder,
shall be, and shall forthwith be delivered to the Collateral Agent to
hold as, Pledged Collateral and shall, if received by any Pledgor, be
received in trust for the benefit of the Collateral Agent, be segregated
from the other property or funds of such Pledgor and be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same form
as so received (with all necessary endorsements); and
(iii) the Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to the appropriate Pledgor all such
proxies, dividend payment orders and other instruments as such Pledgor
may from time to time reasonably request for the purpose of enabling
such Pledgor to exercise the voting and other consensual rights which it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, principal or interest payments which it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an
Actionable Event of Default:
(i) upon written notice from the Collateral Agent to any Pledgor
(which notice need not be given if any of the events of the type
described in paragraphs (g) and (h) of Article VII of the Credit
Agreement shall have occurred with respect to such Pledgor), all rights
of such Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to Section 7(a)(i)
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent who shall thereupon have the sole right to exercise
such voting and other consensual rights;
(ii) all rights of the Pledgors to receive the dividends and
interest payments which they would otherwise be authorized to receive
and retain pursuant to Section 7(a)(ii) shall cease, and all such rights
shall thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to receive and hold as Pledged Collateral
such dividends and interest payments; and
(iii) all dividends, principal and interest payments which are
received by any Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Pledgor
and shall forthwith be paid over to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsements).
(c) In order to permit the Collateral Agent to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant to Section 7(b)(i) and to receive all dividends and other
distributions which it may be entitled to receive under Section 7(a)(ii) or
Section 7(b)(ii), each Pledgor shall promptly execute and deliver (or cause to
be executed and delivered) to the Collateral Agent all such proxies, dividend
payment orders and other instruments as the Collateral Agent may from time to
time reasonably request.
SECTION 8. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby irrevocably appoints the Collateral Agent as such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor, the Collateral Agent or otherwise, from time
to time in the Collateral Agent's discretion to take any action and to execute
any instrument that the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
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(a) to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of such Pledgor;
(b) during the continuance of an Event of Default, to ask,
demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of any of the Pledged Collateral;
(c) to receive, endorse and collect any instruments made payable
to such Pledgor representing any dividend, principal or interest payment
or other distribution in respect of the Pledged Collateral or any part
thereof that is required to be delivered to the Collateral Agent
hereunder and to give full discharge for the same; and
(d) during the continuance of an Event of Default, to file any
claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of
any of the Pledged Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Pledged Collateral.
SECTION 9. Collateral Agent May Perform. If any Pledgor fails to
perform any agreement contained herein, the Collateral Agent may (but shall
not be obligated to) itself perform, or cause performance of, such agreement,
and the expenses of the Collateral Agent incurred in connection therewith
shall be payable by such Pledgor under Section 13.
SECTION 10. Standard of Care. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the exercise of reasonable care in the custody of any Pledged
Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Collateral Agent shall have no duty as to any Pledged
Collateral, it being understood that the Collateral Agent shall have no
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Pledged Collateral, whether or not the Collateral Agent has or is deemed to
have knowledge of such matters, (b) taking any necessary steps (other than
steps taken in accordance with the standard of care set forth above to
maintain possession of the Pledged Collateral) to preserve rights against any
parties with respect to any Pledged Collateral, (c) taking any necessary steps
to collect or realize upon the Secured Obligations or any guarantee therefor,
or any part thereof, or any of the Pledged Collateral, or (d) initiating any
action to protect the Pledged Collateral against the possibility of a decline
in market value. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially
equal to that which the Collateral Agent accords its own property consisting
of negotiable securities.
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SECTION 11. Remedies. (a) If any Event of Default shall have
occurred and be continuing, subject to the provisions of the Intercreditor
Agreement, the Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to all other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party
on default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "Code") (whether or not the Code applies to the affected
Pledged Collateral), and the Collateral Agent may also in its sole discretion,
without notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange
or broker's board or at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, at such time or times and at such
price or prices and upon such other terms as the Collateral Agent may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. The Collateral Agent or any other
Secured Party may be the purchaser of any or all of the Pledged Collateral at
any such sale and the Collateral Agent, as agent for and representative of the
Secured Parties (but not any Secured Party or Secured Parties in its or their
respective individual capacities unless (i) in the event that there is no
outstanding Permitted Acquisition Indebtedness, Lenders as provided in Section
9.08 of the Credit Agreement, or (ii) in the event that there is any
outstanding Permitted Acquisition Indebtedness, Required Creditors, shall
otherwise agree in writing), shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Pledged Collateral payable by the Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from
any claim or right on the part of any Pledgor, and each Pledgor hereby waives
(to the extent permitted by applicable law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. Each Pledgor
agrees that, to the extent notice of sale shall be required by law, at least
ten days' notice to such Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated to make
any sale of Pledged Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor hereby waives any claims against the Collateral Agent
and the other Secured Parties arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was
less than the price which might have been obtained at a public sale, even if
the Collateral Agent accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Pledged Collateral are insufficient to pay all the
Secured Obligations, each Pledgor shall be liable for the deficiency and the
fees of any attorneys employed by the Collateral Agent to collect such
deficiency.
(b) The Pledgors recognize that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to time
amended (the "Securities Act"), and applicable state securities laws, the
Collateral Agent may be compelled, with respect to any sale of all or any part
of the Pledged Collateral conducted without prior registration or
qualification of such Pledged Collateral under the Securities Act and/or such
state securities laws, to limit purchasers to those who will agree, among
other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Pledgors acknowledge that any such private sales may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant
to a registration statement under the Securities Act) and, notwithstanding
such circumstances, the Pledgors agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register
it.
(c) If the Collateral Agent determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, the Pledgors
shall and shall cause each issuer of any Pledged Shares to be sold hereunder
from time to time to furnish to the Collateral Agent all such information as
the Collateral Agent may request in order to determine the number of shares
and other instruments included in the Pledged Collateral
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which may be sold by the Collateral Agent in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
SECTION 12. Application of Proceeds. Except as expressly
provided elsewhere in this Agreement and subject to the terms of the
Intercreditor Agreement, all proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral may, in the discretion of the Collateral Agent,
be held by the Collateral Agent as Pledged Collateral for, and/or then, or at
any time thereafter, be applied in full or in part by the Collateral Agent
against, the Secured Obligations in the following order of priority:
FIRST: to the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
the Collateral Agent and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by the Collateral Agent in
connection therewith, and all amounts for which the Collateral Agent is
entitled to indemnification hereunder and all advances made by the
Collateral Agent hereunder for the account of any Pledgor, and the
payment of all costs and expenses paid or incurred by the Collateral
Agent in connection with the exercise of any right or remedy hereunder,
all in accordance with Section 13 and the applicable Credit Transaction
Documents;
SECOND: to the payment or collateralization in full of the Secured
Obligations; and
THIRD: after payment in full of the amounts specified in the
preceding two subparagraphs of this Section 12, to the payment to or
upon the order of the Pledgors, or to whosoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds.
SECTION 13. Expenses. The Pledgors jointly and severally agree
to pay to the Collateral Agent upon demand the amount of any and all costs and
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, that the Collateral Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or (iv) the failure by any Pledgor to perform or
observe any of the provisions hereof.
SECTION 14. Suretyship Waivers by Pledgors, etc. (a) Each
Pledgor agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety
other than indefeasible payment in full of the Secured Obligations. In
furtherance of the foregoing and without limiting the generality thereof, each
Pledgor agrees as follows: (i) the Collateral Agent or any other Secured
Party may from time to time, without notice or demand and without affecting
the validity or enforceability of this Agreement or giving rise to any
limitation, impairment or discharge of such Pledgor's liability hereunder, (A)
renew, extend, accelerate or otherwise change the time, place, manner or terms
of payment of the Secured Obligations, (B) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Secured Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations, (C) request and accept guarantees of the Secured Obligations and
take and hold other security for the payment of the Secured Obligations, (D)
release, exchange, compromise, subordinate or modify, with or without
consideration, any other security for payment of the Secured Obligations, any
guarantees of the Secured Obligations, or any other obligation of any person
with respect to the Secured Obligations, (E) enforce and apply any other
security now or hereafter held by or for the benefit of Collateral Agent or
any other Secured Party in respect of the Secured Obligations and direct the
order or manner of sale thereof, or exercise any other right or remedy that
the Collateral Agent or Secured Parties, or any of them, may have against any
such security, as the Collateral Agent in its discretion may determine
consistent with the Credit Transaction Documents and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy
of the Pledgors against the Borrower, the Canadian Borrower, any Guarantor
under the Guarantee Agreement or any other security or guarantee for the
Secured
10
<PAGE>
Obligations, and (F) exercise any other rights available to the
Collateral Agent or Secured Parties, or any of them, under the Credit
Transaction Documents, at law or in equity; and (ii) this Agreement and the
obligations of Pledgors hereunder shall be valid and enforceable and shall not
be subject to any limitation, impairment or discharge for any reason (other
than indefeasible payment in full of the Secured Obligations), including
without limitation the occurrence of any of the following, whether or not any
Pledgor shall have had notice or knowledge of any of them: (A) any failure to
assert or enforce, or agreement not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or remedy
with respect to the Secured Obligations or any agreement relating thereto, or
with respect to any guaranty of or other security for the payment of the
Secured Obligations, (B) any waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including without
limitation provisions relating to events of default) of the Credit Agreement,
any Permitted Acquisition Indebtedness Agreement, any of the other Credit
Transaction Documents or any agreement or instrument executed pursuant
thereto, or of any guaranty or other security for the Secured Obligations,
(C) the Secured Obligations, or any agreement relating thereto, at any time
being found to be illegal, invalid or unenforceable in any respect, (D) the
application of payments received from any source to the payment of
indebtedness other than the Secured Obligations, even though the Collateral
Agent or Secured Parties, or any of them, might have elected to apply such
payment to any part or all of the Secured Obligations, (E) any failure to
perfect or continue perfection of a security interest in any other collateral
which secures any of the Secured Obligations, (F) any defenses, set-offs or
counterclaims which the Borrower or the Canadian Borrower or any Guarantor may
allege or assert against the Collateral Agent or any other Secured Party in
respect of the Secured Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury, and (G) 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 Pledgor as an obligor in respect
of the Secured Obligations.
(b) Each Pledgor hereby waives, for the benefit of the Collateral
Agent and Secured Parties: (i) any right to require the Collateral Agent or
the Secured Parties, as a condition of payment or performance by such Pledgor,
to (A) proceed against the Borrower, the Canadian Borrower, any guarantor of
the Secured Obligations or any other person, (B) proceed against or exhaust
any other security held from the Borrower, the Canadian Borrower, any
guarantor of the Secured Obligations or any other person, (C) proceed against
or have resort to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or
the Canadian Borrower or any other person, or (D) pursue any other remedy in
the power of the Collateral Agent or any other Secured Party whatsoever;
(ii) any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of the Borrower, the Canadian Borrower or any
Guarantor including, without limitation, any defense based on or arising out
of the lack of validity or the unenforceability of the Secured Obligations or
any agreement or instrument relating thereto or by reason of the cessation of
the liability of the Borrower, the Canadian Borrower or any Guarantor from any
cause other than indefeasible payment in full of the Secured Obligations;
(iii) any defense based upon any statute or rule of law which provides that
the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal; (iv) any defense based
upon the Collateral Agent's or any other Secured Party's errors or omissions
in the administration of the Secured Obligations, except behavior which
amounts to gross negligence or willful misconduct (including any willful
violation of law); (v)(A) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Agreement
and any legal or equitable discharge of any Pledgor's obligations hereunder,
(B) the benefit of any statute of limitations affecting any Pledgor's
liability hereunder or the enforcement hereof, (C) any rights to set-offs,
recoupments and counterclaims, and (D) promptness, diligence and any
requirement that the Collateral Agent or any other Secured Party protect,
secure, perfect or insure any other security interest or lien or any property
subject thereto; (vi) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, notices of
default under the Credit Agreement, any Permitted Acquisition Indebtedness
Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Secured Obligations or any agreement
related thereto, notices of any extension of credit to the Borrower or the
Canadian Borrower and notices of any of the matters referred to in the
preceding paragraph and any right to consent to any thereof; (vii) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors
or sureties, or which may conflict with the terms of this Agreement; and
(viii) any and all claims, rights or remedies to which it may be entitled or
may
11
<PAGE>
hereafter acquire, that arise hereunder or upon the making of any payment
hereunder, including, without limitation, any claim, remedy or right of
subrogation, reimbursement, exoneration, indemnification, or participation in
any claim, right or remedy against the Borrower, the Canadian Borrower or any
Guarantor or any security which the Collateral Agent now has or hereafter
acquires, whether such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise, to be subrogated to the
rights of any lenders with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Borrower, the Canadian Borrower
or any Guarantor in respect thereof.
(c) Until the Secured Obligations shall have been indefeasibly
paid in full in the case of each Pledgor (other than Holdings) or at any time
in the case of Holdings, each Pledgor shall withhold exercise of (i) any right
of subrogation, (ii) any right of contribution such Pledgor may have against
any guarantor of the Secured Obligations, (iii) any right to enforce any
remedy which the Collateral Agent or any other Secured Party now has or may
hereafter have against the Borrower or the Canadian Borrower, or (iv) any
benefit of, and any right to participate in, any other security now or
hereafter held by the Collateral Agent or any other Secured Party. Each
Pledgor further agrees that, to the extent the waiver of its rights of
subrogation and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation such Pledgor may have against the Borrower or the Canadian
Borrower or against any other collateral or security, and any rights of
contribution such Pledgor may have against any such guarantor, shall be junior
and subordinate to any rights the Collateral Agent or Secured Parties may have
against the Borrower or the Canadian Borrower, to all right, title and
interest the Collateral Agent or Secured Parties may have in any such other
collateral or security, and to any right the Collateral Agent or Secured
Parties may have against any such guarantor.
(d) The Collateral Agent and Secured Parties shall have no
obligation to disclose or discuss with any Pledgor their assessment, or any
Pledgor's assessment, of the financial condition of the Borrower or the
Canadian Borrower. Each Pledgor has adequate means to obtain information from
the Borrower and the Canadian Borrower on a continuing basis concerning the
financial condition of the Borrower and the Canadian Borrower and their
ability to perform their respective obligations under the Credit Transaction
Documents, and each Pledgor assumes the responsibility for being and keeping
informed of the financial condition of the Borrower and the Canadian Borrower
and of all circumstances bearing upon the risk of nonpayment of the Secured
Obligations. Each Pledgor hereby waives and relinquishes any duty on the part
of the Collateral Agent or any other Secured Party to disclose any matter,
fact or thing relating to the business, operations or condition of the
Borrower or the Canadian Borrower now known or hereafter known by the
Collateral Agent or any other Secured Party.
SECTION 15. Continuing Security Interest; Transfer of Secured
Obligations. This Agreement shall create a continuing security interest in
the Pledged Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration (or cash
collateralization in the manner provided in the Credit Agreement) of all
outstanding Letters of Credit, (b) be binding upon each Pledgor, its
successors and assigns, and (c) inure, together with the rights and remedies
of the Collateral Agent hereunder, to the benefit of the Collateral Agent and
its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), and subject to the applicable provisions of the
Credit Transaction Documents, any Secured Party may assign or otherwise
transfer any indebtedness and any other obligations held by it secured by this
Agreement to any other person, and such other person shall thereupon become
vested with all the benefits in respect thereof granted to the Collateral
Agent herein or otherwise. Upon the indefeasible payment in full of all
Secured Obligations, the cancellation or termination of the Commitments and
the cancellation or expiration of all outstanding Letters of Credit, the
security interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to the Pledgors. Upon any such termination the
Collateral Agent will, at Pledgors' expense, execute and deliver to each
Pledgor such documents as such Pledgor shall reasonably request to evidence
such termination and each Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to the
Collateral Agent, of such of the Pledged Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof.
12
<PAGE>
SECTION 16. Collateral Agent. (a) The Collateral Agent has been
appointed to act as Collateral Agent hereunder by the Secured Parties. The
Collateral Agent shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of Pledged Collateral), solely in
accordance with the Credit Transaction Documents.
(b) Upon the acceptance of any appointment as Collateral Agent
under Section 5.04 of the Intercreditor Agreement by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed the Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Pledged
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of
the successor the Collateral Agent under this Agreement, and (ii) execute and
deliver to such successor Collateral Agent such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Collateral Agent of the
security interests created hereunder, whereupon such retiring or removed
Collateral Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Collateral Agent's resignation hereunder
as the Collateral Agent, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Collateral Agent hereunder.
(c) The Secured Parties agree that this Pledge Agreement may be
enforced only by the action of the Collateral Agent acting upon the
instructions of (i) in the event that there is no outstanding Permitted
Acquisition Indebtedness, Lenders as provided in Section 9.08 of the Credit
Agreement, or (ii) in the event that there is any outstanding Permitted
Acquisition Indebtedness, Required Creditors, and that no Secured Party shall
have any right individually to seek to enforce or to enforce this Pledge
Agreement or to realize upon the security to be granted hereunder, it being
understood and agreed that such rights and remedies may be exercised by the
Collateral Agent for the benefit of the Secured Parties upon the terms of this
Pledge Agreement and Guarantee Agreement.
SECTION 17. Amendments, Etc. No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by any Pledgor herefrom, shall in any event be effective without the
written concurrence of (i) in the event that there is no outstanding Permitted
Acquisition Indebtedness, Lenders as provided by Section 9.08 of the Credit
Agreement or (ii) in the event that there is any outstanding Permitted
Acquisition Indebtedness, Required Creditors. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 18. Notices. Any notice or other communication between
the Collateral Agent and any Pledgor and any notices or requests provided
herein to be given shall be in writing and may be personally served, sent by
United States mail postage prepaid, or by telex, facsimile transmission or
cable, to each such party at its address set forth under such party's name on
the signature pages hereof or, as to either party, such other address as shall
be designated by such party in a written notice delivered to the other party
hereto. Any notice, request or demand to or upon the Collateral Agent or
Secured Parties or any Pledgor shall be deemed received in accordance with the
provisions of Section 9.02 of the Credit Agreement.
SECTION 19. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of the Collateral Agent in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 20. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
13
<PAGE>
SECTION 21. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 22. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE CODE
PROVIDES THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Unless otherwise defined herein or in the Credit Transaction Documents, terms
used in Article 9 of the Uniform Commercial Code in the State of New York as
in effect on the date hereof are used herein as therein defined.
SECTION 23. Additional Pledgors. Upon execution and delivery,
after the date hereof, by the Collateral Agent and a subsidiary of Holdings of
an instrument in the form of Annex I attached hereto, such subsidiary of
Holdings shall become a Subsidiary Pledgor hereunder with the same force and
effect as if originally named as a Subsidiary Pledgor herein. The execution
and delivery of any such instrument shall not require the consent of any
Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall
remain in full force and effect notwithstanding the addition of any new
Pledgor as a party to the Agreement.
SECTION 24. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
IN WITNESS WHEREOF, each Pledgor and the Collateral Agent have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
14
<PAGE>
COLLINS & AIKMAN CORPORATION
by
Name: _____________________
Title: _____________________
Notice Address:
Collins & Aikman Corporation
______________________________
______________________________
Charlotte, North Carolina ____
COLLINS & AIKMAN PRODUCTS CO.
by
Name:
Title
Notice Address:
Collins & Aikman Products Co.
______________________________
______________________________
Charlotte, North Carolina ____
15
<PAGE>
[PLEDGOR]
by
Name: _____________________
Title: _____________________
Notice Address:
[Pledgor]
______________________________
______________________________
______________________________
[PLEDGOR]
by
Name: _____________________
Title: _____________________
Notice Address:
[Pledgor]
______________________________
______________________________
______________________________
[PLEDGOR]
by
Name:
Title:
Notice Address:
[Pledgor]
______________________________
______________________________
______________________________
16
<PAGE>
CHEMICAL BANK, as Collateral
Agent
by
Name:
Title:
Notice Address:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: ___________________
<PAGE>
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated
as of July 13, 1994, among Collins & Aikman Corporation, Collins &
Aikman Products Co., certain of their subsidiaries from time to time, as
Pledgors, and Chemical Bank, as Collateral Agent.
Part A
Stock Number
Owner of Stock Class of Certificate Par of
Stock Issuer Stock Nos. Value Shares
Part B
[Must include all intercompany indebtedness owed by the Borrower or any
of its subsidiaries (other than Foreign Subsidiaries) to the Borrower or
any subsidiary (other than Foreign Subsidiaries), to the extent required
by the Pledge Agreement]
Pledgor Debt Issuer Amount of Indebtedness
<PAGE>
SCHEDULE II
Attached to and forming a part of the Pledge Agreement dated
as of July 13, 1994 among Collins & Aikman Corporation, Collins & Aikman
Products Co., certain of their Subsidiaries, as Pledgors, and Chemical
Bank, as Collateral Agent.
Number of Shares Percentage Holders of
Issued and Represented by Shares Not
Stock Issuer Outstanding Pledged Shares Pledged
<PAGE>
SCHEDULE III
PLEDGE AMENDMENT
This Pledge Amendment, dated as of , is
delivered pursuant to Section 6(b) of the Pledge Agreement referred to
below. The undersigned hereby agrees that this Pledge Amendment may be
attached to the Pledge Agreement dated as of June __, 1994 among Collins
& Aikman Corporation, Collins & Aikman Products Co., certain of their
subsidiaries and Chemical Bank, as Collateral Agent (the "Pledge
Agreement", capitalized terms defined therein being used herein as
therein defined) and that the [Pledged Shares] [Pledged Debt] listed on
this Pledge Amendment shall be deemed to be part of the [Pledged Shares]
[Pledged Debt] and shall become part of the Pledged Collateral and shall
secure all Secured Obligations.
[NAME OF PLEDGOR],
by
Title:
Stock
Class of Certificate Number of
Stock Issuer Stock Nos. Par Value Shares
Pledgor Debt Issuer Amount of Indebtedness
<PAGE>
Annex I to
Pledge Agreement
SUPPLEMENT NO. __, dated as of _______ __, ____, to
the Pledge Agreement dated as of July 13, 1994, as amended
(the "Pledge Agreement"), among COLLINS & AIKMAN PRODUCTS
CO., a Delaware corporation (the "Borrower"), COLLINS &
AIKMAN CORPORATION, a Delaware corporation ("Holdings"),
each of the subsidiaries of Holdings listed on the signature
pages thereto and CHEMICAL BANK, a New York banking
corporation, as collateral agent (the "Collateral Agent").
A. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Pledge
Agreement and the Credit Agreement.
B. Holdings, the Borrower and certain subsidiaries of
Holdings have entered into the Pledge Agreement in order to induce the
Lenders to make Loans, to induce the Issuing Banks to issue Letters of
Credit and to induce Permitted Acquisition Indebtedness Creditors to
extend Permitted Acquisition Indebtedness. The Credit Agreement
requires certain Subsidiaries of Holdings that were not in existence or
not Subsidiaries of Holdings on the date thereof to enter into the
Pledge Agreement as a Pledgor. Section 23 of the Pledge Agreement
provides that additional Subsidiaries of Holdings may become Subsidiary
Pledgors under the Pledge Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned (the "New
Subsidiary Pledgor") is a Subsidiary of Holdings and is executing this
Supplement in accordance with the requirements of the Credit Agreement
in order to become a Subsidiary Pledgor under the Pledge Agreement, to
induce the Lenders to make additional Loans and to induce the Issuing
Banks to issue additional Letters of Credit and to induce Permitted
Acquisition Indebtedness Creditors to extend Permitted Acquisition
Indebtedness, and as consideration for Loans previously made, Letters of
Credit previously issued and Permitted Acquisition Indebtedness
previously extended.
Accordingly, the Collateral Agent and the New Subsidiary
Pledgor agree as follows:
SECTION 1. In accordance with Section 23 of the Pledge
Agreement, the New Subsidiary Pledgor by its signature hereto shall
become a Subsidiary Pledgor under the Pledge Agreement with the same
force and effect as if originally named therein as a Subsidiary Pledgor
and the New Subsidiary Pledgor hereby (i) agrees to all the terms and
provisions of the Pledge Agreement applicable to it as a Subsidiary
Pledgor thereunder and (ii) represents and warrants that the
representations and warrants made by it as a Subsidiary Pledgor
thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing the New Subsidiary Pledgor, as security for
the payment and performance in full of the Secured Obligations owed by
it, does hereby transfer, grant, bargain, sell, convey, hypothecate,
pledge, set over and deliver unto the Collateral Agent, and grant to the
Collateral Agent (for the benefit of the Secured Parties) a security
interest in (a) the shares of capital stock listed below the name of the
New Subsidiary Pledgor on Schedule I hereto and any shares of stock of
the Borrower or any subsidiary of the Borrower obtained in the future by
the New Subsidiary Pledgor, (b) the promissory notes listed on Schedule
I hereto and any promissory note issued in the future by Holdings or any
Subsidiary of Holdings to such New Subsidiary Pledgor and (c) all other
Pledged Collateral referred to in the Pledge Agreement and required to
be pledged pursuant thereto. Schedule I attached hereto supplements
Schedule I to the Pledge Agreement and shall be deemed a part thereof
for all purposes of the Pledge Agreement. Each reference to a
"Subsidiary Pledgor" or a "Pledgor" in the Pledge Agreement shall be
deemed to include the New Subsidiary Pledgor. The Pledge Agreement is
hereby incorporated herein by reference.
SECTION 2. This Supplement has been duly authorized,
executed and delivered by the New Subsidiary Pledgor and constitutes a
legal, valid and binding obligation of the New Subsidiary Pledgor,
enforceable against it in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights
generally and to general equitable principles).
2
<PAGE>
SECTION 3. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement
which, when taken together, bear the signatures of the New Subsidiary
Pledgor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the
Pledge Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein and in the Pledge Agreement
shall not in any way be affected or impaired. The parties hereto shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions herein with valid provisions, the economic
effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications to the New Subsidiary Pledgor
shall be given to it at the address set forth under its signature hereto
with a copy to the Borrower.
SECTION 8. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
SECTION 9. The New Subsidiary Pledgor agrees to reimburse
the Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees and
expenses of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary Pledgor and the
Collateral Agent have duly executed this Supplement to the Pledge
Agreement as of the day and year first above written.
[NAME OF NEW SUBSIDIARY PLEDGOR]
By: ________________________
Name:
Title:
Address:
CHEMICAL BANK, as Collateral Agent
By: ________________________
Name:
Title:
<PAGE>
Schedule I to
Supplement No. __
to Pledge Agreement
CAPITAL STOCK
PART A
Stock
Owner of Stock Class of Certificate Number of
Stock Issuer Stock Nos. Par Value Shares
PROMISSORY NOTES
PART B
Debt
Pledgor Issuer Amount of Indebtedness
<PAGE>
EXHIBIT F
TO CREDIT AGREEMENT
[FORM OF OPINION OF CRAVATH, SWAINE & MOORE/
ELIZABETH R. PHILIPP, ESQ./CANADIAN COUNSEL]
1. Each of Holdings, the Borrower, the Canadian Borrower, the
other Guarantors and the other Significant Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of
its organization, has the requisite power and authority to own its property
and assets and to carry on its business as now conducted and as proposed to be
conducted and is qualified to do business in every jurisdiction where such
qualification is required, except where the failure so to qualify would not
have a Material Adverse Effect. Holdings has the corporate power to execute,
deliver and perform its obligations under the Credit Agreement, the Guarantee
Agreement and the Pledge Agreement. Each of the Borrower and the Canadian
Borrower has the corporate power to execute, deliver and perform its
obligations under the Credit Agreement, the Guarantee Agreement and the Pledge
Agreement and to borrow under the Credit Agreement and to execute and deliver
the Notes to which it is a party. The Canadian Borrower has the corporate
power to execute, deliver and perform its obligations under the Credit
Agreement and to execute and deliver the Notes to which it is a party. Each
of the other subsidiaries of Holdings party thereto has the corporate power to
execute, deliver and perform its obligations under the Guarantee Agreement and
the Pledge Agreement.
2. The execution, delivery and performance by Holdings of the Credit
Agreement, the Guarantee Agreement and the Pledge Agreement, the execution,
delivery and performance by the Borrower of the Credit Agreement, the
Guarantee Agreement and the Pledge Agreement, the execution, delivery and
performance by the Canadian Borrower of the Credit Agreement, the borrowings
and other extensions of credit under the Credit Agreement, the execution and
delivery of the Notes by the Borrower and the Canadian Borrower and the
execution, delivery and performance by each of the other subsidiaries of
Holdings party thereto of the Guarantee Agreement and the Pledge Agreement
(collectively, the "Transactions") (a) have been duly authorized by all
requisite corporate and, if required, shareholder action and (b) will not (i)
violate (A) any provision of any law, statute, rule or regulation or the
articles of incorporation or certificate of incorporation, as the case may be,
or the by-laws of Holdings or any of its subsidiaries, (B) to our knowledge,
any order of any court or of any other Governmental Authority binding upon
Holdings or any of its subsidiaries or (C) after giving effect to the
Recapitalization Transactions, any provisions of any material indenture,
material agreement or other material instrument listed as an exhibit to
Holdings' registration statement on Form S-2 dated June , 1994, to which
Holdings or any of its subsidiaries is a party or under which any of their
respective properties or assets are or may be bound or (ii) after giving
effect to the Recapitalization Transactions, be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture, agreement or other instrument referred to in
clause (b)(i)(C) above.
3. The Credit Agreement, the Guarantee Agreement and the Pledge
Agreement have each been duly executed and delivered by Holdings and each
constitutes the legal, valid and binding obligation of Holdings, enforceable
in accordance with its terms except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by general equitable
principles (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing) regardless of whether considered
in a proceeding in equity or at law. The Credit Agreement, the Pledge
Agreement, the Guarantee Agreement and the Notes to which it is a party have
each been duly executed and delivered by the Borrower and each constitutes the
legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization and
other similar laws of general applicability relating to or affecting
creditors' rights generally and by general equitable principles (including,
without limitation, concepts of materiality, reasonableness, good faith and
fair dealing) regardless of whether considered in a proceeding in equity or at
law. The Credit Agreement and the Notes to which it is a party have each been
duly executed
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and delivered by the Canadian Borrower and each constitutes the
legal, valid and binding obligation of the Canadian Borrower, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and other similar laws of general application relating to or
affecting creditors' rights generally and by general equitable principles
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing) regardless of whether considered in a proceeding in
equity or at law. The Guarantee Agreement and the Pledge Agreement have each
been duly executed and delivered by each of the other subsidiaries of Holdings
party thereto and each constitutes the legal, valid and binding obligation of
each such subsidiary, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by general equitable principles (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing) regardless of
whether considered in a proceeding in equity or at law.
With respect to the foregoing opinions, (i) certain provisions of
the Guarantee Agreement and the Pledge Agreement are or may be unenforceable
in whole or in part under the laws of the State of New York, but the inclusion
of such provisions does not affect the validity of such agreements, and each
of the Guarantee Agreement and the Pledge Agreement contains adequate
provisions for the practical realization of the rights and benefits intended
to be afforded thereby, (ii) insofar as provisions contained in the Loan
Documents provide for indemnification, the enforcement thereof may be limited
by public policy considerations, (iii) the availability of a decree for
specific performance or an injunction is subject to the discretion of the
court requested to issue any such decree or injunction and (iv) we express no
opinion as to the effect of the law of any jurisdiction other than the State
of New York wherein any Lender may be located or wherein enforcement of the
Credit Agreement may be sought that limits the rates of interest legally
chargeable or collectible.
4. No registration with or consent or approval of, or other action by,
and no notice to or registration or filing with any Federal, state or other
Governmental Authority is required in connection with the Transactions other
than (i) such reports to United States Governmental Authorities regarding
international capital and foreign currency transactions as may be required
pursuant to 31 C.F.R. Part 128 and (ii) those that have been made or obtained
and are in full force and effect or as to which the failure to be made or
obtained or to be in full force and effect would not result, individually or
in the aggregate, in a Material Adverse Effect.
5. To the best of our knowledge and except as disclosed in Schedule
3.13 to the Credit Agreement, there are not any actions, suits or proceedings
at law or in equity or by or before any court or Governmental Authority now
pending or, to such counsel's knowledge, threatened against or affecting
Holdings or any of its subsidiaries or the business, assets or rights of
Holdings or any of its subsidiaries (a) which involve any of the Transactions
or (b) as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would be likely, in our
judgment, individually or in the aggregate, to have a Material Adverse Effect
or to impair the validity or enforceability of or the ability of any of
Holdings or any of its subsidiaries to perform its obligations under any of
the Loan Documents to which it is a party. To the best of our knowledge,
neither Holdings nor any of its subsidiaries is in default with respect to any
judgment, writ, injunction or decree of any court or governmental
instrumentality or other agency where such default could have a Material
Adverse Effect.
6. Neither Holdings nor any of its subsidiaries is an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940. Neither Holdings nor any of its subsidiaries is a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
7. Assuming (a) delivery to and the continued possession by the
Collateral Agent, in each case in the State of New York, of all the Pledged
Securities (including promissory notes and stock certificates which evidence
any of the Pledged Securities), endorsed in blank in the case of promissory
notes and together with
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stock powers properly executed in blank with respect
thereto in the case of stock certificates, (b) the Collateral Agent, the
Lenders, Holdings, the Borrower and each of the subsidiaries of Holdings are
"bona fide purchasers" within the meaning of Section 8-302 of the Uniform
Commercial Code of the State of New York as in effect on the date hereof (the
"New York UCC") with respect to the Pledged Securities, and (c) no prior
perfected security interests exist with respect to the Pledged Securities as
set forth in Sections 8-313 and 8-321 of the New York UCC, the execution and
delivery of the Pledge Agreement will create a valid and duly perfected lien
on and a security interest in the Pledged Securities and the proceeds thereof
under the Pledge Agreement, which security interest in the Pledged Securities
and such proceeds will be prior to any security interest, lien, charge or
encumbrance that must be perfected by possession or filing under the New York
UCC, except as follows:
(a) in the case of the issuance of additional shares or
other distributions of additional instruments in respect of the
Pledged Securities, or the distribution of cash proceeds or
dividends in respect of such Pledged Securities, the security
interests of the Collateral Agent in such securities, instruments,
proceeds or dividends will be perfected only if possession of the
certificates representing them or cash proceeds, as applicable,
are obtained by the Collateral Agent in accordance with the Pledge
Agreement or, in respect of additional shares, the security
interest of the Collateral Agent is perfected in another manner
provided for in Sections 8-313 and 8-321 of the New York UCC; and
(b) in the case of nonidentifiable cash proceeds and other
proceeds not referred to in clause (a) above, continuation of
perfection of such security interests is limited to the extent set
forth in Section 9-306 of the New York UCC.
8. We express no opinion as to the Borrower's or any Guarantor's, as
the case may be, rights in or title to any Collateral.
We understand that you are satisfying yourself as to the status
under Section 548 of the Bankruptcy Code and applicable state fraudulent
conveyance laws of the obligations of the Borrower, the Canadian Borrower and
the Guarantors under the Loan Documents and the security interest created by
the Loan Documents and we express no opinion thereon.
<PAGE>
EXHIBIT G
TO CREDIT AGREEMENT
[FORM OF FINANCIAL OFFICER CERTIFICATE]
I, ___________________, the _______________ of Collins & Aikman
Corporation ("Holdings") hereby certify that:
1. I am a Financial Officer of Holdings as defined in the
Credit Agreement dated as of June __, 1994, among Collins & Aikman
Products Co., a Delaware corporation (the "Borrower"), Holdings,
the financial institutions listed in Schedule 2.01 thereto, and
Chemical Bank, a New York banking corporation, as administrative
agent for the Lenders and the Issuing Banks (the "Credit
Agreement"; capitalized terms used herein and not defined shall
have the meanings assigned to them in the Credit Agreement).
2. The consolidated financial statements attached hereto,
delivered pursuant to Section 5.04 of the Credit Agreement, fairly
present the financial condition and results of operations of
Holdings and its consolidated subsidiaries and Holdings and the
Restricted Subsidiaries, respectively, in accordance with GAAP
[(other than the absence of footnotes in accordance with GAAP)]
consistently applied (except as disclosed therein)[, subject to
normal year-end audit adjustments]. [Bracketed language to be
included in Certificates delivered with quarterly financial
statements.]
3. The statement of stockholders' equity of Holdings, fairly
presents the stockholders' equity of Holdings in accordance with
GAAP consistently applied (except as disclosed therein).
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of
__________, _____.
_________________________
<PAGE>
EXHIBIT H TO
CREDIT AGREEMENT
[FORM OF INTERCREDITOR AGREEMENT]
MASTER COLLATERAL AND INTERCREDITOR AGREEMENT dated as of July 13, 1994
among the Participating Creditors (as defined below) and CHEMICAL BANK, as
collateral agent (the Collateral Agent ) for the Participating Creditors.
A. The Lenders have agreed to extend credit to Collins & Aikman Products
Co., a Delaware corporation (the Borrower ), and to WCA Canada Inc., a
Canadian corporation (the "Canadian Borrower"), pursuant to the Credit
Agreement dated as of June 22, 1994 (as amended, modified, supplemented,
restated and in effect from time to time, the Credit Agreement ), among the
Borrower, the Canadian Borrower, Collins & Aikman Corporation, a Delaware
corporation ("Holdings"), the financial institutions party thereto as lenders
(the Lenders ) and Chemical Bank, as administrative agent for the Lenders (in
such capacity, the Administrative Agent ). Capitalized terms used but not
defined in this introductory statement shall have the meanings assigned to
such terms in Section 1.01.
B. Pursuant to the Credit Agreement, the Borrower may from time to time
incur Permitted Acquisition Indebtedness up to the maximum aggregate amount,
and subject to the conditions, set forth in the Credit Agreement.
C. Pursuant to the Credit Agreement, (i) Holdings, the Borrower and
certain subsidiaries of the Borrower have entered into, and certain other
subsidiaries of the Borrower in the future may enter into, the Pledge
Agreement, under which they have pledged and will pledge to the Collateral
Agent certain shares of capital stock and certain debt instruments and
(ii) Holdings, the Borrower, the Canadian Borrower and certain Subsidiaries of
the Borrower have entered into, and certain other subsidiaries of the Borrower
in the future may enter into, the Guarantee Agreement under which they have
guaranteed and will guarantee the Guaranteed Obligations.
D. To induce the Permitted Acquisition Indebtedness Creditors to extend
credit pursuant to the Permitted Acquisition Indebtedness Agreements, each of
the Credit Agreement Creditors is willing to enter into this Agreement. In
continuing to extend credit to the Borrower and the Canadian Borrower and in
entering into this Agreement, each of the Credit Agreement Creditors is
relying on the undertakings of each of the Permitted Acquisition Indebtedness
Creditors as set forth herein. In extending credit to the Borrower and in
entering into this Agreement, each of the Permitted Acquisition Indebtedness
Creditors is relying on the undertakings of each of the Credit Agreement
Creditors as set forth herein.
E. Each of the Participating Creditors desires to provide for its rights
in respect of the Pledged Collateral and certain collections from the Borrower
and to make certain other commitments and undertakings in connection with the
Credit Agreement, the Permitted Acquisition Indebtedness Agreements, the
Support Documents, the obligations incurred by Holdings, the Borrower and
subsidiaries of the Borrower under such agreements and the rights of the
Participating Creditors under such agreements.
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Accordingly, each of the Participating Creditors and the Collateral
Agent hereby agrees as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions of Certain Terms. As used herein, the
following terms shall have the meanings set forth below:
"Acknowledgment" shall mean an acknowledgment in the form of Exhibit A
attached to this Agreement.
"Actionable Default" shall mean any Event of Default under and as
defined in the Credit Agreement or any comparable Event of Default under and
as defined in any Permitted Acquisition Indebtedness Agreement.
"Affiliate" shall have the meaning set forth in the Credit Agreement.
"Business Day" shall mean any day (other than a day that is a Saturday,
a Sunday or a legal holiday in the State of New York) on which banks are open
for business in New York City.
"Canadian Term Loans" shall have the meaning set forth in the Credit
Agreement.
"Collateral Accounts" shall have the meaning set forth in Section 4.01.
"Commitments" shall have the meaning set forth in the Credit Agreement.
"Credit Agreement Creditors" shall mean the Administrative Agent, the
Lenders (including as counterparties to Interest Rate Agreements) and the
Issuing Banks.
"Credit Transaction Documents" shall mean this Agreement, the Loan
Documents (as defined in the Credit Agreement) and the Credit Documents
specified in an accepted Acknowledgment.
"Delayed Draw Term Loans" shall have the meaning set forth in the
Credit Agreement.
"Guarantee Agreement" shall have the meaning set forth in the Credit
Agreement.
"Guarantors" shall have the meaning set forth in the Credit Agreement.
"Intercompany Note" shall have the meaning set forth in the Credit
Agreement.
"Interest Rate Agreement Collateral Account" shall have the meaning set
forth in Section 4.01.
"Letter of Credit Disbursement" shall mean a payment or disbursement
made by an Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit" shall mean any letter of credit issued by an Issuing
Bank pursuant to the Credit Agreement.
"Letter of Credit Collateral" Account shall have the meaning set forth
in Section 4.01.
"Lien" shall have the meaning set forth in the Credit Agreement.
"Loans" shall have the meaning set forth in the Credit Agreement.
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"LOC Creditors" shall mean the Issuing Banks and any Lenders that hold
participations in Letters of Credit.
"Majority Creditors" shall mean, at any time, Participating Creditors
holding Voting Obligations representing a majority of the Voting Obligations
at such time.
"Notice of Actionable Default" shall mean a notice delivered by any
Participating Creditor (pursuant to the terms of the Credit Agreement or a
Permitted Acquisition Indebtedness Agreement, as applicable) to the Collateral
Agent, stating that an Actionable Default has occurred and is continuing and
that, as a result thereof, such Participating Creditor is entitled, to the
extent provided in this Agreement and the Support Documents, to exercise
rights and remedies provided by the Support Documents. A Notice of Actionable
Default shall be deemed to have been given when the notice referred to in the
preceding sentence has actually been received by the Collateral Agent and to
have been rescinded when the Collateral Agent has received satisfactory
evidence that such Actionable Default has been cured or when such Actionable
Default has been effectively waived for purposes of this Agreement. A Notice
of Actionable Default shall be deemed to be outstanding at all times after
such Notice has been given until such time, if any, as such Notice has been
rescinded.
"Obligations" shall mean all obligations defined as Guaranteed
Obligations in the Guarantee Agreement and "Secured Obligations" in the
Pledge Agreement.
"Outstanding Credit Agreement Obligations" shall mean, at any time, the
sum (without duplication) of Outstanding Revolving Credit Obligations and
Outstanding Term Loan Obligations at such time.
"Outstanding Interest Rate Agreement Obligations" shall mean, at any
time, the aggregate amount of all monetary obligations of the Borrower and the
other Guarantors that are accrued and owing at such time to the Lenders or any
of them under the Interest Rate Agreements and the Support Documents in
respect of the Interest Rate Agreements, including indemnification and expense
reimbursement obligations and premium, if any. Notwithstanding the foregoing,
no amount shall be treated as Outstanding Interest Rate Agreement Obligations
unless such Interest Rate Agreement is permitted under the Credit Agreement.
"Outstanding Obligations" shall mean, at any time, the sum of (a) the
Outstanding Credit Agreement Obligations at such time, (b) the Outstanding
Permitted Acquisition Indebtedness Agreement Obligations at such time (c) the
Unfunded LOC Exposure at such time and (d) the Outstanding Interest Rate
Agreement Obligations at such time.
"Outstanding Permitted Acquisition" Indebtedness Agreement Obligations
shall mean, at any time, the sum (without duplication) of (a) the aggregate
principal amount of outstanding Permitted Acquisition Indebtedness at such
time and the aggregate amount of accrued and unpaid interest thereon at such
time and (b) the aggregate amount of all other monetary obligations of the
Borrower and the other Guarantors that are accrued and owing at such time to
the Permitted Acquisition Indebtedness Creditors or any of them under the
Permitted Acquisition Indebtedness Agreements and the Support Documents,
including fees and expenses and indemnification and other expense reim-
bursement obligations and premium, if any. Notwithstanding the foregoing, no
amount shall be treated as Outstanding Permitted Acquisition Indebtedness
Agreement Obligations unless such amount is permitted under the Credit
Agreement.
"Outstanding Revolving Credit Obligations" shall mean, with respect to
the Revolving Lenders at any time, the sum (without duplication) of (a) the
aggregate principal amount of the Revolving Loans and the Swingline Loans
outstanding at such time and the aggregate amount of accrued and unpaid
interest thereon at such time, (b) the aggregate amount of all Letter of
Credit Disbursements not yet reimbursed to the LOC Creditors and accrued and
unpaid interest thereon at such time, (c) the aggregate amount of accrued and
unpaid fees payable to the Revolving Lenders, or any of them, under or in
connection with the obligations set forth in clauses (a) and (b) above under
the Credit Agreement and (d) the Revolving Lenders' pro rata share (determined
as provided below) of the aggregate amount of all other monetary obligations
of the Borrower and the other Guarantors that are accrued and owing at such
time to the Revolving Lenders or any of them under
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the Credit Agreement and
the Support Documents, including indemnification and expense reimbursement
obligations (but excluding any Unfunded LOC Exposure). For purposes of
determining the Revolving Lenders' pro rata share of the aggregate amount of
monetary obligations owed to the Lenders pursuant to clause (d) above, such
amount shall be determined on the basis of the ratio of (i) the amount owed to
the Revolving Lenders pursuant to clauses (a), (b) and (c) of this definition
to (ii) the sum of (A) the amount owed to the Revolving Lenders pursuant to
clauses (a), (b) and (c) of this definition and (B) the amounts owed to the
Term Loan Lenders pursuant to clauses (a) and (b) of the definition of the
term Outstanding Term Loan Obligations .
"Outstanding Term Loan Obligations" shall mean, with respect to the Term
Loan Lenders at any time, the sum (without duplication) of (a) the aggregate
principal amount of the Term Loans, Delayed Draw Term Loans and Canadian Term
Loans outstanding at such time and the aggregate amount of accrued and unpaid
interest thereon at such time, (b) the aggregate amount of accrued and unpaid
fees payable to the Term Loan Lenders, or any of them, under or in connection
with the obligations set forth in clause (a) above under the Credit Agreement
and (c) the Term Loan Lenders' pro rata share (determined as provided below)
of the aggregate amount of all other monetary obligations of the Borrower, the
Canadian Borrower and the other Guarantors that are accrued and owing at such
time to the Credit Agreement Creditors or any of them under the Credit
Agreement and the Support Documents, including indemnification and expense
reimbursement obligations. For purposes of determining the Term Loan Lenders'
pro rata share of the aggregate amount of monetary obligations owed to the
Term Loan Lenders pursuant to clause (c) above, such amount shall be
determined on the basis of the ratio of (i) the amount owed to the Term Loan
Lenders pursuant to clauses (a) and (b) of this definition to (ii) the sum of
(A) the amount owed to the Term Loan Lenders pursuant to clauses (a) and (b)
of this definition and (B) the amounts owed to the Revolving Lenders pursuant
to clauses (a), (b) and (c) of the definition of the term Outstanding
Revolving Credit Obligations .
"Participating Creditors" shall mean the Credit Agreement Creditors and
the Permitted Acquisition Indebtedness Creditors under the Credit Agreement or
a Permitted Acquisition Indebtedness Agreement, as the case may be.
"Payment Default" shall mean any Actionable Default arising from a
failure to pay any of the Outstanding Credit Agreement Obligations,
Outstanding Permitted Acquisition Indebtedness Agreement Obligations or
Outstanding Interest Rate Agreement Obligations when and as due (either upon
maturity, by acceleration or otherwise), but only if such Obligations that
have not been paid include principal, interest, premium, fees, unreimbursed
Letter of Credit Disbursements or termination payments.
"Permitted Acquisition Indebtedness" shall have the meaning set forth in
the Credit Agreement. No amount shall be treated as Permitted Acquisition
Indebtedness unless such amount is permitted under the Credit Agreement. No
Indebtedness shall be Permitted Acquisition Indebtedness for purposes of this
Agreement and the Support Documents or entitled to the benefits of this
Agreement or the Support Documents unless it has been identified as such by
the Permitted Acquisition Creditors holding such Permitted Acquisition
Indebtedness in their Acknowledgement, which Acknowledgment has been
countersigned by the Borrower and delivered to the Collateral Agent.
"Permitted Acquisition Indebtedness Creditors" shall mean each person
holding Permitted Acquisition Indebtedness which has executed and delivered an
Acknowledgment to the Collateral Agent. No person shall be a Permitted
Acquisition Indebtedness Creditor or entitled to the benefits of this
Agreement or the Support Documents unless (a) it has executed and delivered to
the Collateral Agent an Acknowledgment with respect to Permitted Acquisition
Indebtedness, which Acknowledgment has been countersigned by the Borrower, and
(b) such Acknowledgment has been delivered to the Collateral Agent.
"Permitted Acquisition Indebtedness Agreement" shall mean each loan
agreement, credit agreement or indenture under which Permitted Acquisition
Indebtedness is extended to the Borrower, as such agreement or indenture may
be amended and in effect from time to time. No loan agreement, credit
agreement or indenture shall be a Permitted Acquisition Indebtedness Agreement
or entitled to the benefits of this Agreement or the
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Support Documents unless
it has been identified as such by the Permitted Acquisition Indebtedness
Creditors extending credit thereunder in their Acknowledgment, which
Acknowledgment has been countersigned by the Borrower and delivered to the
Collateral Agent, and a copy thereof and of each amendment, modification,
supplement or waiver thereof or thereto has been delivered to the Collateral
Agent.
"Permitted Acquisition Indebtedness Agreement Collateral Account" shall
have the meaning set forth in Section 4.01.
"Permitted Investments" shall have the meaning set forth in the Credit
Agreement.
"Permitted Subordinated Indebtedness" shall have the meaning set forth
in the Credit Agreement.
"Pledge Agreement" shall have the meaning set forth in the Credit
Agreement.
"Pledged Collateral" shall have the meaning set forth in the Pledge
Agreement.
"Required Creditors" shall mean the Majority Creditors, so long as at
the time of determination such Majority Creditors shall include (a) Voting
Credit Agreement Obligations representing at least 33-1/3% of the Voting
Credit Agreement Obligations (excluding Voting Credit Agreement Obligations
owned by Holdings, the Borrower or any Affiliate of any thereof) and (b) only
if the then outstanding principal amount of a series or issue of Permitted
Acquisition Indebtedness is greater than or equal to $50,000,000, Voting
Obligations representing at least 33-1/3% of the Voting Permitted Acquisition
Indebtedness Agreement Obligations represented by such series or issue
(excluding Voting Permitted Acquisition Indebtedness Agreement Obligations
owned by Holdings, the Borrower or any Affiliate of any thereof).
"Required Holders" shall mean with respect to any series or issue of
Permitted Acquisition Indebtedness, the percentage of such Permitted
Acquisition Indebtedness required to effect amendments of, or to take other
actions pursuant to, the applicable Permitted Acquisition Indebtedness
Agreement.
"Revolving Credit Collateral Account" shall have the meaning set forth
in Section 4.01.
"Revolving Lenders" shall mean the Lenders in respect of any Revolving
Loans or Swingline Loans.
"Revolving Loans" shall have the meaning set forth in the Credit
Agreement.
"Special Collateral Account" shall have the meaning set forth in
Section 7.02(b).
"subsidiary" and "Subsidiary" shall have the meaning set forth in the
Credit Agreement.
"Support Documents" shall mean the Pledge Agreement and the Guarantee
Agreement.
"Swingline Loans" shall have the meaning set forth in the Credit
Agreement.
"Term Loan Collateral Account" shall have the meaning set forth in
Section 4.01.
"Term Loan Lenders" shall mean the Lenders in respect of any Term Loans,
Delayed Draw Term Loans and Canadian Term Loans.
"Term Loans" shall have the meaning set forth in the Credit Agreement.
"Unfunded LOC Exposure" shall mean, at any time, the aggregate undrawn
amount of all outstanding Letters of Credit at such time.
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"Voting Actions" shall mean all amendments and modifications to, and
waivers of any provisions of, and consents granted under, any of the Support
Documents (other than amendments which add new Pledgors as party to the Pledge
Agreement or Guarantors as party to the Guarantee Agreement or subject
additional collateral to the Lien of the Pledge Agreement).
"Voting Credit Agreement Obligations" shall mean, at any time, (a) the
aggregate principal amount of the Loans outstanding at such time, (b) the
Unfunded LOC Exposure at such time, (c) the aggregate amount of unreimbursed
Letter of Credit Disbursements at such time and (d) the aggregate unused
amount of the Commitments in effect at such time (unless the Borrower is not
able to borrow under the Commitments at such time).
"Voting Interest Rate Agreement Obligations" shall mean, at any time,
the aggregate amount (but not less than zero) which would be owing by the
Borrower and the other Guarantors to the Lenders under all Interest Rate
Agreements which have been terminated.
"Voting Obligations" shall mean the Voting Credit Agreement Obligations,
the Voting Permitted Acquisition Indebtedness Agreement Obligations and the
Voting Interest Rate Agreement Obligations.
"Voting Permitted Acquisition Indebtedness Agreement Obligations" shall
mean, at any time, the aggregate principal amount of outstanding Permitted
Acquisition Indebtedness at such time, provided that any Permitted Acquisition
Indebtedness owned by Holdings, the Borrower, any Subsidiary or any Affiliate
of the Borrower at such time shall be deemed not to be outstanding for the
purposes of this definition.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both 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 .
All references herein to Articles and Sections shall be deemed references to
Articles and Sections of this Agreement unless the context shall otherwise
require.
ARTICLE II
Acts of Participating Creditors;
Amounts of Obligations
SECTION 2.01. Acts of Participating Creditors. Any request, demand,
authorization, direction, notice, consent, waiver or other action permitted or
required by this Agreement to be given or taken by the Participating Creditors
or any portion thereof (including the Required Creditors or the Majority
Creditors) may be and, at the request of the Collateral Agent, shall be
embodied in and evidenced by one or more instruments satisfactory in form to
the Collateral Agent and signed by or on behalf of (including by an agent for)
such persons and, except as otherwise expressly provided in any such
instrument, any such action shall become effective when such instrument or
instruments shall have been delivered to the Collateral Agent. The instrument
or instruments evidencing any action (and the action embodied therein and
evidenced thereby) are sometimes referred to herein as an Act of the persons
signing such instrument or instruments. The Collateral Agent shall be entitled
to rely absolutely upon an Act of any Participating Creditor if such Act
purports to be taken by or on behalf of such Participating Creditor, and
nothing in this Section 2.01 or elsewhere in this Agreement shall be construed
to require any Participating Creditor to demonstrate that it has been
authorized to take any action that it purports to be taking, the Collateral
Agent being entitled to rely conclusively, and being fully protected in so
relying, on any Act of such Participating Creditor.
SECTION 2.02. Determination of Amounts of Obligations. Whenever the
Collateral Agent is required to determine the existence or amount of any of
the Outstanding Obligations or Voting Obligations or any portion thereof or
the existence of any Actionable Default for any purposes of this Agreement,
the Collateral Agent shall be entitled to make such determination on the basis
of one or more certificates of any Participating Creditor (or
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the agent
therefor) (with respect to the Obligations owed to such Participating
Creditor) or the Administrative Agent (with respect to the Obligations owed to
the Credit Agreement Creditors under the Credit Agreement, or any of them);
provided, however, that if, notwithstanding the request of the Collateral
Agent, any Participating Creditor shall fail or refuse within five business
days of such request to certify as to the existence or amount of any Out-
standing Obligations or Voting Obligations or any portion thereof owed to it
or the existence of any Actionable Default, the Collateral Agent shall be
entitled to determine such existence or amount by such method as the
Collateral Agent may, in its sole discretion, determine, including by reliance
upon a certificate of the Borrower; provided further, however, that, promptly
following determination of any such amount, the Collateral Agent shall notify
such Participating Creditor (or the agent therefor) of such determination and
thereafter shall correct any error that such Participating Creditor (or the
agent therefor) brings to the attention of the Collateral Agent. Upon request
by the Collateral Agent each Participating Creditor agrees to provide the
Collateral Agent with a general description of the Outstanding Permitted
Acquisition Indebtedness Agreement Obligations held by it, including the
amount thereof and any other information reasonably required by the Collateral
Agent. The Collateral Agent may rely conclusively, and shall be fully
protected in so relying, on any determination made by it in accordance with
the provisions of the second preceding sentence (or as otherwise directed by a
court of competent jurisdiction) and shall have no liability to the Borrower,
any Participating Creditor or any other person as a result of any action taken
by the Collateral Agent based upon such determination prior to receipt of
notice of any error in such determination. Upon any request of the Collateral
Agent, the Borrower will, and by countersigning this Agreement the Borrower
agrees to, as promptly as practicable, furnish a certificate to the Collateral
Agent as to the existence or amount of any Outstanding Obligation or Voting
Obligation or as to the existence of any Actionable Default. For all purposes
of this Agreement, to the extent that any Outstanding Obligation has been
taken into account for purposes of determining the amount to which any Par-
ticipating Creditor is entitled in any distribution hereunder, any guaranty of
such Outstanding Obligation that is itself an Outstanding Obligation shall not
be taken into account for such purpose. No amount shall be treated as
Permitted Acquisition Indebtedness or Outstanding Permitted Acquisition
Indebtedness Agreement Obligations unless such amount is permitted under the
Credit Agreement.
SECTION 2.03. Restrictions on Actions. Each Participating Creditor
agrees that, as long as any Outstanding Obligations exist, the provisions of
this Agreement shall provide the exclusive method by which any Participating
Creditor may exercise rights and remedies under the Support Documents. There-
fore, each Participating Creditor (other than the Collateral Agent) shall, for
the mutual benefit of all Participating Creditors, except as permitted under
this Agreement:
(a) refrain from taking or filing any action, judicial or other-
wise, to enforce any rights or pursue any remedies under the Support
Documents, except for delivering notices hereunder; and
(b) refrain from exercising any rights or remedies under the
Support Documents that may be exercisable as a result of an Actionable
Default or any other default;
provided, however, that the foregoing shall not prevent (i) any Participating
Creditor from imposing a default rate of interest in accordance with the
Credit Agreement or a Permitted Acquisition Indebtedness Agreement, as
applicable, (ii) a Participating Creditor from raising any defenses in any
action in which such Participating Creditor has been made a party defendant or
has been joined as a third party, except that the Collateral Agent may direct
and control any defense to the extent directly relating to the Pledged
Collateral or the Support Documents, subject to and in accordance with the
provisions of this Agreement, or (iii) a Participating Creditor from
exercising its rights and remedies as a general creditor in accordance with
the Credit Transaction Documents and applicable law, including the right to
commence legal proceedings to collect any Outstanding Obligation due and
payable to such Participating Creditor and remaining unpaid, to obtain a
judgment and to enforce such judgment, in each case to the same extent as if
such Participating Creditor were an unsecured creditor. Each Participating
Creditor hereby agrees not to object to or contest in any manner, or to raise
any defense to, the validity, perfection, priority, enforceability or
allowance of any of the Obligations or any Liens created by the Pledge
Agreement, subject to the last sentence of Section 2.02, provided, however,
that the Collateral Agent and the Credit Agreement Creditors may in good faith
challenge the status of indebtedness as Permitted Acquisition Indebtedness or
of any person as a Permitted Acquisition Indebtedness Creditor.
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SECTION 2.04. Representatives of Permitted Acquisition
Indebtedness Creditors. In acting and making determinations hereunder the
Collateral Agent shall be entitled (but shall not be required) to rely on any
information or direction given to it by any person which the Collateral Agent
reasonably believes is acting as agent, trustee or other representative for
any Permitted Acquisition Indebtedness Creditors and shall incur no liability
to any of Holdings, the Borrower, any Participating Creditor or any Affiliate
of any thereof for so relying. The Permitted Acquisition Indebtedness
Creditors or any of them may act under this Agreement through their agent,
trustee or other representative which has been designated as such by them or
it in writing to the Collateral Agent.
ARTICLE III
Duties of Collateral Agent
SECTION 3.01. Notices to Participating Creditors. The Collateral Agent
shall promptly notify each Credit Agreement Creditor and each Permitted
Acquisition Indebtedness Creditor from which it has received a completed
Acknowledgement in the event the Collateral Agent shall receive any Notice of
Actionable Default or certificate rescinding a Notice of Actionable Default or
any request by any party hereto or by the Borrower for any consent, waiver or
amendment with respect hereto or any other Credit Transaction Document.
SECTION 3.02. Actions Under Support Documents. (a) The Collateral Agent
shall not be obligated to take any action under this Agreement or any of the
Support Documents except for the performance of such duties as are specifi-
cally set forth herein or therein. Notwithstanding the foregoing, subject to
the provisions of Article V and Section 7.05, the Collateral Agent shall take
any action under or with respect to the Support Documents that is requested by
the Required Creditors and which is not inconsistent with or contrary to the
provisions of this Agreement or the Support Documents. The Collateral Agent
may take, but shall have no obligation to take, any and all such actions under
the Support Documents or any of them or otherwise as the Collateral Agent
shall deem to be in the best interests of the Participating Creditors in order
to maintain the Pledged Collateral and protect and preserve the Pledged
Collateral and the rights of the Participating Creditors; provided, however,
that, except as provided in paragraph (b) below or the last sentence of
Section 5.03(d), in the absence of written instructions (which may relate to
the exercise of specific remedies or to the exercise of remedies in general)
from the Required Creditors, the Collateral Agent shall not foreclose any Lien
on the Pledged Collateral or exercise any other remedies available to the
Collateral Agent under any Support Documents with respect to the Pledged
Collateral or any part thereof.
(b) If the Collateral Agent has requested instructions from the Required
Creditors at a time when a Notice of Actionable Default shall be outstanding
and the Required Creditors have not responded to such request within 30 days
after such request is made, the Collateral Agent may take, but shall have no
obligation to take, any and all actions under the Support Documents or any of
them or otherwise, including foreclosure of any Lien or any other exercise of
remedies, as the Collateral Agent, in good faith, shall determine to be in the
interests of the Participating Creditors; provided, however, that, if
instructions are thereafter received from the Required Creditors, then the
actions of the Collateral Agent shall be subject to paragraph (a) above.
SECTION 3.03. Meetings; Voting. (a) When the Collateral Agent receives a
Notice of Actionable Default, the Collateral Agent shall give prompt notice
thereof to the Participating Creditors and, upon the request of any
Participating Creditor, shall schedule a meeting of all Participating
Creditors to be held at the offices of the Collateral Agent, or another
mutually convenient place by furnishing each Participating Creditor with at
least five Business Days prior notice, provided that any Participating
Creditor may participate in such meeting via telephone. At such meeting the
Participating Creditors shall consult with one another in an attempt to
determine a mutually acceptable course of conduct regarding Holdings, the
Borrower and their subsidiaries, the collection of the Outstanding Obligations
and the exercise of rights and remedies under the Support Documents.
(b) Whenever it is necessary to take any Voting Action, the Collateral
Agent shall notify each Participating Creditor entitled to participate therein
of the proposed Voting Action, shall collect instructions from
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the Participating Creditors regarding such Voting Action and shall notify
all Participating Creditors entitled to participate in such Voting Action of
the results thereof.
SECTION 3.04. Records. The Collateral Agent shall maintain records
regarding Voting Actions, determinations of the amounts of the Outstanding
Obligations and Voting Obligations for any purpose, the allocation of deposits
to the Collateral Accounts and any distributions therefrom. The information
contained in such records shall be made available to any Participating
Creditor upon request.
ARTICLE IV
Proceeds Received Under Support Documents
SECTION 4.01. Collateral Accounts. (a) The Collateral Agent shall
establish and maintain at its principal banking office in New York City five
accounts into which it shall (except as otherwise explicitly provided in any
Support Document) deposit all amounts received by it in its capacity as
Collateral Agent (and not in any other capacity) in respect of the Pledged
Collateral or pursuant to enforcement of the Guarantee Agreement upon an
Actionable Default, including all monies received on account of any sale of or
other realization upon any of the Pledged Collateral pursuant to the Pledge
Agreement; provided, however, that notwithstanding any other provision of
this Agreement, amounts that Chemical Bank or any Lender shall receive on
account of the Outstanding Credit Agreement Obligations or Outstanding
Interest Rate Agreement Obligations in its capacity as Administrative Agent or
otherwise in its capacity as a Credit Agreement Creditor (including by
voluntary or mandatory prepayment), and not through enforcement of the
Guarantee Agreement upon an Actionable Default or through the sale of or other
realization upon any Pledged Collateral as provided herein and in the Pledge
Agreement, shall be distributed by it in accordance with the provisions of the
Credit Agreement or the applicable Interest Rate Agreement and shall not be
deposited in the Collateral Accounts. One of the five accounts referred to in
the preceding sentence shall be established and maintained for the benefit of
the Revolving Lenders in respect of the Outstanding Revolving Credit
Obligations (the Revolving Credit Collateral Account ), the second shall be
established and maintained for the benefit of the Term Loan Lenders in respect
of the Outstanding Term Loan Obligations (the Term Loan Collateral Account ),
the third shall be established and maintained for the benefit of the Permitted
Acquisition Indebtedness Creditors (the Permitted Acquisition Indebtedness
Agreement Collateral Account ), the fourth such account shall be established
and maintained for the benefit of the LOC Creditors (the Letter of Credit
Collateral Account ) and the fifth such account shall be established and
maintained for the benefit of the Lenders parties to any Interest Rate
Agreements (the Interest Rate Agreement Collateral Account and, together
with the Revolving Credit Collateral Account, the Term Loan Collateral
Account, the Permitted Acquisition Indebtedness Agreement Collateral Account,
and the Letter of Credit Collateral Account, the Collateral Accounts ). All
amounts deposited in the respective Collateral Accounts shall be held by the
Collateral Agent subject to the terms hereof and of the Support Documents, it
being understood that any such amounts may be released to the Borrower and the
Canadian Borrower to the extent required by the Support Documents (any amounts
so released to be released from the respective Collateral Accounts pro rata in
accordance with the aggregate amounts deposited in such accounts during the
term of this Agreement; provided, however, that the aggregate amounts
deposited in the Letter of Credit Collateral Account shall be deemed to have
been reduced by any amounts released from such Account pursuant to paragraph
(d) below) or upon payment in full of all Outstanding Obligations and
termination of all Letters of Credit and Credit Transaction Documents. Neither
the Borrower nor the Canadian Borrower nor any Guarantor shall have any rights
with respect to, and the Collateral Agent shall have exclusive dominion and
control over, the Collateral Accounts.
(b) Except as set forth in paragraphs (d) and (g) below, all amounts
that the Collateral Agent is required at any time to deposit in the respective
Collateral Accounts pursuant to paragraph (a) above shall be allocated
between, and deposited in, the Revolving Credit Collateral Account, the Term
Loan Collateral Account, the Permitted Acquisition Indebtedness Agreement
Collateral Account, the Interest Rate Agreement Collateral Account and the
Letter of Credit Collateral Account pro rata in accordance with the aggregate
amount of Outstanding Revolving Credit Obligations, Outstanding Term Loan
Obligations, Outstanding Permitted Acquisition
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Indebtedness Agreement Obligations, Outstanding Interest Rate Agreement
Obligations and Unfunded LOC Exposure, respectively, at such time.
(c) The Collateral Agent shall establish sub-accounts in the Letter of
Credit Collateral Account with respect to each outstanding Letter of Credit.
The Collateral Agent shall establish sub-accounts (if necessary) in the
Permitted Acquisition Indebtedness Agreement Collateral Account with respect
to each outstanding issue or series of Permitted Acquisition Indebtedness. All
amounts deposited in the Letter of Credit Collateral Account shall be
allocated between, and deposited in, the respective sub-accounts therein pro
rata in accordance with the Unfunded LOC Exposure with respect to the related
Letters of Credit. All amounts deposited in the Permitted Acquisition
Indebtedness Agreement Collateral Account shall be allocated between, and
deposited in, the respective sub-accounts therein pro rata in accordance with
the Outstanding Permitted Acquisition Agreement Indebtedness Obligations with
respect to the related issue or series of Permitted Acquisition Indebtedness.
If, on or after the date on which any funds are deposited in the Letter of
Credit Collateral Account pursuant to paragraph (b) above, any Letter of
Credit is drawn upon by the beneficiary thereof, the Collateral Agent shall,
upon the written request of the Administrative Agent, apply any funds in the
sub-account with respect to such Letter of Credit to the reimbursement of such
Letter of Credit Disbursement as if such reimbursement were being made by the
Borrower pursuant to the Credit Agreement (but not in an amount in excess of
the amount of such drawing).
(d) At the time of any expiration or cancellation of any outstanding
Letter of Credit, or any other reduction in the amount of Unfunded LOC
Exposure thereunder (other than as a result of a Letter of
Credit Disbursement), the amount of funds in the sub-account with respect to
such Letter of Credit (or, in the case of any partial reduction in the amount
of Unfunded LOC Exposure thereunder, a pro rata portion of such funds) shall
be released from such sub-account, and the funds so released shall be
allocated among, and deposited in, the Revolving Credit Collateral Account,
the Term Loan Collateral Account, the Permitted Acquisition Indebtedness
Agreement Collateral Account, the Interest Rate Agreement Collateral Account
and the Letter of Credit Collateral Account pro rata in accordance with the
aggregate amount of the Outstanding Revolving Credit Obligations, Outstanding
Term Loan Obligations, Outstanding Permitted Acquisition Indebtedness Agre-
ement Obligations, Outstanding Interest Rate Agreement Obligations and
Unfunded LOC Exposure, respectively, at such time.
(e) The Collateral Agent shall have the right at any time and from time
to time to apply any amounts in the Collateral Accounts to the payment of the
out-of-pocket costs and expenses (including reasonable attorney fees and dis-
bursements) reasonably incurred by the Collateral Agent in administering and
carrying out its obligations under this Agreement or any of the Support
Documents, in exercising or attempting to exercise any right or remedy here-
under or thereunder or in taking possession of, protecting, preserving or
disposing of any of the Pledged Collateral, and all amounts against or for
which the Collateral Agent is to be indemnified or reimbursed hereunder
(excluding any such costs, expenses or amounts that have theretofore been
reimbursed) until all of such costs, expenses and amounts have been paid in
full; provided, however, that any such application shall be allocated as among
the Revolving Credit Collateral Account, Term Loan Collateral Account, Letter
of Credit Collateral Account (provided that the aggregate amounts deposited in
the Letter of Credit Collateral Account shall be deemed to have been reduced
by any amounts released from such Account pursuant to paragraph (d) above),
Interest Rate Agreement Collateral Account and the Permitted Acquisition
Indebtedness Agreement Collateral Account ratably in accordance with the
aggregate amounts deposited in such Accounts during the term of this
Agreement. The Collateral Agent shall reimburse any Credit Agreement Creditor
or Permitted Acquisition Indebtedness Creditor, as the case may be, prior to
applying any amounts in the Collateral Accounts pursuant to Section 4.02 for
any and all losses with respect to any amounts expended with respect to any
indemnity provided in accordance with Section 5.03(e) by such Credit Agreement
Creditor or Permitted Acquisition Indebtedness Creditor by application of
funds in the Collateral Accounts in the same manner as provided in the proviso
to the preceding sentence.
(f) For purposes of determining allocations and deposits of funds (but
not distributions of funds) pursuant to this Section 4.01 and Section 4.02,
any Outstanding Obligations shall be deemed to be reduced by
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the amount, if
any, held by the Collateral Agent in the Collateral Account (or sub-account
therein) from which distributions are to be paid in respect of such
Outstanding Obligations.
(g) If, at any time that the Collateral Agent receives any amounts to be
deposited in the Collateral Accounts, any portion of the Outstanding
Obligations consists of out-of-pocket costs and expenses (including attorney
fees and disbursements) or other claims in respect of any indemnification or
expense reimbursement obligations of the Borrower or the Canadian Borrower
under any of the Credit Transaction Documents (collectively, Reimbursement
Obligations ), then, prior to allocating such amounts among the Collateral
Accounts, the Collateral Agent shall, to the extent it shall have received
notice of such Reimbursement Obligations, apply such amounts to pay such
Reimbursement Obligations (pro rata among such Reimbursement Obligations, in
the event that the amount to be so applied is insufficient to pay all such
Reimbursement Obligations in full); provided, however, that the aggregate
cumulative amount applied pursuant to this paragraph (g) to pay Reimbursement
Obligations to Participating Creditors (other than the Collateral Agent or
otherwise in respect of amounts referred to in paragraph (e) above) shall not
exceed $4,000,000.
SECTION 4.02. Application of Proceeds. (a) Amounts deposited in the
Revolving Credit Collateral Account shall be applied in the following order of
priority:
First, to the payment of all Outstanding Revolving Credit
Obligations that consist of costs and expenses incurred in connection
with the enforcement or protection of the rights of the Credit Agreement
Creditors;
Second, to the Credit Agreement Creditors in respect of the
Outstanding Revolving Credit Obligations pro rata in accordance with the
aggregate amounts of the Outstanding Revolving Credit Obligations at
such time, until the Outstanding Revolving Credit Obligations shall have
been paid in full;
Third, if there are any Outstanding Term Loan Obligations, or if
there are any Outstanding Permitted Acquisition Indebtedness Agreement
Obligations or if there are any Outstanding Interest Rate Agreement
Obligations or if there is any Unfunded LOC Exposure (or if the Lenders
shall have any remaining commitments to participate in the issuance of
Letters of Credit), to the Term Loan Collateral Account, the Permitted
Acquisition Indebtedness Agreement Collateral Account, the Interest Rate
Agreement Collateral Account and the Letter of Credit Collateral Account
pro rata in accordance with the respective amounts of such Outstanding
Obligations; and
Fourth, the balance, if any, to the Borrower or such other person
or persons as shall be entitled thereto.
(b) Amounts deposited in the Term Loan Collateral Account shall be
applied in the following order of priority:
First, to the payment of all Outstanding Term Loan Obligations
that consist of costs and expenses incurred in connection with the
enforcement or protection of the rights of the Credit Agreement
Creditors;
Second, to the Credit Agreement Creditors in respect of the
Outstanding Term Loan Obligations pro rata in accordance with the
aggregate amounts of the Outstanding Term Loan Obligations at such time,
until the Outstanding Term Loan Obligations shall have been paid in
full;
Third, if there are any Outstanding Revolving Credit Obligations
(or if the Lenders shall have any remaining commitments to lend under
the Credit Agreement) or if there are any Outstanding Permitted
Acquisition Indebtedness Agreement Obligations or if there are any
Outstanding Interest Rate Agreement Obligations or if there is any
Unfunded LOC Exposure (or if the Lenders shall have any remaining
commitments to participate in the issuance of Letters of Credit), to the
Revolving Credit Collateral Account, the Permitted Acquisition
Indebtedness Agreement Collateral Account, the Interest
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Rate Agreement
Collateral Account and the Letter of Credit Collateral Account pro rata
in accordance with the respective amounts of such Outstanding
Obligations; and
Fourth, the balance, if any, to the Borrower or such other person
or persons as shall be entitled thereto.
(c) Amounts deposited in the Permitted Acquisition Indebtedness
Agreement Collateral Account shall be applied in the following order of
priority:
First, to the payment of all Outstanding Permitted Acquisition
Indebtedness Agreement Obligations that consist of costs and expenses
incurred in connection with the enforcement or protection of the rights
of the Permitted Acquisition Indebtedness Creditors;
Second, to the Permitted Acquisition Indebtedness Creditors pro
rata in accordance with the aggregate amounts of the Outstanding
Permitted Acquisition Indebtedness Agreement Obligations at such time,
until the Outstanding Permitted Acquisition Indebtedness Agreement
Obligations shall have been paid in full;
Third, if there are any Outstanding Revolving Credit Obligations
(or if the Lenders shall have any remaining commitments to lend under
the Credit Agreement), or if there are any Outstanding Term Loan
Obligations or if there are any Outstanding Interest Rate Agreement
Obligations or if there is any Unfunded LOC Exposure (or if the Lenders
shall have any remaining commitments to participate in the issuance of
Letters of Credit), to the Revolving Credit Collateral Account, the Term
Loan Collateral Account, the Interest Rate Agreement Collateral Account
and the Letter of Credit Collateral Account pro rata in accordance with
the respective amounts of such Outstanding Obligations; and
Fourth, the balance, if any, to the Borrower or such other person
or persons as shall be entitled thereto.
(d) Amounts deposited in the Interest Rate Agreement Collateral
Account shall be applied in the following order of priority:
First, to the payment of all Outstanding Interest Rate Agreement
Obligations that consist of costs and expenses incurred in connection
with the enforcement or protection of the rights of the Lenders parties
to the Interest Rate Agreements;
Second, to the Lenders parties to the Interest Rate Agreements pro
rata in accordance with the aggregate amounts of the Outstanding
Interest Rate Agreement Obligations at such time, until the Outstanding
Interest Rate Agreement Obligations shall have been paid in full;
Third, if there are any Outstanding Revolving Credit Obligations
(or if the Lenders shall have any remaining commitments to lend under
the Credit Agreement), or if there are any Outstanding Term Loan
Obligations or if there is any Unfunded LOC Exposure (or if the Lenders
shall have any remaining commitments to participate in the issuance of
Letters of Credit) or if there are any Outstanding Permitted Acquisition
Indebtedness Agreement Obligations, to the Revolving Credit Collateral
Account, the Term Loan Collateral Account and the Letter of Credit
Collateral Account pro rata in accordance with the respective amounts of
such Outstanding Obligations; and
Fourth, the balance, if any, to the Borrower or such other person
or persons as shall be entitled thereto.
(e) All amounts deposited in any sub-account in the Letter of Credit
Collateral Account shall be applied as provided in Sections 4.01(c) and (d).
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(f) Each Participating Creditor agrees that, notwithstanding any
provision of this Agreement or the other Credit Transaction Documents, any
sums and amounts received by such Participating Creditor pursuant to this
Section 4.02 shall be applied to the payment of its Outstanding Obligations as
follows: first, to the payment of all Outstanding Obligations owed to such
Participating Creditor, other than principal, interest and obligations in
respect of reimbursement of Letter of Credit Disbursements; second, to the
payment of all Outstanding Obligations owed to such Participating Creditor
consisting of accrued interest; and third, to the payment of all Outstanding
Obligations owed to such Participating Creditor consisting of principal and
obligations in respect of reimbursement of Letter of Credit Disbursements.
SECTION 4.03. Time of Payments. Unless the Collateral Agent shall have
received written instructions from the holders of a majority of the
Obligations to which such Collateral Account relates as to the times at which
any amounts are to be distributed pursuant to Section 4.02, all distributions
under Section 4.02 shall be made at such times as the Collateral Agent shall
in its sole discretion determine, subject to Section 4.04, provided that any
distributions from the Revolving Credit Collateral Account, the Term Loan
Collateral Account, the Interest Rate Agreement Collateral Account and the
Permitted Acquisition Indebtedness Agreement Collateral Account shall be made
substantially simultaneously.
SECTION 4.04. Application of Amounts Not Distributable. If any
Participating Creditor shall inform the Collateral Agent that there is no
provision under the Credit Agreement or a Permitted Acquisition Indebtedness
Agreement, as the case may be, for the application of amounts that are to be
distributed to the parties to such Agreement pursuant to Section 4.02 (whether
by virtue of the applicable Outstanding Obligations thereunder not being then
due and payable or otherwise) or for the holding of such amounts by or on
behalf of such parties pending application thereof, then the Collateral Agent
shall invest the amounts in the applicable Collateral Account in investments
permitted by Section 4.05 and shall hold such amounts and all proceeds of such
investments in such Collateral Account for the benefit of such Participating
Creditor until such Participating Creditor shall request the delivery thereof
by the Collateral Agent for application against such Outstanding Obligations
or shall notify the Collateral Agent that such Outstanding Obligations have
been paid.
SECTION 4.05. Investment of Amounts in Collateral Accounts. Pending the
disbursement thereof pursuant to the terms of this Agreement, all amounts in
the Collateral Accounts shall (to the extent the Collateral Agent deems prac-
tical) be invested by the Collateral Agent in Permitted Investments. The
Collateral Agent shall, to the extent that the timing of distributions to be
made from any Collateral Account is known or can be reasonably anticipated,
select Permitted Investments for such Collateral Account that mature prior to
the anticipated date of any distribution to be made from such Collateral
Account. The Collateral Agent shall not discriminate between Collateral
Accounts in the selection of Permitted Investments, provided that the fore-
going shall not be construed to prevent the selection of longer-term
investments for the Letter of Credit Collateral Account if distributions from
such Account are expected to be made at a later date than distributions from
the other Collateral Accounts.
ARTICLE V
Concerning the Collateral Agent
SECTION 5.01. Appointment of Collateral Agent. Each of the Participating
Creditors appoints Chemical Bank to act as Collateral Agent pursuant to the
terms of the Support Documents and this Agreement and authorizes the Collat-
eral Agent to execute and perfect the Support Documents in the name of and for
the benefit of the Secured Parties, and Chemical Bank agrees to act as
Collateral Agent for such Participating Creditors, pursuant to the terms of
the Support Documents and this Agreement.
SECTION 5.02. Limitations on Responsibility of Collateral Agent. The
Collateral Agent shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties con-
tained herein or in any other Credit Transaction Document, except for those
expressly made by it herein. The Collateral Agent makes no representation as
to the value of the Pledged Collateral or any part
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thereof, as to the title of
the pledgors under the Pledge Agreement (the Pledgors ) to the Pledged
Collateral, as to the security afforded by this Agreement or any Support
Document or, except as expressly set forth in Article VI, as to the validity,
execution, enforceability, legality or sufficiency of this Agreement or any
other Credit Transaction Document, and the Collateral Agent shall incur no
liability or responsibility in respect of any such matters. The Collateral
Agent shall not be responsible for insuring the Pledged Collateral, for the
payment of taxes, charges, assessments or liens upon the Pledged Collateral or
otherwise as to the maintenance of the Pledged Collateral, except as provided
in the immediately following sentence when the Collateral Agent has possession
of the Pledged Collateral. The Collateral Agent shall have no duty to
Holdings, the Borrower, the Canadian Borrower or any of the other Pledgors or
Guarantors or to the Participating Creditors as to any Pledged Collateral in
its possession or control or in the possession or control of any agent or
nominee of the Collateral Agent or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except the duty to accord such of the Pledged Collateral as may be in
its possession substantially the same care as it accords its own assets and
the duty to account for monies received by it. The Collateral Agent shall not
be required to ascertain or inquire as to the performance by Holdings, the
Borrower, the Canadian Borrower or any of the other Pledgors or Guarantors of
any of the covenants or agreements contained herein or in the other Credit
Transaction Documents. Neither the Collateral Agent nor any officer, agent or
representative thereof shall be personally liable for any action taken or
omitted to be taken by any such person in connection with this Agreement or
any other Credit Transaction Document except for its or such person's own
gross negligence or wilful misconduct. Neither the Collateral Agent nor any
officer, agent or representative thereof shall be personally liable for any
action taken by it or any such person in accordance with any notice given by
the requisite number of Participating Creditors hereunder entitled to give
such notice, even if, at the time such action is taken by it or any such
person, the Participating Creditors that gave the notice to take such action
are no longer Participating Creditors and if the Collateral Agent has not
received written notice of such fact. The Collateral Agent may execute any of
the powers granted under this Agreement or any of the Support Documents and
perform any duty hereunder or thereunder either directly or by or through
agents or attorneys-in-fact, and shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care and without gross negligence or wilful misconduct.
SECTION 5.03. Reliance by Collateral Agent; Indemnity Against
Liabilities; etc. (a) Whenever in the performance of its duties under this
Agreement the Collateral Agent shall deem it necessary or desirable that a
matter be proved or established with respect to Holdings, the Borrower or the
other Pledgors or Guarantors or any other person in connection with the
taking, suffering or omitting of any action hereunder by the Collateral Agent,
such matter may be conclusively deemed to be proved or established by a
certificate purporting to be executed by an officer of such person, and the
Collateral Agent shall have no liability with respect to any action taken,
suffered or omitted in reliance thereon.
(b) The Collateral Agent may consult with counsel and shall be fully
protected in taking any action hereunder and under the Support Documents in
accordance with any advice of such counsel. The Collateral Agent shall have
the right but not the obligation at any time to seek instructions concerning
the administration of this Agreement, the duties created hereunder or the
Collateral from any court of competent jurisdiction.
(c) The Collateral Agent shall be fully protected in relying upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order or other paper or document that it believes to be
genuine and to have been signed or presented by the proper party or parties.
In the absence of its gross negligence or wilful misconduct or actual notice
to the contrary, the Collateral Agent may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificate or opinions furnished to the Collateral Agent in connection
with this Agreement.
(d) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Actionable Default unless and until the Collateral Agent shall have received a
Notice of Actionable Default or a notice from the Borrower to the Collateral
Agent in its capacity as Collateral Agent referring to this Agreement and
indicating that an Actionable Default has occurred. The Collateral Agent shall
have no obligation whatsoever either prior to or after receiving such a notice
to inquire whether an Actionable Default has, in fact, occurred and shall be
entitled to rely conclusively, and shall be fully protected
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in so relying, on
any notice so furnished to it. The Collateral Agent may (but shall not be
obligated to) take action hereunder on the basis of an Actionable Default of
the type specified in clause (g) or (h) of Article VII of the Credit Agreement
or any analogous provision of any Permitted Acquisition Indebtedness Agreement
regardless of whether the Collateral Agent has received any Notice of
Actionable Default stating that such Actionable Default has occurred, provided
that any such action taken by the Collateral Agent without direction from the
Required Creditors shall be limited to actions that the Collateral Agent
determines to be necessary to protect and preserve the Pledged Collateral and
the rights of the Participating Creditors.
(e) If the Collateral Agent has been requested to take any specific
action pursuant to any provision of this Agreement, the Collateral Agent shall
not be under any obligation to exercise any of the rights or powers vested in
it by this Agreement in the manner so requested unless it shall have been
provided indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by it in compliance with such request or
direction.
SECTION 5.04. Resignation of the Collateral Agent. The Collateral Agent
may at any time, by giving 30 days' prior written notice to the Borrower and
each Participating Creditor, resign and be discharged from the respon-
sibilities hereby created, such resignation to become effective upon the
earlier of (a) the acceptance of the appointment of a successor pursuant to
the next sentence of this Section 5.04 and (b) the appointment of a successor
by the Required Creditors and the acceptance of such appointment by such
successor. If no successor shall be appointed and approved pursuant to
clause (b) above within 30 days after the date of any such resignation, the
Collateral Agent may apply to any court of competent jurisdiction to appoint a
successor to act until a successor shall have been appointed by the Required
Creditors as above provided or may, on behalf of the Participating Creditors,
appoint a successor Collateral Agent. Any successor Collateral Agent shall be
a bank with an office in New York, New York, having a combined capital and
surplus of at least $500,000,000 that is authorized to perform the functions
of the Collateral Agent hereunder.
SECTION 5.05. Expenses and Indemnification by Borrower. By
countersigning this Agreement, the Borrower agrees (a) to reimburse the
Collateral Agent, on demand, for any reasonable expenses incurred by the
Collateral Agent, including reasonable counsel fees, other reasonable charges
and disbursements and compensation of agents, arising out of, in any way
connected with, or as a result of, the execution or delivery of this Agreement
or any Support Document or any agreement or instrument contemplated hereby or
thereby or the performance by the parties hereto or thereto of their
respective obligations hereunder or thereunder or in connection with the
enforcement or protection of the rights of the Collateral Agent and the
Participating Creditors under this Agreement and the Support Documents and
(b) to indemnify and hold harmless the Collateral Agent and its directors,
officers, employees and agents (each, an "Indemnitee"), on demand, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Collateral Agent in its capacity as the Collateral Agent or any other
Indemnitee in any way relating to or arising out of this Agreement or any
Support Document or any action taken or omitted by them under this Agreement
or any Support Document, provided that the Borrower shall not be liable to the
Collateral Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements arising from the gross negligence or wilful misconduct of the
Collateral Agent or any other Indemnitee.
The Borrower shall be entitled to assume the defense of any action
for which indemnification is sought hereunder with counsel of its choice at
its expense (in which case the Borrower shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by an Indemnitee
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to each such Indemnitee. Notwithstanding the
Borrower's election to assume the defense of such action, each Indemnitee
shall have the right to employ separate counsel and to participate in the
defense of such action, and the Borrower shall bear the reasonable fees,
costs, and expenses of such separate counsel, if (i) the use of counsel chosen
by the Borrower to represent such Indemnitee would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in, or targets
of, any such action include both the Borrower and such Indemnitee and such
Indemnitee shall have reasonably concluded that there may be legal defenses
available to it that are different
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from or additional to those available to
the Borrower (in which case the Borrower shall not have the right to assume
the defense of such action on behalf of such Indemnitee); (iii) the Borrower
shall not have employed counsel reasonably satisfactory to such Indemnitee to
represent it within a reasonable time after notice of the institution of such
action; or (iv) the Borrower shall authorize such Indemnitee to employ
separate counsel at the Borrower's expense. The Borrower will not be liable
under this Agreement for any amount paid by an Indemnitee to settle claims or
actions if the settlement is entered into without the Borrower's consent,
which consent may not be unreasonably withheld.
SECTION 5.06. Expenses and Indemnification by Lenders and Permitted
Acquisition Indebtedness Creditors. Each Lender and Permitted Acquisition
Indebtedness Creditor agrees (a) to reimburse the Collateral Agent, on demand,
in the amount of its pro rata share (based on the amount of its Voting
Obligations), for any expenses referred to in Section 5.05 that shall not have
been reimbursed by the Borrower or paid from the proceeds of Pledged Collat-
eral as provided herein and (b) to indemnify and hold harmless the Collateral
Agent and its directors, officers, employees and agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements referred to in Section 5.05, to the extent the same
shall not have been reimbursed by the Borrower, or paid from the proceeds of
Pledged Collateral as provided herein, provided that no Lender or Permitted
Acquisition Indebtedness Creditor shall be liable to the Collateral Agent for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements arising from the
gross negligence or wilful misconduct (including any wilful violation of law)
of the Collateral Agent or any of its directors, officers, employees or
agents.
ARTICLE VI
Representations and Warranties
Each of the Collateral Agent and each Participating Creditor represents
and warrants to the other parties hereto that (a) the execution, delivery and
performance of this Agreement (i) have been duly authorized by all requisite
corporate action on its part and (ii) will not contravene any provision of its
charter or by-laws or any order of any court or other Governmental Authority
having applicability to it or any applicable law and (b) this Agreement has
been duly executed and delivered by it and constitutes its legal, valid and
binding obligation.
ARTICLE VII
Intercreditor Arrangements
SECTION 7.01. Security Interests. The Collateral Agent and each of the
Participating Creditors hereby agree that the liens granted to the Collateral
Agent under the Pledge Agreement, and the guarantees provided under the
Guarantee Agreement, shall be treated, as among the Participating Creditors,
as having equal priority and shall at all times be shared by the Participating
Creditors as provided herein.
SECTION 7.02. Turnover of Pledged Collateral and Certain Payments. (a)
If any Participating Creditor (i) acquires custody, control or possession of
any Pledged Collateral or proceeds therefrom or (ii) receives any payment at
any time that an Actionable Default has occurred and is continuing pursuant to
enforcement of the Guarantee Agreement, other than pursuant to the terms of
this Agreement, then such Participating Creditor shall promptly cause such
Pledged Collateral, proceeds or payments to be delivered to or put in the
custody, possession or control of the Collateral Agent for disposition or
distribution in accordance with the provisions of Sections 4.01 and 4.02.
Until such time as the provisions of the immediately preceding sentence have
been complied with, such Participating Creditor shall be deemed to hold such
Pledged Collateral, proceeds or payments in trust for the parties entitled
thereto hereunder. Notwithstanding the foregoing, subject to paragraph (b)
below, no Participating Creditor shall be required to deliver to or put in the
custody, possession or control of
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the Collateral Agent or to hold in trust as
specified in the preceding sentence any amount of any Outstanding Obligation
paid or prepaid by the Borrower or the Canadian Borrower to it (and not
obtained by it through any sale of or other realization upon any Pledged
Collateral or by enforcement of its rights under the Guarantee Agreement, as
provided herein and in the Support Documents) in accordance with the terms of
the Credit Agreement, the Permitted Acquisition Indebtedness Agreements or the
Interest Rate Agreements, as applicable.
(b) In the event that any Payment Default occurs and continues
unremedied for three Business Days, the Collateral Agent shall, promptly
following receipt of written notice thereof from the Borrower or a
Participating Creditor or actual knowledge thereof, notify all Participating
Creditors of (i) such Payment Default, (ii) the amount and nature thereof,
(iii) the date on which the payment was due that is the subject of such
Payment Default and (iv) their obligations under this paragraph (b). Each
Participating Creditor agrees that, in the event that it receives any payment
(other than pursuant to this Agreement) in respect of its Outstanding
Obligations at any time that any other Participating Creditor's Outstanding
Obligations, or any part thereof, are subject to a Payment Default (any such
payment so received being referred to as a Non-Pro-Rata Payment ), then,
promptly following receipt of any notice pursuant to the preceding sentence
(and thereafter promptly following any receipt of a Non-Pro-Rata Payment),
such Participating Creditor will deliver such payment to the Collateral Agent
for deposit in a special collateral account (the Special Collateral
Account ), and such amounts shall be retained in the Special Collateral
Account until distributed as described below. In the event that all Payment
Defaults are cured, the Collateral Agent shall return all amounts on deposit
in the Special Collateral Account to the Participating Creditors from which
such amounts were received, together with their pro rata share of any earnings
thereon from the investment of such amounts. In the event that, prior to the
return of amounts on deposit in the Special Collateral Account to the
applicable Participating Creditors as provided herein, all the Outstanding
Credit Agreement Obligations or all the Outstanding Permitted Acquisition
Indebtedness Agreement Obligations are declared due and payable as provided in
Section 7.06, all amounts on deposit in the Special Collateral Account shall
be allocated and applied as Pledged Collateral pursuant to Article IV. In the
event that any Payment Default occurs and remains continuing for more than
30 days without all the Outstanding Credit Agreement Obligations and
Outstanding Permitted Acquisition Indebtedness Agreement Obligations having
been declared due and payable, then the Collateral Agent shall apply the
amounts then on deposit in the Special Collateral Account to pay (and shall
continue to apply Non-Pro-Rata Payments thereafter received by it to pay)
Outstanding Obligations that are then due and payable pro rata in accordance
with the amounts so due and payable, provided that the foregoing shall not
relieve any Participating Creditor from its obligation to deliver to the
Collateral Agent any Non-Pro-Rata Payment received by it while any Payment
Default remains continuing. By its execution hereof, the Borrower agrees that
any amounts paid to a Participating Creditor in respect of any Outstanding
Obligation shall not relieve the Borrower or the Canadian Borrower from
liability in respect of such Outstanding Obligation to the extent that such
amounts are distributed to other Participating Creditors pursuant to this
paragraph.
SECTION 7.03. Setoffs. If any Participating Creditor exercises any right
of setoff or similar right with respect to any assets (regardless of whether
such assets shall constitute Pledged Collateral) of the Borrower, any Pledgors
or any Guarantor for payment of any Outstanding Obligations, or an Issuing
Bank receives any cash collateral (or cash equivalents delivered as
collateral) for Unfunded LOC Exposure, at any time that an Actionable Default
has occurred and is continuing (other than cash collateralization of the
Letters of Credit in accordance with Article II of the Credit Agreement), the
amounts so set off or such cash collateral shall constitute Pledged Collateral
for purposes of this Agreement and such Participating Creditor shall promptly
cause such amounts to be delivered to or put in the custody, possession or
control of the Collateral Agent for disposition or distribution in accordance
with the provisions of Sections 4.01 and 4.02. Until such time as the
provisions of the immediately preceding sentence have been complied with, such
Participating Creditor shall be deemed to hold such Pledged Collateral in
trust for the parties hereto entitled thereto hereunder.
SECTION 7.04. Amendment of the Credit Agreement, the Permitted
Acquisition Indebtedness Agreements and the Interest Rate Agreements. This
Agreement shall not limit or restrict the ability of (a) Holdings, the
Borrower, their subsidiaries and the Credit Agreement Creditors to amend,
modify, supplement, restate or waive the Credit Agreement and the Loan
Documents (other than this Agreement and the Support Documents) or any
provision thereof, (b) the Borrower and the Permitted Acquisition Indebtedness
Creditors party thereto to
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amend, modify, supplement, restate or waive any
Permitted Acquisition Indebtedness Agreement and related Credit Documents
(other than this Agreement and the Support Documents) or any provision thereof
or (c) the Lenders party thereto to amend, modify, supplement, restate or
waive any Interest Rate Agreement.
SECTION 7.05. Release of Collateral. (a) In connection with any sale,
transfer or disposition of any Pledged Collateral that is permitted by the
Credit Agreement and the Permitted Acquisition Indebtedness Agreements, or
approved by the Required Creditors, the Participating Creditors agree that any
Liens on such Pledged Collateral created pursuant to the Pledge Agreement will
be released upon the delivery of evidence satisfactory to the Collateral Agent
that such sale, transfer or disposition is in compliance with the requirements
of such agreements (or the terms of any such approval by the Required
Creditors) and the proceeds of such transaction have been or will be applied
to the extent required as set forth in Section 2.12 of the Credit Agreement
and any analogous provision of the applicable Permitted Acquisition
Indebtedness Agreement (or any applicable terms of any such approval).
(b) Pledged Collateral may be released in connection with the exercise
of any rights, powers or remedies by the Collateral Agent pursuant to and in
accordance with Section 3.02 and such release shall not require any approval
under this Section 7.05.
(c) The Participating Creditors hereby authorize the Collateral Agent to
execute releases and other documents in form and substance satisfactory to the
Collateral Agent in respect of any release of Collateral permitted under this
Section 7.05.
SECTION 7.06. Acceleration. The Credit Agreement Creditors and the
Permitted Acquisition Indebtedness Creditors hereby covenant and agree that,
notwithstanding any contrary provisions of the Credit Transaction Documents,
as long as this Agreement is in effect, (a) the Loans may not be declared to
be due and payable and the Commitments may not be terminated pursuant to
Article VII of the Credit Agreement unless (i) the Administrative Agent or the
Required Lenders (as defined in the Credit Agreement) shall notify the
Borrower and the Collateral Agent of such declaration and termination in
writing at any time that an Actionable Default under the Credit Agreement has
occurred and is continuing and (ii) at least five days shall have passed since
the time of the giving of such notice and (b) any Permitted Acquisition
Indebtedness may not be declared to be due and payable pursuant to the event
of default or any similar provisions of the applicable Permitted Acquisition
Indebtedness Agreement unless (i) the applicable Required Holders shall notify
the Borrower, the Collateral Agent and the Administrative Agent of such
declaration in writing at any time that an Actionable Default under the
Permitted Acquisition Indebtedness Agreements has occurred and is continuing
and (ii) at least five days shall have passed since the giving of such notice;
provided, however, that (i) the foregoing shall not affect the consequences
specified under the Credit Agreement and the Permitted Acquisition
Indebtedness Agreements in respect of an Actionable Default with respect to
the Borrower or the Canadian Borrower described in clause (g) or (h) or
Article VII of the Credit Agreement or any analogous provision of a Permitted
Acquisition Indebtedness Agreement, (ii) the foregoing shall not affect the
rights of any Permitted Acquisition Indebtedness Creditor to declare its
Permitted Acquisition Indebtedness, if such Permitted Acquisition Indebtedness
is incurred by the Borrower in the form of senior secured notes, to be due and
payable in accordance with the Permitted Acquisition Indebtedness Agreement in
the event of a payment default in respect of such Permitted Acquisition
Indebtedness, or any obligation of the Borrower to purchase Permitted
Acquisition Indebtedness (and to purchase such Permitted Acquisition
Indebtedness) in the event of a Change in Control, as defined in any such
Permitted Acquisition Indebtedness Agreement, (iii) the foregoing shall not
affect the rights of the Administrative Agent to declare the Loans or any of
them to be due and payable and to terminate the Commitments in accordance with
Article VII of the Credit Agreement in the event of a payment default in
respect of any of the Outstanding Credit Agreement Obligations or in the event
of the occurrence of a Change of Control, as defined in the Credit Agreement,
(iv) if the Permitted Acquisition Indebtedness or the Loans, or any of them,
are declared to be due and payable in accordance herewith as a result of any
Actionable Default, then the foregoing shall not affect the rights of any
Permitted Acquisition Indebtedness Creditor or the Administrative Agent to
declare the balance of the Permitted Acquisition Indebtedness or the balance
of the Loans and other Outstanding Credit Agreement Obligations or any of them
to be due and payable and to terminate the Commitments, (v) the Commitments
shall automatically terminate if and when the Loans are
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declared to be due and
payable in accordance with this Section 7.06, (vi) solely for purposes of an
action under this Section 7.06 to declare the Loans and the Permitted
Acquisition Indebtedness to be due and payable, the aggregate unused amount of
the Commitments shall not constitute Voting Credit Agreement Obligations and
(vii) the provisions of this Section 7.06 may be waived with the consent of
each Lender and Permitted Acquisition Indebtedness Creditor.
SECTION 7.07. Additional Collateral. Each of the Participating Creditors
hereby covenants and agrees that it (a) will not accept any guaranty of any of
the Obligations by any Guarantor or any other Subsidiary of Holdings unless
such guaranty is provided pursuant to the Guarantee Agreement or otherwise
guarantees the payment of all the Obligations on a pari passu basis and
(b) will not take any security interest in or Lien on any assets or property
of Holdings or any of its Subsidiaries (except as permitted or required in
connection with cash collateralization of the Letters of Credit as provided in
Article II of the Credit Agreement) to secure any of the Obligations unless
such security interest or Lien secures the payment of all the Obligations on a
pari passu basis pursuant to the Pledge Agreement.
SECTION 7.08. Subordinated Indebtedness Documents. (a) Each of the
Participating Creditors hereby covenants and agrees that the Collateral Agent
shall be the authorized representative of such Participating Creditor in
respect of any Permitted Subordinated Indebtedness.
(b) Each of the Participating Creditors covenants and agrees that the
Collateral Agent shall have the sole right (i) to give any notice under any
Permitted Subordinated Indebtedness and (ii) to file proofs of claims under
any Permitted Subordinated Indebtedness.
SECTION 7.09. Purchase of Pledged Collateral. Any Participating Creditor
may purchase Pledged Collateral at any public sale of such Pledged Collateral
pursuant to the Pledge Agreement and may make payment on account thereof by
using any Outstanding Obligation then due and payable to such Participating
Creditor from the person that granted a security interest in such Pledged
Collateral as a credit against the purchase price to the extent, but only to
the extent, approved by the Required Creditors.
SECTION 7.10. Further Assurances, etc. Each party hereto shall execute
and deliver such other documents and instruments, in form and substance
reasonably satisfactory to the other parties hereto, and shall take such other
action, in each case as any other party hereto may reasonably have requested
(at the cost and expense of the Borrower which, by countersigning this
Agreement, agrees to pay such costs and expenses), to effectuate and carry out
the provisions of this Agreement, including by recording or filing in such
places as the requesting party may deem desirable, this Agreement or such
other documents or instruments.
ARTICLE VIII
Approval by Holdings, Borrower, Guarantors and Pledgors
By entering into the Support Documents, each of Holdings, the Borrower,
the Guarantors and the Pledgors from time to time, although not a party
hereto, acknowledges and consents to and agrees to perform and be bound by the
provisions hereof.
ARTICLE IX
Miscellaneous
SECTION 9.01. No Individual Action. No Participating Creditor may
require the Collateral Agent to take or refrain from taking any action
hereunder or under any of the Support Documents or with respect to any of the
Pledged Collateral except as and to the extent expressly set forth in this
Agreement.
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SECTION 9.02. Successors and Assigns. (a) This Agreement shall be
binding on and inure to the benefit of the Collateral Agent, each of the
Participating Creditors and their respective successors and permitted assigns
(including any assignee of any Lender in accordance with the Credit Agreement
and the holders from time to time of the Permitted Acquisition Indebtedness
Debt); provided, however, that, except as provided in the next sentence, no
Credit Agreement Creditor or Permitted Acquisition Indebtedness Creditor may
assign its rights or obligations hereunder. The rights and obligations of any
Credit Agreement Creditor or Permitted Acquisition Indebtedness Creditor under
this Agreement shall be assigned automatically (without the need for the
execution of any document or any other action in the case of assignments by
Credit Agreement Creditors but subject to the requirements of the next
sentence in the case of Permitted Acquisition Indebtedness Creditors), to, and
the term Credit Agreement Creditor or Permitted Acquisition Indebtedness
Creditor as used in this Agreement shall include, any assignee, transferee or
successor of such Participating Creditor under the Credit Agreement or the
Permitted Acquisition Indebtedness Agreement, as the case may be, in
accordance with the terms of and upon the effectiveness of an assignment
pursuant to Section 9.04 of the Credit Agreement (in the case of a Lender) or
Article VIII of the Credit Agreement (in the case of the Administrative Agent)
or a transfer of Permitted Acquisition Indebtedness pursuant to the analogous
provisions of the Permitted Acquisition Indebtedness Agreement, as the case
may be, and any such assignee, transferee or successor shall automatically (in
the case of assignments or transfers of Obligations under the Credit Agreement
and subject to the next sentence in the case of assignments or transfers of
Permitted Acquisition Indebtedness) become a party to this Agreement. No
assignee, transferee or successor of or to any Permitted Acquisition
Indebtedness Creditor shall be entitled to the benefits of this Agreement and
the Support Documents unless it shall have complied with the last sentence of
the definition of "Permitted Acquisition Indebtedness Creditors". If
requested by any party to this Agreement (including in connection with any
assignment, transfer or refunding), such assignee, transferee or successor
shall execute and deliver to the other parties to this Agreement a written
confirmation of its assumption of the obligations of the assignor or
transferor hereunder. Each of the Credit Agreement Creditors and the
Permitted Acquisition Indebtedness Creditors agrees that it shall deliver a
complete copy of this Agreement to any potential assignee, transferee or
successor of such Credit Agreement Creditor or Permitted Acquisition
Indebtedness Creditor prior to the execution of any such assignment or
transfer. Any Lender or Permitted Acquisition Indebtedness Creditor may,
without the consent of the other Credit Agreement Creditors and Permitted
Acquisition Indebtedness Creditors (but subject to all limitations set forth
in the applicable Credit Transaction Documents), sell one or more partic-
ipations in the Loans or Letters of Credit or the Permitted Acquisition
Indebtedness, as the case may be, held by it or issued pursuant to the terms
and conditions of the Credit Agreement or the Permitted Acquisition
Indebtedness Agreement, as the case may be; provided, however, that (except as
otherwise specified herein) each of the Credit Agreement Creditors and the
Permitted Acquisition Indebtedness Creditors shall remain liable to each other
for the full performance of their obligations hereunder with the same effect
as though no such participation had been sold and as though any and all
amounts, payments or security received by a participant with whom it dealt in
respect of the loan or note participation were received by such party and
shall continue to deal solely and directly with each other with respect to
their respective rights and obligations under this Agreement. Except as
specifically set forth above and in paragraph (b) below, this Agreement is not
intended to confer any benefit on, or create any obligation of the Collateral
Agent or any Participating Creditor to, Holdings, the Borrower, the
Guarantors, the Pledgors or any third party.
(b) The provisions of Sections 7.04, 7.05 and 7.06 (and the provisions
of this paragraph (b) and clause (c) of Section 9.06) are intended to confer a
benefit upon the Borrower and shall be enforceable by the Borrower.
SECTION 9.03. Notices. Notices and other communications provided for
herein or in any Support Document shall be in writing and shall be delivered
by hand or overnight courier service, mailed or sent by telecopy, telex,
graphic scanning or other telegraphic communications equipment of the sending
party, as follows:
(a) if to any Credit Agreement Creditor, to it as set forth in the
Credit Agreement or as specified in the Credit Agreement;
(b) if to any Permitted Acquisition Indebtedness Creditor, to it
as set forth on the Acknowledgement delivered by it to the Collateral
Agent;
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(c) if to the Collateral Agent, to it as set forth after its
signature to this Agreement; and
(d) if to the Borrower, any Guarantor or any Pledgor, to it as
specified in the Credit Agreement, the Guarantee Agreement or the
Permitted Acquisition Indebtedness Agreement.
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 if delivered by hand or overnight courier service or sent
by telecopy, telex, graphic scanning or other telegraphic communications
equipment of the sender, or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 9.03 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.03.
SECTION 9.04. Termination. This Agreement shall terminate automatically
upon the indefeasible payment in full of (a) the Outstanding Credit Agreement
Obligations (and termination of the Commitments under the Credit Agreement)
and the Outstanding Interest Rate Agreement Obligations or (b) the Outstanding
Permitted Acquisition Indebtedness Agreement Obligations; provided, however,
that (i) Articles I, II, III, IV, V, VIII and IX, and Sections 7.01, 7.02,
7.03, 7.05, 7.07, 7.08 and 7.10, shall survive, and remain operative and in
full force and effect, as long as there are any Outstanding Credit Agreement
Obligations or Outstanding Interest Rate Agreement Obligations that are
secured by the Pledge Agreement or guaranteed pursuant to the Guarantee
Agreement and (ii) this Section 9.04 and Sections 5.05, 5.06 and 9.05 of this
Agreement shall survive, and remain operative and in full force and effect,
regardless of the termination of this Agreement.
SECTION 9.05. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
SECTION 9.06. Modification of Agreement. No modification or amendment of
any provision of this Agreement shall in any event be effective unless the
same shall be in writing and signed by the Required Creditors and the Required
Holders of each issue or series of Permitted Acquisition Indebtedness then
outstanding; provided, however, that (a) no such modification or amendment
shall adversely affect any of the Collateral Agent's rights, immunities or
rights to indemnification hereunder or under any Support Document or expand
its duties hereunder or under any Support Document, without the prior written
consent of the Collateral Agent, (b) no such modification or amendment shall
modify any provision hereof that is intended to provide for the equal and
ratable security of all Outstanding Obligations without the prior written
consent of all Participating Creditors, (c) no such modification or amendment
shall be made to Section 7.04, 7.05 or 7.06, or to the definition of the term
Required Creditors or Majority Creditors for purposes of such Sections, or
to Section 9.02(b) or to this clause (c), without the prior written consent of
the Borrower and (d) no such modification or amendment shall change the
definition of the term Required Creditors or Majority Creditors or this
Section or Section 3.02, 4.02, 7.02, 7.03, 7.04, 7.05 or 7.06 without the
prior written consent of each Lender and Permitted Acquisition Indebtedness
Creditor. No waiver of any provision of this Agreement and no consent to any
departure by any party hereto from the provisions hereof shall be effective
unless such waiver or consent shall be set forth in a written instrument
executed by the party against which it is sought to be enforced, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any party hereto in any
case shall entitle such party to any other or further notice or demand in the
same, similar or other circumstances.
SECTION 9.07. Waiver of Rights. Neither any failure nor any delay on the
part of any party hereto in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, and a single or partial exercise thereof
shall not preclude any other or further exercise or the exercise of any other
right, power or privilege.
SECTION 9.08. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. The
parties shall endeavor in
22
<PAGE>
good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.09. Waiver of Jury Trial. EACH PARTY HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed
in any court and that relate to the subject matter of this Agreement,
including without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each party
acknowledges that this waiver is a material inducement for each such party to
enter into a business relationship, that each party has already relied on the
waiver in entering into this Agreement and that each will continue to rely on
the waiver in their related future dealings. Each party further warrants and
represents that each has reviewed this waiver with its legal counsel and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 9.10 Jurisdiction; Consent to Service of Process. (a) Each
Participating Creditor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the Support
Documents, 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 shall affect any right that the Collateral Agent or any
Participating Creditor may otherwise have to bring any action or proceeding
relating to this Agreement or the Support Documents against any Participating
Creditor or its properties in the courts of any jurisdiction.
(b) Each Participating Creditor 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 the
Support Documents in any New York State or Federal court. 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.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.03. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
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<PAGE>
SECTION 9.11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
SECTION 9.12. Section Headings. The Article and Section headings used
herein are for convenience of reference only and are not to affect the
construction of or be taken into consideration in interpreting this Agreement.
SECTION 9.13. Complete Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior representations, negotiations, writings, memoranda
and agreements. To the extent any provision of this Agreement conflicts with
any other Credit Transaction Document, the provisions of this Agreement shall
be controlling.
IN WITNESS WHEREOF, the Collateral Agent, the Credit Agreement Creditors
and the Permitted Acquisition Indebtedness Creditors have caused this
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
CHEMICAL BANK, as Administrative Agent and
Collateral Agent
By:
Name:
Title:
Notice Address:
270 Park Avenue
New York, New York 10017
Attention: _________________
Telephone: _________________
Telecopy: _________________
Countersigned by:
COLLINS & AIKMAN PRODUCTS CO.
By: _________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF
ACKNOWLEDGMENT
Reference is hereby made to the Master Collateral and Intercreditor
Agreement dated as of July 13,1994 (the "Intercreditor Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) among Chemical Bank, as Collateral Agent and Administrative Agent
under the Credit Agreement, and the other Participating Creditors party
thereto referred to therein, in which this Acknowledgment is incorporated.
Each of the undersigned Permitted Acquisition Indebtedness Creditors has
entered into the Permitted Acquisition Indebtedness Agreement described below
with the Borrower pursuant to which Permitted Acquisition Indebtedness
thereunder is to be guaranteed by the Guarantee Agreement and secured by the
Pledged Collateral. [If a Permitted Acquisition Indebtedness Creditor is an
assignee or transferee of Permitted Acquisition Indebtedness, describe the
Permitted Acquisition Indebtedness so acquired and the assignor or
transferee]. The undersigned hereby appoints the Collateral Agent to act on
its behalf in accordance with the terms of the Intercreditor Agreement and
hereby acknowledges the terms of the Intercreditor Agreement and agrees to be
bound thereby (including Sections 2.02, 2.03, 2.04 and 5.06 thereof). Notices
under the Intercreditor Agreement may be given to the undersigned Permitted
Acquisition Indebtedness Creditors at the respective addresses set forth
below.
DESCRIPTION OF PERMITTED ACQUISITION [PERMITTED ACQUISITION INDEBTEDNESS
INDEBTEDNESS AGREEMENT: CREDITOR]
Title, Date:_________________
Parties:_____________________ By:____________________________
Effective Date:______________ Its:___________________________
Original Principal
Amount:____________________ Notice Address:
Current Principal
Amount:____________________ _____________________________
Final Maturity:______________ _____________________________
Credit Documents:____________ _____________________________
[PERMITTED ACQUISITION INDEBTEDNESS
CREDITOR]
By:____________________________
Its:___________________________
Notice Address:
_____________________________
_____________________________
_____________________________
Acknowledged and Agreed:
COLLINS & AIKMAN PRODUCTS CO.
By:____________________________
Its:___________________________
<PAGE>
Accepted:
CHEMICAL BANK, as Collateral Agent
By:____________________________
Its:___________________________
<PAGE>
SCHEDULE 1.01(A) TO
CREDIT AGREEMENT
Applicable Margin
Eurodollar
Ratios Loan Margin ABR Loan Margin
Leverage Ratio greater 1-3/4% 3/4% of 1%
than 2.75:1
or
Interest Coverage Ratio
less than 4.00 ("Level
I")
Leverage Ratio less than 1-1/2% 1/2 of 1%
or equal to 2.75:1
and
Interest Coverage Ratio
greater than or equal to
4.00 ("Level II")
Leverage Ratio less than 1-1/4% 1/4 of 1%
or equal to 2.25:1
and
Interest Coverage Ratio
greater than 5.75:1
("Level III")
Leverage Ratio less than 1% 0%
or equal to 2.00:1
and
Interest Coverage Ratio
greater than or equal to
6.75:1 ("Level IV")
For purposes of the foregoing, the Applicable Margin for any date shall be
determined by reference to the Leverage Ratio and Interest Coverage Ratio
as of the last day of the Borrower's fiscal quarter most recently ended as
of such date and any change in the Applicable Margin shall become
effective upon the delivery to the Administrative Agent of a certificate
of a Responsible Officer of the Borrower (which certificate may be
delivered prior to delivery of the relevant financial statements) with
respect to the financial statements to be delivered, pursuant to Section
5.04 for the most recently ended fiscal quarter (a) setting forth in
reasonable detail the calculation of the Interest Coverage Ratio and
Leverage Ratio for and at the end of such fiscal quarter and (b) stating
that the signer has reviewed the terms of this Agreement and other Loan
Documents and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the transactions and condition of
Holdings and its Subsidiaries during the accounting period, and that the
signer does not have knowledge of the existence as at the date of such
officers' certificate of any Event of Default or Default and shall apply
(i) to ABR Loans outstanding on such delivery date or made on and after
such delivery date and (ii) to Eurodollar Loans made on and after such
delivery date; provided, however, that if the proceeds of such Loans are
used to finance a Permitted Business Acquisition, and either the Leverage
Ratio or Interest Coverage Ratio, after giving effect to such Permitted
Business Acquisition on a pro forma basis, would result in a change in the
Applicable Margin, such change shall become effective for all purposes
simultaneously with the making of such Loans and shall apply (i) to ABR
Loans outstanding on such date or made on or after such date and (ii) to
Eurodollar Loans made on or after such date. It is understood that the
foregoing certificate of a Responsible Officer shall be permitted to be
delivered prior to, but in no event later than, the time of the actual
delivery of the
2
<PAGE>
financial statements required to be delivered pursuant to
Section 5.04. Notwithstanding the foregoing, at any time during which the
Borrower has failed to deliver the Compliance Certificate with respect to
a fiscal quarter following the date the delivery thereof is due, the
Leverage Ratio and Interest Coverage Ratio shall be deemed, solely for the
purposes of this definition, to be greater than 2.75:1 and less than
4.00:1, respectively, until such time as Borrower shall deliver such
Compliance Certificate.
<PAGE>
SCHEDULE 1.01(B) TO
CREDIT AGREEMENT
Applicable Prepayment Percentage
Part I
Applicable Prepayment
Applicable Level Percentage
Level I 75%
Level II 50%
Level III 25%
Level IV 10%
Part II
Notwithstanding the foregoing, if the principal of the Term Loans and Canadian
Term Loans is permanently repaid in the amounts set forth below, the
Applicable Prepayment Percentage shall be based on the current Applicable
Level increased by the number of additional Levels set forth below (but not
above Applicable Level IV):
Aggregate Term Loans
and Canadian Term Number of Additional
Loans Repaid Levels
$150,000,000 1
225,000,000 2
325,000,000 3
<PAGE>
Schedule 1.01 (c)
to Credit Agreement
Additional Designated Persons
Employees and former employees of Holdings and its subsidiaries and any other
persons who are or at any time were participants in a stock option, stock
appreciation or similar plan of Holdings.
<PAGE>
Schedule 1.01(D)
Subordination Provisions of
Permitted Subordinated Indebtedness
ARTICLE X
SUBORDINATION
SECTION X.1. Securities Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, the Company, for
itself and its successors, and each Holder, by his acceptance of Securities,
agrees, that the payment of the principal of and interest on and premiums,
penalties, fees and other liabilities (including, without limitation,
liabilities in respect of any indemnity, any reimbursement, compensation or
contribution obligations, any liquidated damage provision, any breach of
representation or warranty, or any rights of redemption or rescission under
this Indenture, the Purchase Agreement and the Registration Rights Agreement
or by law or otherwise ("Other Obligations")) with respect to the Securities
is subordinated, to the extent and in the manner provided in this Article X,
to the prior payment in full in cash of all Senior Indebtedness.
This Article X shall constitute a continuing offer to all persons
who become holders of, or continue to hold, Senior Indebtedness, and such
provisions are made for the benefit of the holders of Senior Indebtedness and
such holders are made obligees hereunder and any one or more of them may
enforce such provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
SECTION X.2. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment or distribution shall be made
by or on behalf of the Company on account of principal of or interest on or
Other Obligations with respect to the Securities or to acquire, repurchase,
redeem, retire or defease any of the Securities or on account of the
redemption provisions of the Securities (i) upon the maturity of any Senior
Indebtedness by lapse of time, acceleration or otherwise, unless and until all
principal thereof and interest (including Accrued Bankruptcy Interest) thereon
(and, in the case of the Loan Documents and Supplementary Documents, all
obligations for payments for early termination, fees, expenses, indemnities
and other amounts payable thereunder or in connection therewith) shall first
be paid in full in cash, and all Letter of Credit Obligations, to the extent
that the related letters of credit have not been drawn upon, shall have been
fully secured by collateral in the form of cash or Cash Equivalents or shall
have been returned undrawn or (ii) upon the happening of any default in
payment of any principal of or interest on any Senior Indebtedness (or, in the
case of the Loan Documents and Supplementary Documents, any payment for early
termination, fees, expenses, indemnities and other amounts payable thereunder
or in connection therewith when the same becomes due and payable (any event
described in clause (i) or (ii), a "Payment Default"), unless and until such
default shall have been cured or waived or shall have ceased to exist.
(b) Without limiting the effect of Section X.2(a), upon the
happening of a default or event of default (other than a Payment Default)
(including any event which, with the giving of notice or lapse of time, or
both, would become an event of default and including any default or event of
default that would result upon any payment with respect to the Securities)
with respect to any Senior Indebtedness, as such default or event of default
is defined therein or in the instrument or agreement under which it is
outstanding, and upon written notice thereof given to the Trustee (with a copy
to the Company) by any holders of such Senior Indebtedness or their
Representative ("Payment Notice"), then, unless and until such default or
event of default shall have been cured or waived or shall have ceased to exist
or the Credit Agent approves in writing the making of such payment or
distribution, no direct or indirect payment or distribution shall be made by
or on behalf of the Company on account of principal of or interest on or Other
Obligations with respect to the Securities or to acquire, repurchase, redeem,
retire or defease any of the Securities or on account of the redemption
provisions of the Securities; provided, however, that this paragraph (b) shall
not prevent the making of any payment for more than 179 days after the due
date of the first principal or
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<PAGE>
interest payment on the Securities (including
any redemption or mandatory repurchase of Securities required hereunder) after
a Payment Notice shall have been given. Notwithstanding the foregoing (i) not
more than one Payment Notice shall be given within any period of 360
consecutive days, and (ii) a Payment Notice may only be given (A) if Senior
Indebtedness is outstanding under the Credit Agreement at the time of such
notice, by the Credit Agent or (B) if no Senior Indebtedness is outstanding
under the Credit Agreement at the time of such notice, by a holder or holders
(or the Representative of holders) of at least $10,000,000 principal amount of
Senior Indebtedness.
(c) In furtherance of the provisions of Section X.1, if,
notwithstanding the foregoing provisions of this Section X.2, any direct or
indirect payment or distribution on account of principal of or interest on or
Other Obligations with respect to the Securities or to acquire, repurchase,
redeem, retire or defease any of the Securities or on account of the
redemption provisions of the Securities shall be made by or on behalf of the
Company and received by the Trustee, by any Holder or by any Paying Agent (or,
if the Company or any subsidiary or Affiliate of the Company is acting as
Paying Agent, money for any such payment or distribution shall be segregated
and held in trust), at a time when such payment or distribution was prohibited
by the provisions of this Section X.2, then, unless and until such payment or
distribution is no longer prohibited by this Section X.2, such payment or
distribution (subject to the provisions of Sections X.6 and X.7) shall be
received, segregated from other funds, and held in trust by the Trustee or
such Holder or Paying Agent, as the case may be, for the benefit of, and shall
be immediately paid over to, the holders of Senior Indebtedness or their
Representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, to the extent necessary to (A) make
payment in full in cash of all Senior Indebtedness remaining unpaid and (B) in
the case of Letter of Credit Obligations, to the extent the related letters of
credit have not been drawn upon or returned undrawn, to fully secure such
Senior Indebtedness by collateral in the form of cash or Cash Equivalents, in
each case after giving effect to all concurrent payments and distributions to
or for the holders of Senior Indebtedness. The Company shall give prompt
notice to the Trustee of any default or event of default or any acceleration
under any Senior Indebtedness or under any agreement pursuant to which Senior
Indebtedness may have been issued. Failure to give such notice shall not
affect the subordination of the Securities to Senior Indebtedness provided in
this Article X. Notwithstanding anything to the contrary contained herein, in
the absence of its gross negligence or wilful misconduct, the Trustee shall
have no duty to collect or retrieve monies previously paid by it in good
faith; provided that this sentence shall not affect the obligation of any
other party receiving such payment to hold such payment for the benefit of,
and to pay such payment over to, the holders of Senior Indebtedness or their
Representative.
SECTION X.3. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization
of Company.
Upon any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities,
upon any dissolution, winding-up, total or partial liquidation or total or
partial reorganization of the Company (including, without limitation, in
bankruptcy, insolvency or receivership proceedings or upon any assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
the Company and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payments in full in cash of the principal thereof
and interest (including Accrued Bankruptcy Interest) thereon (and, in
the case of the Loan Documents and Supplementary Documents, all payments
for early termination, fees, expenses, indemnities and other amounts
payable thereunder or in connection therewith) and, in the case of
Letter of Credit Obligations, to the extent the related letters of
credit have not been drawn upon or returned undrawn, to have such Senior
Indebtedness be fully secured by collateral in the form of cash or Cash
Equivalents before the Holders are entitled to receive any payment on
account of the principal of or interest on or Other Obligations with
respect to the Securities (whether by payment, acquisition, retirement,
defeasance, redemption or otherwise) or any other payment or
distribution of assets or securities by or on behalf of the Company;
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<PAGE>
(b) any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee on behalf of the Holders
would be entitled except for the provisions of this Article X, including
any such payment or distribution that is payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to the payment of the Securities, shall be paid by the
liquidating trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or their
Representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, until all Senior Indebtedness
remaining unpaid shall have been paid in full in cash and, in the case
of Letter of Credit Obligations, to the extent the related letters of
credit have not been drawn upon or returned undrawn, until all such
Senior Indebtedness shall be fully secured by collateral in the form of
cash or Cash Equivalents or shall have been returned undrawn, in each
case after giving effect to all concurrent payments and distributions to
or for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets or securities of the Company of any
kind or character, whether in cash, property or securities, shall be
received by the Trustee or the Holders or any Paying Agent (or, if the
Company or any Subsidiary or Affiliate of the Company is acting as
Paying Agent, money, assets or securities of any kind or character for
any such payment or distribution shall be segregated or held in trust)
on account of principal of or interest on or Other Obligations with
respect to the Securities before all Senior Indebtedness is paid in full
in cash, such payment or distribution (subject to the provisions of
Sections X.6 and X.7) shall be received, segregated from other funds,
and held in trust by the Trustee or such Holder or Paying Agent for the
benefit of, and shall immediately be paid over to, the holders of Senior
Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by each,
until all Senior Indebtedness remaining unpaid shall have been paid in
full in cash and, in the case of Letter of Credit Obligations, to the
extent the related letters of credit have not been drawn upon or
returned undrawn, until all such Senior Indebtedness shall be fully
secured by collateral in the form of cash or Cash Equivalents or shall
have been returned undrawn, in each case after giving effect to all
concurrent payments and distributions to or for the holders of Senior
Indebtedness. Notwithstanding anything to the contrary contained
herein, in the absence of its gross negligence or wilful misconduct, the
Trustee shall have no duty to collect or retrieve monies previously paid
by it in good faith; provided that this sentence shall not affect the
obligation of any other party receiving such payment to hold such
payment for the benefit of, and to pay over such payment over to, the
holders of Senior Indebtedness or their Representative.
The Company shall give prompt notice to the Trustee prior to any
dissolution, winding-up, total or partial liquidation or total or partial
reorganization of the Company or assignment for the benefit of creditors by
the Company.
SECTION X.4. Securityholders to Be Subrogated to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full in cash of all Senior Indebtedness
and, in the case of Letter of Credit Obligations, to the extent that the
related letters of credit have not been drawn upon or returned undrawn,
subject to the securing in full of such Senior Indebtedness by collateral in
the form of cash or Cash Equivalents, the Holders of Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness (other than the rights to receive payments or distributions with
respect to, or rights in collateral securing, reimbursement obligations for
subsequently drawn Letter of Credit Obligations until such reimbursement
obligations are paid in full in cash) until all amounts owing on the
Securities shall be paid in full in cash, and for the purpose of such
subrogation no payments or distributions to the holders of Senior Indebtedness
by or on behalf of the Company, or by or on behalf of the Holders by virtue of
this Article X, which otherwise would have been made to the Holders, shall, as
between the Company and the Holders, be deemed to be payment by the Company to
or on account of the Senior Indebtedness, it being understood that the
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<PAGE>
provisions of this Article X are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders
of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article X shall
have been applied, pursuant to the provisions of this Article X, to the
payment of all amounts payable under the Senior Indebtedness and to secure
Senior Indebtedness represented by Letter of Credit Obligations to the extent
that the related letters of credit have not been drawn upon or returned
undrawn, then the Holders shall be entitled to receive from the holders of
such Senior Indebtedness any payments or distributions received by such
holders of Senior Indebtedness in excess of the amount sufficient to pay all
amounts payable under or in respect of the Senior Indebtedness in full in cash
and to fully secure Senior Indebtedness represented by Letter of Credit
Obligations to the extent that the related letters of credit have not been
drawn upon or returned undrawn in the form of cash or Cash Equivalents.
SECTION X.5. Obligations of the Company Unconditional.
Nothing contained in this Article X or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company
and the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of and interest on the
Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this
Article X, of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets or securities of the Company
referred to in this Article X, the Trustee, subject to the provisions of
Sections ____ and ____ [Insert reference to provisions setting forth Trustee's
rights and duties], and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which any
dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidating
trustee or agent or other person making any payment or distribution to the
Trustee or to the Holders 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. Nothing in this Section
X.5 shall apply to the claims of, or payments to, the Trustee under or
pursuant to Section ____ [Insert provision setting forth Trustee's
compensation].
SECTION X.6. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee unless and until the Trustee or any Paying Agent shall have
received written notice thereof from the Company or from one or more holders
of Senior Indebtedness or from any Representative therefor and, prior to the
receipt of any such notice, the Trustee, subject to the provisions of Sections
____ and ____ [Insert reference to provisions setting forth Trustee's rights
and duties], shall be entitled in all respects conclusively to assume that no
such fact exists.
SECTION X.7. Application by Trustee of Assets Deposited with It.
U.S. Legal Tender or U.S. Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with Section ____ [Insert
reference to defeasance provisions] (including, without limitation, clause __
thereof [Insert reference to provision prohibiting defeasance if doing so
would violate a contractual obligation of Holdings or Borrower]) shall be for
the sole benefit of Securityholders and, to the extent allocated for the
payment of Securities, shall not be subject to the subordination provisions of
this Article X. Otherwise, any deposit of assets or securities by or on
behalf of the Company with the
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<PAGE>
Trustee or any Paying Agent (whether or not in
trust) for the payment of principal of or interest on or Other Obligations
with respect to any Securities shall be subject to the provisions of this
Article X; provided that if prior to the Business Day preceding the date on
which by the terms of this Indenture any such assets may become distributable
for any purpose (including, without limitation, the payment of either
principal of or interest on any Security) the Trustee or such Paying Agent
shall not have received with respect to such assets the notice provided for in
Section X.6, then the Trustee or such Paying Agent shall have full power and
authority to receive such assets and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary received by it on or after such date. The foregoing shall not apply
to the Paying Agent if the Company or any Subsidiary or Affiliate of the
Company is acting as Paying Agent. Nothing contained in this Section X.7
shall limit the right of the holders of Senior Indebtedness to recover
payments as contemplated by this Article X.
SECTION X.8. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness to enforce the subordination provisions contained in this Article
X shall at any time in any way be prejudiced or impaired by any act or failure
to act on the part of the Company or by any act or failure to act, in good
faith, by any such holder, or by any non-compliance by the Company with the
terms of this Indenture, regardless of any knowledge thereof that any such
holder may have or be otherwise charged with. The holders of Senior
Indebtedness may extend, renew, restate, supplement, modify or amend the terms
of the Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company and its
Subsidiaries, all without affecting the liabilities and obligations of the
parties to this Indenture or the Holders. No provision in any supplemental
indenture that affects the subordination of the Securities or other provisions
of this Article X shall be effective against the holders of the Senior
Indebtedness who have not consented thereto.
[Each Holder of the Securities by his acceptance thereof agrees
that the Representative of any Senior Indebtedness (including, without
limitation, the Credit Agent), in its discretion, without notice or demand and
without affecting any rights of any holder of Senior Indebtedness under this
Article X, may foreclose any mortgage or deed of trust covering interests in
real property secured thereby, by judicial or non-judicial sale; and such
Holder hereby waives any defense to the enforcement by the Representative of
any Senior Indebtedness (including, without limitation, the Credit Agent) or
by any holder of any Senior Indebtedness against such Holder of this Article X
after a judicial or non-judicial sale or other disposition of its interests in
real property secured by such mortgage or deed of trust; and such Holder
expressly waives any defense or benefits that may be derived from California
Civil Code (2 section marrks) 2808, 2809, 2810, 2819, 2845, 2849 or 2850, or
California Code of Civil Procedure (2 section marks) 580a, 580d or 726, or
comparable provisions of the laws of any other jurisdiction or any similar
statute in effect in any other jurisdiction.]
SECTION X.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effect the subordination provisions contained in
this Article X, and appoints the Trustee his attorney-in-fact for such
purpose, including, in the event of any dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company) tending
towards liquidation or reorganization of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of its or his
Securities and Other Obligations in the form required in said proceedings and
cause said claim to be approved. If the Trustee does not file a proper claim
or proof of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims, then the
holders of the Senior Indebtedness or their Representative is hereby
authorized to file an appropriate claim for and on behalf of the Holders of
said Securities. Nothing herein contained shall be deemed to authorize the
Trustee or the holders of Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt
-5-
<PAGE>
on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee or
the holders of Senior Indebtedness or their Representative to vote in respect
of the claim of any Securityholder in any such proceeding.
SECTION X.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in
this Article X in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights
as such holder.
SECTION X.11. Article X Not to Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article X shall
not be construed as preventing the occurrence of a Default or an Event of
Default under Section ____ [Insert reference to Event of Default Section].
SECTION X.12. No Fiduciary Duty of Trustee to 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
(other than for its willful misconduct or gross negligence) if it shall in
good faith mistakenly pay over or deliver to the Holders of Securities 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.
Nothing in this Section X.12 shall affect the obligation of any person other
than the Trustee to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their Representative.
Certain Definitions. As used in this Schedule 1.01(E), the
following terms have the following meanings:
"Accrued Bankruptcy Interest" means all interest accruing after
the filing of a petition by or against the Company under any Bankruptcy
Law, in accordance with and at the rate (including any rate applicable
upon any default or event of default, to the extent lawful) specified in
the Loan Documents, whether or not the claim for such interest is
allowed as a claim after such filing in any proceeding under such
Bankruptcy Law.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Cash Equivalents" means Permitted Investments.
"Company" means [Collins & Aikman Products Co.] [Collins & Aikman
Corporation].
"Credit Agent" means, at any time, the then-acting Administrative
Agent as defined in and under the Credit Agreement, which initially
shall be Chemical Bank. The Company shall promptly notify the Trustee
of any change in the Credit Agent.
"Credit Agreement" means the Credit Agreement, dated as of June
__, 1994, by and among Collins & Aikman Corporation, Collins & Aikman
Products Co., [WCA Canada Inc.] the Lenders and Issuing Banks referred
to therein, Continental Bank, N.A. and NationsBank, N.A., as Managing
Agents, Chemical Bank of Canada, as Canadian Administrative Agent, and
Chemical Bank, as Administrative Agent, as the same may be amended,
extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms,
conditions,
-6-
<PAGE>
covenants and other provisions) from time to time, and any
agreement governing Indebtedness incurred to refund or refinance a
substantial portion of the borrowings and commitments then outstanding
or permitted to be outstanding under such Credit Agreement or such
agreement; provided that such refunding or refinancing by its terms
states that it is intended to be senior in right of payment to the
Securities. The Company shall promptly notify the Trustee of any such
refunding or refinancing of the Credit Agreement; provided that failure
to give such notice shall not impair the subordination provisions
hereof.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books or otherwise having a
legal or beneficial interest in a Security.
"Indenture" means the Indenture pursuant to which the Securities
are issued.
"Interest Swap Obligation" means any obligation of any person
pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time
periodic payments calculated by applying either a fixed or floating rate
of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or floating
rate of interest on the same notional amount; provided that the term
"Interest Swap Obligation" shall also include interest rate exchange,
collar, cap, swap option or similar agreements providing interest rate
protection.
"Letter of Credit Obligations" means Senior Indebtedness with
respect to letters of credit issued and outstanding pursuant to the
Credit Agreement.
"Loan Documents" means the Credit Agreement and all promissory
notes, guarantees, security agreements, pledge agreements, deeds of
trust, mortgages, letters of credit and other instruments, agreements
and documents executed pursuant thereto or in connection therewith,
including all amendments, supplements, extensions, renewals,
restatements, replacements or refinancings thereof, or other
modifications (in whole or in part, and without limitation as to amount,
terms, conditions, covenants or other provisions) thereof from time to
time.
"Paying Agent" means any Paying Agent under the Indenture.
"Purchase Agreement" means the several Purchase Agreements by and
among the Company and the Purchasers, each dated as of ________ ___,
199__ providing for the purchase of the Securities.
"Purchasers" means the Purchasers named on the execution pages
attached to the Purchase Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Purchasers, dated as of
_______ ____, 199__.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness; provided that the
person acting as Trustee may not serve as a Representative.
"Securities" means the securities evidencing the Permitted
Subordinated Indebtedness.
"Senior Indebtedness" means (x) all obligations of the Company now
or hereafter existing, whether directly or by guarantee, to pay the
principal of, and interest (including, in the case of the Loan Documents
and the Supplementary Documents, Accrued Bankruptcy Interest with
respect thereto) on, any Indebtedness of the Company (and, in the case
of the Loan Documents and the Supplementary Documents, all obligations
of the Company for all payments for early termination, fees, expenses,
indemnities and other amounts payable thereunder or in connection
therewith),
-7-
<PAGE>
whether outstanding on the date of this Indenture or
hereafter created, incurred, assumed, guaranteed or in effect guaranteed
by the Company (including, without limitation, Indebtedness under the
Loan Documents and the Supplementary Documents and all obligations of
the Company to indemnify the Credit Agent, the Lenders, the Issuing
Banks and the other Agents thereunder pursuant to the Loan Documents and
all obligations of the Company for all payments for early termination,
fees, expenses and indemnities and other amounts payable thereunder or
in connection therewith if the instrument creating or evidencing the
same expressly provides that such Indebtedness shall be senior in right
of payment to the Securities, (y) Indebtedness of the Company, whether
direct or by guarantee, with respect to Interest Swap Obligations and
(z) all obligations of the Company in respect of any financing of
accounts receivable of the Company and its subsidiaries.
"Supplementary Documents" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements designed to hedge against fluctuations in interest rates or
foreign exchange rates.
"Trustee" means the Trustee for the Securities under the
Indenture.
-8-
<PAGE>
SCHEDULE 2.01 TO
CREDIT AGREEMENT
ADDRESSES FOR NOTICES; COMMITMENTS
CHEMICAL BANK
270 Park Avenue
10th Floor
New York, New York 10017
Attention: Suzanne Kjorlien
Telecopy: (212) 270-3279
Revolving Credit Commitment: $ 7,826,086.95
Term Loan Commitment: $43,521,739.10
Delayed Term Loan Commitment: $ 1,304,347.87
Canadian Term Commitment: $ 2,347,826.08
BANK OF SCOTLAND
565 Fifth Avenue
New York, New York 10017
Attention: Jack Dykes
Telecopy: (212) 682-5720
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Commitment: $ 1,330,434.78
GIROCREDIT BANK
65 East 55th Street
New York, New York 10022
Attention: John Redding
Telecopy: (212) 644-0644
Revolving Credit Commitment: $ 1,956,521.74
Term Loan Commitment: $ 4,630,434.78
Delayed Term Loan Commitment: $ 326,086.96
Canadian Term Loan Commitment: $ 586,956.52
THE BANK OF TOKYO TRUST COMPANY
1251 Avenue of the Americas
New York, New York 10116
Attention: William J. Darby
Telecopy: (212) 782-6440
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Commitment: $ 1,330,434.78
1
<PAGE>
THE YASUDA TRUST & BANKING CO., LTD.
285 Peachtree Center Avenue
Suite 2104
Atlanta, Georgia 30303
Attention: Melinda Lowe
Telecopy: (404) 584-7816
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
SOCIETY NATIONAL BANK
127 Public Square
Cleveland, Ohio 44114
Attention: Lawrence A. Mack
Telecopy: (216) 689-4981
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Commitment: $ 1,330,434.78
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH
165 Broadway
49th Floor
New York, New York 10006
Attention: Mitsuo Matsunaga
Telecopy: (212) 608-2371
Revolving Credit Commitment: $ 6,000,000.00
Term Loan Commitment: $14,200,000.00
Delayed Term Loan Commitment: $ 1,000,000.00
Canadian Term Loan Commitment: $ 1,800,000.00
THE BANK OF NEW YORK
One Wall Street
22nd Floor
New York, New York 10286
Attention: Gregory L. Batson
Telecopy: (212) 635-6434
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
2
<PAGE>
NATIONAL CITY BANK
1900 East Ninth Street
10th Floor
Cleveland, Ohio 44114
Attention: Sharon F. Weinstein
Telecopy: (216) 575-9396
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
CRESTAR BANK
919 East Main Street
Richmond, Virginia 23219
Attention: T. Patrick Collins
Telecopy: (804) 782-5413
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
THE FIRST NATIONAL BANK OF BOSTON
400 Perimeter Center Terrace
Suite 745
Atlanta, Georgia 30346
Attention: Stephen Y. McGehee
Telecopy: (404) 393-4166
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
BARCLAYS BANK PLC
222 Broadway
11th Floor
New York, New York 10038
Attention: Bob Cauley
Telecopy: (212) 412-7580
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
3
<PAGE>
THE MITSUBISHI TRUST AND BANKING CORPORATION
520 Madison Avenue
26th Floor
New York, New York 10022
Attention: Susan L. LeFevre
Telecopy: (212) 755-2349
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
SOCIETE GENERALE
50 Rockefeller Plaza
13th Floor
New York, New York 10020
Attention: Jack Stack
Telecopy: (212) 830-6178
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
WACHOVIA BANK OF NORTH CAROLINA, N.A.
400 S. Tryon Street
6th Floor
Charlotte, North Carolina 28202-1915
Attention: Joanne M. Starnes
Telecopy: (704) 378-5181
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
CONTINENTAL BANK, N.A.
231 South LaSalle Street
Chicago, IL 60697
Attention: John Orecchio
Telecopy: (312) 828-3864
Revolving Credit Commitment: $ 6,782,608.70
Term Loan Commitment: $16,052,173.91
Delayed Term Loan Commitment: $ 1,130,434.78
Canadian Term Loan Commitment: $ 2,034,782.61
4
<PAGE>
NATIONSBANK, N.A.
100 North Tryon Street, NCI 007-08-11
Charlotte, NC 28255
Attention: J. Timothy Martin
Telecopy: (704) 386-1270
Revolving Credit Commitment: $ 6,782,608.70
Term Loan Commitment: $16,052,173.91
Delayed Term Loan Commitment: $ 1,130,434.78
Canadian Term Loan Commitment: $ 2,034,782.61
THE INDUSTRIAL BANK OF JAPAN
245 Park Avenue
New York, New York 10167
Attention: Mikihide Katsumata
Telecopy: (212) 682-2870
Revolving Credit Commitment: $ 6,000,000.00
Term Loan Commitment: $14,200,000.00
Delayed Term Loan Commitment: $ 1,000,000.00
Canadian Term Loan Commitment: $ 1,800,000.00
BRANCH BANKING AND TRUST COMPANY
434 Fayetteville Street Mall
29th Floor
Raleigh, North Carolina 27601
Attention: Allan M. Bookout
Telecopy: (919) 831-4121
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
CREDITANSTALT-BANKVEREIN
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attention: Daniel D. Lensgraf
Telecopy: (404) 390-1851
Revolving Credit Commitment: $ 1,956,521.74
Term Loan Commitment: $ 4,630,434.78
Delayed Term Loan Commitment: $ 326,086.96
Canadian Term Loan Commitment: $ 586,956.52
5
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attention: C.J. Klenk
Telecopy: (404) 319-4954
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENE
520 Madison Avenue
37th Floor
New York, New York 10022
Attention: Sean Mounier
Telecopy: (212) 715-4535
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
THE NIPPON CREDIT BANK, LTD.
245 Park Avenue, 30th Floor
New York, New York 10167
Attention: Cliff Abramsky
Telecopy: (212) 490-3895
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
BANK OF AMERICA NT&SA
335 Madison Avenue
5th Floor
New York, New York 10017
Attention: Laurie Marshall
Telecopy: (212) 503-7066
Revolving Credit Commitment: $ 6,000,000.00
Term Loan Commitment: $14,200,000.00
Delayed Term Loan Commitment: $ 1,000,000.00
Canadian Term Loan Commitment: $ 1,800,000.00
6
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
301 South Tryon Street
Floor M-2
Charlotte, North Carolina 28288-0145
Attention: Bert M. Corum
Telecopy: (704) 374-4000
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
THE TRAVELERS INSURANCE COMPANY
One Tower Square - 9PB
Hartford, Connecticut 06183-2030
Attention: John Console
Telecopy: (203) 954-3730
Revolving Credit Commitment: $ 3,130,434.78
Term Loan Commitment: $ 7,408,695.66
Delayed Term Loan Commitment: $ 521,739.13
Canadian Term Loan Commitment: $ 939,130.43
THE TRAVELERS INDEMNITY COMPANY
One Tower Square - 9PB
Hartford, Connecticut 06183-2030
Attention: John Console
Telecopy: (203) 954-3730
Revolving Credit Commitment: $ 1,304,347.83
Term Loan Commitment: $ 3,086,956.52
Delayed Term Loan Commitment: $ 217,391.30
Canadian Term Loan Commitment: $ 391,304.35
BANQUE PARIBAS
787 Seventh Avenue
32nd Floor
New York, New York 10019
Attention: David Buseck
Telecopy: (212) 841-2363
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
7
<PAGE>
THE SUMITOMO TRUST AND BANKING CO., LTD., NEW YORK BRANCH
527 Madison Avenue
New York, New York 10022
Attention: Kristin Condon
Telecopy: (212) 418-4848
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
MIDLAND BANK
140 Broadway
5th Floor
New York, New York 10005-1185
Attention: Gina Sidorsky
Telecopy: (212) 658-2586
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
THE TORONTO-DOMINION BANK
909 Fannin
Suite 1700
Houston, Texas 77010
Attention: Debbie A. Greene
Telecopy: (713) 951-9921
Revolving Credit Commitment: $ 6,000,000.00
Term Loan Commitment: $14,200,000.00
Delayed Term Loan Commitment: $ 1,000,000.00
Canadian Term Loan Commitment: $ 1,800,000.00
CREDIT LYONNAIS, CAYMAN ISLAND BRANCH
235 Peachtree Street
Suite 1700
Atlanta, Georgia 30303
Attention: David Edge
Telecopy: (404) 584-5249
Revolving Credit Commitment: $ 6,000,000.00
Term Loan Commitment: $14,200,000.00
Delayed Term Loan Commitment: $ 1,000,000.00
Canadian Term Loan Commitment: $ 1,800,000.00
8
<PAGE>
ARAB BANKING CORPORATION
245 Park Avenue
31st Floor
New York, New York 10167
Attention: Louis Bilbro
Telecopy: (212) 599-8385
Revolving Credit Commitment: $ 1,956,521.74
Term Loan Commitment: $ 4,630,434.78
Delayed Term Loan Commitment: $ 326,086.96
Canadian Term Loan Commitment: $ 586,956.52
VAN KAMPEN MERRITT PRIME RATE INCOME TRUST
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attention: Jeffrey M. Maillet
Telecopy: (708) 684-6740/6741
Revolving Credit Commitment: $ 0.00
Term Loan Commitment: $20,000,000.00
Delayed Term Loan Commitment: $ 0.00
Canadian Term Loan Commitment: $ 0.00
NBD BANK, N.A.
611 Woodward Avenue
Detroit, Michigan 48226
Attention: James D. Heinz
Telecopy: (313) 225-2649
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
CRESCENT CAPITAL
1325 Avenue of the Americas
New York, New York 10019
Attention: Justin Driscoll
Telecopy: (212) 245-2488
Revolving Credit Commitment: $ 0.00
Term Loan Commitment: $ 5,000,000.00
Delayed Term Loan Commitment: $ 0.00
Canadian Term Loan Commitment: $ 0.00
9
<PAGE>
FUJI BANK
2 World Trade Center
79th Floor
New York, New York 10028
Attention: Vincent Ingato
Telecopy: (212) 912-0516
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
UNITED STATES NATIONAL BANK OF OREGON
111 S.W. Fifth, T-29
Portland, Oregon 97204
Attention: David Wynde
Telecopy: (503) 275-4267
Revolving Credit Commitment: $ 2,608,695.65
Term Loan Commitment: $ 6,173,913.04
Delayed Term Loan Commitment: $ 434,782.61
Canadian Term Loan Commitment: $ 782,608.70
WELLS FARGO BANK N.A.
420 Montgomery Street
MAC 0101-091
San Francisco, California 94163
Attention: Kathleen Harrison
Telecopy: (415) 421-1352
Revolving Credit Commitment: $ 4,434,782.61
Term Loan Commitment: $10,495,652.18
Delayed Term Loan Commitment: $ 739,130.43
Canadian Term Loan Commitment: $ 1,330,434.78
BANK OF IRELAND
540 Fifth Avenue
New York, New York 10019
Attention: Roger Burns
Telecopy: (212) 586-7752
Revolving Credit Commitment: $ 1,956,521.74
Term Loan Commitment: $ 4,630,434.78
Delayed Term Loan Commitment: $ 326,086.96
Canadian Term Loan Commitment: $ 586,956.52
10
<PAGE>
SCHEDULE 2.11(a) TO
CREDIT AGREEMENT
Term Loan Amortization Schedule
Term Loan Repayment Date Aggregate Repayment
Quarterly Anniversary of Closing Date
5 $ 6,250,000
6 6,250,000
7 6,250,000
8 6,250,000
9 11,250,000
10 11,250,000
11 11,250,000
12 11,250,000
13 16,250,000
14 16,250,000
15 16,250,000
16 16,250,000
17 18,750,000
18 18,750,000
19 18,750,000
20 18,750,000
21 20,000,000
22 20,000,000
23 20,000,000
24 20,000,000
25 20,000,000
26 20,000,000
27 20,000,000
28 20,000,000
29 20,000,000
30 15,000,000
Canadian Term Loan Amortization Schedule
Canadian Term Loan Repayment Date Aggregate
Quarterly Anniversary of Closing Date Repayment
30 5,000,000
31 20,000,000
32 20,000,000
<PAGE>
Schedule 3.07(b)(1)
to Credit Agreement
HOLDINGS COMMON STOCK OF DESIGNATED PERSONS
After giving effect to the Recapitalization Transactions
(including purchase by the Blackstone Entities and WP
Entities after the Closing assuming the Overallotment
Option granted to the Underwriters is not exercised)
Shares of Common Stock Owned
Blackstone Entities 26,131,096
WP Entities 27,629,570
Schedule 1.01(c) Persons To be determined*
* Approximately 300 persons were invited to purchase between 100 and 1,000
shares of Common Stock each in the Public Offering under a reserve share
program. The actual number of shares purchased under this program will
not be finally determined until the Public Offering is consummated. In
addition, as described in the Preliminary Prospectus, certain employees
also possess options to purchase shares of Common Stock pursuant to the
1993 Employee Stock Option Plan and the 1994 Employee Stock Option Plan of
Holdings. None of the options is exercisable prior to June 1, 1995,
except in the case of a Change in Control of Holdings (as defined in such
Plans).
<PAGE>
Schedule 3.07 (b) (2)
to Credit Agreement
OPTIONS AND RIGHTS REGARDING HOLDINGS CAPITAL STOCK
1. Amended and Restated Stockholders Agreement, dated as of
June __, 1994 among Blackstone, WP, Collins & Aikman
Holdings II Corporation ("Holdings II"), Holdings, and
Collins & Aikman Group, Inc.
2. Stockholders Agreement dated as of December 7, 1988, among
Blackstone, WP, WCI Holdings II Corporation (now known as
Holdings II), WCI Holdings Corporation, (now known as
Holdings), WCI Acquisition Corporation and The Government of
the State of Kuwait, Kuwait Investment office.
3. Stockholders Agreement, dated as of December 7, 1988, among
Blackstone, WP, WCI Holdings II Corporation (now known as
Holdings II), WCI Holdings Corporation (now known as
Holdings), WCI Acquisition Corporation and The Prudential
Insurance Company of America.
4. Letter Agreement dated April 19, 1994, among Holdings,
Blackstone and WP.
<PAGE>
Schedule 3.12(a)
Subsidiaries of Collins & Aikman Corporation
(Gives effect to merger of Collins & Aikman Group, Inc.
into Collins & Aikman Products Co.)
Company Jurisdiction
Collins & Aikman Products Co.* Delaware
Ackerman Associates, Inc.(I) New York
Ack-Ti-Lining, Inc.(I) New York
The Akro Corporation* Delaware
Builders Emporium Payroll Services, Inc.(I) Delaware
Cepco Incorporated(I) Delaware
Collins & Aikman Automotive International, Inc. Delaware
Collins & Aikman Holdings Canada, Inc.* Canada
WCA Canada, Inc.* Canada
Imperial Wallcoverings (Canada), Inc.1* Canada
Collins & Aikman Lease Co.* Delaware
Collins & Aikman United Kingdom, Ltd. United Kingdom
Dura Acquisition Corp.* Delaware
Dura Convertible Systems de Mexico, S.A. de C.V.2 Mexico
(1% owned by Collins & Aikman Products Co.)
Imperial Wallcoverings, Inc.* Delaware
Marketing Service, Inc. Delaware
Collins & Aikman de Mexico, S.A. de C.V.3 Mexico
Gamble Development Company(I) Minnesota
Greeff Fabrics, Inc. New York
Hopkins Realty Company(I) Minnesota
Ole's, Inc. California
Ole's Nevada, Inc.(I) Nevada
Simmons Universal Corporation(I) Delaware
Warner Fabrics plc United Kingdom
(Owned with Wickes International Corporation)
Harris Fabrics Limited(I) United Kingdom
Warner & Sons, Ltd.(I) United Kingdom
(1 share owned by Warner Fabrics plc; 1 share
owned by Warner Fabrics plc and Nicholas E. Joels,
as joint holders)
1 24% owned by Imperial Wallcoverings, Inc.
2 In formation.
3 1% owned by The Akro Corporation.
1
<PAGE>
Subsidiaries of Collins & Aikman Corporation A Cont.
Company Jurisdiction
Wickes Asset Management, Inc. Delaware
Wickes Guaranteed Parts, Ltd.(I) Canada
Wickes International Corporation Delaware
Design Edition Limited(I) United Kingdom
(50% ownership with Warner Fabrics plc)
Warner Weaving Company Limited(I) United Kingdom
(50% ownership with Warner Fabrics plc)
Wickes Manufacturing Company Delaware
Wickes Products, Inc. Delaware
Wickes ELCO Corporation(I) Delaware
Wickes Manufacturing Services Company, Inc.(I) Delaware
Wickes Realty, Inc. Delaware
Wickes Venture Capital, Inc.(I) Delaware
Sequoia Pacific Development Company Delaware
Significant Subsidiaries are indicated with an asterisk (*). Inactive
subsidiaries are indicated with an "I". 100% of the outstanding stock of
Collins & Aikman Products Co. is directly owned by Collins & Aikman
Corporation. All other subsidiaries (except Warner & Sons, Ltd.) are wholly
owned, directly or indirectly, by Collins & Aikman Products Co. Except as
otherwise indicated, indirect subsidiaries are shown below and to the right
of the direct subsidiary that owns them.
2
<PAGE>
Schedule 3.12 (b)
to Credit Agreement
OUTSTANDING COMMITMENTS RELATING TO CAPITAL STOCK
None, except, with respect to foreign subsidiaries, as necessary
to comply with foreign laws.
<PAGE>
Schedule 3.17 to
Credit Agreement
TAX RETURNS
(i) Material Claims
The Internal Revenue Service has proposed adjustments which would disallow
approximately $177 million of the approximately $434 million of net
operating loss carryforwards at January 29, 1994.
The California Franchise Tax Board has proposed a tax assessment of
approximately $12 million for fiscal year 1987. The interest on this
assessment is estimated to be $9 million.
(ii) Statute Extensions
<TABLE>
<CAPTION>
Taxing Type of Extension
Authority Tax Entity Period Date
<S> <C> <C> <C> <C>
Federal Income Collins & Aikman Holdings II Corp. & Subs. 1/89 - 1/90 06/30/95
Federal Income Collins & Aikman Holdings II Corp. & Subs. 1/91 12/31/95
Federal Income Collins & Aikman Group, Inc. & Subs. 1/89 - 4/89 06/30/95
Federal Income Collins & Aikman Export Corporation 1/91 12/31/95
Federal Income Collins & Aikman Export Corporation 1/89 - 1/90 06/30/95
Federal Withholding Collins & Aikman Group, Inc. & Subs. 12/88 - 12/90 06/30/95
California Income Collins & Aikman Group, Inc. & Subs. 1/88 11/15/95
California Unemployment Collins & Aikman Group, Inc. 9/90 - 3/91 07/31/94
Illinois Sales/Use Collins & Aikman Corporation 1/91 - 2/94 12/31/94
NY City Income Collins & Aikman Group, Inc. 1/86 - 1/89 12/31/94
NY City Income Greeff Fabrics, Inc. 1/90 - 1/91 12/31/94
</TABLE>
(iii) Tax Examinations
<TABLE>
<CAPTION>
Taxing Type of
Authority Tax Entity Period Under Exam
<S> <C> <C> <C>
Federal Income Collins & Aikman Holdings II & Subs. 1/89 - 1/92
Federal Income Collins & Aikman Group, Inc. & Subs. 1/89 - 4/89
Federal Income Collins & Aikman Export Corporation 1/89 - 1/91
Canada Customs/GST Imperial Wallcoverings (Canada) Inc. 6/91 - 6/94
California Income Collins & Aikman Group, Inc. & Subs. 1/88
California Unemployment Collins & Aikman Group, Inc. 9/90 - 12/93
Florida Sales/Use Imperial Wallcoverings, Inc. 3/88 - 2/93
Illinois Sales/Use Collins & Aikman Corporation 1/91 - 2/94
</TABLE>
2
<PAGE>
Taxing Type of
Authority Tax Entity Period Under Exam
Massachusetts Income Collins & Aikman Group, Inc. 1/89 - 1/90
Massachusetts Income Collins & Aikman Group, Inc. 1/83
Massachusetts Income Wickes Manufacturing Co. 1/90
Mecklenburg
County (NC) Property Collins & Aikman Group, Inc. 1/92 - 12/93
New York Income Collins & Aikman Corporation 1/88 - 1/91
New York Income Wickes Manufacturing Company 1/88 - 1/91
New York City Income Collins & Aikman Group, Inc. 1/86 - 1/89
New York City Income Greeff Fabrics, Inc. 1/90 - 1/91
New York City Income Collins & Aikman Group, Inc. 4/89 - 1/92
North Carolina Income Collins & Aikman Corporation
and Collins & Aikman Lease Co. 1/91 - 1/93
Ohio Income Collins & Aikman Group, Inc. 1/91 - 1/92
Ohio Sales/Use Imperial Wallcoverings, Inc. 2/90 - 1/93
Philadelphia Income Collins & Aikman Corporation 1/88 - 1/93
Texas Sales/Use Collins & Aikman Group, Inc. 1/91 - 4/94
Texas Sales/Use Collins & Aikman Corporation 7/88 - 6/92
(iv) Pending Issues
The Internal Revenue Service has proposed adjustments which would disallow
approximately $177 million of the approximately $434 million of net operating
loss carryforwards at January 29, 1994.
The California Franchise Tax Board has proposed a tax assessment of
approximately $12 million for fiscal year 1987. The interest on this
assessment is estimated to be $9 million.
<PAGE>
SCHEDULE 4.02 (o) TO
CREDIT AGREEMENT
Indebtedness to be Repaid or Redeemed on Closing Date
Collins & Aikman Holdings Corporation Subordinated PIK Bridge
Notes Held by the Government of the State of Kuwait, Kuwait
Investment Office and Broadhorn & Co., c/o State Street Bank
& Trust Co., as nominee for the Phoenix High Yield Fund
Series
Collins & Aikman Group, Inc. (formerly Wickes Companies,
Inc.)
7-1/2%/10% Debentures due January 31, 2005
Collins & Aikman Group, Inc. (formerly Wickes Companies,
Inc.)
11-3/8% Usable Subordinated Debentures due 1997
Collins & Aikman Group, Inc. (formerly Wickes Companies,
Inc.)
11-7/8% Senior Subordinated Debentures due 2001
Collins & Aikman Group, Inc. (formerly Wickes Companies,
Inc.)
15% Subordinated Notes due 1995
Amended And Restated Loan Agreement as of August 3, 1993
Between Canadian Imperial Bank of Commerce, WCA Canada, Inc.,
and Imperial Wallcoverings (Canada) Inc.
$2,500,000 Clinton Industrial Authority 1973 First Mortgage
Revenue Bonds (Wachovia Bank & Trust Company) As amended by
1978 Supplemental First Mortgage Bond Indenture dated as of
August 1, 1978 by and between Trustees of the Clinton
Industrial Authority and Wachovia Bank & Trust Company N.A.
$2,000,000 Clinton Industrial Authority 1978 First Mortgage
Industrial Development Revenue Bonds; Wachovia Bank and Trust
Company N.A (Trustee)
$900,000 Economic Development First Mortgage Revenue Bonds and
Citizens State Bank of New Castle (Trustee); City of New
Castle, Indiana and Commercial Vinyls, Inc.
<PAGE>
SCHEDULE 6.01 TO
CREDIT AGREEMENT
Existing Indebtedness For Borrowed Money
Rhode Island Port Authority and Economic Development Corporation
(the "Lessor") (Old Stone Bank, Trustee) $3,900,000 Industrial
Development Revenue Bonds (secured by Lease Agreements dated as
of May 1, 1979 between Lessor and Imperial Wallpaper Mill, Inc.,
now Imperial Wallcoverings, Inc., as Lessee)
Michigan Strategic Fund $8,000,000 Limited Obligation Revenue
Bonds with Collins & Aikman Corporation and NBD Bank, N.A. as
the Letter of Credit Bank ("NBD") (secured by a Reimbursement
Agreement and a Security Agreement between NBD and Collins &
Aikman Corporation dated as of August 1, 1991 and by Loan
Agreement dated as of August 1, 1991 between Collins & Aikman
Corporation and Michigan Strategic Funds)
Loan Agreements dated December 22, 1993 between Midland Bank plc
and Warner Fabrics plc
Arizona Realty Mortgage and Security Agreement dated April 10,
1974 between DLN Realty Corp.-Arizona (predecessor in interest
to Wickes Asset Management, Inc.) and The Equitable Life
Assurance Society of the United States
Arizona Realty Mortgage and Security Agreement dated November 9,
1972 between DLN Realty Corp.-Arizona (predecessor in interest
to Wickes Asset Management, Inc.) and the Equitable Life
Assurance Society of the United States
Loan Agreement dated August 3, 1984 between Federal Business
Development Bank and Imperial Wallcoverings (Canada), Inc.
(secured by first mortgage bonds, commercial pledges and
floating charges on assets)
Loan Agreement dated October 24, 1984 between Societe de
Developpement Industrial de Quebec and Imperial Wallcoverings,
Inc. (Canada)
<PAGE>
SCHEDULE 6.04 TO
CREDIT AGREEMENT
Existing Liens
Securing Indebtedness For Borrowed Money
Rhode Island Port Authority and Economic Development Corporation
(the "Lessor") (Old Stone Bank, Trustee) $3,900,000 Industrial
Development Revenue Bonds (secured by Lease Agreements dated as
of May 1, 1979 between Lessor and Imperial Wallpaper Mill, Inc.,
now Imperial Wallcoverings, Inc., as Lessee)
Michigan Strategic Fund $8,000,000 Limited Obligation Revenue
Bonds with Collins & Aikman Corporation and NBD Bank, N.A. as the
Letter of Credit Bank ("NBD") (secured by a Reimbursement
Agreement and a Security Agreement between NBD and Collins &
Aikman Corporation dated as of August 1, 1991 and by Loan
Agreement dated as of August 1, 1991 between Collins & Aikman
Corporation and Michigan Strategic Funds)
Loan Agreements dated December 22, 1993 between Midland Bank plc
and Warner Fabrics plc
Arizona Realty Mortgage and Security Agreement dated April 10,
1974 between DLN Realty Corp.-Arizona (predecessor in interest to
Wickes Asset Management, Inc.) and The Equitable Life Assurance
Society of the United States
Arizona Realty Mortgage and Security Agreement dated November 9,
1972 between DLN Realty Corp.-Arizona (predecessor in interest to
Wickes Asset Management, Inc.) and the Equitable Life Assurance
Society of the United States
Loan Agreement dated August 3, 1984 between Federal Business
Development Bank and Imperial Wallcoverings (Canada), Inc.
(secured by first mortgage bonds, commercial pledges and floating
charges on assets)
<PAGE>
SCHEDULE 6.07 TO
CREDIT AGREEMENT
Existing Investments
Description
Class "A" Beneficial Interests ("CBI-AS") in the
Trust Established Under The DBL Liquidating Trust
Agreement and Drexel Partnership Interest ("DPI-AS")
H. Koch & Sons Note
Heckler Manufacturing and Investment Group, Inc.
Note
Heckler Manufacturing and Investment Group, Inc.
Common Stock
H&T Holdings Notes
Clark County, Mississippi Industrial Revenue Bond
Series 1982 (Nazareth Note)
Detroit Body Products, Inc. Note
America Property Investors IV Note
Child & Associates Note, Chowchilla, CA
Circle D Sandblasting Note, Corpus Christi, TX
Lease Assignment to T. J. Maxx, Scottsdale, AZ
Banco De Guatemala Bonds
Applied Science Laboratories Note
Warner Fabrics Note dated December 16, 1993
Warner Fabrics Note dated March 31, 1993
St. Clair, MI IRB Escrow
Wallcoverings/CMT Joint Venture
D. M. Split Dollar Life Insurance
Supplemental Retirement Group Annuity Contract
D. M. Supplemental Retirement Plan
Legwear Acquisition Corporation (K-R) Warrant dated as
of January 28, 1994
<PAGE>
Exhibits
Exhibit A-1 Revolving Credit Note
Exhibit A-2 Delayed Draw Term Note
Exhibit A-3 Term Note
Exhibit A-4 Swingline Note
Exhibit A-5 Canadian Term Note
Exhibit A-6 Intercompany Note
Exhibit B Assignment and Acceptance
Exhibit C Administrative Questionnaire
Exhibit D Form of Guarantee Agreement
Exhibit E Form of Pledge Agreement
Exhibit F Form of Opinion of Cravath, Swaine & Moore,
Elizabeth R. Philipp, Esq. and Stikeman, Elliott
Exhibit G Form of Compliance Certificate
Exhibit H Form of Intercreditor Agreement
Schedules
1.01(A) Applicable Margin
1.01(B) Applicable Prepayment Percentage
1.01(C) Additional Designated Persons
1.01(D) Subordination Terms
2.01 Commitments
2.11(a) Term Loan Amortization Schedule; Canadian Term Loan
Amortization Schedule
3.07(b)(1) Holdings Common Stock By Designated Persons
3.07(b)(2) Options and Rights Regarding Holdings
Capital Stock
3.12(a) Subsidiaries of Holdings
3.12(b) Outstanding Commitments Relating to Capital Stock
3.17 Tax Matters
4.02(o) Indebtedness to be repaid on Closing Date
6.01 Existing Indebtedness
6.04 Existing Liens
6.07 Existing Investments
Exhibit 10.1
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
among
BLACKSTONE CAPITAL PARTNERS L.P.,
WASSERSTEIN PERELLA PARTNERS, L.P.,
COLLINS & AIKMAN CORPORATION
and
COLLINS & AIKMAN GROUP, INC.
Dated as of June 29, 1994
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT, dated as of June 29, 1994, among
BLACKSTONE CAPITAL PARTNERS L.P., a Delaware
limited partnership ("BCP"), WASSERSTEIN
PERELLA PARTNERS, L.P., a Delaware limited
partnership ("WPP"), COLLINS & AIKMAN
CORPORATION, a Delaware corporation (the
"Company"), and COLLINS & AIKMAN GROUP, INC.,
a Delaware corporation ("Group").
WHEREAS BCP, WPP, the Company (as the surviving
corporation from a merger between Collins & Aikman Holdings
Corporation, a Delaware corporation, and Collins & Aikman
Holdings II Corporation, a Delaware corporation, pursuant to
the Recapitalization (as such term is defined in the
Registration Statement on Form S-2 initially filed by the
Company on April 19, 1994, as such Registration Statement
may be amended from time to time)) and Group are parties to
a Stockholders Agreement dated as of December 6, 1988, as
amended by Amendment No. 1 dated as of May 1, 1992 (the
"Stockholders Agreement");
WHEREAS BCP and WPP (or their affiliates) are
entitled to certain fees for the provision of services to
the Company and Group (or their subsidiaries) pursuant to
the Stockholders Agreement and pursuant to an agreement
ratified September 5, 1990 (the "Management and Retainer
Agreement");
WHEREAS in connection with the Recapitalization,
BCP and WPP have agreed (subject to, and effective only
upon, the consummation of the Recapitalization) to reduce
the fees required by the Stockholders Agreement and the
Management and Retainer Agreement; and
WHEREAS the parties to the Stockholders Agreement
wish to otherwise amend the Stockholders Agreement and
restate it in its entirety (subject to, and effective only
upon, the consummation of the Recapitalization).
<PAGE>
NOW, THEREFORE, in consideration of the premises
and the covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Certain Definitions. As used in
this Agreement, the following terms shall have the meanings
specified below:
"Affiliate" shall mean, when used with respect to
any person, any other person which directly or indirectly
beneficially owns or controls 25% or more of the total
voting power of shares of capital stock of such person
having the right to vote for directors under ordinary
circumstances, any person controlling, controlled by or under
common control with any such person (within the meaning of
Rule 405 of the Securities Act), and any director or
executive officer of any such person. "Affiliate" shall in
any event include, when used with respect to WPP,
Wasserstein Perella Co., Inc., Wasserstein Perella Group,
Inc. and Wasserstein Perella Management Partners, Inc. and,
when used with respect to BCP, The Blackstone Group L.P. and
Blackstone Group Holdings L.P.
"Common Stock" shall mean the capital stock of the
Company having the right to vote for directors under
ordinary circumstances.
"Demanding Party" shall mean either BCP or WPP or
both, or any transferee of BCP's or WPP's rights under
Section 3.01 hereof, which party has properly given notice
that it is seeking demand registration pursuant to
Section 3.01 hereof.
"Holder" shall mean BCP and WPP and any person who
becomes a party to this Agreement pursuant to Section 2.03
or 2.04 hereof so long as such person remains the beneficial
owner of Common Stock.
"HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
"Piggyback Party" shall mean either BCP or WPP or
both, or any transferee of BCP's or WPP's rights under
<PAGE>
Section 3.02 hereof, which party has properly given notice
that it is seeking piggyback registration pursuant to
Section 3.02 hereof.
"Registration Right Party" shall mean any
Demanding Party and any Piggyback Party.
"Registration Shares" shall mean (a) the shares of
Common Stock held by BCP or WPP immediately following the
Recapitalization, (b) any shares of Common Stock acquired by
BCP or WPP or Affiliates of BCP or WPP subsequent to the
Recapitalization, and (c) any shares of Common Stock or
other securities issued or issuable with respect to any such
Common Stock (set forth in clauses (a) and (b) above) by way
of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Securities Act" shall mean the Securities Act of
1933, as from time to time amended.
SECTION 1.02. Additional Definitions. Other
capitalized terms not defined in Section 1.01 hereof are
defined in the following Sections:
Term Section
Additional Services 4.02
Affiliate Transfer Agreement 2.04(a)
Affiliate Transferee 2.04(a)
BCP Parties
Company Parties
Company Securities 3.04
Demanding Party 3.01
Demand Registration 3.01
Former Fees 4.01
Group Parties
Holder Offeree 2.05(a)
Company Parties
Company Securities 3.04
Management and Retainer Agreement Recitals
Monitoring Fee 4.01
Offered Shares 2.05(a)
Offering Price 2.06(b)
Offering Terms 2.06(b)
Offeror 2.05(a)
Offer Terms 2.05(a)
Piggyback Registration 3.02(a)
Proposed Purchaser 2.06(b)
<PAGE>
Purchase Offer 2.06(b)
Recapitalization Recitals
Refusal Offeree 2.05(a)
Registration Statement 3.10(a)
Selling Holder 2.06(b)
Stockholders Agreement Recitals
Tag-Along Stockholder 2.06(b)
Third Party Offeree 2.05(a)
Transfer 2.03
Transfer Agreement 2.03
WPP Parties
ARTICLE II
Restrictions on Transfer
SECTION 2.01. General Restrictions. Each Holder
agrees that it shall not, directly or indirectly, offer,
sell, assign, transfer, grant a participation in, pledge, or
create, incur or assume any encumbrance with respect to or
otherwise dispose of, any Common Stock (or solicit any
offers to buy or otherwise acquire, or take a pledge, of any
Common Stock) except (i) in compliance with this Agreement
and with all applicable federal, state and foreign
securities laws, (ii) after having given written notice to
the Company as set forth in this Agreement or, if no notice
is otherwise required by the applicable provisions of this
Agreement, after having given at least three business days
prior written notice to the Company, and (iii) when
requested by the Company, with a written opinion of counsel
(which opinion shall be reasonably satisfactory in form and
substance to the Company) that an exemption from
registration under the Securities Act is available and that
the proposed transaction would not violate applicable
securities laws.
SECTION 2.02. Legends. Each certificate
evidencing outstanding Common Stock that is issued to any
Holder shall bear a legend in substantially the following
form so long as the restrictions set forth in the legend are
applicable to such Common Stock:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), OR BY THE SECURITIES REGULATORY AUTHORITY OF
ANY STATE OF THE UNITED STATES OR BY ANY SUCH AUTHORITY
IN CANADA OR ANY PROVINCE OF CANADA OR OF ANY OTHER
<PAGE>
JURISDICTION. NO REGISTRATION OF TRANSFER OF SUCH
SECURITIES SHALL BE MADE ON THE BOOKS OF THE ISSUER
UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
REGISTRATION OF THE SECURITIES UNDER THE SECURITIES
LAWS OF ANY APPLICABLE JURISDICTIONS OR PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND THE SECURITIES LAWS OF ANY APPLICABLE
JURISDICTIONS.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER
RESTRICTIONS AS SET FORTH IN THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT, DATED AS OF JUNE 29, 1994, AS
SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME, COPIES
OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE ISSUER. NO REGISTRATION OF TRANSFER OF SUCH
SECURITIES SHALL BE MADE ON THE BOOKS OF THE ISSUER
UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN
COMPLIED WITH.
When either paragraph of the preceding legend ceases to
apply to any Common Stock and upon the request of the holder
of such Common Stock, the Company shall issue a new
certificate or certificates to such holder without the
inapplicable portions of such legend in exchange for the
certificate or certificates held by such holder.
SECTION 2.03. Agreements to be Bound. Each
Holder agrees that it shall not (except as required by law),
directly or indirectly, sell, assign, transfer, grant a
participation in or pledge (each, to "Transfer") any Common
Stock to any transferee if following such Transfer such
transferee and its Affiliates, if any, will be the
beneficial owner or owners of in aggregate 10% or more of
the then outstanding shares of Common Stock or a member of a
group, within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, that is such an owner,
provided, however, that the foregoing restriction shall not
apply to any Transfer to a transferee where the transferee
has, prior to such Transfer, executed a Transfer Agreement,
substantially in the form attached hereto as Exhibit A,
which shall cause such transferee to be bound by the
obligations of this Agreement as a Holder (yet not receive
the benefits of this Agreement except as expressly
transferred in such Transfer Agreement pursuant to a
provision of this Agreement allowing such transfer), a copy
of which Transfer Agreement shall be maintained on file with
<PAGE>
the Secretary of the Company and shall include the address
of such transferee to which notices hereunder shall be sent.
Each such Transfer Agreement shall become effective upon its
execution by the transferee of the Common Stock (and shall
not require the signature or consent of any other Holder)
and delivery to all the parties hereto.
SECTION 2.04. Transfers to Affiliates, General
Partners and Limited Partners. (a) Each of BCP and WPP may
Transfer any Common Stock held by it, in whole or in part,
to any of its Affiliates without incurring any obligations
pursuant to Sections 2.05 or 2.06 hereof, provided that
prior to any such Transfer such Affiliate of BCP or WPP (an
"Affiliate Transferee"), shall execute and deliver to the
parties hereto (i) an Affiliate Transfer Agreement,
substantially in the Form attached hereto as Exhibit B,
which shall cause such Affiliate Transferee to be bound by
the obligations of, and enjoy the benefits of, this
Agreement as a successor to BCP or WPP, respectively, with
such Affiliate Transfer Agreement becoming effective upon
its execution by the Affiliate Transferee and delivery to
all the parties hereto and (ii) an irrevocable proxy
granting to BCP, in the case of an Affiliate Transferee of
BCP, or to WPP, in the case of an Affiliate Transferee of
WPP, all voting rights with respect to the Common Stock so
transferred. Such Affiliate Transferee shall also agree
that it shall not cease to be an Affiliate of BCP or WPP,
as the case may be, unless prior to the time such Affiliate
Transferee ceases to be an Affiliate of BCP or WPP, such
Affiliate Transferee transfers to BCP or WPP, as the case
may be, or to an Affiliate thereof designated by BCP or WPP,
as the case may be, who has become bound by the terms of
this Agreement pursuant to this Section 2.04, all shares of
Common Stock owned by such Affiliate Transferee, and BCP and
WPP hereby agree to cause such Affiliate Transferee prior to
the time it ceases to be an Affiliate of BCP or WPP to so
transfer such Common Stock.
(b) Each of BCP and WPP may Transfer any Common
Stock held by it, in whole or in part, to any of its or its
Affiliates' limited partners that is not an Affiliate of BCP
or WPP (a "Partner Transferee") without incurring any
obligations pursuant to Sections 2.05 or 2.06 hereof,
provided that if, following any Transfer pursuant to this
Section 2.04(b), any Partner Transferee combined with its
Affiliates, if any, will be the beneficial owner or owners
of in aggregate 10% or more of the then outstanding shares
<PAGE>
of Common Stock, such Partner Transferee shall enter into a
Transferee Agreement as provided in Section 2.03 hereof.
SECTION 2.05. Right of First Refusal. (a) In the
event that any Holder (the "Offeror") shall have made an
offer to, or shall have an offer from, a third party (the
"Third Party Offeree") to sell or otherwise transfer shares
of Common Stock owned by such Holder in one transaction or
from time to time in a series of transactions (except in a
registered public offering or pursuant to Rule 144 under the
Securities Act), the Holder Offeree (as defined below) and
the Company shall have a right of first refusal with respect
to such Common Stock as set forth below. Prior to such sale
or transfer of shares of Common Stock to the Third Party
Offeree, the Offeror shall offer such Common Stock (the
"Offered Shares") for purchase by BCP, in the case of WPP
and Affiliates or transferees of WPP, or by WPP, in the case
of BCP and Affiliates or transferees of BCP (the "Holder
Offeree"), as hereinafter provided by notifying the Holder
Offeree in writing of such offer, setting forth the terms
and conditions of sale and the price at which the Offeror
proposes to sell the Offered Shares (the "Offer Terms") and
the identity of the Third Party Offeree (with a copy of such
notice given to the Company concurrently with such notice to
the Holder Offeree). The giving of such notice shall
constitute an offer by the Offeror, irrevocable during the
20-day period referred to in and subject to the terms of
this Section 2.05, to sell to the Holder Offeree the Offered
Shares on the Offer Terms. The Holder Offeree shall have a
period of 20 days after the receipt of such notice from the
Offeror in which to notify the Offeror in writing that it
(or any of its Affiliates) elects to purchase the Offered
Shares upon the Offer Terms. If the Holder Offeree (or any
of its Affiliates) elects to purchase the Offered Shares, it
shall give irrevocable notice of such election to the
Offeror within such 20-day period. If the Holder Offeree
does not give notice to the Offeror within such 20-day
period or at any time during such 20-day period the Holder
Offeree gives notice that it does not elect to purchase the
Offered Shares, the Offeror shall offer the Offered Shares
for purchase by the Company (together with the Holder
Offeree, the "Refusal Offerees") by notifying the Company in
writing of such offer, setting forth the Offer Terms and the
identity of the Third Party Offeree. The giving of notice
shall constitute an offer by the Offeror, irrevocable during
the 10 days following the Company's receipt of such notice,
to sell to the Company the Offered Shares on the Offer
Terms. During such 10-day period, the Company may
<PAGE>
irrevocably notify the Offeror in writing that it (or any of
its Affiliates other than BCP and WPP) elects to purchase
the Offered Shares upon the Offer Terms. If the Company
does not give notice to the Offeror within such 10-day
period or at any time during such 10-day period the Company
gives notice that it does not elect to purchase the Offered
Shares, the Offeror shall be free to sell the Offered Shares
to the Third Party Offeree on the Offer Terms (or, if there
has been a material change in the facts considered by the
Offeror and the Third Party Offeree in arriving at the Offer
Terms, at a price which is at least 90% of the offered price
and upon terms which are at least as favorable to the
Offeror as the Offer Terms) provided that (i) such sale to
the Third Party Offeree shall be consummated within 45 days
after the 10-day period referred to above and (ii) the
Offeror shall furnish to the Refusal Offerees (x) a
certificate of an officer of the Offeror specifying the
price and other material terms of sale to the Third Party
Offeree, (y) a written instrument of the Third Party Offeree
pursuant to which the Third Party Offeree represents and
warrants that it is acquiring the Offered Shares for its own
account and not for purposes of distribution thereof and
(z) a Transfer Agreement of the Third Party Offeree pursuant
to Section 2.03 hereof in which the Third Party Offeree
agrees to be bound by the obligations of this Agreement;
provided, however, that clause (ii)(z) of this Section
2.05(a) shall apply only if, following such sale of Offered
Shares, the Third Party Offeree and its Affiliates will be
the beneficial owner or owners of in the aggregate 10% or
more of the then outstanding shares of Common Stock or a
member of a group, within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, that is such an owner.
(b) In the event that a Refusal Offeree (or any
of its Affiliates) elects to purchase the Offered Shares
pursuant to paragraph (a) of this Section 2.05, the Offeror
(including any Tag-Along Stockholders selling pursuant to
Section 2.06 hereof) shall be obligated to sell to such
Refusal Offeree (or its Affiliates), and such Refusal
Offeree (or its Affiliates) shall be obligated to purchase
from the Offeror (and Tag-Along Stockholders), the Offered
Shares upon the Offer Terms. The written notice of election
given to the Offeror pursuant to paragraph (a) of this
Section 2.05 shall specify the place and date (not later
than the later of 45 days from the date such notice is given
and the expiration of any applicable waiting period under
the HSR Act) for the closing of such purchase. At the
closing of a purchase of Offered Shares hereunder, the
<PAGE>
Refusal Offeree (or its Affiliates) shall pay to the Offeror
(and Tag-Along Stockholders) the purchase price for all the
Offered Shares in accordance with paragraph (a) of this
Section 2.05 and the Offeror (and Tag-Along Stockholders)
will deliver or cause to be delivered to the Refusal Offeree
(or its Affiliates) a certificate or certificates
representing the Offered Shares, duly endorsed or
accompanied by appropriate stock powers duly executed in
blank and a certificate containing the representation
described in clause (iii) of the next sentence. The
obligation of the Offeror (and Tag-Along Stockholders) to
deliver the Offered Shares and the Refusal Offeree (or its
Affiliates) to purchase the Offered Shares at such closing
shall be subject only to the conditions that (i) no
preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or
commission shall be in effect which would prohibit such sale
and delivery, (ii) any applicable waiting period under the
HSR Act shall have expired and any other applicable
governmental approvals and clearances shall have been
obtained and (iii) with respect to the obligation of the
Refusal Offeree (or its Affiliates), the Offeror shall
deliver to the Refusal Offeree (or its Affiliates) a
representation in form and substance reasonably satisfactory
to the Refusal Offeree (or its Affiliates) that the Offeror
(and Tag-Along Stockholders) has good and marketable title
to the Offered Shares, free and clear of all liens, claims,
encumbrances and security interests, and that the Offeror
(and Tag-Along Stockholders) has full right, power and
authority to effect such sale.
(c) A Holder shall be entitled to rights under
this Section 2.05 only so long as such Holder (combined with
its Affiliates) beneficially owns 8% or more of the then
outstanding shares of Common Stock.
SECTION 2.06. Tag-Along Rights. (a) Anything in
this Agreement to the contrary notwithstanding, if any
Holder or group of Holders proposes, in a single transaction
or from time to time in a group of related transactions, to
sell or otherwise dispose of an amount of Common Stock equal
to 5% or more of the shares of Common Stock then outstanding
(other than (a) to an Affiliate of such Holder(s), (b) in a
registered public offering or (c) pursuant to Rule 144 of
the Securities Act), such Holder(s) shall refrain from
effecting such transaction(s) unless, prior to the
consummation thereof, BCP and WPP (and their Affiliates)
<PAGE>
shall have been afforded the opportunity to join in such
transfer as provided in clause (b) of this Section 2.06.
(b) Prior to the consummation of any transaction
subject to this Section 2.06, the Holder or Holders that
propose(s) to sell shares of Common Stock in a transaction
or series of related transactions (the "Selling Holder")
shall offer (the "Purchase Offer") in writing to BCP and WPP
(collectively with the Affiliates of BCP and WPP, the
"Tag-Along Stockholders") the option, exercisable by written
notice to such Selling Holder within 15 days after receipt
of the Purchase Offer, to require the Selling Holder to
arrange for the proposed purchaser or purchasers (the
"Proposed Purchaser") to purchase at the same time as the
purchase from the Selling Holder, the number of shares
described below at the price per share (the "Offering
Price") at which and on the terms and conditions (the
"Offering Terms") on which the Proposed Purchaser purchases
the shares of Common Stock of the Selling Holder. If any of
the Tag-Along Stockholders shall so elect, the Selling
Holder shall arrange for the Proposed Purchaser to purchase
the total number of shares of Common Stock as originally
agreed upon between the Selling Holder and the Proposed
Purchaser but from both the Selling Holder and the Tag-Along
Stockholder, pro rata in the proportion to each such
seller's total beneficial ownership of Common Stock
immediately prior to the Purchase Offer, provided, however,
that the Tag-Along Stockholder may elect, in its original
written notice to the Selling Holder, to sell an amount of
Common Stock less than such pro rata amount. In the event
that a sale or other transfer subject to this Section 2.06
is to be made, the Selling Holder shall notify the Proposed
Purchaser that the sale or other transfer is subject to this
Section 2.06 and shall ensure that no sale or other transfer
is consummated without first complying with this Section
2.06.
(c) A Holder shall be entitled to rights under
this Section 2.06 only so long as such Holder (combined with
its Affiliates) beneficially owns 4% or more of the then
outstanding shares of Common Stock.
SECTION 2.07. Prohibition on Encumbrance. No
Holder shall pledge, hypothecate or grant a security
interest in any of the shares of Common Stock held by it;
provided, however, that a Holder may pledge, hypothecate or
grant a security interest in such shares to a lender if such
lender agrees in writing to be bound by the terms of this
<PAGE>
Agreement (and acknowledges that it shall not receive any of
the rights granted to Holders under this Agreement) and such
lender is not granted any voting rights prior to
foreclosure.
ARTICLE III
Registration Rights
SECTION 3.01. Demand Registrations. At any time
following the Recapitalization, the Company shall, upon the
written demand of BCP or WPP (the "Demanding Party"), use
its best efforts to effect the registration (a "Demand
Registration") under the Securities Act of such number of
Registration Shares then beneficially owned by the Demanding
Party and its Affiliates as shall be indicated in a written
demand by the Demanding Party sent to the Company and to the
other Holders, if any, with demand rights pursuant to this
Section 3.01; provided, however, that as to each of BCP and
WPP (a) the Company shall be obligated to effect a total of
no more than five Demand Registrations, with no more than
two such Demand Registrations in any twelve month period,
with the first such Demand Registration occurring no earlier
than January 1, 1995 (unless this date restriction is waived
by the Company); (b) the Company shall not be obligated to
effect a Demand Registration unless the total number of
shares of Common Stock proposed to be registered by such
Demanding Party equals (x) at least 5% of the total number
of Registration Shares held by such Demanding Party
immediately following the Recapitalization or (y) all of
such Demanding Party's Common Stock, (c) if a registration
pursuant to this Section 3.01 involves an underwritten
offering and the managing underwriter advises the Company
that, in the opinion of such managing underwriter, the
number of Registration Shares proposed to be included in
such registration would have a material adverse effect on
the success of the offering, then the Company will include
in such registration only the number of Registration Shares
requested to be included in such registration that, in the
opinion of such managing underwriter, can be successfully
sold, (d) a Demand Registration shall not count as such
until it has become effective, except that if, after it has
become effective, the offering of Registration Shares
pursuant to such registration is interfered with by any stop
order, injunction or other order or requirement of the SEC
or any other governmental authority, such registration shall
be deemed not to have been effected unless such stop order,
<PAGE>
injunction or other order or requirement shall subsequently
have been vacated or otherwise removed. Upon receipt of the
Demanding Party's written demand and subject to Section 3.04
hereof, the Company shall expeditiously effect the
registration under the Securities Act of the Registration
Shares and use its best efforts to have such registration
become and remain effective as provided in Section 3.10.
The Demanding Party, together with any other party
participating in the Demand Registration pursuant to
Section 3.02 hereof (unless such other party is registering
less than 80% of the amount of Registration Shares being
registered by the Demanding Party), shall have the right to
select the managing underwriter for a Demand Registration.
SECTION 3.02. Piggyback Registrations. (a) If
the Company proposes to register, or is caused to register
pursuant to a demand registration, any Common Stock under
the Securities Act for sale for cash (otherwise than in
connection with the registration of Common Stock issuable
pursuant to an employee or director stock option, stock
purchase or similar plan or pursuant to a merger, exchange
offer or a transaction of the type specified in Rule 145(a)
under the Securities Act), the Company shall give BCP and
WPP notice of such proposed registration at least 15 days
prior to the filing of a registration statement. At the
written request of BCP or WPP delivered to the Company
within 10 days after the receipt of the notice from the
Company, which request shall state the number of
Registration Shares that such party wishes to sell or
distribute publicly under the registration statement pro-
posed to be filed by the Company, the Company shall use its
best efforts to register under the Securities Act such
Registration Shares, and to cause such registration (a
"Piggyback Registration") to become and remain effective as
provided in Section 3.10. In a piggyback registration
pursuant to this Section 3.02 (other than a piggyback
registration on a Demand Registration), the managing
underwriter shall be selected by the Company in consultation
with the Piggyback Party or Piggyback Parties, as the case
may be.
(b) If a Piggyback Registration is an under-
written primary registration on behalf of the Company, and
the managing underwriters thereof advise the Company in
writing that in their opinion the number of shares of Common
Stock requested to be included in the registration exceeds
the number which can be sold in the offering, the Company
shall include in the registration (i) first, the Common
<PAGE>
Stock the Company proposes to sell and (ii) second, the
Registration Shares that BCP or WPP propose to sell divided
pro rata between BCP and WPP based on the total beneficial
ownership of Common Stock of each of BCP and WPP,
respectively, at the time notice is given to the Company by
such managing underwriters. Any Piggyback Party shall be
given prompt notice by the Company of any such cutback.
(c) If a Piggyback Registration is an under-
written secondary registration on behalf of a Demanding
Party and the managing underwriters thereof advise the
Company in writing that in their opinion the number of
shares of Common Stock requested to be included in the
registration exceeds the number which can be sold in the
offering, the Company shall include in the registration (i)
first, a pro rata amount of each of BCP and WPP's
Registration Shares, based on the total beneficial ownership
of Common Stock of each of BCP and WPP, respectively, at the
time notice is given to the Company by such managing
underwriters, until one such party has had all shares so
demanded included and (ii) second, the Registration Shares
of the other party, if any. Any Piggyback Party shall be
given prompt notice by the Company of any such cutback. In
the event the Company subsequently desires to participate in
such a registration of securities, the Company shall include
in the registration (A) first, the Registration Shares BCP
and WPP propose to sell and (B) second, the Common Stock
that the Company proposes to sell.
SECTION 3.03. Lock-up. Each Holder hereby agrees
that, in connection with any public offering effected
pursuant to this Article III, such Holder will, if so
requested by the managing underwriter of such offering,
enter into a customary lock-up agreement not to transfer any
Common Stock held by it for a period of up to 90 days
following such offering (such lock-up agreement in form and
substance acceptable to such managing underwriter).
SECTION 3.04. The Company's Right to Delay Demand
Registration. The Company shall not be obligated to file a
registration statement relating to any Demand Registration
pursuant to Section 3.01 hereof if counsel to the Company
renders an opinion, in form and substance reasonably
satisfactory to the Demanding Party, to the effect that
registration is not required for the proposed transfer of
Registration Shares or if a post-effective amendment to an
existing registration statement would be sufficient for such
proposed transfer (and the Company files such a post-
<PAGE>
effective amendment to effect the proposed transfer). The
Company may delay filing the registration statement relating
to any Demand Registration pursuant to Section 3.01 hereof
for not more than 60 days if (i) in the case of an
underwritten offering, the Company has filed, or has taken
substantial steps toward filing, a registration statement
relating to any of the Company's securities (the "Company
Securities"), and the managing underwriter is of the opinion
that the filing of a registration statement with respect to
the Demand Registration would adversely affect the offering
by the Company of Company Securities, or (ii) the Board of
Directors of the Company determines in good faith, by
resolution, that the filing of a registration statement
would, if not so deferred, materially and adversely affect a
then proposed or pending financial project, acquisition,
merger or corporate reorganization.
SECTION 3.05. Indemnification by the Company. In
the event of any registration of any Registration Shares
under the Securities Act, the Company shall, and hereby
does, indemnify and hold harmless each Registration Rights
Party, its directors and officers, each other person who
participates as an underwriter in the offering or sale of
such Registration Shares and each other person, if any, who
controls such Registration Rights Party or any such
underwriter within the meaning of Section 15 of the Securities
Act against any losses, claims, damages or liabilities,
joint or several, to which such Registration Rights Party or
any such director or officer or underwriter or controlling
person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under
which the Registration Shares were registered under the
Securities Act, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and
the Company shall reimburse each Registration Rights Party,
and each such director, officer, underwriter and controlling
person for any legal or any other expenses reasonably
incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that the Company shall not be
<PAGE>
liable in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with
written information about a Registration Rights Party
furnished to the Company through an instrument duly executed
by or on behalf of such Registration Rights Party,
specifically stating that it is for use in the preparation
thereof; and provided further, however, that the Company
shall not be liable to any person who participates as an
underwriter in the offering or sale of Registration Shares
or any other person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case
to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense
arises out of such person's failure to send or give a copy
of the final prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue
statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale
of Registration Shares to such person if such statement or
omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of a Registration
Rights Party or any such director, officer or controlling
person and shall survive the transfer of the Registration
Shares by such Registration Rights Party.
SECTION 3.06. Indemnification by the Registration
Rights Party. The Company may require, as a condition to
including any Registration Shares in any registration
statement filed pursuant to Section 3.01 or 3.02, that the
Company shall have received an undertaking reasonably
satisfactory to it from the Registration Rights Party to
indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 3.05) the Company, each
director of the Company, each officer of the Company signing
such registration statement and each other person, if any,
who controls the Company within the meaning of Section 15 of
the Securities Act with respect to any untrue statement or
alleged untrue statement of any material fact in such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein or any
amendment or supplement thereto, or omission to state
therein a material fact required to be stated therein or
<PAGE>
necessary to make the statements therein in light of the
circumstances in which they were made not misleading, if
such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and
in conformity with written information about the
Registration Rights Party as a shareholder of the Company
furnished to the Company through an instrument duly executed
by the Registration Rights Party specifically stating that
it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any
such director, officer or controlling person and shall
survive the transfer by the seller of the securities of the
Company being registered.
SECTION 3.07. Notices of Claims, etc. Promptly
after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim
referred to in Section 3.05 or 3.06, such indemnified party
will, if a claim in respect thereof is to be made against an
indemnifying party, give notice to the latter of the
commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under Section 3.05 or 3.06, except to the extent
that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist or the
indemnified party may have defenses not available to the
indemnifying party in respect of such claim, the indemnify-
ing party shall be entitled to participate in and to assume
the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnify-
ing party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection
with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable for
any settlement of any action or proceeding effected without
its written consent. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
<PAGE>
claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.
SECTION 3.08. Other Indemnification. Indemnifi-
cation similar to that specified in Section 3.05 and 3.06
hereof (with appropriate modifications) shall be given by
the Company and the Registration Rights Party with respect
to any required registration or other qualification of
Registration Shares under any Federal or state law or
regulation of any Governmental Authority other than the
Securities Act.
SECTION 3.09. Indemnification Payments. The
indemnification required by this Article III shall be made
by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
SECTION 3.10. Registration Covenants of the
Company. In the event that any Registration Shares of the
Registration Rights Party are to be registered pursuant to
Section 3.01 or 3.02 hereof, the Company covenants and
agrees that it shall use its best efforts to effect the
registration and cooperate in the sale of the Registration
Shares to be registered and shall as expeditiously as
possible:
(a) (i) prepare and file with the SEC a registra-
tion statement with respect to the Registration Shares
(as well as any necessary amendments or supplements
thereto) (a "Registration Statement") and (ii) use its
best efforts to cause the Registration Statement to
become effective;
(b) prior to the filing described above in Section
3.10(a), furnish to the Registration Rights Party
copies of the Registration Statement and any amendments
or supplements thereto and any prospectus forming a
part thereof, which documents shall be subject to the
review of counsel for the Registration Rights Party
(but not approval of such counsel except with respect
to any statement in the Registration Statement which
relates to the Registration Rights Party);
(c) notify the Registration Rights Party, promptly
after the Company shall receive notice thereof, of the
time when the Registration Statement becomes effective
or when any amendment or supplement or any prospectus
<PAGE>
forming a part of the Registration Statement has been
filed;
(d) notify the Registration Rights Party promptly
of any request by the SEC for the amending or
supplementing of the Registration Statement or
prospectus or for additional information;
(e) (i) advise the Registration Rights Party after
the Company shall receive notice or otherwise obtain
knowledge of the issuance of any order by the SEC
suspending the effectiveness of the Registration
Statement or any amendment thereto or of the initiation
or threatening of any proceeding for that purpose and
(ii) promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal
promptly if a stop order should be issued;
(f) (i) prepare and file with the SEC such amend-
ments and supplements to the Registration Statement and
the prospectus forming a part thereof as may be
necessary to keep the Registration Statement effective for
the lesser of (A) a period of time necessary to permit
the Registration Rights Party to dispose of all its
Registration Shares and (B) 30 days and (ii) comply
with the provisions of the Securities Act with respect
to the disposition of all Registration Shares covered
by the Registration Statement during such period in
accordance with the intended methods of disposition by
the Registration Rights Party set forth in the
Registration Statement;
(g) furnish to the Registration Rights Party such
number of copies of the Registration Statement, each
amendment and supplement thereto, the prospectus
included in the Registration Statement (including each
preliminary prospectus) and such other documents as the
Registration Rights Party may reasonably request in
order to facilitate the disposition of the Registration
Shares owned by the Registration Rights Party;
(h) use its best efforts to register or qualify
such Registration Shares under such other securities or
blue sky laws of such jurisdictions as determined by
the underwriters after consultation with the Company
and the Registration Rights Party and do any and all
other acts and things which may be reasonably necessary
or advisable to enable the Registration Rights Party to
<PAGE>
consummate the disposition in such jurisdictions of the
Registration Shares (provided that the Company shall
not be required to (i) qualify generally to do business
in any jurisdiction in which it would not otherwise be
required to qualify but for this Section 3.10(h), (ii)
subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such
jurisdiction);
(i) notify the Registration Rights Party, at any
time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening
of any event as a result of which the Registration
Statement would contain an untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, and, at the request
of the Registration Rights Party, prepare a supplement
or amendment to the Registration Statement so that the
Registration Statement shall not, to the Company's
knowledge, contain an untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary to make the statements
therein not misleading;
(j) if the Common Stock is not then listed on a
securities exchange, and if the NASD is reasonably
likely to permit the reporting of the Common Stock on
NASDAQ, use its best efforts, consistent with the then-
current corporate structure of the Company, to
facilitate the reporting of the Common Stock on NASDAQ;
(k) provide a transfer agent and registrar, which
may be a single entity, for all the Registration Shares
not later than the effective date of the Registration
Statement;
(l) enter into such customary agreements (includ-
ing an underwriting agreement in customary form) and
take all such other action, if any, as the Registration
Rights Party or the underwriters shall reasonably
request in order to expedite or facilitate the
disposition of the Registration Shares pursuant to this
Article III;
(m) (i) make available for inspection by the
Registration Rights Party, any underwriter
participating in any disposition pursuant to the
<PAGE>
Registration Statement and any attorney, accountant or
other agent retained by the Registration Rights Party
or any such underwriter all relevant financial and
other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's
officers, directors and employees to supply all
relevant information reasonably requested by the
Registration Rights Party or any such underwriter,
attorney, accountant or agent in connection with the
Registration Statement;
(n) use its best efforts to cause the Registration
Shares covered by the Registration Statement to be
registered with or approved by such other Governmental
Authorities as may be necessary to enable the
Registration Rights Party to consummate the disposition
of such Registration Shares; and
(o) cause the Company's independent public
accountants to provide a comfort letter in customary
form and covering such matters of the type customarily
covered by comfort letters.
SECTION 3.11. Shelf Registrations. If a
Demanding Party shall demand a shelf registration pursuant
to paragraph (a) of this Section 3.01 or a Piggyback Party
shall piggyback on a shelf registration pursuant to Section
3.02 hereof, such Demanding Party or Piggyback Party shall
have 30 days from the time such shelf registration is
declared effective by the Securities and Exchange Commission
to distribute all Registration Shares so registered.
SECTION 3.12. Expenses. In connection with any
Demand Registration pursuant to Section 3.01, the Company
shall pay all registration, filing and NASD fees, all fees
and out-of-pocket expenses of complying with securities or
blue sky laws, all word processing, duplicating and printing
expenses, all messenger and delivery expenses, the
reasonable fees and disbursements of the Company's
independent public accountants for services required because
of the Demand Registration (including the expenses of
comfort letters required for the Demand Registration) and
any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities. In any registration,
(i) the Registration Rights Party shall pay for its own
underwriting discounts and commissions and transfer taxes
and (ii) each of the Company and the Registration Rights
Party shall pay for its own counsel.
<PAGE>
SECTION 3.13. Assignment of Registration
Rights. BCP and WPP may assign their rights under this
Article III in whole or in part to anyone to whom BCP or
WPP, respectively, sells, transfers or assigns any of the
Registration Shares (other than in sales pursuant to Rule
144 under the Securities Act or a registered public sale);
provided, however, that no assignment shall increase the
Company's obligations to effect registrations or pay
expenses thereof.
SECTION 3.14. Other Registration Rights. The
Company shall not grant any right of registration under the
Securities Act relating to any of its securities to any
person other than BCP, WPP or an assignee of BCP or WPP
unless BCP and WPP shall be entitled to have included in any
piggyback registration pursuant to such grant a number of
Registration Shares requested by BCP and WPP to be so
included representing at least 30% of such offering prior to
the inclusion of any securities requested to be registered
by the persons entitled to any such registration rights.
SECTION 3.15. Rule 144. So long as the Company
is subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall take all
actions reasonably necessary to enable BCP and WPP to sell
the Registration Shares without registration under the
Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC, including filing on
a timely basis all reports required to be filed by the
Company by the Exchange Act. Upon the request of BCP or
WPP, the Company shall deliver to BCP or WPP a written
statement as to whether it has complied with such
requirements.
ARTICLE IV
Fees and Other Payments
SECTION 4.01. Monitoring Fee. Following the
consummation of the Recapitalization, Group (or any of its
subsidiaries or affiliates, on Group's behalf) shall pay an
annual monitoring fee of $1,000,000 per year to each of BCP
and WPP (the "Monitoring Fee"). Following the consummation
of the Recapitalization, the annual operating management fee
<PAGE>
set forth in Section 6.4 of the Stockholders Agreement and
the Management and Retainer Services Fee set forth in the
Management and Retainer Agreement (collectively, the "Former
Fees") shall no longer be payable (although BCP and WPP or
their affiliates shall not be required to refund any portion
of the Former Fees already paid at the time of the
Recapitalization). The Monitoring Fee shall be payable in
quarterly installments at the beginning of each quarter
commencing after the consummation of the Recapitalization.
In consideration of the Monitoring Fee, each of BCP and WPP
shall provide personnel to monitor the management of the
Company and its subsidiaries, including Group. Such
personnel shall not receive any separate compensation for
such services except as provided herein, but such personnel
(or BCP or WPP on their behalf) shall be entitled to
reimbursement of their reasonable out-of-pocket expenses in
connection therewith, including travel expenses, and shall
provide documentation of such expenses to the Company upon
request.
SECTION 4.02. Other Fees Not Precluded.
Notwithstanding the foregoing, nothing contained herein
shall preclude BCP and WPP or their Affiliates from
receiving fees in addition to the Monitoring Fee; provided
that any such fees shall be for services ("Additional
Services") in addition to providing personnel to monitor the
management of the Company and its subsidiaries. Additional
Services may include, but are not limited to, services in
connection with transactions such as acquisitions,
divestitures, the negotiation of credit agreements or
amendments thereto, sales and dispositions of assets or
subsidiaries, public or private offerings of debt or equity
securities, work-outs and other traditional or nontraditional
investment banking, consultant or management services.
SECTION 4.03. Compensation of Directors. Each
director of the Company and Group who is not a full-time
employee thereof shall receive reimbursement of out-of-pocket
expenses incurred in connection with attendance at
meetings of, and other activities relating to, serving on
the Boards of Directors and any committees thereof.
Following the Recapitalization, a director's fee of $40,000
per year, payable quarterly, for each such director shall be
paid to each such director unless and to the extent that WPP
or BCP shall notify the Company or Group that it should
receive the director's fees for the directors that it has
the right to designate to the Boards of Directors of the
<PAGE>
Company and Group. Nothing contained herein shall preclude
the Boards of Directors of the Company or Group from
increasing director's fees or authorizing directors stock
options or additional director's fees.
SECTION 4.04. Accrual of Payments. To the extent
that the payment of any of the fees, expenses or other
compensation provided for in this Agreement is not timely
made, such fees, expenses or other compensation shall be
accrued, together with interest thereon at the rate of
interest announced publicly in New York, New York, from time
to time by Citibank, N.A., as its base rate and shall be
paid as soon as practicable.
ARTICLE V
Miscellaneous
SECTION 5.01. Amendment and Restatement of the
Stockholders Agreement; Complete Agreement. Subject to, and
effective only upon, the consummation of the
Recapitalization, this Agreement shall constitute an
amendment and restatement of the Stockholders Agreement.
This Agreement constitutes the entire agreement and
understanding among the parties hereto with respect to the
matters referred to herein and supersedes all prior
agreements and understandings among the parties hereto with
respect to the matters referred to herein, including,
without limitation, the Stockholders Agreement and the
Management and Retainer Agreement.
SECTION 5.02. No Inconsistent Agreements.
Neither the Company nor any of its subsidiaries shall, and
BCP and WPP shall not permit the Company or any of its
subsidiaries to, enter into any agreement inconsistent with
the terms of this Agreement.
SECTION 5.03. Amendment. Except as otherwise
expressly provided herein, this Agreement may not be
amended, modified or supplemented and no waivers of or
consents to departures from the provisions hereof may be
given unless consented to in writing by each of the parties
hereto.
SECTION 5.04. Notices. All notices, statements,
instructions or other documents provided for herein shall be
in writing and shall be either transmitted by facsimile or
<PAGE>
delivered either personally or by mailing the same in a
sealed envelope, first-class mail, postage prepaid and
either certified or registered, return receipt requested,
addressed as follows: ,
For notices and communications to the Company or
Group:
210 Madison Avenue
New York, NY 10016
Attention: Elizabeth R. Philipp, Esq.
and
8320 University Executive Park
Suite 102
Charlotte, NC 28262
Attention: Corporate Counsel
For notices and communications to BCP:
118 North Bedford Road
Suite 300
Mount Kisco, New York 10549
Attention: Mr. David A. Stockman
For notices and communications to WPP:
31 West 52nd Street
New York, New York 10019
Attention: Mr. Randall J. Weisenburger
Each party, by written notice given to the other parties in
accordance with this Section 5.04, may change the address to
which notices, statements, instructions or other documents
are to be sent to such party. All notices, statements,
instructions and other documents hereunder shall be deemed
to have been given on the earlier of the date of actual or
facsimile delivery and three days after the date of mailing,
except that notice of a change of address shall be effective
only upon actual delivery.
<PAGE>
SECTION 5.05. Successors; Assigns. The terms and
conditions of this Agreement shall be binding on and inure
to the benefit of the respective successors and permitted
assigns of the parties hereto.
SECTION 5.06. Counterparts. This Agreement may
be executed by the parties hereto in any number of
counterparts, each of which shall be deemed to be an
original, but all of which shall together constitute one and
the same instrument.
SECTION 5.07. Severability. The invalidity,
illegality or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this
Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement or such provision in any
other jurisdiction, it being the intent of the parties
hereto that all rights and obligations of the parties hereto
under this Agreement shall be enforceable to the fullest
extent permitted by law.
SECTION 5.08. Headings. The section headings
herein are for convenience of reference only and in no way
define, limit or extend the scope or intent of this
Agreement or any provisions hereof.
SECTION 5.09. Applicable Law. The laws of the
State of Delaware shall govern this Agreement, regardless of
the laws that might be applied under applicable principles
of conflicts of laws.
SECTION 5.10. Term of the Agreement. This
Agreement shall become effective only upon consummation of
the Recapitalization and shall expire 10 years after the
date hereof unless extended by the parties hereto.
SECTION 5.11. No Third-Party Beneficiaries. This
Agreement is intended to be solely for the benefit of the
parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
SECTION 5.12. Specific Performance. Each party
hereto acknowledges that its failure to comply with the
provisions of this Agreement will result in irreparable and
continuing damage to the other parties hereto for which
there will be no adequate remedies at law and that, in the
<PAGE>
event of a failure of any party hereto to comply with the
terms of this Agreement, the other parties hereto shall be
entitled to injunctive relief, without the necessity of
proving actual damages and without being required to post a
bond or other security, and to such other and further relief
as may be proper and necessary to ensure compliance with the
provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first above
written.
BLACKSTONE CAPITAL PARTNERS, L.P.,
by BLACKSTONE MANAGEMENT
PARTNERS, L.P., its general
partner,
by David A. Stockman
Name: David A. Stockman
Title: General Partner
WASSERSTEIN PERELLA PARTNERS, L.P.,
by WASSERSTEIN PERELLA MANAGEMENT
PARTNERS, INC., its general
partner,
by W. Townsend Ziebold, Jr.
Name: W. Townsend Ziebold, Jr.
Title: Vice President
COLLINS & AIKMAN CORPORATION,
by Elizabeth Philipp
Name: Elizabeth Philipp
Title: Executive Vice President
COLLINS & AIKMAN GROUP, INC.,
by Elizabeth Philipp
Name: Elizabeth Philipp
Title: Executive Vice President
<PAGE>
EXECUTION COPY
CARCORP, INC.
RECEIVABLES SALE AGREEMENT
Dated as of July 13, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . 3
2.4 No Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Rebates, Adjustments, Returns and Reductions; Modifications . . 5
2.6 Limited Repurchase Obligation . . . . . . . . . . . . . . . . . 5
2.7 Obligations Unaffected . . . . . . . . . . . . . . . . . . . . 6
2.8 Certain Charges . . . . . . . . . . . . . . . . . . . . . . . . 6
2.9 Certain Allocations . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial Purchase of
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Conditions Precedent to All the Company's Purchases of
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Conditions Precedent to Sellers' Obligations . . . . . . . . . 8
3.4 Conditions Precedent to the Addition of a Seller . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Sellers Relating to the
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(a) Organization, Corporate Powers . . . . . . . . . . . . .10
-i-
<PAGE>
Page
(b) Authorization . . . . . . . . . . . . . . . . . . . . .10
(c) Enforceability . . . . . . . . . . . . . . . . . . . . .11
(d) Capitalization . . . . . . . . . . . . . . . . . . . . .11
(e) Litigation; Compliance with Laws . . . . . . . . . . . .11
(f) Agreements . . . . . . . . . . . . . . . . . . . . . . .11
(g) Tax Returns. . . . . . . . . . . . . . . . . . . . . . .12
(h) No Material Misstatements . . . . . . . . . . . . . . .12
(i) Employee Benefit Plans . . . . . . . . . . . . . . . . .13
(j) Solvency . . . . . . . . . . . . . . . . . . . . . . . .13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
(l) Indebtedness to Company. . . . . . . . . . . . . . . . .13
(m) Lockboxes. . . . . . . . . . . . . . . . . . . . . . . .13
(n) Filings . . . . . . . . . . . . . . . . . . . . . . . .14
(o) Receivables Documents . . . . . . . . . . . . . . . . .14
4.2 Representations and Warranties of the Sellers Relating to the
Agreement and the Receivables . . . . . . . . . . . . . . . .14
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Certificates; Other Information . . . . . . . . . . . . . . . .16
5.2 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . .16
5.3 Preservation of Corporate Existence . . . . . . . . . . . . . .16
5.4 Visitation Rights . . . . . . . . . . . . . . . . . . . . . . .16
5.5 Keeping of Records and Books of Account . . . . . . . . . . . .17
5.6 Location of Records . . . . . . . . . . . . . . . . . . . . . .17
5.7 Computer Files . . . . . . . . . . . . . . . . . . . . . . . .17
5.8 Policies . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.9 Taxes; ERISA . . . . . . . . . . . . . . . . . . . . . . . . .17
5.10 Collections . . . . . . . . . . . . . . . . . . . . . . . . .18
5.11 Lockbox Agreements; Lockbox Accounts . . . . . . . . . . . . .18
5.12 Furnishing Copies, etc . . . . . . . . . . . . . . . . . . . .19
5.13 Obligations with Respect to Obligors and Receivables . . . . .19
5.14 Responsibilities of the Sellers . . . . . . . . . . . . . . .19
5.15 Further Action . . . . . . . . . . . . . . . . . . . . . . . .20
5.16 Certain Procedures
6.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
6.2 Extension or Amendment of Receivables . . . . . . . . . . . . .22
6.3 Change in Payment Instructions to Obligors . . . . . . . . . .22
6.4 Change in Name . . . . . . . . . . . . . . . . . . . . . . . .22
-ii-
<PAGE>
Page
6.5 Modification of Ledger . . . . . . . . . . . . . . . . . . . .22
6.6 Business of the Sellers . . . . . . . . . . . . . . . . . . . .23
6.7 Accounting of Purchases . . . . . . . . . . . . . . . . . . . .23
6.8 Chattel Paper . . . . . . . . . . . . . . . . . . . . . . . . .23
6.9 Ineligible Receivables . . . . . . . . . . . . . . . . . . . .23
ARTICLE VII
PURCHASE TERMINATION EVENTS . . . . . . . . .23
ARTICLE VIII
THE SUBORDINATED NOTES
8.1 Subordinated Notes . . . . . . . . . . . . . . . . . . . . . .25
8.2 Restrictions on Transfer of Subordinated Notes . . . . . . . .25
ARTICLE IX
MISCELLANEOUS
9.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . .26
9.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .26
9.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . .26
9.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . .27
9.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . .27
9.6 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . .28
9.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . .28
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . .28
9.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .28
9.11 Construction of Agreement as Security Agreement . . . . . . .29
9.12 Waivers of Jury Trial . . . . . . . . . . . . . . . . . . . .29
9.13 Jurisdiction; Consent to Service of Process . . . . . . . . .29
9.14 Addition of Sellers . . . . . . . . . . . . . . . . . . . . .30
9.15 Optional Termination of Seller . . . . . . . . . . . . . . . .30
9.16 No Bankruptcy Petition . . . . . . . . . . . . . . . . . . . .31
9.17 Termination . . . . . . . . . . . . . . . . . . . . . . . . .31
9.18 Confidentiality . . . . . . . . . . . . . . . . . . . . . . .31
ANNEX X Definitions
-iii-
<PAGE>
Page
SCHEDULES
1 Locations of Chief Executive Offices; Locations of
Books and Records
2 Lockboxes
3 Discounted Percentage
4 Tax Matters
EXHIBITS
A Form of U.S. Dollar Subordinated Note
BB Form of Canadian Dollar Subordinated Note
CC Form of Additional Seller Supplement
-iv-
<PAGE>
RECEIVABLES SALE AGREEMENT, dated as of July 13, 1994,
among Collins & Aikman Products Co., a Delaware corporation ("C&A
Products"), Ack-Ti-Lining, Inc., WCA Canada, Inc., Imperial
Wallcoverings (Canada), Inc., Imperial Wallcoverings, Inc., The
Akro Corporation, Dura Acquisition Corp. and each of the other
subsidiaries of C&A Products from time to time parties hereto
(each of the foregoing, a "Seller"), C&A Products, as Master
Servicer (in such capacity, the "Master Servicer"), and Carcorp,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, in the ordinary course of business, each
Seller generates accounts receivable; and
WHEREAS, each Seller desires to sell to the Company,
and the Company is willing to purchase from such Seller, all of
such Seller's right, title and interest in, to and under the
Receivables (as defined herein) now existing or hereafter created
and the rights of such Seller in, to and under all Related
Property (as so defined) related thereto;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this
Agreement shall have the respective meanings assigned to such
terms in Annex X hereto unless otherwise defined herein.
1.2 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
article, section, subsection, schedule and exhibit references are
to this Agreement unless otherwise specified.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms
relating to the Sellers and the Company, unless otherwise defined
herein, shall have the respective meanings given to them under
generally accepted accounting principles.
(c) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
<PAGE>
2
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables. (a) By
execution of this Agreement, each of the Sellers does hereby
sell, transfer, assign, set over and otherwise convey, without
recourse (except as expressly provided herein), to the Company,
on the Effective Date, all Receivables owned by the Sellers at
the close of business on the Effective Date and all Related
Property in respect of such Receivables. Subject to Article VII,
as of each Payment Date, each of the Sellers does hereby sell,
transfer, assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Company, all of its
right, title and interest in, to and under all Receivables owned
by the Sellers at the close of business on such Payment Date and
not theretofore conveyed to the Company and all Related Property
in respect of such Receivables. The foregoing sale, transfer,
assignment, set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not
constitute, and are not intended to result in, the creation or an
assumption by the Company or any other Person of any obligation
of the Sellers in connection with the Receivables or under any
agreement or instrument relating thereto, including any
obligation to any Obligor.
(b) On the Effective Date and on the date of creation
of each newly created Receivable, all of the applicable Seller's
right, title and interest in and to (i) in the case of the
Effective Date, all existing Receivables and Related Property in
respect of such Receivables and (ii) in the case of each such
date of creation, all such newly created Receivables and all
Related Property in respect of such Receivables shall be
immediately and automatically sold, assigned, transferred and
conveyed to the Company pursuant to paragraph (a) above without
any further action by such Seller or any other Person. If any
Seller shall not have received payment from the Company of the
Purchase Price for any newly created Receivable on the Payment
Date therefor in accordance with the terms of subsection 2.3(c),
such newly created Receivable and the Related Property with
respect thereto shall, upon receipt of notice from the applicable
Seller of such failure to receive payment, immediately and
automatically be sold, assigned, transferred and reconveyed by
the Company to such Seller without any further action by the
Company or any other Person.
(c) In connection with the foregoing conveyances, each
Seller agrees to record and file, or cause to be recorded and
filed, at its own expense, financing statements (and continuation
statements with respect to such financing statements when
applicable), and any other similar instruments, with respect to
the Receivables and Related Property now existing and hereafter
acquired by the Company from the Sellers meeting the requirements
of applicable law in such manner and in such jurisdictions as are
necessary to perfect the purchases of the Receivables and Related
Property by the Company from the Sellers, and to deliver evidence
of such filings to the Company on or prior to the Effective Date.
The parties hereto intend that the transfer of Receivables
effected by this Agreement be sales.
(d) In connection with the foregoing conveyances, each
Seller agrees at its own expense, as agent of the Company, that
it will (i) indicate or cause to be indicated on the
<PAGE>
3
computer files and other listings relating to the Receivables that
all Receivables and Related Property have been sold to the Company
and that the Company has sold an interest therein and has granted
a security interest in the Company's retained interest therein
and (ii) deliver or cause to be delivered to the Company computer
files, microfiche lists or typed or printed lists containing true
and complete lists of all such Receivables, identified by Obligor
and by the Receivables balance as of June 15, 1994.
2.2 Purchase Price. The amount payable by the Company
to a Seller (the "Purchase Price") for newly created Receivables
and Related Property on any Payment Date under this Agreement
shall be equal to the product of (a) the aggregate outstanding
Principal Amount of such Receivables as set forth in the
applicable Daily Report and (b) the Discounted Percentage with
respect to such Seller. To the extent the Purchase Price of any
Receivable is denominated in Canadian Dollars, the Dollar
equivalent of such Purchase Price shall be equal to the Canadian
Exchange Percentage thereof.
2.3 Payment of Purchase Price. (a) Upon fulfillment
of the conditions set forth in Article III, the Purchase Price
for Receivables and the Related Property shall be paid or
provided for in the manner provided below on each day for which a
Daily Report is prepared and delivered to the Company (each such
day, a "Payment Date"). Each Seller hereby appoints the Master
Servicer as its agent to receive payment of the Purchase Price
for Receivables sold by it to the Company and hereby authorizes
the Company to make all payments due to such Seller directly to,
or as directed by, the Master Servicer. The Master Servicer
hereby accepts and agrees to such appointment.
(b) The Purchase Price for Receivables and the Related
Property with respect thereto purchased by the Company on the
Effective Date from each Seller shall be paid by the Company as
follows:
(i) in cash from the net proceeds of the sale of an
interest in such Purchased Receivables by the Company to
other Persons; and
(ii) in cash from the proceeds of capital contributed
by C&A Products to the Company in respect of its equity
interest in the Company.
(c) The Purchase Price for Receivables and the Related
Property with respect thereto purchased by the Company on any
Payment Date after the Effective Date shall be paid by the
Company on such Payment Date as follows:
(i) by netting the amount of any Seller Adjustment
Payments or Seller Repurchase Payments pursuant to
subsection 2.5 or 2.6 against such Purchase Price;
(ii) to the extent available for such purpose, in cash
from Collections; it being understood that Canadian Dollar
cash Collections shall be applied solely to the Purchase
Price of Canadian Dollar denominated Receivables;
<PAGE>
4
(iii) to the extent available for such purpose, in cash
from the net proceeds of the sale of an interest in such
Purchased Receivables by the Company to other Persons;
(iv) at the option of the Company, by means of an
addition to the principal amount of the Canadian Dollar
Subordinated Note or U.S. Dollar Subordinated Note, as
appropriate in accordance with this subsection, in an
aggregate amount equal to the remaining portion of the
Purchase Price; provided, however, that the Company may pay
by means of additions to the principal amount of either
Subordinated Note only if, at the time of such payment and
after giving effect thereto, the fair market value of its
assets, including any beneficial interests or indebtedness
of a trust and all Receivables and Related Property it owns,
after giving effect for this purpose to any Adjustments with
respect to the Purchased Receivables or any participation
interest therein sold to the Banks under the Receivables
Transfer Agreement, is greater than the amount of its
liabilities including its liabilities on the Subordinated
Notes and in respect of the Purchase Discount Amounts and
all fees payable under the Receivables Transfer Agreement.
Any such addition to the principal amount of the
Subordinated Notes shall be allocated among the Sellers by
the Master Servicer provided, however, that additions to the
principal amount of the Canadian Dollar Subordinated Note
may only be made to evidence the purchase price of
Receivables denominated in Canadian Dollars and additions to
the U.S. Dollar Subordinated Note may only be made to
evidence the purchase price of Receivables denominated in
Dollars. The Master Servicer may evidence such payments by
means of additions to the principal amount of the
appropriate Subordinated Note by recording the date and
amount thereof on the books and records of the Master
Servicer or the Sellers or on the grid attached to such
Subordinated Note; provided that the failure to make any
such recordation or any error in such grid shall not
adversely affect any Seller's rights; and
(v) in cash from the proceeds of capital contributed
by C&A Products to the Company in respect of its equity
interest in the Company.
(d) The Master Servicer may allocate among the Sellers
the payment of the Purchase Price for Receivables and any amounts
netted therefrom pursuant to subsection 2.3(c)(i). The Company
shall be entitled to pay all amounts in respect of the Purchase
Price of Receivables to an account of the Master Servicer without
regard to whether or how such payments are allocated by the
Master Servicer to the Sellers. All payments under this
Agreement (i) to the extent such payments are made in Canadian
Dollars, shall be made on the date specified therefor in Canadian
Dollars in same day funds or by check, as the Master Servicer
shall elect, (ii) in all other cases, shall be made on the date
specified therefor in Dollars in same day funds or by check, as
the Master Servicer shall elect, (iii) in all cases, shall be
made not later than 3:00 p.m (New York City time) and (iv) shall
be made (x) if to any Seller, to the bank account for such Seller
designated in writing by the Master Servicer to the Company and
(y) if to the Master Servicer, to the bank account designated in
writing by the Master Servicer to the Company.
<PAGE>
5
(e) Whenever any payment to be made under this
Agreement shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding
Business Day. Amounts not paid when due in accordance with the
terms of this Agreement shall bear interest at a rate equal at
all times to the ABR plus the Applicable ABR Margin plus 2%,
payable on demand.
2.4 No Repurchase. Except to the extent expressly set
forth herein, no Seller shall have any right or obligation under
this Agreement, by implication or otherwise, to repurchase from
the Company any Purchased Receivables or Related Property or to
rescind or otherwise retroactively effect any purchase of any
Purchased Receivables or Related Property after the Payment Date
relating thereto.
2.5 Rebates, Adjustments, Returns and Reductions;
Modifications. From time to time a Seller may make Adjustments
to Receivables in accordance with this subsection 2.5 and
subsection 6.2. The Sellers, jointly and severally, agree to pay
to the Company, on the Payment Date immediately succeeding the
date of the grant of any Adjustment (regardless of which Seller
shall have granted such Adjustment), the amount of any such
Adjustment (a "Seller Adjustment Payment"); provided, that, prior
to any Purchase Termination Event, any such payments to the
Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(c)(i). An
"Adjustment" shall mean any rebate, discount, refund or
adjustment (including, without limitation, as a result of the
application of any special or other discounts or any
reconciliations) of any Receivable, the amount owing for any
returns (including, without limitation, as a result of the return
of any stale goods) or cancellations and the amount of any other
reduction of any payment under any Receivable in each case
granted or made by the applicable Seller to the related Obligor,
provided, that, an "Adjustment" does not include any Charge-Off.
The amount of any Adjustment shall be set forth on the first
Daily Report prepared after the date of the grant thereof.
2.6 Limited Repurchase Obligation. In the event that
any of the representations or warranties contained in subsection
4.2 in respect of any Receivable shall be or have been incorrect
in any material respect as of the date made or deemed made, or
any Eligible Receivable shall become subject to any defense,
dispute, offset or counterclaim of any kind (other than as
expressly permitted by this Agreement) or any Seller shall breach
any covenant contained in subsection 5.2, 5.8, 6.1, 6.2, 6.3,
6.4, 6.5, 6.8 or 6.9 with respect to any Receivable (each of the
foregoing events or circumstances, a "Repurchase Event"), such
Receivable shall cease to be an Eligible Receivable on the date
on which such Repurchase Event occurs. In addition, if any
Repurchase Event shall occur with respect to any Receivable, then
the Sellers, jointly and severally, agree to pay to the Company
an amount (the "Repurchase Amount") equal to the Purchase Price
of such Receivable (whether the Company paid such Purchase Price
in cash or otherwise) less Collections received by the Company in
respect of such Receivable, regardless of which Seller shall have
been responsible for such Repurchase Event, such payment to occur
on the 30th day after the day such Repurchase Event becomes known
(or should have become known with due diligence) to any Seller
(except that if such 30th day is not a Business Day, such payment
shall be made on the Business Day immediately succeeding such
30th day) unless such Repurchase Event shall have been cured on
or before such 30th day; provided, that, prior to the occurrence of
<PAGE>
6
any Purchase Termination Event, any such payments to the
Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(c)(i). Any
payment by any Seller pursuant to this subsection 2.6 is referred
to as a "Seller Repurchase Payment". If, on or prior to such
30th day (or the Business Day immediately succeeding such 30th
day, as applicable), any Seller shall so reacquire any such
Receivable, then
the Company shall have no further remedy against the Sellers in
respect of the Repurchase Event with respect to such reacquired
Receivable. Upon a Seller Repurchase Payment, the Company shall
automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the applicable
Seller, without recourse, representation or warranty, all the
right, title and interest of the Company in, to and under such
Receivable and the Related Property with respect thereto. The
Company shall execute such documents and instruments of transfer
or assignment and take such other actions as shall reasonably be
requested by such Seller to effect the conveyance of such
Receivable pursuant to this section 2.6.
2.7 Obligations Unaffected. The obligations of the
Sellers to the Company under this Agreement shall not be affected
by reason of any invalidity, illegality or irregularity of any
Receivable or any sale of a Receivable.
2.8 Certain Charges. Each of the Sellers and the
Company agrees that late charge revenue, reversals of discounts,
other fees and charges and other similar items, whenever created,
accrued in respect of Purchased Receivables shall be the property
of the Company notwithstanding the occurrence of an Early
Termination, and all Collections with respect thereto shall
continue to be allocated and treated as Collections in respect of
Purchased Receivables.
2.9 Certain Allocations. Each of the Sellers hereby
agrees that, following the occurrence of an Early Termination in
respect of any Seller, all Collections and other proceeds
received in respect of Receivables generated by such Seller shall
be applied first, to pay the outstanding Principal Amount of
Purchased Receivables (as of the date of such Early Termination)
of the Obligor to whom such Collections are attributable until
such Purchased Receivables are paid in full and, second, to such
Seller to pay Receivables of such Obligor not sold to the
Company; provided, however, that notwithstanding the foregoing,
if any such Seller can attribute a Collection to a specific
Obligor and a specific Receivable, then such Collection shall be
applied to pay such Receivable of such Obligor.
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial
Purchase of Receivables. The obligation of the Company to
purchase the Receivables and the Related Property hereunder on
the Effective Date from any Seller is subject to the conditions
precedent, which may be waived by the Company, that (a) each of
the Sale Documents shall be in full force
<PAGE>
7
and effect and (b) the
conditions set forth below shall have been satisfied on or before
the Effective Date:
(i) the Company shall have received copies of duly
adopted resolutions of the Board of Directors of each Seller
as in effect on the Effective Date and in form and substance
reasonably satisfactory to the Company, authorizing this
Agreement, the documents to be delivered by such Seller
hereunder and the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of such
Seller;
(ii) the Company shall have received duly executed
certificates of the Secretary or an Assistant Secretary of
each Seller, dated the Effective Date and in form and
substance reasonably satisfactory to the Company, certifying
the names and true signatures of the officers authorized on
behalf of such Seller to sign this Agreement and any
instruments or documents in connection with this Agreement;
(iii) each Seller shall have filed and recorded, at its
own expense, UCC-1 financing statements (and other similar
instruments) with respect to the Receivables and the Related
Property in such manner and in such jurisdictions as are
necessary or desirable to perfect the Company's ownership
interest thereof under the Uniform Commercial Code (or any
other similar law) and delivered evidence of such filings to
the Company on or prior to the Effective Date; and all other
action necessary or desirable, in the reasonable judgment of
the Company, to perfect the Company's ownership of the
Receivables shall have been duly taken;
(iv) each Seller shall have delivered to the Company a
microfiche, typed or printed list or other tangible evidence
reasonably acceptable to the Company showing as of a date no
later than five Business Days preceding the Effective Date,
the Obligors whose Receivables are to be transferred to the
Company on the Effective Date and the balance of the
Receivables with respect to each such Obligor as of such
preceding date; and
(v) the Company shall have received reports of UCC-1
and other searches of the Sellers with respect to the
Receivables and the Related Property reflecting the absence
of Liens thereon, except Liens created in connection with
the sale by the Company of an interest in the Purchased
Receivables and except for Liens as to which the Company has
received Uniform Commercial Code termination statements to
be filed on or prior to the Effective Date.
3.2 Conditions Precedent to All the Company's
Purchases of Receivables. The obligation of the Company to pay a
Seller for any Receivable and the Related Property with respect
thereto on each Payment Date (including the Effective Date) shall
be subject to the further conditions precedent, which may be
waived by the Company, that on such Payment Date:
(a) the following statements shall be true (and the
acceptance by such Seller of the Purchase Price for any
Receivables on any Payment Date shall constitute a
<PAGE>
8
representation and warranty by such Seller that on such
Payment Date such statements are true):
(i) the representations and warranties of such
Seller contained in subsections 4.1 and 4.2 shall be
true and correct in all material respects on and as of
such Payment Date as though made on and as of such
date, except insofar as such representations and
warranties are expressly made only as of another date;
and
(ii) no Purchase Termination Event or Incipient
Purchase Termination Event shall have occurred and be
continuing; and
(iii) there has been no material adverse change
since the date of this Agreement in the collectibility
of the Receivables (other than due to a change in the
creditworthiness of the Obligors);
(b) the Company shall be satisfied that such Seller's
systems, procedures and record-keeping relating to the
Purchased Receivables are in all material respects
sufficient and satisfactory in order to permit the purchase
and administration of the Purchased Receivables in
accordance with the terms and intent of this Agreement (it
being understood and agreed that as of the date hereof, the
Sellers' systems, procedures and record-keeping relating to
the Receivables are in all material respects sufficient and
satisfactory);
(c) the Company shall have received payment in full of
all amounts for which payment is due from such Seller
pursuant to subsection 2.5, 2.6 or 9.3;
(d) the Company shall have received such other
approvals, opinions or documents as the Company may
reasonably request; and
(e) such Seller shall have complied with all of its
covenants in all material respects and satisfied all of its
obligations in all material respects under this Agreement
required to be complied with or satisfied as of such date;
provided, however, that the failure of any Seller to satisfy any
of the foregoing conditions shall not prevent such Seller from
subsequently selling Receivables upon satisfaction of all such
conditions or exercising its rights under subsection 2.1(b).
3.3 Conditions Precedent to Sellers' Obligations.
(a) The obligations of each Seller on the Effective Date shall
be subject to the conditions precedent that such Seller shall
have received on or before the Effective Date the following, each
dated the Effective Date and in form and substance satisfactory
to such Seller:
(i) a copy of duly adopted resolutions of the Board of
Directors of the Company authorizing this Agreement, the
documents to be delivered by the Company
<PAGE>
9
hereunder and the transactions contemplated hereby, certified
by the Secretary or Assistant Secretary of the Company; and
(ii) a duly executed certificate of the Secretary or
Assistant Secretary of the Company certifying the names and
true signatures of the officers authorized on its behalf to
sign this Agreement and the other documents to be delivered
by it hereunder.
(b) The obligations of each Seller on each Payment
Date shall be subject to the condition precedent that no
Termination Event set forth in paragraph (f) of Article IX of the
Receivables Transfer Agreement shall have occurred and be
continuing.
3.4 Conditions Precedent to the Addition of a Seller.
No Subsidiary of C&A Products approved by the Company as an
additional Seller pursuant to subsection 9.14 shall be added as a
Seller hereunder unless the conditions set forth below shall have
been satisfied on or before the date designated for the addition
of such Seller (the "Seller Addition Date"):
(i) the Company shall have received an Additional
Seller Supplement substantially in the form of Exhibit C
hereto, duly executed and delivered by such Seller;
(ii) the Company shall have received copies of duly
adopted resolutions of the Board of Directors of such Seller
as in effect on the related Seller Addition Date and in form
and substance reasonably satisfactory to the Company,
authorizing this Agreement, the documents to be delivered by
such Seller hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of
such Seller;
(iii) the Company shall have received duly executed
certificates of the Secretary or an Assistant Secretary of
such Seller dated the related Seller Addition Date and in
form and substance reasonably satisfactory to the Company,
certifying the names and true signatures of the officers
authorized on behalf of such Seller to sign the Additional
Seller Supplement or any instruments or documents in
connection with this Agreement;
(iv) a Lockbox Account with respect to Receivables to
be sold by such Seller shall have been established in the
name of the Company;
(v) such Seller shall have filed and recorded, at its
own expense, UCC-1 financing statements (and other similar
instruments) with respect to the Receivables and the Related
Property in such manner and in such jurisdictions as are
necessary or desirable to perfect the Company's ownership
interest thereof under the Uniform Commercial Code (or any
other similar law) and delivered evidence of such filings to
the Company on or prior to the date hereof; and all other
action necessary or desirable, in the opinion of the
Company, to perfect the Company's ownership of the
Receivables shall have been duly taken;
<PAGE>
10
(vi) such Seller shall have delivered to the Company a
microfiche, a typed or printed list or other tangible
evidence reasonably acceptable to the Company showing as of
a date acceptable to the Company prior to the related Seller
Addition Date the Obligors whose Receivables are to be
transferred to the Company and the balance of the
Receivables with respect to each such Obligor as of such
date; and
(vii) the Company shall have received reports of UCC-1
and other searches of such Seller with respect to the
Receivables and the Related Property reflecting the absence
of Liens thereon, except Liens created in connection with
the sale by the Company of an interest in the Purchased
Receivables and except for Liens as to which the Company has
received Uniform Commercial Code termination statements to
be filed on or prior to the related Seller Addition Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Sellers
Relating to the Sellers. Each Seller hereby represents and
warrants to the Company on the Effective Date and on each Payment
Date that:
(a) Organization, Corporate Powers. It (i) is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, (ii) has all requisite corporate power and
authority, and all material licenses, permits, franchises,
consents and approvals, to own or lease its property and
assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified and in good
standing as a foreign corporation to do business in every
jurisdiction where such qualification is necessary, except
where the failure so to qualify would not have a Material
Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform this Agreement and
each of the other Sale Documents to which it is a party and
each other agreement or instrument contemplated hereby or
thereby to which it is or will be a party. It does not have
any assets or business, nor is it a party to any material
contract within the meaning of Item 6.01(b)(10) of
Regulation S-K of the Securities and Exchange Commission,
other than as disclosed or referred to in the registration
statement of which the Preliminary Prospectus is a part or
as contemplated hereby and thereby.
(b) Authorization. The execution, delivery and
performance by it of this Agreement and each of the other
Sale Documents to which it is a party, the sale of
Receivables by it hereunder and the consummation of the
other transactions contemplated by any of the foregoing
(collectively, the "Sale Transactions") (i) have been duly
authorized by all requisite corporate and, if required,
stockholder action and (ii) will not (x) violate (A) any
provision of law, statute, rule or regulation (including,
without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar
governing documents) of such Seller, (B) any applicable
order of
<PAGE>
11
any court or any rule, regulation or order of any
Governmental Authority or (C) any indenture, certificate of
designation for preferred stock, agreement or other
instrument to which such Seller is a party or by which it or
any of its property is bound, (y) be in conflict with,
result in a breach of or constitute (with notice or lapse of
time or both) a default under any such indenture, agreement
or other instrument where any such conflict, violation,
breach or default referred to in clause (ii)(x) or (ii)(y)
of this subsection, individually or in the aggregate, would
have a Material Adverse Effect or (z) result in the creation
or imposition of any Lien upon any of its property or
assets, except for Liens created under this Agreement and
Liens created in connection with the sale by the Company of
an interest in the Receivables.
(c) Enforceability. Each of this Agreement and each
of the other Sale Documents to which it is a party has been
duly executed and delivered by such Seller and constitutes a
legal, valid and binding obligation of such Seller
enforceable against it in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may
be limited by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(d) Capitalization. All of its Capital Stock is owned
directly or indirectly by C&A Products.
(e) Litigation; Compliance with Laws. (1) Except as
described in the registration statement of which the
Preliminary Prospectus is a part, there are not any actions,
suits or proceedings at law or in equity or by or before any
court or Governmental Authority now pending or, to the
knowledge of such Seller, threatened against or affecting
such Seller or any of its property or rights as to which
there is a reasonable possibility of an adverse
determination and which (i) if adversely determined, could
individually or in the aggregate result in a Material
Adverse Effect or (ii) involve the Transaction Documents or
(iii) if adversely determined, could materially adversely
affect the Sale Transactions.
(2) It is not in default with respect to any law,
order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default
could have a Material Adverse Effect. The sales hereunder
and the use of the proceeds thereof will not violate any
applicable law or regulation or violate or be prohibited by
any judgment, writ, injunction, decree or order of any court
or Governmental Authority or subject such Seller to any
civil or criminal penalty or fine. No Purchase Termination
Event or Incipient Purchase Termination Event has occurred
and is continuing.
(f) Agreements. (1) It is not a party to any
agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
<PAGE>
12
(2) It is not in default in any manner under any
provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or
instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, in either case
where such default could result in a Material Adverse
Effect.
(g) Tax Returns. It has filed or caused to be filed
all Federal, and all material state, local and foreign, tax
returns required to have been filed by it and has paid or
caused to be paid all taxes shown thereon to be due and
payable, and any assessments in excess of $2,000,000 in the
aggregate received by it, except taxes the amount or
validity of which are currently being contested in good
faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on its
books and taxes, assessments, charges, levies or claims in
respect of property taxes for property that it has
determined to abandon where the sole recourse for such tax,
assessment, charge, levy or claim is to such property. It
has paid in full or made adequate provision (in accordance
with GAAP) for the payment of all taxes due with respect to
the periods ending on or before January 29, 1994, which
taxes, if not paid or adequately provided for, would have a
Material Adverse Effect. The tax returns of such Seller
have been examined by relevant Federal tax authorities for
all periods through January 26, 1985, and all deficiencies
asserted as a result of such examinations have been paid.
Except as set forth on Schedule 4, as of the Effective Date,
with respect to such Seller, (i) no material claims are
being asserted in writing with respect to any taxes, (ii) no
presently effective waivers or extensions of statutes of
limitation with respect to taxes have been given or
requested, (iii) no tax returns are being examined by, and
no written notification of intention to examine has been
received from, the Internal Revenue Service or any other
taxing authority and (iv) no currently pending issues have
been raised in writing by the Internal Revenue Service or
any other taxing authority. For purposes of this paragraph,
"taxes" shall mean any present or future tax, levy, impost,
duty, charge, assessment or fee of any nature (including
interest, penalties and additions thereto) that is imposed
by any Governmental Authority.
(h) No Material Misstatements. The information,
reports, financial statements, exhibits and schedules
furnished by or on behalf of such Seller to the Company in
connection with the negotiation of any Sale Document or
included therein or delivered pursuant thereto did not
contain and will not contain as of the Effective Date any
material misstatement of fact and did not omit and will not
omit to state as of the Effective Date any material fact
necessary to make the statements therein, in the light of
the circumstances under which they were, are or will be
made, not materially misleading in their presentation of the
Sale Transactions or such Seller.
<PAGE>
13
(i) Employee Benefit Plans. Each of such Seller and
each of its ERISA Affiliates is in compliance in all
material respects with the applicable provisions of ERISA
and the regulations and published interpretations thereunder
except for such noncompliance which would not be expected to
result in a Material Adverse Effect. No Reportable Event
has occurred as to which such Seller or any of its ERISA
Affiliates was required to file a report with the PBGC,
other than reports for which the 30 day notice requirement
is waived, reports that have been filed and reports the
failure of which to file would not result in a Material
Adverse Effect and, as of the Effective Date, the present
value of all benefit liabilities under each Plan of such
Seller or any of its ERISA Affiliates (on a termination
basis and based on those assumptions used to fund such Plan)
did not, as of the last annual valuation report applicable
thereto, exceed by more than $7,500,000 the value of the
assets of such Plan. None of such Seller or any of its
ERISA Affiliates has incurred or could reasonably be
expected to incur any Withdrawal Liability that could result
in a Material Adverse Effect. None of such Seller or any of
its ERISA Affiliates has received any notification that any
Multiemployer Plan is in reorganization or has been termi-
nated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorgan-
ization or to be terminated where such reorganization or
termination has resulted or could reasonably be expected to
result, through increases in the contributions required to
be made to such Plan or otherwise, in a Material Adverse
Effect.
(j) Solvency. The fair salable value of the assets of
such Seller exceeds the amount that will be required to be
paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of such
Seller. The assets of such Seller do not constitute
unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Such Seller does
not intend to, or believe that it will, incur debts beyond
its ability to pay such debts as they mature (taking into
account the Recapitalization Transactions but assuming that
the Overallotment Option is not exercised).
(k) Absence of Certain Restrictions. No indenture,
certificate of designation for preferred stock, agreement or
other instrument to which such Seller or any of its
Subsidiaries is a party will prohibit or materially
restrain, or have the effect of prohibiting or materially
restraining, or imposing materially adverse conditions upon,
the sale of Receivables or the granting of Liens thereon.
(l) Indebtedness to Company. Immediately prior to
consummation of the transactions contemplated hereby on the
Effective Date, it had no outstanding Indebtedness to the
Company.
(m) Lockboxes. Set forth in Schedule 2 is a complete
and accurate description as of the Effective Date of each
Lockbox Account currently maintained by such Seller. Each
of the Lockbox Agreements, once entered into, shall be the
legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency,
<PAGE>
14
reorganization, moratorium or other
similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as
such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).
(n) Filings. Upon the making of the filings and the
performance of the acts described in the legal opinions
delivered pursuant to subsections 6.1(b)(iii) and (iv) of
the Receivables Transfer Agreement (which shall be made or
performed no later than five Business Days after the
Effective Date), all filings and other acts necessary or
advisable (including but not limited to all filings and
other acts necessary or advisable under the Uniform
Commercial Code of each relevant jurisdiction) shall have
been made or performed in order to grant the Company a first
priority perfected ownership interest in respect of all
Receivables.
(o) Receivables Documents. Upon the delivery, if any,
by such Seller to the Company of licenses, rights, computer
programs, related materials, computer tapes, disks,
cassettes and data relating to the administration of the
Purchased Receivables pursuant to subsection 5.15(d)(5), the
Company shall have been furnished with all materials and
data necessary to permit immediate collection of the
Purchased Receivables without the participation of any
Seller in such collection.
4.2 Representations and Warranties of the Sellers
Relating to the Agreement and the Receivables. Each Seller
hereby represents and warrants to the Company on the Effective
Date and on each Payment Date that with respect to the
Receivables being paid for as of such date:
(a) Receivables Description. The microfiche, printed
or typed list or computer file delivered pursuant to
subsection 3.1(b)(iv) is an accurate and complete listing in
all material respects of all its Receivables as of June 15,
1994 and the information contained therein with respect to
the identity of such Receivables is true and correct in all
material respects as of such date.
(b) Eligible Receivable. Each Receivable sold by it
hereunder and included as an Eligible Receivable in the
calculation of Applicable Eligible Receivables Percentage
will be, on and as of the date of such inclusion, an
Eligible Receivable. The aggregate outstanding Principal
Amount of Receivables sold by it on any Payment Date is
correctly set forth on the Seller Daily Report with respect
to such Seller and with respect to such Payment Date. The
aggregate outstanding Adjusted Principal Amount of
Receivables denominated in Canadian Dollars and sold by it
on any Payment Date is correctly set forth on the Seller
Daily Report with respect to such Seller and with respect to
such Payment Date.
(c) Title; No Liens. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, such Seller is the sole
legal and beneficial owner of its Receivables, and upon the
sale of each Receivable of such Seller, the Company will
<PAGE>
15
become the sole legal and beneficial owner of such
Receivable, free and clear of any Liens (except for Liens
granted by such Seller in favor of the Company and the
interest in such Purchased Receivables sold and the security
interest therein granted by the Company to other Persons and
except for Liens which are released on or prior to the
Effective Date), and no effective financing statement or
other instrument similar in effect covering all or any part
of such Purchased Receivable, Related Property or
Collections with respect thereto will at such time be on
file against such Seller in any filing or recording office
except such as have been filed in favor of the Company in
accordance with this Agreement.
(d) Governmental Consents. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, all consents, licenses,
approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be
obtained, effected or given by the Company in connection
with the conveyance of each Receivable pursuant to the
Receivables Transfer Agreement have been duly obtained,
effected or given and are in full force and effect.
(e) Compliance With Laws. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, all laws, statutes, rules
and regulations (including, without limitation, usury laws),
applicable at the related Payment Date to any of the
Receivables have been duly complied with by such Seller
except to the extent any failure to so comply could not
affect the validity or collectibility of such Receivable.
(f) No Set-Off. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, the Receivables are not
subject to any defense, dispute, offset or counterclaim,
whether arising out of the transactions represented by the
Receivables or independently thereof and whether arising out
of any assertion by any Obligor that its obligations in
respect of any Receivable are, or may be, payable to a third
party, instead of the owner of such Receivable, or
otherwise.
(g) Chief Executive Office. The chief executive
office of such Seller is listed opposite its name on
Schedule 1, which office is the place where such Person is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State of New York, and the
offices of such Seller where such Seller keeps its records
concerning the Receivables are also listed in said Schedule
opposite its name.
(h) Absence of Changes. As of the related Payment
Date, there has not been since the date of this Agreement
any material adverse change in the ability of such Seller,
acting as the Servicer, to perform its obligations hereunder
or under the Receivables Transfer Agreement.
<PAGE>
16
ARTICLE V
AFFIRMATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company or until an Early
Termination with respect to such Seller, whichever is later, such
Seller or the Master Servicer on behalf of such Seller shall:
5.1 Certificates; Other Information. Furnish to the
Company:
(a) not later than 90 days after the end of each
fiscal year and not later than 45 days after the end of each
of the first three fiscal quarters of each fiscal year, a
certificate of a Responsible Officer of the Master Servicer
stating that, to the best of such Officer's knowledge, such
Seller during such period has observed or performed all of
its covenants and other agreements, and satisfied every
condition, contained in the Sale Documents to which it is a
party to be observed, performed or satisfied by it, and that
such Officer has obtained no knowledge of any Purchase
Termination Event or Incipient Purchase Termination Event
except as specified in such certificate; and
(b) promptly, such additional financial and other
information as the Company may from time to time reasonably
request.
5.2 Compliance with Laws, etc. Comply in all material
respects with its Certificate of Incorporation and by-laws and
all laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, applicable
to the Purchased Receivables, except to the extent that failure
to comply therewith could not materially adversely affect the
rights of the Company in the Purchased Receivables or the
collectibility or validity thereof. Each Seller will comply, in
all material respects, with its obligations under contracts with
Obligors relating to the Purchased Receivables except to the
extent such compliance would result in a violation of a laws,
rules, regulations and orders of any Governmental Authority.
5.3 Preservation of Corporate Existence. Do or cause
to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and maintain such legal
existence separate from that of the Company, provided that any
Seller may be merged or consolidated with or into any other
Seller or C&A Products.
5.4 Visitation Rights. At any reasonable time during
normal business hours and from time to time, in each case upon
reasonable notice to such Seller and the Master Servicer, permit
(i) the Company, or any of its agents or representatives, (A) to
examine and make copies of and abstracts from the records, books
of account and documents (including computer tapes and disks) of
each Seller relating to the Purchased Receivables hereunder and
(B) following the termination of the appointment of C&A Products
as Master Servicer or of such Seller as Servicer with respect to
the Purchased Receivables, to be present at the offices and
properties of such Seller to administer and control the
collection of amounts owing on the
<PAGE>
17
Purchased Receivables and (ii)
the Company, or any of its agents or representatives, to visit
the properties of such Seller for the purpose of examining such
records, books of account and documents, and to discuss the
affairs, finances and accounts of such Seller relating to the
Purchased Receivables or such Seller's performance hereunder with
any of its officers or directors and with its independent
certified public accountants (subject to any requirements of
confidentiality imposed by law or contract).
5.5 Keeping of Records and Books of Account. Maintain
and implement, or cause to be maintained or implemented,
administrative and operating procedures reasonably necessary or
advisable for the collection of amounts owing on all Purchased
Receivables, and, until any delivery to the Company, keep and
maintain, or cause to be kept and maintained, all documents,
books, records and other information reasonably necessary or
advisable for the collection of amounts owing on all such
Purchased Receivables and the Related Property with respect
thereto.
5.6 Location of Records. Keep its chief place of
business and chief executive office, and the offices where it
keeps the records concerning the Purchased Receivables (and all
original documents relating thereto) at the locations referred to
for it on Schedule 1 hereto or, upon 30 days' prior written
notice to the Company, at such other locations in a jurisdiction
where all action required by subsection 5.15(a) shall have been
taken and completed and be in full force and effect.
5.7 Computer Files. At its own cost and expense,
retain the ledger used by such Seller as a master record of the
Obligors and retain copies of all documents relating to each
Obligor as custodian and agent for the Company and other Persons
with interests in the Purchased Receivables and mark the computer
tape or other physical records of the Purchased Receivables to
the effect that interests in the Purchased Receivables existing
with respect to the Obligors listed thereon have been sold to the
Company.
5.8 Policies. Perform its obligations in accordance
with and comply in all material respects with the Policies and
the Company Policies and neither change nor modify the Policies
or the Company Policies in any material respect, except with the
prior written consent of the Company or if such changes are
necessary under any law, rule, regulation or order of any
Governmental Authority applicable to it; it being understood that
material changes to the Policies and the Company Policies shall
include, without limitation, changes to the timing of Charge-Offs
of Receivables and changes to the creditworthiness criteria used
in determining whether to extend credit to a Person and in
determining the amount of such credit to extend.
5.9 Taxes; ERISA. (a) Pay and discharge promptly all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default,
as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such
payment and discharge shall not be required with respect to any
such tax, assessment, charge, levy or claim so long as (i) the
validity or amount thereof shall be contested in good faith by
appropriate
<PAGE>
18
proceedings and Holdings or such Seller, as
applicable, shall set aside on its books adequate reserves as
required by GAAP with respect thereto, (ii) such tax, assessment,
charge, levy or claim is in respect of property taxes for
property that such Seller has determined to abandon and the sole
recourse for such tax, assessment, charge, levy or claim is to
such property or (iii) the amount of such taxes assessments,
charges, levies and claims and interest and penalties thereon
does not exceed $1,000,000 in the aggregate for the Master
Servicer and all Sellers taken as a whole.
(b) (i) Comply in all material respects with the
applicable provisions of ERISA and (ii) furnish to the Company
(w) as soon as possible, and in any event within 30 days after
any Responsible Officer of such Seller or any ERISA Affiliate of
such Seller knows or has reason to know that any Reportable Event
has occurred that alone or together with any other Reportable
Event could reasonably be expected to result in liability of the
Master Servicer, such Seller or any of their ERISA Affiliates to
the PBGC in an aggregate amount exceeding $10,000,000, a
statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect
thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (x) promptly after any
Responsible Officer learns of receipt thereof, a copy of any
notice such Seller or any of its ERISA Affiliates may receive
from the PBGC relating to the intention of the PBGC to terminate
any Plan or Plans (other than a Plan maintained by any of their
ERISA Affiliates which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code) or
to appoint a trustee to administer any Plan or Plans, (y) within
20 days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code a notice of failure to make a required
installment or other payment with respect to a Plan, a statement
of a Financial Officer setting forth details as to such failure
and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC and (z)
promptly after any Responsible Officer learns thereof and in any
event within 30 days after receipt thereof by such Seller or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by such Seller or such ERISA Affiliate
concerning (I) the imposition of Withdrawal Liability or (II) a
determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, in each case within the meaning
of Title IV of ERISA.
5.10 Collections. Use its best efforts to cause any
Obligor which currently pays its Receivables by checks mailed to
such Seller to make future payments in respect of Receivables to
a Lockbox Account or by wire transfer to the Collection Account,
provided, that, prior to an Incipient Purchase Termination Event
or a Purchase Termination Event, no Seller shall be obliged to
make any such request of any such Obligor if such Seller
determines in its reasonable judgment that such request could be
detrimental to its ongoing business relationship with such
Obligor.
5.11 Lockbox Agreements; Lockbox Accounts. Within 60
days of the Effective Date,
(a) if such Seller has not established a Lockbox
Account on the Effective Date, it shall establish one and
enter into a Lockbox Agreement with respect thereto;
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19
(b) if such Seller shall not have entered into a
Lockbox Agreement with respect to any existing Lockbox
Account on the Effective Date, it shall enter into such a
Lockbox Agreement.
5.12 Furnishing Copies, etc. Furnish to the Company:
(a) within two Business Days of the Company's request,
but no more than once each month, a certificate of the chief
financial officer of such Seller or of the Master Servicer
on behalf of such Seller certifying, as of the date thereof,
to the best knowledge of such officer, that no Purchase
Termination Event has occurred and is continuing, and
setting forth the computations used by the chief financial
officer of such Seller in making such determination or if
one has so occurred specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with
respect thereto;
(b) promptly upon obtaining knowledge of the
occurrence of any Purchase Termination Event or Incipient
Purchase Termination Event, written notice thereof;
(c) promptly following request therefor, such other
information, documents, records or reports regarding or with
respect to the Purchased Receivables of the applicable
Seller, as the Company may from time to time reasonably
request;
(d) promptly upon obtaining knowledge of the
occurrence thereof, written notice of any event of default
or default under any other Sale Document;
(e) promptly upon obtaining knowledge of the
occurrence thereof, written notice of any development that
has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect; and
(f) promptly upon determining that any Purchased
Receivable designated as an Eligible Receivable on the
applicable Daily Report or Settlement Statement was not an
Eligible Receivable as of the date provided therefor,
written notice of such determination.
5.13 Obligations with Respect to Obligors and
Receivables. Take all actions on its part reasonably necessary
to maintain in full force and effect its material rights under
all contracts relating to the Purchased Receivables.
5.14 Responsibilities of the Sellers. Notwithstanding
anything herein to the contrary, (i) each Seller shall perform or
cause to be performed all its obligations under the Policies and
the Company Policies related to the Purchased Receivables to the
same extent as if such Purchased Receivables had not been
transferred to the Company hereunder, (ii) the exercise by the
Company of any of its rights hereunder shall not relieve any
Seller of its obligations with respect to such Purchased
Receivables and (iii) except as provided by law, the Company
shall not have any obligation or liability with respect to any
Purchased
<PAGE>
20
Receivables, nor shall the Company be obligated to
perform any of the obligations or duties of any Seller
thereunder.
5.15 Further Action. In addition to the foregoing:
(a) Each Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that
may be necessary or desirable in such Seller's reasonable
judgment or that the Company may reasonably request, in
order to protect or more fully evidence the Company's right,
title and interest in the Purchased Receivables, or to
enable the Company to exercise or enforce any of its rights
in respect thereof. Without limiting the generality of the
foregoing, each Seller will upon the request of the Company
(A) execute and file such financing or continuation
statements, or amendments thereto, and such other
instruments or notices, as may be necessary or, in the
opinion of the Company, advisable, (B) indicate on its books
and records that the Purchased Receivables have been
purchased by the Company and that the Company has sold an
interest therein and has granted a security interest therein
in the Company's retained interest, and provide to the
Company, upon request, copies of any such records, and (C)
obtain the agreement of any Person having a Lien on any
Receivables owned by any Seller (other than any Lien created
or imposed hereunder or any Lien expressly permitted
pursuant to subsection 6.1) to release such Lien upon the
purchase of any such Receivables by the Company.
(b) Each Seller hereby irrevocably authorizes the
Company to file one or more financing or continuation
statements (and other similar instruments), and amendments
thereto, relative to all or any part of the Purchased
Receivables and the Related Property sold or to be sold by
such Seller without the signature of such Seller to the
extent permitted by applicable law.
(c) If any Seller fails to perform any of its
agreements or obligations under this Agreement, the Company
may (but shall not be required to) perform, or cause
performance of, such agreements or obligations, and the
expenses of the Company incurred in connection therewith
shall be payable by such Seller as provided in subsection
9.3.
(d) Each Seller agrees that, upon the occurrence and
during the continuation of a Purchase Termination Event,
Incipient Purchase Termination Event or a Servicer Event of
Default:
(1) the Company (and its assignees) shall have
the right at any time to notify, or require that any
Seller at such Seller's expense notify, the respective
Obligors of the Company's ownership of the Purchased
Receivables and may direct that payment of all amounts
due or to become due under the Purchased Receivables be
made directly to the Company or its designee;
<PAGE>
21
(2) the Company (and its assignees) shall have
the right to (x) sue for collection on any Purchased
Receivables or (y) sell any Purchased Receivables to
any Person for a price that is acceptable to the
Company. If required by the terms of Section 9-504 or
9-505 of the Uniform Commercial Code, the Company (and
its assignees) may offer to sell any Purchased
Receivable to any Person, together, at its option, with
all other Purchased Receivables created by the same
Obligor. Any Purchased Receivable sold hereunder shall
cease to be a Receivable for all purposes under this
Agreement as of the effective date of such sale;
(3) each Seller shall, upon the Company's written
request and at such Seller's expense, (x) assemble all
such Seller's documents, instruments and other records
(including credit files and computer tapes or disks)
that (1) evidence or will evidence or record
Receivables sold by such Seller and (2) are otherwise
necessary or desirable to effect Collections of such
Purchased Receivables (collectively, the "Documents")
and (y) deliver the Documents to the Company or its
designee at a place designated by the Company. In
recognition of each Seller's need to have access to any
Documents which may be transferred to the Company
hereunder, whether as a result of its continuing
business relationship with any Obligor for Receivables
purchased hereunder or as a result of its
responsibilities as Servicer, the Company hereby grants
to the applicable Seller an irrevocable license to
access the Documents transferred by such Seller to
Company and to access any such transferred computer
software in connection with any activity arising in the
ordinary course of such Seller's business or in
performance of such Seller's duties as Servicer,
provided that such Seller shall not disrupt or
otherwise interfere with the Company's use of and
access to the Documents and its computer software
during such license period;
(4) each Seller hereby irrevocably authorizes the
Company or its designee to take any and all steps in
such Seller's name necessary or desirable, in the
reasonable opinion of the Company, to collect all
amounts due under the Purchased Receivables, including
endorsing such Seller's name on checks and other
instruments representing Collections, enforcing the
Purchased Receivables and exercising all rights and
remedies in respect thereof; and
(5) upon written request of the Company, each
Seller will (x) deliver to the Company or a party
designated by the Company all licenses, rights,
computer programs, related material, computer tapes,
disks, cassettes and data necessary to the immediate
collection of the Purchased Receivables by the Company,
with or without the participation of any Seller
(excluding software licenses which by their terms are
not permitted to be so delivered, provided, that such
Seller shall use its best efforts to obtain the consent
of the relevant licensor to such delivery) and (y) make
such arrangements with respect to the collection of the
Purchased Receivables as may be reasonably required by
the Company.
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22
5.16 Certain Procedures. Each Seller shall take, or
refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken in order to (a) ensure that
the assumptions and factual recitations set forth in the
Specified Bankruptcy Opinion Provisions remain true and correct
with respect to such Seller and (b) comply with those procedures
described in such provisions which are applicable to such Seller.
ARTICLE VI
NEGATIVE COVENANTS
Each Seller hereby agrees that, so long as there are
any amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company or until an Early
Termination with respect to such Seller, whichever is later, such
Seller shall not, directly or indirectly:
6.1 Liens. Except as otherwise expressly herein
provided, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon
or with respect to, any Receivables or Related Property, or
assign any right to receive proceeds in respect thereof except
for Liens created or imposed hereunder or under the Receivables
Transfer Agreement.
6.2 Extension or Amendment of Receivables. Extend,
make any Adjustment to, rescind, cancel, amend or otherwise
modify, or attempt or purport to extend, amend or otherwise
modify, the terms of any Purchased Receivables, except (i) in
accordance with the terms of the Policies and the Company
Policies, (ii) as required by any Requirement of Law, (iii) in
the case of Adjustments, upon making an Adjustment Payment
pursuant to subsection 2.5, or (iv) with the consent of the
Company, provided that the applicable Servicer may cause
Receivables to become Charge-Offs.
6.3 Change in Payment Instructions to Obligors.
Instruct any Obligor of any Purchased Receivables to make any
payments with respect to any Receivables other than in accordance
with its current practices with respect to such Obligor; provided
that, in accordance with subsection 5.10, it may instruct any
Obligor to make such payments to a Lockbox Account or by wire
transfer to the Collection Account.
6.4 Change in Name. Change its name, identity or
corporate structure in any manner which would or might make any
financing statement or continuation statement (or other similar
instrument) relating to this Agreement seriously misleading
within the meaning of Section 9-402(7) of the Uniform Commercial
Code (or any other similar law) without 30 days' prior written
notice to the Company.
6.5 Modification of Ledger. Delete or otherwise
modify the marking on the ledger referred to in subsection 5.7.
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23
6.6 Business of the Sellers. (a) Engage at any time
in any business or business activity other than the business
currently conducted by it and business activities reasonably
incidental thereto or (b) fail to maintain and operate such
business in substantially the manner in which it is presently
conducted and operated if such failure would materially adversely
affect the interests of the Company under the Transaction
Documents.
6.7 Accounting of Purchases. Prepare any financial
statements which shall account for the transactions contemplated
hereby (other than capital contributions and the Subordinated
Notes) in any manner other than as sales of the Purchased
Receivables by such Seller to the Company or in any other respect
account for or treat the transactions contemplated hereby
(including for accounting purposes and, where taxes are not
consolidated, for tax reporting purposes, except as required by
law) (other than capital contributions and the Subordinated
Notes) in any manner other than as sales of the Purchased
Receivables by such Seller to the Company.
6.8 Chattel Paper. Not take any action to cause any
Receivable to be evidenced by any instrument (as defined in the
Uniform Commercial Code as in effect in the State of New York)
except in connection with the enforcement or collection of a
Receivable.
6.9 Ineligible Receivables. Without the prior written
approval of the Company, take any action to cause, or which would
permit, an Eligible Receivable to cease to be an Eligible
Receivable, except as otherwise expressly provided by this
Agreement.
ARTICLE VII
PURCHASE TERMINATION EVENTS
If any of the following events (herein called "Purchase
Termination Events") shall have occurred and be continuing:
(a) any Seller shall fail (i) to pay any amount due
pursuant to subsection 2.6 in accordance with the provisions
thereof and such failure shall continue unremedied for a
period of five days from the earlier of (A) the date any
officer of such Seller obtains knowledge of such default and
(B) the date such Seller receives notice of such default
from the Company or (ii) to pay any other amount required to
be paid by such Seller hereunder within two Business Days of
the date when due; or
(b) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained in
subsection 5.6, 5.7, 5.12 or 5.15(a), provided no such
failure shall constitute a Purchase Termination Event under
this paragraph (b) unless such default shall continue
unremedied for 10 consecutive days; or
(c) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained in
subsection 5.2, 5.8, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 or 6.9;
provided that a Purchase Termination Event shall not be
deemed to have occurred under this paragraph (c) based upon
a failure to observe a covenant contained in
<PAGE>
24
subsection 5.2,
5.8, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 or 6.9 if the Sellers
shall have complied with the provisions of subsection 2.6 in
respect thereof; or
(d) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained herein
(other than as specified in paragraph (a), (b) or (c) of
this Article VII), provided that no such failure shall
constitute a Purchase Termination Event under this paragraph
(d) unless such default shall continue unremedied for a
period of 30 consecutive days from the earlier of (A) the
date any Responsible Officer of such Seller obtains
knowledge of such default and (B) the date such Seller
receives notice of such default from the Company; or
(e) any representation, warranty, certification or
statement made or deemed made by any Seller in this
Agreement or in any statement, record, certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been false or misleading
in any material respect on or as of the date made or deemed
made, provided, that a Purchase Termination Event shall not
be deemed to have occurred under this paragraph (e) based
upon a breach of any representation or warranty set forth in
subsection 4.2 if the Sellers shall have complied with the
provisions of subsection 2.6 in respect thereof; or
(f) (i) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (x) relief in respect of any
Seller or of a substantial part of the property or assets of
any Seller under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law, (y) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for
any Seller or for a substantial part of the property or
assets of any Seller or (z) the winding-up or liquidation of
any Seller; and 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; or (ii) any
Seller shall (t) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (u) consent to the institution
of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in
clause (f)(i) above, (v) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for such Seller or for a
substantial part of the property or assets of such Seller,
(w) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (x) make a
general assignment for the benefit of creditors, (y) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (z) take any action for
the purpose of effecting any of the foregoing; or
(g) there shall have occurred a Termination Event
under the Receivables Transfer Agreement or the Commitments
shall have terminated thereunder;
<PAGE>
25
then, (x) in the case of any Purchase Termination Event described
in paragraph (f) above with respect to any Seller, automatically
the obligation of the Company to purchase Receivables from such
Seller shall thereupon terminate without notice of any kind,
which is hereby waived by the Sellers and (y) in the case of any
Purchase Termination Event, so long as such Purchase Termination
Event shall be continuing, the Company may terminate its
obligation to purchase Receivables from any or all of the Sellers
by written notice to each such Seller (any termination pursuant
to clause (x) or (y) of this Article VII which affects a Seller
is herein called an "Early Termination" with respect to such
Seller).
ARTICLE VIII
THE SUBORDINATED NOTES
8.1 Subordinated Notes. On the Effective Date, the
Company shall issue to the Sellers (i) a subordinated note
substantially in the form of Exhibit A (the "U.S. Dollar
Subordinated Note") and (ii) a subordinated note substantially in
the form of Exhibit B (the "Canadian Dollar Subordinated Note";
each, a "Subordinated Note" and collectively, the "Subordinated
Notes"). The aggregate principal amount of the Subordinated
Notes at any time shall be equal to the difference between (a)
the aggregate principal amount on the issuance thereof and each
addition to the principal amount of each Subordinated Note with
respect to each Seller pursuant to the terms of subsection 2.3
minus (b) the aggregate amount of all payments made in respect of
the principal of the Subordinated Notes. All payments made in
respect of the Subordinated Notes shall be allocated among the
Sellers by the Master Servicer. Each Seller's interest in the
Subordinated Notes shall equal the sum of each addition thereto
allocated to such Seller pursuant to subsection 2.3(c) less the
sum of each repayment thereof allocated to such Seller. Interest
on the principal amount of each Subordinated Note shall accrue on
the last day of each fiscal month of the Sellers at the ABR from
and including the Effective Date and shall be paid on each
Settlement Date with respect to amounts accrued and not paid as
of the last day of the preceding Settlement Period and/or the
maturity date thereof provided, however, that accrued interest on
a Subordinated Note which is not so paid may be added to the
principal amount of such Subordinated Note. Principal not prepaid
pursuant to the terms hereof and of the other Sale Documents
shall be payable on the maturity date thereof. Default in the
payment of principal or interest under either Subordinated Note
shall not constitute a default or event of default or a Purchase
Termination Event hereunder or a Termination Event under the
Receivables Transfer Agreement.
8.2 Restrictions on Transfer of Subordinated Notes.
Neither any Subordinated Note, nor any right of any Seller to
receive payments thereunder, shall be assigned, transferred,
exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that any Seller may pledge its
rights to receive payments under either Subordinated Note to the
lenders under the Credit Agreement subject to the conditions that
the Collateral Agent and any present or future holder or
beneficiary of such right to receive payments under a
Subordinated Note agrees, in its capacity as such, to be bound by
all the terms and conditions of this Agreement, including without
limitation, subsection 9.16 hereof.
<PAGE>
26
ARTICLE IX
MISCELLANEOUS
9.1 Further Assurances. (a) Each Seller agrees, from
time to time, to do and perform any and all acts and to execute
any and all further instruments reasonably required or requested
by the Company more fully to effect the purposes of this
Agreement and the sales of the Receivables hereunder, including,
without limitation, the execution of any financing statements or
continuation statements (and other similar instruments) relating
to the Receivables for filing under the provisions of the Uniform
Commercial Code, or any similar law, of any applicable
jurisdiction.
(b) From time to time at the request of a Seller, the
Company shall deliver to such Seller such documents, assignments,
releases and instruments of termination as such Seller may
reasonably request to evidence the reconveyance by the Company to
such Seller of a Receivable pursuant to the terms of subsection
2.1(b) or 2.6, provided that the Company shall have been paid all
amounts due thereunder; and the Company and the Master Servicer
shall take such action as such Seller may reasonably request, at
the expense of such Seller, to assure that any such Receivable,
the Related Property with respect thereto and the proceeds
thereof do not remain commingled with Collections hereunder.
9.2 Payments. Each cash payment to be made by any of
the Company or the Sellers hereunder shall be made on the
required payment date and in immediately available funds at the
office of the payee set forth below its signature hereto or to
such other office as may be specified by either party in a notice
to the other party hereto and (x) with respect to payments on
account of Receivables denominated in Canadian Dollars, in
Canadian Dollars except to the extent provided otherwise in
Article II hereof and (ii) in all other cases, in Dollars.
9.3 Costs and Expenses. The Sellers, jointly and
severally, agree (a) to pay or reimburse the Company for all its
out-of-pocket costs and expenses incurred in connection with the
preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the other Sale Documents and any
other documents prepared in connection herewith and therewith,
the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation,
all reasonable and documented fees and disbursements of counsel,
(b) to pay or reimburse the Company for all its costs and
expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement and any of the
other Related Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Company, (c)
to pay, indemnify, and hold the Company harmless from, any and
all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise
and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of,
this Agreement and any such other documents, (d) to pay,
indemnify, and hold the
<PAGE>
27
Company harmless from, any and all
Canadian withholding taxes which may be imposed in respect of the
Receivables or in connection with the Sale Transactions, and (e)
to pay, indemnify, and hold the Company harmless from and against
any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (i) which may at
any time be imposed on, incurred by or asserted against the
Company in any way relating to or arising out of this Agreement
or the transactions contemplated hereby or in connection herewith
or any action taken or omitted by the Company under or in
connection with any of the foregoing (all such other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements being herein called
"Indemnified Liabilities") or (ii) which would not have been
imposed on, incurred by or asserted against the Company but for
its having purchased the Receivables hereunder, provided, that
such indemnity shall not be available to the extent that such
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 the Company, and provided, further, that
the Sellers shall have no obligation under this subsection 9.3 to
the Company with respect to Indemnified Liabilities arising from
(i) any action taken, or omitted to be taken, by a Servicer which
is not an Affiliate of the Sellers, (ii) any Eligible Receivable
which becomes a Charge-Off as a result of non-payment by the
Obligor with respect thereto or (iii) any action taken by the
Banks or the Company at the direction of the Administrative Agent
in collecting from an Obligor. The agreements in this subsection
shall survive the collection of all Receivables, the termination
of this Agreement and the payment of all amounts payable
hereunder.
9.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Sellers and the
Company and their respective successors (whether by merger,
consolidation or otherwise) and assigns. Except as expressly
permitted pursuant to subsections 8.2 and 8.4, each Seller agrees
that it will not assign or transfer all or any portion of its
rights or obligations hereunder without the prior written consent
of the Company. The Sellers acknowledge that the Company shall
assign all of its rights hereunder to the Banks and, after the
termination of the Receivables Transfer Agreement, to another
entity or entities (each, a "Subsequent Financing Party") buying
an interest in the Receivables. Each Seller consents to such
assignment and agrees that the Administrative Agent and the
Banks, to the extent provided in the Receivables Transfer
Agreement, and each Subsequent Financing Party to the extent
provided in the documents to which it is a party, shall be
entitled to enforce the terms of this Agreement and the rights
(including, without limitation, the right to grant or withhold
any consent or waiver) of the Company directly against such
Seller, whether or not a Purchase Termination Event or a
Termination Event has occurred. Each Seller further agrees that,
in respect of its obligations hereunder, it will act at the
direction of and in accordance with all requests and instructions
from the Administrative Agent or such Subsequent Financing Party,
as the case may be, until all amounts due to the Banks or such
Subsequent Financing Party, as the case may be, are paid in full.
Each of the Administrative Agent and each such Subsequent
Financing Party shall have the rights of third-party
beneficiaries under this Agreement.
9.5 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
<PAGE>
28
GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
9.6 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Company,
any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
9.7 Amendments and Waivers. Neither this Agreement
nor any terms hereof may be amended, supplemented or modified
except in a writing signed by the Company and any affected
Seller.
9.8 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.9 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Company
and C&A Products, and as set forth on Schedule 1 hereof in the
case of the Sellers, or to such other address as may be hereafter
notified by the respective parties hereto:
The Company: Carcorp, Inc.
5025 S. Eastern Avenue
Suite 16, Number 205
Las Vegas, Nevada 89119
Attention:
Telecopy:
C&A Products: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Mark Remissong
Telecopy: 704-548-2330
9.10 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same
<PAGE>
29
instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company.
9.11 Construction of Agreement as Security Agreement.
(a) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase
by the Company and a sale by the applicable Seller of the
Purchased Receivables and Related Property with respect thereto
and not as a lending transaction. If, however, notwithstanding
the intent of the parties, such transactions are deemed to be
loans, each Seller hereby grants to the Company a first priority
security interest in all of such Seller's right, title and
interest in and to the Receivables and the Related Property now
existing and hereafter created, all monies due or to become due
and all amounts received with respect thereto, including, without
limitation, Recoveries, and all "proceeds" thereof, to secure all
such Seller's obligations hereunder.
(b) This Agreement shall constitute a security
agreement under applicable law.
9.12 Waivers 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 respect of any litigation
directly or indirectly arising out of, under or in connection
with this Agreement or any of the other Sale Documents. 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 and the other Sale
Documents, as applicable, by, among other things, the mutual
waivers and certifications in this subsection 9.12.
9.13 Jurisdiction; Consent to Service of Process. (a)
Each party hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Sale Documents, 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 shall affect any
right that the Company may otherwise have to bring any action or
proceeding relating to this Agreement or the other Sale Documents
against any Seller or its properties in the courts of any
jurisdiction.
(b) Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent they 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 the
other Sale Documents in any New York State or Federal court.
Each of the
<PAGE>
30
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.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in
subsection 9.9. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other
manner permitted by law.
9.14 Addition of Sellers. Subject to subsection 3.4
hereof, subsection 8.22 of the Receivables Transfer Agreement and
the terms and conditions of this subsection 9.14, from time to
time one or more additional Subsidiaries of C&A Products may
become Sellers hereunder and parties hereto. If any such
Subsidiary wishes to become an additional Seller, it shall submit
a request to such effect in writing to the Company. The Company,
in its sole and absolute discretion, may agree to or deny any
such request, provided that, if the Company shall have failed to
respond to any such request within 30 days after receipt thereof,
such request shall be deemed to have been denied. If the Company
shall have agreed to any such request, such Subsidiary shall
become an additional Seller hereunder and a party hereto on the
related Seller Addition Date upon satisfaction of the conditions
set forth in subsection 3.4.
9.15 Optional Termination of Seller. (a) Any Seller
may be terminated as a Seller hereunder on the date such Seller
ceases to be a wholly owned direct or indirect Subsidiary of C&A
Products, provided (i) that the aggregate outstanding Adjusted
Principal Amount of Purchased Receivables sold by all Sellers
which so cease to be wholly owned Subsidiaries at such time
(together with the aggregate outstanding Adjusted Principal
Amount of Purchased Receivables sold by all Sellers which have
been terminated pursuant to this subsection 9.15 within the
preceding 90 days) shall not exceed 10% of the aggregate
outstanding Adjusted Principal Amount of all Purchased
Receivables and (ii) that no Purchase Termination Event or
Incipient Purchase Termination Event has occurred and is
continuing, or would result as a result thereof. From and after
the date any such Seller ceases to be a wholly owned Subsidiary
of C&A Products, the Company shall cease buying Receivables and
Related Property from such Seller. Each such Seller shall be
released as a Seller party hereto for all purposes and shall
cease to be a party hereto on the date on which there are no
amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company, whether such
amounts have been repurchased, collected or written off in
accordance with the Policies and the Company Policies. Prior to
such date, such Seller shall be obligated to perform its
servicing and other obligations hereunder and under the
Transaction Documents to which it is a party with respect to
Purchased Receivables previously sold by such Seller to the
Company, including, without limitation, its obligation to deposit
Collections into the appropriate Lockboxes.
(b) From time to time the Sellers, or the Master
Servicer on behalf of the Sellers, may request in writing that
the Company designate one or more Sellers as Sellers that shall
cease to be parties to this Agreement; provided that no Purchase
Termination Event or Incipient Purchase Termination Event has
occurred and is continuing, or would result as a result thereof.
Any such request shall specify the minimum aggregate Adjusted
Principal Amount of outstanding Purchased Receivables to have
been sold by the Sellers to be so designated by the Company. The
Company, in its sole and absolute discretion (subject to
<PAGE>
31
subsection 8.23 of the Receivables Transfer Agreement), shall,
within 45 days of receipt of such request, select the Sellers to
be so terminated, provided that the aggregate Adjusted Principal
Amount of outstanding Purchased Receivables previously sold by
such Sellers shall be substantially equal to the Adjusted
Principal Amount specified in such request. Promptly after
receipt of any such designation by the Company, the Sellers shall
either (i) elect not to terminate such designated Sellers or (ii)
select a date, which date shall not be later than 30 days after
the date of receipt of such designation, as the "Sale Termination
Date" for such designated Sellers. From and after such date, the
Company shall cease buying Receivables and Related Property from
such Sellers. Each such Seller shall be released as a Seller
hereunder and a party hereto for all purposes and shall cease to
be a party hereto on the date on which there are no amounts
outstanding with respect to Purchased Receivables previously sold
by such Seller to the Company, whether such amounts have been
repurchased in the manner provided in clause (a) above, collected
or written off in accordance with the Policies and the Company
Policies. Prior to such date, such Seller shall be obligated to
perform its servicing and other obligations hereunder and under
the Related Documents with respect to Purchased Receivables
previously sold by such Seller to the Company, including, without
limitation, its obligation to deposit Collections into the
appropriate Lockboxes.
(c) A terminated Seller shall have no obligation to
repurchase any Receivables other than Receivables previously sold
by it to the Company which are subject to a Repurchase Event.
9.16 No Bankruptcy Petition. Each Seller and C&A
Products by entering into this Agreement, and any present or
future holder of a Subordinated Note, by its acceptance thereof,
covenants and agrees that, prior to the date which is one year
and one day after the date of termination of this Agreement
pursuant to subsection 9.17, it will not institute against, or
join any other Person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal
or state bankruptcy or similar law.
9.17 Termination. This Agreement will terminate at
such time as (a) the commitment of the Company to purchase
Receivables from all Sellers hereunder shall have terminated and
(b) all Receivables purchased hereunder have been collected, and
the proceeds thereof turned over to the Company and all other
amounts owing to the Company hereunder shall have been paid in
full or, if Receivables sold hereunder have not been collected
such Receivables have become Defaulted Receivables and the
Company shall have completed its collection efforts in respect
thereto; provided, however, that the indemnities of the Sellers
to the Company set forth in this Agreement shall survive such
termination and provided, further, that, to the extent any
amounts remain due and owing to the Company hereunder, the
Company shall remain entitled to receive any collections on
Receivables sold hereunder which have become Defaulted
Receivables after it shall have completed its collection efforts
in respect thereof.
9.18 Confidentiality. The Company agrees that it
shall maintain in confidence any information relating to any
Seller furnished to it by or on behalf of such Seller (other than
information that (x) has become generally available to the public
other than as a result of
<PAGE>
32
a disclosure by such party, (y) has
been independently developed by such party without violating this
subsection 9.18 or (z) was available to such party from a third
party having, to such party's knowledge, no obligation of
confidentiality to such Seller) and shall not reveal the same
other than to its directors, officers, employees and advisors
with a need to know except: (a) to the extent necessary to
comply with law or any legal process or the requirements of any
Governmental Authority or of any securities exchange on which
securities of the disclosing party or any Affiliate of the
disclosing party are listed or traded, (b) as part of normal
reporting or review procedures to Governmental Authorities or its
parent companies, Affiliates or auditors, (c) in order to enforce
its rights under any Sale Document in a legal proceeding and (d)
in connection with the collection of any Purchased Receivable or
the exercise of any remedy hereunder or under the Receivables
Transfer Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
COLLINS & AIKMAN PRODUCTS CO., as Master
Servicer
By: Paul W. Meeks
Title: Vice President & Treasurer
CARCORP, INC.
By: Mark O. Remissong
Title: President
The Sellers:
COLLINS & AIKMAN PRODUCTS CO.
By: Paul W. Meeks
Title: Vice President & Treasurer
ACK-TI-LINING, INC.
By: Paul W. Meeks
Title: Vice President & Treasurer
<PAGE>
33
WCA CANADA, INC.
By: Paul W. Meeks
Title: Assistant Treasurer
IMPERIAL WALLCOVERINGS (CANADA), INC.
By: Paul W. Meeks
Title: Vice President & Treasurer
IMPERIAL WALLCOVERINGS, INC.
By: Paul W. Meeks
Title: Vice President & Treasurer
THE AKRO CORPORATION
By: Paul W. Meeks
Title: Vice President & Treasurer
DURA ACQUISITION CORP.
By: Paul W. Meeks
Title: Vice President & Treasurer
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
State of
Incorporation
Seller Location of Chief Executive Office Office Where Records are Kept
<S> <C> <C> <C>
Ack-Ti-Lining, Inc. New York 210 Madison Avenue, 6th Floor, New 701 McCullough Drive, Charlotte, NC
York, NY 10016 28262
The Akro Corporation Delaware 1212 7th Street SW, P.O. Box 8650, 701 McCullough Drive, Charlotte, NC
Canton, OH 44711 28262
Collins & Aikman Products Delaware 701 McCullough Drive, Charlotte, NC 701 McCullough Drive, Charlotte, NC
Co. 28262 28262
Dura Acquisition Corp. Delaware 1365 East Beecher Street, Adrian, MI 1365 East Beecher Street, Adrian, MI
49221 49221
Imperial Wallcoverings, Delaware 23645 Mercantile Road, Beachwood, OH 23645 Mercantile Road, Beachwood, OH
Inc. 44122 44122
Imperial Wallcoverings Ontario 1051 Rue Galt Est, Sherbrooke, Quebec, 1051 Rue Galt Est, Sherbrooke, Quebec,
(Canada), Inc. Canada J1G 1Y7 Canada, J1G 1Y7
WCA Canada, Inc. Ontario 150 Collins Street, Farnham, Quebec, 150 Collins Street, Farnham, Quebec,
Canada, J2N 2R6 Canada, J2N 2R6
</TABLE>
<PAGE>
SCHEDULE 2
LOCKBOXES
<PAGE>
SCHEDULE 3
DISCOUNTED PERCENTAGE
The Discounted Percentage applicable to the Receivables purchased on any
date from any Seller shall equal the percentage obtained from the
following formula:
100% - (A + B + C + D)
all determined by the Company as of the related Payment Date,
Where
A = Adjusted Loss Reserve Percentage, which as of such Payment Date
will equal the ratio obtained by dividing (a) Charge-Offs (net of
recoveries in respect of Charge-Offs) with respect to such Seller
during the twelve-fiscal-month period immediately preceding the
Settlement Date most recently preceding such Payment Date by (b)
four times the aggregate amount of Collections during the three-
fiscal-month period immediately preceding the Settlement Date most
recently preceding such Payment Date with respect to Receivables
originated by such Seller.
B = Adjusted Yield Reserve Percentage, which as of such Payment Date
will equal the amount obtained by dividing (a) the product of (i)
1.5, (ii) Days Sales Outstanding and (iii) the Adjusted Discount
Rate by (b) 360.
C = Servicing Reserve Percentage.
D = Processing Expense Reserve Percentage, which will equal 1/2% and
reflects the cost of the Company's overhead, including costs of
processing the purchase of Receivables and other normal operating
costs and a reasonable profit margin.
None of the elements of the above-referenced formula, in respect of any
purchase of Receivables, will be adjusted following the related Payment
Date.
"Adjusted Discount Rate" means as of such Payment Date the sum of (a)
the weighted average of (i) the weighted average rate of interest
payable to the Banks or any Subsequent Financing Party with respect to
the outstanding Participating Interest and (ii) the rate of interest
payable to the Sellers with respect to the outstanding principal amount
of the Subordinated Notes as such rates are in effect as at the end of
the fiscal month immediately preceding the Settlement Date most recent
to such Payment Date and (iii) an assumed return on the shareholders'
equity in the Company at a rate to be determined from time to time by
the Master Servicer and (b) the amount obtained by dividing (i) the
aggregate amount of fees (other than the Monthly Servicing Fee) accrued
with respect to the Receivables Transfer Agreement during the fiscal
month immediately preceding the Settlement Date most recent to such
Payment Date by (ii) the average outstanding Adjusted Principal Amount
of the Receivables during such fiscal month.
With respect to each calculation set forth above with respect to a
Settlement Date, such calculation as calculated on each Settlement
Statement Date and included in the applicable Settlement Statement shall
remain in effect from and including the related Settlement Date to but
excluding the following Statement Date.
<PAGE>
SCHEDULE 4
TAX RETURNS
(i) Material Claims
The Internal Revenue Service has proposed adjustments which would disallow
approximately $177 million of the approximately $434 million of net operating
loss carryforwards at January 29, 1994.
The California Franchise Tax Board has proposed a tax assessment of
approximately $12 million for fiscal year 1987. The interest on this
assessment is estimated to be $9 million.
(ii) Statute Extensions
<TABLE>
<CAPTION>
Taxing Type of Extension
Authority Tax Entity Period Date
<S> <C> <C> <C> <C>
Federal Income Collins & Aikman Holdings II Corp. & Subs. 1/89 - 1/90 06/30/95
Federal Income Collins & Aikman Holdings II Corp. & Subs. 1/91 12/31/95
Federal Income Collins & Aikman Group, Inc. & Subs. 1/89 - 4/89 06/30/95
Federal Income Collins & Aikman Export Corporation 1/91 12/31/95
Federal Income Collins & Aikman Export Corporation 1/89 - 1/90 06/30/95
Federal Withholding Collins & Aikman Group, Inc. & Subs. 12/88 -12/90 06/30/95
California Income Collins & Aikman Group, Inc. & Subs. 1/88 11/15/95
California Unemployment Collins & Aikman Group, Inc. 9/90 - 3/91 07/31/94
Illinois Sales/Use Collins & Aikman Corporation 1/91 - 2/94 12/31/94
NY City Income Collins & Aikman Group, Inc. 1/86 - 1/89 12/31/94
NY City Income Greeff Fabrics, Inc. 1/90 - 1/91 12/31/94
</TABLE>
(iii) Tax Examinations
<TABLE>
<CAPTION>
Taxing Type of
Authority Tax Entity Period Under Exam
<S> <C> <C> <C>
Federal Income Collins & Aikman Holdings II & Subs. 1/89 - 1/92
Federal Income Collins & Aikman Group, Inc. & Subs. 1/89 - 4/89
Federal Income Collins & Aikman Export Corporation 1/89 - 1/91
Canada Customs/GST Imperial Wallcoverings (Canada) Inc. 6/91 - 6/94
California Income Collins & Aikman Group, Inc. & Subs. 1/88
California Unemployment Collins & Aikman Group, Inc. 9/90 - 12/93
Florida Sales/Use Imperial Wallcoverings, Inc. 3/88 - 2/93
Illinois Sales/Use Collins & Aikman Corporation 1/91 - 2/94
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
Taxing Type of
Authority Tax Entity Period Under Exam
<S> <C> <C> <C>
Massachusetts Income Collins & Aikman Group, Inc. 1/89 - 1/90
Massachusetts Income Collins & Aikman Group, Inc. 1/83
Massachusetts Income Wickes Manufacturing Co. 1/90
Mecklenburg
County (NC) Property Collins & Aikman Group, Inc. 1/92 - 12/93
New York Income Collins & Aikman Corporation 1/88 - 1/91
New York Income Wickes Manufacturing Company 1/88 - 1/91
New York City Income Collins & Aikman Group, Inc. 1/86 - 1/89
New York City Income Greeff Fabrics, Inc. 1/90 - 1/91
New York City Income Collins & Aikman Group, Inc. 4/89 - 1/92
North Carolina Income Collins & Aikman Corporation
and Collins & Aikman Lease Co. 1/91 - 1/93
Ohio Income Collins & Aikman Group, Inc. 1/91 - 1/92
Ohio Sales/Use Imperial Wallcoverings, Inc. 2/90 - 1/93
Philadelphia Income Collins & Aikman Corporation 1/88 - 1/93
Texas Sales/Use Collins & Aikman Group, Inc. 1/91 - 4/94
Texas Sales/Use Collins & Aikman Corporation 7/88 - 6/92
</TABLE>
(iv) Pending Issues
The Internal Revenue Service has proposed adjustments which would disallow
approximately $177 million of the approximately $434 million of net operating
loss carryforwards at January 29, 1994.
The California Franchise Tax Board has proposed a tax assessment of
approximately $12 million for fiscal year 1987. The interest on this
assessment is estimated to be $9 million.
<PAGE>
EXHIBIT A TO THE
RECEIVABLES SALE AGREEMENT
[FORM OF U.S. DOLLAR SUBORDINATED NOTE]
New York, New York
July __, 1994
CARCORP, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Collins & Aikman Products
Co., a Delaware corporation ("C&A Products"), and to each of the
subsidiaries of C&A Products which is from time to time a party
to the Receivables Sale Agreement referred to below (together
with C&A Products, collectively, the "Sellers"), the principal
amount of this Subordinated Note, determined as described below,
together with interest thereon at a rate per annum equal to the
ABR (as defined in the Receivables Sale Agreement) in lawful
money of the United States of America. Capitalized terms used
herein but not defined herein shall have the meanings assigned to
such terms in the Receivables Sale Agreement, dated as of July
13, 1994, among the Company, the Sellers and C&A Products, as
Master Servicer (as amended, supplemented or otherwise modified
from time to time, the "Receivables Sale Agreement"). This
Subordinated Note is the U.S. Dollar Subordinated Note referred
to in the Receivables Sale Agreement.
The aggregate principal amount of this Subordinated
Note at any time shall be equal to the difference between (a) the
aggregate principal amount on the issuance hereof and each
addition to the principal amount of this Subordinated Note
pursuant to the terms of subsection 2.3 of the Receivables Sale
Agreement or pursuant to the proviso contained in the penultimate
sentence of this paragraph minus (b) the aggregate amount of all
payments made in respect of the principal of this Subordinated
Note, in each case, as recorded on Schedule 1 annexed to and
constituting a part of this Subordinated Note. All payments made
in respect of this Subordinated Note shall be allocated among the
Sellers by the Master Servicer. Principal not prepaid pursuant
to the terms of the Receivables Sale Agreement and of the other
Sale Documents shall be payable on the maturity date thereof (the
"Maturity Date"). Payments of interest on this Subordinated Note
shall be paid on each Settlement Date with respect to amounts
accrued and not paid as of the last day of the preceding
Settlement Period (or, in the case of the first Settlement Date,
as of the date on which this Subordinated Note is issued) and on
the Maturity Date by wire transfer of immediately available funds
to such account of each Seller as such Seller may designate in
writing, provided, however, that accrued interest hereon which is
not so paid may instead be added to the principal amount hereof.
Notwithstanding the foregoing, no payments of interest or
principal may be made under this Subordinated Note at any time
<PAGE>
2
except as permitted under the Subordination Agreement referred to
below.
Default in the payment of principal or interest under
this Subordinated Note shall not constitute a default or event of
default hereunder or a Purchase Termination Event under the
Receivables Sale Agreement or a Termination Event under the
Receivables Transfer Agreement.
The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Senior
Obligations pursuant to, and as defined in, the Subordination
Agreement, dated as of July 13, 1994, among the maker hereof, the
payees named herein and certain other parties. Each holder of
this Subordinated Note agrees that it shall have no right to be
paid, and shall have no claim to payment, except in accordance
with, and subject to the terms of, subsection 2.7 of the
Receivables Transfer Agreement.
The Company hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The failure
of any holder to exercise any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that
or any subsequent instance.
Neither this Subordinated Note, nor any right of any
Seller to receive payments hereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed.
THIS SUBORDINATED NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CARCORP, INC.
By:_________________________
Title:
<PAGE>
Schedule 1 to
Subordinated Note
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of Unpaid
Seller (if Amount of Principal Principal Notation
Date specified) Loans Repaid Balance Made By
<S> <C> <C> <C> <C> <C>
____ __________ _________ _________ ________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ ________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
</TABLE>
<PAGE>
EXHIBIT B TO THE
RECEIVABLES SALE AGREEMENT
[FORM OF CANADIAN DOLLAR SUBORDINATED NOTE]
New York, New York
July __, 1994
CARCORP, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Collins & Aikman Products
Co., a Delaware corporation ("C&A Products"), and to each of the
subsidiaries of C&A Products which is from time to time a party
to the Receivables Sale Agreement referred to below (together
with C&A Products, collectively, the "Sellers"), the principal
amount of this Subordinated Note, determined as described below,
together with interest thereon at a rate per annum equal to the
ABR (as defined in the Receivables Sale Agreement) in lawful
money of Canada. Capitalized terms used herein but not defined
herein shall have the meanings assigned to such terms in the
Receivables Sale Agreement, dated as of July 13, 1994, among the
Company, the Sellers and C&A Products, as Master Servicer (as
amended, supplemented or otherwise modified from time to time,
the "Receivables Sale Agreement"). This Subordinated Note is the
Canadian Dollar Subordinated Note referred to in the Receivables
Sale Agreement.
The aggregate principal amount of this Subordinated
Note at any time shall be equal to the difference between (a) the
aggregate principal amount on the issuance hereof and each
addition to the principal amount of this Subordinated Note
pursuant to the terms of subsection 2.3 of the Receivables Sale
Agreement or pursuant to the proviso contained in the penultimate
sentence of this paragraph minus (b) the aggregate amount of all
payments made in respect of the principal of this Subordinated
Note, in each case, as recorded on Schedule 1 annexed to and
constituting a part of this Subordinated Note. All payments made
in respect of this Subordinated Note shall be allocated among the
Sellers by the Master Servicer. Principal not prepaid pursuant
to the terms of the Receivables Sale Agreement and of the other
Sale Documents shall be payable on the maturity date thereof (the
"Maturity Date"). Payments of interest on this Subordinated Note
shall be paid on each Settlement Date with respect to amounts
accrued and not paid as of the last day of the preceding
Settlement Period (or, in the case of the first Settlement Date,
as of the date on which this Subordinated Note is issued) and on
the Maturity Date by wire transfer of immediately available funds
to such account of each Seller as such Seller may designate in
writing, provided, however, that accrued interest hereon which is
not so paid may instead be added to the principal amount hereof.
Notwithstanding the foregoing, no payments of interest or
principal may be made under this Subordinated Note at any time
<PAGE>
2
except as permitted under the Subordination Agreement referred to
below.
Default in the payment of principal or interest under
this Subordinated Note shall not constitute a default or event of
default hereunder or a Purchase Termination Event under the
Receivables Sale Agreement or a Termination Event under the
Receivables Transfer Agreement.
The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Senior
Obligations pursuant to, and as defined in, the Subordination
Agreement dated as of July 13, 1994 among the maker hereof, the
payees named herein and certain other parties. Each holder of
this Subordinated Note agrees that it shall have no right to be
paid, and shall have no claim to payment, except in accordance
with, and subject to the terms of, subsection 2.7 of the
Receivables Transfer Agreement.
The Company hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The failure
of any holder to exercise any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that
or any subsequent instance.
Neither this Subordinated Note, nor any right of any
Seller to receive payments hereunder, shall be assigned,
transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed.
THIS SUBORDINATED NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
CARCORP, INC.
By:_________________________
Title:
<PAGE>
Schedule 1 to
Subordinated Note
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of Unpaid
Seller (if Amount of Principal Principal Notation
Date specified) Loans Repaid Balance Made By
<S> <C> <C> <C> <C> <C>
____ __________ _________ _________ ________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ ________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
____ __________ _________ _________ _________ ________
</TABLE>
<PAGE>
EXHIBIT C TO THE RECEIVABLES SALE AGREEMENT
EXHIBIT F TO THE RECEIVABLES TRANSFER AGREEMENT
[FORM OF ADDITIONAL SELLER/SERVICER SUPPLEMENT]
SUPPLEMENT, dated _________________, to (i) the
Receivables Sale Agreement, dated as of July 13, 1994 (as
amended, the "Receivables Sale Agreement"), among Collins &
Aikman Products Co., a Delaware corporation ("C&A Products"), and
each of the subsidiaries of C&A Products from time to time
parties thereto (the "Sellers"), C&A Products, as master servicer
(in such capacity, the "Master Servicer"), and Carcorp, Inc., a
Delaware corporation (the "Company"), (ii) the Receivables
Transfer and Servicing Agreement, dated as of July 13, 1994 (as
amended, the "Receivables Transfer Agreement"), among the
Company, the Master Servicer, certain of the Sellers, in their
capacities as servicers of the Receivables (in such capacities,
the "Servicers"), the several financial institutions from time to
time parties thereto (the "Banks") and Chemical Bank, as
administrative agent for the Banks (in such capacity, the
"Administrative Agent"), and (iii) the Subordination Agreement,
dated as of July 13, 1994 (as amended, the "Subordination
Agreement"), among the Company, the Sellers from time to time
parties thereto and the Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Receivables Sale Agreement provides that
any Subsidiary of C&A Products, although not originally a Seller
thereunder, may become a Seller under the Receivables Sale
Agreement, with (i) the consent of the Company and the Required
Banks and (ii) the satisfaction of each of the conditions
precedent set forth in subsection 3.4 of the Receivables Sale
Agreement (one of which is the delivery to the Company of a
supplement in substantially the form of this Supplement);
WHEREAS, the Receivables Transfer Agreement provides
that any Subsidiary of C&A Products, although not originally a
Servicer thereunder, may become a Servicer under the Receivables
Transfer Agreement, with (i) the consent of the Company and the
Required Banks to such Subsidiary becoming a Seller under the
Receivables Sale Agreement, (ii) the delivery to the Company of a
supplement in substantially the form of this Supplement and (iii)
the satisfaction of each of the conditions precedent set forth in
subsection 3.4 of the Receivables Sale Agreement;
WHEREAS, the Subordination Agreement provides that any
Subsidiary of C&A Group, although not originally a Seller
thereunder, shall become a Seller under the Subordination
Agreement immediately upon such Subsidiary becoming a Seller
under the Receivables Sale Agreement; and
<PAGE>
2
WHEREAS, the undersigned was not an original Seller
under the Receivables Sale Agreement and the Subordination
Agreement or an original Servicer under the Receivables Transfer
Agreement but now desires to become a Seller and a Servicer,
respectively, thereunder.
NOW, THEREFORE, the undersigned hereby agrees as
follows:
1. The undersigned agrees to be bound by all of the
provisions of each of the Receivables Sale Agreement, the
Subordination Agreement and the Receivables Transfer
Agreement applicable to a Seller and a Servicer,
respectively, thereunder and agrees that it shall, on the
date this Supplement is accepted by the Company and the
Required Banks, become (a) in the case of the Receivables
Sale Agreement and the Subordination Agreement, a Seller and
(b) in the case of the Receivables Transfer Agreement, a
Servicer, for all purposes of the Receivables Sale
Agreement, the Subordination Agreement and the Receivables
Transfer Agreement, respectively, to the same extent as if
originally a party thereto.
2. Terms defined in Annex X to the Receivables
Transfer Agreement shall have their defined meanings when
used herein.
IN WITNESS WHEREOF, the undersigned has caused this
Supplement to be executed and delivered by a duly authorized
officer on the date first above written.
[Insert name of Seller/Servicer]
By________________________________
Title:
Accepted as of the date first
above written:
CARCORP, INC.
By:
Title:
[Required Banks]
By:
Title:
<PAGE>
ANNEX X
"ABR": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof, "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by
Chemical as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as
being effective. "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and
(ii) Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such
day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published
in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day,
the average of the secondary market quotations for
three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average 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 which is a Business Day, the average
of the quotations for the day of such transactions received
by the Administrative Agent from three Federal funds brokers
of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the
terms thereof, the ABR shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
ABR due to a change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"ABR Participating Interest": with respect to any
Bank, that portion of its Participating Interest in the
Receivables with respect to which the Purchase Discount
Amount is determined by reference to the ABR.
<PAGE>
2
"Accounts": as defined in subsection 2.1(c)(ii) of the
Receivables Transfer Agreement.
"Acquiring Banks": as defined in subsection 11.4(d) of
the Receivables Transfer Agreement.
"Additional Seller Supplement": an instrument
substantially in the form of Exhibit C to the Receivables
Sale Agreement by which a Subsidiary of C&A Products becomes
a Seller party to the Receivables Sale Agreement.
"Additional Servicer Supplement": an instrument
substantially in the form of Exhibit F to the Receivables
Transfer Agreement by which a Subsidiary of C&A Products
becomes a Servicer party to the Receivables Transfer
Agreement.
"Adjusted Principal Amount": (a) in the case of any
Receivable denominated in U.S. Dollars, the Principal Amount
in respect thereof and (b) in the case of any Receivable
denominated in Canadian Dollars, the Canadian Exchange
Percentage of the Principal Amount in respect thereof.
"Adjustment": as defined in subsection 2.5 of the
Receivables Sale Agreement.
"Adjustment Payment": as defined in subsection 12.4 of
the Receivables Transfer Agreement.
"Administrative Agent": Chemical, together with its
affiliates, as the arranger of the Commitments and as the
agent for the Banks under the Receivables Transfer
Agreement.
"Affiliate": as to any Person, any other Person that
directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with
the Person specified.
"Aggregate Eligible Receivables": the excess of (a)
the Applicable Eligible Receivables Percentage of the
aggregate outstanding Adjusted Principal Amount of all
Receivables over (b) the aggregate Excess Amounts with
respect to all Obligors.
"Agreement": the agreement wherein such term is used,
as the same may from time to time be amended, supplemented
or otherwise modified.
"Amortization Period": the period commencing after the
end of the Commitment Period and ending with the termination
of the Receivables Transfer Agreement pursuant to subsection
4.1 thereof.
"Applicable ABR Margin": (a) prior to the 270th day
after the Effective Date, 0% and (b) on and after such 270th
day, the "Applicable Margin" with respect to "ABR Loans" (as
each such term is defined in the Credit Agreement),
determined in
<PAGE>
3
accordance with the provisions of the Credit
Agreement as in effect on the Effective Date.
"Applicable Eligible Receivables Percentage": at any
date of determination, a fraction (expressed as a
percentage) equal to (a) the aggregate Adjusted Principal
Amount of all Eligible Receivables determined pursuant to
the most recent Settlement Statement divided by (b) the
aggregate Adjusted Principal Amount of all outstanding
Receivables generated by the Sellers determined pursuant to
such Settlement Statement.
"Applicable Eurodollar Margin": (a) prior to the 270th
day after the Effective Date, 0.625% and (b) on and after
such 270th day, the "Applicable Margin" with respect to
"Eurodollar Loans" (as each such term is defined in the
Credit Agreement), determined in accordance with the
provisions of the Credit Agreement as in effect on the
Effective Date.
"Applicable Obligor Percentage": with respect to any
Obligor, (a) 7.5%, in the case of any such Obligor having a
long-term senior unsecured debt rating of at least A- from
S&P or A3 from Moody's or a short-term deposit or commercial
paper rating of at least A-1 from S&P or P-1 from Moody's,
provided, that in the case of General Motors Corporation,
Chrysler Corporation, Ford Motor Company and Honda Motor
Co., the Applicable Obligor Percentage shall instead be
17.0% so long as such Obligor maintains a short-term deposit
or commercial paper rating of at least A-2 from S&P or P-2
from Moody's; (b) 5.0%, in the case of any such Obligor (not
described in clause (a) above) having a long-term senior
unsecured debt rating of at least BBB- from S&P or Baa3 from
Moody's or a short-term deposit or commercial paper rating
of at least A-3 from S&P or P-3 from Moody's; or (c) 2.0%,
in the case of any other such Obligor.
"Assessment Rate": for any date, the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%)
most recently estimated by the Administrative Agent as the
then current net annual assessment rate that will be
employed in determining amounts payable by Chemical to the
Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time
deposits made in dollars at Chemical's domestic offices.
"Average Default Ratio": for any Settlement Period, a
percentage equal to (a) the sum of the Default Ratios for
such Settlement Period and each of the two preceding
Settlement Periods divided by (b) 3.
"Average Dilution Ratio": with respect to any
Settlement Period, a fraction (a) the numerator of which is
the aggregate amount of Dilutive Credits which are incurred
with respect to the Receivables during the twelve-month
period ended on the last day of such Settlement Period and
(b) the denominator of which is the aggregate Adjusted
Principal Amount of Receivables generated by the Sellers
during the twelve-month period ended on the last day of such
Settlement Period.
<PAGE>
4
"Bank": each financial institution listed on Schedule
1 to the Receivables Transfer Agreement and each financial
institution to which an assignment has been made pursuant to
the terms of the Receivables Transfer Agreement, and any
successor of the foregoing.
"benefitted Bank": as defined in subsection 11.12 of
the Receivables Transfer Agreement.
"Board": the Board of Governors of the Federal Reserve
System and any successor thereto.
"Business Day": any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York)
on which banks are open for business in New York City;
provided, however, that, when used in connection with any
Fixed Tranche or the determination of any Eurodollar Rate,
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.
"Business Day Received": as defined in subsection
12.1(d) of the Receivables Transfer Agreement.
"C&A Products": Collins & Aikman Products Co., a
Delaware corporation.
"Canada/Canadian Dollar Concentration Account": as
defined in subsection 2.7(a) of the Receivables Transfer
Agreement.
"Canada/U.S. Dollar Concentration Account": as defined
in subsection 2.7(a) of the Receivables Transfer Agreement.
"Canadian Dollars": dollars in lawful currency of
Canada.
"Canadian Dollar Subordinated Note": as defined in
subsection 8.1 of the Receivables Sale Agreement.
"Canadian Exchange Percentage": at any date, the rate
at which Canadian Dollars may be exchanged into Dollars
(expressed as the percentage of Dollars per Canadian
Dollar), determined by reference to the relevant Bloomberg
currency page. In the event that such rate does not appear
on any Bloomberg currency page, the "Canadian Exchange
Percentage" shall be determined by reference to such other
publicly available service for displaying exchange rates
with respect to Canadian Dollars as may be selected by the
Administrative Agent.
"Capital Lease Obligations": with respect to any
Person, 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 combina-
tion thereof, which obligations are required to be classi-
fied and accounted for as capital leases on a
<PAGE>
5
balance sheet of such Person under GAAP and, for the purposes
hereof, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance
with GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants, options or other rights to
purchase or acquire any of the foregoing.
"Cash Equivalents": book-entry securities, negotiable
instruments or securities represented by instruments in
bearer or registered form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company
incorporated under the laws of the United States of America
or any state thereof (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal
or State banking or depository institution authorities;
provided, that at the time of the investment or contractual
commitment to invest therein the commercial paper or other
short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a
Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a
rating of A-1 from S&P or of P-1 from Moody's;
(d) investments in money market funds having a rating
from each of the Rating Agencies in the highest investment
category granted thereby;
(e) demand deposits, time deposits and certificates of
deposit which are fully insured by the Federal Deposit
Insurance Corporation;
(f) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(g) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed
by the full faith and credit of the United States of
America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described
in clause (b) above or (ii) so long as the Company takes
actual or constructive possession of each security subject
to such repurchase obligations, a depository institution or
trust company the deposits of which are insured by the
Federal Deposit Insurance Corporation; or
<PAGE>
6
(h) any other investment permitted by Moody's and S&P
for short-term investment of funds supporting securities
with a rating of A1/P1 or better.
"Change in Control": (a) any "Change in Control"
under the Credit Agreement (as such term is defined
therein on the Effective Date), (b) except upon the
exercise by the Collateral Agent of any of its remedies
in accordance with the terms of the Pledge Agreement
(as in effect on the Effective Date), the Company shall
at any time not be a direct wholly owned Subsidiary of
C&A Products or (c) except as permitted pursuant to
subsection 9.15 of the Receivables Sale Agreement and
subsection 12.10 of the Receivables Transfer Agreement,
any Seller or Servicer (other than C&A Products) shall
at any time not be wholly owned, either directly or
indirectly, by C&A Products.
"Charge-Offs": with respect to the Receivables
originated by any Seller, for any period, the aggregate
amount of such Receivables that are written off, or should
be written off, during such period as uncollectible in
accordance with the Company Policies.
"Chemical": Chemical Bank, a New York banking
corporation.
"Closing Date": as defined in subsection 2.3(a) of the
Receivables Transfer Agreement.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Agent": as defined in the Credit
Agreement.
"Collections": all cash collections and other cash
proceeds received in respect of Receivables and Related
Property including, without limitation, Seller Repurchase
Payments and Seller Adjustment Payments and any Investment
Earnings.
"Commitment": of each Bank, the amount set forth
opposite the name of such Bank on Schedule 1 to the
Receivables Transfer Agreement, as such amount may be
changed pursuant to subsection 2.10 or 11.4 of the
Receivables Transfer Agreement.
"Commitment Fee": as defined in subsection 2.4 of the
Receivables Transfer Agreement.
"Commitment Percentage": as to any Bank, (a) on or
prior to the termination of the Commitments, the percentage
equivalent of a fraction the numerator of which is the
Commitment of such Bank and the denominator of which is the
Maximum Commitment and (b) thereafter, the percentage
equivalent of a fraction the numerator of which is the
Commitment of such Bank immediately prior to such
termination and the denominator of which is the Maximum
Commitment immediately prior to such termination.
<PAGE>
7
"Commitment Period": the period from and including the
Effective Date, up to but not including the first to occur
of (a) the Scheduled Termination Date, (b) any termination
of the Commitments pursuant to Article IX of the Receivables
Transfer Agreement and (c) termination (but not reduction)
of the Commitments pursuant to subsection 2.10 of the
Receivables Transfer Agreement.
"Company": Carcorp, Inc., a Delaware corporation.
"Company Policies": the written policies of the
Company with respect to Charge-Offs and Write-Offs of
Receivables.
"Complete Servicing Transfer": as defined in
subsection 12.2(d) of the Receivables Transfer Agreement.
"Concentration Accounts": the collective reference to
the U.S. Concentration Account, the Canada/U.S. Dollar
Concentration Account and the Canada/Canadian Dollar
Concentration Account.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is
bound.
"Control": 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 ownership of
voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Agreement": the Credit Agreement dated as of
June 22, 1994 among the Credit Agreement Borrower, WCA
Canada, Inc., as Canadian Borrower, Collins & Aikman
Corporation, as Guarantor, the Lenders named therein,
Continental Bank, N.A. and NationsBank, N.A., as Managing
Agents, and Chemical Bank, as Administrative Agent, as
amended, supplemented or otherwise modified from time to
time.
"Credit Agreement Borrower": C&A Products Co.
"Daily Report": as defined in subsection 12.5(a) of
the Receivables Transfer Agreement.
"Days Sales Outstanding": as of any day, the product
of (a) 91 and (b) the amount obtained by dividing (i) the
difference between (x) the aggregate Adjusted Principal
Amount of the Receivables and (y) the aggregate bad debt
reserve of the Sellers, in each case as at the end of the
fiscal month immediately preceding the most recent
Settlement Date, by (ii) aggregate net sales of the Sellers
for the three-fiscal-month period immediately preceding the
most recent Settlement Date.
<PAGE>
8
"Defaulted Receivable": any Receivable which has been
charged off, or should have been charged off, by the related
Servicer as uncollectible in accordance with the Policies of
such Servicer and the Company Policies.
"Default Ratio": (a) with respect to any Settlement
Period ending on or before April 30, 1994, a fraction (i)
the numerator of which is the aggregate Adjusted Principal
Amount of Receivables which first became 60 to 89 days past
due as of the last day of such month and (ii) the
denominator of which is the aggregate Adjusted Principal
Amount of Receivables generated by the Sellers during the
fourth preceding Settlement Period and (b) with respect to
any Settlement Period ending on any date thereafter, a
fraction (i) the numerator of which is the aggregate
Adjusted Principal Amount of Receivables which first became
90 to 119 days past due as of the last day of such month and
(ii) the denominator of which is the aggregate Adjusted
Principal Amount of Receivables generated by the Sellers
during the fifth preceding Settlement Period.
"Dilution Reserve Ratio": as of any day, the
percentage equivalent, determined pursuant to the most
recent Settlement Statement, of the product of (x) the sum
of clauses (i) and (ii) below and (y) clause (iii) below:
(i) (A) 2.0 times (B) the Average Dilution Ratio for
the most recently ended Settlement Period;
(ii) the product of (A)(x) the highest Peak Dilution
Ratio during the period of 12 fiscal months ended on the
last day of the most recently ended Settlement Period minus
(y) the amount determined pursuant to clause (i)(B) of this
definition and (B) the amount determined pursuant to clause
(A)(x) above divided by the amount determined pursuant to
clause (A)(y) above; and
(iii) (A) the aggregate Adjusted Principal Amount of
Receivables generated by the Sellers during the most
recently ended Settlement Period divided by (B) the
aggregate Adjusted Principal Amount of Eligible Receivables
on the last day of such Settlement Period.
"Dilutive Credits": for any period, the aggregate
amount of discount expense, rebates, refunds, billing error
expense, credits against Receivables and other adjustments
or allowances in respect of Receivables permitted or
incurred by the Seller or Servicer with respect thereto
during such period.
"Discount Rate": as of any day, the sum of (a) the
weighted average Purchase Discount Amount rate in effect
with respect to the Participating Interest as at the end of
the fiscal month immediately preceding the most recent
Settlement Date and (b) the amount obtained by dividing (i)
the aggregate amount of fees (other than the Monthly
Servicing Fee and the Purchase Discount Amount) accrued with
respect to the Participating Interest during the fiscal
month immediately preceding the most recent Settlement Date
by (ii) the average daily Net Investment during such fiscal
month.
<PAGE>
9
"Discounted Percentage": as defined in Schedule 3 to
the Receivables Sale Agreement.
"Documents": as defined in subsection 5.15(d)(3) of
the Receivables Sale Agreement.
"Dollars", "U.S. Dollars" and "$": dollars in lawful
currency of the United States of America.
"Early Termination": as defined in Article VII of the
Receivables Sale Agreement.
"Effective Date": as defined in subsection 6.1 of the
Receivables Transfer Agreement.
"Eligible Letter of Credit": any irrevocable direct
pay or standby letter of credit (a) issued in favor of the
Company by (i) any Bank or (ii) any commercial bank that (x)
has combined capital and surplus of not less than
$500,000,000 and (y) has (or the holding company parent of
which has) a long-term senior unsecured debt rating of at
least A from S&P or at least A2 from Moody's and (b) which
permits the Company to draw, upon notice to the issuing
bank, an amount equal to the entire face amount of any
Receivable supported thereby, in Dollars payable by the
issuing bank in the United States, no later than 90 days
after the original invoice date with respect to such
Receivable.
"Eligible Obligor": each Obligor that satisfies each
of the following eligibility criteria:
(a) it is not organized or located (within the
meaning of Section 9-103(3)(d) of the New York Uniform
Commercial Code) in a jurisdiction other than the
United States; provided, however, that (i) Receivables
which have Obligors organized or located in Canada or
which are Japanese Obligors or (ii) Receivables which
have Obligors not otherwise described in clause (i)
above which are located (within the meaning of Section
9-103(3)(d) of the New York Uniform Commercial Code)
outside the United States shall be excluded from this
clause (a) if (x) in the case of clauses (i) and (ii)
above, such Receivables would otherwise be Eligible
Receivables and (y) in the case of clause (ii) above,
(1) such Receivables are supported by an Eligible
Letter of Credit and (2) the aggregate Adjusted
Principal Amount of all such Receivables does not
exceed 15% of the Adjusted Principal Amount of the
Eligible Receivables;
(b) it is not a direct or indirect Subsidiary of
Holdings;
(c) it is not a domestic or foreign government or
any agency, department, or instrumentality thereof;
provided, however, that up to 3% of the aggregate
Adjusted Principal Amount of the Eligible Receivables
may be
<PAGE>
10
owing by the United States government or any
agency, department or instrumentality thereof; and
(d) it is not the subject of any reorganization,
bankruptcy, receivership, custodianship or insolvency,
unless the payment of Receivables from such Obligor is
secured in a manner satisfactory to the Administrative
Agent or, if such Receivables arise subsequent to a
decree or order for relief under the Bankruptcy Reform
Act of 1978, as amended, with respect to such Obligor,
the Administrative Agent shall have determined that
timely payment and collection of such Receivables will
not be impaired.
"Eligible Receivable": as of any date, each Receivable
in existence as of such date that is not subject to a
Repurchase Event and (i) which the Administrative Agent
determines, in its commercially reasonable judgment, to be
an "Eligible Receivable" or (ii) that satisfies each of the
following eligibility criteria:
(a) the Company has lawful title to such
Receivable, free and clear of all Liens other than the
security interest in favor of the Banks;
(b) the Banks have a Lien on such Receivable,
which Lien is legal, valid, binding, perfected and
first priority under the Uniform Commercial Code or
other applicable law;
(c) the Company has the full and unqualified
right to assign and grant a Lien on such Receivable to
the Banks;
(d) such Receivable is payable in Dollars in the
United States or Canada and is a legal, valid, binding
and enforceable obligation of the Obligor under such
Receivable; provided, however, that Receivables having
an aggregate Adjusted Principal Amount equal to no more
than 10% of the aggregate Adjusted Principal Amount of
all Eligible Receivables may be payable in Canadian
dollars in the United States or Canada;
(e) such Receivable is not subject to any bona
fide dispute, setoff, counterclaim or other claim or
defense on the part of the related Obligor denying
liability under such Receivable in whole or in part;
provided, however, that any such Receivable shall
constitute an Eligible Receivable to the extent it is
not subject to any such dispute, setoff, counterclaim
or other claim or defense;
(f) such Receivable is evidenced by an invoice
rendered to the related Obligor and is not evidenced by
any "instrument" or "chattel paper", as such terms are
defined in the Uniform Commercial Code;
(g) such Receivable is a bona fide Receivable
which arose in the ordinary course of business, and
with respect to which,
<PAGE>
11
(i) in the case of a Receivable arising from
the sale of goods, such goods have been shipped or
delivered to and accepted by the Obligor, such
Receivable was created as a result of a sale on an
absolute basis and not on a consignment, approval
or sale-and-return basis and all other actions
have been taken necessary to create a binding
obligation on the part of the Obligor for such
Receivable, and
(ii) in the case of a Receivable relating to
the sale of services, such services have been
performed or completed and accepted by the Obligor
and all other actions have been taken necessary to
create a binding obligation on the part of the
Obligor;
(h) the Obligor with respect to such Receivable
is an Eligible Obligor;
(i) such Receivable is not outstanding more than
90 days past the original invoice date with respect
thereto (which date, for all purposes of eligibility,
shall not be later than the shipment date of the goods
giving rise to such Receivable); provided, however,
that Receivables of Imperial Wallcoverings, Inc. and
Imperial Wallcoverings (Canada), Inc. (not to exceed an
aggregate Adjusted Principal Amount of $12,500,000) may
be outstanding for up to, but not in excess of, 120
days past such original invoice date;
(j) payment with respect to such Receivable, if
by check, has not been returned for insufficient funds;
(k) such Receivable has not been placed with an
attorney for collection;
(l) such Receivable, to the extent it represents
a consumer credit card receivable, conforms to all
federal and state consumer protection laws;
(m) if such Receivable represents a consumer
credit card receivable, the outstanding balance of such
Receivable does not reflect more than two arrearages;
and
(n) such Receivable has such other
characteristics or criteria as the Administrative
Agent, in its reasonable discretion, may specify in
writing to the Company.
"Equipment": as defined in subsection 2.1(c)(i) of the
Receivables Transfer Agreement.
"ERISA": the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
<PAGE>
12
"ERISA Affiliate": with respect to any Person, any
trade or business (whether or not incorporated) that is a
member of a group of which such Person is a member and which
is treated as a single employer under Section 414 of the
Code.
"Eurodollar Participating Interest": with respect to
any Bank, that portion of its Participating Interest in the
Receivables with respect to which the Purchase Discount
Amount is determined by reference to the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during
each Transfer Period pertaining to a Fixed Tranche, a rate
per annum (rounded upwards, if necessary, to the next 1/16
of 1%) equal to the product of (a) the Eurodollar Base Rate
in effect for such Transfer Period and (b) Statutory
Reserves. For purposes hereof, (a) if at least two offered
rates for deposits in dollars for a period comparable to the
applicable Transfer Period appear on page 3750 (or any
successor page) of the Dow Jones Telerate Screen as of 11:00
a.m., London time, on the day that is two Business Days
prior to the first day of such Transfer Period, the term
"Eurodollar Base Rate" shall mean the arithmetic mean of all
such offered rates and (b) if fewer than two such offered
rates so appear on page 3750 (or any successor page) of the
Dow Jones Telerate Screen, the term "Eurodollar Base Rate"
shall mean the rate (rounded upwards, if necessary, to the
next 1/16 of 1%) at which dollar deposits approximately
equal in principal amount to Chemical's portion of the
applicable Fixed Tranche and for a period comparable to the
applicable Transfer Period are offered to Chemical's office
in which its relevant eurodollar operations are being
conducted in immediately available funds in the eurodollar
market at approximately 11:00 a.m., New York time, on the
day that is two Business Days prior to the first day of such
Transfer Period.
"Excess Amount": at any time, with respect to any
Obligor, the excess (if any) of (a) the aggregate
outstanding Adjusted Principal Amount of the Eligible
Receivables owing by such Obligor over (b) the Applicable
Obligor Percentage of the aggregate outstanding Adjusted
Principal Amount of all Eligible Receivables; provided, that
the Excess Amount of each Obligor shall be deemed to be zero
until the first Settlement Date subsequent to the 270th day
after the Effective Date.
"Excess Application Amount": as defined in subsection
2.12(c) of the Receivables Transfer Agreement.
"Facility Amount": $150,000,000.
"Financial Officer": of any corporation, the chief
financial officer, Senior Vice President-Finance and
Accounting, Vice President-Finance, Controller, or Treasurer
of such corporation.
"Fixed Tranche": a portion of the Net Investment on
which the rate at which the Purchase Discount Amount accrues
is based upon the Eurodollar Rate.
<PAGE>
13
"Floating Tranche": that portion of the Net Investment
not allocated to a Fixed Tranche and the Purchase Discount
Amount in respect of which is based upon the ABR.
"Force Majeure Delay": with respect to any Servicer or
the Master Servicer, any cause or event which is beyond the
control and not due to the negligence of such Servicer or
the Master Servicer, as the case may be, which delays,
prevents or prohibits such Person's delivery of Seller Daily
Reports or Daily Reports and/or Seller Settlement Statements
or Settlement Statements, as the case may be, including,
without limitation, computer, electrical and mechanical
failures, acts of God or the elements and fire; provided
that no such cause or event shall be deemed to be a Force
Majeure Delay unless the affected Servicer or Master
Servicer shall have given the Company and the Administrative
Agent written notice thereof as soon as possible after the
beginning of such delay.
"GAAP": generally accepted accounting principles in
the United States of America as in effect from time to time.
"Governmental Authority": any international, Federal,
state, regional, local or foreign court or governmental
agency, authority, instrumentality or regulatory body.
"Guarantee": of or by any Person, shall mean (a) any
obligation, contingent or otherwise, of such Person guaran-
teeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness (whether arising by virtue
of partnership arrangements, by agreement to keep well, to
purchase assets, goods, securities or services, to take-
or-pay or otherwise) or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of
such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (iii) to
maintain working capital, equity capital or other financial
statement conditions or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or
(iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment
thereof or to protect such holders against loss in respect
thereof (in whole or in part), or (b) any Lien on any assets
of such Person securing any Indebtedness of any other
Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the term Guarantee shall not
include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Holdings": Collins & Aikman Corporation, a Delaware
corporation.
"Incipient Purchase Termination Event": any condition
or act specified in Article VII of the Receivables Sale
Agreement that, with the giving of notice or the lapse of
time or both, would become a Purchase Termination Event.
<PAGE>
14
"Increase in Net Investment": for any applicable
Closing Date, the Dollar amount by which the Net Investment
of the Banks is being increased on such Closing Date.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar
instrument, (c) all Capital Lease Obligations of such
Person, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such
Person, (e) 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 any
property owned or acquired by such Person even though such
Person has not assumed or otherwise become liable for the
payment thereof, (f) all obligations of such Person in
respect of interest rate protection agreements, foreign
currency exchange agreements or other interest or exchange
rate hedging arrangements and (g) all Guarantees by such
Person of Indebtedness of others. The Indebtedness of any
Person shall include the Indebtedness of any partnership in
which such Person is a general partner; provided that, if
the sole asset of such Person is its general partnership
interest in such partnership, the amount of such
Indebtedness shall be deemed equal to the value of such
general partnership interest and the amount of any
Indebtedness in respect of any Guarantee of such partnership
Indebtedness shall be limited to the same extent as such
Guarantee may be limited.
"Indemnified Liabilities": as defined in subsection
9.3 of the Receivables Sale Agreement.
"Indemnitee": as defined in subsection 11.3 of the
Receivables Transfer Agreement.
"Intermediate Lockbox Account": as defined in
subsection 12.1(b) of the Receivables Transfer Agreement.
"Invested Percentage": a fraction the numerator of
which is Net Investment and the denominator of which is
Aggregate Eligible Receivables.
"Investment Earnings": as defined in subsection
2.7(a)(iii) of the Receivables Transfer Agreement.
"Japanese Obligor": any of Fuji Heavy Industries,
Inc., Toyota Motor Co., Honda Motor Co., Ltd., Toyota Tsusho
Corp., or Kotobakiya Fronte Co., Inc.
"Lien": with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset, (b) the interest of a vendor
or a lessor under any conditional sale agreement, capital
lease or title retention
<PAGE>
15
agreement 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.
"Lockbox Account" means each blocked deposit account
identified by number and name of bank on Schedule 3 to the
Receivables Transfer Agreement, including the box identified
by location and number on such Schedule 3, and any
replacements therefor or additions thereto which are
acceptable to the Administrative Agent.
"Lockbox Agreement" means a lockbox agreement in form
and substance satisfactory to the Administrative Agent, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with subsection 8.14 of the
Receivables Transfer Agreement.
"Lockbox Bank" means each bank listed on Schedule 3,
and any replacements therefor or additions thereto agreed to
in writing by the Administrative Agent.
"Loss Reserve Ratio": as of any day thereafter, the
percentage equivalent, determined pursuant to the most
recent Settlement Statement, of the product of:
(i) the highest Average Default Ratio during the period
of twelve consecutive fiscal months ended on the last day of
the most recently ended Settlement Period; and
(ii) (A) the aggregate Adjusted Principal Amount of
Receivables generated by the Sellers during the 3.5
preceding Settlement Periods divided by the outstanding
Adjusted Principal Amount of Eligible Receivables as of the
last day of the preceding Settlement Period; and
(iii) 2.0.
"Loss to Liquidation Ratio": a ratio (expressed as a
percentage), as of the last day of any fiscal month, equal
to (a) the difference, if any, between (i) the aggregate
reduction in the outstanding Adjusted Principal Amount of
all Receivables as a result of Write-Offs during the
immediately preceding twelve-fiscal-month period and (ii)
the aggregate amount of Recoveries during such twelve-
fiscal-month period, divided by (b) four times the aggregate
amount of Collections during the immediately preceding
three-fiscal-month period.
"Margin Stock": as defined in Regulation U.
"Master Servicer": C&A Products, in its capacity as
Master Servicer under the Receivables Transfer Agreement.
"Material Adverse Effect": (a) with respect to the
Master Servicer, any Servicer or any Seller, (i) a materi-
ally adverse effect on the business, assets, properties,
operations or financial condition of C&A Products and its
Subsidiaries, taken as a whole, (ii) a material impairment
of the ability of the Master Servicer, any
<PAGE>
16
Servicer or any
Seller to perform any of its material obligations under any
Transaction Document to which it is or will be a party or to
consummate the Transactions or the Sale Transactions or
(iii) an impairment of the validity or enforceability of, or
a material impairment of the rights, remedies or benefits
available to the Administrative Agent or the Banks under,
any Transaction Document or (b) with respect to the Company,
(i) a materially adverse effect on the business, assets,
properties, operations or financial condition of the
Company, (ii) a material impairment of the ability of the
Company to perform any of its material obligations under any
Transaction Document to which it is or will be a party or to
consummate the Transactions or the Sale Transactions or
(iii) an impairment of the validity or enforceability of, or
a material impairment of the rights, remedies or benefits
available to the Administrative Agent or the Banks under,
any Transaction Document.
"Maximum Commitment": $150,000,000, as such amount may
be reduced pursuant to subsection 2.10 of the Receivables
Transfer Agreement.
"Maximum Invested Percentage": at a particular date,
100% minus the greater of (a) 17% and (b) the Required
Reserve Percentage.
"Maximum Transfer Amount": at a particular date, the
lesser of (a) the Maximum Commitment at such date and (b)
the product of (i) the Maximum Invested Percentage at such
date and (ii) Aggregate Eligible Receivables (which, for
purposes of this definition, shall not include a Seller from
which the Company has ceased purchasing Receivables pursuant
to subsection 9.15 of the Receivables Sale Agreement and
shall not include, from the date which is 30 days after the
date of any such termination, a Seller with respect to which
the Company has terminated its obligation to acquire
Receivables pursuant to Article VII of the Receivables Sale
Agreement) as of the close of business on the Business Day
preceding such date.
"Monthly Servicing Fee": for each Settlement Period,
the product of (a) the number of days in such period, (b) 1%
and (c) the average daily principal balance of Purchased
Receivables during such period divided by 365.
"Moody's": Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan": with respect to any Person, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA
to which such Person or any ERISA Affiliate of such Person
(other than one considered an ERISA Affiliate only pursuant
to subsection (m) or (o) of Section 414 of the Code) is
making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Investment": at any time, the excess, if any, of
(a) the aggregate of the amount paid by the Banks pursuant
to subsections 2.2 and 2.3 of the Receivables Transfer
Agreement over (b) the aggregate amount of Collections
distributed to the
<PAGE>
17
Banks in repayment of the Net Investment
pursuant to the Receivables Transfer Agreement.
"Obligor": with respect to any Receivable, the Person
or Persons obligated to make payments with respect to such
Receivable, including any guarantor thereof.
"Overallotment Option": as defined in the Credit
Agreement.
"Partial Servicing Transfer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"Participants": as defined in subsection 11.4(b) of
the Receivables Transfer Agreement.
"Participating Interest": as defined in subsection 2.2
of the Receivables Transfer Agreement.
"Payment Date": as defined in subsection 2.3(a) of the
Receivables Sale Agreement.
"PBGC": the Pension Benefit Guaranty Corporation
referred to and defined in ERISA (or any successor).
"Peak Dilution Ratio": with respect to any Settlement
Period, a fraction (a) the numerator of which is the
aggregate amount of Dilutive Credits which are incurred with
respect to the Receivables during the two-month period ended
on the last day of such Settlement Period and (b) the
denominator of which is the aggregate Adjusted Principal
Amount of Receivables generated by the Sellers during the
two-month period ended on the last day of such Settlement
Period.
"Person": any natural person, corporation, business
trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan": with respect to any Person, any pension plan
(other than a Multiemployer Plan) subject to the provisions
of Title IV of ERISA or Section 412 of the Code which is
maintained for employees of such Person or any ERISA
Affiliate of such Person.
"Pledge Agreement": the Pledge Agreement referred to
in the Credit Agreement.
"Policies": with respect to any Seller which has set
forth its credit and collection policies in writing, such
written credit and collection policies as they have been
applied by such Seller in the ordinary course of its
business prior to the Effective Date and, with respect to
any Seller which has not set forth its credit and collection
<PAGE>
18
policies in writing, its credit and collection policies as
in effect and applied by such Seller in the ordinary course
of its business prior to the Effective Date, in each case as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with the Receivables
Transfer Agreement and the Receivables Sale Agreement.
"Pooled Property": as defined in subsection 2.1(a) of
the Receivables Transfer Agreement.
"Potential Termination Event": any Termination Event
and any event or condition that upon notice, lapse of time
or both would constitute a Termination Event.
"Preliminary Prospectus": the preliminary prospectus
of Holdings dated June 2, 1994, filed with the Securities
and Exchange Commission in connection with the underwritten
public offering of shares of common stock, par value $.01
per share, of Holdings, as amended or supplemented from time
to time.
"Principal Amount": with respect to any Receivable,
the amount due thereunder (expressed in U.S. Dollars or
Canadian Dollars, as the case may be), net of any available
prompt payment discount, volume discount or other
promotional discount or rebate.
"Purchase Discount Amount": a purchase discount which
(a) accrues to the Banks in respect of the Participating
Interest; (b) is payable in arrears on each Purchase
Discount Amount Payment Date (both prior to and after the
commencement of the Amortization Period) occurring during
the period commencing on the date of the first transfer and
assignment of the Participating Interest in Receivables and
Related Property pursuant to subsection 2.3(a) of the
Receivables Transfer Agreement and ending on the date on
which the Net Investment is equal to zero and the
Commitments of the Banks have terminated; and (c) is
calculated at a rate per annum equal to: (i) in respect of
that portion of the Net Investment allocated to any Fixed
Tranche, the sum of the Eurodollar Rate with respect thereto
plus the Applicable Eurodollar Margin and (ii) in respect of
that portion of the Net Investment not allocated to any
Fixed Tranche, the sum of the ABR in effect from time to
time during the period for which payment is made plus the
Applicable ABR Margin.
"Purchase Discount Amount Payment Date": (a) as to the
Floating Tranche, each Settlement Date, (b) as to any Fixed
Tranche having a Transfer Period of one, two or three
months, the last day of such Transfer Period, (c) as to any
Fixed Tranche having a Transfer Period longer than three
months, each day which is three months, or a whole multiple
thereof, after the first day of such Transfer Period, and
the last day of such Transfer Period and (d) as to any
Tranche, any date on which the principal portion of the Net
Investment represented thereby is paid, prepaid or is
otherwise due (by mandatory prepayment, acceleration or
otherwise).
<PAGE>
19
"Purchase Price": as defined in subsection 2.2 of the
Receivables Sale Agreement.
"Purchase Termination Event": as defined in Article
VII of the Receivables Sale Agreement.
"Purchased Receivable": any Receivable sold to the
Company by any Seller pursuant to, and in accordance with
the terms of, the Receivables Sale Agreement and not resold
to such Seller pursuant to subsection 2.1(b) or 2.6 thereof.
"Rating Agencies": Moody's and S&P.
"Recapitalization Transactions": as defined in the
Credit Agreement.
"Receivables": the indebtedness and payment
obligations of any Person to a Seller arising from a sale of
merchandise or services by such Seller, including, without
limitation, any right to payment for goods sold or leased or
for services rendered, and including the right of payment of
any interest, sales taxes, finance charges, returned check
or late charges and other obligations of such Person with
respect thereto.
"Receivables Sale Agreement": the Receivables Sale
Agreement, dated as of July 13, 1994, among the Sellers, the
Master Servicer and the Company, as buyer, as amended,
supplemented or otherwise modified from time to time.
"Receivables Transfer Agreement": the Receivables
Transfer and Servicing Agreement, dated as of July 13, 1994,
among the Company, as seller, the Master Servicer, the
Servicers, the Banks and the Administrative Agent, as
amended, supplemented or otherwise modified from time to
time.
"Recoveries": amounts collected in respect of
Defaulted Receivables.
"Reduction Date": as defined in subsection 2.11(b) of
the Receivables Transfer Agreement.
"Register": as defined in subsection 11.4(e) of the
Receivables Transfer Agreement.
"Regulation G, T, U or X": Regulation G, T, U or X,
respectively, of the Board as from time to time in effect
and all official rulings and interpretations thereunder or
thereof.
"Related Property": as defined in subsection
2.1(a)(iv) of the Receivables Transfer Agreement.
"Replacement Facility": as defined in subsection 12.6
of the Receivables Transfer Agreement.
<PAGE>
20
"Reportable Event": any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Reporting Day": as defined in subsection 12.5 of the
Receivables Transfer Agreement.
"Repurchase Amount": as defined in subsection 2.6 of
the Receivables Sale Agreement.
"Repurchase Event": as defined in subsection 2.6 of
the Receivables Sale Agreement.
"Required Banks": Banks having Commitment Percentages
the sum of which, in the aggregate, is equal to or exceeds
51%.
"Required Reserve Percentage": as of any day, the sum,
expressed as a percentage, of (a) the Loss Reserve Ratio,
(b) the Dilution Reserve Ratio, (c) the Yield Reserve Ratio
and (d) the Servicing Reserve Ratio.
"Requirement of Law": as to any Person, any law,
treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.
"Responsible Officer": with respect to any Person, the
chief executive officer, the president, any senior vice
president or any vice president of such Person or, with
respect to financial matters, the chief financial officer,
Senior Vice President-Finance and Accounting, Vice
President-Finance, Controller, or Treasurer of such Person.
"Restricted Payments": as defined in subsection 8.7 of
the Receivables Transfer Agreement.
"Retransfer Payment": as defined in subsection 5.3(b)
of the Receivables Transfer Agreement.
"S&P": Standard & Poor's Ratings Group and its
successors.
"Sale Documents": the Receivables Sale Agreement, the
Subordinated Notes and the Subordination Agreement.
"Sale Termination Date": as defined in subsection
9.15(b) of the Receivables Sale Agreement.
<PAGE>
21
"Sale Transactions": as defined in subsection 4.1(b)
of the Receivables Sale Agreement.
"Scheduled Termination Date": the seventh anniversary
of the Effective Date.
"Seller Addition Date": as defined in subsection 3.4
of the Receivables Sale Agreement.
"Seller Adjustment Payment": as defined in subsection
2.5 of the Receivables Sale Agreement.
"Seller Daily Report": as defined in subsection
12.5(a) of the Receivables Transfer Agreement.
"Seller Repurchase Payment": as defined in subsection
2.6 of the Receivables Sale Agreement.
"Seller Settlement Statement": as defined in
subsection 12.5(b) of the Receivables Transfer Agreement.
"Sellers": as defined in the preamble to the
Receivables Sale Agreement.
"Servicer Default": any Servicer Event of Default and
any event or condition that upon notice, lapse of time or
both would constitute a Servicer Event of Default.
"Servicer Event of Default": as defined in subsection
12.12 of the Receivables Transfer Agreement.
"Servicer Transfer Payment": as defined in subsection
12.7 of the Receivables Transfer Agreement.
"Servicers": each Seller party to the Receivables
Transfer Agreement in its capacity as a servicer (excluding
any such Sellers which have been terminated as Servicers in
accordance with the provisions of the Receivables Transfer
Agreement) together with any other Person which has been
added as a Servicer in accordance with the provisions of the
Receivables Transfer Agreement, in their capacities as
servicers under the Receivables Transfer Agreement.
"Servicing Reserve Percentage": as of any day, 0.25%.
"Servicing Reserve Ratio": as of any day, (a) 2.0
times (b) the Servicing Reserve Percentage.
"Settlement Date": with respect to any fiscal month,
the day that is 22 calendar days following the last day of
such fiscal month (or if such 22nd calendar day is not a
Business Day, the next succeeding Business Day).
<PAGE>
22
"Settlement Period": each fiscal month.
"Settlement Statement": as defined in subsection
12.5(b) of the Receivables Transfer Agreement.
"Settlement Statement Date": with respect to any
fiscal month for which a Settlement Statement is required to
be prepared, the day that is 20 calendar days following the
last day of such fiscal month (or, if such 20th calendar day
is not a Business Day, the next succeeding Business Day).
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Specified Bankruptcy Opinion Provisions": the
provisions contained in the legal opinion delivered pursuant
to subsection 6.1(b)(i) of the Receivables Transfer
Agreement (and substantially in the form of Exhibit D-2
thereto) under the headings "Transactions", "Corporate
Procedures and Financial Effect" and "Disclosure of the
Transactions".
"Statutory Reserves": 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 and any other banking
authority to which the Administrative Agent is subject (a)
with respect to the Base CD Rate (as such term is used in
the definition of "ABR"), for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities
approximately equal to three months, and (b) with respect to
the Eurodollar Rate, for Eurocurrency Liabilities (as
defined in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such
Regulation D. Fixed Tranches shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration,
exemptions or offsets which may be available from time to
time to any Bank under such Regulation D. Statutory
Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subordinated Notes": as defined in subsection 8.1 of
the Receivables Sale Agreement.
"Subordination Agreement": the Subordination
Agreement, dated as of July 13, 1994 among the Sellers, the
Master Servicer, the Company and the Administrative Agent,
as amended, supplemented or otherwise modified from time to
time.
"Subsequent Financing Party": as defined in subsection
9.4 of the Receivables Sale Agreement.
<PAGE>
23
"Subsidiary": with respect to any Person (herein
referred to as the "parent"), any corporation, partnership,
association or other business 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
more than 50% of the general partnership interests are, at
the time any determination is being made, owned, controlled
or held, or (b) which is, at the time any determination is
made, 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.
"Substitute Servicer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"Termination Event": as defined in Article IX of the
Receivables Transfer Agreement.
"Tranches": the collective reference to the Floating
Tranche and the Fixed Tranches.
"Transaction Documents": the Receivables Transfer
Agreement, the Receivables Sale Agreement, the Subordination
Agreement and the Lockbox Agreements.
"Transaction Parties": the Company, the Master
Servicer, the Sellers and the Servicers.
"Transactions": as defined in subsection 5.1(b) of the
Receivables Transfer Agreement.
"Transfer Notice": as defined in subsection 12.2(d) of
the Receivables Transfer Agreement.
"Transfer Period": with respect to any portion of the
Net Investment allocated to a Fixed Tranche:
(a) initially, the period commencing on the
Closing Date or conversion date, as the case may be,
with respect to such Fixed Tranche and ending one, two,
three or six months thereafter, as selected by the
Company in its notice of Closing Date or notice of
conversion, as the case may be, given with respect
thereto; and
(b) thereafter, each period commencing on the
last day of the next preceding Transfer Period
applicable to such Fixed Tranche and ending one, two,
three or six months thereafter, as selected by the
Company by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the
last day of the then current Transfer Period with
respect thereto;
<PAGE>
24
provided that, all of the foregoing provisions relating to
Transfer Periods are subject to the following:
(1) if any Transfer Period would otherwise end on
a day that is not a Business Day, such Transfer Period
shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry
such Transfer Period into another calendar month in
which event such Transfer Period shall end on the
immediately preceding Business Day;
(2) any Transfer Period that would otherwise
extend beyond the Scheduled Termination Date shall end
on the Scheduled Termination Date; and
(3) any Transfer Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Transfer Period)
shall end on the last Business Day of a calendar month.
"Transferee": as defined in subsection 11.4(g) of the
Receivables Transfer Agreement.
"Transferred Agreement": as defined in subsection
2.1(b) of the Receivables Transfer Agreement.
"Transferring Servicer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"U.S. Concentration Account": as defined in subsection
2.7(a) of the Receivables Transfer Agreement.
"U.S. Dollar Subordinated Note": as defined in
subsection 8.1 of the Receivables Sale Agreement.
"Withdrawal Liability": 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.
"Write-Offs": with respect to any Seller, for any
period, the aggregate amount of Receivables that are written
off during such period as uncollectible in accordance with
the Company Policies.
"Yield Reserve Ratio": as of any day, the amount as of
such day obtained by dividing (a) the product of (i) 1.75,
(ii) Days Sales Outstanding as of the Settlement Date
immediately preceding such day and (iii) the Discount Rate
in effect as of the Settlement Date immediately preceding
such day by (b) 360.
EXECUTION COPY
CARCORP, INC.
COLLINS & AIKMAN PRODUCTS CO.,
as Master Servicer
RECEIVABLES TRANSFER AND SERVICING AGREEMENT
Dated as of July 13, 1994
CHEMICAL BANK,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . 1
ARTICLE II
Acquisition and Transfer of Participating Interest . 2
2.1 Acquisition and Transfer of Participating
Interest . . . . . . . . . . . . . . . . . . . . 2
2.2 Payment for Initial Transfer of a Participating
Interest and any Increase in Net Investment . . . 4
2.3 Acquisition and Transfer Procedure . . . . . . . 4
2.4 Commitment Fees . . . . . . . . . . . . . . . . . 5
2.5 Fee and Purchase Discount Amount Calculations . . 5
2.6 Interest on Overdue Payments . . . . . . . . . . 5
2.7 Establishment of Accounts; Allocation of
Collections; Reinvestment of Principal
Collections . . . . . . . . . . . . . . . . . . . 6
2.8 Payments; Pro Rata Treatment . . . . . . . . . . 9
2.9 Netting of Payments . . . . . . . . . . . . . . . 9
2.10 Termination or Reduction of Commitment . . . . . 10
2.11 Optional Retransfer; Reduction of Net
Investment . . . . . . . . . . . . . . . . . . . 10
2.12 Mandatory Reductions in Net Investment . . . . . 10
ARTICLE III
Increased Costs . . . . . . . . . . 12
3.1 Illegality . . . . . . . . . . . . . . . . . . . 12
3.2 Indemnity . . . . . . . . . . . . . . . . . . . . 12
3.3 Requirements of Law . . . . . . . . . . . . . . . 13
3.4 Inability to Determine Eurodollar Rate . . . . . 14
3.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
Termination . . . . . . . . . . . 18
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Page
4.1 Termination . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
Covenants, Representations and Warranties . . . 18
5.1 Representations and Warranties of the Company
Relating to the Company . . . . . . . . . . . . . . . 18
(a) Organization; Corporate Powers . . . . . . . . . 18
(b) Authorization . . . . . . . . . . . . . . . . . . 19
(c) Enforceability . . . . . . . . . . . . 19
(d) Consents . . . . . . . . . . . . . . . . . . . . 19
(e) Litigation, etc . . . . . . . . . . . . . . . . . 19
(f) No Default, etc . . . . . . . . . . . . . . . . . 20
(g) Ownership of Property; Liens . . . . . . . . . . 20
(h) Investment Company Act; Other Regulations . . . . 20
(i) Taxes . . . . . . . . . . . . . . . . . . . . . . 20
(j) Ownership; Subsidiaries . . . . . . . . . . . . . 21
(k) Accuracy and Completeness of Information . . . . 21
(l) Pro Forma Balance Sheet . . . . . . . . . . . . . 21
(m) No Material Adverse Change . . . . . . . . . . . 21
(n) Solvency . . . . . . . . . . . . . . . . . . 21
(o) Employee Benefit Plans . . . . . . . . . . . 22
5.2 Representations and Warranties of the Company
Relating to this Agreement and the Receivables . 22
5.3 Retransfer Obligation . . . . . . . . . . . . . . 24
5.4 Obligations Unaffected . . . . . . . . . . . . . 24
ARTICLE VI
Conditions to Effectiveness/Transfers/Reinvestments . 25
6.1 Effective Date . . . . . . . . . . . . . . . . . 25
6.2 Condition to each Increase in Net Investment . . 27
ARTICLE VII
Affirmative Covenants . . . . . . . . 28
7.1 Financial Statements . . . . . . . . . . . . . . 28
7.2 Certificates; Other Information . . . . . . . . . 29
7.3 Existence; Businesses and Properties; Insurance;
Receivables . . . . . . . . . . . . . . . . . . . 29
7.4 Taxes . . . . . . . . . . . . . . . . . . . . . . 30
7.5 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . 30
7.6 Notices . . . . . . . . . . . . . . . . . . . . . 30
7.7 ERISA . . . . . . . . . . . . . . . . . . . . . . 31
7.8 Use of Proceeds . . . . . . . . . . . . . . . . . 31
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Page
7.9 Separate Corporate Existence . . . . . . . . . . 31
7.10 Facility Rating . . . . . . . . . . . . . . . . 31
7.11 Lockbox Agreements . . . . . . . . . . . . . . . 32
7.12 Eligible Letters of Credit . . . . . . . . . . . 32
7.13 Company Policies . . . . . . . . . . . . . . . . 32
ARTICLE VIII
Negative Covenants . . . . . . . . . 32
8.1 Accounting of Transfers . . . . . . . . . . . . . 32
8.2 Limitation on Indebtedness . . . . . . . . . . . 32
8.3 Limitation on Liens . . . . . . . . . . . . . . . 32
8.4 Limitation on Guarantees . . . . . . . . . . . . 33
8.5 Limitation on Fundamental Changes . . . . . . . . 33
8.6 Limitation on Sale of Assets . . . . . . . . . . 33
8.7 Limitation on Dividends and Payments on
Subordinated Notes . . . . . . . . . . . . . . . 33
8.8 Business of the Company . . . . . . . . . . . . . 33
8.9 Limitation on Investments, Loans and Advances . . 33
8.10 Limitation on Sales and Leasebacks . . . . . . . 33
8.11 Transactions with Affiliates . . . . . . . . . . 34
8.12 Capital Stock . . . . . . . . . . . . . . . . . 34
8.13 Amendments . . . . . . . . . . . . . . . . . . . 34
8.14 Receivables Sale Agreement, etc . . . . . . . . 34
8.15 Policies . . . . . . . . . . . . . . . . . . . . 34
8.16 No Powers of Attorney . . . . . . . . . . . . . 34
8.17 Receivables Not To Be Evidenced by Promissory
Notes . . . . . . . . . . . . . . . . . . . . . . 34
8.18 Ownership of Assets and Property . . . . . . . . 34
8.19 Rescission or Cancellation . . . . . . . . . . . 35
8.20 Ineligible Receivables . . . . . . . . . . . . . 35
8.21 Offices . . . . . . . . . . . . . . . . . . . . 35
8.22 Addition of Sellers . . . . . . . . . . . . . . 35
8.23 Optional Termination of Seller . . . . . . . . . 35
8.24 Operating Expenses . . . . . . . . . . . . . . . 35
ARTICLE IX
Events of Termination . . . . . . . . 36
ARTICLE X
The Administrative Agent . . . . . . . 39
10.1 Appointment . . . . . . . . . . . . . . . . . . 39
10.2 Delegation of Duties . . . . . . . . . . . . . . 40
10.3 Exculpatory Provisions . . . . . . . . . . . . 40
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<PAGE>
Page
10.4 Reliance by the Administrative Agent . . . . . . 40
10.5 Notice of Default or Termination Event . . . . . 41
10.6 Non-Reliance on the Administrative Agent and
Other Banks . . . . . . . . . . . . . . . . . . . 41
10.7 Indemnification . . . . . . . . . . . . . . . . 41
10.8 The Administrative Agent in Its Individual
Capacity . . . . . . . . . . . . . . . . . . . . 42
10.9 Successor Administrative Agent . . . . . . . . . 42
ARTICLE XI
Miscellaneous . . . . . . . . . . 42
11.1 Further Assurances . . . . . . . . . . . . . . . 43
11.2 Payments . . . . . . . . . . . . . . . . . . . . 43
11.3 Costs and Expenses . . . . . . . . . . . . . . . 43
11.4 Successors and Assigns; Participations;
Acquiring Banks . . . . . . . . . . . . . . . . . 44
11.5 GOVERNING LAW . . . . . . . . . . . . . . . . . 46
11.6 No Waiver; Cumulative Remedies . . . . . . . . . 47
11.7 Amendments and Waivers . . . . . . . . . . . . . 47
11.8 Severability . . . . . . . . . . . . . . . . . . 47
11.9 Notices . . . . . . . . . . . . . . . . . . . . 48
11.10 Counterparts . . . . . . . . . . . . . . . . . 48
11.11 Construction of Agreement as Security
Agreement . . . . . . . . . . . . . . . . . . . . 48
11.12 Adjustments; Set-off . . . . . . . . . . . . . 49
11.13 Jurisdiction; Consent to Service of Process . . 49
11.14 Acknowledgements . . . . . . . . . . . . . . . 50
11.15 Waiver of Jury Trial . . . . . . . . . . . . . 50
11.16 Confidentiality . . . . . . . . . . . . . . . . 51
11.17 No Bankruptcy Petition . . . . . . . . . . . . 51
11.18 Tax Treatment . . . . . . . . . . . . . . . . . 51
11.19 No Action by Banks . . . . . . . . . . . . . . 51
ARTICLE XII
Servicing
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.1 Servicing . . . . . . . . . . . . . . . . . . . 52
12.2 Collections by the Servicers . . . . . . . . . . 55
12.3 Maintenance of Records . . . . . . . . . . . . . 57
12.4 Rebates, Adjustments, Returns and Reductions;
Modifications . . . . . . . . . . . . . . . . . . 58
12.5 Daily Reports; Settlement Statements . . . . . . 58
12.6 Representations, Warranties and Covenants of
the Servicers . . . . . . . . . . . . . . . . . . 60
12.7 Acquisition Obligation . . . . . . . . . . . . . 65
12.8 Obligations Unaffected . . . . . . . . . . . . . 67
12.9 Addition of Servicers . . . . . . . . . . . . . 67
12.10 Optional Termination of Servicers . . . . . . . 67
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<PAGE>
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12.11 Interest on Overdue Payments . . . . . . . . . 67
12.12 Servicer Events of Defaults . . . . . . . . . . 67
12.13 Audit . . . . . . . . . . . . . . . . . . . . . 69
ANNEX X Definitions
SCHEDULES
1 Names, Addresses and Commitments of Banks
2 Location of Chief Executive Offices; Location of
Books and Records
3 Lockboxes
4 Transactions with Affiliates
5 Contractual Obligations
6 Local Counsel
EXHIBITS
A Form of Assignment and Acceptance
B Form of Lockbox Agreement
C Form of Subordination Agreement
*D-1 Form of Opinion of Cravath, Swaine & Moore
(Corporate)
*D-2 Form of Opinion of Cravath, Swaine & Moore
(Bankruptcy)
*D-3 Form of Opinion of Elizabeth R. Philipp, Esq.,
general counsel of Collins & Aikman Corporation
*D-4 Form of Opinion of Stikeman, Elliott, special
Canadian counsel
*D-5 Form of Opinion of Local Counsel
E Form of Settlement Statement
F Form of Additional Servicer Supplement
G Form of Responsible Officer's Certificate as to
Solvency, etc.
H Form of Daily Report
I Form of Receivables Sale Agreement
* Omitted
-v-
<PAGE>
RECEIVABLES TRANSFER AND SERVICING AGREEMENT, dated as of
July 13, 1994, among CARCORP, INC., a Delaware corporation (the
"Company"), COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation
("C&A Products"), as master servicer (in
such capacity, the "Master Servicer"), C&A Products and each of the
subsidiaries of C&A Products from time to time parties hereto, in
their capacities as servicers of receivables (in such capacities,
the "Servicers"), the several financial institutions from time to
time parties to this Agreement (the "Banks") and CHEMICAL BANK, a
New York banking corporation, as administrative agent for the
Banks.
W I T N E S S E T H :
WHEREAS, the Company desires to assign and transfer to
the Banks, and the Banks desire to acquire a Participating Interest
(as hereinafter defined) in, all the Company's right, title and
interest in, to and under the Receivables (as hereinafter defined)
now existing or hereafter created and in the rights of the Company
in, to and under all other Related Property (as hereinafter
defined);
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree as
follows:
ARTICLE I
Definitions
1.1 Defined Terms. Capitalized terms used in this
Agreement shall have the respective meanings assigned to such terms
in Annex X hereto unless otherwise defined herein.
1.2 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and article,
section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms
relating to C&A Products and its Subsidiaries, unless otherwise
defined herein, shall have the respective meanings given to them
under GAAP.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
<PAGE>
2
ARTICLE II
Acquisition and Transfer of Participating Interest
2.1 Acquisition and Transfer of Participating Interest.
(a) By execution of this Agreement and subject to the terms and
conditions contained herein, the Company does hereby sell,
transfer, assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Banks on the
Effective Date and from time to time during the Commitment Period,
and each Bank hereby severally agrees to acquire from the Company
on the Effective Date and from time to time during the Commitment
Period, a Participating Interest (up to the maximum amount
specified in subsection 2.3) in all right, title and interest of
the Company in, to and under the following, whether now owned or
hereafter acquired (collectively, with the property described in
subsections 2.1(b) and 2.1(c), the "Pooled Property"):
(i) all Receivables;
(ii) (A) all goods, if any, relating to the sale which
gave rise to any Receivable;
(B) all other security interests or liens and
property subject thereto from time to time purporting to
secure payment of any Receivable, whether pursuant to the
contract related to such Receivable or otherwise,
together with all financing statements or similar
instruments signed by an Obligor describing any
collateral securing such Receivable;
(C) all guarantees, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of any Receivable whether
pursuant to the contract related to such Receivable or
otherwise; and
(D) all rights (including rescission, replevin or
reclamation) relating to any Receivable or arising
therefrom;
(iii) all monies due or to become due with respect to
the foregoing, including, without limitation, all Recoveries;
and
(iv) all proceeds of the foregoing, including, without
limitation, whatever is received upon the sale, exchange,
collection or other disposition of the foregoing or proceeds
thereof (the items described in clauses (ii), (iii) and (iv),
collectively, the "Related Property").
(b) The Company hereby assigns to the Administrative
Agent, for the benefit of the Banks, and grants to the
Administrative Agent, for the benefit of the Banks, a security
interest in, all its right, title and interest in, to and under the
Receivables Sale Agreement, including (i) all rights of the Company
to receive moneys due and to become due under or pursuant to such
agreement, whether payable as fees, expenses, costs or otherwise,
(ii) all rights of the Company to receive proceeds of any
insurance, indemnity, warranty or guaranty with
<PAGE>
3
respect to such agreement, (iii) claims of the Company for damages
arising out of or for breach of or default under such agreement,
(iv) the right of the Company to amend, waive or terminate such
agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder and (v) all other
rights, remedies, powers, privileges and claims of the Company
under or in connection with such agreement (whether arising pursuant
to such agreement or otherwise available to the Company at law or
in equity), including the rights of the Company to enforce such
agreement and to give or withhold any and all consents, requests,
notices, directions, approvals, extensions or waivers under or in
connection therewith (the Pooled Property described in this
sentence being referred to herein as the "Transferred Agreement").
(c) In addition, to secure the obligations of the
Company hereunder, the Company hereby grants to the Administrative
Agent, for the benefit of the Banks, a security interest in all
right, title and interest of the Company in, to and under the
following, whether now owned or hereafter acquired:
(i) all equipment in all its forms, wherever located,
now or hereafter existing (including all software, data bases,
materials, books, records, magnetic tapes, disks and cassettes
relating to the Receivables and all other equipment in which
information concerning the Receivables is stored), and all
parts thereof and accessions thereto (any and all such
equipment, parts and accessions being the "Equipment");
(ii) all the following (the "Accounts"):
(A) each Concentration Account and each Lockbox
Account, all funds and other evidences of payment held
therein and all certificates and instruments, if any,
from time to time representing or evidencing any of such
Accounts or any funds and other evidences of payment held
therein;
(B) any operating account or other accounts of the
Company, all funds held therein and all certificates and
instruments, if any, from time to time representing or
evidencing any such operating account or any funds held
therein;
(C) all Cash Equivalents and all certificates and
instruments from time to time representing or evidencing
the Cash Equivalents;
(D) all notes, certificates of deposit and other
instruments from time to time hereafter delivered to, or
otherwise possessed by, the Administrative Agent for and
on behalf of the Company in substitution for or in
addition to any of the then existing Accounts; and
(E) all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for
any and all of the then existing Accounts; and
(iii) all proceeds of or payments in respect of any and
all of the foregoing (including proceeds that constitute
property of the types described in clauses (i) and (ii) above
and including Collections) and, to the extent not otherwise
included, all payments
<PAGE>
4
under insurance (whether or not the Administrative Agent is
the loss payee in respect thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the Pooled Property.
2.2 Payment for Initial Transfer of a Participating
Interest and any Increase in Net Investment. The undivided
participating interest of the Banks in the Receivables and the
Related Property (the "Participating Interest"; a Bank's Commitment
Percentage of such Participating Interest shall equal such Bank's
"Participating Interest") shall equal, at any date of determination
thereof, the Net Investment at such date. The Company shall notify
the Banks of the amount of the initial transfer and assignment of a
Participating Interest or any request for an Increase in Net
Investment pursuant to subsection 2.3. The amount which the Banks
shall pay for such initial transfer and assignment or Increase in
Net Investment shall equal the amount of such initial transfer and
assignment or Increase in Net Investment, as the case may be.
After receipt by the Administrative Agent of the notice required by
subsection 2.3(a) from the Company, the Administrative Agent shall
promptly provide notice (which may be telephonic but shall be
confirmed in writing) to each Bank of the Closing Date and of the
portion of the Participating Interest or the Increase in Net
Investment allocable to such Bank on such Closing Date. Amounts
payable to the Company in respect of the initial transfer and
assignment of a Participating Interest or any Increase in Net
Investment on such Closing Date shall be obtained by the
Administrative Agent from the Banks and paid by the Administrative
Agent to the Company in accordance with the provisions of
subsection 2.8(a).
2.3 Acquisition and Transfer Procedure. (a) Subject to
subsections 2.3(b) and 6.2, the initial transfer and assignment of
a Participating Interest or an Increase in Net Investment of the
Banks shall occur, upon notice from the Company, on the Effective
Date and on any Business Day during the Commitment Period (each
date on which the initial transfer and assignment of a
Participating Interest in the Receivables or an Increase in Net
Investment of the Banks occurs hereunder being herein referred to
as the "Closing Date" applicable to such transfer and assignment or
such increase, as the case may be) and shall take place at the
office of the Administrative Agent or such other place as may be
mutually agreed upon, provided that the Company shall have given
the Administrative Agent irrevocable notice (effective upon
receipt) of such request no later than (i) if the initial transfer
and assignment of a Participating Interest or the Increase in Net
Investment on such date is to be priced solely with reference to
ABR, 12:00 Noon (New York City time) one Business Day prior to such
Closing Date or (ii) if all or a portion of the initial transfer
and assignment of a Participating Interest or the Increase in Net
Investment is to be allocated to a Fixed Tranche, 12:00 Noon (New
York City time) three Business Days prior to such Closing Date,
provided, further, that the provisions of this subsection 2.3 shall
not restrict the allocations of Collections pursuant to subsection
2.7. Such notice shall state (i) the Closing Date, (ii) the amount
of the initial transfer and assignment of a Participating Interest
or the Increase in Net Investment, as the case may be, for the
proposed transaction, (iii) what portion thereof will be allocated
to a Fixed Tranche and/or the Floating Tranche and (iv) if any
portion thereof is to be allocated to a Fixed Tranche, the length
of the Transfer Period therefor.
(b) Each Bank shall have no obligation to acquire a
Participating Interest or to increase its pro rata share of the Net
Investment on any Closing Date hereunder:
<PAGE>
5
(1) unless, in the case of an Increase in Net
Investment, the Increase in Net Investment on such Closing
Date is equal to at least $500,000 or an integral multiple
thereof;
(2) to the extent that, after giving effect to (A) in
the case of the initial transfer and assignment of a
Participating Interest, such transfer, and (B) in the case of
an Increase in Net Investment, such Increase in Net Investment
on such date, the Net Investment would exceed the Maximum
Transfer Amount; or
(3) if the Commitments of the Banks have terminated
pursuant to Article IX.
The initial transfer and assignment of the Participating Interest
or an Increase in Net Investment allocable to the Banks as a group
shall be allocated to each Bank according to the Commitment
Percentage of such Bank.
2.4 Commitment Fees. The Company agrees to pay to the
Administrative Agent, for the account of the Banks, a commitment
fee (the "Commitment Fee") for the Commitment Period, computed at
the rate of 3/8ths of 1% per annum on the average daily excess of
the Maximum Commitment over the Net Investment for each day during
the period for which such Commitment Fee is payable. Commitment
Fees shall be payable in arrears on each Settlement Date for the
relevant Settlement Period.
2.5 Fee and Purchase Discount Amount Calculations. (a)
Calculations of per annum rates under this Agreement shall be made
on the basis of a 360-day year for actual days elapsed, except that
Commitment Fees and Purchase Discount Amounts on the Floating
Tranche determined by reference to the Prime Rate shall be
calculated on the basis of a 365- (or 366-, as the case may be) day
year. Each determination of the Eurodollar Rate hereunder by the
Administrative Agent shall be conclusive and binding upon each of
the parties hereto in the absence of manifest error. Any change in
the Purchase Discount Amount resulting from a change in ABR or
Statutory Reserves shall become effective as of the opening of
business on the day on which such change is announced.
(b) Anything contained in this Agreement to the contrary
notwithstanding, (i) the portion of the Net Investment allocable to
any Fixed Tranche must be an amount equal to $10,000,000 or an
integral multiple of $1,000,000 in excess thereof, (ii) no more
than ten Fixed Tranches shall be outstanding at any one time, and
(iii) after the occurrence and during the continuance of any
Termination Event, at the end of the related Transfer Period all of
the Net Investment allocated to any Fixed Tranche shall be
reallocated to the Floating Tranche.
2.6 Interest on Overdue Payments. If any amount
payable by the Company to the Banks or the Administrative Agent
hereunder, whether on account of fees or expenses or on account of
amounts collected by the Company or amounts payable by the Company
pursuant to Article III or subsection 5.3, or otherwise, is not
paid by the Company or otherwise on the relevant Settlement Date or
other relevant date, such amount shall be payable together with
interest, payable on demand, for each day from such Settlement Date
or other relevant date, as the case may be, until such amount is
paid in full at a rate per annum equal to the ABR plus the
Applicable ABR Margin plus 2%.
<PAGE>
6
2.7 Establishment of Accounts; Allocation of
Collections; Reinvestment of Principal Collections.
(a) (i) The Administrative Agent shall establish and
maintain in the name of the Administrative Agent (x) with Chemical
one account in the United States (the "U.S. Concentration
Account"), (y) with a financial institution acceptable to the
Administrative Agent one account in Canada for the purpose of
receiving certain Collections in U.S. Dollars (the "Canada/U.S.
Dollar Concentration Account") and (z) with a financial institution
acceptable to the Administrative Agent one account in Canada for
the purpose of receiving Collections in Canadian Dollars (the
"Canada/Canadian Dollar Concentration Account"). Collections
deposited into each Lockbox Account will be transferred to the
relevant Concentration Account as set forth in Article XII (either
directly or through an intermediate Lockbox Account at the same
Lockbox Bank); provided that Collections may, at the option of the
applicable Obligor, be deposited directly into the relevant
Concentration Account by wire transfer from an account of such
Obligor to the Concentration Account or by means of transfer
through the Automated Clearing House System, as set forth in
Article XII. All Collections otherwise received by any Servicer,
the Master Servicer or the Company shall be deposited by it either
to a Lockbox Account or through the Automated Clearing House System
into the relevant Concentration Account as set forth in Article
XII. The Administrative Agent shall have sole and exclusive
dominion over and control of each Concentration Account and the
Company, the Servicers and the Master Servicer shall not have any
dominion over or control of any such account.
(ii) Amounts deposited in any Concentration Account
shall be invested by the Administrative Agent as directed by the
Master Servicer in Cash Equivalents maturing not later than the
next Business Day.
(iii) Any earnings (net of losses and investment expenses)
on such invested funds in any Concentration Account ("Investment
Earnings") will be treated as Collections and retained therein.
(iv) Neither the Company nor the Master Servicer nor any
Servicer nor any Person claiming by, through or under the Company,
any Servicer or the Master Servicer shall have any right, title or
interest in, or any control over the use of, or any right to
withdraw moneys from, any Concentration Account, except the right
to give directions for investments of amounts on deposit therein as
expressly provided for in paragraph (ii) above.
(b) Prior to the commencement of an Amortization Period,
the Collections, Retransfer Payments, Servicer Transfer Payments
and Adjustment Payments deposited in the Concentration Accounts
(collectively, "Receivables Proceeds") shall be applied by the
Administrative Agent on each Business Day, as follows:
(i) first, if such Business Day is a Settlement Date, to
the payment of the Monthly Servicing Fee of any Servicer that
is not an Affiliate of the Company, the Master Servicer or any
Seller;
(ii) second, on each Purchase Discount Amount Payment
Date occurring during the period commencing on the date of the
first transfer and assignment of the
<PAGE>
7
Participating Interest in Receivables and Related Property
pursuant to subsection 2.3(a) and ending on the date on which
the Net Investment is equal to zero and the Commitments of the
Banks have terminated, to the payment in arrears of accrued
Purchase Discount Amount on such Business Day to the Banks in
respect of the Participating Interest;
(iii) third, to the payment of (x) the Commitment Fees
and (y) any other amounts, if any, accrued and payable on such
Business Day to the Administrative Agent and the Banks in
respect of the Participating Interest;
(iv) fourth, to the payments, if any, required by
subsection 2.12 (Mandatory Reductions in Net Investment) on
such Business Day;
(v) fifth, to the payment of the Company's indemnity
obligations hereunder and, then, to the Company's operating
account for the payment of the operating expenses of the
Company incurred or reserved for on such Business Day,
provided that the aggregate amounts paid to the Company's
operating account pursuant to this clause (v) shall not
exceed, for any fiscal year of the Company, $250,000;
(vi) sixth, if such Business Day is a Settlement Date,
to the payment of the Monthly Servicing Fee of any Servicer
that is an Affiliate of the Company, the Master Servicer or
any Seller;
(vii) seventh, to the Company to enable the Company to
acquire Receivables from the Sellers pursuant to the
Receivables Sale Agreement in the aggregate amount specified
in the applicable Daily Report, provided that the Company may
elect to (A) retain all or any portion of such amounts in the
Concentration Accounts and (B) on the next Reduction Date, if
the Company shall have given the Administrative Agent
irrevocable notice in accordance with subsection 2.11(b), have
all or any portion of such amounts remitted to the Banks on
such Reduction Date and have the Net Investment reduced
accordingly (subject to the payment by the Company of any
amounts required pursuant to subsection 3.2);
(viii) eighth, at the Company's option and subject to
the terms of this Agreement and the Subordinated Notes, to
make payments on account of the Subordinated Notes, in the
aggregate amount specified in the applicable Daily Report;
(ix) ninth, to the extent such expenses are not paid
pursuant to clause (v) above, to the Company's operating
account for the payment of the operating expenses of the
Company incurred or reserved for such Business Day; and
(x) tenth, at the Company's option and subject to the
terms of this Agreement, to the Company to enable the Company
to make payments on account of Restricted Payments in the
aggregate amount specified in the applicable Daily Report, so
long as the outstanding principal amount of the Subordinated
Notes shall be zero at the time of such payment and all
accrued interest thereon shall have been paid in full;
<PAGE>
8
provided, that (I) in no event shall any Receivables Proceeds be
distributed from the Concentration Accounts with respect to clauses
(iii)(y) and (iv)-(x) above on the first or second Business Day
next preceding any Purchase Discount Amount Payment Date or
Settlement Date to the extent the amount remaining in the U.S.
Concentration Account would be less than the aggregate of the
amounts referred to in clauses (i), (ii) and (iii)(x) above payable
on such Purchase Discount Amount Payment Date or Settlement Date;
(II) in no event shall any Receivables Proceeds be distributed from
the Concentration Accounts with respect to clauses (iv)-(x) above
to the extent such distribution would necessitate a payment under
subsection 2.12; (III) in no event shall any Receivables Proceeds
be distributed from the Concentration Accounts with respect to
clauses (vii)-(x) above (other than a distribution in accordance
with the proviso in clause (vii)), if a Potential Termination Event
of a type set forth in subsection 9(b)(ii) has occurred and is
continuing; (IV) in no event shall any Receivables Proceeds be
distributed from the Concentration Accounts with respect to clauses
(viii)-(x) above if a Termination Event shall have occurred and be
continuing or would occur as a result of such payment; and (V)
Receivables Proceeds shall first be distributed out of the U.S.
Concentration Account and the Canada/U.S. Dollar Concentration
Account before any distributions are made out of the
Canada/Canadian Dollar Concentration Account (except in the case of
distributions to be applied to make payments in Canadian Dollars,
which shall instead be distributed out of the Canada/Canadian
Dollar Concentration Account so long as all obligations having a
prior claim to Receivables Proceeds have been paid in full).
(c) During any Amortization Period, all Receivables
Proceeds shall be applied by the Administrative Agent as follows:
(i) first, (x) to the payment of Monthly Servicing Fees of any
Servicer that is not an Affiliate of the Company, the Master
Servicer or any Seller and (y) to the payment of the reasonable
operating expenses of the Company and (to the extent approved by
the Required Banks) any Servicer that is an Affiliate of the
Company, the Master Servicer or any Seller, (ii) second, to the
payment to each Bank of its Commitment Percentage of such
Receivables Proceeds until such time as the Net Investment and
Purchase Discount Amounts thereon and the payment of all other
amounts that are payable to the Administrative Agent and its
Affiliates and the Banks shall have been paid in full and (iii)
after such time as the Net Investment and Purchase Discount Amounts
thereon and all other amounts that are due and payable to the
Administrative Agent and the Banks shall have been paid in full,
the remainder to the Company.
(d) The Master Servicer shall as soon as possible after
receipt of any Collections and other proceeds determine whether or
not they are with respect to Purchased Receivables and shall as
soon as possible notify the Administrative Agent of such
determination. The Administrative Agent shall as soon as possible
thereafter transfer any Collections that are not with respect to
Purchased Receivables from the relevant Concentration Account to
the Master Servicer for payment to the applicable Person, provided,
that with respect to any Collections for which the Administrative
Agent has not been provided such a determination by the Master
Servicer by the end of the Business Day five Business Days from the
date of receipt thereof, such Collections shall be deemed to be
Collections with respect to Purchased Receivables and no other
Person shall have any rights therein except to the extent provided
in applicable state laws governing the laws of restitution and
mistake. Notwithstanding the foregoing, during any Amortization
Period the Administrative Agent shall apply all cash collections
and other proceeds received in respect of an Obligor with respect
to all Receivables of such Obligor first, to pay the
<PAGE>
9
outstanding principal balance of Purchased Receivables (on the date
of such notification) of such Obligor until Purchased Receivables with
respect to such Obligor are paid in full and second, amounts in
excess thereof shall be paid to the Master Servicer for payment to
the Person legally entitled thereto to pay the outstanding
principal balance of all remaining Receivables with respect to such
Obligor. The Master Servicer agrees that in making each such
determination with respect to Collections and other proceeds, the
Master Servicer represents and warrants at such time, to the best
of the Master Servicer's knowledge, that such determination is true
and correct.
2.8 Payments; Pro Rata Treatment. (a) Not later than
11:00 a.m. (New York City time) on each date on which the Banks are
notified to remit payments to the Administrative Agent or as the
Administrative Agent shall direct on account of any Increase in Net
Investment, each Bank shall make available to the Administrative
Agent or as the Administrative Agent shall direct an amount in
immediately available funds equal to the amount of such remittance
calculated as provided herein. The Administrative Agent shall
credit the proceeds of such payments in a timely manner in
accordance with the instructions of the Company.
(b) Unless the Administrative Agent shall have been
notified in writing by any Bank prior to a Closing Date that such
Bank will not make the amount which would constitute its portion of
the Participating Interest or Increase in Net Investment on such
date available to the Administrative Agent, the Administrative
Agent may assume that such Bank has made such amount available to
the Administrative Agent on such Closing Date, and the
Administrative Agent may, in reliance upon such assumption, make
available to the Company, a corresponding amount. If such amount
is made available to the Administrative Agent on a date after such
Closing Date, such Bank shall pay to the Administrative Agent on
demand an amount equal to the product of (i) the daily average
Federal Funds Effective Rate during such period, times (ii) the
amount of such Bank's portion of the Participating Interest or
Increase in Net Investment, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such
Closing Date to the date on which such Bank's funds shall have
become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative
Agent submitted to any Bank with respect to any amounts owing under
this subsection 2.8(b) shall be conclusive, absent manifest error.
If such Bank's portion of the Participating Interest or Increase in
Net Investment is not in fact made available to the Administrative
Agent by such Bank within three Business Days of such Closing Date,
the Administrative Agent shall be entitled to recover such amount
with interest thereon at a per annum rate equal to the ABR plus the
Applicable ABR Margin, on demand, from the Company. No provision
contained in this subsection 2.8(b) shall prejudice any rights of
the Company against any Bank.
(c) Except where an amount is payable to a particular
Bank, the amount of such collections and amounts paid allocable to
the Banks to be remitted to each Bank shall be such Bank's
Commitment Percentage of the aggregate amount thereof allocable to
the Banks.
2.9 Netting of Payments. Anything contained in this
Agreement to the contrary notwithstanding, the Administrative Agent
may, in its sole discretion, net any amounts the Administrative
Agent is required to make available to the Company on any day
pursuant to subsection 2.7(b) or any other subsection of this
Agreement against any amounts the
<PAGE>
10
Administrative Agent is required to make available to the Banks on
such day pursuant to subsection 2.7(b) or any other provision of
this Agreement.
2.10 Termination or Reduction of Commitment. The
Company may on any Settlement Date, upon three Business Days' prior
written notice to the Administrative Agent (effective upon
receipt), (i) terminate the Banks' Commitments hereunder or
(ii) reduce the Maximum Commitment hereunder in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof;
provided, that the Maximum Commitment may not be reduced below the
Net Investment. After receipt by the Administrative Agent of any
such notice from the Company, the Administrative Agent shall
promptly provide a copy of such notice to each Bank. Upon any such
reduction, the Commitment of each Bank shall be reduced pro rata
according to the Commitment Percentage of such Bank. Upon any such
termination or reduction as aforesaid, the Maximum Commitment of
the Banks shall terminate or be reduced, as the case may be. Any
such termination shall not in any way affect the Company's
obligations under Article III hereof. Once terminated or reduced,
the Commitments of the Banks cannot be reinstated unless otherwise
agreed in writing by all of the Banks.
2.11 Optional Retransfer; Reduction of Net Investment.
(a) On any Settlement Date during the Amortization Period on which
the Net Investment equals 10% or less of the Net Investment as of
the first day of the Amortization Period, the Company shall have
the option, exercisable upon three Business Days' prior notice to
the Administrative Agent (effective upon receipt), to acquire the
Banks' total Participating Interest at a transfer price equal to
the Net Investment plus all accrued and unpaid fees (including
without limitation, Purchase Discount Amounts) to the date of such
transfer plus any amounts payable pursuant to subsections 3.2 and
3.3. After receipt by the Administrative Agent of any such notice
from the Company, the Administrative Agent shall promptly provide a
copy of such notice to each Bank.
(b) The Company may, in accordance with subsection
2.7(b)(vii), reduce the Net Investment on any date (a "Reduction
Date") which is a Business Day, without premium or penalty (other
than amounts payable pursuant to subsection 3.2), upon at least
three Business Days' irrevocable notice to the Administrative
Agent, in the case of reductions in the Net Investment that are
part of any Fixed Tranche, and one Business Day's irrevocable
notice to the Administrative Agent, in the case of reductions in
the Net Investment that are part of the Floating Tranche,
specifying (a) the Tranches to be reduced, (b) the date and amount
of such reduction and (c) if such reduction is of a combination of
Fixed Tranche amounts and Floating Tranche amounts, the amount of
reduction allocable to each (and, with respect to such Fixed
Tranche, each Tranche thereof). Upon receipt of any such notice,
the Administrative Agent will promptly notify each Bank thereof.
If any such notice is given, amounts on deposit in the
Concentration Accounts shall be applied pursuant to subsection
2.7(b)(vii) on the date specified therein. Each reduction of the
Net Investment pursuant to this subsection 2.11(b) shall be in an
amount equal to the lesser of (x) a whole multiple of $1,000,000
and (y) the Net Investment then outstanding.
2.12 Mandatory Reductions in Net Investment. (a) On
any Business Day on which the Net Investment exceeds the Maximum
Transfer Amount (except to the extent Excess Application Amounts in
respect of such excess are being held in a cash collateral account
pursuant to subsection 2.12(c)), all Receivables Proceeds shall be
applied on such Business Day
<PAGE>
11
to reduce the Net Investment (and the Purchase Discount Amounts
accrued on the portion thereof so repaid) in such amount as shall
be necessary so that after giving effect to such payment there shall
be no such excess and, to the extent such Receivables Proceeds are
not sufficient to pay such excess (and the Purchase Discount Amount
accrued thereon) on such Business Day, all subsequent Receivables
Proceeds shall be applied to pay such excess (and the Purchase
Discount Amounts accrued thereon) until so paid.
(b) Notwithstanding anything to the contrary set forth
in this Agreement, any mandatory reduction hereunder shall be
applied, unless the Administrative Agent receives instructions from
the Company otherwise, (i) first, to the Floating Tranche, (ii)
second, to any Fixed Tranche the then applicable Transfer Period
with respect to which ends on the date of the relevant payment and
(iii) third, unless otherwise directed by the Company pursuant to
subsection 2.12(c), to the other Fixed Tranches as selected by the
Administrative Agent in its sole discretion, provided that, in any
event, the Company shall pay such amounts, if any, required by
subsection 3.2.
(c) In the event the amount of any mandatory reduction
required to be made on any date pursuant to this subsection 2.12
shall exceed the aggregate of the amounts described in clauses (i)
and (ii) of paragraph (b) above with respect to such date (the
amount of any such excess being called the "Excess Application
Amount"), the Company shall have the right, in lieu of making such
reduction in full, to first apply such reduction in the manner
contemplated by said clauses (i) and (ii) and to deposit an amount
equal to the Excess Application Amount with the Administrative
Agent in a cash collateral account maintained (pursuant to
documentation satisfactory to the Administrative Agent) by and in
the sole dominion and control of the Administrative Agent. Any
amounts so deposited shall be held by the Administrative Agent as
collateral for the obligations of the Company hereunder and applied
to the reduction of the applicable Fixed Tranches at the end of the
current Transfer Periods applicable thereto. On any Business Day
on which (x) collected amounts remain on deposit in or to the
credit of such cash collateral account after giving effect to the
payments made on such day pursuant to this paragraph (c) and (y)
the Company shall have delivered to the Administrative Agent a
written request or a telephonic request (which shall be promptly
confirmed in writing) that such remaining collected amounts be
invested in the Cash Equivalents specified in such request, the
Administrative Agent shall use its reasonable efforts to invest
such remaining collected amounts in such Cash Equivalents;
provided, that the Administrative Agent shall have continuous
dominion and full control over any such investments (and over any
interest that accrues thereon) to the same extent that it has
dominion and control over such cash collateral account and no Cash
Equivalent shall mature after the end of the Transfer Period for
which it is to be applied. Unless a Termination Event or Potential
Termination Event then exists or would result, the Company shall
have the right to withdraw any amount from such cash collateral
account if (i) the applicable Fixed Tranches have been reduced to
zero and accrued Purchase Discount Amount thereon has been paid in
full or (ii) the Net Investment has otherwise ceased to exceed the
Maximum Transfer Amount.
(d) All payments under this subsection 2.12 shall be
subject to subsection 3.2 but otherwise without premium or penalty.
All payments in reduction of the Net Investment under this
subsection 2.12 shall be accompanied by the Purchase Discount
Amounts on the amount being paid accrued to the date of payment.
<PAGE>
12
ARTICLE III
Increased Costs
3.1 Illegality. (a) Notwithstanding any other
provision herein, if the adoption of or any change in any law or
regulation or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof
shall make it unlawful for any Bank to purchase or maintain a
Eurodollar Participating Interest as contemplated by this Agreement
or to give effect to its obligations as contemplated hereby with
respect to any portion of the Net Investment allocated to any Fixed
Tranche, then, by written notice to the Company and to the
Administrative Agent, such Bank may:
(i) declare that a Eurodollar Participating Interest
will not thereafter be purchased or maintained by such Bank
hereunder, whereupon any request by the Company for a
Eurodollar Participating Interest shall, as to such Bank only,
be deemed a request for an ABR Participating Interest unless
such declaration shall be subsequently withdrawn; and
(ii) require that the outstanding Eurodollar
Participating Interest of such Bank be converted to an ABR
Participating Interest, in which event such Eurodollar
Participating Interest shall be automatically converted to an
ABR Participating Interest as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Bank shall exercise its rights under clause (i) or
(ii) above, all payments which would otherwise have been applied to
reduce the Eurodollar Participating Interest that would have been
held by such Bank or the converted Eurodollar Participating
Interest of such Bank shall instead be applied to reduce the ABR
Participating Interest made by such Bank in lieu of, or resulting
from the conversion of, such Eurodollar Participating Interest.
(b) For purposes of this subsection 3.1, a notice to the
Company by any Bank shall be effective as to each Fixed Tranche, if
lawful, on the last day of the Transfer Period currently applicable
to such Fixed Tranche; in all other cases such notice shall be
effective on the date of receipt by the Company.
3.2 Indemnity. The Company shall indemnify each Bank
against any loss or expense (other than taxes) which such Bank may
sustain or incur as a consequence of (a) any failure by the Company
to fulfill on the date of any Increase in Net Investment or
proposed Increase in Net Investment hereunder the applicable
conditions set forth in Article VI, (b) any failure by the Company
to effectuate an Increase in Net Investment or to convert or
continue any Fixed Tranche or Floating Tranche hereunder after
irrevocable notice of such increase, conversion or continuation has
been given pursuant hereto, (c) any reduction or conversion of a
Fixed Tranche required by any other provision of this Agreement or
otherwise made or deemed made on a date other than the last day of
the Transfer Period applicable thereto, (d) any default in
reduction in respect of the Net Investment or any part thereof or
the payment of Purchase Discount Amount accrued thereon, as and
when such reduction is required or such amount is due and payable,
as the case may be, or (e) the occurrence of any Termination Event,
including, in
<PAGE>
13
each such case, any loss or reasonable expense sustained or
incurred or to be sustained or incurred in liquidating
or employing deposits from third parties acquired to effect or
maintain any Participating Interest or any part thereof as a
Eurodollar Participating Interest. Such loss or reasonable expense
shall exclude loss of margin hereunder but shall include an amount
equal to the excess, if any, as reasonably determined by such Bank,
of (i) its cost of obtaining the funds for the Participating
Interest being reduced, converted or not transferred, converted or
continued (assumed to be the Eurodollar Rate applicable thereto)
for the period from the date of such reduction, conversion or
failure to transfer, convert or continue to the last day of the
Transfer Period for such Eurodollar Participating Interest (or, in
the case of a failure to transfer, convert or continue, the
Transfer Period for such Eurodollar Participating Interest which
would have commenced on the date of such failure) over (ii) the
amount of interest (as reasonably determined by such Bank) that
would be realized by such Bank in reemploying the funds in an
amount equal to the amount of such reduction or conversion or the
amount not transferred, converted or continued for such period or
Transfer Period, as the case may be. A certificate of any Bank
setting forth any amount or amounts which such Bank is entitled to
receive pursuant to this subsection 3.2 (and the reasons therefor)
shall be delivered to the Company through the Administrative Agent
and shall be conclusive absent manifest error.
3.3 Requirements of Law. (a) Notwithstanding any
other provision herein, if after the date of this Agreement any
change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with
the interpretation or administration thereof (whether or not having
the force of law) shall change the basis of taxation of payments to
any Bank in respect of the Eurodollar Participating Interest of
such Bank or any fees or other amounts payable hereunder (other
than changes in respect of (i) taxes imposed on the overall net
income of such Bank by the jurisdiction in which such Bank has its
principal office or by any political subdivision or taxing
authority therein and (ii) any Taxes described in subsection 3.5),
or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets or deposits with or
for the account of or credit extended by such Bank (except any such
reserve requirement which is reflected in the Eurodollar Rate) or
shall impose on such Bank or the interbank eurodollar market any
other condition affecting this Agreement or the Eurodollar
Participating Interest of such Bank, and the result of any of the
foregoing shall be to increase the cost to such Bank of purchasing
or maintaining its Eurodollar Participating Interest or to reduce
the amount of any sum received or receivable by such Bank hereunder
(whether in repayment of the Net Investment, payment of any
Purchase Discount Amount or otherwise) by an amount deemed by such
Bank to be material, then the Company will pay to such Bank upon
demand such additional amount or amounts as will compensate such
Bank for such additional costs incurred or reduction suffered.
(b) If any Bank shall have determined that the adoption
after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in
any of the foregoing or in the interpretation or administration of
any of the foregoing by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any purchasing office of
such Bank) or any Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the
force of law) made or issued after the date hereof by any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on
the capital of such Bank's holding company, if any,
<PAGE>
14
as a consequence of this Agreement or its obligations pursuant hereto
to a level below that which such Bank or such Bank's holding company
would have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies and the policies of
such Bank's holding company with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time
the Company shall pay to such Bank such additional amount or
amounts as will compensate such Bank or such Bank's holding company
for any such reduction suffered.
(c) A certificate of each Bank setting forth such amount
or amounts as shall be necessary to compensate such Bank or its
holding company as specified in paragraph (a) or (b) above, as the
case may be, shall be delivered to the Company and shall be
conclusive absent manifest error. The Company shall pay each Bank
the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.
(d) In the event any Bank delivers a notice pursuant to
paragraph (e) below, the Company may require, at the Company's
expense and subject to subsection 3.2, such Bank to assign, at par
plus accrued Purchase Discount Amount and fees, without recourse
(in accordance with subsection 11.4) all its interests, rights and
obligations hereunder (including all of its Commitment and the
Participating Interests at the time held by it) to a financial
institution specified by the Company provided that (i) such
assignment shall not conflict with or violate any law, rule or
regulation or order of any court or other Governmental Authority,
(ii) the Company shall have received the written consent of the
Administrative Agent, which consent shall not unreasonably be
withheld, to such assignment and (iii) the Company shall have paid
to the assigning Bank all monies accrued and owing hereunder to it
(including pursuant to this subsection 3.3).
(e) Promptly after any Bank has determined, in its sole
judgment, that it will make a request for increased compensation
pursuant to this subsection 3.3, such Bank will notify the Company
thereof. Failure on the part of any Bank so to notify the Company
or to demand compensation for any increased costs or reduction in
amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of such
Bank's right to demand compensation with respect to such period or
any other period; provided that the Company shall not be under any
obligation to compensate any Bank under subsection 3.3(b) with
respect to increased costs or reductions with respect to any period
prior to the date that is six months prior to such request if such
Bank knew or could reasonably have been expected to be aware of the
circumstances giving rise to such increased costs or reductions and
of the fact that such circumstances would in fact result in such
increased costs or reduction; provided, further, that, the
foregoing limitation shall not apply to any increased costs or
reductions arising out of the retroactive application of any law,
regulation, rule, guideline or directive as aforesaid within such
six month period. The protection of this subsection 3.3 shall be
available to each Bank regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition which shall have occurred or
been imposed.
3.4 Inability to Determine Eurodollar Rate. In the
event, and on each occasion, that on the day two Business Days
prior to the commencement of any Transfer Period for a Fixed
Tranche the Administrative Agent shall have determined that dollar
deposits, in the respective amounts of the portion of each Bank's
Eurodollar Participating Interest comprising
<PAGE>
15
such Fixed Tranche, are not generally available in the interbank
eurodollar market, or that the rates at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to
any Bank of purchasing or maintaining its Eurodollar Participating
Interest during such Transfer Period, or that reasonable means do
not exist for ascertaining the Eurodollar Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telex
notice of such determination to the Company and the Banks. If such
notice is given, the Purchase Discount Amount applicable to that
portion of the Net Investment that was to be allocated to a Fixed
Tranche shall be determined by reference to the ABR. Until such
notice has been withdrawn by the Administrative Agent, no further
Eurodollar Rate elections shall be made. Each determination by the
Administrative Agent hereunder shall be conclusive absent manifest
error.
3.5 Taxes. (a) Any and all payments by the Company,
any Servicer or the Master Servicer (each, a "Tax Indemnifying
Party") to the Administrative Agent or the Banks hereunder shall be
made, in accordance with subsection 2.8, free and clear of and
without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) in the case of each Bank and
the Administrative Agent, taxes that would not be imposed but for a
connection between such Bank or the Administrative Agent (as the
case may be) and the jurisdiction imposing such tax, other than a
connection arising solely by virtue of the activities of such Bank
or the Administrative Agent (as the case may be) pursuant to or in
respect of this Agreement, including, without limitation, entering
into, making purchases pursuant to, receiving payments under, or
enforcing, this Agreement, and (ii) in the case of each Bank and
the Administrative Agent, any United States withholding taxes
payable with respect to payments hereunder under laws (including,
without limitation, any statute, treaty, ruling, determination or
regulation) in effect on the Initial Date (as hereinafter defined)
for such Bank or the Administrative Agent, as the case may be, but
not excluding any United States withholding taxes payable solely as
a result of any change in such laws occurring after the Initial
Date (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). For purposes of this subsection 3.5, the term
"Initial Date" shall mean (i) in the case of the Administrative
Agent or any Bank, the date on which such Person became a party to
this Agreement and (ii) in the case of any assignment including any
assignment by a Bank to a new purchasing office, the date of such
assignment. If any Taxes shall be required by law to be deducted
from or in respect of any sum payable hereunder to any Bank or the
Administrative Agent (i) the sum payable by the relevant Tax
Indemnifying Party shall be increased as may be necessary so that
after making all required deductions (including deductions
applicable to additional sums payable under this subsection 3.5)
such Bank or the Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such
deductions been made, (ii) the relevant Tax Indemnifying Party
shall make such deductions and (iii) the relevant Tax Indemnifying
Party shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. No
Tax Indemnifying Party shall, however, be required to pay any
amounts pursuant to clause (i) of the preceding sentence to any
Bank or the Administrative Agent not organized under the laws of
the United States of America or a state thereof if such Bank or the
Administrative Agent fails to comply with the requirements of
paragraphs (f) or (g), as the case may be, and paragraph (h) of
this subsection 3.5.
<PAGE>
16
(b) In addition, the Company agrees to pay any present
or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from the
execution, delivery or registration of, or otherwise with respect
to, this Agreement (hereinafter referred to as "Other Taxes").
(c) Each Tax Indemnifying Party will indemnify each Bank
and the Administrative Agent for the full amount of Taxes and Other
Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this subsection 3.5) paid by
such Bank or the Administrative Agent, as the case may be, and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto whether or not such Taxes or
Other Taxes were correctly or legally asserted. Such
indemnification shall be made within 10 days after the date any
Bank or the Administrative Agent, as the case may be, makes written
demand therefor. If a Bank or the Administrative Agent shall
become aware that it is entitled to receive a refund or is
reasonably requested by the relevant Tax Indemnifying Party to
pursue a claim for a refund in respect of Taxes or Other Taxes, it
shall promptly notify such Tax Indemnifying Party of the
availability of such refund (unless instructed to pursue a claim by
such Tax Indemnifying Party) and shall, within 30 days after
receipt of a request by such Tax Indemnifying Party, pursue or
timely claim such refund at such Tax Indemnifying Party's expense.
If any Bank or the Administrative Agent receives a refund in
respect of any Taxes or Other Taxes for which such Bank or the
Administrative Agent has received payment from any Tax Indemnifying
Party hereunder, it shall promptly notify such Tax Indemnifying
Party of such refund and shall, within 30 days after receipt of a
request by such Tax Indemnifying Party (or promptly upon receipt,
if such Tax Indemnifying Party has requested application for such
refund pursuant hereto), repay such refund (plus any interest
received) to such Tax Indemnifying Party, provided that such Tax
Indemnifying Party, upon the request of such Bank or the
Administrative Agent, agrees to return such refund (plus any
penalties, interest or other charges required to be paid) to such
Bank or the Administrative Agent in the event such Bank or the
Administrative Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of
Taxes or Other Taxes withheld by any Tax Indemnifying Party in
respect of any payment to any Bank or the Administrative Agent,
such Tax Indemnifying Party will furnish to the Administrative
Agent, at its address referred to in subsection 11.2, the original
or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations
contained in this subsection 3.5 shall survive the termination of
this Agreement.
(f) This paragraph (f) shall apply to cases where the
Tax Indemnifying Party is a U.S. Person (within the meaning of the
Code). Each of each Bank and the Administrative Agent that is not
organized under the laws of the United States of America or a state
thereof agrees that at least 10 days prior to the first Purchase
Discount Amount Payment Date following the Initial Date in respect
of such Bank, it will deliver to the Company and the Administrative
Agent (if appropriate) two duly completed copies of either (i)
United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each
case that such Bank or the Administrative Agent, as the case may
be, is entitled to receive
<PAGE>
17
payments under this Agreement payable to it without deduction or
withholding of any United States federal income taxes and backup
withholding taxes or is entitled to receive such payments at
a reduced rate pursuant to a treaty provision or (ii) in the case
of a Bank that is not a "bank" within the meaning of Section
881(c)(3) of the Code, United States Internal Revenue
Service Form W-8 or successor applicable form and a statement from
such Bank certifying to the fact that interest payable to it
hereunder (A) will not be described in Section 871(h)(3)(A) or
Section 881(c)(3)(A), (B) or (C) of the Code and (B) will not be
effectively connected with a trade or business carried on in the
United States by such Bank. Each of each Bank and the
Administrative Agent required to deliver to the Company and the
Administrative Agent a Form 1001, 4224 or W-8 pursuant to the
preceding sentence further undertakes to deliver to the Company and
the Administrative Agent (if appropriate) two further copies of
Form 1001, 4224 or W-8, or successor forms, or other similar manner
of certification and such extensions or renewals thereof as may
reasonably be requested by the Company and, in the case where a
Form W-8 has been delivered, a further statement certifying to the
fact set forth in clause (B) of the preceding sentence (i) at the
times reasonably requested by the Company, (ii) after the
occurrence of an event requiring a change in the most recent form
or statement previously delivered by it to the Company or (iii) in
the case of Form 1001, 4224 or W-8, on or before the date that any
such form expires or becomes obsolete, and, in the case of Form
1001 or 4224, certifying that such Bank is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes and backup withholding taxes
or is entitled to receive such payments at a reduced rate pursuant
to a treaty provision, unless such Bank advises the Company that it
is unable lawfully to provide such forms and other certifications
and notifies the Company to such effect. Unless the Company and
the Administrative Agent have received forms, certificates and
other documents satisfactory to them indicating that payments
hereunder to or for any Bank not incorporated under the laws of the
United States or a state thereof are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the relevant Tax Indemnifying Party or the
Administrative Agent, as the case may be, shall withhold such taxes
from such payments at the applicable statutory rate.
(g) This paragraph (g) shall apply to cases where the
Tax Indemnifying Party is incorporated in or under the laws of
Canada. Each Bank and the Administrative Agent that is not
incorporated within or under the laws of Canada and that is
claiming such additional amounts agrees that within a reasonable
period of time following the request of the relevant Tax
Indemnifying Party, it will, to the extent it is legally entitled
to a reduction in the rate of or exemption from Canadian
withholding taxes, deliver to the such Tax Indemnifying Party and
the Administrative Agent (if appropriate) any form or document
required under the laws, regulations, official interpretations or
treaties enacted by, made or entered into with Canada properly
completed and duly executed by such Bank or Administrative Agent
establishing that any payments hereunder are exempt from Canadian
withholding tax or subject to a reduced rate of Canadian
withholding tax, as the case may be; provided that, in the sole
determination of such Bank or the Administrative Agent, such form
or document shall not be otherwise disadvantageous to such Bank or
the Administrative Agent.
(h) Any Bank claiming any additional amounts payable
pursuant to this subsection 3.5 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any
certificate or document requested by the relevant Tax Indemnifying
Party or to change
<PAGE>
18
the jurisdiction of its applicable purchasing office if the
making of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts which
may thereafter accrue and would not, in the sole determination of
such Bank, be otherwise disadvantageous to such Bank.
ARTICLE IV
Termination
4.1 Termination. This Agreement will terminate at such
time after the expiration of the Commitment Period when the Net
Investment has been reduced to zero and all other amounts owing to
the Banks and the Administrative Agent hereunder shall have been
paid in full; provided, however, that the indemnities of the
Company, the Servicers and the Master Servicer to the Banks and the
Administrative Agent set forth in this Agreement (including those
set forth in Article III) shall survive such termination. Upon (i)
the expiration of the Commitment Period and (ii) the reduction of
the Net Investment to zero and the payment in full of all other
amounts owing to the Banks and the Administrative Agent hereunder,
the Administrative Agent shall, at the expense of the Company,
execute such Uniform Commercial Code termination statements and
such other documents, and take such other actions, as the Company
may reasonably request to evidence the termination of the ownership
interest of the Banks in the Receivables and the payment of all
amounts owing pursuant to and in connection with this Agreement.
ARTICLE V
Covenants, Representations and Warranties
5.1 Representations and Warranties of the Company
Relating to the Company. The Company hereby represents and
warrants to the Administrative Agent and the Banks, (x) as of the
Effective Date, and (y) with respect to an Increase in Net
Investment, as of the related Closing Date, unless, in either case,
such representation or warranty expressly relates only to a prior
date, that:
(a) Organization; Corporate Powers. The Company (i) is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated,
(ii) has all requisite corporate power and authority, and all
material licenses, permits, franchises, consents and approvals, to
own or lease its property and assets and to carry on its business
as now conducted and as proposed to be conducted, (iii) is
qualified and in good standing as a foreign corporation to do
business in every jurisdiction where such qualification is
necessary, except where the failure so to qualify would not have a
Material Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform each of the Transaction
Documents and each agreement or instrument contemplated hereby or
thereby to which it is or will be a party.
<PAGE>
19
(b) Authorization. The execution, delivery and
performance of each of the Transaction Documents to which the
Company is a party, the assignment and transfer of the
Participating Interests hereunder and the consummation of the other
transactions contemplated by any of the foregoing (collectively,
the "Transactions") (i) have been duly authorized by all requisite
corporate and, if required, stockholder action and (ii) will not
(x) violate (A) any provision of law, statute, rule or regulation
(including, without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar governing
documents) of the Company, (B) any applicable order of any court or
any rule, regulation or order of any Governmental Authority or (C)
any indenture, certificate of designation for preferred stock,
agreement or other instrument to which the Company is a party or by
which the Company or any of its property is bound, (y) be in
conflict with, result in a breach of or constitute (with notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument where any such conflict, violation,
breach or default referred to in clause (ii)(x) or (ii)(y) of this
subsection 5.1(b), individually or in the aggregate, would have a
Material Adverse Effect or (z) result in the creation or imposition
of any Lien upon any property or assets of the Company, except for
Liens created by this Agreement.
(c) Enforceability. This Agreement has been duly
executed and delivered by the Company and constitutes, and each
other Transaction Document if and when executed and delivered by
the Company will constitute, a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and except as enforceability
may be limited by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity
or at law).
(d) Consents. All consents and approvals of, filings
and registrations with, and other actions in respect of, all
Governmental Authorities required in order to make or consummate
the Transactions have been obtained, given, filed or taken and are
in full force and effect, other than any such consents, approvals,
filings or other actions, the failure to obtain or make which could
not reasonably be expected to result in a Material Adverse Effect.
(e) Litigation, etc. (i) There are not any actions,
suits or proceedings at law or in equity or by or before any court
or Governmental Authority now pending or, to the knowledge of the
Company, threatened against or affecting the Company or any
property or rights of the Company as to which there is a reasonable
possibility of an adverse determination and which (x) if adversely
determined, could individually or in the aggregate result in a
Material Adverse Effect or (y) involve the Transaction Documents or
(z) if adversely determined could materially adversely affect the
Transactions.
(ii) The Company is not in default with respect to any
law, order, judgment, writ, injunction, decree, rule or regulation
of any Governmental Authority where such default could have a
Material Adverse Effect. The assignment and transfer of the
Participating Interests hereunder, the use of the proceeds thereof
and the other Transactions will not violate any applicable law or
regulation or violate or be prohibited by any judgment, writ,
injunction, decree or order of any court or Governmental Authority
or subject the Company to any civil or criminal penalty or fine.
<PAGE>
20
(f) No Default, etc. (i) The Company is not a party to
any agreement or instrument or subject to any corporate restriction
that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(ii) No indenture, certificate of designation for
preferred stock, agreement or other instrument to which the Company
is a party will prohibit or materially restrain, or have the effect
of prohibiting or materially restraining, or imposing materially
adverse conditions upon, the consummation of any of the
Transactions.
(iii) The Company is not in default in any manner under
any provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or
instrument to which it is a party or by which it or any of its
properties or assets are or may be bound, in either case where such
default could result in a Material Adverse Effect. After giving
effect to the Transactions, no Termination Event or Potential
Termination Event shall have occurred and be continuing.
(g) Ownership of Property; Liens. The Company has good
and marketable title to, or valid leasehold interests in, or
easements on or other limited property interests in, all its
material properties and assets, except for minor defects in title
and limitations on property interests that do not interfere with
its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes.
All such material properties and assets are free and clear of
Liens, other than Liens expressly permitted by subsection 8.3.
(h) Investment Company Act; Other Regulations. (i) The
Company is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
(ii) The Company is not a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
(iii) The Company is not engaged principally, or as one
of its important activities, in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.
(iv) The assignment and transfer of the Participating
Interests hereunder and the use of the proceeds thereof and the
other Transactions will not violate or be inconsistent with the
provisions of the Regulations of the Board, including Regulations
G, T, U and X.
(i) Taxes. The Company has filed or caused to be filed
all Federal, and all material state and local, tax returns required
to have been filed by it and has paid or caused to be paid all
taxes shown thereon to be due and payable, and any assessments
received by it, except taxes that are being contested in accordance
with subsection 7.4. For purposes of this paragraph, "taxes" shall
mean any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any Governmental Authority.
<PAGE>
21
(j) Ownership; Subsidiaries. All the issued and
outstanding capital stock of the Company is owned, legally and
beneficially, by C&A Products. The Company has no Subsidiaries.
(k) Accuracy and Completeness of Information. The
information, reports, financial statements, exhibits and schedules
furnished by or on behalf of the Company to the Administrative
Agent or any Bank in connection with the negotiation of any
Transaction Document or included therein or delivered pursuant
thereto, when taken as a whole, did not contain, and as they may be
amended, supplemented or modified from time to time, will not
contain, as of the Effective Date any material misstatement of fact
and did not omit, and as they may be amended, supplemented or
modified from time to time, will not omit, to state as of the
Effective Date any material fact necessary to make the statements
therein, in the light of the circumstances under which they were,
are or will be made, not materially misleading in their
presentation of the Transactions or of the Company.
(l) Pro Forma Balance Sheet. The Company has heretofore
furnished to the Administrative Agent and each of the Banks its pro
forma balance sheet after giving effect to the transactions to take
place on the Effective Date. Such balance sheet (i) was prepared
in good faith on the basis of reasonable assumptions and (ii)
discloses all material liabilities, direct or contingent, of the
Company as of the date thereof.
(m) No Material Adverse Change. There has been no
material adverse change in the business, properties, assets,
operations or financial condition of the Company (after giving
effect to the Transactions contemplated to occur on or prior to the
Effective Date pursuant to the Transaction Documents) since the
date of the pro forma balance sheet referred to in paragraph (l)
above.
(n) Solvency. (i) The fair salable value of the assets
of the Company exceeds the amount that will be required to be paid
on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Company. After giving
effect to the Transactions to occur on the Effective Date or such
Closing Date, as applicable, the fair salable value of the assets
of the Company will exceed the amount that will be required to be
paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of the Company.
(ii) The assets of the Company do not constitute unreasonably
small capital to carry out its business as conducted or as proposed
to be conducted. After giving effect to the Transactions to occur
on the Effective Date or such Closing Date, as applicable, the
assets of the Company will not constitute unreasonably small
capital for the Company to carry out its business as now conducted
and as proposed to be conducted, including the capital needs of the
Company taking into account the particular capital requirements of
the business conducted by it and projected capital requirements and
capital availability thereof.
(iii) The Company does not intend to incur debts beyond its
ability to pay such debts as they mature, taking into account the
timing and amounts of cash to be received by the Company and of
amounts to be payable on or in respect of debt of the Company.
<PAGE>
22
(o) Employee Benefit Plans. The Company and each of its
ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the regulations and published
interpretations thereunder except for such noncompliance which
would not be expected to result in a Material Adverse Effect. No
Reportable Event has occurred as to which the Company or any of its
ERISA Affiliates was required to file a report with the PBGC, other
than reports for which the 30 day notice requirement is waived,
reports that have been filed and reports the failure of which to
file would not result in a Material Adverse Effect and, as of the
Effective Date, the present value of all benefit liabilities under
each Plan of the Company or any of its ERISA Affiliates (on a
termination basis and based on those assumptions used to fund such
Plan) did not, as of the last annual valuation report applicable
thereto, exceed by more than $7,500,000 the value of the assets of
such Plan. None of the Company or any of its ERISA Affiliates has
incurred or could reasonably be expected to incur any Withdrawal
Liability that could result in a Material Adverse Effect. None of
the Company or any of its ERISA Affiliates has received any
notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization
or to be terminated where such reorganization or termination has
resulted or could reasonably be expected to result, through
increases in the contributions required to be made to such Plan or
otherwise, in a Material Adverse Effect.
The representations and warranties set forth in this
subsection 5.1 shall survive the initial transfer of a
Participating Interest and any Increase in the Net Investment.
Upon discovery by the Company, any Bank or the Administrative Agent
of a breach of any of the foregoing representations and warranties,
the Person discovering such breach shall give prompt written notice
to such other Persons.
5.2 Representations and Warranties of the Company
Relating to this Agreement and the Receivables. The Company hereby
represents and warrants to the Administrative Agent and the Banks,
(x) as of the Effective Date, and (y) with respect to an Increase
in Net Investment, as of the related Closing Date, unless, in
either case, such representation or warranty expressly relates only
to a prior date, that:
(a) The document or computer file delivered pursuant to
subsection 6.1(j) is an accurate and complete listing in all
material respects of all the Receivables as of the date set
forth therein and the information contained therein with
respect to the identity of such Receivables is true and
correct in all material respects as of such date. As of such
date, the aggregate amount of Eligible Receivables is as set
forth on such document or file.
(b) The Company has not sold, assigned or transferred,
or granted any existing Lien on, the Receivables or any of the
other Pooled Property, or any interest therein, to any Person,
except the Banks hereunder.
(c) Other than with respect to Receivables which the
Company shall have stated in writing (in the Daily Report or
otherwise) on the Closing Date therefor are not Eligible
Receivables on such date, with respect to each Receivable, all
consents, licenses, approvals or authorizations of or
registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Company in
connection with
<PAGE>
23
the conveyance of such Receivable to the Banks
have been duly obtained, effected or given and are in full
force and effect.
(d) This Agreement effects a valid transfer and
assignment to the Banks of an undivided, participating
ownership interest in all right, title and interest of the
Company in the Receivables, the Related Property and the
proceeds thereof, including Recoveries relating thereto, or,
if this Agreement does not effect a transfer and assignment of
such an ownership interest, it effects a grant of a "security
interest" (as defined in the Uniform Commercial Code as in
effect in the State of New York) in such property to the
Banks, which, in the case of existing Receivables, the Related
Property and the proceeds thereof, is enforceable upon
execution and delivery of this Agreement, and which will be
enforceable with respect to such Receivables hereafter created
and the proceeds thereof upon such creation. On or prior to
the initial Closing Date, all filings and other acts necessary
or advisable (including but not limited to all filings and
other acts necessary or advisable under the Uniform Commercial
Code of each relevant jurisdiction) have been made or
performed in order to grant the Banks a first priority
perfected ownership interest in respect of all Receivables and
Related Property. On the Effective Date and, in the case of
the Receivables hereafter created and the proceeds thereof,
upon the creation thereof, the Banks shall have a first
priority perfected ownership or security interest in such
property.
(e) This Agreement effects a grant of a "security
interest" (as defined in the Uniform Commercial Code as in
effect in the State of New York) in all of the Equipment, the
Transferred Agreement and the Accounts to the Banks, which, in
the case of such property and the proceeds thereof existing as
of the date hereof, is enforceable upon execution and delivery
of this Agreement, and which will be enforceable with respect
to such property hereafter created and the proceeds thereof
upon such creation. On or prior to the initial Closing Date,
all filings and other acts necessary or advisable (including
but not limited to all filings and other acts necessary or
advisable under the Uniform Commercial Code of each relevant
jurisdiction) have been made or performed in order to grant
the Banks a first priority perfected ownership interest in
respect of all such property. On the Effective Date and, in
the case of such property hereafter created and the proceeds
thereof, upon the creation thereof, the Banks shall have a
first priority perfected ownership or security interest in
such property.
(f) The chief executive office of the Company is listed
on Schedule 2, which office is the place where the Company is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State in which such office is
located, and the offices at which the Company keeps its
records concerning the Receivables are also listed on said
Schedule.
(g) No Termination Event or Potential Termination Event
has occurred and is continuing.
(h) Each Receivable that is included by the Company in
its determination of the aggregate Adjusted Principal Amount
of all Eligible Receivables shall be a Receivable
<PAGE>
24
with respect to which all of the criteria contained in the
definition of "Eligible Receivable" hereunder are satisfied.
The representations and warranties set forth in this
subsection 5.2 shall survive the initial transfer of a
Participating Interest and any Increase in Net Investment. Upon
discovery by the Company, any Bank or the Administrative Agent or
of a breach of any of the foregoing representations and warranties,
the Person discovering such breach shall give prompt written notice
to such other Persons.
5.3 Retransfer Obligation. (a) In the event of any
breach of any of the representations or warranties of the Company
contained in subsection 5.2(d), (e), (f) or (h), then upon the
earlier to occur of the discovery of such event by the Company, or
receipt by the Company of written notice of such event given by the
Administrative Agent, the outstanding Principal Amount of
Receivables shall be reduced by the Principal Amount of Receivables
as to which such representations and warranties were breached;
provided, however, that (i) prior to the Amortization Period, to
the extent that such a reduction would cause the Invested
Percentage to be more than the Maximum Invested Percentage, the
Company agrees to acquire such Receivables and any Related Property
with respect thereto on the terms and conditions set forth in
paragraph (b) below and (ii) during the Amortization Period, the
Company agrees to acquire such Receivables and any Related Property
with respect thereto on the terms and conditions set forth in
paragraph (b) below.
(b) If any breach of a representation or warranty which
necessitates the Company's reacquisition of a Receivable pursuant
to paragraph (a) above remains uncured on the date which is 30 days
after discovery or notice of such breach, the Company shall acquire
such Receivable and any Related Property with respect thereto by
depositing into the relevant Concentration Account in immediately
available funds on such 30th day (or, if such day is not a Business
Day, on the next succeeding Business Day, an amount equal to (i)
prior to an Amortization Period, the lesser of (A) the amount
necessary to cause the Invested Percentage to equal the Maximum
Invested Percentage and (B) the Principal Amount of such Receivable
or (ii) during an Amortization Period, the Principal Amount of such
Receivables (in either case, a "Retransfer Payment"). Upon deposit
of the Retransfer Payment, the Banks shall automatically and
without further action be deemed to transfer, assign, set-over and
otherwise convey to the Company, free and clear of any Lien created
by the Banks but otherwise without recourse, representation or
warranty, all the right, title and interest of the Banks in and to
such Receivable, all Related Property with respect thereto, all
monies due or to become due with respect thereto and all proceeds
thereof; and such reacquired Receivable shall be treated by the
Banks as collected in full as of the date on which it was
transferred. The Administrative Agent shall execute such documents
and instruments of transfer or assignment and take such other
actions as shall reasonably be requested by the Company to effect
the conveyance of such Receivables pursuant to this subsection 5.3.
The obligation to reacquire any Receivable shall constitute the
sole remedy respecting any breach of the representations,
warranties and covenants set forth in subsection 5.2(d), (e), (f)
or (h) with respect to such Receivables available to Banks or the
Administrative Agent on behalf of the Banks.
5.4 Obligations Unaffected. The obligations of the
Company to the Administrative Agent and the Banks under this
Agreement shall not be affected by reason of any
<PAGE>
25
invalidity, illegality or irregularity of any Receivable or any
transfer and assignment of a Receivable.
ARTICLE VI
Conditions to Effectiveness/Transfers/Reinvestments
6.1 Effective Date. This Agreement shall become
effective on the date (the "Effective Date") on which each of the
following conditions precedent are either (x) satisfied or (y)
waived by the Required Banks:
(a) The Company, each Servicer and the Master Servicer
shall have delivered to the Administrative Agent, with a copy
for each Bank, (i) a copy of the certificate or articles of
incorporation, including all amendments thereto, of such
Person, certified as of a recent date by the Secretary of
State of the state of incorporation thereof, and such
certificate or articles shall be in form and substance
satisfactory to the Administrative Agent, and a certificate as
to the good standing of such Person as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary
or Assistant Secretary of such Person dated the Effective Date
and certifying (A) that attached thereto is a true and
complete copy of the Bylaws of such Person as in effect on the
Effective Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions in
form and substance satisfactory to the Administrative Agent
and duly adopted by the Board of Directors of such Person
authorizing the execution, delivery and performance of the
Transaction Documents to which such Person is a party and the
transactions contemplated thereby, and that such resolutions
have not been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles of
incorporation of such Person has not been amended since the
date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to clause (i) above and (D)
as to the incumbency and specimen signature of each officer
executing any Transaction Document or any other document
delivered in connection herewith or therewith on behalf of
such Person; and (iii) a certificate of another officer as to
the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to
clause (ii) above.
(b) There shall have been delivered to the
Administrative Agent, with a copy for each Bank, the written
opinions of (i) Cravath, Swaine & Moore, special counsel for
the Company, the Servicers and the Master Servicer, in
substantially the forms of Exhibits D-1 and D-2, (ii)
Elizabeth R. Philipp, Esq., general counsel of Collins &
Aikman Corporation, in substantially the form of Exhibit D-3,
(iii) Stikeman, Elliott, special Canadian counsel, in
substantially the form of Exhibit D-4, and (iv) each local
state counsel listed on Schedule 6, in substantially the form
of Exhibit D-5, in each case addressed to the Administrative
Agent and the Banks, dated the Effective Date, and in form and
substance satisfactory to the Administrative Agent, and such
additional opinions, if any, as may be reasonably requested by
the Administrative Agent.
<PAGE>
26
(c) Appropriate financing statements relating to the
Receivables shall have been executed and delivered and shall
be in proper form for filing in each appropriate filing office
in the jurisdiction in which the Company maintains its
principal executive office.
(d) The Administrative Agent shall have received search
reports satisfactory to the Administrative Agent dated a date
reasonably near to the Effective Date, listing all effective
financing statements which name the Company as debtor and
which are filed in the jurisdictions in which filings were
made pursuant to paragraph (c) above, together with copies of
such other financing statements or notices of assignment (none
of which shall cover any Receivables unless a corresponding
termination statement has been delivered to the Administrative
Agent).
(e) There shall have been delivered to the
Administrative Agent search reports acceptable to the
Administrative Agent dated a date reasonably near the
Effective Date confirming the absence of any tax lien and
judgment lien filings made against the Company or any of its
assets in any filing office in any jurisdiction where filings
were made pursuant to paragraph (c) above.
(f) The Administrative Agent shall have received a
certificate from the Company, dated the Effective Date and
signed by one of its Responsible Officers, in form and
substance satisfactory to the Administrative Agent, confirming
compliance with the conditions precedent set forth in
subsection 6.2.
(g) The Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the
Effective Date.
(h) The Administrative Agent shall have received (i) a
copy of the Receivables Sale Agreement, duly executed on
behalf of C&A Products, each of the Sellers and the Company
and (ii) the Subordination Agreement, duly executed on behalf
of each of C&A Products, each of the Sellers and the Company.
(i) The initial funding under the Credit Agreement shall
have occurred or shall occur simultaneously with the initial
purchase under this Agreement.
(j) The Administrative Agent shall have received a
microfiche or other tangible evidence, as certified by a
Responsible Officer of the Company, acceptable to the
Administrative Agent, showing as of a date acceptable to the
Administrative Agent prior to the Effective Date the Obligors
whose Receivables have been transferred to the Company and the
balance of the Receivables with respect to each such Obligor
as of such date.
(k) A Responsible Officer of the Company shall have
certified that all conditions to the obligations of the
Company and each of the Sellers under the Receivables Sale
Agreement shall have been satisfied in all respects (or waived
by the Required Banks).
<PAGE>
27
(l) The Administrative Agent shall have received an
agreed-upon procedures letter relating to historical financial
information with respect to the Receivables from independent
auditors satisfactory to the Administrative Agent.
(m) The Administrative Agent shall have received, as
certified by a Responsible Officer of the Company, copies of
(i) the written Policies, or, to the extent that the credit
and collection policies of the Sellers are not in written form
at the Effective Date, a written description of the historical
credit and collection practices of the Sellers and proposed
practices for the Company, in each case in form and substance
acceptable to the Administrative Agent and (ii) the Company
Policies.
(n) The Administrative Agent shall have received
licenses or contingent licenses, or the Administrative Agent
shall otherwise be satisfied with its ability, to use any
computer programs, material tapes, disks, cassettes and data
necessary or advisable to permit the collection of the
Receivables by a Servicer without the participation of any
Seller or the Company.
(o) The Administrative Agent shall have reviewed the
computer programs, material, data and back-up plans of the
Sellers required for the collection of Receivables and shall
be satisfied that the foregoing, including the procedures of
the Sellers for the preparation, storage and retrieval
thereof, are sufficient to permit (i) the Company or the
Administrative Agent to collect the Receivables with or
without the participation of the Sellers or any servicer and
(ii) a third-party servicer to collect the Receivables with or
without the participation of the Sellers or the Company.
(p) The composition of the Company's Board of Directors
(including the independent director) shall be reasonably
acceptable to the Administrative Agent.
(q) The Administrative Agent shall have received the pro
forma opening balance sheet for the Company referred to in
subsection 5.1(l).
(r) The Administrative Agent shall have received a
certificate dated the Effective Date and signed by a
Responsible Officer of the Company, substantially in the form
of Exhibit G, to the effect that the Company will be solvent
after giving effect to the transactions occurring on the
Effective Date.
6.2 Condition to each Increase in Net Investment. The
obligations of the Banks to increase the Net Investment on any
Closing Date is subject to the conditions that:
(a) no Termination Event or Potential Termination Event
shall have occurred and then be continuing, and no such
Termination Event or Potential Termination Event shall occur
as a result of the proposed Increase in Net Investment on such
Closing Date;
(b) the representations and warranties of the Company
set forth in Article V shall be true and correct in all
material respects on and as of such Closing Date;
<PAGE>
28
(c) the representations and warranties of the Servicers
and the Master Servicer set forth in Article XII shall be true
and correct in all material respects on and as of such Closing
Date; and
(d) the Administrative Agent shall have timely received
all notices, statements and certificates relating to such
Closing Date required by subsections 2.3 and 12.5.
Each Increase in Net Investment on any Closing Date shall
constitute a representation and warranty by the Company that the
conditions to the transfer thereof on such Closing Date, as the
case may be, have been satisfied.
ARTICLE VII
Affirmative Covenants
The Company hereby agrees that, unless and until this
Agreement is terminated pursuant to subsection 4.1, the Company
shall:
7.1 Financial Statements. Furnish to each Bank:
(a) as soon as available, but in any event within
90 days after the end of each fiscal year of the Company, a
copy of the balance sheet of the Company as at the end of such
year and the related statements of income and retained
earnings and cash flows for such year, setting forth in each
case (beginning with the financial statements delivered for
the 1995 fiscal year) in comparative form the figures for the
previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of
the scope of the audit, by Arthur Andersen & Co. or other
independent certified public accountants of nationally
recognized standing reasonably acceptable to the
Administrative Agent; and
(b) as soon as available, but in any event not later
than 45 days after the end of each of the first three
quarterly periods of each fiscal year of the Company, the
unaudited balance sheet of the Company as at the end of such
quarter and the related unaudited statements of income and
retained earnings and cash flows of the Company for such
quarter and the portion of the fiscal year through the end of
such quarter, setting forth in each case, with respect to any
such financial statements covering any fiscal quarter
commencing after the first anniversary of the Effective Date,
in comparative form the figures for the corresponding quarter
and portion of the previous year, certified by a Responsible
Officer of the Company as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by
such accountants or Responsible Officer, as the case may be, and
disclosed therein).
<PAGE>
29
7.2 Certificates; Other Information. Furnish to each
Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.1(a), a certificate of
the independent certified public accountants reporting on such
financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any
Termination Event or Potential Termination Event, except as
specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) or (b), a
certificate of a Responsible Officer of the Company stating
that, to the best of such Responsible Officer's knowledge, the
Company during such period has observed or performed all of
its covenants and other agreements, and satisfied every
condition, contained in the Transaction Documents to which it
is a party to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any
Termination Event or Potential Termination Event, except as
specified in such certificate; and
(c) promptly, such additional financial and other
information as any Bank may from time to time reasonably
request by written notice to the Company (through the
Administrative Agent).
7.3 Existence; Businesses and Properties; Insurance;
Receivables. (a) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal
existence.
(b) Do or cause to be done all things necessary to
obtain, preserve, renew, extend and keep in full force and effect
the rights, licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of
its business; comply in all material respects with all applicable
laws, rules, regulations and orders of any Governmental Authority,
whether now in effect or hereafter enacted; and at all times
maintain and preserve all property material to the conduct of such
business and keep such property in good repair, working order and
condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried
on in connection therewith, if any, may be properly conducted at
all times.
(c) Keep its insurable properties insured (including
through self-insurance) at all times by financially sound and
reputable insurers in such amounts as shall be customary for
similar businesses and maintain such other insurance, of such
types, to such extent and against such risks, as is customary with
companies in the same or similar businesses; and maintain such
other insurance as may be required by law.
(d) Defend the right, title and interest of the Banks
in, to and under the Receivables and the other Pooled Property,
whether now existing or hereafter created, against all claims of
third parties claiming through or under the Company, the Sellers,
the Master Servicer or the Servicers.
<PAGE>
30
(e) Duly fulfill all material obligations on its part to
be fulfilled under or in connection with each Receivable and do
nothing that could reasonably be expected to impair the rights of
the Banks in any Receivable.
7.4 Taxes. Pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property, before
the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise which,
if unpaid, might give rise to a Lien upon such properties or any
part thereof; provided, however, that such payment and discharge
shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as (a) the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the
Company shall set aside on its books adequate reserves as required
by GAAP with respect thereto, (b) such tax, assessment, charge,
levy or claim is in respect of property taxes for property that the
Company has determined to abandon and the sole recourse for such
tax, assessment, charge, levy or claim is to such property or (c)
the amount of such taxes assessments, charges, levies and claims
and interest and penalties thereon does not exceed $1,000,000 in
the aggregate.
7.5 Inspection of Property; Books and Records;
Discussions. Maintain all financial records in accordance with
GAAP and permit any Persons designated by the Administrative Agent
(or, during the continuance of any Termination Event, any Bank) to
visit and inspect the financial records and the properties of the
Company at reasonable times, upon reasonable notice and as often as
reasonably requested and to make extracts from and copies of such
financial records, and permit any Persons designated by the
Administrative Agent (or, during the continuance of any Termination
Event, any Bank) to discuss the affairs, finances and condition of
the Company with the officers thereof and independent accountants
therefor (subject to reasonable requirements of confidentiality,
including requirements imposed by law or by contract).
7.6 Notices. Promptly give notice to the Administrative
Agent and each Bank of:
(a) the occurrence of any Termination Event, Potential
Termination Event, Servicer Default or Servicer Event of
Default, specifying the nature and extent thereof and the
corrective action (if any) proposed to be taken with respect
thereto;
(b) any Lien not permitted by subsection 8.3 on any
Receivable or any other Pooled Property other than the
conveyances and Liens hereunder and under the Receivables Sale
Agreement;
(c) the filing or commencement of any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Company in respect of
which there is a reasonable possibility of an adverse
determination and which, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
and
(d) any development known to a Responsible Officer of
the Company that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.
<PAGE>
31
7.7 ERISA. (a) Comply in all material respects with
the applicable provisions of ERISA and (b) furnish to the
Administrative Agent and each Bank (i) as soon as possible, and in
any event within 30 days after any Responsible Officer of the
Company or any ERISA Affiliate of any of them knows or has reason
to know that any Reportable Event has occurred that alone or
together with any other Reportable Event could reasonably be
expected to result in liability of the Company or any of its ERISA
Affiliates to the PBGC in an aggregate amount exceeding
$10,000,000, a statement of a Responsible Officer of the Company
setting forth details as to such Reportable Event and the action
proposed to be taken with respect thereto, together with a copy of
the notice, if any, of such Reportable Event given to the PBGC,
(ii) promptly after any Responsible Officer of the Company learns
of receipt thereof, a copy of any notice the Company or any of its
ERISA Affiliates may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than a
Plan maintained by any of their ERISA Affiliates which is
considered an ERISA Affiliate only pursuant to subsection (m) or
(o) of Section 414 of the Code) or to appoint a trustee to
administer any Plan or Plans, (iii) within 20 days after the due
date for filing with the PBGC pursuant to Section 412(n) of the
Code a notice of failure to make a required installment or other
payment with respect to a Plan, a statement of a Responsible
Officer of the Company setting forth details as to such failure and
the action proposed to be taken with respect thereto, together with
a copy of such notice given to the PBGC and (iv) promptly after any
Responsible Officer of the Company learns thereof and in any event
within 30 days after receipt thereof by the Company or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each
notice received by the Company or such ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability or (B) a determination
that a Multiemployer Plan is, or is expected to be, terminated or
in reorganization, in each case within the meaning of Title IV of
ERISA.
7.8 Use of Proceeds. The Company shall use the proceeds
of the initial transfer and assignment of the Participating
Interest only to acquire all the Receivables owned by the Sellers
on the date of such transfer and assignment and to pay fees and
expenses pursuant to the Transaction Documents. The Company shall
use the proceeds of any Increases in Net Investment (a) to acquire
Receivables from the Sellers pursuant to the Receivables Sale
Agreement in an amount not to exceed the aggregate amount specified
in the applicable Daily Report, (b) to pay operating expenses of
the Company, (c) to make payments on account of the Subordinated
Notes in the aggregate amount specified in the applicable Daily
Report, and (d) to make payments on account of Restricted Payments
in the aggregate amount specified in the applicable Daily Report.
7.9 Separate Corporate Existence. The Company shall
take, or refrain from taking, as the case may be, all actions that
are necessary to be taken or not taken in order to (a) ensure that
the assumptions and factual recitations set forth in the Specified
Bankruptcy Opinion Provisions remain true and correct with respect
to the Company and (b) comply with those procedures described in
such provisions which are applicable to the Company.
7.10 Facility Rating. Promptly upon request of the
Administrative Agent, at the expense of the Company, cause the
receivables purchase facility created by this Agreement to be rated
by S&P or another nationally recognized rating agency designated by
the Administrative Agent.
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7.11 Lockbox Agreements. Within 60 days after the
Effective Date, deliver to the Administrative Agent one or more
confirmations that the Lockbox Accounts, in the name of the
Company, have been established in accordance with the terms of this
Agreement and deliver to the Administrative Agent an executed
Lockbox Agreement from each of the Lockbox Banks.
7.12 Eligible Letters of Credit. (a) Submit to the
relevant issuing bank all documentation necessary to effect a
drawing under any Eligible Letter of Credit immediately upon the
occurrence of any event entitling the Company to receive any
payment thereunder and (b) cause such payment to be deposited
directly into the U.S. Concentration Account.
7.13 Company Policies. Amend, supplement or otherwise
modify in any material respect (or permit to be amended,
supplemented or otherwise modified in any material respect) the
Company Policies or vary (or permit to be varied) the
implementation of the Company Policies other than (a) with the
consent of the Required Banks and (b) changes that are required by
applicable law; provided, that material changes to the Company
Policies shall include, without limitation, changes to the timing
of Charge-Offs of Receivables.
ARTICLE VIII
Negative Covenants
The Company hereby agrees that, unless and until this
Agreement is terminated pursuant to subsection 4.1, the Company
shall not directly or indirectly:
8.1 Accounting of Transfers. Prepare any financial
statements which shall account for the transactions contemplated
hereby (other than capital contributions contemplated hereby) in
any manner other than as sales of participating interests in the
Purchased Receivables by the Company to the Banks or in any other
respect account for or treat the transactions contemplated hereby
(including for financial accounting purposes, except as required by
law) (other than capital contributions and loans from Affiliates
contemplated hereby) in any manner other than as assignments and
transfers of participating interests in the Purchased Receivables
by the Company to the Banks, provided however that this subsection
8.1 shall not apply for any tax or tax accounting purposes.
8.2 Limitation on Indebtedness. Create, incur, assume
or suffer to exist any Indebtedness, except: (a) Indebtedness
evidenced by the Subordinated Notes; (b) Indebtedness representing
fees, expenses and indemnities payable pursuant to and in
accordance with the Transaction Documents; and (c) Indebtedness for
services supplied or furnished to the Company in an amount not to
exceed $50,000 at any time outstanding.
8.3 Limitation on Liens. Create, incur, assume or
suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for (a)
Liens created pursuant to this Agreement and (b) Liens for taxes
not yet due or which are being contested in good faith by
appropriate proceedings provided that adequate reserves with
respect thereto are maintained on the books of the Company in
conformity with GAAP.
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33
8.4 Limitation on Guarantees. Create, incur, assume or
suffer to exist any obligation constituting a Guarantee.
8.5 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of, all
or substantially all of its property, business or assets, or make
any material change in its present method of conducting business,
other than the assignments and transfers to the Banks contemplated
hereby.
8.6 Limitation on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property,
business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired,
other than (a) the assignments and transfers contemplated hereby
and (b) sales or other dispositions of property with an aggregate
book value not exceeding $10,000 in any period of twelve
consecutive fiscal months.
8.7 Limitation on Dividends and Payments on Subordinated
Notes. Declare or pay any dividend on, or make any payment on
account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the
Company, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Company (such
declarations, payments, setting apart, purchases, redemptions,
defeasances, retirements, acquisitions and distributions being
herein called "Restricted Payments"), or make, directly or
indirectly, payments in any form in respect of the Subordinated
Notes except that, so long as no Termination Event or Potential
Termination Event shall have occurred and be continuing or would
result therefrom, the Company may (a) make payments on the
Subordinated Notes and (b) make Restricted Payments, each pursuant
to subsection 2.7.
8.8 Business of the Company. Engage at any time in any
business or business activity other than the acquisition of
Receivables pursuant to the Receivables Sale Agreement, the
assignments and transfers hereunder and the other transactions
contemplated by the Transaction Documents, and any activity
incidental to the foregoing and necessary or convenient to
accomplish the foregoing, or enter into or be a party to any
agreement or instrument other than in connection with the
foregoing, except those agreements or instruments set forth on
Schedule 5.
8.9 Limitation on Investments, Loans and Advances. Make
any advance, loan, extension of credit or capital contribution to,
or purchase any stock, bonds, notes, debentures or other securities
of or any assets constituting a business unit of, or make any other
investment in, any Person, except for the Receivables and the other
Pooled Property.
8.10 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the
Company of real or personal property which has been or is to be
sold or transferred by the Company to such Person or to any other
Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of the
Company.
<PAGE>
34
8.11 Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transactions with,
any of its Affiliates except (a) as expressly contemplated by the
Transaction Documents; (b) as disclosed on Schedule 4; or (c) with
the unanimous approval or ratification of the Board of Directors of
the Company upon fair and reasonable terms no less favorable to the
Company than it could reasonably expect to obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
8.12 Capital Stock. Issue any Capital Stock to any
Person or permit any of its Capital Stock to be transferred to any
Person, except pursuant to the Pledge Agreement.
8.13 Amendments. Amend (or permit to be amended) its
Certificate of Incorporation.
8.14 Receivables Sale Agreement, etc. Amend, supplement
or otherwise modify (or permit to be amended, supplemented or
otherwise modified) the Receivables Sale Agreement or any of the
other Transaction Documents or give any consent or waiver to any
Seller thereunder, provided that, with respect to any Lockbox
Agreement, the Company shall be permitted to amend, supplement or
otherwise modify any such Lockbox Agreement so long as (a) such
amendment, supplement or modification could not be reasonably
expected to have a Material Adverse Effect and (b) the
Administrative Agent shall have received a substantially final
draft of such amendment, supplement or modification at least five
Business Days prior to the effective date thereof.
8.15 Policies. Amend, supplement or otherwise modify in
any material respect (or permit to be amended, supplemented or
otherwise modified in any material respect) the Policies or the
Company Policies or vary the implementation of the Policies or the
Company Policies other than (a) with the consent of the Required
Banks and (b) changes that are required by applicable law;
provided, that material changes to the Policies and the Company
Policies shall include, without limitation, changes to the timing
of Charge-Offs of Receivables and changes to the creditworthiness
criteria used in determining whether to extend credit to a Person
and in determining the amount of such credit to extend.
8.16 No Powers of Attorney. Grant any powers of
attorney to any Person for any purposes except (a) for the purpose
of permitting any Person to perform any ministerial functions on
behalf of the Company that are not prohibited by or inconsistent
with the terms of the Transaction Documents; (b) to the
Administrative Agent in connection herewith; or (c) as expressly
permitted by the Transaction Documents.
8.17 Receivables Not To Be Evidenced by Promissory
Notes. Take any action to cause any Receivable to be evidenced by
any "instrument" (as defined in the Uniform Commercial Code (or any
similar law) as in effect in any state in which the Company's or
any Seller's chief executive offices or books and records relating
to such Receivable are located) other than as expressly
contemplated by the Policies.
8.18 Ownership of Assets and Property. Own or lease any
material tangible assets other than as expressly contemplated
pursuant to the terms of this Agreement and the
<PAGE>
35
other Transaction Documents, or own or lease any facilities or
incur, create, assume or permit to exist any lease obligations other
than arms' length lease obligations to Affiliates or third parties
in respect of office space, equipment and computer time.
8.19 Rescission or Cancellation. Rescind or cancel any
Receivable or modify or extend any term or provision of any thereof
without the prior written consent of the Required Banks, except (a)
in the ordinary course of its business and consistent with the
Policies and the Company Policies or (b) as required by any
Requirement of Law, provided that the Company may cause Receivables
to become Charge-Offs and may allow Sellers to make Adjustments in
accordance with subsection 2.5 of the Receivables Sale Agreement.
8.20 Ineligible Receivables. Without the prior written
approval of the Required Banks, take any action to cause, or which
would permit, an Eligible Receivable to cease to be an Eligible
Receivable, except as otherwise expressly provided for in this
Agreement.
8.21 Offices. (a) Move outside the state where such
office is now located the location of its chief executive office or
of any of the offices where it keeps its records with respect to
the Receivables without (i) 30 days' prior written notice to the
Administrative Agent and (ii) taking all actions reasonably
requested by the Administrative Agent (including but not limited to
all filings and other acts necessary or advisable under the Uniform
Commercial Code of each relevant jurisdiction) in order to continue
the Banks' first priority perfected ownership interest in all
Receivables now owned or hereafter created or (b) fail to give the
Administrative Agent prompt notice of a change within the state
where such office is now located of the location of its chief
executive office or any office where it keeps its records with
respect to the Receivables.
8.22 Addition of Sellers. Agree to the addition of any
Subsidiary as an additional Seller pursuant to subsection 9.14 of
the Receivables Sale Agreement unless (a) the Required Banks have
approved such addition in writing and (b) such Subsidiary shall
have been simultaneously added as a Servicer party hereto pursuant
to subsection 12.9 hereof.
8.23 Optional Termination of Seller. Designate any
Seller as a Seller to be terminated as a Seller pursuant to
subsection 9.15(b) of the Receivables Sale Agreement unless (a) the
Required Banks have approved such designation in writing and (b) if
such Seller is a Servicer hereunder, such Seller shall have been
terminated as a Servicer pursuant to subsection 12.10 hereof.
8.24 Operating Expenses. Incur or otherwise become
liable for operating expenses other than expenses for office space,
equipment, personnel, office supplies, computer time, services of
third party professionals and other reasonable overhead expenses.
<PAGE>
36
ARTICLE IX
Events of Termination
If any of the following events (herein called
"Termination Events") shall have occurred and be continuing:
(a) the Company shall fail to deliver any Daily Report
or any Settlement Statement conforming in all material
respects to the requirements of subsection 12.5 and such
failure shall continue for two consecutive Business Days after
the Administrative Agent shall have delivered notice thereof
to the Company, provided that if a Force Majeure Delay shall
have occurred with respect to any Servicer or the Master
Servicer, as the case may be, (i) in the case of such an event
with respect to a Servicer, the failure of any Daily Report or
Settlement Statement to contain information with respect to
the Receivables serviced by such Servicer or (ii) in the case
of such an event with respect to the Master Servicer, the
failure of the Company to deliver any Daily Report or
Settlement Statement, shall not, in either case, constitute a
Termination Event unless such failure continues for longer
than the lesser of (x) ten consecutive Business Days and (y)
the length of such Force Majeure Delay (or, if greater, two
Business Days) after the Administrative Agent shall have
delivered notice of such failure to the Company;
(b) the Company shall fail to pay, or the Banks or the
Administrative Agent shall not be paid, any amount (i)
required to be paid hereunder in respect of reduction of the
Net Investment when due or (ii) required to be paid in respect
of Purchase Discount Amounts, any other amounts payable to the
Banks or Administrative Agent or any payment reflected in any
Daily Report or Settlement Statement as being required to be
made by the Company, in any case, with respect to this clause
(ii), within five Business Days after the date when due;
(c) default shall be made in the due observance or
performance by the Company of any covenant, condition or
agreement contained in subsection 7.3(a), 7.6(a) or 7.8 or in
Article VIII;
(d) the Company shall fail to observe or perform any
covenant or agreement applicable to it contained herein (other
than as specified in paragraph (a), (b) or (c) of this Article
IX), provided that no such failure shall constitute a
Termination Event under this paragraph (d) unless such failure
shall continue unremedied for a period of 30 consecutive days
in the case of subsection 7.3(b) or 7.3(c) and 15 consecutive
days in the case of all others, in each case after notice
thereof from the Administrative Agent or the Required Banks to
the Company;
(e) any representation, warranty, certification or
statement made or deemed made by the Company in this Agreement
or in any Settlement Statement or other certificate, financial
statement or other document delivered pursuant to this
Agreement shall prove to have been false or misleading in any
material respect on or as of the date made or deemed made;
provided that a Termination Event shall not be deemed to have
occurred under this paragraph (e) based upon a breach of a
representation or warranty contained in
<PAGE>
37
subsection 5.2(d), (e), (f) or (h) if the Company shall have
complied with the provisions of subsection 5.3(b) in respect
thereof;
(f) (i) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent
jurisdiction seeking (A) relief in respect of the Company, or
of a substantial part of its property or assets, under Title
11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (B) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or
similar official for the Company or for a substantial part of
its property or assets or (C) the winding-up or liquidation of
the Company; and 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; or (ii) the
Company shall (A) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or
similar law, (B) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in clause (i) above, (C)
apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for the Company or for a substantial part of its
property or assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such
proceeding, (E) make a general assignment for the benefit of
creditors, (F) become unable, admit in writing its inability
or fail generally to pay its debts as they become due or (G)
take any action for the purpose of effecting any of the
foregoing;
(g) Holdings or any Restricted Subsidiary or any
Significant Subsidiary (as each such term is defined in the
Credit Agreement as in effect on the Effective Date) shall (i)
fail to pay any principal or interest, regardless of amount,
due in respect of Indebtedness having an aggregate principal
or notional amount in excess of $7,500,000, when and as the
same shall become due and payable, or (ii) fail to observe or
perform any other term, covenant, condition or agreement
contained in any agreements or instruments evidencing or
governing any Indebtedness having an aggregate principal
amount in excess of $7,500,000 if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the
holder or holders of such Indebtedness or a trustee on its or
their behalf to cause, such Indebtedness to become due prior
to its stated maturity;
(h) (i) a Reportable Event or Reportable Events, or a
failure to make a required installment or other payment
(within the meaning of Section 412(n)(1) of the Code), shall
have occurred with respect to any Plan or Plans that
reasonably could be expected to result in liability of the
Company or any of its ERISA Affiliates to the PBGC or to a
Plan in an aggregate amount exceeding $5,000,000 and, within
30 days after the reporting of any such Reportable Event to
the Administrative Agent or after the receipt by the
Administrative Agent of the statement required pursuant to
Section 7.7(b)(iii), the Administrative Agent shall have
notified the Company in writing that (x) the Required Banks
have made a determination that, on the basis of such
Reportable Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for the
termination of such Plan or Plans by the PBGC, (B) for the
appointment by the appropriate United States District Court of
a trustee to administer
<PAGE>
38
such Plan or Plans or (C) for the imposition of a lien in favor
of a Plan and (y) as a result thereof a Termination Event exists
hereunder; or a trustee shall be appointed by a United States
District Court to administer any such Plan or Plans; or the
PBGC shall institute proceedings to terminate any Plan or
Plans; or (ii) (x) the Company or any of its ERISA Affiliates
shall have been notified by the sponsor of a Multiemployer Plan
that it has incurred Withdrawal Liability to such Multiemployer
Plan, (y) the Company or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or
is not in fact contesting such Withdrawal Liability in a timely
and appropriate manner and (z) the amount of the Withdrawal
Liability specified in such notice, when aggregated with all
other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the
date or dates of such notification), exceeds $7,500,000 or
requires payments exceeding $7,500,000 in any year; or (iii)
the Company or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if solely
as a result of such reorganization or termination the
aggregate annual contributions of the Company and its ERISA
Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been
or will be increased over the amounts required to be
contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding
$7,500,000;
(i) there shall have occurred a Change in Control;
(j) (i) one or more judgments for the payment of money
in an aggregate amount in excess of $250,000 (to the extent
not covered by insurance) shall be rendered against the
Company and the same shall remain undischarged or stayed for a
period of 30 consecutive days during which execution shall not
be effectively stayed, or any action shall be legally taken by
a judgment creditor to levy upon assets or properties of the
Company to enforce any such judgment or (ii) one or more
judgments for the payment of money in an aggregate amount in
excess of $7,500,000 (to the extent not covered by insurance)
shall be rendered against Holdings or any Restricted
Subsidiary or any Significant Subsidiary (as each such term is
defined in the Credit Agreement as in effect on the Effective
Date) or any combination thereof and the same shall remain
undischarged or stayed for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to levy
upon assets or properties of Holdings or any Restricted
Subsidiary to enforce any such judgment;
(k) any material provision of the Transaction Documents
shall not be in full force and effect, enforceable in
accordance with its terms, or the Company, a Seller, a
Servicer or the Master Servicer, or any Affiliate of any of
the foregoing, shall so assert in writing;
(l) the Participating Interest shall for any reason
cease to be a valid and perfected first priority undivided
participating interest in the Receivables;
(m) the Company shall have become an "investment
company" under the Investment Company Act of 1940;
<PAGE>
39
(n) a Purchase Termination Event shall have occurred and
be continuing under the Receivables Sale Agreement;
(o) the Company shall fail to pay the Purchase Price for
any newly created Receivable when due pursuant to subsection
2.3 of the Receivables Sale Agreement (including, without
limitation, by application of any restrictions in such
subsection); provided that no such failure shall constitute a
Termination Event under this paragraph (o) unless such failure
shall continue for five consecutive Business Days;
(p) a Servicer Event of Default shall have occurred and
be continuing;
(q) at the end of any fiscal month, the Loss to
Liquidation Ratio exceeds 5%;
(r) the ratio (expressed as a percentage) of (i) the
aggregate Adjusted Principal Amount of all Receivables that
are more than 60 days past due at the end of any fiscal month
(and are not Defaulted Receivables) to (ii) the aggregate
Adjusted Principal Amount of all Receivables (which are not
Defaulted Receivables) at the end of such fiscal month exceeds
10%;
(s) at the end of any fiscal month, Days Sales
Outstanding with respect to such fiscal month exceeds 75 days;
or
(t) the Net Investment exceeds the Maximum Transfer
Amount on the second Business Day following any Settlement
Date, after giving effect to the calculation of the Required
Reserve Percentage on such Settlement Date, and after
application of Collections and all other payments and amounts
to reduce the Net Investment to and including such second
Business Day (except to the extent Excess Application Amounts
in respect of such excess are being held in a cash collateral
account pursuant to subsection 2.12(c));
then, (x) if such event is (I) a Termination Event described in
paragraph (f) above or (II) a Termination Event described in
paragraph (n) above resulting from a Purchase Termination Event
described in paragraph (f) of Article VII of the Receivables Sale
Agreement, automatically the Commitment Period shall thereupon
terminate without notice of any kind, which is hereby waived by the
Company and (y) if such event is any other Termination Event, so
long as such Termination Event shall be continuing, with the
consent of the Required Banks the Administrative Agent may, or upon
the request of the Required Banks the Administrative Agent shall,
by notice to the Company terminate the Commitment Period.
ARTICLE X
The Administrative Agent
10.1 Appointment. Each Bank hereby irrevocably
designates and appoints the Administrative Agent as the agent of
such Bank under this Agreement and each Bank irrevocably authorizes
the Administrative Agent, as the agent for such Bank, to take
such action
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40
on its behalf under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this
Agreement, together with such other powers as are reasonably
incidental thereto, including, but not limited to, the signing by
the Administrative Agent, as agent for the Banks, of any financing
statements related to the Receivables. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary
relationship with any Bank, the Company, any Servicer or the Master
Servicer, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.
Each Bank acknowledges and consents to Chemical Bank's acting as
administrative agent for the lenders under the Credit Agreement and
the documents delivered pursuant thereto.
10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions. Neither the
Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or the transactions
contemplated hereby or thereby (except for its or such Person's own
gross negligence or willful misconduct), (ii) responsible in any
manner to any party hereto for any recitals, statements,
representations or warranties made by the Company, any Servicer,
the Master Servicer or any of the Banks or any officer thereof
contained in this Agreement, or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Administrative Agent under or in connection with
this Agreement or the transactions contemplated hereby or thereby
or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or (iii) for any
failure of the Company, any Servicer, the Master Servicer, or any
of the Banks to perform their respective obligations hereunder.
The Administrative Agent shall not be under any obligation to any
party hereto to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement or to inspect the properties, books or records
of the Company, any Servicer, the Master Servicer or any of the
Banks.
10.4 Reliance by the Administrative Agent. The
Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without
limitation, counsel to any of the Banks and counsel to the Company,
any Servicer or the Master Servicer), independent accountants and
other experts selected by the Administrative Agent, as the case may
be. The Administrative Agent shall be fully justified in failing
or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Banks as it deems
appropriate or it shall first be indemnified to its satisfaction by
the Banks against any and all liability and expense which may be
incurred by it
<PAGE>
41
by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Banks entitled to
give such a request hereunder, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all
the Banks.
10.5 Notice of Default or Termination Event. The
Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any default or Termination Event
hereunder unless the Administrative Agent has received notice from
a Bank, the Company, any Servicer or the Master Servicer referring
to this Agreement, describing such default or Termination Event and
stating that such notice is a "notice of default" or a "notice of
Termination Event", as the case may be. In the event that the
Administrative Agent receives such a notice, the Administrative
Agent shall give promptly notice thereof to the Banks and to the
Company. The Administrative Agent shall take such action with
respect to such default or Termination Event as shall be reasonably
directed by the Required Banks, provided that unless and until the
Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
default or Termination Event as it shall deem advisable in the best
interests of the Banks.
10.6 Non-Reliance on the Administrative Agent and Other
Banks. Each Bank hereby expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the
affairs of the Company, any Servicer or the Master Servicer, shall
be deemed to constitute any representation or warranty by the
Administrative Agent to any Bank. Each Bank hereby represents to
the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Bank, and based
on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business,
operations, property and financial and other condition and
creditworthiness of the Company, the Servicers and the Master
Servicer and made its own decision to acquire a Participating
Interest hereunder and enter into this Agreement. Each Bank hereby
also represents that it will, independently and without reliance
upon the Administrative Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking or not
taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business,
operations, property and financial and other condition and
creditworthiness of the Company, the Servicers and the Master
Servicer. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the
Administrative Agent hereunder, the Administrative Agent shall not
have any duty or responsibility to provide any Bank with any
information concerning the business, operations, property,
condition (financial or otherwise), prospects or creditworthiness
of the Company, any Servicer or the Master Servicer which may come
into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.7 Indemnification. Each Bank hereby agrees to
indemnify the Administrative Agent in its capacity as such (to the
extent not reimbursed by the Company and without limiting
<PAGE>
42
the obligation of the Company to do so), ratably according to their
respective Commitment Percentages in effect on the date on which
indemnification is sought under this subsection 10.7, from and
against any and all Indemnified Liabilities which may at any time
(including without limitation at any time following the termination
of the commitment of the Banks to increase their Participating
Interest hereunder) be imposed on, incurred by or asserted against
the Administrative Agent in any way relating to or arising out of
this Agreement, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken
or omitted by the Administrative Agent under or in connection with
any of the foregoing, provided that no Bank shall be liable for the
payment of any portion of such Indemnified Liabilities resulting
from the Administrative Agent's gross negligence or willful
misconduct. The agreements in this subsection 10.7 shall survive
the termination of the commitments of the Banks to acquire a
Participating Interest hereunder, the collection of all
Receivables, the termination of this Agreement and the payment of
all amounts payable hereunder.
10.8 The Administrative Agent in Its Individual
Capacity. The Administrative Agent and its affiliates may make
loans to, accept deposits from and generally engage in any kind of
business with the Company, the Servicers, the Master Servicer or
any of their affiliates as though the Administrative Agent were not
the Administrative Agent. With respect to any Participating
Interests purchased or maintained by it under this Agreement, the
Administrative Agent shall have the same rights and powers
hereunder as any Bank and may exercise the same as though it were
not the Administrative Agent, and the term "Bank" shall include the
Administrative Agent in its individual capacity.
10.9 Successor Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by
notifying the Banks and the Company. Upon any such resignation,
the Required Banks shall have the right to appoint a successor,
with the consent of the Company (not to be unreasonably withheld).
If no successor shall have been so appointed by the Required Banks
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 Banks,
appoint a successor Administrative Agent, with the consent of the
Company (not to be unreasonably withheld), which shall be a bank
with an office in New York, New York, having a combined capital and
surplus of at least $500,000,000 or an Affiliate of any such bank
which is also a bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, 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. After the Administrative Agent's
resignation hereunder, the provisions of this Article X and of
subsection 11.3 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was
acting as Administrative Agent.
ARTICLE XI
Miscellaneous
<PAGE>
43
11.1 Further Assurances. Each of the Company, the
Servicers and the Master Servicer agrees, from time to time, to do
and perform any and all acts and to execute any and all further
instruments reasonably required or requested by the Administrative
Agent at the request of any Bank more fully to effect the purposes
of this Agreement and the assignments and transfers of the
Participating Interest hereunder, including, without limitation,
the execution of any financing statements or continuation
statements relating to the Receivables for filing under the
provisions of the Uniform Commercial Code, or any similar law, of
any applicable jurisdiction.
11.2 Payments. Each payment to be made by any of the
Banks, the Company, any of the Servicers or the Master Servicer
hereunder shall be made on the required payment date in Dollars and
in immediately available funds at the office of the Administrative
Agent located at 270 Park Avenue, New York, New York 10017 or to
such other office as may be specified by the Administrative Agent
in a notice to the Company, the Servicers, the Master Servicer and
the Banks.
11.3 Costs and Expenses. (a) The Company agrees to pay
all reasonable out-of-pocket expenses incurred by the
Administrative Agent in connection with the preparation of this
Agreement and the other Transaction Documents, or by the
Administrative Agent in connection with the syndication of the
Commitments or the administration of this Agreement, or in
connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the
Administrative Agent or any Bank in connection with the enforcement
or protection of their rights in connection with this Agreement and
the other Transaction Documents or in connection with the purchases
made hereunder, including the reasonable fees, charges and
disbursements of Simpson Thacher & Bartlett, counsel for the
Administrative Agent, and, in connection with any such enforcement
or protection, the reasonable fees, charges and disbursements of
any other counsel (including the reasonable allocated costs of
internal counsel if a Bank elects to use internal counsel in lieu
of outside counsel) for the Administrative Agent or any Bank (but
no more than one such counsel for any Bank).
(b) The Company agrees to indemnify the Administrative
Agent, each Bank and each of their respective directors, officers,
employees and agents (each such Person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i)
the execution or delivery of this Agreement or any other
Transaction Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the
proceeds of the initial transfer and assignment of the
Participating Interest and of any Increases in Net Investment,
(iii) any and all Canadian withholding taxes which may be imposed
in respect of the Receivables or in connection with the
Transactions (without duplication of any amounts in respect of such
taxes payable pursuant to subsection 3.3 or 3.5), or (iv) any
claim, litigation, investigation or proceeding relating to any of
the foregoing, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages,
liabilities or related expenses (i) are determined by a
<PAGE>
44
court of competent jurisdiction by final and nonappealable judgment
to have resulted from the gross negligence or wilful misconduct of
such Indemnitee (treating, for this purpose only, any Bank and its
directors, officers, employees and agents as a single Indemnitee)
or (ii) arise from (x) any Receivable which becomes a Charge-Off as
a result of non-payment by the Obligor with respect thereto, (y)
any action taken, or omitted to be taken, by any Servicer which is
not an Affiliate of C&A Products, or (z) any action taken by the
Banks in collecting from an Obligor.
(c) The Company shall be entitled to assume the defense
of any action for which indemnification is sought hereunder with
counsel of its choice at its expense (in which case the Company
shall not thereafter be responsible for the fees and expenses of
any separate counsel retained by an Indemnitee except as set forth
below); provided, however, that such counsel shall be reasonably
satisfactory to each such Indemnitee. Notwithstanding the
Company's election to assume the defense of such action, each
Indemnitee shall have the right to employ separate counsel and to
participate in the defense of such action, and the Company shall
bear the reasonable fees, costs, and expenses of such separate
counsel, if (i) the use of counsel chosen by the Company to
represent such Indemnitee would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in,
or targets of, any such action include both the Company and such
Indemnitee and such Indemnitee shall have reasonably concluded that
there may be legal defenses available to it that are different from
or additional to those available to the Company (in which case the
Company shall not have the right to assume the defense or such
action on behalf of such Indemnitee); (iii) the Company shall not
have employed counsel reasonably satisfactory to such Indemnitee to
represent it within a reasonable time after notice of the
institution of such action; or (iv) the Company shall authorize
such Indemnitee to employ separate counsel at the Company's
expense. The Company will not be liable under this Agreement for
any amount paid by an Indemnitee to settle any claims or actions if
the settlement is entered into without the Company's consent, which
consent may not be withheld unless such settlement is unreasonable
in light of such claims or actions against, and defenses available
to, such Indemnitee.
(d) Notwithstanding anything to the contrary in this
subsection 11.3, this subsection 11.3 (other than clause (iii) of
paragraph (b) thereof) shall not apply to taxes, it being
understood that the Company's only obligations with respect to
taxes shall arise under subsections 3.3 and 3.5 and under said
clause (iii).
(e) The provisions of this subsection 11.3 shall remain
operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of all or any portion of the Net
Investment, the invalidity or unenforceability of any term or
provision of this Agreement or any other Transaction Document, or
any investigation made by or on behalf of the Administrative Agent
or any Bank. All amounts due under this subsection 11.3 shall be
payable on written demand therefor.
11.4 Successors and Assigns; Participations; Acquiring
Banks. (a) The provisions of this Agreement shall be binding upon
and inure to the benefit of the Company, the Banks, the Master
Servicer, the Servicers, the Administrative Agent and their
respective successors and assigns, except that the Company, the
Servicers and the Master Servicer may not
<PAGE>
45
assign or transfer any of its or their rights or obligations under
this Agreement without the prior written consent of each Bank.
(b) Any Bank may, in the ordinary course of its business
and in accordance with applicable law, at any time sell to one or
more banks or other entities ("Participants") a participation in
the Participating Interest of such Bank, any Commitment of such
Bank or any other interests of such Bank hereunder. In the event
of any such sale by a Bank of a participation to a Participant,
such Bank's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Bank shall remain
solely responsible for the performance thereof, and the Company,
the Master Servicer, the Servicers and the Administrative Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement. The Company, the Servicers, and the Master Servicer
agree that if amounts outstanding under this Agreement are due or
unpaid, each Participant shall be deemed to have the right of
setoff in respect of its participation in amounts owing under this
Agreement to the same extent and subject to the same terms and
conditions as if the amount of its participation were owing
directly to it as a Bank under this Agreement, provided that such
right of setoff shall be subject to the obligation of such
Participant to share with the Banks, and the Banks agree to share
with such Participant, as provided in subsection 11.12. The
Company also agrees that each Participant shall be entitled to the
benefits of subsections 3.2, 3.3 and 3.5 with respect to its
Participating Interest; provided that, in the case of subsection
3.5, such Participant shall have complied with the requirements of
said subsection and provided further that no Participant shall be
entitled to receive any greater amount pursuant to such subsections
than the transferor Bank would have been entitled to receive in
respect of the amount of the participation transferred by such
transferor Bank to such Participant had no such transfer occurred.
Each Bank will disclose the identity of its participants to the
Company and Administrative Agent if requested by the Company or the
Administrative Agent.
(c) Each Bank agrees that any agreement between such
Bank and any Participant in respect of any participation shall not
restrict such Bank's right to agree to any amendment, supplement or
modification to this Agreement or any of the Transaction Documents
except (i) to extend the Scheduled Termination Date, or increase
the amount of such Bank's Commitment, or change the definition of
"Maximum Invested Percentage" so as to permit the Maximum Invested
Percentage to exceed 83%, or reduce the rate or extend the time of
payment of any Purchase Discount Amount or Commitment Fee, in each
case to the extent such Participant is directly affected thereby
and (ii) to release any substantial portion of the Pooled Property
(other than pursuant to subsection 5.3 or 12.7).
(d) Any Bank may, in the ordinary course of its business
and in accordance with applicable law, at any time sell (x) to any
Bank or any Lender (as defined in the Credit Agreement) or any
affiliate thereof, and (y) with the consent of the Company and the
Administrative Agent (which in each case shall not be unreasonably
withheld or delayed), to one or more additional financial
institutions ("Acquiring Banks") all or any part of its rights and
obligations under this Agreement pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit A, executed by
such Acquiring Bank and such transferor Bank (and, in the case of a
Acquiring Bank that is not then a Bank or a Lender (as defined in
the Credit Agreement) or an affiliate thereof, by the
Administrative Agent and the Company) and delivered to the
<PAGE>
46
Administrative Agent for its acceptance and recording in the
register, provided that the Commitment transferred pursuant to any
such sale to a Acquiring Bank shall be in an amount not less than
the lesser of $5,000,000 and the amount of such transferor Bank's
Commitment, unless (i) otherwise agreed by the Company or (ii) the
assignment is to any Bank or any Lender (as defined in the Credit
Agreement) or any affiliate thereof. Upon such execution,
delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (x) the
Acquiring Bank thereunder shall be a party hereto, shall be subject
to the requirements of subsections 3.5(f) and (g) and, to the
extent provided in such Assignment and Acceptance, shall have the
rights and obligations of a Bank hereunder with a Commitment
Percentage as set forth therein, and (y) the assigning Bank
thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations
under this Agreement, such assigning Bank shall cease to be a party
hereto).
(e) The Administrative Agent shall maintain at its
address referred to in subsection 11.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Participating Interests
owing to, each Bank from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the
Company, the Servicers, the Master Servicer, the Administrative
Agent and the Banks may treat each Person whose name is recorded in
the Register as the owner of the Participating Interests recorded
therein for all purposes of this Agreement. The Register shall be
available for inspection by the Company, the Servicers, the Master
Servicer or any Bank at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and a Acquiring Bank (and, in the
case of a Acquiring Bank that is not then a Bank or an affiliate
thereof, by the Administrative Agent and the Company) together with
payment to the Administrative Agent of a registration and
processing fee of $3,500, the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information
contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Company.
(g) Subject to subsection 11.16, the Master Servicer,
each Servicer and the Company authorize each Bank to disclose to
any Participant or Acquiring Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such
Bank's possession concerning such Servicer, the Master Servicer,
the Company or any of its or their Affiliates which has been
delivered to such Bank by or on behalf of such Servicer, the Master
Servicer, the Company or such Affiliate in connection with such
Bank's credit evaluation of such Servicer, the Master Servicer or
the Company.
11.5 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
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47
11.6 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the
Administrative Agent or the Banks, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
11.7 Amendments and Waivers. Neither this Agreement nor
any terms hereof may be amended, supplemented or modified except in
accordance with the provisions of this subsection 11.7. The
Required Banks may, or, with the written consent of the Required
Banks, the Administrative Agent may, from time to time, (a) enter
into with the Company, the Master Servicer and the Servicers
written amendments, supplements or modifications hereto for the
purpose of adding any provisions to this Agreement or changing in
any manner the rights of the Banks, the Company, the Servicers or
the Master Servicer hereunder or (b) waive, on such terms and
conditions as the Required Banks or the Administrative Agent, as
the case may be, may specify in such instrument, any of the
requirements of this Agreement or any default or Termination Event
and its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall (i) extend the
Scheduled Termination Date; or reduce the rate or extend the time
of payment of any Purchase Discount Amount or Commitment Fee; or
extend the time of payment of any mandatory reduction of the Net
Investment; or modify subsection 2.12 so that the fact that the Net
Investment exceeds the Maximum Transfer Amount does not necessitate
a mandatory reduction in the Net Investment; or change the
definition of "Maximum Invested Percentage" so as to permit the
Maximum Invested Percentage to exceed 83%; or increase the amount
of any Bank's Commitment; or amend, modify or waive any provision
of this subsection 11.7; or reduce the percentage specified in the
definition of Required Banks; or consent to the assignment or
transfer by the Company, any Servicer or the Master Servicer of any
of their respective rights and obligations under this Agreement
(except in accordance with Article XII); or release any substantial
portion of the Pooled Property (other than pursuant to subsection
5.3 or 12.7); in each case without the written consent of each Bank
directly affected thereby or (ii) amend, modify or waive any
provision of Article X without the written consent of the
Administrative Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Banks
and shall be binding upon the Company, the Servicers, the Master
Servicer, the Banks, the Administrative Agent and all future
holders of a Participating Interest. In the case of any waiver,
the Company, the Servicers, the Master Servicer, the Banks and the
Administrative Agent shall be restored to their former position and
rights hereunder, any default or Termination Event waived shall be
deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other default or Termination Event, or
impair any right consequent thereon.
11.8 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent such prohibition
or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
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48
11.9 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Company and the
Administrative Agent, as set forth under their signatures on the
signature pages hereof (in the case of the Master Servicer and the
Servicers) and as set forth on Schedule 1 hereto (in the case of
the Banks), or to such other address as may be hereafter notified
by the respective parties hereto:
The Company: Carcorp, Inc.
5025 S. Eastern Avenue
Suite 16, Number 205
Las Vegas, Nevada 89119
Attention:
Telecopy No.:
The Administrative Agent: Chemical Bank Agency Services
140 East 45th Street
New York, New York 10017
Attention: James Morgan
Telecopy: 212-622-0002
with a copy to: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Suzanne Kjorlien
Telecopy: 212-972-0009
provided that any notice, request or demand to or upon the
Administrative Agent or the Banks pursuant to subsections 2.3,
2.7, 2.8, 2.10, 2.11 and 2.12 shall not be effective until
received.
11.10 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company and
the Administrative Agent.
11.11 Construction of Agreement as Security Agreement.
(a) It is the intent of the parties that the transactions
contemplated herein constitute assignments and transfers of the
Receivables and the Related Property with respect thereto to the
Banks. If, however, such transactions are deemed to be loans,
the Company hereby grants to the Administrative Agent, for the
benefit of the Banks, a first priority security interest in all
of the Company's right, title and interest in and to (i) the
Receivables and the Related Property now existing and hereafter
created, all monies due or to become due and all amounts received
with respect thereto, (ii) the Receivables Sale Agreement and
(iii) all "proceeds" of any of the foregoing, including, without
limitation, whatever is received upon the sale, exchange,
collection or other
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49
disposition of the foregoing or any proceeds
thereof, to secure all the Company's obligations hereunder.
(b) Each Servicer hereby grants to the Administrative
Agent on behalf of the Banks a first priority security interest
in all of the Servicer's right, title and interest in, to and
under its records relating to the Receivables and Related
Property serviced by it to secure all of the Company's
obligations hereunder.
(c) This Agreement shall constitute a security
agreement under applicable law.
11.12 Adjustments; Set-off. (a) If any Bank (a
"benefitted Bank") shall at any time receive any payment of all
or part of its Participating Interest of the Net Investment, or
any Purchase Discount Amount in respect thereof, or receive any
collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in paragraph (f) of Article IX, or
otherwise) in a greater proportion than any such payment to and
collateral received by any other Bank, if any, in respect of such
other Bank's Participating Interest of the Net Investment, or any
Purchase Discount Amount in respect thereof, such benefitted Bank
shall acquire for cash from the other Banks such portion of each
such other Bank's Participating Interest of the Net Investment,
or shall provide such other Banks with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to
cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the
Banks; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such
benefitted Bank, such acquisition shall be rescinded, and the
transfer price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the
Banks provided by law, each Bank shall have the right, without
prior notice to the Company, any such notice being expressly
waived by the Company to the extent permitted by applicable law,
upon any amount, other than amounts in respect of the principal
amount of the Net Investment and the Purchase Discount Amounts
with respect thereto, becoming due and payable by the Company
hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by such Bank or any branch or agency
thereof to or for the credit or the account of the Company. Each
Bank agrees promptly to notify the Company and the Administrative
Agent after any such set-off and application made by such Bank,
provided that the failure to give such notice shall not affect
the validity of such set-off and application.
11.13 Jurisdiction; Consent to Service of Process.
(a) Each of the Company, the Master Servicer and each Servicer
hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America
sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating
to this Agreement or the other Transaction Documents, or for
recognition or enforcement of any
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50
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 shall affect any
right that the Administrative Agent or any Bank may otherwise
have to bring any action or proceeding relating to this Agreement
or the other Transaction Documents against the Company, the
Master Servicer or any Servicer or their properties in the courts
of any jurisdiction.
(b) Each of the Company, the Master Servicer and each
Servicer 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 the other Transaction Documents in
any New York State or Federal court. 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.
(c) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in
subsection 11.9. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other
manner permitted by law.
11.14 Acknowledgements. Each of the Company, the
Master Servicer and each Servicer hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other
Transaction Documents to which it is a party;
(b) neither the Administrative Agent nor any Bank has
any fiduciary relationship with or duty to the Company, the
Master Servicer or any Servicer arising out of or in
connection with this Agreement or any of the other
Transaction Documents, and the relationship between the
Administrative Agent and the Banks, on one hand, and the
Company, on the other hand, in connection herewith or
therewith is solely that of purchaser/creditor and
seller/debtor; and
(c) no joint venture is created hereby or by the other
Transaction Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Banks or among
the Company, the Master Servicer or any Servicer and the
Banks.
11.15 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 respect of any litigation
directly or indirectly arising out of, under or in connection
with this Agreement or any of the other Transaction Documents.
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
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51
into this Agreement and the other Transaction
Documents, as applicable, by, among other things, the mutual
waivers and certifications in this subsection 11.15.
11.16 Confidentiality. Each of the Banks and the
Administrative Agent agrees that it shall maintain in confidence
any information relating to the Company, the Master Servicer or
any Servicer furnished to it by or on behalf of the Company, the
Master Servicer or any Servicer (other than information that (x)
has become generally available to the public other than as a
result of a disclosure by such party, (y) has been independently
developed by such party without violating this subsection 11.16
or (z) was available to such party from a third party having, to
such party's knowledge, no obligation of confidentiality to the
Company, the Master Servicer or such Servicer, as the case may
be) and shall not reveal the same other than (i) to its
directors, officers, employees and advisors with a need to know
and (ii) as contemplated by subsection 11.4(g), except: (a) to
the extent necessary to comply with law or any legal process or
the requirements of any Governmental Authority or of any
securities exchange on which securities of the disclosing party
or any Affiliate of the disclosing party are listed or traded,
(b) as part of normal reporting or review procedures to
Governmental Authorities or its parent companies, Affiliates or
auditors and (c) in order to enforce its rights under any
Transaction Document in a legal proceeding.
11.17 No Bankruptcy Petition. Each Servicer, the
Master Servicer, each Bank and the Administrative Agent covenants
and agrees that, prior to the date which is one year and one day
after the date of termination of this Agreement pursuant to
subsection 4.1, it will not institute against, or join any other
Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state
bankruptcy or similar law.
11.18 Tax Treatment. (a) The execution and delivery
of this Agreement shall constitute an acknowledgement by the
Banks, the Administrative Agent, the Company, the Master Servicer
and each Servicer that they do not intend to establish (for
Federal tax purposes) an association taxable as a corporation.
The powers granted and obligations undertaken in this Agreement
shall be construed so as to further such intent.
(b) It is the intent of the Company and the Banks
that, for federal, state and local income and franchise tax
purposes, the Participating Interest will be indebtedness of the
Company secured by the Pooled Property. The Company and the
Banks agree to treat the Company as the owner of the Pooled
Property and the Participating Interest as indebtedness of the
Company secured by the Pooled Property and the Purchase Discount
Amount as interest for federal, state and local income and
franchise tax purposes (including for reporting purposes), except
as otherwise required by law or any tax authorities. This
subsection 11.18 shall survive the termination of this Agreement
and shall be binding on all Transferees.
11.19 No Action by Banks. Each of the Banks and the
Administrative Agent hereby agrees that, until the occurrence of
a Purchase Termination Event, an Incipient Purchase Termination
Event or a Servicer Event of Default, the Banks will not
exercise, or otherwise direct the Administrative Agent to
exercise on their behalf, the rights of the Company pursuant to
subsection 5.15(d) of the Receivables Sale Agreement.
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52
ARTICLE XII
Servicing
12.1 Servicing. (a) Appointment of Servicers. The
Banks and the Company hereby appoint (i) the Servicers as their
agents to service and administer the Receivables originated by
such Persons in their capacities as Sellers and (ii) C&A Products
as their agent to coordinate the servicing of the Receivables by
the Servicers. Each of the Servicers and the Master Servicer
hereby consents to such appointment and agrees to service and
administer the Receivables in accordance with the terms and
conditions contained herein. The Company hereby appoints the
Master Servicer, and the Master Servicer hereby consents to such
appointment, to take any actions on behalf of the Company which
by the terms hereof have been delegated to the Master Servicer
and any further actions incidental thereto. The Company and the
Master Servicer may agree, in accordance with subsection 8.11,
that the Master Servicer may perform on behalf of the Company
certain of the Company's obligations under the Transaction
Documents. Prior to the occurrence of a Complete Servicing
Transfer, on each Settlement Date, the Servicers and the Master
Servicer shall receive the Monthly Servicing Fee for performing
their functions as Servicers and Master Servicer hereunder as
provided in subsection 2.7.
(b) Collection Procedures. (i) Each Collection shall
be deposited into a Lockbox Account and shall be transferred from
such Lockbox Account (either directly or through an intermediate
Lockbox Account (an "Intermediate Lockbox Account") at the same
Lockbox Bank) to the relevant Concentration Account at least as
often as once each day that is a business day for the applicable
Lockbox Bank and for Chemical, such transfer from such Lockbox
Account and from any such Intermediate Lockbox Account, in each
case, to be commenced in any event by 1:00 p.m. (New York City
time) on the business day following such day of deposit; provided
that Collections may, at the option of the applicable Obligor, be
deposited directly into the relevant Concentration Account by
wire transfer from an account of such Obligor to the
Concentration Account or by means of transfer through the
Automated Clearing House System. Each of the Company, the Master
Servicer and each Servicer acknowledges and agrees that it shall
not have any right to withdraw any funds or any remittance
advisements or payment invoices on deposit in any Concentration
Account or any Lockbox Account except as otherwise expressly
provided in this Agreement or in the Lockbox Agreements; provided
however that until the date which is 60 days after the Effective
Date (at which time a Lockbox Account in the name of the Company
shall have been established, as required hereunder), the
Servicers set forth on Schedule 3 which do not have, as of the
Effective Date, a Lockbox Account in place, shall be allowed to
continue to receive and deposit Collections in the same manner in
which such Servicer receives and deposits Collections as of the
Effective Date.
(ii) All Collections otherwise received by any
Servicer, the Master Servicer or the Company shall be deposited
by it either to a Lockbox Account or through the Automated
Clearing House System into the relevant Concentration Account as
soon as possible after receipt thereof, such transfer to commence
in no event later than the Business Day after such receipt.
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53
(iii) Each of the Company, the Master Servicer and
each Servicer represents, warrants, covenants and agrees that all
Collections shall be collected, processed and deposited pursuant
to, and in accordance with, the terms of this Agreement.
(iv) The Company represents, warrants, covenants and
agrees that it shall not make or maintain any deposits in any
bank account, deposit account or trust account with any financial
institution other than the Lockbox Accounts and the Concentration
Accounts as provided for by this Agreement and other than one
operating account funded solely with amounts disbursed as
operating expenses pursuant to subsection 2.7. The Company shall
provide the Administrative Agent with the account number and
location of such account, and any other information as the
Administrative Agent may reasonably request with respect thereto.
The Company represents, warrants, covenants and agrees that it
shall have no bank accounts, deposit accounts or trust accounts
other than the Lockbox Accounts and the Concentration Accounts
and such operating account. The Company represents, warrants,
covenants and agrees that no new bank accounts or deposit
accounts will be established unless and until the Company has
received the prior written consent of the Administrative Agent.
(v) Each of the Company, the Master Servicer and each
Servicer represents, warrants, covenants and agrees that no
location other than the Lockbox Accounts, and, with respect to
wire transfers, the Concentration Accounts, has been established
for the deposit of Collections; provided however that until the
date which is 60 days after the Effective Date (at which time a
Lockbox Account in the name of the Company shall have been
established, as required hereunder), the Servicers set forth on
Schedule 3 which do not have, as of the Effective Date, a Lockbox
Account in place, shall be allowed to continue to receive and
deposit Collections in the same manner in which such Servicer
receives and deposits Collections as of the Effective Date. Each
of the Company, the Master Servicer and each Servicer represents,
warrants, covenants and agrees that no new location for the
deposit of Collections will be established unless and until the
Company has received the prior written consent of the
Administrative Agent.
(vi) The Company agrees to pay all fees for the
services of the Lockbox Banks.
(vii) Notwithstanding anything to the contrary in this
Agreement, all Receivables Proceeds shall be deposited (directly
or through a Lockbox Account in the case of Collections) into the
U.S. Concentration Account; except that Receivables Proceeds in
respect of any Receivable as to which the Obligor and/or the
Seller is organized or located in Canada may instead be deposited
(directly or through a Lockbox Account in the case of
Collections) into the Canada/Canadian Dollar Concentration
Account (in the case of Receivables denominated in Canadian
Dollars) or the Canada/U.S. Dollar Concentration Account (in the
case of Receivables denominated in U.S. Dollars).
(c) Lockbox Accounts. Within 60 days after the
Effective Date, the Company shall deliver to the Administrative
Agent fully executed letter agreements in substantially the form
of Exhibit B (the "Lockbox Agreements") from each Lockbox Bank,
(x) with such changes as to which the Administrative Agent
reasonably consents or (y) in such form as the
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54
Lockbox Bank party thereto requires in the ordinary course of its
business for transactions of a type similar to those contemplated by
this Agreement.
(i) The Company shall instruct, or cause the Servicers
to instruct, each Lockbox Bank to transfer at least as often as
once each day that is a business day for such Lockbox Bank and
for Chemical and in any event by 1:00 p.m. (New York City time)
on the business day following each such day of deposit, via the
Automated Clearing House System, all available funds on deposit
in any Lockbox Account on such day to the relevant Concentration
Account (either directly or through an Intermediate Lockbox
Account) along with (unless otherwise provided in the related
Lockbox Agreement) any remittance advisements or payment invoices
on deposit therein.
(ii) In the event the Company (with the consent of the
Administrative Agent) or any Servicer or any Lockbox Bank shall,
after the date hereof, terminate the Lockbox Agreement with
respect to the maintenance of any Lockbox Account with any
Lockbox Bank for any reason, or, in the event (A) a Termination
Event or Potential Termination Event shall occur and be
continuing or (B) there has been a failure by any Lockbox Bank to
perform any of its material obligations under the applicable
Lockbox Agreement and such failure could have a Material Adverse
Effect on the Banks' interest in any Receivables or the
Administrative Agent's or the Banks' rights, or ability to
exercise any remedies, under this Agreement, if the
Administrative Agent shall demand such termination, the Company
agrees to notify, or cause the responsible Servicer to notify
(and, if the Company or such Servicer fails to so notify, the
Company irrevocably grants the Administrative Agent the authority
to notify) all Obligors that were depositing Collections into
such terminated Lockbox Account or Lockbox Bank to make all
future deposits to another Lockbox Bank with which the Company
has a Lockbox Agreement that has not been terminated by the
Company, by such Lockbox Bank or by demand from the
Administrative Agent; provided, however, that, if the
Administrative Agent shall demand termination of any Lockbox
Accounts of the Company with all Lockbox Banks, the Company
agrees to notify, or cause the responsible Servicer to notify
(and, if the Company or such Servicer fails to so notify, the
Company irrevocably grants the Administrative Agent the authority
to notify) all Obligors to make all future payments directly to
the relevant Concentration Account or any other account
designated by the Administrative Agent.
(iii) The Company represents, warrants, covenants and
agrees that (x) upon execution of a Lockbox Agreement with
respect thereto the Administrative Agent will be authorized to
receive mail delivered to any Lockbox Bank with respect to any
Lockbox Account and (y) within 60 days after the Effective Date,
a form of standing delivery order shall have been filed by the
Company with the United States Postal Service authorizing the
Administrative Agent to receive mail delivered to Lockbox Banks
with respect to any Lockbox Account.
(iv) The Administrative Agent shall have sole and
exclusive dominion over and control of each Lockbox Account and
the Company and the Servicer shall not have any dominion over or
control of any Lockbox Account, other than the right to authorize
transfers to the Concentration Accounts (and to any Intermediate
Lockbox Account) as set forth herein and pursuant to the terms
hereof.
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55
(v) Each of the Company, the Master Servicer and each
Servicer agrees that the Administrative Agent shall have the
unconditional right at any time, whether or not a Termination
Event or Potential Termination Event has occurred, (i) to
instruct any Lockbox Bank to transfer, via the Automated Clearing
House System, all available funds on deposit in any Lockbox
Account to the relevant Concentration Account or (ii) to instruct
any Lockbox Bank to thereafter transfer automatically at least as
often as once each day that is a business day for such Lockbox
Bank and for Chemical and in any event at the opening of business
on the business day following each such day of deposit, via the
Automated Clearing House System, all available funds on deposit
in any Lockbox Account to the relevant Concentration Account
along with any remittance advisements or payment invoices on
deposit therein. Any such instructions may be revoked only upon
the written direction of the Administrative Agent.
(d) The Administrative Agent shall treat all
collections received by it or deposited in any Concentration
Account as "Collections" for purposes of this Agreement as of the
Business Day Received (as defined in the immediately succeeding
sentence). As used herein, the term "Business Day Received"
shall mean (i) if funds are otherwise deposited in the
Concentration Account by 1:00 p.m. (New York City time), such day
of deposit and (ii) if funds are deposited in the Concentration
Account after 1:00 p.m. (New York City time), the Business Day
next following such day of deposit.
12.2 Collections by the Servicers. (a) Each
Servicer will, at its cost and expense and as agent for the Banks
and the Company, use its best efforts to collect, consistent with
its past practices, as and when the same becomes due, the amount
owing on each Receivable for which it is the Servicer. No
Servicer will make any material changes that deviate from the
Policies or the Company Policies in its administrative, servicing
and collection systems without the prior written approval of the
Required Banks. In the event of default under any Receivable,
the responsible Servicer shall have the power and authority, on
behalf of the Banks and the Company, to take such action in
respect of such Receivable as such Servicer may reasonably deem
advisable. In the enforcement or collection of any Receivable,
each Servicer shall be entitled to sue thereon in (i) its own
name, (ii) if, but only if, the Administrative Agent consents in
writing, as agent of the Banks, or (iii) if, but only if, the
Company consents in writing, as agent for the Company. In no
event shall any Servicer or the Master Servicer be entitled to
take any action which would make the Administrative Agent or any
of the Banks or the Company a party to any litigation without the
express prior written consent of the Administrative Agent or each
such Bank or the Company, as the case may be.
(b) The Master Servicer and the Servicers which are
Affiliates of the Company, jointly and severally, agree to defend
and indemnify the Banks and the Administrative Agent against all
reasonable costs, expenses, claims and liabilities in respect of
any action taken by the Master Servicer or any Servicer which is
an Affiliate of the Company arising out of its collection or
servicing efforts and relative to any Receivable or relative to
any failure of compliance of any Receivable with the provisions
of any law or regulation, whether Federal, state, local or
foreign, applicable thereto (including, without limitation, any
usury law). Each Master Servicer or Servicer which is not an
Affiliate of the Company agrees to defend and indemnify the Banks
and the Administrative Agent and the Company and the Sellers
against all reasonable costs, expenses, claims and liabilities in
respect of any
<PAGE>
56
action taken by such Servicer or such Master
Servicer, as the case may be, relative to any Receivable, or
arising out of any failure of compliance of any Receivable with
the provisions of any law or regulation, whether Federal, state,
local or foreign, applicable thereto (including, without
limitation, any usury law). The Administrative Agent and the
Banks shall have no obligation to, and unless and until the
occurrence of an event described in clause (i) or (ii) of the
second sentence of subsection 12.2(d) neither the Administrative
Agent nor the Banks shall, take any action or commence any legal
proceedings to realize upon any Receivable (including, without
limitation, any Defaulted Receivable) or to enforce any of their
rights or remedies with respect thereto. Notwithstanding
anything to the contrary contained in this subsection 12.2(b),
neither the Master Servicer nor any Servicer shall be obligated
to indemnify or otherwise hold any Person harmless with respect
to any losses arising from the nonpayment of any Receivable by or
on behalf of the related Obligor.
(c) The Servicers, the Master Servicer and the Company
each hereby irrevocably grant to the Administrative Agent an
irrevocable power of attorney, with full power of substitution,
coupled with an interest, to take in the name of the Master
Servicer, such Servicer or the Company or in its own name at any
time after the occurrence of a Complete Servicing Transfer all
steps necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or owned
by the Master Servicer, such Servicer or the Company or
transmitted to or received by the Administrative Agent as payment
on account or otherwise in respect of any Receivable.
(d) Upon the occurrence and during the continuance of
any Servicer Event of Default, the Administrative Agent shall, at
the request of the Required Banks, by giving two Business Days'
notice in writing to the Master Servicer (a "Transfer Notice"),
terminate any or all Servicer or Master Servicer administrative,
servicing and collection functions provided for herein as to any
or all of the Servicers and the Master Servicer (the termination
of all such functions with respect to all Servicers and the
Master Servicer being referred to as a "Complete Servicing
Transfer" and any other such termination being referred to as a
"Partial Servicing Transfer"). Upon the occurrence of either a
Partial Servicing Transfer or a Complete Servicing Transfer,
without limitation, (i) a designee of the Required Banks (for
purposes of paragraphs (d) through (e) of this subsection 12.2,
the term "Substitute Servicer" means such designee, as
appropriate) shall administer the administrative, servicing and
collection functions of each terminated Servicer (each, a
"Transferring Servicer") (in the case of a Partial Servicing
Transfer) or all Servicers and the Master Servicer (in the case
of a Complete Servicing Transfer) in any manner it deems fit
(which may include notifying any Obligor of the assignment to the
Banks of the interest in the affected Receivables and/or
directing any Obligor to make all payments in respect of the
affected Receivables in the name of the Substitute Servicer),
provided that the Substitute Servicer shall furnish or cause to
be furnished to the Company such information as such Company
needs to perform its obligations under this Agreement, and the
Company may, without independent investigation, rely on such
information for all purposes of this Agreement and (ii) the
Company, each Transferring Servicer (in the case of a Partial
Servicing Transfer) or each Servicer and the Master Servicer (in
the case of a Complete Servicing Transfer) shall, at its own
expense, (x) if so requested by the Substitute Servicer, endorse
each instrument, if any, evidencing any Receivable to the
Substitute Servicer in such manner as the Substitute Servicer
shall reasonably direct and (y) perform, or cause to be performed
by any Person involved in administrative, servicing or
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57
collection functions on behalf of or under the direction of each
Transferring Servicer (in the case of a Partial Servicing
Transfer) or each Servicer and the Master Servicer (in the case
of a Complete Servicing Transfer) or the Company, any and all
acts, any and all documents as, in each case, may be reasonably
requested by the Substitute Servicer in order to effect the
purposes of this Agreement and the transfer and assignment of the
Participating Interest and to perfect and protect the ownership
interest of the Banks in the Receivables and the Related
Property. Each Servicer agrees to serve as a Substitute Servicer
if so designated by the Required Banks at any time and from time
to time. Upon the occurrence of a Partial Servicing Transfer or
a Complete Servicing Transfer, each Transferring Servicer (in the
case of a Partial Servicing Transfer) or each Servicer and the
Master Servicer (in the case of a Complete Servicing Transfer)
shall promptly transfer its electronic records relating to its
Receivables to the Substitute Servicer in such electronic form as
the Substitute Servicer may reasonably request and shall promptly
transfer to the Substitute Servicer all other records,
correspondence and documents necessary for the continued
servicing of such Receivables in the manner and at such times as
the Substitute Servicer shall reasonably request; provided that
to the extent that such Transferring Servicer or such Servicer
and the Master Servicer, as the case may be, is required to have,
as a result of a continuing relationship with the related
Obligors, access to any such records in respect of its
Receivables, the Substitute Servicer shall allow such
Transferring Servicer or such Servicer and the Master Servicer,
as the case may be, to have reasonable access to such records
upon reasonable advance notice and so long as such access shall
not disrupt or otherwise interfere with the Substitute Servicer's
use of such records in performing its duties hereunder.
(e) Each Transferring Servicer (in the case of a
Partial Servicing Transfer) or each Servicer and the Master
Servicer (in the case of a Complete Servicing Transfer) and the
Company shall each execute and deliver such additional documents
and shall take such further action as the Substitute Servicer may
reasonably request to effect or evidence the transfer of
servicing and shall execute and deliver to the Substitute
Servicer such powers-of-attorney (in addition to the power of
attorney provided for in subsection 12.2(c)) as may be necessary
or appropriate to enable the Substitute Servicer, on behalf of
the Banks, to endorse for payment any check, draft or other
instrument delivered in payment of any amount under or in respect
of an affected Receivable. If, at any time when the provisions
of subsection 12.1(c) shall have become operative, any Servicer,
the Master Servicer or the Company receives any cash or checks,
drafts or other instruments for the payment of money on account
or otherwise in respect of the Purchased Receivables, such
Servicer, the Master Servicer or the Company shall segregate such
cash and other items, hold such cash and other items in trust for
the benefit of the Banks and cause such cash and other items
(properly endorsed, where required, so that such items may be
collected by the Substitute Servicer) to be transmitted or
delivered to the Substitute Servicer for deposit in the relevant
Concentration Account within one Business Day after the date any
such cash or other item shall have been identified and segregated
by such Servicer, the Master Servicer or the Company as being on
account of a Purchased Receivable.
12.3 Maintenance of Records. Each Servicer and the
Master Servicer will hold in trust for the Banks at the office of
such Servicer or Master Servicer set forth in Schedule 2 such
books of account and other records as it currently maintains for
its own purposes in the ordinary course of its business, provided
that, as of the date which is three
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58
months following the Effective Date, such books of account
and other records shall be in a form reasonably satisfactory
to the Administrative Agent to determine at any time the
status of the Receivables and all collections and
payments in respect thereof (including, without limitation,
an ability to recreate records evidencing Receivables
in the event of the destruction of the originals thereof). The
Administrative Agent may at any time and from time to time upon
reasonable prior notice during the regular business hours of any
Servicer or the Master Servicer inspect, audit, check and make
abstracts from the books, accounts, records, or other papers of
such Servicer or the Master Servicer pertaining to the
Receivables. From time to time upon the written request of the
Administrative Agent, which request shall be promptly made upon a
request therefor to the Administrative Agent by any Bank, each
Servicer or the Master Servicer, at its own expense, will as
promptly as is practicable deliver to the Administrative Agent a
schedule of the Receivables indicating as to each Receivables
information as to the Obligor thereon, the unpaid balance
thereof, the amount and delinquency of any Receivable that is
past due and such other information as the Administrative Agent
may reasonably request. Upon the written request of the
Administrative Agent, which request may only be made at any time
after a Partial Servicing Transfer or a Complete Servicing
Transfer, each terminated Servicer and the Master Servicer, at
its own expense, will deliver to the Administrative Agent, or to
any agent selected by the Administrative Agent, any records
pertaining thereto and evidence thereof as the Administrative
Agent may deem necessary to enable it to enforce the Banks'
rights thereunder; provided that to the extent that such
terminated Servicer or the Master Servicer is required to have,
as a result of a continuing relationship with the related
Obligors, access to any such records in respect of its
Receivables, the Administrative Agent (or the agent selected by
it) shall allow such terminated Servicer or the Master Servicer
to have reasonable access to such records upon reasonable advance
notice and so long as such access shall not disrupt or otherwise
interfere with the Administrative Agent's (or its agent's) use of
such records in performing its duties hereunder. Upon the
expiration of the Commitment Period, the reduction of the Net
Investment to zero and the payment in full of all amounts owing
to the Banks and the Administrative Agent hereunder, the
Administrative Agent will promptly return to the Servicers and
the Master Servicer any such records delivered to the
Administrative Agent or its agent.
12.4 Rebates, Adjustments, Returns and Reductions;
Modifications. From time to time a Servicer may make Adjustments
to Receivables in accordance with subsection 12.6(p). If the
Master Servicer or any Servicer makes any Adjustment, then, in
any such case, the amount of Receivables will be automatically
reduced by the principal amount of such Adjustment. Any
Adjustment shall be made on the Business Day on which such
adjustment obligation arises or is identified. In addition, if,
after giving effect to any such Adjustment, the Invested
Percentage would exceed the Maximum Invested Percentage, the
Company shall pay to the Administrative Agent, for the account of
the Banks, an amount equal to the lesser of (i) the dollar amount
of such Adjustment and (ii) the amount necessary to cause the
Invested Percentage to equal the Maximum Invested Percentage (the
amount of each such payment is referred to herein as an
"Adjustment Payment"). Such Adjustment Payment shall be treated
as a Collection and shall be distributed in accordance with the
applicable provisions of subsection 2.7.
12.5 Daily Reports; Settlement Statements. (a) (i)
On each Business Day the Master Servicer will prepare a written
report (the "Daily Report") in the form of Exhibit H,
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with such changes as may be agreed upon by the Administrative Agent
and the Master Servicer, setting forth for the second preceding
Business Day (the "Reporting Day") total Collections, the estimated
amount of Receivables and Eligible Receivables created, and such other
information as the Administrative Agent may request. The Master
Servicer shall complete such Daily Report and deliver it to the
Administrative Agent prior to 12:00 Noon (New York City time) on
the second Business Day following the Reporting Day. Each Daily
Report shall be transmitted by telecopy to the Administrative
Agent at the telecopy number specified in subsection 11.9.
(ii) On each Business Day, each Servicer shall provide
the Master Servicer with a written report (a "Seller Daily
Report") with respect to the Receivables serviced by such
Servicer, in a form to be agreed upon by such Servicer and the
Master Servicer, which report shall contain such information as
the Master Servicer shall need or otherwise request in order to
complete the Daily Report.
(b) (i) Not later than two Business Days prior to
each Settlement Date until the Participating Interest of the
Banks in the Receivables has been reduced to zero and the
Commitments of the Banks hereunder have been terminated, the
Master Servicer shall submit to the Administrative Agent a
statement (hereinafter, a "Settlement Statement"), substantially
in the form attached hereto as Exhibit E or such other form as
may be acceptable to the Administrative Agent. Promptly upon
receipt thereof, the Administrative Agent shall forward a copy of
each Settlement Statement to each Bank.
(ii) Not later than three Business Days prior to each
Settlement Date, each Servicer shall provide the Master Servicer
with a written report (a "Seller Settlement Statement") with
respect to the Receivables serviced by such Servicer, in a form
to be agreed upon by such Servicer and the Master Servicer, which
report shall contain such information as the Master Servicer
shall need or otherwise request in order to complete the
Settlement Statement.
(c) (i) Within 45 days after the end of each fiscal
quarter of C&A Products, the Master Servicer will deliver to the
Administrative Agent and each Bank a certificate of a Responsible
Officer of the Master Servicer stating that (a) a review of the
activities of the Master Servicer and each Servicer and its
performance hereunder during such fiscal quarter was made under
the supervision of such Responsible Officer, (b) to the best
knowledge of such Responsible Officer, based on such review, the
Master Servicer and each Servicer has accurately and correctly
performed its obligations hereunder in all material respects
throughout such quarter, or, if there has been a material default
in the performance of any such obligation, specifying the nature
and status of each such default and (c) to the best knowledge of
such Responsible Officer, based on such review, each Daily Report
and Settlement Statement was accurate and correct in all material
respects, except as specified in such certificate.
(ii) In connection with the annual audit of the Master
Servicer referred to in subsection 12.6(s)(i) and at the
Administrative Agent's prior request therefor, within 90 days
after the end of each fiscal year of C&A Products, the Master
Servicer shall cause a firm of independent certified public
accountants (who may also render other services to the Master
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Servicer, the Servicers and the Company) to deliver to the
Administrative Agent and each Bank a report of examination to the
effect that such firm has examined the activities of the Master
Servicer and each Servicer with respect to the Receivables and
its performance hereunder during such fiscal year and that such
examination included tests relating to Receivables serviced and
such other auditing procedures as such firm considered necessary
under the circumstances and, except as described in such report,
disclosed no material exceptions or errors in the records
relating to the Receivables serviced and its material performance
hereunder that, in such firm's opinion, are required to be
reported by such firm.
12.6 Representations, Warranties and Covenants of the
Servicers. Each Servicer and the Master Servicer hereby makes
the following representations, warranties and covenants to the
Banks and the Administrative Agent:
(a) Organization; Corporate Powers. Such Person (i)
is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it
is incorporated, (ii) has all requisite corporate power and
authority, and all material licenses, permits, franchises,
consents and approvals, to own or lease its property and
assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is duly qualified to do
business and is in good standing as a foreign corporation
(or is exempt from such requirements) and has obtained all
necessary licenses and approvals in each jurisdiction in
which the servicing of the Receivables as required by this
Agreement requires such qualification except where the
failure to so qualify or obtain licenses or approvals would
not have a Material Adverse Effect and (iv) has the
corporate power and authority to execute, deliver and
perform this Agreement.
(b) Authorization. The execution, delivery and
performance by such Person of this Agreement and the
consummation of the other Transactions (i) have been duly
authorized by all requisite corporate and, if required,
stockholder action and (ii) will not (x) violate (A) any
provision of law, statute, rule or regulation (including,
without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar
governing documents) of such Person, (B) any applicable
order of any court or any rule, regulation or order of any
Governmental Authority or (C) any indenture, certificate of
designation for preferred stock, agreement or other
instrument to which such Person is a party or by which such
Person or any of its property is bound, (y) be in conflict
with, result in a breach of or constitute (with notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument where any such conflict,
violation, breach or default referred to in clause (ii)(x)
or (ii)(y) of this subsection 12.6(b), individually or in
the aggregate, would have a Material Adverse Effect or (z)
result in the creation or imposition of any Lien upon any
property or assets of the such Person.
(c) Enforceability. This Agreement has been duly
executed and delivered by such Person and constitutes a
legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its
terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting creditors' rights generally and
except as enforceability may be limited
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61
by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(d) Litigation, etc. (i) There are not any actions,
suits or proceedings at law or in equity or by or before any
court or Governmental Authority now pending or, to the
knowledge of such Person, threatened against or affecting
such Person or any property or rights of such Person as to
which there is a reasonable possibility of an adverse
determination and which (x) if adversely determined, could
individually or in the aggregate result in a Material
Adverse Effect or (y) involve the Transaction Documents or
(z) if adversely determined could materially adversely
affect the Transactions.
(ii) Such Person is not in default with respect to any
law, order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default
could have a Material Adverse Effect. The Transactions will
not violate any applicable law or regulation or violate or
be prohibited by any judgment, writ, injunction, decree or
order of any court or Governmental Authority or subject such
Person to any civil or criminal penalty or fine.
(e) Taxes. Such Person and each of its Subsidiaries
has filed or caused to be filed all Federal, and material
state, local and foreign, tax returns required to have been
filed by it and has paid or caused to be paid all taxes
shown thereon to be due and payable, and any assessments
received by it, except taxes that are being contested in
good faith by appropriate proceedings and such Person or
such Subsidiary, as the case may be, shall set aside on its
books adequate reserves as required by GAAP with respect
thereto. For purposes of this paragraph, "taxes" shall mean
any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest,
penalties and additions thereto) that is imposed by any
Governmental Authority.
(f) Consents. All consents and approvals of, filings
and registrations with, and other actions in respect of, all
Governmental Authorities required in order to make or
consummate the Transactions have been obtained, given, filed
or taken and are in full force and effect, other than any
such consents, approvals, filings or other actions, the
failure to obtain or make which could not reasonably be
expected to result in a Material Adverse Effect.
(g) Compliance with Requirements of Law. Such Person
(i) shall duly satisfy all obligations on its part to be
fulfilled under or in connection with the servicing and
collection of the Receivables, (ii) will maintain in effect
all qualifications required under Requirements of Law in
order to properly service the Receivables and (iii) will
comply in all respects with all Requirements of Law in
connection with servicing the Receivables, except, in each
case, where such conduct could not have a Material Adverse
Effect.
(h) Agreement to Cooperate. The Master Servicer shall
from time to time and at any time provide, and shall cause
its Subsidiaries to provide, information with
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62
respect to the business, operations, properties and financial
matters of the Master Servicer and such Subsidiaries to the
Company, its officers, employees, agents and professional
advisers in connection with the replacement or refinancing, in
whole or in part, of this Agreement and the other Transaction
Documents with a new receivables financing facility in which
ownership interests in, or notes, commercial paper,
certificates or other debt instruments secured by, the
Receivables shall be sold in one or more public offerings,
private placements or otherwise (such facility, the
"Replacement Facility"), and the Master Servicer shall
otherwise cooperate with, and cause its Subsidiaries to
cooperate with, the Company and such officers, employees,
agents and professional advisers in the negotiation,
development, preparation and execution of, such Replacement
Facility.
(i) Protection of Banks' Rights. Such Person shall
take no action, nor omit to take any action, which act or
omission would substantially impair the rights of Banks in
the Receivables, nor shall it reschedule, revise or defer
payments due on any Receivable except in accordance with the
Policies and the Company Policies or except as otherwise
expressly permitted by this Agreement; provided, that such
Person shall have no obligation to the Banks or the
Administrative Agent under this paragraph (i) in respect of
Receivables which become Charge-Offs as a result of non-
payment by the Obligor with respect thereto.
(j) Security Interest. Except for the conveyance
hereunder and under the Receivables Sale Agreement, such
Person will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to
exist any Lien on any Receivable or other Pooled Property
transferred and assigned to the Banks, whether now existing
or hereafter created, or any interest therein, and such
Person shall defend the right, title and interest of the
Banks in, to and under any Receivable or other Pooled
Property transferred and assigned to the Banks, whether now
existing or hereafter created, against all claims of third
parties claiming through or under such Person, the Master
Servicer or any Seller.
(k) Location of Offices. The chief executive office
of each Servicer and the Master Servicer is listed on
Schedule 2, which office is the place where such Person is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State of New York, and the
offices of each Servicer and the Master Servicer where such
Servicer and the Master Servicer keeps its records
concerning the Receivables are also listed in said Schedule.
Such Person (i) will not move outside the State listed on
Schedule 2 under the heading "Chief Executive Office" the
location of its chief executive office or outside of the
State listed on Schedule 2 under the heading "Offices Where
Records Kept" the location of any of the offices where it
keeps its records with respect to the Receivables without 30
days' prior written notice to the Administrative Agent and
(ii) will promptly take all actions reasonably required
(including but not limited to all filings and other acts
necessary or advisable under the Uniform Commercial Code of
each relevant jurisdiction) in order to continue the first
priority perfected ownership interest of the Banks in all
Receivables and other Pooled Property now owned or hereafter
created. Such Person will give the Administrative Agent
prompt notice of a change within the State listed on
Schedule 2 of the location
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63
of its chief executive office or of a change within the State
listed on Schedule 2 of the location of any office where it
keeps its records with respect to the Receivables and the other
Pooled Property.
(l) No Adverse Change. There has not been since the
date of this Agreement any material adverse change in the
ability of such Person to perform its obligations under
Article XII of this Agreement.
(m) Lockboxes and other Payment Methods. Listed on
Schedule 3 is each Lockbox Account to which, as of the
initial Closing Date, the Obligors have been directed to
remit payments on account of the Receivables, except to the
extent that any of the Servicers, in the normal course of
their business and consistent with past practices, have
directed such Obligors to remit payments by (i) delivering
cash, a check or other instrument to or in care of the
Person delivering goods to such Obligor, (ii) a wire
transfer of such funds directly to the relevant
Concentration Account or (iii) delivering a check to the
business offices, agents or officers of such Servicer.
Neither the Master Servicer nor any Servicer shall (i) add
or terminate any bank as a bank at which a Lockbox Account
is maintained, (ii) add or terminate any such Lockbox
Account at any such bank or (iii) make any change in its
instructions to any Obligor regarding payments to be made to
any such bank or Lockbox Account; provided, that a Servicer
may at any time change its instructions to Obligors so as to
require such Obligors to make payments to a different
Lockbox Account, so long as such Servicer has previously
delivered to the Administrative Agent an executed Lockbox
Agreement in form and substance reasonably satisfactory to
the Administrative Agent regarding such Lockbox Account.
(n) Reports. The information with respect to the
Receivables serviced by such Person contained in each
Settlement Statement will be true and correct in all
material respects as of the date of such Settlement
Statement.
(o) Instruments. Such Person will not take any action
to cause any Receivable to be evidenced by any instrument
(other than an instrument which constitutes chattel paper)
(as each such term is defined in the Uniform Commercial Code
as in effect in the State of New York) except in connection
with the enforcement or collection of a Receivable.
(p) Extension of Receivables; Amendment of Policies.
Extend, make any Adjustment to, rescind, cancel, amend or
otherwise modify, or attempt or purport to extend, amend or
otherwise modify, the terms of any Purchased Receivables,
except (i) in accordance with the terms of the Policies and
the Company Policies, (ii) as required by any Requirement of
Law, (iii) in the case of Adjustments, upon making an
Adjustment Payment pursuant to subsection 12.4 or (iv) with
the consent of the Required Banks, provided the Servicers
may cause Receivables to become Charge-Offs. Neither the
Servicers nor the Master Servicer shall amend or otherwise
modify or waive any term or condition of the Policies or the
Company Policies except in accordance with subsection 5.8 of
the Receivables Sale Agreement.
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64
(q) Ineligible Receivables. Without the prior written
approval of the Required Banks, such Person shall not take
any action to cause, or which would permit, an Eligible
Receivable to cease to be an Eligible Receivable, except as
expressly permitted in this Agreement.
(r) Notices. Such Person will give written notice to
the Administrative Agent and each Bank promptly upon
obtaining knowledge of (i) the occurrence of any Termination
Event, Potential Termination Event, Servicer Default or
Servicer Event of Default (which notice shall specify what,
if any, action will be taken with respect thereto) and (ii)
a breach of any of the representations and warranties of the
Company set forth in Article V.
(s) Financial Statements. The Master Servicer shall
furnish to each Bank:
(i) as soon as available, but in any event within
90 days after the end of each fiscal year of the Master
Servicer, a copy of the consolidated balance sheet of
the Master Servicer and its consolidated Subsidiaries
as at the end of such year and the related consolidated
statements of income, shareholders' equity and retained
earnings and cash flows for such year, setting forth
the comparative amounts for the previous year and
certified without a "going concern" or like
qualification or exception, or scope limitation, by
Arthur Andersen & Co. or other independent certified
public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent;
(ii) as soon as available, but in any event not
later than 45 days after the end of each of the first
three quarterly periods of each fiscal year of the
Master Servicer, the unaudited consolidated balance
sheet of the Master Servicer and its consolidated
Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income,
shareholders' equity and retained earnings and cash
flows of the Master Servicer and its consolidated
Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting
forth the comparative amounts for the corresponding
quarter and portion of the previous year, certified by
a Responsible Officer of the Master Servicer as being
fairly stated in all material respects (subject to
normal year-end audit adjustments); and
(iii) as soon as available, but in any event not
later than 45 days after the end of each month in each
fiscal year of the Master Servicer, the unaudited
consolidated balance sheet of the Master Servicer and
its consolidated Subsidiaries as at the end of such
month and the related unaudited consolidated statements
of income, shareholders' equity and retained earnings
and cash flows of the Master Servicer and its
consolidated Subsidiaries for such month and the
portion of the fiscal year through the end of such
month, setting forth the comparative amounts for the
corresponding month of the previous year, certified by
a Responsible Officer of the Master Servicer as being
fairly stated in all material respects (subject to
normal year-end audit adjustments);
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65
all such financial statements shall be complete and correct
in all material respects and shall be prepared in reasonable
detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior
periods (except as approved by such accountants or
Responsible Officer, as the case may be, and disclosed
therein) except that the monthly financial statements
provided pursuant to clause (iii) shall only be consistent
with GAAP in all material respects and that the monthly
financial statements provided pursuant to clause (iii) shall
not be required to include footnotes.
(t) Certificates; Other Information. The Master
Servicer shall furnish to each Bank:
(i) concurrently with the delivery of the
financial statements referred to in clause (s)(i), a
certificate of the independent certified public
accountants reporting on such financial statements
stating that in making the examination necessary
therefor no knowledge was obtained of any Servicer
Default or Servicer Event of Default, except as
specified in such certificate;
(ii) concurrently with the delivery of the
financial statements referred to in clause (s)(i) and
(ii), a certificate of a Responsible Officer of the
Master Servicer stating that, to the best of such
Responsible Officer's knowledge, each Transaction Party
during such period has observed or performed all of its
covenants and other agreements, and satisfied every
condition, contained in the Transaction Documents to
which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Servicer Default or
Servicer Event of Default except as specified in such
certificate.
(u) Separate Corporate Existence of the Company. The
Master Servicer shall cause the Company to comply with the
provisions of subsection 7.9. Neither the Master Servicer
nor any Servicer shall take any action, or omit to take any
action, which is inconsistent with the provisions thereof.
The Master Servicer shall not assign, pledge, transfer or
otherwise dispose of the Capital Stock of the Company other
than pursuant to the terms of the Pledge Agreement.
Each of the Master Servicer and each Servicer agrees and
acknowledges that each of the representations and warranties
contained in this subsection 12.6 shall be deemed to have been
made by the Master Servicer or such Servicer, as the case may be,
(x) as of the Effective Date, and (y) with respect to an Increase
in Net Investment, as of the related Closing Date, unless, in
either case, such representation or warranty expressly relates
only to a prior date.
12.7 Acquisition Obligation. (a) In the event of any
breach of any of the representations, warranties or covenants of
the Master Servicer or any Servicer which is an Affiliate of the
Company contained in subsection 12.6(g), (i), (j), (k), (p) or
(q), then upon the earlier to occur of the discovery of such
event by a Responsible Officer of such Person, or receipt by such
Person of written notice of such event given by the
Administrative Agent, the outstanding Principal Amount of
Receivables shall be reduced by the Principal Amount of
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66
such Receivables in respect of which such representation or warranty
was incorrect or such covenant was breached; provided, however,
that (i) prior to the Amortization Period, to the extent that
such a reduction would cause the Invested Percentage to be more
than the Maximum Invested Percentage, the Master Servicer and the
Servicers which are Affiliates of the Company, jointly and
severally, agree to acquire such Receivable and any Related
Property with respect thereto on the terms and conditions set
forth in paragraph (b) below and (ii) during the Amortization
Period, the Master Servicer and the Servicers which are
Affiliates of the Company, jointly and severally, agree
(regardless of which such Servicer or Master Servicer shall have
been responsible for such breach) to acquire such Receivable and
any Related Property with respect thereto on the terms and
conditions set forth in paragraph (b) below. In the event of any
breach of any of the representations, warranties or covenants of
the Master Servicer or any Servicer which is not an Affiliate of
the Company contained in subsection 12.6(g), (i), (j), (k), (p)
or (q), then upon the earlier to occur of the discovery of such
event by such Person, or receipt by such Person of written notice
of such event given by the Administrative Agent, the outstanding
Principal Amount of Receivables shall be reduced by the Principal
Amount of such Receivables in respect of which such
representation or warranty was incorrect or such covenant was
breached upon the deposit by the Master Servicer or such Servicer
(which deposit the Master Servicer or such Servicer hereby agrees
to make) into the relevant Concentration Account in immediately
available funds an amount equal to the Principal Amount of such
Receivable (together with payments pursuant to paragraph (b),
"Servicer Transfer Payments").
(b) If any breach of a representation, warranty or
covenant by a Servicer or the Master Servicer which is an
Affiliate of the Company which necessitates the acquisition of a
Receivable by the Master Servicer and the Servicers pursuant to
paragraph (a) remains uncured on the day which is 30 days after
discovery or notice of such breach, the Master Servicer and such
Servicers shall acquire such Receivable and any Related Property
with respect thereto by depositing into the relevant
Concentration Account in immediately available funds on such 30th
day (or, if such day is not a Business Day, the immediately
succeeding Business Day, an amount equal to (i) prior to an
Amortization Period, the lesser of (A) the amount necessary to
cause the Invested Percentage to equal the Maximum Invested
Percentage and (B) the Principal Amount of such Receivable or
(ii) during an Amortization Period, the Principal Amount of such
Receivable (also, a "Servicer Transfer Payment"). Upon deposit
of the Servicer Transfer Payment, the Banks shall automatically
and without further action be deemed to sell, transfer, assign,
set-over and otherwise convey to such Person, free and clear of
any Lien created by the Banks but otherwise without recourse,
representation or warranty, all the right, title and interest of
the Banks in and to such Receivable, and all Related Property
with respect thereto; and such retransferred Receivable shall be
treated by the Banks as collected in full as of the date on which
it was transferred. The Administrative Agent shall execute such
documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the Master
Servicer to effect the conveyance of such Receivables pursuant to
this subsection 12.7. The obligation to acquire any Receivable
shall constitute the sole remedy respecting any breach of the
representations, warranties and covenants set forth in subsection
12.6(g), (i), (j), (k), (p) or (q) with respect to such
Receivables available to Banks or the Administrative Agent on
behalf of the Banks.
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67
12.8 Obligations Unaffected. The obligations of the
Master Servicer, each Servicer and the Company to the
Administrative Agent and the Banks under this Agreement shall not
be affected by reason of any invalidity, illegality or
irregularity of any Receivable or any transfer and assignment of
a Receivable.
12.9 Addition of Servicers. Subject to the terms and
conditions hereof, from time to time one or more Subsidiaries of
C&A Products which the Required Banks have approved as additional
Sellers pursuant to subsection 8.22 shall become additional
Servicers parties hereto upon (a) execution by each such
Subsidiary of an Additional Servicer Supplement and (b)
satisfaction of all conditions precedent set forth in subsection
3.4 of the Receivables Sale Agreement to such Subsidiary becoming
an additional Seller.
12.10 Optional Termination of Servicers. Any Servicer
which is terminated as a Seller pursuant to subsection 9.15 of
the Receivables Sale Agreement shall be released as a Servicer
party hereto and shall cease to be a party hereto on the date it
ceases to be a party to the Receivables Sale Agreement.
12.11 Interest on Overdue Payments. If any amount
payable by the Servicers or the Master Servicer to the Banks or
the Administrative Agent hereunder, whether on account of fees or
expenses or on account of amounts collected by the Servicers or
the Master Servicer or amounts payable pursuant to subsection
12.4 or 12.7, or otherwise, is not paid by such Servicer or the
Master Servicer, as the case may be, on the relevant Settlement
Date or other relevant date, such amount shall be payable
together with interest for each day from such Settlement Date or
other relevant date, as the case may be, until such amount is
paid in full at a rate per annum equal to ABR plus the Applicable
ABR Margin plus 2%.
12.12 Servicer Events of Defaults. If any of the
following events (herein called "Servicer Events Of Default")
shall have occurred and be continuing:
(a) any Servicer or the Master Servicer, as the case
may be, (1) shall fail to deliver any Daily Report or any
Settlement Statement conforming in all material respects to
the requirements of subsection 12.5 and such failure shall
continue unremedied for two consecutive Business Days after
the Administrative Agent shall have delivered notice thereof
to such Servicer or the Master Servicer, as the case may be,
provided that if a Force Majeure Delay shall have occurred
with respect to any Servicer or the Master Servicer, as the
case may be, (i) in the case of such an event with respect
to a Servicer, the failure of any Daily Report or Settlement
Statement to contain information with respect to the
Receivables serviced by such Servicer or (ii) in the case of
such an event with respect to the Master Servicer, the
failure of the Master Servicer to deliver any Daily Report
or Settlement Statement, shall not constitute, in either
case, a Servicer Event of Default unless such failure
continues for longer than the lesser of (x) ten consecutive
Business Days and (y) the length of such Force Majeure Delay
(or, if greater, two Business Days) after the Administrative
Agent shall have delivered notice of such failure to the
Company, or (2) shall fail to make any payment reflected in
such Daily Report or Settlement Statement as being required
to be made by it thereunder on the date such report or
statement is delivered;
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68
(b) any Servicer or the Master Servicer, as the case
may be, shall fail to pay any amount required to be paid by
it hereunder (other than those specified in paragraph (a) of
this subsection 12.12) within five Business Days after the
date when due;
(c) any Servicer or the Master Servicer, as the case
may be, shall fail to observe or perform any covenant or
agreement applicable to it contained herein (other than as
specified in subsections (a) and (b) of this subsection
12.12), provided that, except in the case of any failure to
observe or perform any covenant contained in subsection
12.6(r)(i), no such failure shall constitute a Servicer
Event of Default under this paragraph (c) unless such
failure shall continue unremedied for a period of 30
consecutive days after notice thereof from the
Administrative Agent, the Required Banks or the Company;
provided that a Servicer Event of Default shall not be
deemed to have occurred under this paragraph (c) based upon
a breach of a representation, warranty or covenant contained
in subsection 12.6(g), (i), (j), (k), (p) or (q) if the
Servicers and Master Servicer shall have complied with the
provisions of subsection 12.7 with respect thereto;
(d) any representation, warranty, certification or
statement made or deemed made by any Servicer or the Master
Servicer, as the case may be, in this Agreement or in any
Settlement Statement or other certificate, financial
statement or other document delivered pursuant to this
Agreement shall prove to have been false or misleading in
any material respect on or as of the date made or deemed
made; provided that a Servicer Event of Default shall not be
deemed to have occurred under this paragraph (d) based upon
a breach of a representation, warranty or covenant contained
in subsection 12.6(g), (i), (j), (k), (p) or (q) if the
Servicers and Master Servicer shall have complied with the
provisions of subsection 12.7 with respect thereto;
(e) (i) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (A) relief in respect of any
Servicer or the Master Servicer, as the case may be, or of a
substantial part of its property or assets, under Title 11
of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (B) the appointment
of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the any Servicer or the Master
Servicer, as the case may be, or for a substantial part of
its property or assets or (C) the winding-up or liquidation
of the any Servicer or the Master Servicer, as the case may
be; and 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; or (ii) any
Servicer or the Master Servicer, as the case may be, shall
(A) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law, (B) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding
or the filing of any petition described in clause (i) above,
(C) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar
official for such Servicer or the Master Servicer, as the
case may be, or for a substantial part of its
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69
property or assets, (D) file an answer admitting the material
allegations of a petition filed against it in any such
proceeding, (E) make a general assignment for the benefit of
creditors, (F) become unable, admit in writing its inability
or fail generally to pay its debts as they become due or (G)
take any action for the purpose of effecting any of the
foregoing; or
(f) a Purchase Termination Event shall have occurred
and be continuing under the Receivables Sale Agreement;
then, in any such event, so long as such Servicer Event of
Default shall be continuing, with the consent of the Required
Banks the Administrative Agent or the Company may, or upon the
request of the Required Banks the Administrative Agent or the
Company shall, terminate the rights of any or all of the
Servicers and the Master Servicer in accordance with subsection
12.2(d) by notice to each such Servicer and/or the Master
Servicer, as the case may be.
12.13 Audit. Upon the earlier of (a) the date which
is 270 days after the Effective Date and (b) the date on which
C&A Products shall have determined not to pursue the replacement
or refinancing, in whole, of this Agreement and the other
Transaction Documents with a Replacement Facility, the
Administrative Agent, at the expense of C&A Products, may select
and engage a third party to audit the Receivables and all
computer programs, material and data of the Sellers required for
the collection of Receivables by the Company. C&A Products
hereby agrees to give the Administrative Agent prompt written
notice of any determination referred to in clause (b) of the
preceding sentence.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
CARCORP, INC.
By: Mark O. Remissong
Title: Senior Vice President
COLLINS & AIKMAN PRODUCTS CO.,
as Master Servicer
By: Mark O. Remissong
Title: Senior Vice President
Address for Notices:
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Chief Financial Officer
Telecopy: 704-548-2330
CHEMICAL BANK, as Administrative Agent
and as a Bank
By: Suzanne Kjorlien
Title: Vice President
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The Servicers:
COLLINS & AIKMAN PRODUCTS CO., as
Servicer for itself and for Ack-Ti-
Lining, Inc. and The Akro Corporation
By: Mark O. Remissong
Title: Senior Vice President
DURA ACQUISITION CORP.
By: Mark O. Remissong
Title: Senior Vice President
IMPERIAL WALLCOVERINGS, INC.
By: Mark O. Remissong
Title: Senior Vice President
IMPERIAL WALLCOVERINGS (CANADA), INC.
By: Mark O. Remissong
Title: Senior Vice President
WCA CANADA, INC.
By: Mark O. Remissong
Title: Senior Vice President
Address for Notices for all Servicers:
c/o Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Chief Financial Officer
Telecopy: 704-548-2330
<PAGE>
SCHEDULE 1
NAMES, ADDRESSES AND COMMITMENTS OF BANKS
Commitment
CHEMICAL BANK . . . . . . . . . . . . . . . . . . . $150,000,000
270 Park Avenue
New York, New York 10017
Attention:
Telecopy No.:
<PAGE>
SCHEDULE 2
<TABLE>
<CAPTION>
State of
Incorporat
Seller ion Location of Chief Executive Office Office Where Records are Kept
<S> <C> <C> <C>
Carcorp, Inc. Delaware 5025 S. Eastern Avenue, Suite 16, No. 5025 S. Eastern Avenue, Suite 16, No.
25, Las Vegas, NV 89119 25, Las Vegas, NV 89119
Collins & Aikman Products Delaware 701 McCullough Drive, Charlotte, NC 701 McCullough Drive, Charlotte, NC
Co. 28262 28262
Dura Acquisition Corp. Delaware 1365 East Beecher Street, Adrian, MI 1365 East Beecher Street, Adrian, MI
49221 49221
Imperial Wallcoverings, Delaware 23645 Mercantile Road, Beachwood, OH 23645 Mercantile Road, Beachwood, OH
Inc. 44122 44122
Imperial Wallcoverings Ontario 1051 Rue Galt Est, Sherbrooke, Quebec, 1051 Rue Galt Est, Sherbrooke, Quebec,
(Canada), Inc. Canada J1G 1Y7 Canada, J1G 1Y7
WCA Canada, Inc. Ontario 150 Collins Street, Farnham, Quebec, 150 Collins Street, Farnham, Quebec,
Canada, J2N 2R6 Canada, J2N 2R6
</TABLE>
<PAGE>
SCHEDULE 3
LOCKBOXES
Account No.
Seller Bank (including
Lockbox No.)
Collins & Aikman Products
Co.
Dura Acquisition Corp.
Imperial Wallcoverings,
Inc.
Imperial Wallcoverings
(Canada), Inc.
WCA Canada, Inc.
<PAGE>
SCHEDULE 4
TRANSACTIONS WITH AFFILIATES
1. The Company may become a party to a Tax Sharing Agreement among Collins
& Aikman Corporation, a Delaware corporation ("Parent"), C&A Products
and other subsidiaries of Parent and C&A Products.
2. The Company may, from time to time, make payments to C&A Products in the
form of intercompany loans to the extent, if any, that the payment of
the amounts so loaned would be permitted as Restricted Payments if paid
to C&A Products in the form of a dividend or other distribution with
respect to the Capital Stock of the Company.
<PAGE>
SCHEDULE 5
CONTRACTUAL OBLIGATIONS
See the agreements set forth as part of Schedule 4.
<PAGE>
SCHEDULE 6
LOCAL COUNSEL
State Counsel
Michigan Honigman Miller Schwartz and Cohn
Nevada Lionel, Sawyer & Collins
North Carolina Fennesbresque, Clark, Swindell & Hay
Ohio Baker & Hostetler
<PAGE>
EXHIBIT A TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF ASSIGNMENT AND ACCEPTANCE]
Reference is made to the Receivables Transfer and Servicing
Agreement, dated as of July 13, 1994 (as amended, supplemented or
otherwise modified from time to time, the "Receivables Transfer
Agreement"), among Carcorp, Inc., a Delaware corporation (the
"Company"), COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation
("C&A Products"), as master servicer (in such capacity, the
"Master Servicer"), C&A Products and certain subsidiaries of C&A
Products in their capacities as servicers of receivables (in such
capacities, the "Servicers"), the several financial institutions
from time to time parties thereto (the "Banks") and Chemical
Bank, a New York banking corporation, as administrative agent for
the Banks (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Receivables
Transfer Agreement and used herein shall have the meanings given
to them in the Receivables Transfer Agreement.
(the "Transferor Bank") and
(the "Acquiring Bank") agree as follows:
1. The Transferor Bank hereby irrevocably sells and assigns
to the Acquiring Bank without recourse to the Transferor Bank,
and the Acquiring Bank hereby irrevocably purchases and assumes
from the Transferor Bank without recourse to the Transferor Bank,
as of the Transfer Date (as defined below), a ___% interest (the
"Assigned Interest") in and to the Transferor Bank's rights and
obligations under the Receivables Transfer Agreement with respect
to the Participating Interests under the Receivables Transfer
Agreement as are set forth on SCHEDULE 1 hereto, in a principal
amount for such Assigned Interest as set forth on SCHEDULE 1
hereto.
2. The Transferor Bank (a) makes no representation or
warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with the Receivables Transfer Agreement or any other
instrument or document furnished pursuant thereto or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Receivables Transfer Agreement or any
other instrument or document furnished pursuant thereto, other
than that it has not created any adverse claim upon the interest
being assigned by it hereunder and that such interest is free and
clear of any such adverse claim; and (b) makes no representation
or warranty and assumes no responsibility with respect to the
financial condition of the Company, C&A Products, any of the
Sellers or any of the Obligors under the Receivables or the
performance or observance by the Company, C&A Products, such
Sellers or such Obligors of any of their respective obligations
under the Receivables Transfer
<PAGE>
2
Agreement, the Receivables or any
other instrument or document furnished pursuant thereto.
3. The Acquiring Bank (a) represents and warrants that it
is legally authorized to enter into this Assignment and
Acceptance; (b) confirms that it has received a copy of the
Receivables Transfer Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.1
thereof, copies of the other Transaction Documents and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently
and without reliance upon the Transferor Bank, the Administrative
Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under the Receivables Transfer Agreement or any other instrument
or document furnished pursuant thereto; (d) appoints and
authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers and discretion under
the Receivables Transfer Agreement, the other Transaction
Documents or any other instrument or document furnished pursuant
thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and
(e) agrees that it will be bound by the provisions of the
Receivables Transfer Agreement and will perform in accordance
with its terms all the obligations which by the terms of the
Receivables Transfer Agreement are required to be performed by it
as a Bank including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant
to Section 3.5 of the Receivables Transfer Agreement.
4. The effective date of this Assignment and Acceptance
shall be , 19 (the "Transfer Date"). Following
the execution of this Assignment and Acceptance by the parties
hereto (including, if the Acquiring Bank is not then a Bank or a
Lender (as defined in the Credit Agreement) or an affiliate
thereof, by the Company), it will be delivered, together with the
payment to the Administrative Agent of a registration and
processing fee of $3,500, to the Administrative Agent for
acceptance by it and recording by the Administrative Agent
pursuant to Section 11.4(e) of the Receivables Transfer
Agreement, effective as of the Transfer Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be
earlier than five Business Days after the date of such acceptance
and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the
Transfer Date, the Administrative Agent shall make all payments
in respect of the Assigned Interest (including payments of
principal, Commitment Fees and other amounts) to the Acquiring
Bank whether such amounts have accrued prior to the Transfer Date
or accrue subsequent to the Transfer Date. The Transferor Bank
and the Acquiring Bank shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the
Effective Date
<PAGE>
3
or with respect to the making of this assignment
directly between themselves.
6. From and after the Transfer Date, (a) the Acquiring Bank
shall be a party to the Receivables Transfer Agreement and, to
the extent provided in this Assignment and Acceptance, have the
rights and obligations of a Bank thereunder and shall be bound by
the provisions thereof and (b) the Transferor Bank shall, to the
extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Receivables
Transfer Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first
above written by their respective duly authorized officers on
Schedule 1 hereto.
<PAGE>
SCHEDULE 1
TO ASSIGNMENT AND ACCEPTANCE
RELATING TO THE RECEIVABLES TRANSFER AGREEMENT,
DATED AS OF JULY 13, 1994, AMONG
CARCORP, INC.,
COLLINS & AIKMAN PRODUCTS CO.,
CERTAIN SUBSIDIARIES OF COLLINS & AIKMAN PRODUCTS CO.,
THE BANKS NAMED THEREIN AND
CHEMICAL BANK, AS ADMINISTRATIVE AGENT FOR THE BANKS
Name of Transferor Bank:
Name of Acquiring Bank:
Transfer Date of Assignment:
Commitment Principal Commitment Percentage
Assigned Amount Assigned Assigned
$____________ $_____________ __._________%
[Name of Acquiring Bank] [Name of Transferor Bank]
By:______________________ By:_______________________
Title: Title:
Address for Notices:
[Address]
Attention:
Telephone:
Telecopier:
[Consented To:]
CHEMICAL BANK, as CARCORP, INC.
Administrative Agent
By:_____________________ By:_______________________
Title: Title:
Accepted for Recordation in the Register:
CHEMICAL BANK, as
Administrative Agent
By:_____________________
Title:
<PAGE>
EXHIBIT B TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF LOCKBOX AGREEMENT]
________ __, 1994
[Name and address of Lockbox Bank]
________________________
________________________
Attention: _________________
Dear Sirs:
Carcorp, Inc., a Delaware corporation (the "Company"),
has agreed to purchase certain receivables (the "Receivables")
from a number of sellers (the "Sellers") pursuant to the
Receivables Sale Agreement, dated as of July 13, 1994, among the
Sellers, Collins & Aikman Products Co., as master servicer of the
receivables (in such capacity, the "Master Servicer") and the
Company. The Company has in turn sold the Receivables to the
several financial institutions (the "Banks") from time to time
parties to the Receivables Transfer and Servicing Agreement,
dated as of July 13, 1994 (as amended, supplemented or otherwise
modified from time to time, the "Receivables Transfer
Agreement"), among the Company, the Master Servicer, certain of
the Sellers, as servicer in respect of its related receivables
(each, in such capacity, a "Servicer"), the Banks and Chemical
Bank, as administrative agent for the Banks (in such capacity,
the "Administrative Agent"). Capitalized terms used herein but
not defined herein shall have the meanings assigned to such terms
in Annex X to the Receivables Transfer Agreement.
Pursuant to the terms of the Receivables Transfer
Agreement and except as otherwise provided therein, (i) each of
the Servicers has agreed to instruct all Obligors under the
Receivables to make all payments in respect of the Receivables to
a blocked deposit account (each, a "Lockbox Account") designated
by such Servicer to such Obligor and (ii) the Company has agreed
to grant a security interest in its right, title and interest in
each Lockbox Account and all funds and other evidences of payment
held therein to the Banks. Furthermore, the Company, the
Servicers, the Master Servicer and the Administrative Agent have
agreed, pursuant to the Receivables Transfer Agreement, to enter
into an agreement with each bank maintaining a Lockbox Account
and hereby request that [Name of Lockbox Bank] (the "Lockbox
Bank") act as, and the Lockbox Bank hereby agrees to act as, a
lockbox deposit bank for the Company with respect to the Lockbox
Account. This Letter Agreement defines certain rights and
obligations with respect to the appointment of the Lockbox Bank.
<PAGE>
2
Accordingly, the Company, the Master Servicer, on
behalf of itself and the Servicers, the Servicer party hereto,
the Administrative Agent and the Lockbox Bank agree as follows:
Reference is made to the Lockbox Account (Account No.
______), including box number ______ thereunder, maintained with
you by the related Servicer. The related Servicer hereby
transfers the Lockbox Account to the Company and hereafter the
Lockbox Account shall be maintained by the Lockbox Bank for the
benefit of the Company and the Administrative Agent, as set forth
herein. All funds and other evidences of payment received by the
Lockbox Bank in its capacity as Lockbox Bank in respect of the
Receivables shall be deposited in the Lockbox Account. Such
payments shall not be commingled with other funds. All funds and
other evidences of payment at any time on deposit in the Lockbox
Account shall be held by the Lockbox Bank for application
strictly in accordance with the terms of this Letter Agreement.
The Lockbox Bank agrees to give the Administrative Agent prompt
notice if the Lockbox Account shall become subject to any writ,
judgment, warrant of attachment, execution or similar process.
The Administrative Agent shall have the sole and
exclusive dominion over and control of the Lockbox Account and
all Collections and other property from time to time deposited
therein, and shall have the sole right of withdrawal from the
Lockbox Account. Each of the Company and the Master Servicer
acknowledges and agrees that neither it nor any Servicer shall
have any dominion over or control of the Lockbox Account or any
Collections or other property from time to time deposited therein
including any right to withdraw or utilize any funds or other
evidences of payment on deposit in the Lockbox Account, other
than the right to authorize transfers to the Concentration
Account (as defined below) as set forth herein and pursuant to
the terms of the Receivables Transfer Agreement. The Company or
the Administrative Agent shall initiate and the Lockbox Bank
shall permit, at least as often as once each day that is a
business day for the Lockbox Bank and for Chemical Bank (in such
capacity, the "Concentration Bank" or the "Collection Bank", as
the context requires), and in any event by 1:00 p.m., New York
time, on the Business Day following each such day, the transfer,
by means of the Automated Clearing House System, of all available
funds on deposit in the Lockbox Account, including all funds
transferred from Obligors on or before the end of such day, along
with, subject to the next succeeding sentence, all remittance
advisements and payment invoices on deposit therein, to the
deposit account (Account No. _________), maintained in the name
of the Administrative Agent at the Concentration Bank (the
"Concentration Account"). The Lockbox Bank acknowledges that,
until it receives instructions from the Administrative Agent to
the contrary, the Lockbox Bank shall return to the Company, upon
the Company's reasonable request therefor, any remittance
advisements and payment invoices deposited into the Lockbox
Account.
<PAGE>
3
As soon as practicable following (and in any event not
later than the day following) receipt of written notice from the
Administrative Agent and thereafter, the Lockbox Bank shall
transfer automatically at least as often as once each day that is
a business day for the Lockbox Bank and for the Concentration
Bank, as the case may be, and in any event at the open of
business on the Business Day following each such day of deposit,
by means of the Automated Clearing House System, all available
funds on deposit in the Lockbox Account to the Concentration
Account, as provided in such notice, along with any remittance
advisements and payment invoices on deposit therein. Any such
instructions may be revoked only upon written notice from the
Administrative Agent.
Deposited checks with respect to the Lockbox Account
returned to the Lockbox Bank for any reason will be charged
against the Lockbox Account. Nothing contained in the previous
sentence shall be construed to prejudice other rights of the
Lockbox Bank, which rights include the right of recourse against
the Company for any overdrafts in the Lockbox Account.
The Administrative Agent is authorized to receive mail
delivered to the Lockbox Bank with respect to the Lockbox Account
and the Company has filed a form of standing delivery order with
the United States Postal Service authorizing the Administrative
Agent to receive mail delivered to the Lockbox Bank with respect
to the Lockbox Account.
The Lockbox Bank shall also furnish the Administrative
Agent with statements, in the form and manner typical for the
Lockbox Bank, of amounts of deposits in, and amounts transferred
to the Concentration Account from, the Lockbox Account pursuant
to any reasonable request of the Administrative Agent but in any
event not less frequently than monthly and such other information
relating to the Lockbox Account at such times as shall be
reasonably requested by the Administrative Agent.
For purposes of this Letter Agreement, any officer of
the Administrative Agent shall be authorized to act, and to give
instructions and notice, on behalf of the Administrative Agent
hereunder.
The fees for the services of the Lockbox Bank shall be
mutually agreed upon between the Company and the Lockbox Bank and
paid by the Company. Such fees shall not be paid by means of the
withdrawal of funds from the Lockbox Account. Neither the
Administrative Agent nor any Bank shall have any responsibility
or liability for the payment of any such fee.
The Lockbox Bank may perform any of its duties
hereunder by or through its officers, employees or agents and
shall be entitled to rely upon the advice of counsel as to its
duties. The Lockbox Bank shall not be liable to the
Administrative Agent, the Master Servicer, any Servicer or the
<PAGE>
4
Company for any action taken or omitted to be taken by it in good
faith, nor shall the Lockbox Bank be responsible to the
Administrative Agent, the Master Servicer, any Servicer or the
Company for the consequences of any oversight or error of
judgment or be answerable to the Administrative Agent for the
same unless the same shall happen through the Lockbox Bank's
gross negligence or willful misconduct.
The Lockbox Bank may resign at any time as Lockbox
Bank hereunder by delivery to the Administrative Agent and the
Company of written notice of resignation not less than 10 days
prior to the effective date of such resignation. The Company
may, with the written consent of the Administrative Agent, and,
if the Company shall refuse any demand by the Administrative
Agent to do so in the event (i) a Termination Event shall occur
and be continuing or (ii) there has been a failure by the Lockbox
Bank to perform any of its material obligations hereunder and
such failure could materially adversely affect the Banks'
interest in any Receivable or the Administrative Agent's rights,
or ability to exercise any remedies, under this Letter Agreement
or the Receivables Transfer Agreement, the Administrative Agent
may close the Lockbox Account at any time by delivery of notice
to the Lockbox Bank and the Company at the addresses appearing
below. This Letter Agreement shall terminate upon receipt of
such notice of closing, or delivery of such notice of
resignation, except that the Lockbox Bank shall immediately
transfer to the Concentration Account, or any other account
designated by the Administrative Agent all available funds or,
subject to the Company's reasonable request to retain such items,
any remittances advises or payment invoices, if any, then on
deposit in, or otherwise to the credit of, the Lockbox Account
and deliver any available funds or such remittance advises or
payment invoices relating to the Receivables received by the
Lockbox Bank after such notice directly to the Concentration
Account or any other account designated by the Administrative
Agent.
Each of the Company, the Master Servicer and the
Servicers acknowledges that the Lockbox Bank shall incur no
liability to the Company, the Master Servicer or such Servicer as
a result of any action taken pursuant to an instruction given by
or on behalf of the Administrative Agent.
All notices and communications hereunder shall be in
writing (except where telephonic instructions or notices are
authorized herein) and shall be deemed to have been received and
shall be effective on the day on which delivered (including
delivery by telex) (i) in the case of the Administrative Agent,
to it at 270 Park Avenue (___ Floor), New York, New York 10017,
Attention: ______________ (Telecopy No. (212) ___-____), (ii) in
the case of the Lockbox Bank, to it at _______________,
________________, Attention: __________ (Telecopy No. (___) ___-
____), (iii) in the case of the Company, to it at
__________________, _________________, Attention: __________
<PAGE>
5
(Telecopy No. (___) ___-___), (iv) in the case of the Master
Servicer, c/o Collins & Aikman Products Co., _____________,
Attention: ___________ (Telecopy No. (___) ___-____), and (v) in
the case of the Servicer party hereto, to it at _______________,
________________, Attention: __________ (Telecopy No. (___) ___-
____).
The Lockbox Bank shall not assign or transfer any of
its rights or obligations hereunder (other than to the
Administrative Agent) without the prior written consent of the
Administrative Agent. This Letter Agreement may be amended only
by a written instrument executed by the Company, the Master
Servicer, the Servicer party hereto, the Administrative Agent and
the Lockbox Bank, acting by their representative officers
thereunto duly authorized. Except with respect to rights of
setoff available to the Lockbox Bank in the event that it is also
a Bank under the Receivables Transfer Agreement, the Lockbox Bank
hereby unconditionally and irrevocably waives (so long as the
Receivables Transfer Agreement is in effect) any rights of setoff
or banker's lien against, or to otherwise deduct from, any funds
or other evidences of payment held in any Lockbox Account for any
indebtedness or other claim owed by the Company, the Master
Servicer or any Servicer to the Lockbox Bank.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST OR REMEDIES HEREUNDER IN
RESPECT OF ANY PARTICULAR RECEIVABLE MAY BE GOVERNED BY THE LAW
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
This Letter Agreement (i) shall inure to the benefit
of, and be binding upon, the Company, the Servicers, the Master
Servicer, the Administrative Agent, the Lockbox Bank and their
respective successors and assigns and (ii) may be executed in two
or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature
page to this Letter Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this
Letter Agreement.
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused is
Letter Agreement to be executed by their duly authorized officers
as of the date first above written.
Very truly yours,
CARCORP, INC.
By:__________________________
Title:
COLLINS & AIKMAN PRODUCTS CO., as
Master Servicer and on behalf of
the Servicers
By:__________________________
Title:
[Servicer]
By:__________________________
Title:
Agreed to and accepted:
[NAME OF LOCKBOX BANK],
as Lockbox Bank
By:________________________
Title:
CHEMICAL BANK,
as Administrative Agent
By:__________________________
Title:
<PAGE>
EXHIBIT C TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF SUBORDINATION AGREEMENT]
SUBORDINATION AGREEMENT, dated as of July 13, 1994,
among CARCORP, INC., a Delaware corporation (the "Company"),
COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation ("C&A
Products"), and the subsidiaries of the C&A Products from time to
time parties hereto (together with C&A Products, collectively,
the "Sellers") and CHEMICAL BANK, a New York banking corporation,
as administrative agent under the Receivables Transfer Agreement
referred to below (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Banks (as defined below) have agreed to
make purchases from the Company of undivided interests in the
Receivables (as defined below) on the terms and subject to the
conditions set forth in the Receivables Transfer Agreement; and
WHEREAS, the obligations of the Banks to make purchases
under the Receivables Transfer Agreement are conditioned on,
among other things, the execution and delivery by the Company and
the Sellers of an agreement in the form hereof.
NOW THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1. Definitions; Construction. (a) Capitalized
terms used herein and not defined herein shall have the meanings
assigned to such terms in the Receivables Transfer and Servicing
Agreement, dated as of July 13, 1994 (as amended, supplemented or
otherwise modified from time to time, the "Receivables Transfer
Agreement"), among the Company, the C&A Products, as master
servicer (in such capacity, the "Master Servicer"), certain
Sellers in their capacities as servicers (in such capacities, the
"Servicers"), the several financial institutions from time to
time parties thereto (the "Banks") and the Administrative Agent.
Unless otherwise defined herein or in the Receivables Transfer
Agreement, terms used in Article 9 of the Uniform Commercial Code
of the State of New York are used herein as defined therein. For
all purposes of this Agreement, the following terms shall have
the following meanings:
"Agreement" shall mean this Subordination Agreement as
it may from time to time be amended, supplemented or otherwise
modified in accordance with its terms.
<PAGE>
2
"Senior Obligations" shall mean the obligations (other
than obligations of the Company to any Seller or to any Affiliate
of the Company or any Seller) of the Company now or hereafter
existing, and all Banks' rights to receive payment, under the
Receivables Transfer Agreement, whether for the payment of
principal, Purchase Discount Amount, Commitment Fees, other fees,
expenses or otherwise and any Monthly Servicing Fee.
"Senior Parties" shall mean the Administrative Agent,
the Banks, the Master Servicer in its capacity as such and the
Servicers in their capacities as such.
"Subordinated Debt" shall mean any obligations payable
from time to time by the Company to any of the Sellers under the
Subordinated Notes (and any extensions, renewals, refinancing,
refundings and replacements of all or any part of such
obligations).
"Subordinated Parties" shall mean the Sellers, as
holders of the Subordinated Notes.
(b) The definitions referred to or set forth in this
Article I shall apply equally to both 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". All references herein to Articles and Sections
shall be deemed references to Articles and Sections of this
Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with GAAP.
ARTICLE II
SUBORDINATION
2.1. Subordination. (a) In consideration for the
entry by the Banks into the Receivables Transfer Agreement and
the other agreements to be delivered in connection therewith,
each of the Subordinated Parties hereby agrees that all rights of
such Subordinated Party to payments of principal and interest and
any other amounts in respect of the Subordinated Debt are hereby
expressly subordinated, to the extent and in the manner set forth
in this Article II, to the prior payment in full in cash of all
Senior Obligations in accordance with the terms thereof.
(b) Except as set forth in subsection 2.7 of the
Receivables Transfer Agreement, no payment (whether directly or
indirectly, by exercise of any right of set-off or otherwise) in
respect of the Subordinated Debt, whether as principal, interest
or otherwise, shall be made by the Company or received or
accepted, directly or indirectly, by or on behalf of any
<PAGE>
3
Subordinated Party or any of its Affiliates unless and until all
amounts (including Purchase Discount Amount accruing after the
commencement of any proceeding under any bankruptcy, insolvency,
receivership or similar law, regardless of whether a claim
therefor is allowable as a claim in such proceeding), however
denominated, payable to the Senior Parties in respect of the
Senior Obligations have been paid in full in cash and received by
the Senior Parties in cash.
2.2. Dissolution or Insolvency. Upon any distribution
of all or any of the assets of the Company or upon any
dissolution, winding up, total or partial liquidation,
reorganization, adjustment, protection, relief or composition of
the Company or its debts, whether in bankruptcy, insolvency,
reorganization, arrangement or receivership proceedings or
otherwise, or upon any assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of the
Company, or otherwise:
(a) the Senior Parties shall first be entitled to
receive payment in full in cash of the Senior Obligations in
accordance with the terms of the Senior Obligations
(whenever arising) before any Subordinated Party shall be
entitled to receive any payment on account of any
Subordinated Debt, whether of principal, interest or
otherwise; and
(b) any payment or distribution of any kind (including
cash, property, securities and any payment or distribution
which may be payable or deliverable by reason of the payment
of any other Indebtedness of the Company being subordinated
to the payment of the Subordinated Debt) in respect of the
Subordinated Debt that otherwise would be payable or
deliverable upon or with respect to the Subordinated Debt,
directly or indirectly, by set-off or in any other manner,
including from or by way of collateral, shall be paid or
delivered by the Person making such payment or delivery
(whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the
Administrative Agent on behalf of the Banks for application
(in the case of cash) to, or as collateral (in the case of
noncash property or securities) for, the payment of the
Senior Obligations until the Senior Obligations shall have
been paid in full in cash.
2.3. Certain Termination Events. In the event of any
Termination Event under paragraph (f) of Article IX of the
Receivables Transfer Agreement arising in respect of the Company:
(a) the Administrative Agent, on behalf of the Banks,
is hereby irrevocably authorized and empowered (in its own name
or in the name of the Subordinated Parties or otherwise), but
shall have no obligation, to demand, sue for, collect and receive
every payment or distribution of any kind (including cash,
<PAGE>
4
property or securities) made in respect of the Subordinated Debt
and in connection with any Termination Event referred to in this
subsection 2.3, and give acquittance therefor and to file claims
and proofs of claim and take such other action (including
enforcing any security interest or other lien securing payment of
the Subordinated Debt) as the Administrative Agent, on behalf of
the Banks, may deem necessary or advisable for the exercise or
enforcement of any of the rights or interests of holders of
Senior Obligations hereunder, provided that in the event the
Administrative Agent, on behalf of the Banks, takes such action,
it shall apply all proceeds first to the payment of costs under
this Agreement, then to the payment of the Senior Obligations and
any surplus proceeds remaining thereafter to be paid over to
whomsoever may be lawfully entitled thereto; and
(b) each Subordinated Party shall duly and promptly
take such action as the Administrative Agent, on behalf of the
Banks, may request (i) to file appropriate claims or proofs of
claim in respect of the Subordinated Debt, (ii) to execute and
deliver to the Administrative Agent, on behalf of the Banks, such
powers of attorney, assignments, or other instruments as the
Administrative Agent, on behalf of the Banks, may request in
order to enable it to enforce any and all claims with respect to,
and any security interests and other liens securing payment of,
the Subordinated Debt, and (iii) to collect and receive any and
all payments or distributions which may be payable or deliverable
upon or with respect to the Subordinated Debt for account of the
Administrative Agent, on behalf of the Banks.
2.4. Certain Payments Held in Trust. All payments or
distributions upon or with respect to the Subordinated Debt that
are received by any Subordinated Party or any of its Affiliates,
directly or indirectly, by set-off or in any other manner,
including, without limitation, from or by way of collateral,
contrary to the provisions of this Agreement, the Receivables
Transfer Agreement or any Subordinated Note shall be received in
trust for the benefit of the Banks, shall be segregated from
other funds and property held by such Subordinated Party or such
Affiliate and shall be forthwith paid over to the Administrative
Agent on behalf of the Banks in the form received (with any
necessary endorsement or assignment) to be applied (in the case
of cash) to, or held as collateral (in the case of noncash
property or securities) for the payment of, the Senior
Obligations until the Senior Obligations shall have been paid in
full in cash. In the event that any Subordinated Party or its
Affiliate fails to make any endorsement or assignment required
hereby, the Administrative Agent, on behalf of the Banks, is
hereby irrevocably authorized to make such endorsement or
assignment as attorney-in-fact for such Subordinated Party or
such Affiliate.
2.5. Subrogation. Each Subordinated Party agrees that
no payment or distribution to the Administrative Agent or the
Banks pursuant to the provisions of this Agreement shall entitle
<PAGE>
5
any Subordinated Party to exercise any rights of subrogation in
respect thereof until the Senior Obligations shall have been paid
in full in cash. Each Subordinated Party agrees that the
subordination provisions contained herein shall not be affected
by any action, or failure to act, by any holder of Senior
Obligations which results, or may result, in affecting, impairing
or extinguishing any right of reimbursement or subrogation or
other right or remedy of any Subordinated Party.
2.6. Waiver of Notices, Etc. Each Subordinated Party
and the Company hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Senior
Obligations and the Subordinated Debt and any requirement that
the Administrative Agent or any Bank protect, secure, perfect or
insure any security interest or lien on any property subject
thereto or exhaust any right or take any action against the
Company or any other Person or any Pooled Property.
2.7. No Security. (a) Without the prior written
consent of the Required Banks, the Company will not give to any
Person, and neither any of the Subordinated Parties nor any of
their Affiliates will receive or accept, any security of any
nature whatsoever in respect of the Subordinated Debt on any
property or assets, whether now existing or hereafter acquired,
of the Company.
(b) Each Subordinated Party agrees and confirms that
the Subordinated Debt held by it represents solely the right to
receive certain amounts from funds available under the
Receivables Transfer Agreement and only to the extent, in the
manner and at the times set forth in the Receivables Transfer
Agreement and that the Subordinated Debt held by it does not
represent a security or other interest in the Receivables or
their proceeds.
2.8. Subordination Legend; Further Assurances.
The Subordinated Parties will cause each instrument evidencing
the Subordinated Debt held by it to be endorsed with the
following legend:
"The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Senior
Obligations (as defined in the Subordination Agreement
hereinafter referred to) pursuant to, and to the extent
provided in, the Subordination Agreement, dated as of
July 13, 1994, among the maker hereof, the payee named
herein and certain other parties."
Each of the Subordinated Parties will further mark its books of
account, in such a manner as shall be effective to give proper
notice of the effect of this Agreement and will cause all
Subordinated Debt held by it to be evidenced by all appropriate
instrument or instruments endorsed with the above legend. Each
of the Subordinated Parties will, at its expense and at any time
<PAGE>
6
and from time to time, promptly execute and deliver all further
instruments and documents, and take all further action, that may
be necessary or desirable or that the Administrative Agent, on
behalf of the Banks, may, at any time, request, in order to
protect any right or interest granted or purported to be granted
hereby or to enable the Administrative Agent, on behalf of the
Banks, to exercise and enforce its rights and remedies hereunder.
2.9. Representations and Warranties. Each Seller
hereby represents and warrants that this Agreement constitutes a
legal, valid and binding obligation of such Person, enforceable
in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in
equity).
ARTICLE III
OTHER MATTERS REGARDING THE SUBORDINATED DEBT
3.1. No Waiver. No right of the Senior Parties to
enforce this Agreement shall at any time or in any way be
prejudiced or impaired by any act or failure to act on the part
of any of the Senior Parties, the Company or any Subordinated
Party, or by any noncompliance by the Company or any Subordinated
Party with the terms, provisions and covenants herein, and the
Senior Parties are hereby expressly authorized to extend, renew,
increase, decrease, modify or amend the terms of the Senior
Obligations or any security therefor, and to release, sell or
exchange any such security and otherwise deal freely with the
Company, all without notice to or consent of any Subordinated
Party or any of its Affiliates hereunder and without affecting
the liabilities and obligations of the parties hereto.
3.2. Payment on Subordinated Debt and Remedies. Each
of the Subordinated Parties agrees that, except upon request of
the Administrative Agent, it will not ask, demand, accelerate,
sue or take or receive from the Company, directly or indirectly
(including from or by way of collateral), any payment of or
security for all or any part of the Subordinated Debt or exercise
any remedies or take any action or proceeding to enforce the same
until the Senior Obligations have been paid in full in cash, and
each Subordinated Party further agrees not to institute or join
with any other creditors of the Company in instituting any
petition commencing any bankruptcy, insolvency, reorganization,
arrangement, receivership or similar proceeding or any assignment
for the benefit of creditors against or in respect of the Company
or any other marshalling of the assets and liabilities of the
Company.
<PAGE>
7
3.3. No Transfer of or Change in Subordinated Debt.
Each Subordinated Party agrees that it will (a) not sell, assign,
transfer, hypothecate or otherwise dispose of all or any part of
the Subordinated Debt to any Person, including any of such
Subordinated Party's Affiliates, (b) permit the terms of any of
the Subordinated Debt to be changed in any manner or (c)
subordinate any Subordinated Debt for the benefit of any other
Person, in each case without the prior written consent of the
Administrative Agent.
3.4. Obligations Hereunder Not Affected. All rights
and interests of the Senior Parties hereunder, and all agreements
and obligations of the Subordinated Parties and the Company
hereunder, shall remain in full force and effect irrespective of:
(a) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Senior
Obligations, or any other amendment or waiver of or consent
to departure from the Receivables Transfer Agreement or any
other Transaction Document; or
(b) any exchange, release or nonperfection of any
security interest in any collateral, or any release or
amendment or waiver of or consent to departure from any
Transaction Document, in respect of all or any of the Senior
Obligations.
This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of the
Senior Obligations or any part thereof is rescinded or must
otherwise be returned by any Senior Party upon the insolvency,
bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
Each Subordinated Party hereby authorizes the Senior
Parties, without notice or demand hereunder and without affecting
or impairing any of the obligations of any Subordinated Party
hereunder, from time to time to (a) renew, compromise, extend,
increase, accelerate or otherwise change the time for payment of,
or otherwise change the terms of, the Senior Obligations or any
part thereof or any security therefor; (b) take or hold security
for the payment of the Senior Obligations and exchange, enforce,
foreclose upon, waive or release any such security; (c) apply
such security and direct the order or manner of sale thereof as
the Senior Parties, in their sole discretion, may determine; (d)
release and substitute one or more endorsers, warrantors,
borrowers or other obligors; and (e) exercise or refrain from
exercising any rights against any Subordinated Party, the Company
or any other Person and otherwise deal freely with the Company.
3.5. Reaffirmation of Representations and Warranties.
Each Subordinated Party party to the Receivables Sale Agreement
or the Receivables Transfer Agreement, as the case may be,
reaffirms and repeats its respective representations and
<PAGE>
8
warranties contained in such Agreements and agrees that the Banks
and the Administrative Agent may rely on such representations and
warranties as though set forth herein in full.
ARTICLE IV
MISCELLANEOUS
4.1. Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed to the addresses in accordance with
subsection 11.9 of the Receivables Transfer Agreement.
4.2. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Company
and each Subordinated Party herein and in the certificates or
other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been
relied upon by the Administrative Agent and the holders of the
Senior Obligations and shall survive the execution and delivery
of the Transaction Documents, regardless of any investigation
made by the Administrative Agent or the holders of the Senior
Obligations or on their behalf, and shall continue in full force
and effect as long as any Senior Obligation is outstanding and
unpaid and so long as the Commitments have not been terminated.
4.3. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Company, the
Administrative Agent and each Subordinated Party and thereafter
shall be binding upon and inure to the benefit of the Company,
each Subordinated Party, the Administrative Agent and the Banks
and their respective successors and assigns, except that neither
the Company nor any Subordinated Party shall have the right to
assign or delegate its rights or duties hereunder.
4.4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
4.5. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the
Administrative Agent or the Banks, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein
<PAGE>
9
provided are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.
4.6. Waivers; Amendment. Neither this Agreement nor
any terms hereof may be waived, amended, supplemented or modified
except pursuant to an agreement or agreements in writing entered
into by the Company, each affected Subordinated Party and the
Administrative Agent. Each Senior Party shall be bound by any
waiver, amendment, supplement or modification authorized by this
Section.
4.7. WAIVER OF JURY TRIAL. THE COMPANY, THE SELLERS
AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
4.8. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
4.9. Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company and
the Administrative Agent.
4.10. Addition of Sellers. Subject to the terms and
conditions of the Receivables Sale Agreement, from time to time
one or more Subsidiaries of the C&A Products may become
additional Sellers parties to the Receivables Sale Agreement.
Upon any such Subsidiary becoming an additional Seller under the
Receivables Sale Agreement, such Subsidiary shall automatically
be deemed for all purposes hereunder to be a Seller under this
Agreement, commencing on the related Seller Addition Date.
<PAGE>
10
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers,
all as of the date first above written.
CARCORP, INC.
By:___________________________
Title:
CHEMICAL BANK, as Administrative
Agent
By:___________________________
Title:
The Sellers:
COLLINS & AIKMAN PRODUCTS CO.
By:___________________________
Title:
ACK-TI-LINING, INC.
By:_________________________
Title:
WCA CANADA, INC.
By:_________________________
Title:
IMPERIAL WALLCOVERINGS (CANADA),
INC.
By:_________________________
Title:
<PAGE>
11
IMPERIAL WALLCOVERINGS, INC.
By:_________________________
Title:
THE AKRO CORPORATION
By:_________________________
Title:
DURA ACQUISITION CORP.
By:_________________________
Title:
<PAGE>
EXHIBIT E TO THE
RECEIVABLES TRANSFER AGREEMENT
COLLINS & AIKMAN
as Master Servicer for Carcorp
Monthly Settlement Report
For Fiscal Period:
Beginning
Ending
I. CALCULATION OF RECEIVABLES BALANCE
A. Beginning Gross Receivables Balance
B. Receivables Created During Fiscal Month
C. Less: Cash Collections Occurring During Fiscal Month
Cash Discounts
Returns
Other Credits
D. Less: Total Dilutive Credits
Writeoffs
Recoveries
E. Less: Writeoffs Net of Recoveries
F. Ending Gross Receivables Balances for Fiscal Month
II. CALCULATION OF ELIGIBLITY PERCENTAGE
A. Gross Receivables Balance on Eligibility Determination Date
B. Less Amounts in Gross Receivables Which:
C. the Entity does not have lawful/absolute title; subject to a
lien by another
D. the Buyer does not have a legal, valid, binding 1st priority
security interest
E. the Entity does not have a full right to assign and grant a
lien to Buyers
F. are not payable in US Dollars or are not enforceable
obligations of the debtor
Less: receivables denominated in Canadian dollars
G. are subject to any bona fide dispute, claim, setoff or
counterclaim by debtor
H. are not evidenced by an invoice but by an instrument or
chattel paper
I. are not bona fide accounts:
(i) accounts from goods shipped on consignment
<PAGE>
(ii) accounts of services not performed or completed
J. The Receivables Debtor is any of the following:
(i) incorporated outside the US
Less: Canadian accounts which are otherwise eligible
accounts of Japanese Receivables Debtors
accounts incorporated outside the U.S. but supported by an
LOC
(ii.) any direct or indirect subsidiary of Holdings
(iii) a domestic or foreign government or agency
Less: receivables of the United States Gov't or agencies
thereof
(iv) is subject to bankruptcy or reorganization
K. Invoices outstanding 90 days past original invoice date (120
days for Imperial)
L. payment in respect of receivable has been returned for
insufficient funds
M. are placed with attorneys for collection
N. is a consumer credit card receivable w/o all consumer
protection laws
O. is a consumer credit card receivable with two or more missed
payments
P. is an account specified by the Administrative Agent
Q. Sum of Ineligible Receivables Specified Above
R. Eligible Receivables
Less: Receivables supported by an LOC in excess of 15% of
Adjusted Principal
Amount of Eligible Receivables
Less: United States government or agency Receivables in excess
of 3% of the Adjusted Principal Amount of Eligible Receivables
Less: Receivables denominated in Canadian dollars in excess of
10% of Adjusted Principal Amount of Eligible Receivables
Less: Balances in excess of obligor percentage (zero until 270
days after closing)
S. Remaining Eligible Receivables
T. Eligiblity Percentage [ (R) / (S) ]
<PAGE>
III. CALCULATION OF MAXIMUM INVESTED PERCENTAGE
Loss Reserve Ratio
A. Aggregate Adjusted Principal Amount of Receivables which were
90-119 days past due as of the last day of such fiscal month
B. Aggregate Adjusted Principal Amount of Receivables generated
by the Sellers during the fifth month prior to such fiscal month
C. Default Ratio (A/B)
D. The highest three month rolling average of the Default Ratio
that occurred during the last twelve fiscal months
E. Factor
F. The Aggregate Adjusted Principal Amount of Receivables
generated during the last 3.5 fiscal months
G. The outstanding Adjusted Principal Amount of Eligible
Receivables as of the last day of such fiscal month.
H. Loss Reserve Ratio (D*(F/G)*E)
Yield Reserve Ratio
I. Discount Rate = (Weighted Average Purchase Discount Amount
Rate in effect at the end of the last fiscal month + accrued fees
(other than the servicing fee) for such fiscal month / average
daily Net Investment during such fiscal month)
J. Days Sales Outstanding = 91 * (Amount of receivables at the
end of the last fiscal month - aggregate bad debt reserve at the
end of such fiscal month) / aggregate net sales for last 3 fiscal
months
K. Factor
L. Yield Reserve Ratio (I*J*K)/360
Servicing Reserve Percentage
M. Servicing Reserve Percentage
Dilution Reserve Percentage
N. Factor
O. Aggregate Dilutive Credits for last 12 fiscal months
P. Aggregate Adjusted Principal Amount of Receivables generated
during last fiscal 12 months
<PAGE>
Q. Average Dilution Ratio (O / P)
R. The Peak Dilution Ratio during the last 12 fiscal months
S. The aggregate Adjusted Principal Amount of Receivables
generated in last fiscal month divided by the aggregate Adjusted
Amount of Eligible Receivables for such fiscal month
T. Dilution Reserve Ratio ((N*Q)+(R-Q)*(R/Q)))*S
Required Reserve Percentage:
Sum of:
Loss Reserve Ratio
Yield Reserve Ratio
Servicing Reserve Ratio
Dilution Reserve Ratio
V. Total Required Reserve Percentage
Maximum Invested Percentage
W. 100% minus greater of 17% and the Required Reserve
Percentage
IV. MONTHLY AGINGS SUMMARY
Total
Outstanding 1 - 29 30 - 59 60 - 89 90-119 120 +
Balance of Days Days Days Days Days
Receivables Current Past Due Past Due Past Due Past
$
%
V. CONCENTRATIONS - TOP 5 OBLIGORS
Excess
% of Applicable over
Eligible Obligor Obligor
Balance Receivables Percentage Percentage
1.
2.
3.
4.
5.
<PAGE>
FINANCIAL COVENANTS
ACTUAL COVENANT
VI. LOSS TO LIQUIDATION RATIO
A. Writeoffs net of Recoveries during the last 12 fiscal months
B. Four times the aggregate amount of Collections during the last
3 fiscal months
C. Loss to Liquidation Ratio (A / B)
VII. DAYS SALES OUTSTANDING
A. DSO
VIII. % OF RECEIVABLES > 60 DAYS PAST DUE
A. All Receivables more than 60 days past due at the end of last
fiscal month
B. Gross Receivables balance at the end of such fiscal month
C. (A / B)
<PAGE>
EXHIBIT C TO THE RECEIVABLES SALE AGREEMENT
EXHIBIT F TO THE RECEIVABLES TRANSFER AGREEMENT
[FORM OF ADDITIONAL SELLER/SERVICER SUPPLEMENT]
SUPPLEMENT, dated _________________, to (i) the
Receivables Sale Agreement, dated as of July 13, 1994 (as
amended, the "Receivables Sale Agreement"), among Collins &
Aikman Products Co., a Delaware corporation ("C&A Products"), and
each of the subsidiaries of C&A Products from time to time
parties thereto (the "Sellers"), C&A Products, as master servicer
(in such capacity, the "Master Servicer"), and Carcorp, Inc., a
Delaware corporation (the "Company"), (ii) the Receivables
Transfer and Servicing Agreement, dated as of July 13, 1994 (as
amended, the "Receivables Transfer Agreement"), among the
Company, the Master Servicer, certain of the Sellers, in their
capacities as servicers of the Receivables (in such capacities,
the "Servicers"), the several financial institutions from time to
time parties thereto (the "Banks") and Chemical Bank, as
administrative agent for the Banks (in such capacity, the
"Administrative Agent"), and (iii) the Subordination Agreement,
dated as of July 13, 1994 (as amended, the "Subordination
Agreement"), among the Company, the Sellers from time to time
parties thereto and the Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Receivables Sale Agreement provides that
any Subsidiary of C&A Products, although not originally a Seller
thereunder, may become a Seller under the Receivables Sale
Agreement, with (i) the consent of the Company and the Required
Banks and (ii) the satisfaction of each of the conditions
precedent set forth in subsection 3.4 of the Receivables Sale
Agreement (one of which is the delivery to the Company of a
supplement in substantially the form of this Supplement);
WHEREAS, the Receivables Transfer Agreement provides
that any Subsidiary of C&A Products, although not originally a
Servicer thereunder, may become a Servicer under the Receivables
Transfer Agreement, with (i) the consent of the Company and the
Required Banks to such Subsidiary becoming a Seller under the
Receivables Sale Agreement, (ii) the delivery to the Company of a
supplement in substantially the form of this Supplement and (iii)
the satisfaction of each of the conditions precedent set forth in
subsection 3.4 of the Receivables Sale Agreement;
WHEREAS, the Subordination Agreement provides that any
Subsidiary of C&A Group, although not originally a Seller
thereunder, shall become a Seller under the Subordination
Agreement immediately upon such Subsidiary becoming a Seller
under the Receivables Sale Agreement; and
<PAGE>
2
WHEREAS, the undersigned was not an original Seller
under the Receivables Sale Agreement and the Subordination
Agreement or an original Servicer under the Receivables Transfer
Agreement but now desires to become a Seller and a Servicer,
respectively, thereunder.
NOW, THEREFORE, the undersigned hereby agrees as
follows:
1. The undersigned agrees to be bound by all of the
provisions of each of the Receivables Sale Agreement, the
Subordination Agreement and the Receivables Transfer
Agreement applicable to a Seller and a Servicer,
respectively, thereunder and agrees that it shall, on the
date this Supplement is accepted by the Company and the
Required Banks, become (a) in the case of the Receivables
Sale Agreement and the Subordination Agreement, a Seller and
(b) in the case of the Receivables Transfer Agreement, a
Servicer, for all purposes of the Receivables Sale
Agreement, the Subordination Agreement and the Receivables
Transfer Agreement, respectively, to the same extent as if
originally a party thereto.
2. Terms defined in Annex X to the Receivables
Transfer Agreement shall have their defined meanings when
used herein.
IN WITNESS WHEREOF, the undersigned has caused this
Supplement to be executed and delivered by a duly authorized
officer on the date first above written.
[Insert name of Seller/Servicer]
By________________________________
Title:
Accepted as of the date first
above written:
CARCORP, INC.
By:
Title:
[Required Banks]
By:
Title:
<PAGE>
EXHIBIT G TO THE
RECEIVABLES TRANSFER AGREEMENT
[FORM OF CLOSING CERTIFICATE]
[NAME OF CERTIFYING PARTY]
(a Delaware corporation)
Pursuant to subsection[s] 6.1(a)[, (f), (k), (m) and
(r)]* of the Receivables Transfer and Servicing Agreement, dated
as of July 13, 1994 (the "Receivables Transfer Agreement";
capitalized terms defined therein shall be used herein as therein
defined), among Carcorp, Inc., a Delaware corporation (the
"Company"), Collins & Aikman Products Co., a Delaware corporation
("C&A Products"), as master servicer (in such capacity, the
"Master Servicer"), C&A Products and each of the subsidiaries of
C&A Products from time to time parties thereto, in their
capacities as servicers (in such capacities, the "Servicers"),
the several financial institutions from time to time parties
thereto (the "Banks"), and Chemical Bank, a New York banking
corporation, as administrative agent for the Banks (in such
capacity, the "Administrative Agent"), the undersigned
___________ of __________________ (the "Certifying Party") hereby
certifies as follows:
[1. As of the date hereof, each of the conditions
precedent set forth in subsection 6.2 of the Receivables
Transfer Agreement has been satisfied;
2. As of the date hereof, all conditions to the
obligations of the Company and each of the Sellers under the
Receivables Sale Agreement have either been (i) satisfied or
(ii) waived by the Required Banks;
3. As of the date hereof (and after giving effect to
all of the transactions occurring on the Effective Date),
the Company is not "insolvent" under Section 101(32) of the
U.S. Bankruptcy Code (11 U.S.C. Section 101(32));
4. Attached hereto as Exhibit A is a true, correct and
complete copy of (a) the written Policies, or, to the extent
that the credit and collection policies of the Sellers are
not in written form at the date hereof, a written
description of the historical credit and collection
practices of the Sellers and proposed practices for the
Company and (b) the Company Policies;]*
5. As of the date hereof, the representations and
warranties of the Certifying Party set forth in
___________** of the Receivables Transfer Agreement are
true and correct in all material respects on and as of such
date;
*/ Insert bracketed language only in certificate of Company.
**/ Insert "Article V" in the case of the Company or subsection
12.6 in the case of the other Certifying Parties.
<PAGE>
2
6. ___________ is and at all times since ___ __, 199
has been, the duly elected and qualified [Secretary] of the
Certifying Party and the signature set forth for such
officer below is such officer's true and genuine signature;
and the undersigned [Secretary] of the Certifying Party certifies
as follows:
7. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Certifying
Party, nor has any other event occurred adversely affecting
or threatening the continued corporate existence of the
Certifying Party after the date hereof;
8. The Certifying Party is a corporation duly
organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation;
9. Attached hereto as Annex 1 is a correct and
complete copy of resolutions duly adopted by the Board of
Directors of the Certifying Party on __________ ___, 1994
authorizing (i) the execution, delivery and performance of
the Transaction Documents and the other documents executed
and delivered pursuant thereto to which it is a party and
(ii) the transactions contemplated by such Transaction
Documents and such other documents; such resolutions have
not in any way been amended, modified, revoked or rescinded
and have been in full force and effect since their adoption
to and including the date hereof and are now in full force
and effect; such resolutions are the only corporate
proceedings of the Certifying Party now in force relating to
or affecting the matters referred to therein; attached
hereto as Annex 2 is a correct and complete copy of the By-
Laws of the Certifying Party as in effect at all times since
____ __, 199 to and including the date hereof; and
attached hereto as Annex 3 is a correct and complete copy of
the Certificate of Incorporation of the Certifying Party as
in effect at all times since ____ __, 199 to and including
the date hereof, and such By-laws and Certificate have not
been amended, repealed, modified or restated;
10. The following persons are now duly elected and
qualified officers of the Certifying Party holding the
offices indicated next to their respective names below, and
such officers have held such offices with the Certifying
Party at all times since the date indicated next to their
respective titles to and including the date hereof, and the
signatures appearing opposite their respective names below
are the true and genuine signatures of such officers, and
each of such officers is duly authorized to execute and
deliver on behalf of the Certifying Party each of the
Transaction Documents and the other documents executed and
delivered pursuant thereto to which it is a party:
<PAGE>
3
Name Office Signature
IN WITNESS WHEREOF, the undersigned have hereunto set
our names as of the date set forth below.
By: By:
Title: Title:
Date: July __, 1994
<PAGE>
EXHIBIT H TO THE
RECEIVABLES TRANSFER AGREEMENT
CARCORP, INC.
Receivables Facility
Daily Report
Today's Date
Date of Processing
Daily Servicer Input
Gross Receivables Balance - Previous Date
Plus Can. dollar New Sales
Plus U.S. dollar New Sales
Less Can. dollar Collections
Less U.S. dollar Collections
Foreign Exchange Gain/(Loss)
Less Other Adjustments
Gross Receivables Balance - Today
Calculation of Maximum Transfer
Eligibility Percentage
Eligible Receivables
Required Reserve Percentage
Required Reserves
Maximum Transfer
Total in Cash Collateral Accounts
Beginning Balance
Plus New Earnings
Plus New Deposits
Less Contribution to Sources
Ending Balance
<PAGE>
Calculation of Net Investment
Net Investment - Previous
New Transfers Allowed / (Repmts. Req.'d)
Cash Received from New Transfers
Cash Repayments
Libor Tranche Maturities
ABR Balance
Cash Collateral Account
Net Investment - Today
Less Cash Collateral Balance
Aggregate Net Investment
Excess/(Shortfall) Maximum Transfer vs. Net Investment
Flow of Funds
SOURCES
Cash Collections Balance Available
Cash Collateral Balance Available
New Transfers
Capital Contribution
Total Sources
USES
Purchase Discount Payment
Bank Fee Payment
Net Investment Repayment
Operating Expense Payment
Servicer Fee Payment
Recvbls Purchase / Sub Note Repay / Dividends
Total Uses
<PAGE>
EXHIBIT I TO THE
RECEIVABLES TRANSFER AGREEMENT
CARCORP, INC.
RECEIVABLES SALE AGREEMENT
Dated as of July 13, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . 3
2.3 Payment of Purchase Price . . . . . . . . . . . . . . . . 3
2.4 No Repurchase . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Rebates, Adjustments, Returns and Reductions;
Modifications . . . . . . . . . . . . . . . . . . . . . 5
2.6 Limited Repurchase Obligation . . . . . . . . . . . . . . 5
2.7 Obligations Unaffected . . . . . . . . . . . . . . . . . 6
2.8 Certain Charges . . . . . . . . . . . . . . . . . . . . . 6
2.9 Certain Allocations . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial Purchase of
Receivables . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Conditions Precedent to All the Company's Purchases of
Receivables . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Conditions Precedent to Sellers' Obligations . . . . . . 8
3.4 Conditions Precedent to the Addition of a Seller . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Sellers Relating to
the Sellers . . . . . . . . . . . . . . . . . . . . . . 10
(a) Organization, Corporate Powers . . . . . . . . . . 10
-i-
<PAGE>
Page
(b) Authorization . . . . . . . . . . . . . . . . . . 10
(c) Enforceability . . . . . . . . . . . . . . . . . . 11
(d) Capitalization . . . . . . . . . . . . . . . . . . 11
(e) Litigation; Compliance with Laws . . . . . . . . . 11
(f) Agreements . . . . . . . . . . . . . . . . . . . . 11
(g) Tax Returns . . . . . . . . . . . . . . . . . . 12
(h) No Material Misstatements . . . . . . . . . . . . 12
(i) Employee Benefit Plans . . . . . . . . . . . . . . 13
(j) Solvency . . . . . . . . . . . . . . . . . . . . . 13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) Indebtedness to Company. . . . . . . . . . . . . . 13
(m) Lockboxes. . . . . . . . . . . . . . . . . . . . . 13
(n) Filings . . . . . . . . . . . . . . . . . . . . . 14
(o) Receivables Documents . . . . . . . . . . . . . . 14
4.2 Representations and Warranties of the Sellers Relating to
the Agreement and the Receivables . . . . . . . . . . . 14
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Certificates; Other Information . . . . . . . . . . . . . 16
5.2 Compliance with Laws, etc. . . . . . . . . . . . . . . . 16
5.3 Preservation of Corporate Existence . . . . . . . . . . . 16
5.4 Visitation Rights . . . . . . . . . . . . . . . . . . . . 16
5.5 Keeping of Records and Books of Account . . . . . . . . . 17
5.6 Location of Records . . . . . . . . . . . . . . . . . . . 17
5.7 Computer Files . . . . . . . . . . . . . . . . . . . . . 17
5.8 Policies . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 Taxes; ERISA . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Collections . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Lockbox Agreements; Lockbox Accounts . . . . . . . . . . 18
5.12 Furnishing Copies, etc . . . . . . . . . . . . . . . . . 19
5.13 Obligations with Respect to Obligors and Receivables . . 19
5.14 Responsibilities of the Sellers . . . . . . . . . . . . 19
5.15 Further Action . . . . . . . . . . . . . . . . . . . . . 20
5.16 Certain Procedures
6.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Extension or Amendment of Receivables . . . . . . . . . . 22
6.3 Change in Payment Instructions to Obligors . . . . . . . 22
6.4 Change in Name . . . . . . . . . . . . . . . . . . . . . 22
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<PAGE>
6.5 Modification of Ledger . . . . . . . . . . . . . . . . . 22
6.6 Business of the Sellers . . . . . . . . . . . . . . . . . 23
6.7 Accounting of Purchases . . . . . . . . . . . . . . . . . 23
6.8 Chattel Paper . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Ineligible Receivables . . . . . . . . . . . . . . . . . 23
ARTICLE VII
PURCHASE TERMINATION EVENTS . . . . . . . . 23
ARTICLE VIII
THE SUBORDINATED NOTES
8.1 Subordinated Notes . . . . . . . . . . . . . . . . . . . 25
8.2 Restrictions on Transfer of Subordinated Notes . . . . . 25
ARTICLE IX
MISCELLANEOUS
9.1 Further Assurances . . . . . . . . . . . . . . . . . . . 26
9.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . 26
9.4 Successors and Assigns . . . . . . . . . . . . . . . . . 27
9.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 27
9.6 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 28
9.7 Amendments and Waivers . . . . . . . . . . . . . . . . . 28
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . 28
9.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 28
9.11 Construction of Agreement as Security Agreement . . . . 29
9.12 Waivers of Jury Trial . . . . . . . . . . . . . . . . . 29
9.13 Jurisdiction; Consent to Service of Process . . . . . . 29
9.14 Addition of Sellers . . . . . . . . . . . . . . . . . . 30
9.15 Optional Termination of Seller . . . . . . . . . . . . . 30
9.16 No Bankruptcy Petition . . . . . . . . . . . . . . . . . 31
9.17 Termination . . . . . . . . . . . . . . . . . . . . . . 31
9.18 Confidentiality . . . . . . . . . . . . . . . . . . . . 31
ANNEX X Definitions
-iii-
<PAGE>
Page
SCHEDULES
1 Locations of Chief Executive Offices; Locations of
Books and Records
2 Lockboxes
3 Discounted Percentage
4 Tax Matters
EXHIBITS
A Form of U.S. Dollar Subordinated Note
BB Form of Canadian Dollar Subordinated Note
CC Form of Additional Seller Supplement
-iv-
<PAGE>
RECEIVABLES SALE AGREEMENT, dated as of July 13, 1994,
among Collins & Aikman Products Co., a Delaware corporation ("C&A
Products"), Ack-Ti-Lining, Inc., WCA Canada, Inc., Imperial
Wallcoverings (Canada), Inc., Imperial Wallcoverings, Inc., The
Akro Corporation, Dura Acquisition Corp. and each of the other
subsidiaries of C&A Products from time to time parties hereto
(each of the foregoing, a "Seller"), C&A Products, as Master
Servicer (in such capacity, the "Master Servicer"), and Carcorp,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, in the ordinary course of business, each
Seller generates accounts receivable; and
WHEREAS, each Seller desires to sell to the Company,
and the Company is willing to purchase from such Seller, all of
such Seller's right, title and interest in, to and under the
Receivables (as defined herein) now existing or hereafter created
and the rights of such Seller in, to and under all Related
Property (as so defined) related thereto;
NOW, THEREFORE, in consideration of the premises and of
the mutual covenants herein contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized terms used in this
Agreement shall have the respective meanings assigned to such
terms in Annex X hereto unless otherwise defined herein.
1.2 Other Definitional Provisions. (a) The words
"hereof", "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and
article, section, subsection, schedule and exhibit references are
to this Agreement unless otherwise specified.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms
relating to the Sellers and the Company, unless otherwise defined
herein, shall have the respective meanings given to them under
generally accepted accounting principles.
(c) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
<PAGE>
2
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables. (a) By
execution of this Agreement, each of the Sellers does hereby
sell, transfer, assign, set over and otherwise convey, without
recourse (except as expressly provided herein), to the Company,
on the Effective Date, all Receivables owned by the Sellers at
the close of business on the Effective Date and all Related
Property in respect of such Receivables. Subject to Article VII,
as of each Payment Date, each of the Sellers does hereby sell,
transfer, assign, set over and otherwise convey, without recourse
(except as expressly provided herein), to the Company, all of its
right, title and interest in, to and under all Receivables owned
by the Sellers at the close of business on such Payment Date and
not theretofore conveyed to the Company and all Related Property
in respect of such Receivables. The foregoing sale, transfer,
assignment, set-over and conveyance and any subsequent sales,
transfers, assignments, set-overs and conveyances do not
constitute, and are not intended to result in, the creation or an
assumption by the Company or any other Person of any obligation
of the Sellers in connection with the Receivables or under any
agreement or instrument relating thereto, including any
obligation to any Obligor.
(b) On the Effective Date and on the date of creation
of each newly created Receivable, all of the applicable Seller's
right, title and interest in and to (i) in the case of the
Effective Date, all existing Receivables and Related Property in
respect of such Receivables and (ii) in the case of each such
date of creation, all such newly created Receivables and all
Related Property in respect of such Receivables shall be
immediately and automatically sold, assigned, transferred and
conveyed to the Company pursuant to paragraph (a) above without
any further action by such Seller or any other Person. If any
Seller shall not have received payment from the Company of the
Purchase Price for any newly created Receivable on the Payment
Date therefor in accordance with the terms of subsection 2.3(c),
such newly created Receivable and the Related Property with
respect thereto shall, upon receipt of notice from the applicable
Seller of such failure to receive payment, immediately and
automatically be sold, assigned, transferred and reconveyed by
the Company to such Seller without any further action by the
Company or any other Person.
(c) In connection with the foregoing conveyances, each
Seller agrees to record and file, or cause to be recorded and
filed, at its own expense, financing statements (and continuation
statements with respect to such financing statements when
applicable), and any other similar instruments, with respect to
the Receivables and Related Property now existing and hereafter
acquired by the Company from the Sellers meeting the requirements
of applicable law in such manner and in such jurisdictions as are
necessary to perfect the purchases of the Receivables and Related
Property by the Company from the Sellers, and to deliver evidence
of such filings to the Company on or prior to the Effective Date.
The parties hereto intend that the transfer of Receivables
effected by this Agreement be sales.
(d) In connection with the foregoing conveyances, each
Seller agrees at its own expense, as agent of the Company, that
it will (i) indicate or cause to be indicated on the
<PAGE>
3
computer files and other listings relating to the Receivables that all
Receivables and Related Property have been sold to the Company
and that the Company has sold an interest therein and has granted
a security interest in the Company's retained interest therein
and (ii) deliver or cause to be delivered to the Company computer
files, microfiche lists or typed or printed lists containing true
and complete lists of all such Receivables, identified by Obligor
and by the Receivables balance as of June 15, 1994.
2.2 Purchase Price. The amount payable by the Company
to a Seller (the "Purchase Price") for newly created Receivables
and Related Property on any Payment Date under this Agreement
shall be equal to the product of (a) the aggregate outstanding
Principal Amount of such Receivables as set forth in the
applicable Daily Report and (b) the Discounted Percentage with
respect to such Seller. To the extent the Purchase Price of any
Receivable is denominated in Canadian Dollars, the Dollar
equivalent of such Purchase Price shall be equal to the Canadian
Exchange Percentage thereof.
2.3 Payment of Purchase Price. (a) Upon fulfillment
of the conditions set forth in Article III, the Purchase Price
for Receivables and the Related Property shall be paid or
provided for in the manner provided below on each day for which a
Daily Report is prepared and delivered to the Company (each such
day, a "Payment Date"). Each Seller hereby appoints the Master
Servicer as its agent to receive payment of the Purchase Price
for Receivables sold by it to the Company and hereby authorizes
the Company to make all payments due to such Seller directly to,
or as directed by, the Master Servicer. The Master Servicer
hereby accepts and agrees to such appointment.
(b) The Purchase Price for Receivables and the Related
Property with respect thereto purchased by the Company on the
Effective Date from each Seller shall be paid by the Company as
follows:
(i) in cash from the net proceeds of the sale of an
interest in such Purchased Receivables by the Company to
other Persons; and
(ii) in cash from the proceeds of capital contributed
by C&A Products to the Company in respect of its equity
interest in the Company.
(c) The Purchase Price for Receivables and the Related
Property with respect thereto purchased by the Company on any
Payment Date after the Effective Date shall be paid by the
Company on such Payment Date as follows:
(i) by netting the amount of any Seller Adjustment
Payments or Seller Repurchase Payments pursuant to
subsection 2.5 or 2.6 against such Purchase Price;
(ii) to the extent available for such purpose, in cash
from Collections; it being understood that Canadian Dollar
cash Collections shall be applied solely to the Purchase
Price of Canadian Dollar denominated Receivables;
<PAGE>
4
(iii) to the extent available for such purpose, in cash
from the net proceeds of the sale of an interest in such
Purchased Receivables by the Company to other Persons;
(iv) at the option of the Company, by means of an
addition to the principal amount of the Canadian Dollar
Subordinated Note or U.S. Dollar Subordinated Note, as
appropriate in accordance with this subsection, in an
aggregate amount equal to the remaining portion of the
Purchase Price; provided, however, that the Company may pay
by means of additions to the principal amount of either
Subordinated Note only if, at the time of such payment and
after giving effect thereto, the fair market value of its
assets, including any beneficial interests or indebtedness
of a trust and all Receivables and Related Property it owns,
after giving effect for this purpose to any Adjustments with
respect to the Purchased Receivables or any participation
interest therein sold to the Banks under the Receivables
Transfer Agreement, is greater than the amount of its
liabilities including its liabilities on the Subordinated
Notes and in respect of the Purchase Discount Amounts and
all fees payable under the Receivables Transfer Agreement.
Any such addition to the principal amount of the
Subordinated Notes shall be allocated among the Sellers by
the Master Servicer provided, however, that additions to the
principal amount of the Canadian Dollar Subordinated Note
may only be made to evidence the purchase price of
Receivables denominated in Canadian Dollars and additions to
the U.S. Dollar Subordinated Note may only be made to
evidence the purchase price of Receivables denominated in
Dollars. The Master Servicer may evidence such payments by
means of additions to the principal amount of the
appropriate Subordinated Note by recording the date and
amount thereof on the books and records of the Master
Servicer or the Sellers or on the grid attached to such
Subordinated Note; provided that the failure to make any
such recordation or any error in such grid shall not
adversely affect any Seller's rights; and
(v) in cash from the proceeds of capital contributed
by C&A Products to the Company in respect of its equity
interest in the Company.
(d) The Master Servicer may allocate among the Sellers
the payment of the Purchase Price for Receivables and any amounts
netted therefrom pursuant to subsection 2.3(c)(i). The Company
shall be entitled to pay all amounts in respect of the Purchase
Price of Receivables to an account of the Master Servicer without
regard to whether or how such payments are allocated by the
Master Servicer to the Sellers. All payments under this
Agreement (i) to the extent such payments are made in Canadian
Dollars, shall be made on the date specified therefor in Canadian
Dollars in same day funds or by check, as the Master Servicer
shall elect, (ii) in all other cases, shall be made on the date
specified therefor in Dollars in same day funds or by check, as
the Master Servicer shall elect, (iii) in all cases, shall be
made not later than 3:00 p.m (New York City time) and (iv) shall
be made (x) if to any Seller, to the bank account for such Seller
designated in writing by the Master Servicer to the Company and
(y) if to the Master Servicer, to the bank account designated in
writing by the Master Servicer to the Company.
<PAGE>
5
(e) Whenever any payment to be made under this
Agreement shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding
Business Day. Amounts not paid when due in accordance with the
terms of this Agreement shall bear interest at a rate equal at
all times to the ABR plus the Applicable ABR Margin plus 2%,
payable on demand.
2.4 No Repurchase. Except to the extent expressly set
forth herein, no Seller shall have any right or obligation under
this Agreement, by implication or otherwise, to repurchase from
the Company any Purchased Receivables or Related Property or to
rescind or otherwise retroactively effect any purchase of any
Purchased Receivables or Related Property after the Payment Date
relating thereto.
2.5 Rebates, Adjustments, Returns and Reductions;
Modifications. From time to time a Seller may make Adjustments
to Receivables in accordance with this subsection 2.5 and
subsection 6.2. The Sellers, jointly and severally, agree to pay
to the Company, on the Payment Date immediately succeeding the
date of the grant of any Adjustment (regardless of which Seller
shall have granted such Adjustment), the amount of any such
Adjustment (a "Seller Adjustment Payment"); provided, that, prior
to any Purchase Termination Event, any such payments to the
Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(c)(i). An
"Adjustment" shall mean any rebate, discount, refund or
adjustment (including, without limitation, as a result of the
application of any special or other discounts or any
reconciliations) of any Receivable, the amount owing for any
returns (including, without limitation, as a result of the return
of any stale goods) or cancellations and the amount of any other
reduction of any payment under any Receivable in each case
granted or made by the applicable Seller to the related Obligor,
provided, that, an "Adjustment" does not include any Charge-Off.
The amount of any Adjustment shall be set forth on the first
Daily Report prepared after the date of the grant thereof.
2.6 Limited Repurchase Obligation. In the event that
any of the representations or warranties contained in subsection
4.2 in respect of any Receivable shall be or have been incorrect
in any material respect as of the date made or deemed made, or
any Eligible Receivable shall become subject to any defense,
dispute, offset or counterclaim of any kind (other than as
expressly permitted by this Agreement) or any Seller shall breach
any covenant contained in subsection 5.2, 5.8, 6.1, 6.2, 6.3,
6.4, 6.5, 6.8 or 6.9 with respect to any Receivable (each of the
foregoing events or circumstances, a "Repurchase Event"), such
Receivable shall cease to be an Eligible Receivable on the date
on which such Repurchase Event occurs. In addition, if any
Repurchase Event shall occur with respect to any Receivable, then
the Sellers, jointly and severally, agree to pay to the Company
an amount (the "Repurchase Amount") equal to the Purchase Price
of such Receivable (whether the Company paid such Purchase Price
in cash or otherwise) less Collections received by the Company in
respect of such Receivable, regardless of which Seller shall have
been responsible for such Repurchase Event, such payment to occur
on the 30th day after the day such Repurchase Event becomes known
(or should have become known with due diligence) to any Seller
(except that if such 30th day is not a Business Day, such payment
shall be made on the Business Day immediately succeeding such
30th day) unless such Repurchase Event shall have been cured on
or before such 30th day; provided, that, prior to the occurrence of
<PAGE>
6
any Purchase Termination Event, any such payments to the
Company shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.3(c)(i). Any
payment by any Seller pursuant to this subsection 2.6 is referred
to as a "Seller Repurchase Payment". If, on or prior to such
30th day (or the Business Day immediately succeeding such 30th
day, as applicable), any Seller shall so reacquire any such
Receivable, then
the Company shall have no further remedy against the Sellers in
respect of the Repurchase Event with respect to such reacquired
Receivable. Upon a Seller Repurchase Payment, the Company shall
automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the applicable
Seller, without recourse, representation or warranty, all the
right, title and interest of the Company in, to and under such
Receivable and the Related Property with respect thereto. The
Company shall execute such documents and instruments of transfer
or assignment and take such other actions as shall reasonably be
requested by such Seller to effect the conveyance of such
Receivable pursuant to this section 2.6.
2.7 Obligations Unaffected. The obligations of the
Sellers to the Company under this Agreement shall not be affected
by reason of any invalidity, illegality or irregularity of any
Receivable or any sale of a Receivable.
2.8 Certain Charges. Each of the Sellers and the
Company agrees that late charge revenue, reversals of discounts,
other fees and charges and other similar items, whenever created,
accrued in respect of Purchased Receivables shall be the property
of the Company notwithstanding the occurrence of an Early
Termination, and all Collections with respect thereto shall
continue to be allocated and treated as Collections in respect of
Purchased Receivables.
2.9 Certain Allocations. Each of the Sellers hereby
agrees that, following the occurrence of an Early Termination in
respect of any Seller, all Collections and other proceeds
received in respect of Receivables generated by such Seller shall
be applied first, to pay the outstanding Principal Amount of
Purchased Receivables (as of the date of such Early Termination)
of the Obligor to whom such Collections are attributable until
such Purchased Receivables are paid in full and, second, to such
Seller to pay Receivables of such Obligor not sold to the
Company; provided, however, that notwithstanding the foregoing,
if any such Seller can attribute a Collection to a specific
Obligor and a specific Receivable, then such Collection shall be
applied to pay such Receivable of such Obligor.
ARTICLE III
CONDITIONS TO PURCHASE AND SALE
3.1 Conditions Precedent to the Company's Initial
Purchase of Receivables. The obligation of the Company to
purchase the Receivables and the Related Property hereunder on
the Effective Date from any Seller is subject to the conditions
precedent, which may be waived by the Company, that (a) each of
the Sale Documents shall be in full force
<PAGE>
7
and effect and (b) the conditions set forth below shall have been
satisfied on or before the Effective Date:
(i) the Company shall have received copies of duly
adopted resolutions of the Board of Directors of each Seller
as in effect on the Effective Date and in form and substance
reasonably satisfactory to the Company, authorizing this
Agreement, the documents to be delivered by such Seller
hereunder and the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of such
Seller;
(ii) the Company shall have received duly executed
certificates of the Secretary or an Assistant Secretary of
each Seller, dated the Effective Date and in form and
substance reasonably satisfactory to the Company, certifying
the names and true signatures of the officers authorized on
behalf of such Seller to sign this Agreement and any
instruments or documents in connection with this Agreement;
(iii) each Seller shall have filed and recorded, at its
own expense, UCC-1 financing statements (and other similar
instruments) with respect to the Receivables and the Related
Property in such manner and in such jurisdictions as are
necessary or desirable to perfect the Company's ownership
interest thereof under the Uniform Commercial Code (or any
other similar law) and delivered evidence of such filings to
the Company on or prior to the Effective Date; and all other
action necessary or desirable, in the reasonable judgment of
the Company, to perfect the Company's ownership of the
Receivables shall have been duly taken;
(iv) each Seller shall have delivered to the Company a
microfiche, typed or printed list or other tangible evidence
reasonably acceptable to the Company showing as of a date no
later than five Business Days preceding the Effective Date,
the Obligors whose Receivables are to be transferred to the
Company on the Effective Date and the balance of the
Receivables with respect to each such Obligor as of such
preceding date; and
(v) the Company shall have received reports of UCC-1
and other searches of the Sellers with respect to the
Receivables and the Related Property reflecting the absence
of Liens thereon, except Liens created in connection with
the sale by the Company of an interest in the Purchased
Receivables and except for Liens as to which the Company has
received Uniform Commercial Code termination statements to
be filed on or prior to the Effective Date.
3.2 Conditions Precedent to All the Company's
Purchases of Receivables. The obligation of the Company to pay a
Seller for any Receivable and the Related Property with respect
thereto on each Payment Date (including the Effective Date) shall
be subject to the further conditions precedent, which may be
waived by the Company, that on such Payment Date:
(a) the following statements shall be true (and the
acceptance by such Seller of the Purchase Price for any
Receivables on any Payment Date shall constitute a
<PAGE>
8
representation and warranty by such Seller that on such
Payment Date such statements are true):
(i) the representations and warranties of such
Seller contained in subsections 4.1 and 4.2 shall be
true and correct in all material respects on and as of
such Payment Date as though made on and as of such
date, except insofar as such representations and
warranties are expressly made only as of another date;
and
(ii) no Purchase Termination Event or Incipient
Purchase Termination Event shall have occurred and be
continuing; and
(iii) there has been no material adverse change
since the date of this Agreement in the collectibility
of the Receivables (other than due to a change in the
creditworthiness of the Obligors);
(b) the Company shall be satisfied that such Seller's
systems, procedures and record-keeping relating to the
Purchased Receivables are in all material respects
sufficient and satisfactory in order to permit the purchase
and administration of the Purchased Receivables in
accordance with the terms and intent of this Agreement (it
being understood and agreed that as of the date hereof, the
Sellers' systems, procedures and record-keeping relating to
the Receivables are in all material respects sufficient and
satisfactory);
(c) the Company shall have received payment in full of
all amounts for which payment is due from such Seller
pursuant to subsection 2.5, 2.6 or 9.3;
(d) the Company shall have received such other
approvals, opinions or documents as the Company may
reasonably request; and
(e) such Seller shall have complied with all of its
covenants in all material respects and satisfied all of its
obligations in all material respects under this Agreement
required to be complied with or satisfied as of such date;
provided, however, that the failure of any Seller to satisfy any
of the foregoing conditions shall not prevent such Seller from
subsequently selling Receivables upon satisfaction of all such
conditions or exercising its rights under subsection 2.1(b).
3.3 Conditions Precedent to Sellers' Obligations.
(a) The obligations of each Seller on the Effective Date shall
be subject to the conditions precedent that such Seller shall
have received on or before the Effective Date the following, each
dated the Effective Date and in form and substance satisfactory
to such Seller:
(i) a copy of duly adopted resolutions of the Board of
Directors of the Company authorizing this Agreement, the
documents to be delivered by the Company
<PAGE>
9
hereunder and the transactions contemplated hereby, certified
by the Secretary or Assistant Secretary of the Company; and
(ii) a duly executed certificate of the Secretary or
Assistant Secretary of the Company certifying the names and
true signatures of the officers authorized on its behalf to
sign this Agreement and the other documents to be delivered
by it hereunder.
(b) The obligations of each Seller on each Payment
Date shall be subject to the condition precedent that no
Termination Event set forth in paragraph (f) of Article IX of the
Receivables Transfer Agreement shall have occurred and be
continuing.
3.4 Conditions Precedent to the Addition of a Seller.
No Subsidiary of C&A Products approved by the Company as an
additional Seller pursuant to subsection 9.14 shall be added as a
Seller hereunder unless the conditions set forth below shall have
been satisfied on or before the date designated for the addition
of such Seller (the "Seller Addition Date"):
(i) the Company shall have received an Additional
Seller Supplement substantially in the form of Exhibit C
hereto, duly executed and delivered by such Seller;
(ii) the Company shall have received copies of duly
adopted resolutions of the Board of Directors of such Seller
as in effect on the related Seller Addition Date and in form
and substance reasonably satisfactory to the Company,
authorizing this Agreement, the documents to be delivered by
such Seller hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of
such Seller;
(iii) the Company shall have received duly executed
certificates of the Secretary or an Assistant Secretary of
such Seller dated the related Seller Addition Date and in
form and substance reasonably satisfactory to the Company,
certifying the names and true signatures of the officers
authorized on behalf of such Seller to sign the Additional
Seller Supplement or any instruments or documents in
connection with this Agreement;
(iv) a Lockbox Account with respect to Receivables to
be sold by such Seller shall have been established in the
name of the Company;
(v) such Seller shall have filed and recorded, at its
own expense, UCC-1 financing statements (and other similar
instruments) with respect to the Receivables and the Related
Property in such manner and in such jurisdictions as are
necessary or desirable to perfect the Company's ownership
interest thereof under the Uniform Commercial Code (or any
other similar law) and delivered evidence of such filings to
the Company on or prior to the date hereof; and all other
action necessary or desirable, in the opinion of the
Company, to perfect the Company's ownership of the
Receivables shall have been duly taken;
<PAGE>
10
(vi) such Seller shall have delivered to the Company a
microfiche, a typed or printed list or other tangible
evidence reasonably acceptable to the Company showing as of
a date acceptable to the Company prior to the related Seller
Addition Date the Obligors whose Receivables are to be
transferred to the Company and the balance of the
Receivables with respect to each such Obligor as of such
date; and
(vii) the Company shall have received reports of UCC-1
and other searches of such Seller with respect to the
Receivables and the Related Property reflecting the absence
of Liens thereon, except Liens created in connection with
the sale by the Company of an interest in the Purchased
Receivables and except for Liens as to which the Company has
received Uniform Commercial Code termination statements to
be filed on or prior to the related Seller Addition Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Sellers
Relating to the Sellers. Each Seller hereby represents and
warrants to the Company on the Effective Date and on each Payment
Date that:
(a) Organization, Corporate Powers. It (i) is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, (ii) has all requisite corporate power and
authority, and all material licenses, permits, franchises,
consents and approvals, to own or lease its property and
assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified and in good
standing as a foreign corporation to do business in every
jurisdiction where such qualification is necessary, except
where the failure so to qualify would not have a Material
Adverse Effect and (iv) has the corporate power and
authority to execute, deliver and perform this Agreement and
each of the other Sale Documents to which it is a party and
each other agreement or instrument contemplated hereby or
thereby to which it is or will be a party. It does not have
any assets or business, nor is it a party to any material
contract within the meaning of Item 6.01(b)(10) of
Regulation S-K of the Securities and Exchange Commission,
other than as disclosed or referred to in the registration
statement of which the Preliminary Prospectus is a part or
as contemplated hereby and thereby.
(b) Authorization. The execution, delivery and
performance by it of this Agreement and each of the other
Sale Documents to which it is a party, the sale of
Receivables by it hereunder and the consummation of the
other transactions contemplated by any of the foregoing
(collectively, the "Sale Transactions") (i) have been duly
authorized by all requisite corporate and, if required,
stockholder action and (ii) will not (x) violate (A) any
provision of law, statute, rule or regulation (including,
without limitation, Regulations G, T, U and X) or the
certificate of incorporation or by-laws (or similar
governing documents) of such Seller, (B) any applicable
order of
<PAGE>
11
any court or any rule, regulation or order of any
Governmental Authority or (C) any indenture, certificate of
designation for preferred stock, agreement or other
instrument to which such Seller is a party or by which it or
any of its property is bound, (y) be in conflict with,
result in a breach of or constitute (with notice or lapse of
time or both) a default under any such indenture, agreement
or other instrument where any such conflict, violation,
breach or default referred to in clause (ii)(x) or (ii)(y)
of this subsection, individually or in the aggregate, would
have a Material Adverse Effect or (z) result in the creation
or imposition of any Lien upon any of its property or
assets, except for Liens created under this Agreement and
Liens created in connection with the sale by the Company of
an interest in the Receivables.
(c) Enforceability. Each of this Agreement and each
of the other Sale Documents to which it is a party has been
duly executed and delivered by such Seller and constitutes a
legal, valid and binding obligation of such Seller
enforceable against it in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may
be limited by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(d) Capitalization. All of its Capital Stock is owned
directly or indirectly by C&A Products.
(e) Litigation; Compliance with Laws. (1) Except as
described in the registration statement of which the
Preliminary Prospectus is a part, there are not any actions,
suits or proceedings at law or in equity or by or before any
court or Governmental Authority now pending or, to the
knowledge of such Seller, threatened against or affecting
such Seller or any of its property or rights as to which
there is a reasonable possibility of an adverse
determination and which (i) if adversely determined, could
individually or in the aggregate result in a Material
Adverse Effect or (ii) involve the Transaction Documents or
(iii) if adversely determined, could materially adversely
affect the Sale Transactions.
(2) It is not in default with respect to any law,
order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default
could have a Material Adverse Effect. The sales hereunder
and the use of the proceeds thereof will not violate any
applicable law or regulation or violate or be prohibited by
any judgment, writ, injunction, decree or order of any court
or Governmental Authority or subject such Seller to any
civil or criminal penalty or fine. No Purchase Termination
Event or Incipient Purchase Termination Event has occurred
and is continuing.
(f) Agreements. (1) It is not a party to any
agreement or instrument or subject to any corporate
restriction that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
<PAGE>
12
(2) It is not in default in any manner under any
provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or
instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, in either case
where such default could result in a Material Adverse
Effect.
(g) Tax Returns. It has filed or caused to be filed
all Federal, and all material state, local and foreign, tax
returns required to have been filed by it and has paid or
caused to be paid all taxes shown thereon to be due and
payable, and any assessments in excess of $2,000,000 in the
aggregate received by it, except taxes the amount or
validity of which are currently being contested in good
faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on its
books and taxes, assessments, charges, levies or claims in
respect of property taxes for property that it has
determined to abandon where the sole recourse for such tax,
assessment, charge, levy or claim is to such property. It
has paid in full or made adequate provision (in accordance
with GAAP) for the payment of all taxes due with respect to
the periods ending on or before January 29, 1994, which
taxes, if not paid or adequately provided for, would have a
Material Adverse Effect. The tax returns of such Seller
have been examined by relevant Federal tax authorities for
all periods through January 26, 1985, and all deficiencies
asserted as a result of such examinations have been paid.
Except as set forth on Schedule 4, as of the Effective Date,
with respect to such Seller, (i) no material claims are
being asserted in writing with respect to any taxes, (ii) no
presently effective waivers or extensions of statutes of
limitation with respect to taxes have been given or
requested, (iii) no tax returns are being examined by, and
no written notification of intention to examine has been
received from, the Internal Revenue Service or any other
taxing authority and (iv) no currently pending issues have
been raised in writing by the Internal Revenue Service or
any other taxing authority. For purposes of this paragraph,
"taxes" shall mean any present or future tax, levy, impost,
duty, charge, assessment or fee of any nature (including
interest, penalties and additions thereto) that is imposed
by any Governmental Authority.
(h) No Material Misstatements. The information,
reports, financial statements, exhibits and schedules
furnished by or on behalf of such Seller to the Company in
connection with the negotiation of any Sale Document or
included therein or delivered pursuant thereto did not
contain and will not contain as of the Effective Date any
material misstatement of fact and did not omit and will not
omit to state as of the Effective Date any material fact
necessary to make the statements therein, in the light of
the circumstances under which they were, are or will be
made, not materially misleading in their presentation of the
Sale Transactions or such Seller.
<PAGE>
13
(i) Employee Benefit Plans. Each of such Seller and
each of its ERISA Affiliates is in compliance in all
material respects with the applicable provisions of ERISA
and the regulations and published interpretations thereunder
except for such noncompliance which would not be expected to
result in a Material Adverse Effect. No Reportable Event
has occurred as to which such Seller or any of its ERISA
Affiliates was required to file a report with the PBGC,
other than reports for which the 30 day notice requirement
is waived, reports that have been filed and reports the
failure of which to file would not result in a Material
Adverse Effect and, as of the Effective Date, the present
value of all benefit liabilities under each Plan of such
Seller or any of its ERISA Affiliates (on a termination
basis and based on those assumptions used to fund such Plan)
did not, as of the last annual valuation report applicable
thereto, exceed by more than $7,500,000 the value of the
assets of such Plan. None of such Seller or any of its
ERISA Affiliates has incurred or could reasonably be
expected to incur any Withdrawal Liability that could result
in a Material Adverse Effect. None of such Seller or any of
its ERISA Affiliates has received any notification that any
Multiemployer Plan is in reorganization or has been termi-
nated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorgan-
ization or to be terminated where such reorganization or
termination has resulted or could reasonably be expected to
result, through increases in the contributions required to
be made to such Plan or otherwise, in a Material Adverse
Effect.
(j) Solvency. The fair salable value of the assets of
such Seller exceeds the amount that will be required to be
paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of such
Seller. The assets of such Seller do not constitute
unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Such Seller does
not intend to, or believe that it will, incur debts beyond
its ability to pay such debts as they mature (taking into
account the Recapitalization Transactions but assuming that
the Overallotment Option is not exercised).
(k) Absence of Certain Restrictions. No indenture,
certificate of designation for preferred stock, agreement or
other instrument to which such Seller or any of its
Subsidiaries is a party will prohibit or materially
restrain, or have the effect of prohibiting or materially
restraining, or imposing materially adverse conditions upon,
the sale of Receivables or the granting of Liens thereon.
(l) Indebtedness to Company. Immediately prior to
consummation of the transactions contemplated hereby on the
Effective Date, it had no outstanding Indebtedness to the
Company.
(m) Lockboxes. Set forth in Schedule 2 is a complete
and accurate description as of the Effective Date of each
Lockbox Account currently maintained by such Seller. Each
of the Lockbox Agreements, once entered into, shall be the
legal, valid and binding obligation of the parties thereto,
enforceable against such parties in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency,
<PAGE>
14
reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors'
rights in general and except as such enforceability may be
limited by general principles of equity (whether considered
in a suit at law or in equity).
(n) Filings. Upon the making of the filings and the
performance of the acts described in the legal opinions
delivered pursuant to subsections 6.1(b)(iii) and (iv) of
the Receivables Transfer Agreement (which shall be made or
performed no later than five Business Days after the
Effective Date), all filings and other acts necessary or
advisable (including but not limited to all filings and
other acts necessary or advisable under the Uniform
Commercial Code of each relevant jurisdiction) shall have
been made or performed in order to grant the Company a first
priority perfected ownership interest in respect of all
Receivables.
(o) Receivables Documents. Upon the delivery, if any,
by such Seller to the Company of licenses, rights, computer
programs, related materials, computer tapes, disks,
cassettes and data relating to the administration of the
Purchased Receivables pursuant to subsection 5.15(d)(5), the
Company shall have been furnished with all materials and
data necessary to permit immediate collection of the
Purchased Receivables without the participation of any
Seller in such collection.
4.2 Representations and Warranties of the Sellers
Relating to the Agreement and the Receivables. Each Seller
hereby represents and warrants to the Company on the Effective
Date and on each Payment Date that with respect to the
Receivables being paid for as of such date:
(a) Receivables Description. The microfiche, printed
or typed list or computer file delivered pursuant to
subsection 3.1(b)(iv) is an accurate and complete listing in
all material respects of all its Receivables as of June 15,
1994 and the information contained therein with respect to
the identity of such Receivables is true and correct in all
material respects as of such date.
(b) Eligible Receivable. Each Receivable sold by it
hereunder and included as an Eligible Receivable in the
calculation of Applicable Eligible Receivables Percentage
will be, on and as of the date of such inclusion, an
Eligible Receivable. The aggregate outstanding Principal
Amount of Receivables sold by it on any Payment Date is
correctly set forth on the Seller Daily Report with respect
to such Seller and with respect to such Payment Date. The
aggregate outstanding Adjusted Principal Amount of
Receivables denominated in Canadian Dollars and sold by it
on any Payment Date is correctly set forth on the Seller
Daily Report with respect to such Seller and with respect to
such Payment Date.
(c) Title; No Liens. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, such Seller is the sole
legal and beneficial owner of its Receivables, and upon the
sale of each Receivable of such Seller, the Company will
<PAGE>
15
become the sole legal and beneficial owner of such
Receivable, free and clear of any Liens (except for Liens
granted by such Seller in favor of the Company and the
interest in such Purchased Receivables sold and the security
interest therein granted by the Company to other Persons and
except for Liens which are released on or prior to the
Effective Date), and no effective financing statement or
other instrument similar in effect covering all or any part
of such Purchased Receivable, Related Property or
Collections with respect thereto will at such time be on
file against such Seller in any filing or recording office
except such as have been filed in favor of the Company in
accordance with this Agreement.
(d) Governmental Consents. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, all consents, licenses,
approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be
obtained, effected or given by the Company in connection
with the conveyance of each Receivable pursuant to the
Receivables Transfer Agreement have been duly obtained,
effected or given and are in full force and effect.
(e) Compliance With Laws. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, all laws, statutes, rules
and regulations (including, without limitation, usury laws),
applicable at the related Payment Date to any of the
Receivables have been duly complied with by such Seller
except to the extent any failure to so comply could not
affect the validity or collectibility of such Receivable.
(f) No Set-Off. Other than with respect to
Receivables which such Seller states in writing (in the
applicable Seller Daily Report or otherwise) are not
Eligible Receivables on such date, the Receivables are not
subject to any defense, dispute, offset or counterclaim,
whether arising out of the transactions represented by the
Receivables or independently thereof and whether arising out
of any assertion by any Obligor that its obligations in
respect of any Receivable are, or may be, payable to a third
party, instead of the owner of such Receivable, or
otherwise.
(g) Chief Executive Office. The chief executive
office of such Seller is listed opposite its name on
Schedule 1, which office is the place where such Person is
"located" for the purposes of Section 9-103(3)(d) of the
Uniform Commercial Code of the State of New York, and the
offices of such Seller where such Seller keeps its records
concerning the Receivables are also listed in said Schedule
opposite its name.
(h) Absence of Changes. As of the related Payment
Date, there has not been since the date of this Agreement
any material adverse change in the ability of such Seller,
acting as the Servicer, to perform its obligations hereunder
or under the Receivables Transfer Agreement.
<PAGE>
16
ARTICLE V
AFFIRMATIVE COVENANTS
Each Seller hereby agrees that, so long as there are any
amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company or until an Early
Termination with respect to such Seller, whichever is later, such
Seller or the Master Servicer on behalf of such Seller shall:
5.1 Certificates; Other Information. Furnish to the
Company:
(a) not later than 90 days after the end of each
fiscal year and not later than 45 days after the end of each
of the first three fiscal quarters of each fiscal year, a
certificate of a Responsible Officer of the Master Servicer
stating that, to the best of such Officer's knowledge, such
Seller during such period has observed or performed all of
its covenants and other agreements, and satisfied every
condition, contained in the Sale Documents to which it is a
party to be observed, performed or satisfied by it, and that
such Officer has obtained no knowledge of any Purchase
Termination Event or Incipient Purchase Termination Event
except as specified in such certificate; and
(b) promptly, such additional financial and other
information as the Company may from time to time reasonably
request.
5.2 Compliance with Laws, etc. Comply in all material
respects with its Certificate of Incorporation and by-laws and
all laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, applicable
to the Purchased Receivables, except to the extent that failure
to comply therewith could not materially adversely affect the
rights of the Company in the Purchased Receivables or the
collectibility or validity thereof. Each Seller will comply, in
all material respects, with its obligations under contracts with
Obligors relating to the Purchased Receivables except to the
extent such compliance would result in a violation of a laws,
rules, regulations and orders of any Governmental Authority.
5.3 Preservation of Corporate Existence. Do or cause
to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and maintain such legal
existence separate from that of the Company, provided that any
Seller may be merged or consolidated with or into any other
Seller or C&A Products.
5.4 Visitation Rights. At any reasonable time during
normal business hours and from time to time, in each case upon
reasonable notice to such Seller and the Master Servicer, permit
(i) the Company, or any of its agents or representatives, (A) to
examine and make copies of and abstracts from the records, books
of account and documents (including computer tapes and disks) of
each Seller relating to the Purchased Receivables hereunder and
(B) following the termination of the appointment of C&A Products
as Master Servicer or of such Seller as Servicer with respect to
the Purchased Receivables, to be present at the offices and
properties of such Seller to administer and control the
collection of amounts owing on the
<PAGE>
17
Purchased Receivables and (ii) the Company, or any of its agents
or representatives, to visit the properties of such Seller
for the purpose of examining such records, books of account
and documents, and to discuss the affairs, finances and accounts
of such Seller relating to the Purchased Receivables or such
Seller's performance hereunder with any of its officers or
directors and with its independent certified public accountants
(subject to any requirements of confidentiality imposed by law
or contract).
5.5 Keeping of Records and Books of Account. Maintain
and implement, or cause to be maintained or implemented,
administrative and operating procedures reasonably necessary or
advisable for the collection of amounts owing on all Purchased
Receivables, and, until any delivery to the Company, keep and
maintain, or cause to be kept and maintained, all documents,
books, records and other information reasonably necessary or
advisable for the collection of amounts owing on all such
Purchased Receivables and the Related Property with respect
thereto.
5.6 Location of Records. Keep its chief place of
business and chief executive office, and the offices where it
keeps the records concerning the Purchased Receivables (and all
original documents relating thereto) at the locations referred to
for it on Schedule 1 hereto or, upon 30 days' prior written
notice to the Company, at such other locations in a jurisdiction
where all action required by subsection 5.15(a) shall have been
taken and completed and be in full force and effect.
5.7 Computer Files. At its own cost and expense,
retain the ledger used by such Seller as a master record of the
Obligors and retain copies of all documents relating to each
Obligor as custodian and agent for the Company and other Persons
with interests in the Purchased Receivables and mark the computer
tape or other physical records of the Purchased Receivables to
the effect that interests in the Purchased Receivables existing
with respect to the Obligors listed thereon have been sold to the
Company.
5.8 Policies. Perform its obligations in accordance
with and comply in all material respects with the Policies and
the Company Policies and neither change nor modify the Policies
or the Company Policies in any material respect, except with the
prior written consent of the Company or if such changes are
necessary under any law, rule, regulation or order of any
Governmental Authority applicable to it; it being understood that
material changes to the Policies and the Company Policies shall
include, without limitation, changes to the timing of Charge-Offs
of Receivables and changes to the creditworthiness criteria used
in determining whether to extend credit to a Person and in
determining the amount of such credit to extend.
5.9 Taxes; ERISA. (a) Pay and discharge promptly all
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default,
as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such
payment and discharge shall not be required with respect to any
such tax, assessment, charge, levy or claim so long as (i) the
validity or amount thereof shall be contested in good faith by
appropriate
<PAGE>
18
proceedings and Holdings or such Seller, as
applicable, shall set aside on its books adequate reserves as
required by GAAP with respect thereto, (ii) such tax, assessment,
charge, levy or claim is in respect of property taxes for
property that such Seller has determined to abandon and the sole
recourse for such tax, assessment, charge, levy or claim is to
such property or (iii) the amount of such taxes assessments,
charges, levies and claims and interest and penalties thereon
does not exceed $1,000,000 in the aggregate for the Master
Servicer and all Sellers taken as a whole.
(b) (i) Comply in all material respects with the
applicable provisions of ERISA and (ii) furnish to the Company
(w) as soon as possible, and in any event within 30 days after
any Responsible Officer of such Seller or any ERISA Affiliate of
such Seller knows or has reason to know that any Reportable Event
has occurred that alone or together with any other Reportable
Event could reasonably be expected to result in liability of the
Master Servicer, such Seller or any of their ERISA Affiliates to
the PBGC in an aggregate amount exceeding $10,000,000, a
statement of a Financial Officer setting forth details as to such
Reportable Event and the action proposed to be taken with respect
thereto, together with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (x) promptly after any
Responsible Officer learns of receipt thereof, a copy of any
notice such Seller or any of its ERISA Affiliates may receive
from the PBGC relating to the intention of the PBGC to terminate
any Plan or Plans (other than a Plan maintained by any of their
ERISA Affiliates which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Section 414 of the Code) or
to appoint a trustee to administer any Plan or Plans, (y) within
20 days after the due date for filing with the PBGC pursuant to
Section 412(n) of the Code a notice of failure to make a required
installment or other payment with respect to a Plan, a statement
of a Financial Officer setting forth details as to such failure
and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC and (z)
promptly after any Responsible Officer learns thereof and in any
event within 30 days after receipt thereof by such Seller or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy
of each notice received by such Seller or such ERISA Affiliate
concerning (I) the imposition of Withdrawal Liability or (II) a
determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, in each case within the meaning
of Title IV of ERISA.
5.10 Collections. Use its best efforts to cause any
Obligor which currently pays its Receivables by checks mailed to
such Seller to make future payments in respect of Receivables to
a Lockbox Account or by wire transfer to the Collection Account,
provided, that, prior to an Incipient Purchase Termination Event
or a Purchase Termination Event, no Seller shall be obliged to
make any such request of any such Obligor if such Seller
determines in its reasonable judgment that such request could be
detrimental to its ongoing business relationship with such
Obligor.
5.11 Lockbox Agreements; Lockbox Accounts. Within 60
days of the Effective Date,
(a) if such Seller has not established a Lockbox
Account on the Effective Date, it shall establish one and
enter into a Lockbox Agreement with respect thereto;
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19
(b) if such Seller shall not have entered into a
Lockbox Agreement with respect to any existing Lockbox
Account on the Effective Date, it shall enter into such a
Lockbox Agreement.
5.12 Furnishing Copies, etc. Furnish to the Company:
(a) within two Business Days of the Company's request,
but no more than once each month, a certificate of the chief
financial officer of such Seller or of the Master Servicer
on behalf of such Seller certifying, as of the date thereof,
to the best knowledge of such officer, that no Purchase
Termination Event has occurred and is continuing, and
setting forth the computations used by the chief financial
officer of such Seller in making such determination or if
one has so occurred specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with
respect thereto;
(b) promptly upon obtaining knowledge of the
occurrence of any Purchase Termination Event or Incipient
Purchase Termination Event, written notice thereof;
(c) promptly following request therefor, such other
information, documents, records or reports regarding or with
respect to the Purchased Receivables of the applicable
Seller, as the Company may from time to time reasonably
request;
(d) promptly upon obtaining knowledge of the
occurrence thereof, written notice of any event of default
or default under any other Sale Document;
(e) promptly upon obtaining knowledge of the
occurrence thereof, written notice of any development that
has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect; and
(f) promptly upon determining that any Purchased
Receivable designated as an Eligible Receivable on the
applicable Daily Report or Settlement Statement was not an
Eligible Receivable as of the date provided therefor,
written notice of such determination.
5.13 Obligations with Respect to Obligors and
Receivables. Take all actions on its part reasonably necessary
to maintain in full force and effect its material rights under
all contracts relating to the Purchased Receivables.
5.14 Responsibilities of the Sellers. Notwithstanding
anything herein to the contrary, (i) each Seller shall perform or
cause to be performed all its obligations under the Policies and
the Company Policies related to the Purchased Receivables to the
same extent as if such Purchased Receivables had not been
transferred to the Company hereunder, (ii) the exercise by the
Company of any of its rights hereunder shall not relieve any
Seller of its obligations with respect to such Purchased
Receivables and (iii) except as provided by law, the Company
shall not have any obligation or liability with respect to any
Purchased
<PAGE>
20
Receivables, nor shall the Company be obligated to
perform any of the obligations or duties of any Seller
thereunder.
5.15 Further Action. In addition to the foregoing:
(a) Each Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that
may be necessary or desirable in such Seller's reasonable
judgment or that the Company may reasonably request, in
order to protect or more fully evidence the Company's right,
title and interest in the Purchased Receivables, or to
enable the Company to exercise or enforce any of its rights
in respect thereof. Without limiting the generality of the
foregoing, each Seller will upon the request of the Company
(A) execute and file such financing or continuation
statements, or amendments thereto, and such other
instruments or notices, as may be necessary or, in the
opinion of the Company, advisable, (B) indicate on its books
and records that the Purchased Receivables have been
purchased by the Company and that the Company has sold an
interest therein and has granted a security interest therein
in the Company's retained interest, and provide to the
Company, upon request, copies of any such records, and (C)
obtain the agreement of any Person having a Lien on any
Receivables owned by any Seller (other than any Lien created
or imposed hereunder or any Lien expressly permitted
pursuant to subsection 6.1) to release such Lien upon the
purchase of any such Receivables by the Company.
(b) Each Seller hereby irrevocably authorizes the
Company to file one or more financing or continuation
statements (and other similar instruments), and amendments
thereto, relative to all or any part of the Purchased
Receivables and the Related Property sold or to be sold by
such Seller without the signature of such Seller to the
extent permitted by applicable law.
(c) If any Seller fails to perform any of its
agreements or obligations under this Agreement, the Company
may (but shall not be required to) perform, or cause
performance of, such agreements or obligations, and the
expenses of the Company incurred in connection therewith
shall be payable by such Seller as provided in subsection
9.3.
(d) Each Seller agrees that, upon the occurrence and
during the continuation of a Purchase Termination Event,
Incipient Purchase Termination Event or a Servicer Event of
Default:
(1) the Company (and its assignees) shall have
the right at any time to notify, or require that any
Seller at such Seller's expense notify, the respective
Obligors of the Company's ownership of the Purchased
Receivables and may direct that payment of all amounts
due or to become due under the Purchased Receivables be
made directly to the Company or its designee;
<PAGE>
21
(2) the Company (and its assignees) shall have
the right to (x) sue for collection on any Purchased
Receivables or (y) sell any Purchased Receivables to
any Person for a price that is acceptable to the
Company. If required by the terms of Section 9-504 or
9-505 of the Uniform Commercial Code, the Company (and
its assignees) may offer to sell any Purchased
Receivable to any Person, together, at its option, with
all other Purchased Receivables created by the same
Obligor. Any Purchased Receivable sold hereunder shall
cease to be a Receivable for all purposes under this
Agreement as of the effective date of such sale;
(3) each Seller shall, upon the Company's written
request and at such Seller's expense, (x) assemble all
such Seller's documents, instruments and other records
(including credit files and computer tapes or disks)
that (1) evidence or will evidence or record
Receivables sold by such Seller and (2) are otherwise
necessary or desirable to effect Collections of such
Purchased Receivables (collectively, the "Documents")
and (y) deliver the Documents to the Company or its
designee at a place designated by the Company. In
recognition of each Seller's need to have access to any
Documents which may be transferred to the Company
hereunder, whether as a result of its continuing
business relationship with any Obligor for Receivables
purchased hereunder or as a result of its
responsibilities as Servicer, the Company hereby grants
to the applicable Seller an irrevocable license to
access the Documents transferred by such Seller to
Company and to access any such transferred computer
software in connection with any activity arising in the
ordinary course of such Seller's business or in
performance of such Seller's duties as Servicer,
provided that such Seller shall not disrupt or
otherwise interfere with the Company's use of and
access to the Documents and its computer software
during such license period;
(4) each Seller hereby irrevocably authorizes the
Company or its designee to take any and all steps in
such Seller's name necessary or desirable, in the
reasonable opinion of the Company, to collect all
amounts due under the Purchased Receivables, including
endorsing such Seller's name on checks and other
instruments representing Collections, enforcing the
Purchased Receivables and exercising all rights and
remedies in respect thereof; and
(5) upon written request of the Company, each
Seller will (x) deliver to the Company or a party
designated by the Company all licenses, rights,
computer programs, related material, computer tapes,
disks, cassettes and data necessary to the immediate
collection of the Purchased Receivables by the Company,
with or without the participation of any Seller
(excluding software licenses which by their terms are
not permitted to be so delivered, provided, that such
Seller shall use its best efforts to obtain the consent
of the relevant licensor to such delivery) and (y) make
such arrangements with respect to the collection of the
Purchased Receivables as may be reasonably required by
the Company.
<PAGE>
22
5.16 Certain Procedures. Each Seller shall take, or
refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken in order to (a) ensure that
the assumptions and factual recitations set forth in the
Specified Bankruptcy Opinion Provisions remain true and correct
with respect to such Seller and (b) comply with those procedures
described in such provisions which are applicable to such Seller.
ARTICLE VI
NEGATIVE COVENANTS
Each Seller hereby agrees that, so long as there are
any amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company or until an Early
Termination with respect to such Seller, whichever is later, such
Seller shall not, directly or indirectly:
6.1 Liens. Except as otherwise expressly herein
provided, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon
or with respect to, any Receivables or Related Property, or
assign any right to receive proceeds in respect thereof except
for Liens created or imposed hereunder or under the Receivables
Transfer Agreement.
6.2 Extension or Amendment of Receivables. Extend,
make any Adjustment to, rescind, cancel, amend or otherwise
modify, or attempt or purport to extend, amend or otherwise
modify, the terms of any Purchased Receivables, except (i) in
accordance with the terms of the Policies and the Company
Policies, (ii) as required by any Requirement of Law, (iii) in
the case of Adjustments, upon making an Adjustment Payment
pursuant to subsection 2.5, or (iv) with the consent of the
Company, provided that the applicable Servicer may cause
Receivables to become Charge-Offs.
6.3 Change in Payment Instructions to Obligors.
Instruct any Obligor of any Purchased Receivables to make any
payments with respect to any Receivables other than in accordance
with its current practices with respect to such Obligor; provided
that, in accordance with subsection 5.10, it may instruct any
Obligor to make such payments to a Lockbox Account or by wire
transfer to the Collection Account.
6.4 Change in Name. Change its name, identity or
corporate structure in any manner which would or might make any
financing statement or continuation statement (or other similar
instrument) relating to this Agreement seriously misleading
within the meaning of Section 9-402(7) of the Uniform Commercial
Code (or any other similar law) without 30 days' prior written
notice to the Company.
6.5 Modification of Ledger. Delete or otherwise
modify the marking on the ledger referred to in subsection 5.7.
<PAGE>
23
6.6 Business of the Sellers. (a) Engage at any time
in any business or business activity other than the business
currently conducted by it and business activities reasonably
incidental thereto or (b) fail to maintain and operate such
business in substantially the manner in which it is presently
conducted and operated if such failure would materially adversely
affect the interests of the Company under the Transaction
Documents.
6.7 Accounting of Purchases. Prepare any financial
statements which shall account for the transactions contemplated
hereby (other than capital contributions and the Subordinated
Notes) in any manner other than as sales of the Purchased
Receivables by such Seller to the Company or in any other respect
account for or treat the transactions contemplated hereby
(including for accounting purposes and, where taxes are not
consolidated, for tax reporting purposes, except as required by
law) (other than capital contributions and the Subordinated
Notes) in any manner other than as sales of the Purchased
Receivables by such Seller to the Company.
6.8 Chattel Paper. Not take any action to cause any
Receivable to be evidenced by any instrument (as defined in the
Uniform Commercial Code as in effect in the State of New York)
except in connection with the enforcement or collection of a
Receivable.
6.9 Ineligible Receivables. Without the prior written
approval of the Company, take any action to cause, or which would
permit, an Eligible Receivable to cease to be an Eligible
Receivable, except as otherwise expressly provided by this
Agreement.
ARTICLE VII
PURCHASE TERMINATION EVENTS
If any of the following events (herein called "Purchase
Termination Events") shall have occurred and be continuing:
(a) any Seller shall fail (i) to pay any amount due
pursuant to subsection 2.6 in accordance with the provisions
thereof and such failure shall continue unremedied for a
period of five days from the earlier of (A) the date any
officer of such Seller obtains knowledge of such default and
(B) the date such Seller receives notice of such default
from the Company or (ii) to pay any other amount required to
be paid by such Seller hereunder within two Business Days of
the date when due; or
(b) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained in
subsection 5.6, 5.7, 5.12 or 5.15(a), provided no such
failure shall constitute a Purchase Termination Event under
this paragraph (b) unless such default shall continue
unremedied for 10 consecutive days; or
(c) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained in
subsection 5.2, 5.8, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 or 6.9;
provided that a Purchase Termination Event shall not be
deemed to have occurred under this paragraph (c) based upon
a failure to observe a covenant contained in
<PAGE>
24
subsection 5.2, 5.8, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 or 6.9 if
the Sellers shall have complied with the provisions of
subsection 2.6 in respect thereof; or
(d) any Seller shall fail to observe or perform any
covenant or agreement applicable to it contained herein
(other than as specified in paragraph (a), (b) or (c) of
this Article VII), provided that no such failure shall
constitute a Purchase Termination Event under this paragraph
(d) unless such default shall continue unremedied for a
period of 30 consecutive days from the earlier of (A) the
date any Responsible Officer of such Seller obtains
knowledge of such default and (B) the date such Seller
receives notice of such default from the Company; or
(e) any representation, warranty, certification or
statement made or deemed made by any Seller in this
Agreement or in any statement, record, certificate,
financial statement or other document delivered pursuant to
this Agreement shall prove to have been false or misleading
in any material respect on or as of the date made or deemed
made, provided, that a Purchase Termination Event shall not
be deemed to have occurred under this paragraph (e) based
upon a breach of any representation or warranty set forth in
subsection 4.2 if the Sellers shall have complied with the
provisions of subsection 2.6 in respect thereof; or
(f) (i) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (x) relief in respect of any
Seller or of a substantial part of the property or assets of
any Seller under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law, (y) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for
any Seller or for a substantial part of the property or
assets of any Seller or (z) the winding-up or liquidation of
any Seller; and 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; or (ii) any
Seller shall (t) voluntarily commence any proceeding or file
any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (u) consent to the institution
of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in
clause (f)(i) above, (v) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for such Seller or for a
substantial part of the property or assets of such Seller,
(w) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (x) make a
general assignment for the benefit of creditors, (y) become
unable, admit in writing its inability or fail generally to
pay its debts as they become due or (z) take any action for
the purpose of effecting any of the foregoing; or
(g) there shall have occurred a Termination Event
under the Receivables Transfer Agreement or the Commitments
shall have terminated thereunder;
<PAGE>
25
then, (x) in the case of any Purchase Termination Event described
in paragraph (f) above with respect to any Seller, automatically
the obligation of the Company to purchase Receivables from such
Seller shall thereupon terminate without notice of any kind,
which is hereby waived by the Sellers and (y) in the case of any
Purchase Termination Event, so long as such Purchase Termination
Event shall be continuing, the Company may terminate its
obligation to purchase Receivables from any or all of the Sellers
by written notice to each such Seller (any termination pursuant
to clause (x) or (y) of this Article VII which affects a Seller
is herein called an "Early Termination" with respect to such
Seller).
ARTICLE VIII
THE SUBORDINATED NOTES
8.1 Subordinated Notes. On the Effective Date, the
Company shall issue to the Sellers (i) a subordinated note
substantially in the form of Exhibit A (the "U.S. Dollar
Subordinated Note") and (ii) a subordinated note substantially in
the form of Exhibit B (the "Canadian Dollar Subordinated Note";
each, a "Subordinated Note" and collectively, the "Subordinated
Notes"). The aggregate principal amount of the Subordinated
Notes at any time shall be equal to the difference between (a)
the aggregate principal amount on the issuance thereof and each
addition to the principal amount of each Subordinated Note with
respect to each Seller pursuant to the terms of subsection 2.3
minus (b) the aggregate amount of all payments made in respect of
the principal of the Subordinated Notes. All payments made in
respect of the Subordinated Notes shall be allocated among the
Sellers by the Master Servicer. Each Seller's interest in the
Subordinated Notes shall equal the sum of each addition thereto
allocated to such Seller pursuant to subsection 2.3(c) less the
sum of each repayment thereof allocated to such Seller. Interest
on the principal amount of each Subordinated Note shall accrue on
the last day of each fiscal month of the Sellers at the ABR from
and including the Effective Date and shall be paid on each
Settlement Date with respect to amounts accrued and not paid as
of the last day of the preceding Settlement Period and/or the
maturity date thereof provided, however, that accrued interest on
a Subordinated Note which is not so paid may be added to the
principal amount of such Subordinated Note. Principal not prepaid
pursuant to the terms hereof and of the other Sale Documents
shall be payable on the maturity date thereof. Default in the
payment of principal or interest under either Subordinated Note
shall not constitute a default or event of default or a Purchase
Termination Event hereunder or a Termination Event under the
Receivables Transfer Agreement.
8.2 Restrictions on Transfer of Subordinated Notes.
Neither any Subordinated Note, nor any right of any Seller to
receive payments thereunder, shall be assigned, transferred,
exchanged, pledged, hypothecated, participated or otherwise
conveyed; provided, however, that any Seller may pledge its
rights to receive payments under either Subordinated Note to the
lenders under the Credit Agreement subject to the conditions that
the Collateral Agent and any present or future holder or
beneficiary of such right to receive payments under a
Subordinated Note agrees, in its capacity as such, to be bound by
all the terms and conditions of this Agreement, including without
limitation, subsection 9.16 hereof.
<PAGE>
26
ARTICLE IX
MISCELLANEOUS
9.1 Further Assurances. (a) Each Seller agrees, from
time to time, to do and perform any and all acts and to execute
any and all further instruments reasonably required or requested
by the Company more fully to effect the purposes of this
Agreement and the sales of the Receivables hereunder, including,
without limitation, the execution of any financing statements or
continuation statements (and other similar instruments) relating
to the Receivables for filing under the provisions of the Uniform
Commercial Code, or any similar law, of any applicable
jurisdiction.
(b) From time to time at the request of a Seller, the
Company shall deliver to such Seller such documents, assignments,
releases and instruments of termination as such Seller may
reasonably request to evidence the reconveyance by the Company to
such Seller of a Receivable pursuant to the terms of subsection
2.1(b) or 2.6, provided that the Company shall have been paid all
amounts due thereunder; and the Company and the Master Servicer
shall take such action as such Seller may reasonably request, at
the expense of such Seller, to assure that any such Receivable,
the Related Property with respect thereto and the proceeds
thereof do not remain commingled with Collections hereunder.
9.2 Payments. Each cash payment to be made by any of
the Company or the Sellers hereunder shall be made on the
required payment date and in immediately available funds at the
office of the payee set forth below its signature hereto or to
such other office as may be specified by either party in a notice
to the other party hereto and (x) with respect to payments on
account of Receivables denominated in Canadian Dollars, in
Canadian Dollars except to the extent provided otherwise in
Article II hereof and (ii) in all other cases, in Dollars.
9.3 Costs and Expenses. The Sellers, jointly and
severally, agree (a) to pay or reimburse the Company for all its
out-of-pocket costs and expenses incurred in connection with the
preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the other Sale Documents and any
other documents prepared in connection herewith and therewith,
the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation,
all reasonable and documented fees and disbursements of counsel,
(b) to pay or reimburse the Company for all its costs and
expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement and any of the
other Related Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Company, (c)
to pay, indemnify, and hold the Company harmless from, any and
all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise
and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of,
this Agreement and any such other documents, (d) to pay,
indemnify, and hold the
<PAGE>
27
Company harmless from, any and all Canadian withholding taxes which
may be imposed in respect of the Receivables or in connection with
the Sale Transactions, and (e) to pay, indemnify, and hold the
Company harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever
(i) which may at any time be imposed on, incurred by or asserted
against the Company in any way relating to or arising out of this
Agreement or the transactions contemplated hereby or in connection
herewith or any action taken or omitted by the Company under or in
connection with any of the foregoing (all such other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements being herein called
"Indemnified Liabilities") or (ii) which would not have been
imposed on, incurred by or asserted against the Company but for
its having purchased the Receivables hereunder, provided, that
such indemnity shall not be available to the extent that such
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 the Company, and provided, further, that
the Sellers shall have no obligation under this subsection 9.3 to
the Company with respect to Indemnified Liabilities arising from
(i) any action taken, or omitted to be taken, by a Servicer which
is not an Affiliate of the Sellers, (ii) any Eligible Receivable
which becomes a Charge-Off as a result of non-payment by the
Obligor with respect thereto or (iii) any action taken by the
Banks or the Company at the direction of the Administrative Agent
in collecting from an Obligor. The agreements in this subsection
shall survive the collection of all Receivables, the termination
of this Agreement and the payment of all amounts payable
hereunder.
9.4 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Sellers and the
Company and their respective successors (whether by merger,
consolidation or otherwise) and assigns. Except as expressly
permitted pursuant to subsections 8.2 and 8.4, each Seller agrees
that it will not assign or transfer all or any portion of its
rights or obligations hereunder without the prior written consent
of the Company. The Sellers acknowledge that the Company shall
assign all of its rights hereunder to the Banks and, after the
termination of the Receivables Transfer Agreement, to another
entity or entities (each, a "Subsequent Financing Party") buying
an interest in the Receivables. Each Seller consents to such
assignment and agrees that the Administrative Agent and the
Banks, to the extent provided in the Receivables Transfer
Agreement, and each Subsequent Financing Party to the extent
provided in the documents to which it is a party, shall be
entitled to enforce the terms of this Agreement and the rights
(including, without limitation, the right to grant or withhold
any consent or waiver) of the Company directly against such
Seller, whether or not a Purchase Termination Event or a
Termination Event has occurred. Each Seller further agrees that,
in respect of its obligations hereunder, it will act at the
direction of and in accordance with all requests and instructions
from the Administrative Agent or such Subsequent Financing Party,
as the case may be, until all amounts due to the Banks or such
Subsequent Financing Party, as the case may be, are paid in full.
Each of the Administrative Agent and each such Subsequent
Financing Party shall have the rights of third-party
beneficiaries under this Agreement.
9.5 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
<PAGE>
28
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
9.6 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Company,
any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
9.7 Amendments and Waivers. Neither this Agreement
nor any terms hereof may be amended, supplemented or modified
except in a writing signed by the Company and any affected
Seller.
9.8 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.9 Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Company
and C&A Products, and as set forth on Schedule 1 hereof in the
case of the Sellers, or to such other address as may be hereafter
notified by the respective parties hereto:
The Company: Carcorp, Inc.
5025 S. Eastern Avenue
Suite 16, Number 205
Las Vegas, Nevada 89119
Attention:
Telecopy:
C&A Products: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28262
Attention: Mark Remissong
Telecopy: 704-548-2330
9.10 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and
the same
<PAGE>
29
instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company.
9.11 Construction of Agreement as Security Agreement.
(a) The parties to this Agreement intend that the transactions
contemplated hereby shall be, and shall be treated as, a purchase
by the Company and a sale by the applicable Seller of the
Purchased Receivables and Related Property with respect thereto
and not as a lending transaction. If, however, notwithstanding
the intent of the parties, such transactions are deemed to be
loans, each Seller hereby grants to the Company a first priority
security interest in all of such Seller's right, title and
interest in and to the Receivables and the Related Property now
existing and hereafter created, all monies due or to become due
and all amounts received with respect thereto, including, without
limitation, Recoveries, and all "proceeds" thereof, to secure all
such Seller's obligations hereunder.
(b) This Agreement shall constitute a security
agreement under applicable law.
9.12 Waivers 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 respect of any litigation
directly or indirectly arising out of, under or in connection
with this Agreement or any of the other Sale Documents. 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 and the other Sale
Documents, as applicable, by, among other things, the mutual
waivers and certifications in this subsection 9.12.
9.13 Jurisdiction; Consent to Service of Process. (a)
Each party hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
any New York State court or Federal court of the United States of
America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Sale Documents, 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 shall affect any
right that the Company may otherwise have to bring any action or
proceeding relating to this Agreement or the other Sale Documents
against any Seller or its properties in the courts of any
jurisdiction.
(b) Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent they 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 the
other Sale Documents in any New York State or Federal court.
Each of the
<PAGE>
30
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.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in
subsection 9.9. Nothing in this Agreement will affect the right
of any party to this Agreement to serve process in any other
manner permitted by law.
9.14 Addition of Sellers. Subject to subsection 3.4
hereof, subsection 8.22 of the Receivables Transfer Agreement and
the terms and conditions of this subsection 9.14, from time to
time one or more additional Subsidiaries of C&A Products may
become Sellers hereunder and parties hereto. If any such
Subsidiary wishes to become an additional Seller, it shall submit
a request to such effect in writing to the Company. The Company,
in its sole and absolute discretion, may agree to or deny any
such request, provided that, if the Company shall have failed to
respond to any such request within 30 days after receipt thereof,
such request shall be deemed to have been denied. If the Company
shall have agreed to any such request, such Subsidiary shall
become an additional Seller hereunder and a party hereto on the
related Seller Addition Date upon satisfaction of the conditions
set forth in subsection 3.4.
9.15 Optional Termination of Seller. (a) Any Seller
may be terminated as a Seller hereunder on the date such Seller
ceases to be a wholly owned direct or indirect Subsidiary of C&A
Products, provided (i) that the aggregate outstanding Adjusted
Principal Amount of Purchased Receivables sold by all Sellers
which so cease to be wholly owned Subsidiaries at such time
(together with the aggregate outstanding Adjusted Principal
Amount of Purchased Receivables sold by all Sellers which have
been terminated pursuant to this subsection 9.15 within the
preceding 90 days) shall not exceed 10% of the aggregate
outstanding Adjusted Principal Amount of all Purchased
Receivables and (ii) that no Purchase Termination Event or
Incipient Purchase Termination Event has occurred and is
continuing, or would result as a result thereof. From and after
the date any such Seller ceases to be a wholly owned Subsidiary
of C&A Products, the Company shall cease buying Receivables and
Related Property from such Seller. Each such Seller shall be
released as a Seller party hereto for all purposes and shall
cease to be a party hereto on the date on which there are no
amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company, whether such
amounts have been repurchased, collected or written off in
accordance with the Policies and the Company Policies. Prior to
such date, such Seller shall be obligated to perform its
servicing and other obligations hereunder and under the
Transaction Documents to which it is a party with respect to
Purchased Receivables previously sold by such Seller to the
Company, including, without limitation, its obligation to deposit
Collections into the appropriate Lockboxes.
(b) From time to time the Sellers, or the Master
Servicer on behalf of the Sellers, may request in writing that
the Company designate one or more Sellers as Sellers that shall
cease to be parties to this Agreement; provided that no Purchase
Termination Event or Incipient Purchase Termination Event has
occurred and is continuing, or would result as a result thereof.
Any such request shall specify the minimum aggregate Adjusted
Principal Amount of outstanding Purchased Receivables to have
been sold by the Sellers to be so designated by the Company. The
Company, in its sole and absolute discretion (subject to
<PAGE>
31
subsection 8.23 of the Receivables Transfer Agreement), shall,
within 45 days of receipt of such request, select the Sellers to
be so terminated, provided that the aggregate Adjusted Principal
Amount of outstanding Purchased Receivables previously sold by
such Sellers shall be substantially equal to the Adjusted
Principal Amount specified in such request. Promptly after
receipt of any such designation by the Company, the Sellers shall
either (i) elect not to terminate such designated Sellers or (ii)
select a date, which date shall not be later than 30 days after
the date of receipt of such designation, as the "Sale Termination
Date" for such designated Sellers. From and after such date, the
Company shall cease buying Receivables and Related Property from
such Sellers. Each such Seller shall be released as a Seller
hereunder and a party hereto for all purposes and shall cease to
be a party hereto on the date on which there are no amounts
outstanding with respect to Purchased Receivables previously sold
by such Seller to the Company, whether such amounts have been
repurchased in the manner provided in clause (a) above, collected
or written off in accordance with the Policies and the Company
Policies. Prior to such date, such Seller shall be obligated to
perform its servicing and other obligations hereunder and under
the Related Documents with respect to Purchased Receivables
previously sold by such Seller to the Company, including, without
limitation, its obligation to deposit Collections into the
appropriate Lockboxes.
(c) A terminated Seller shall have no obligation to
repurchase any Receivables other than Receivables previously sold
by it to the Company which are subject to a Repurchase Event.
9.16 No Bankruptcy Petition. Each Seller and C&A
Products by entering into this Agreement, and any present or
future holder of a Subordinated Note, by its acceptance thereof,
covenants and agrees that, prior to the date which is one year
and one day after the date of termination of this Agreement
pursuant to subsection 9.17, it will not institute against, or
join any other Person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal
or state bankruptcy or similar law.
9.17 Termination. This Agreement will terminate at
such time as (a) the commitment of the Company to purchase
Receivables from all Sellers hereunder shall have terminated and
(b) all Receivables purchased hereunder have been collected, and
the proceeds thereof turned over to the Company and all other
amounts owing to the Company hereunder shall have been paid in
full or, if Receivables sold hereunder have not been collected
such Receivables have become Defaulted Receivables and the
Company shall have completed its collection efforts in respect
thereto; provided, however, that the indemnities of the Sellers
to the Company set forth in this Agreement shall survive such
termination and provided, further, that, to the extent any
amounts remain due and owing to the Company hereunder, the
Company shall remain entitled to receive any collections on
Receivables sold hereunder which have become Defaulted
Receivables after it shall have completed its collection efforts
in respect thereof.
9.18 Confidentiality. The Company agrees that it
shall maintain in confidence any information relating to any
Seller furnished to it by or on behalf of such Seller (other than
information that (x) has become generally available to the public
other than as a result of
<PAGE>
32
a disclosure by such party, (y) has been independently developed
by such party without violating this subsection 9.18 or (z) was
available to such party from a third party having, to such
party's knowledge, no obligation of confidentiality to such Seller)
and shall not reveal the same other than to its directors, officers,
employees and advisors with a need to know except: (a) to the
extent necessary to comply with law or any legal process or the
requirements of any Governmental Authority or of any securities
exchange on which securities of the disclosing party or any
Affiliate of the disclosing party are listed or traded, (b) as
part of normal reporting or review procedures to Governmental
Authorities or its parent companies, Affiliates or auditors, (c) in
order to enforce its rights under any Sale Document in a legal
proceeding and (d) in connection with the collection of any
Purchased Receivable or the exercise of any remedy hereunder or
under the Receivables Transfer Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
COLLINS & AIKMAN PRODUCTS CO., as Master
Servicer
By:
Title:
CARCORP, INC.
By:
Title:
The Sellers:
COLLINS & AIKMAN PRODUCTS CO.
By:
Title:
ACK-TI-LINING, INC.
By:
Title:
<PAGE>
33
WCA CANADA, INC.
By:
Title:
IMPERIAL WALLCOVERINGS (CANADA), INC.
By:
Title:
IMPERIAL WALLCOVERINGS, INC.
By:
Title:
THE AKRO CORPORATION
By:
Title:
DURA ACQUISITION CORP.
By:
Title:
<PAGE>
ANNEX X
"ABR": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof, "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by
Chemical as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as
being effective. "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and
(ii) Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such
day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published
in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day,
the average of the secondary market quotations for
three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not
be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing
selected by it. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average 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 which is a Business Day, the average
of the quotations for the day of such transactions received
by the Administrative Agent from three Federal funds brokers
of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the
terms thereof, the ABR shall be determined without regard to
clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
ABR due to a change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"ABR Participating Interest": with respect to any
Bank, that portion of its Participating Interest in the
Receivables with respect to which the Purchase Discount
Amount is determined by reference to the ABR.
<PAGE>
2
"Accounts": as defined in subsection 2.1(c)(ii) of the
Receivables Transfer Agreement.
"Acquiring Banks": as defined in subsection 11.4(d) of
the Receivables Transfer Agreement.
"Additional Seller Supplement": an instrument
substantially in the form of Exhibit C to the Receivables
Sale Agreement by which a Subsidiary of C&A Products becomes
a Seller party to the Receivables Sale Agreement.
"Additional Servicer Supplement": an instrument
substantially in the form of Exhibit F to the Receivables
Transfer Agreement by which a Subsidiary of C&A Products
becomes a Servicer party to the Receivables Transfer
Agreement.
"Adjusted Principal Amount": (a) in the case of any
Receivable denominated in U.S. Dollars, the Principal Amount
in respect thereof and (b) in the case of any Receivable
denominated in Canadian Dollars, the Canadian Exchange
Percentage of the Principal Amount in respect thereof.
"Adjustment": as defined in subsection 2.5 of the
Receivables Sale Agreement.
"Adjustment Payment": as defined in subsection 12.4 of
the Receivables Transfer Agreement.
"Administrative Agent": Chemical, together with its
affiliates, as the arranger of the Commitments and as the
agent for the Banks under the Receivables Transfer
Agreement.
"Affiliate": as to any Person, any other Person that
directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with
the Person specified.
"Aggregate Eligible Receivables": the excess of (a)
the Applicable Eligible Receivables Percentage of the
aggregate outstanding Adjusted Principal Amount of all
Receivables over (b) the aggregate Excess Amounts with
respect to all Obligors.
"Agreement": the agreement wherein such term is used,
as the same may from time to time be amended, supplemented
or otherwise modified.
"Amortization Period": the period commencing after the
end of the Commitment Period and ending with the termination
of the Receivables Transfer Agreement pursuant to subsection
4.1 thereof.
"Applicable ABR Margin": (a) prior to the 270th day
after the Effective Date, 0% and (b) on and after such 270th
day, the "Applicable Margin" with respect to "ABR Loans" (as
each such term is defined in the Credit Agreement),
determined in
<PAGE>
3
accordance with the provisions of the Credit
Agreement as in effect on the Effective Date.
"Applicable Eligible Receivables Percentage": at any
date of determination, a fraction (expressed as a
percentage) equal to (a) the aggregate Adjusted Principal
Amount of all Eligible Receivables determined pursuant to
the most recent Settlement Statement divided by (b) the
aggregate Adjusted Principal Amount of all outstanding
Receivables generated by the Sellers determined pursuant to
such Settlement Statement.
"Applicable Eurodollar Margin": (a) prior to the 270th
day after the Effective Date, 0.625% and (b) on and after
such 270th day, the "Applicable Margin" with respect to
"Eurodollar Loans" (as each such term is defined in the
Credit Agreement), determined in accordance with the
provisions of the Credit Agreement as in effect on the
Effective Date.
"Applicable Obligor Percentage": with respect to any
Obligor, (a) 7.5%, in the case of any such Obligor having a
long-term senior unsecured debt rating of at least A- from
S&P or A3 from Moody's or a short-term deposit or commercial
paper rating of at least A-1 from S&P or P-1 from Moody's,
provided, that in the case of General Motors Corporation,
Chrysler Corporation, Ford Motor Company and Honda Motor
Co., the Applicable Obligor Percentage shall instead be
17.0% so long as such Obligor maintains a short-term deposit
or commercial paper rating of at least A-2 from S&P or P-2
from Moody's; (b) 5.0%, in the case of any such Obligor (not
described in clause (a) above) having a long-term senior
unsecured debt rating of at least BBB- from S&P or Baa3 from
Moody's or a short-term deposit or commercial paper rating
of at least A-3 from S&P or P-3 from Moody's; or (c) 2.0%,
in the case of any other such Obligor.
"Assessment Rate": for any date, the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%)
most recently estimated by the Administrative Agent as the
then current net annual assessment rate that will be
employed in determining amounts payable by Chemical to the
Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time
deposits made in dollars at Chemical's domestic offices.
"Average Default Ratio": for any Settlement Period, a
percentage equal to (a) the sum of the Default Ratios for
such Settlement Period and each of the two preceding
Settlement Periods divided by (b) 3.
"Average Dilution Ratio": with respect to any
Settlement Period, a fraction (a) the numerator of which is
the aggregate amount of Dilutive Credits which are incurred
with respect to the Receivables during the twelve-month
period ended on the last day of such Settlement Period and
(b) the denominator of which is the aggregate Adjusted
Principal Amount of Receivables generated by the Sellers
during the twelve-month period ended on the last day of such
Settlement Period.
<PAGE>
4
"Bank": each financial institution listed on Schedule
1 to the Receivables Transfer Agreement and each financial
institution to which an assignment has been made pursuant to
the terms of the Receivables Transfer Agreement, and any
successor of the foregoing.
"benefitted Bank": as defined in subsection 11.12 of
the Receivables Transfer Agreement.
"Board": the Board of Governors of the Federal Reserve
System and any successor thereto.
"Business Day": any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York)
on which banks are open for business in New York City;
provided, however, that, when used in connection with any
Fixed Tranche or the determination of any Eurodollar Rate,
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.
"Business Day Received": as defined in subsection
12.1(d) of the Receivables Transfer Agreement.
"C&A Products": Collins & Aikman Products Co., a
Delaware corporation.
"Canada/Canadian Dollar Concentration Account": as
defined in subsection 2.7(a) of the Receivables Transfer
Agreement.
"Canada/U.S. Dollar Concentration Account": as defined
in subsection 2.7(a) of the Receivables Transfer Agreement.
"Canadian Dollars": dollars in lawful currency of
Canada.
"Canadian Dollar Subordinated Note": as defined in
subsection 8.1 of the Receivables Sale Agreement.
"Canadian Exchange Percentage": at any date, the rate
at which Canadian Dollars may be exchanged into Dollars
(expressed as the percentage of Dollars per Canadian
Dollar), determined by reference to the relevant Bloomberg
currency page. In the event that such rate does not appear
on any Bloomberg currency page, the "Canadian Exchange
Percentage" shall be determined by reference to such other
publicly available service for displaying exchange rates
with respect to Canadian Dollars as may be selected by the
Administrative Agent.
"Capital Lease Obligations": with respect to any
Person, 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 combina-
tion thereof, which obligations are required to be classi-
fied and accounted for as capital leases on a
<PAGE>
5
balance sheet of such Person under GAAP and, for the purposes
hereof, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants, options or other rights to
purchase or acquire any of the foregoing.
"Cash Equivalents": book-entry securities, negotiable
instruments or securities represented by instruments in
bearer or registered form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company
incorporated under the laws of the United States of America
or any state thereof (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal
or State banking or depository institution authorities;
provided, that at the time of the investment or contractual
commitment to invest therein the commercial paper or other
short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a
Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a
rating of A-1 from S&P or of P-1 from Moody's;
(d) investments in money market funds having a rating
from each of the Rating Agencies in the highest investment
category granted thereby;
(e) demand deposits, time deposits and certificates of
deposit which are fully insured by the Federal Deposit
Insurance Corporation;
(f) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(g) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed
by the full faith and credit of the United States of
America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described
in clause (b) above or (ii) so long as the Company takes
actual or constructive possession of each security subject
to such repurchase obligations, a depository institution or
trust company the deposits of which are insured by the
Federal Deposit Insurance Corporation; or
<PAGE>
6
(h) any other investment permitted by Moody's and S&P
for short-term investment of funds supporting securities
with a rating of A1/P1 or better.
"Change in Control": (a) any "Change in Control"
under the Credit Agreement (as such term is defined
therein on the Effective Date), (b) except upon the
exercise by the Collateral Agent of any of its remedies
in accordance with the terms of the Pledge Agreement
(as in effect on the Effective Date), the Company shall
at any time not be a direct wholly owned Subsidiary of
C&A Products or (c) except as permitted pursuant to
subsection 9.15 of the Receivables Sale Agreement and
subsection 12.10 of the Receivables Transfer Agreement,
any Seller or Servicer (other than C&A Products) shall
at any time not be wholly owned, either directly or
indirectly, by C&A Products.
"Charge-Offs": with respect to the Receivables
originated by any Seller, for any period, the aggregate
amount of such Receivables that are written off, or should
be written off, during such period as uncollectible in
accordance with the Company Policies.
"Chemical": Chemical Bank, a New York banking
corporation.
"Closing Date": as defined in subsection 2.3(a) of the
Receivables Transfer Agreement.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Agent": as defined in the Credit
Agreement.
"Collections": all cash collections and other cash
proceeds received in respect of Receivables and Related
Property including, without limitation, Seller Repurchase
Payments and Seller Adjustment Payments and any Investment
Earnings.
"Commitment": of each Bank, the amount set forth
opposite the name of such Bank on Schedule 1 to the
Receivables Transfer Agreement, as such amount may be
changed pursuant to subsection 2.10 or 11.4 of the
Receivables Transfer Agreement.
"Commitment Fee": as defined in subsection 2.4 of the
Receivables Transfer Agreement.
"Commitment Percentage": as to any Bank, (a) on or
prior to the termination of the Commitments, the percentage
equivalent of a fraction the numerator of which is the
Commitment of such Bank and the denominator of which is the
Maximum Commitment and (b) thereafter, the percentage
equivalent of a fraction the numerator of which is the
Commitment of such Bank immediately prior to such
termination and the denominator of which is the Maximum
Commitment immediately prior to such termination.
<PAGE>
7
"Commitment Period": the period from and including the
Effective Date, up to but not including the first to occur
of (a) the Scheduled Termination Date, (b) any termination
of the Commitments pursuant to Article IX of the Receivables
Transfer Agreement and (c) termination (but not reduction)
of the Commitments pursuant to subsection 2.10 of the
Receivables Transfer Agreement.
"Company": Carcorp, Inc., a Delaware corporation.
"Company Policies": the written policies of the
Company with respect to Charge-Offs and Write-Offs of
Receivables.
"Complete Servicing Transfer": as defined in
subsection 12.2(d) of the Receivables Transfer Agreement.
"Concentration Accounts": the collective reference to
the U.S. Concentration Account, the Canada/U.S. Dollar
Concentration Account and the Canada/Canadian Dollar
Concentration Account.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its property is
bound.
"Control": 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 ownership of
voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Agreement": the Credit Agreement dated as of
June 22, 1994 among the Credit Agreement Borrower, WCA
Canada, Inc., as Canadian Borrower, Collins & Aikman
Corporation, as Guarantor, the Lenders named therein,
Continental Bank, N.A. and NationsBank, N.A., as Managing
Agents, and Chemical Bank, as Administrative Agent, as
amended, supplemented or otherwise modified from time to
time.
"Credit Agreement Borrower": C&A Products Co.
"Daily Report": as defined in subsection 12.5(a) of
the Receivables Transfer Agreement.
"Days Sales Outstanding": as of any day, the product
of (a) 91 and (b) the amount obtained by dividing (i) the
difference between (x) the aggregate Adjusted Principal
Amount of the Receivables and (y) the aggregate bad debt
reserve of the Sellers, in each case as at the end of the
fiscal month immediately preceding the most recent
Settlement Date, by (ii) aggregate net sales of the Sellers
for the three-fiscal-month period immediately preceding the
most recent Settlement Date.
<PAGE>
8
"Defaulted Receivable": any Receivable which has been
charged off, or should have been charged off, by the related
Servicer as uncollectible in accordance with the Policies of
such Servicer and the Company Policies.
"Default Ratio": (a) with respect to any Settlement
Period ending on or before April 30, 1994, a fraction (i)
the numerator of which is the aggregate Adjusted Principal
Amount of Receivables which first became 60 to 89 days past
due as of the last day of such month and (ii) the
denominator of which is the aggregate Adjusted Principal
Amount of Receivables generated by the Sellers during the
fourth preceding Settlement Period and (b) with respect to
any Settlement Period ending on any date thereafter, a
fraction (i) the numerator of which is the aggregate
Adjusted Principal Amount of Receivables which first became
90 to 119 days past due as of the last day of such month and
(ii) the denominator of which is the aggregate Adjusted
Principal Amount of Receivables generated by the Sellers
during the fifth preceding Settlement Period.
"Dilution Reserve Ratio": as of any day, the
percentage equivalent, determined pursuant to the most
recent Settlement Statement, of the product of (x) the sum
of clauses (i) and (ii) below and (y) clause (iii) below:
(i) (A) 2.0 times (B) the Average Dilution Ratio for
the most recently ended Settlement Period;
(ii) the product of (A)(x) the highest Peak Dilution
Ratio during the period of 12 fiscal months ended on the
last day of the most recently ended Settlement Period minus
(y) the amount determined pursuant to clause (i)(B) of this
definition and (B) the amount determined pursuant to clause
(A)(x) above divided by the amount determined pursuant to
clause (A)(y) above; and
(iii) (A) the aggregate Adjusted Principal Amount of
Receivables generated by the Sellers during the most
recently ended Settlement Period divided by (B) the
aggregate Adjusted Principal Amount of Eligible Receivables
on the last day of such Settlement Period.
"Dilutive Credits": for any period, the aggregate
amount of discount expense, rebates, refunds, billing error
expense, credits against Receivables and other adjustments
or allowances in respect of Receivables permitted or
incurred by the Seller or Servicer with respect thereto
during such period.
"Discount Rate": as of any day, the sum of (a) the
weighted average Purchase Discount Amount rate in effect
with respect to the Participating Interest as at the end of
the fiscal month immediately preceding the most recent
Settlement Date and (b) the amount obtained by dividing (i)
the aggregate amount of fees (other than the Monthly
Servicing Fee and the Purchase Discount Amount) accrued with
respect to the Participating Interest during the fiscal
month immediately preceding the most recent Settlement Date
by (ii) the average daily Net Investment during such fiscal
month.
<PAGE>
9
"Discounted Percentage": as defined in Schedule 3 to
the Receivables Sale Agreement.
"Documents": as defined in subsection 5.15(d)(3) of
the Receivables Sale Agreement.
"Dollars", "U.S. Dollars" and "$": dollars in lawful
currency of the United States of America.
"Early Termination": as defined in Article VII of the
Receivables Sale Agreement.
"Effective Date": as defined in subsection 6.1 of the
Receivables Transfer Agreement.
"Eligible Letter of Credit": any irrevocable direct
pay or standby letter of credit (a) issued in favor of the
Company by (i) any Bank or (ii) any commercial bank that (x)
has combined capital and surplus of not less than
$500,000,000 and (y) has (or the holding company parent of
which has) a long-term senior unsecured debt rating of at
least A from S&P or at least A2 from Moody's and (b) which
permits the Company to draw, upon notice to the issuing
bank, an amount equal to the entire face amount of any
Receivable supported thereby, in Dollars payable by the
issuing bank in the United States, no later than 90 days
after the original invoice date with respect to such
Receivable.
"Eligible Obligor": each Obligor that satisfies each
of the following eligibility criteria:
(a) it is not organized or located (within the
meaning of Section 9-103(3)(d) of the New York Uniform
Commercial Code) in a jurisdiction other than the
United States; provided, however, that (i) Receivables
which have Obligors organized or located in Canada or
which are Japanese Obligors or (ii) Receivables which
have Obligors not otherwise described in clause (i)
above which are located (within the meaning of Section
9-103(3)(d) of the New York Uniform Commercial Code)
outside the United States shall be excluded from this
clause (a) if (x) in the case of clauses (i) and (ii)
above, such Receivables would otherwise be Eligible
Receivables and (y) in the case of clause (ii) above,
(1) such Receivables are supported by an Eligible
Letter of Credit and (2) the aggregate Adjusted
Principal Amount of all such Receivables does not
exceed 15% of the Adjusted Principal Amount of the
Eligible Receivables;
(b) it is not a direct or indirect Subsidiary of
Holdings;
(c) it is not a domestic or foreign government or
any agency, department, or instrumentality thereof;
provided, however, that up to 3% of the aggregate
Adjusted Principal Amount of the Eligible Receivables
may be
<PAGE>
10
owing by the United States government or any
agency, department or instrumentality thereof; and
(d) it is not the subject of any reorganization,
bankruptcy, receivership, custodianship or insolvency,
unless the payment of Receivables from such Obligor is
secured in a manner satisfactory to the Administrative
Agent or, if such Receivables arise subsequent to a
decree or order for relief under the Bankruptcy Reform
Act of 1978, as amended, with respect to such Obligor,
the Administrative Agent shall have determined that
timely payment and collection of such Receivables will
not be impaired.
"Eligible Receivable": as of any date, each Receivable
in existence as of such date that is not subject to a
Repurchase Event and (i) which the Administrative Agent
determines, in its commercially reasonable judgment, to be
an "Eligible Receivable" or (ii) that satisfies each of the
following eligibility criteria:
(a) the Company has lawful title to such
Receivable, free and clear of all Liens other than the
security interest in favor of the Banks;
(b) the Banks have a Lien on such Receivable,
which Lien is legal, valid, binding, perfected and
first priority under the Uniform Commercial Code or
other applicable law;
(c) the Company has the full and unqualified
right to assign and grant a Lien on such Receivable to
the Banks;
(d) such Receivable is payable in Dollars in the
United States or Canada and is a legal, valid, binding
and enforceable obligation of the Obligor under such
Receivable; provided, however, that Receivables having
an aggregate Adjusted Principal Amount equal to no more
than 10% of the aggregate Adjusted Principal Amount of
all Eligible Receivables may be payable in Canadian
dollars in the United States or Canada;
(e) such Receivable is not subject to any bona
fide dispute, setoff, counterclaim or other claim or
defense on the part of the related Obligor denying
liability under such Receivable in whole or in part;
provided, however, that any such Receivable shall
constitute an Eligible Receivable to the extent it is
not subject to any such dispute, setoff, counterclaim
or other claim or defense;
(f) such Receivable is evidenced by an invoice
rendered to the related Obligor and is not evidenced by
any "instrument" or "chattel paper", as such terms are
defined in the Uniform Commercial Code;
(g) such Receivable is a bona fide Receivable
which arose in the ordinary course of business, and
with respect to which,
<PAGE>
11
(i) in the case of a Receivable arising from
the sale of goods, such goods have been shipped or
delivered to and accepted by the Obligor, such
Receivable was created as a result of a sale on an
absolute basis and not on a consignment, approval
or sale-and-return basis and all other actions
have been taken necessary to create a binding
obligation on the part of the Obligor for such
Receivable, and
(ii) in the case of a Receivable relating to
the sale of services, such services have been
performed or completed and accepted by the Obligor
and all other actions have been taken necessary to
create a binding obligation on the part of the
Obligor;
(h) the Obligor with respect to such Receivable
is an Eligible Obligor;
(i) such Receivable is not outstanding more than
90 days past the original invoice date with respect
thereto (which date, for all purposes of eligibility,
shall not be later than the shipment date of the goods
giving rise to such Receivable); provided, however,
that Receivables of Imperial Wallcoverings, Inc. and
Imperial Wallcoverings (Canada), Inc. (not to exceed an
aggregate Adjusted Principal Amount of $12,500,000) may
be outstanding for up to, but not in excess of, 120
days past such original invoice date;
(j) payment with respect to such Receivable, if
by check, has not been returned for insufficient funds;
(k) such Receivable has not been placed with an
attorney for collection;
(l) such Receivable, to the extent it represents
a consumer credit card receivable, conforms to all
federal and state consumer protection laws;
(m) if such Receivable represents a consumer
credit card receivable, the outstanding balance of such
Receivable does not reflect more than two arrearages;
and
(n) such Receivable has such other
characteristics or criteria as the Administrative
Agent, in its reasonable discretion, may specify in
writing to the Company.
"Equipment": as defined in subsection 2.1(c)(i) of the
Receivables Transfer Agreement.
"ERISA": the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
<PAGE>
12
"ERISA Affiliate": with respect to any Person, any
trade or business (whether or not incorporated) that is a
member of a group of which such Person is a member and which
is treated as a single employer under Section 414 of the
Code.
"Eurodollar Participating Interest": with respect to
any Bank, that portion of its Participating Interest in the
Receivables with respect to which the Purchase Discount
Amount is determined by reference to the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during
each Transfer Period pertaining to a Fixed Tranche, a rate
per annum (rounded upwards, if necessary, to the next 1/16
of 1%) equal to the product of (a) the Eurodollar Base Rate
in effect for such Transfer Period and (b) Statutory
Reserves. For purposes hereof, (a) if at least two offered
rates for deposits in dollars for a period comparable to the
applicable Transfer Period appear on page 3750 (or any
successor page) of the Dow Jones Telerate Screen as of 11:00
a.m., London time, on the day that is two Business Days
prior to the first day of such Transfer Period, the term
"Eurodollar Base Rate" shall mean the arithmetic mean of all
such offered rates and (b) if fewer than two such offered
rates so appear on page 3750 (or any successor page) of the
Dow Jones Telerate Screen, the term "Eurodollar Base Rate"
shall mean the rate (rounded upwards, if necessary, to the
next 1/16 of 1%) at which dollar deposits approximately
equal in principal amount to Chemical's portion of the
applicable Fixed Tranche and for a period comparable to the
applicable Transfer Period are offered to Chemical's office
in which its relevant eurodollar operations are being
conducted in immediately available funds in the eurodollar
market at approximately 11:00 a.m., New York time, on the
day that is two Business Days prior to the first day of such
Transfer Period.
"Excess Amount": at any time, with respect to any
Obligor, the excess (if any) of (a) the aggregate
outstanding Adjusted Principal Amount of the Eligible
Receivables owing by such Obligor over (b) the Applicable
Obligor Percentage of the aggregate outstanding Adjusted
Principal Amount of all Eligible Receivables; provided, that
the Excess Amount of each Obligor shall be deemed to be zero
until the first Settlement Date subsequent to the 270th day
after the Effective Date.
"Excess Application Amount": as defined in subsection
2.12(c) of the Receivables Transfer Agreement.
"Facility Amount": $150,000,000.
"Financial Officer": of any corporation, the chief
financial officer, Senior Vice President-Finance and
Accounting, Vice President-Finance, Controller, or Treasurer
of such corporation.
"Fixed Tranche": a portion of the Net Investment on
which the rate at which the Purchase Discount Amount accrues
is based upon the Eurodollar Rate.
<PAGE>
13
"Floating Tranche": that portion of the Net Investment
not allocated to a Fixed Tranche and the Purchase Discount
Amount in respect of which is based upon the ABR.
"Force Majeure Delay": with respect to any Servicer or
the Master Servicer, any cause or event which is beyond the
control and not due to the negligence of such Servicer or
the Master Servicer, as the case may be, which delays,
prevents or prohibits such Person's delivery of Seller Daily
Reports or Daily Reports and/or Seller Settlement Statements
or Settlement Statements, as the case may be, including,
without limitation, computer, electrical and mechanical
failures, acts of God or the elements and fire; provided
that no such cause or event shall be deemed to be a Force
Majeure Delay unless the affected Servicer or Master
Servicer shall have given the Company and the Administrative
Agent written notice thereof as soon as possible after the
beginning of such delay.
"GAAP": generally accepted accounting principles in
the United States of America as in effect from time to time.
"Governmental Authority": any international, Federal,
state, regional, local or foreign court or governmental
agency, authority, instrumentality or regulatory body.
"Guarantee": of or by any Person, shall mean (a) any
obligation, contingent or otherwise, of such Person guaran-
teeing or having the economic effect of guaranteeing any
Indebtedness of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness (whether arising by virtue
of partnership arrangements, by agreement to keep well, to
purchase assets, goods, securities or services, to take-
or-pay or otherwise) or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of
such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (iii) to
maintain working capital, equity capital or other financial
statement conditions or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or
(iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment
thereof or to protect such holders against loss in respect
thereof (in whole or in part), or (b) any Lien on any assets
of such Person securing any Indebtedness of any other
Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the term Guarantee shall not
include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Holdings": Collins & Aikman Corporation, a Delaware
corporation.
"Incipient Purchase Termination Event": any condition
or act specified in Article VII of the Receivables Sale
Agreement that, with the giving of notice or the lapse of
time or both, would become a Purchase Termination Event.
<PAGE>
14
"Increase in Net Investment": for any applicable
Closing Date, the Dollar amount by which the Net Investment
of the Banks is being increased on such Closing Date.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which
is evidenced by a note, bond, debenture or similar
instrument, (c) all Capital Lease Obligations of such
Person, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such
Person, (e) 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 any
property owned or acquired by such Person even though such
Person has not assumed or otherwise become liable for the
payment thereof, (f) all obligations of such Person in
respect of interest rate protection agreements, foreign
currency exchange agreements or other interest or exchange
rate hedging arrangements and (g) all Guarantees by such
Person of Indebtedness of others. The Indebtedness of any
Person shall include the Indebtedness of any partnership in
which such Person is a general partner; provided that, if
the sole asset of such Person is its general partnership
interest in such partnership, the amount of such
Indebtedness shall be deemed equal to the value of such
general partnership interest and the amount of any
Indebtedness in respect of any Guarantee of such partnership
Indebtedness shall be limited to the same extent as such
Guarantee may be limited.
"Indemnified Liabilities": as defined in subsection
9.3 of the Receivables Sale Agreement.
"Indemnitee": as defined in subsection 11.3 of the
Receivables Transfer Agreement.
"Intermediate Lockbox Account": as defined in
subsection 12.1(b) of the Receivables Transfer Agreement.
"Invested Percentage": a fraction the numerator of
which is Net Investment and the denominator of which is
Aggregate Eligible Receivables.
"Investment Earnings": as defined in subsection
2.7(a)(iii) of the Receivables Transfer Agreement.
"Japanese Obligor": any of Fuji Heavy Industries,
Inc., Toyota Motor Co., Honda Motor Co., Ltd., Toyota Tsusho
Corp., or Kotobakiya Fronte Co., Inc.
"Lien": with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security
interest in or on such asset, (b) the interest of a vendor
or a lessor under any conditional sale agreement, capital
lease or title retention
<PAGE>
15
agreement 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.
"Lockbox Account" means each blocked deposit account
identified by number and name of bank on Schedule 3 to the
Receivables Transfer Agreement, including the box identified
by location and number on such Schedule 3, and any
replacements therefor or additions thereto which are
acceptable to the Administrative Agent.
"Lockbox Agreement" means a lockbox agreement in form
and substance satisfactory to the Administrative Agent, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with subsection 8.14 of the
Receivables Transfer Agreement.
"Lockbox Bank" means each bank listed on Schedule 3,
and any replacements therefor or additions thereto agreed to
in writing by the Administrative Agent.
"Loss Reserve Ratio": as of any day thereafter, the
percentage equivalent, determined pursuant to the most
recent Settlement Statement, of the product of:
(i) the highest Average Default Ratio during the period
of twelve consecutive fiscal months ended on the last day of
the most recently ended Settlement Period; and
(ii) (A) the aggregate Adjusted Principal Amount of
Receivables generated by the Sellers during the 3.5
preceding Settlement Periods divided by the outstanding
Adjusted Principal Amount of Eligible Receivables as of the
last day of the preceding Settlement Period; and
(iii) 2.0.
"Loss to Liquidation Ratio": a ratio (expressed as a
percentage), as of the last day of any fiscal month, equal
to (a) the difference, if any, between (i) the aggregate
reduction in the outstanding Adjusted Principal Amount of
all Receivables as a result of Write-Offs during the
immediately preceding twelve-fiscal-month period and (ii)
the aggregate amount of Recoveries during such twelve-
fiscal-month period, divided by (b) four times the aggregate
amount of Collections during the immediately preceding
three-fiscal-month period.
"Margin Stock": as defined in Regulation U.
"Master Servicer": C&A Products, in its capacity as
Master Servicer under the Receivables Transfer Agreement.
"Material Adverse Effect": (a) with respect to the
Master Servicer, any Servicer or any Seller, (i) a materi-
ally adverse effect on the business, assets, properties,
operations or financial condition of C&A Products and its
Subsidiaries, taken as a whole, (ii) a material impairment
of the ability of the Master Servicer, any
<PAGE>
16
Servicer or any Seller to perform any of its material
obligations under any Transaction Document to which it is or
will be a party or to consummate the Transactions or the Sale
Transactions or (iii) an impairment of the validity or
enforceability of, or a material impairment of the rights,
remedies or benefits available to the Administrative Agent or
the Banks under, any Transaction Document or (b) with respect
to the Company, (i) a materially adverse effect on the
business, assets, properties, operations or financial condition
of the Company, (ii) a material impairment of the ability of the
Company to perform any of its material obligations under any
Transaction Document to which it is or will be a party or to
consummate the Transactions or the Sale Transactions or
(iii) an impairment of the validity or enforceability of, or
a material impairment of the rights, remedies or benefits
available to the Administrative Agent or the Banks under,
any Transaction Document.
"Maximum Commitment": $150,000,000, as such amount may
be reduced pursuant to subsection 2.10 of the Receivables
Transfer Agreement.
"Maximum Invested Percentage": at a particular date,
100% minus the greater of (a) 17% and (b) the Required
Reserve Percentage.
"Maximum Transfer Amount": at a particular date, the
lesser of (a) the Maximum Commitment at such date and (b)
the product of (i) the Maximum Invested Percentage at such
date and (ii) Aggregate Eligible Receivables (which, for
purposes of this definition, shall not include a Seller from
which the Company has ceased purchasing Receivables pursuant
to subsection 9.15 of the Receivables Sale Agreement and
shall not include, from the date which is 30 days after the
date of any such termination, a Seller with respect to which
the Company has terminated its obligation to acquire
Receivables pursuant to Article VII of the Receivables Sale
Agreement) as of the close of business on the Business Day
preceding such date.
"Monthly Servicing Fee": for each Settlement Period,
the product of (a) the number of days in such period, (b) 1%
and (c) the average daily principal balance of Purchased
Receivables during such period divided by 365.
"Moody's": Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan": with respect to any Person, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA
to which such Person or any ERISA Affiliate of such Person
(other than one considered an ERISA Affiliate only pursuant
to subsection (m) or (o) of Section 414 of the Code) is
making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Investment": at any time, the excess, if any, of
(a) the aggregate of the amount paid by the Banks pursuant
to subsections 2.2 and 2.3 of the Receivables Transfer
Agreement over (b) the aggregate amount of Collections
distributed to the
<PAGE>
17
Banks in repayment of the Net Investment
pursuant to the Receivables Transfer Agreement.
"Obligor": with respect to any Receivable, the Person
or Persons obligated to make payments with respect to such
Receivable, including any guarantor thereof.
"Overallotment Option": as defined in the Credit
Agreement.
"Partial Servicing Transfer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"Participants": as defined in subsection 11.4(b) of
the Receivables Transfer Agreement.
"Participating Interest": as defined in subsection 2.2
of the Receivables Transfer Agreement.
"Payment Date": as defined in subsection 2.3(a) of the
Receivables Sale Agreement.
"PBGC": the Pension Benefit Guaranty Corporation
referred to and defined in ERISA (or any successor).
"Peak Dilution Ratio": with respect to any Settlement
Period, a fraction (a) the numerator of which is the
aggregate amount of Dilutive Credits which are incurred with
respect to the Receivables during the two-month period ended
on the last day of such Settlement Period and (b) the
denominator of which is the aggregate Adjusted Principal
Amount of Receivables generated by the Sellers during the
two-month period ended on the last day of such Settlement
Period.
"Person": any natural person, corporation, business
trust, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan": with respect to any Person, any pension plan
(other than a Multiemployer Plan) subject to the provisions
of Title IV of ERISA or Section 412 of the Code which is
maintained for employees of such Person or any ERISA
Affiliate of such Person.
"Pledge Agreement": the Pledge Agreement referred to
in the Credit Agreement.
"Policies": with respect to any Seller which has set
forth its credit and collection policies in writing, such
written credit and collection policies as they have been
applied by such Seller in the ordinary course of its
business prior to the Effective Date and, with respect to
any Seller which has not set forth its credit and collection
<PAGE>
18
policies in writing, its credit and collection policies as
in effect and applied by such Seller in the ordinary course
of its business prior to the Effective Date, in each case as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with the Receivables
Transfer Agreement and the Receivables Sale Agreement.
"Pooled Property": as defined in subsection 2.1(a) of
the Receivables Transfer Agreement.
"Potential Termination Event": any Termination Event
and any event or condition that upon notice, lapse of time
or both would constitute a Termination Event.
"Preliminary Prospectus": the preliminary prospectus
of Holdings dated June 2, 1994, filed with the Securities
and Exchange Commission in connection with the underwritten
public offering of shares of common stock, par value $.01
per share, of Holdings, as amended or supplemented from time
to time.
"Principal Amount": with respect to any Receivable,
the amount due thereunder (expressed in U.S. Dollars or
Canadian Dollars, as the case may be), net of any available
prompt payment discount, volume discount or other
promotional discount or rebate.
"Purchase Discount Amount": a purchase discount which
(a) accrues to the Banks in respect of the Participating
Interest; (b) is payable in arrears on each Purchase
Discount Amount Payment Date (both prior to and after the
commencement of the Amortization Period) occurring during
the period commencing on the date of the first transfer and
assignment of the Participating Interest in Receivables and
Related Property pursuant to subsection 2.3(a) of the
Receivables Transfer Agreement and ending on the date on
which the Net Investment is equal to zero and the
Commitments of the Banks have terminated; and (c) is
calculated at a rate per annum equal to: (i) in respect of
that portion of the Net Investment allocated to any Fixed
Tranche, the sum of the Eurodollar Rate with respect thereto
plus the Applicable Eurodollar Margin and (ii) in respect of
that portion of the Net Investment not allocated to any
Fixed Tranche, the sum of the ABR in effect from time to
time during the period for which payment is made plus the
Applicable ABR Margin.
"Purchase Discount Amount Payment Date": (a) as to the
Floating Tranche, each Settlement Date, (b) as to any Fixed
Tranche having a Transfer Period of one, two or three
months, the last day of such Transfer Period, (c) as to any
Fixed Tranche having a Transfer Period longer than three
months, each day which is three months, or a whole multiple
thereof, after the first day of such Transfer Period, and
the last day of such Transfer Period and (d) as to any
Tranche, any date on which the principal portion of the Net
Investment represented thereby is paid, prepaid or is
otherwise due (by mandatory prepayment, acceleration or
otherwise).
<PAGE>
19
"Purchase Price": as defined in subsection 2.2 of the
Receivables Sale Agreement.
"Purchase Termination Event": as defined in Article
VII of the Receivables Sale Agreement.
"Purchased Receivable": any Receivable sold to the
Company by any Seller pursuant to, and in accordance with
the terms of, the Receivables Sale Agreement and not resold
to such Seller pursuant to subsection 2.1(b) or 2.6 thereof.
"Rating Agencies": Moody's and S&P.
"Recapitalization Transactions": as defined in the
Credit Agreement.
"Receivables": the indebtedness and payment
obligations of any Person to a Seller arising from a sale of
merchandise or services by such Seller, including, without
limitation, any right to payment for goods sold or leased or
for services rendered, and including the right of payment of
any interest, sales taxes, finance charges, returned check
or late charges and other obligations of such Person with
respect thereto.
"Receivables Sale Agreement": the Receivables Sale
Agreement, dated as of July 13, 1994, among the Sellers, the
Master Servicer and the Company, as buyer, as amended,
supplemented or otherwise modified from time to time.
"Receivables Transfer Agreement": the Receivables
Transfer and Servicing Agreement, dated as of July 13, 1994,
among the Company, as seller, the Master Servicer, the
Servicers, the Banks and the Administrative Agent, as
amended, supplemented or otherwise modified from time to
time.
"Recoveries": amounts collected in respect of
Defaulted Receivables.
"Reduction Date": as defined in subsection 2.11(b) of
the Receivables Transfer Agreement.
"Register": as defined in subsection 11.4(e) of the
Receivables Transfer Agreement.
"Regulation G, T, U or X": Regulation G, T, U or X,
respectively, of the Board as from time to time in effect
and all official rulings and interpretations thereunder or
thereof.
"Related Property": as defined in subsection
2.1(a)(iv) of the Receivables Transfer Agreement.
"Replacement Facility": as defined in subsection 12.6
of the Receivables Transfer Agreement.
<PAGE>
20
"Reportable Event": any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan (other than a Plan
maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code).
"Reporting Day": as defined in subsection 12.5 of the
Receivables Transfer Agreement.
"Repurchase Amount": as defined in subsection 2.6 of
the Receivables Sale Agreement.
"Repurchase Event": as defined in subsection 2.6 of
the Receivables Sale Agreement.
"Required Banks": Banks having Commitment Percentages
the sum of which, in the aggregate, is equal to or exceeds
51%.
"Required Reserve Percentage": as of any day, the sum,
expressed as a percentage, of (a) the Loss Reserve Ratio,
(b) the Dilution Reserve Ratio, (c) the Yield Reserve Ratio
and (d) the Servicing Reserve Ratio.
"Requirement of Law": as to any Person, any law,
treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is
subject.
"Responsible Officer": with respect to any Person, the
chief executive officer, the president, any senior vice
president or any vice president of such Person or, with
respect to financial matters, the chief financial officer,
Senior Vice President-Finance and Accounting, Vice
President-Finance, Controller, or Treasurer of such Person.
"Restricted Payments": as defined in subsection 8.7 of
the Receivables Transfer Agreement.
"Retransfer Payment": as defined in subsection 5.3(b)
of the Receivables Transfer Agreement.
"S&P": Standard & Poor's Ratings Group and its
successors.
"Sale Documents": the Receivables Sale Agreement, the
Subordinated Notes and the Subordination Agreement.
"Sale Termination Date": as defined in subsection
9.15(b) of the Receivables Sale Agreement.
<PAGE>
21
"Sale Transactions": as defined in subsection 4.1(b)
of the Receivables Sale Agreement.
"Scheduled Termination Date": the seventh anniversary
of the Effective Date.
"Seller Addition Date": as defined in subsection 3.4
of the Receivables Sale Agreement.
"Seller Adjustment Payment": as defined in subsection
2.5 of the Receivables Sale Agreement.
"Seller Daily Report": as defined in subsection
12.5(a) of the Receivables Transfer Agreement.
"Seller Repurchase Payment": as defined in subsection
2.6 of the Receivables Sale Agreement.
"Seller Settlement Statement": as defined in
subsection 12.5(b) of the Receivables Transfer Agreement.
"Sellers": as defined in the preamble to the
Receivables Sale Agreement.
"Servicer Default": any Servicer Event of Default and
any event or condition that upon notice, lapse of time or
both would constitute a Servicer Event of Default.
"Servicer Event of Default": as defined in subsection
12.12 of the Receivables Transfer Agreement.
"Servicer Transfer Payment": as defined in subsection
12.7 of the Receivables Transfer Agreement.
"Servicers": each Seller party to the Receivables
Transfer Agreement in its capacity as a servicer (excluding
any such Sellers which have been terminated as Servicers in
accordance with the provisions of the Receivables Transfer
Agreement) together with any other Person which has been
added as a Servicer in accordance with the provisions of the
Receivables Transfer Agreement, in their capacities as
servicers under the Receivables Transfer Agreement.
"Servicing Reserve Percentage": as of any day, 0.25%.
"Servicing Reserve Ratio": as of any day, (a) 2.0
times (b) the Servicing Reserve Percentage.
"Settlement Date": with respect to any fiscal month,
the day that is 22 calendar days following the last day of
such fiscal month (or if such 22nd calendar day is not a
Business Day, the next succeeding Business Day).
<PAGE>
22
"Settlement Period": each fiscal month.
"Settlement Statement": as defined in subsection
12.5(b) of the Receivables Transfer Agreement.
"Settlement Statement Date": with respect to any
fiscal month for which a Settlement Statement is required to
be prepared, the day that is 20 calendar days following the
last day of such fiscal month (or, if such 20th calendar day
is not a Business Day, the next succeeding Business Day).
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Specified Bankruptcy Opinion Provisions": the
provisions contained in the legal opinion delivered pursuant
to subsection 6.1(b)(i) of the Receivables Transfer
Agreement (and substantially in the form of Exhibit D-2
thereto) under the headings "Transactions", "Corporate
Procedures and Financial Effect" and "Disclosure of the
Transactions".
"Statutory Reserves": 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 and any other banking
authority to which the Administrative Agent is subject (a)
with respect to the Base CD Rate (as such term is used in
the definition of "ABR"), for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities
approximately equal to three months, and (b) with respect to
the Eurodollar Rate, for Eurocurrency Liabilities (as
defined in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such
Regulation D. Fixed Tranches shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration,
exemptions or offsets which may be available from time to
time to any Bank under such Regulation D. Statutory
Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subordinated Notes": as defined in subsection 8.1 of
the Receivables Sale Agreement.
"Subordination Agreement": the Subordination
Agreement, dated as of July 13, 1994 among the Sellers, the
Master Servicer, the Company and the Administrative Agent,
as amended, supplemented or otherwise modified from time to
time.
"Subsequent Financing Party": as defined in subsection
9.4 of the Receivables Sale Agreement.
<PAGE>
23
"Subsidiary": with respect to any Person (herein
referred to as the "parent"), any corporation, partnership,
association or other business 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
more than 50% of the general partnership interests are, at
the time any determination is being made, owned, controlled
or held, or (b) which is, at the time any determination is
made, 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.
"Substitute Servicer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"Termination Event": as defined in Article IX of the
Receivables Transfer Agreement.
"Tranches": the collective reference to the Floating
Tranche and the Fixed Tranches.
"Transaction Documents": the Receivables Transfer
Agreement, the Receivables Sale Agreement, the Subordination
Agreement and the Lockbox Agreements.
"Transaction Parties": the Company, the Master
Servicer, the Sellers and the Servicers.
"Transactions": as defined in subsection 5.1(b) of the
Receivables Transfer Agreement.
"Transfer Notice": as defined in subsection 12.2(d) of
the Receivables Transfer Agreement.
"Transfer Period": with respect to any portion of the
Net Investment allocated to a Fixed Tranche:
(a) initially, the period commencing on the
Closing Date or conversion date, as the case may be,
with respect to such Fixed Tranche and ending one, two,
three or six months thereafter, as selected by the
Company in its notice of Closing Date or notice of
conversion, as the case may be, given with respect
thereto; and
(b) thereafter, each period commencing on the
last day of the next preceding Transfer Period
applicable to such Fixed Tranche and ending one, two,
three or six months thereafter, as selected by the
Company by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the
last day of the then current Transfer Period with
respect thereto;
<PAGE>
24
provided that, all of the foregoing provisions relating to
Transfer Periods are subject to the following:
(1) if any Transfer Period would otherwise end on
a day that is not a Business Day, such Transfer Period
shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry
such Transfer Period into another calendar month in
which event such Transfer Period shall end on the
immediately preceding Business Day;
(2) any Transfer Period that would otherwise
extend beyond the Scheduled Termination Date shall end
on the Scheduled Termination Date; and
(3) any Transfer Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Transfer Period)
shall end on the last Business Day of a calendar month.
"Transferee": as defined in subsection 11.4(g) of the
Receivables Transfer Agreement.
"Transferred Agreement": as defined in subsection
2.1(b) of the Receivables Transfer Agreement.
"Transferring Servicer": as defined in subsection
12.2(d) of the Receivables Transfer Agreement.
"U.S. Concentration Account": as defined in subsection
2.7(a) of the Receivables Transfer Agreement.
"U.S. Dollar Subordinated Note": as defined in
subsection 8.1 of the Receivables Sale Agreement.
"Withdrawal Liability": 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.
"Write-Offs": with respect to any Seller, for any
period, the aggregate amount of Receivables that are written
off during such period as uncollectible in accordance with
the Company Policies.
"Yield Reserve Ratio": as of any day, the amount as of
such day obtained by dividing (a) the product of (i) 1.75,
(ii) Days Sales Outstanding as of the Settlement Date
immediately preceding such day and (iii) the Discount Rate
in effect as of the Settlement Date immediately preceding
such day by (b) 360.
Collins & Aikman Corporation
Computation of Earnings Per Share Exhibit 11
In thousands, except per share data
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Shares outstanding at beginning of
period (1) . . . . . . . . . . . . . 28,164 28,164 28,164 28,164
Recapitalization on July 13, 1994
Initial public offering of 15,000
shares . . . . . . . . . . . . . 2,967 - 1,484 -
Subordinated PIK Bridge Notes
exchanged for 18,547 shares . . . 3,669 - 1,834 -
Purchase of 6,560 shares byaffiliates. . 1,298 - 648 -
Purchase of 2,250 shares by affiliates
on July 29, 1994 . . . . . . . . . . 49 - 25 -
Shares issued upon exercise of options 3,206 3,206 3,206 3,206
Proceeds from exercise of options . . . $ 14,812 $ 14,812 $ 14,812 $ 14,812
Applicable compensation expense . . . . 1,354 28,344 1,354 28,344
Amount available to buy back shares . . $ 16,166 $ 43,156 $ 16,166 $ 43,156
Per share price . . . . . . . . . . $ 10.50 $ 10.50 $ 10.50 $ 10.50
Shares repurchased under Treasury
Stock Method . . . . . . . . . . 1,540 4,110 1,540 4,110
Increase (decrease) in total shares . . 1,666 (904) 1,666 (904)
Total shares for EPS . . . . . 37,813 27,260 33,821 27,260
Loss applicable to common shareholders:
Continuing operations (2) . . . . $ (82,021) $ (26,450) $ (76,353) $ (37,543)
Discontinued operations . . . . . - (128,802) - (132,398)
Extraordinary item . . . . . . . (106,528) - (106,528) -
Net loss . . . . . . . . . . . $(188,549) $(155,252) $(182,881) $(169,941)
Loss per common share:
Continuing operations . . . . . . . $ (2.17) $ (.97) $ (2.26) $ (1.38)
Discontinued operations . . . . . . - (4.73) - (4.86)
Extraordinary item . . . . . . . . . (2.82) - (3.15) -
Net loss . . . . . . . . . . . $ (4.99) $ (5.70) $ (5.41) $ (6.24)
</TABLE>
Notes:
(1) Shares outstanding as of the beginning of each of the respective
periods have been restated to reflect the impact of themerger of
Collins & Aikman Holdings II Corporation into the Company on July
13, 1994.
(2) Income (loss) from continuing operations has been adjusted for
dividends and accretion requirements on redeemable preferred
stock of $7,322 and $14,408 for the thirteen and twenty-six weeks
ended July 30, 1994, respectively, and $5,822 and $11,442
for the thirteen and twenty-six weeks ended July 31, 1993,
respectively. In addition, income (loss) from continuing
operations for the thirteen and twenty-six weeks ended July 30,
1994 has been adjusted for the loss on redemption of
preferred stock of $82,022.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains Summary Financial information extracted from the
Company's Consolidated Balance Sheet and Consolidated Statement of
Operations at and for the Quarter and Six Months ended July 30, 1994
and such is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> OTHER QTR-1 6-MOS
<FISCAL-YEAR-END> JUL-30-1994 JUL-30-1994 JUL-30-1994
<PERIOD-END> JUL-30-1994 JUL-30-1994 JUL-30-1994
<CASH> 13,729 0 0
<SECURITIES> 0 0 0
<RECEIVABLES> 69,185 0 0
<ALLOWANCES> 6,746 0 0
<INVENTORY> 195,639 0 0
<CURRENT-ASSETS> 319,382 0 0
<PP&E> 564,453 0 0
<DEPRECIATION> 263,224 0 0
<TOTAL-ASSETS> 679,311 0 0
<CURRENT-LIABILITIES> 211,867 0 0
<BONDS> 607,293 0 0
<COMMON> 705 0 0
0 0 0
0 0 0
<OTHER-SE> (460,170) 0 0
<TOTAL-LIABILITY-AND-EQUITY> 679,311 0 0
<SALES> 0 359,749 750,195
<TOTAL-REVENUES> 0 359,749 750,195
<CGS> 0 272,392 561,884
<TOTAL-COSTS> 0 272,392 561,884
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 550 1,125
<INTEREST-EXPENSE> 0 25,554 54,615
<INCOME-PRETAX> 0 10,293 25,665
<INCOME-TAX> 0 2,970 5,588
<INCOME-CONTINUING> 0 7,323 20,077
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 (106,528) (106,528)
<CHANGES> 0 0 0
<NET-INCOME> 0 (99,205) (86,451)
<EPS-PRIMARY> 0 (4.99) (5.41)
<EPS-DILUTED> 0 (4.99) (5.41)
</TABLE>
