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 April 27, 1996
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
A Delaware Corporation (IRS Employer Identification
No. 13-3489233)
701 McCullough Drive
Charlotte, North Carolina 28262
Telephone (704) 547-8500
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
As of June 6, 1996, the number of outstanding shares of the Registrant's common
stock, $.01 par value, was 69,073,963 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)
Quarter Ended
April 27, April 29,
1996 1995
Net sales ........................................... $ 373,611 $ 334,890
Cost of goods sold .................................. 295,655 261,307
Selling, general and administrative expenses ........ 37,349 31,307
333,004 292,614
Operating income .................................... 40,607 42,276
Interest expense, net ............................... 15,163 11,426
Loss on sale of receivables ......................... 2,065 2,694
Other (income) expense .............................. (1,307) --
Income from continuing operations before income taxes 24,686 28,156
Income tax expense .................................. 9,900 3,389
Income from continuing operations ................... 14,786 24,767
Discontinued operations:
Income from operations, net of income tax expense of
$21 and $264.................................... 356 4,134
Net income .......................................... $ 15,142 $ 28,901
Net income per primary and fully diluted common share:
Continuing operations ............................ $ .21 $ .35
Discontinued operations .......................... .01 .05
Net income ....................................... $ .22 $ .40
Average common shares outstanding:
Primary .......................................... 70,035 71,748
Fully diluted .................................... 70,117 71,748
See accompanying notes.
I-1
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
(Unaudited)
---------------
April 27, January 27,
1996 1996
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ......................... $ 5,493 $ 977
Accounts and notes receivable, net ................ 153,870 128,595
Inventories ....................................... 147,243 147,774
Net assets of discontinued operations ............. 80,712 79,401
Other ............................................. 56,089 74,158
Total current assets ............................ 443,407 430,905
Property, plant and equipment, at cost less accumulated 292,062 286,033
depreciation and amortization of $230,729 and $222,384
Deferred tax assets .................................. 123,803 124,395
Goodwill, net ........................................ 158,362 159,347
Other assets ......................................... 50,771 49,327
$ 1,068,405 $ 1,050,007
LIABILITIES AND COMMON STOCKHOLDERS' DEFICIT
Current Liabilities:
Notes payable ..................................... $ 1,243 $ 2,101
Current maturities of long-term debt .............. 53,897 51,508
Accounts payable .................................. 116,037 117,059
Accrued expenses .................................. 120,762 97,883
Total current liabilities ....................... 291,939 268,551
Long-term debt ....................................... 704,739 713,514
Other, including postretirement benefit obligation ... 283,958 295,794
Commitments and contingencies ........................ -- --
Common stock (150,000 shares authorized, 70,521 shares issued
and 69,074 shares outstanding) ................... 705 705
Other paid-in capital ................................ 585,358 585,469
Accumulated deficit .................................. (754,997) (770,139)
Foreign currency translation adjustments ............. (23,129) (23,719)
Pension equity adjustment ............................ (9,090) (9,090)
Treasury stock, at cost (1,447 shares) ............... (11,078) (11,078)
Total common stockholders' deficit .............. (212,231) (227,852)
$ 1,068,405 $ 1,050,007
</TABLE>
See accompanying notes.
I-2
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Quarter Ended
April 27, April 29,
1996 1995
OPERATING ACTIVITIES
<S> <C> <C>
Income from continuing operations............................................... $ 14,786 $ 24,767
Adjustments to derive cash flow from
continuing operating activities:
Depreciation and leasehold amortization.................................... 9,754 10,291
Amortization of goodwill................................................... 1,030 -
Amortization of other assets............................................... 1,995 734
Decrease (increase) in accounts and notes receivable....................... (26,275) 26,809
Decrease (increase) in inventories......................................... 531 (2,225)
Decrease in accounts payable............................................... (1,022) (19,026)
Increase in interest payable............................................... 446 730
Other, net................................................................. 22,368 (5,099)
Net cash provided by continuing operating activities..................... 23,613 36,981
Cash provided by (used in) Wallcoverings discontinued operations................ 3,666 (5,525)
Cash provided by (used in) other discontinued operations........................ 2,385 (6,831)
Net cash provided by (used in) discontinued operations................... 6,051 (12,356)
INVESTING ACTIVITIES
Additions to property, plant and equipment...................................... (19,940) (21,462)
Sales of property, plant and equipment.......................................... 2,363 274
Other, net...................................................................... (1,254) (2,250)
Net cash used in investing activities.................................... (18,831) (23,438)
FINANCING ACTIVITIES
Issuance of long-term debt...................................................... 184 717
Repayment of long-term debt..................................................... (14,516) (1,863)
Proceeds from (reduction of) participating interests in accounts
receivable, net of redemptions............................................... 1,000 (5,000)
Net borrowings on revolving credit facilities.................................. 8,000 15,000
Net borrowings (repayments) on notes payable.................................... (858) 227
Other, net...................................................................... (127) 134
Net cash provided by (used in) financing activities...................... (6,317) 9,215
Net increase in cash and cash equivalents....................................... 4,516 10,402
Cash and cash equivalents at beginning of period................................ 977 3,317
Cash and cash equivalents at end of period...................................... $ 5,493 $ 13,719
</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) is a Delaware corporation. Prior to July 13, 1994, the
Company was a wholly-owned subsidiary of Collins & Aikman Holdings II
Corporation ("Holdings II"). In connection with an initial public offering of
common stock ("Common Stock") and a recapitalization (the "Recapitalization"),
Holdings II was merged into the Company. Concurrently, Collins & Aikman Group,
Inc., a wholly-owned subsidiary of the Company ("Group"), was merged into its
wholly-owned subsidiary, Collins & Aikman Corporation, which changed its name to
Collins & Aikman Products Co. ("C&A Products"). On July 7, 1994, the Company
changed its name from Collins & Aikman Holdings Corporation to Collins & Aikman
Corporation.
Prior to the Recapitalization, the Company was jointly owned by
Blackstone Capital Partners L.P. ("Blackstone Partners") and Wasserstein Perella
Partners, L.P. ("WP Partners") and their respective affiliates. As of April 27,
1996, Blackstone Partners and WP Partners and their respective affiliates
collectively own approximately 78% of the Common Stock.
The Company conducts all of its operating activities through its
wholly-owned C&A Products subsidiary.
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 these condensed consolidated financial
statements for the quarter ended April 29, 1995 to conform to the fiscal 1996
presentation and are primarily related to the Wallcoverings segment being
reclassified as a discontinued operation. See Note I.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Collins & Aikman Corporation Annual Report
on Form 10-K for the fiscal year ended January 27, 1996.
C. Interest Rate Protection Programs:
The Company maintains a program designed to reduce its exposure to
changes in the cost of its variable rate borrowings by the use of interest rate
corridor and collar agreements. At April 27, 1996, the Company has a corridor
agreement to limit its exposure through October 1996 on a notional principal
amount of $250 million at an average LIBOR strike price of 7.50%. The strike
price of corridor and collar agreements exceeded the current market levels at
the time they were entered into and their cost is included in interest expense
ratably during the life of the agreements. Payments to be received, if any, as a
result of the agreements are accrued as a reduction of interest expense.
Unamortized costs of these arrangements are included in other assets. The
Company has limited its exposure through April 2, 1998 on $80 million of
notional principal amount utilizing zero cost collars with 4.75% floors and a
weighted average cap of 7.86%.
Amortization of these agreements amounted to $.3 million and $.1
million during the quarter ended April 27, 1996 and April 29, 1995,
respectively.
I-4
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
D. Goodwill:
Goodwill, representing the excess of purchase price over the fair value
of net assets of the acquired entities, is being amortized on a straight-line
basis over the period of forty years. Amortization of goodwill applicable to
continuing operations for the first quarter of 1996 was $1.0 million.
Accumulated amortization at April 27, 1996 was $1.3 million. The carrying value
of goodwill will be reviewed periodically based on the nondiscounted cash flows
and pretax income of the entities acquired over the remaining amortization
periods. Should this review indicate that the goodwill balance will not be
recoverable, the Company's carrying value of the goodwill will be reduced. At
April 27, 1996, the Company believes its goodwill of $158.4 million was not
impaired.
E. Receivables Facility:
On March 31, 1995, C&A Products repaid and terminated the receivables
financing arrangement it entered into in connection with the Recapitalization
(the "Bridge Receivables Facility") and entered, through a trust (the "Trust")
formed by Carcorp, Inc., a wholly-owned, bankruptcy remote subsidiary of C&A
Products ("Carcorp"), into a new receivables facility (the "Receivables
Facility") comprised of (i) term certificates, which were issued on March 31,
1995, in an aggregate face amount of $110 million and have a term of five years
and (ii) variable funding certificates, which represent revolving commitments of
up to an aggregate of $75 million and have a term of five years. Carcorp
purchases on a revolving basis and transfers to the Trust virtually all trade
receivables generated by C&A Products and certain of its subsidiaries (the
"Sellers").
Availability under the variable funding certificates at any time
depends primarily on the amount of receivables generated by the Sellers from
sales to the auto industry, the rate of collection on those receivables and
other characteristics of those receivables which affect their eligibility (such
as the bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these criteria, at April 27,
1996 approximately $24.2 million was available under the variable funding
certificates, of which approximately $19.0 million was utilized.
The term certificates bear interest at an average rate equal to
one-month LIBOR plus .34% per annum. The variable funding certificates bear
interest, at Carcorp's option, at LIBOR plus .40% per annum or a prime rate.
As of April 27 1996 the Trust's receivables pool was $215.3 million net
of allowances for doubtful accounts. As of April 27, 1996 the holders of term
certificates and variable funding certificates collectively possessed a $129.0
million undivided senior interest (net of settlements in transit) in the Trust's
receivables pool and, accordingly, such receivables were not reflected in the
Company's accounts receivable balance as of that date.
I-5
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
F. Inventories:
Inventory balances are summarized as follows (in thousands):
April 27, January 27,
1996 1996
Raw materials...................$ 82,915 $ 80,827
Work in process................. 25,918 24,140
Finished goods.................. 38,410 42,807
$ 147,243 $ 147,774
G. Interest Expense, Net:
Interest expense for the quarters ended April 27, 1996 and April 29,
1995 is net of interest income of $.3 million and $.8 million, respectively.
H. Facility Closing Costs:
In the fourth quarter of fiscal 1995, the Company in its Automotive
Products segment provided for the cost to exit one manufacturing facility.
Additionally, the Company provided for the cost to exit one manufacturing and
three distribution centers in its discontinued Wallcoverings segment. During the
first quarter of 1996, the Company did not expend cash related to closure and
disposal of idled facilities for continuing operations. Cash outlays for
facility closing costs related to discontinued operations during the first
quarter of 1996 were approximately $.4 million for severance benefits and $.1
million for closing and disposal of idled facilities.
I. Discontinued Operations:
On April 9, 1996, the Company announced a plan to spin off its Imperial
Wallcoverings, Inc. subsidiary ("Wallcoverings") to the stockholders of the
Company in the form of a stock dividend. The spin-off requires, among other
things, the consent of the Company's lenders and the final approval of the
Company's Board of Directors. The Company expects the spin-off to occur during
the third quarter of 1996. The Company has accounted for the financial results
and net assets of Wallcoverings as a discontinued operation. Accordingly,
previously reported financial results for all periods presented have been
restated to reflect Wallcoverings as a discontinued operation.
Wallcoverings had income of $.4 million in the first quarter of 1996
compared to income of $4.1 million in the prior year period.
J. Related Party Transactions:
Under the Amended and Restated Stockholders' Agreement among the
Company, C&A Products, Blackstone Partners and WP Partners, the Company pays
Blackstone Partners and WP Partners, or their respective affiliates, each an
annual monitoring fee of $1.0 million, which is payable quarterly.
I-6
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
K. Information About Industry Segments of the Company's Continuing
Operations:
Information about the Company's continuing industry segments for the
first quarter of fiscal 1996 and of fiscal 1995 follows (in thousands):
<TABLE>
<CAPTION>
Depreciation
Quarter Ended Net Gross Operating and Capital
April 27, 1996 Sales Margin Income Amortization (a) Expenditures
<S> <C> <C> <C> <C> <C>
Automotive Products $ 282,702 $ 51,874 $ 30,146 $ 8,774 $ 8,768
Interior Furnishings 90,909 26,082 10,461 2,951 7,150
Corporate items (b) - - - 1,054 4,022
$ 373,611 $ 77,956 $ 40,607 $ 12,779 $ 19,940
</TABLE>
<TABLE>
<CAPTION>
Depreciation
Quarter Ended Net Gross Operating and Capital
April 29, 1995 Sales Margin Income Amortization (a) Expenditures
<S> <C> <C> <C> <C> <C>
Automotive Products $ 243,694 $ 45,728 $ 31,080 $ 6,507 $ 15,312
Interior Furnishings 91,196 27,855 11,196 3,478 4,625
Corporate items (b) - - - 1,040 1,525
$ 334,890 $ 73,583 $ 42,276 $ 11,025 $ 21,462
</TABLE>
(a) Includes the amortization of goodwill and other assets and liabilities
and excludes depreciation and amortization for discontinued operations.
(b) Includes capital expenditures for discontinued operations for the first
quarter of 1996 and 1995 of $3.5 million and $1.2 million,
respectively.
The geographic dispersion of the operations of the Company and its
subsidiaries did not change significantly from January 27, 1996 to April 27,
1996.
L. 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 results of operations.
See also "PART I - FINANCIAL INFORMATION, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
I-7
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Continued)
(Unaudited)
C&A Products (or its predecessor, Group) has assigned leases related to
divested businesses. Although C&A Products has obtained releases from the
lessors of certain of these properties, C&A Products remains contingently liable
under most of the leases. C&A Products' 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 results of
operations.
M. Common Stockholders' Deficit:
Activity in common stockholders' deficit is as follows (in thousands):
<TABLE>
<CAPTION>
Foreign
Common Other Currency Pension
Stock Paid-in Accumulated Translation Equity Treasury
Capital Deficit Adjustments Adjustment Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 27, 1996.. $ 705 $ 585,469 $ (770,139) $ (23,719) $ (9,090) $ (11,078) $ (227,852)
Compensation expense
adjustment................ - (111) - - - - (111)
Net income................... - - 15,142 - - - 15,142
Foreign currency
translation adjustments... - - - 590 - - 590
Balance at April 27, 1996.... $ 705 $ 585,358 $ (754,997) $ (23,129) $ (9,090) $ (11,078) $ (212,231)
</TABLE>
N. Earnings Per Share:
Earnings per common share are based on the weighted average number of
shares of Common Stock outstanding during each period and the assumed exercise
of employee stock options less the number of treasury shares assumed to be
purchased from the proceeds, including applicable deferred compensation expense.
O. Significant Subsidiary:
The Company conducts all of its operating activities through its
wholly-owned subsidiary C&A Products. The following represents summarized
consolidated financial information of C&A Products and its subsidiaries for the
fiscal quarter ending (in thousands):
April 27, April 29,
1996 1995
Current assets ............................ $442,913 $331,701
Noncurrent assets ......................... 624,998 307,547
Current liabilities ....................... 291,939 204,711
Noncurrent liabilities .................... 986,115 820,835
Net sales ................................. 373,611 334,890
Gross margin .............................. 77,956 73,583
Income from continuing operations ......... 14,761 25,038
Net income ................................ 15,117 29,172
I-8
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL REPORT (Concluded)
(Unaudited)
Separate financial statements of C&A Products are not presented because
they would not be material to the holders of any debt securities of C&A Products
that have been or may be issued, there being no material differences between the
financial statements of C&A Products and the Company. The absence of separate
financial statements of C&A Products is also based upon the fact that any debtof
C&A Products issued, and the assumption that any debt to be issued, under the
Registration Statement on Form S-3 filed by the Company and C&A Products
(Registration No. 33-62665) is or will be fully and unconditionally guaranteed
by the Company.
I-9
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RECENT DEVELOPMENTS
On May 1, 1996, the Company acquired the business of BTR Fatati Limited
("Fatati"), a manufacturer and supplier of molded floor carpets and luggage
compartment trim for the European automotive market. The acquisition increases
the Company's carpet molding capacity and gives it a European base from which to
supply its new carpet molding plant in Austria. Fatati's customers include
General Motors, Saab and Toyota.
On June 10, 1996, the Company's wholly-owned subsidiary, C&A Products,
issued $400 million principal amount of 11-1/2 % Senior Subordinated Notes due
2006 (the "Subordinated Notes"), which are guaranteed by the Company.
TheSubordinated Notes were sold at a price equal to 100% of their principal
amount. The Company used approximately $349.8 million of the estimated net
proceeds of $387.2 million to repay $339.0 million principal amount of the
outstanding bank borrowings plus accrued interest on such borrowings and related
fees and expenses and intends to use the remainder for general corporate
purposes, including working capital, capital expenditures and acquisitions.
GENERAL
The Company's continuing business segments consist of Automotive
Products, which supplies textile and plastic interior trim products and
convertible top systems to the North American and, increasingly, the European
automotive industry; and Interior Furnishings, which manufactures residential
upholstery and commercial carpet products in the United States. The
Wallcoverings segment, which produces residential and commercial wallpaper in
North America, has been classified as a discontinued operation and, accordingly,
all prior year segment information has been restated.
The Company's net sales in the first quarter of fiscal 1996 were $373.6
million, with approximately $282.7 million (75.7%) in Automotive Products and
$90.9 million (24.3%) in Interior Furnishings. 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 primarily influenced by the level of North American vehicle
production. Interior Furnishings' Decorative Fabrics group is directly
influenced by the level of retail furniture sales, which in turn is primarily
influenced by the level of residential construction and renovation and by
consumer confidence. Interior Furnishings' Floorcoverings group is primarily
influenced by the level of institutional and commercial construction.
I-10
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
RESULTS OF OPERATIONS
Discussion of results of each of the Company's operating segments follows:
Automotive Products
<TABLE>
<CAPTION>
Quarter Ended
April 27, 1996 April 29, 1995
Amount Percent Amount Percent
(amounts in thousands)
<S> <C> <C> <C> <C>
Net sales.......................................... $ 282,702 100.0% $ 243,694 100.0%
Cost of goods sold................................. 230,828 81.7 197,966 81.2
Gross margin....................................... 51,874 18.3 45,728 18.8
Selling, general & administrative expenses......... 21,728 7.6 14,648 6.0
Operating income................................... $ 30,146 10.7% $ 31,080 12.8%
</TABLE>
Net Sales: Automotive Products' net sales increased 16.0% to approximately
$282.7 million in the first quarter of 1996, up $39.0 million over the
comparable 1995 quarter. The overall increase was due to the acquisition of
Manchester Plastics in January 1996, as well as increased sales in convertible
top systems, molded carpet, accessory mats and luggage compartment trim. These
increases were partially offset by a reduction of approximately $16.0 million in
sales to General Motors resulting from the United Auto Workers strike against
General Motors in March 1996 and decreased sales of automotive bodycloth. The
overall increase in the segment's sales compares with a 4.4% decrease in the
North American vehicle build over the comparable quarter of the prior year. For
the remainder of the year, the Company currently does not expect any increase in
the North American vehicle build versus last year.
Manchester Plastics, which was acquired in January 1996, contributed $38.3
million in sales of plastic interior trim components in the first quarter of
1996. Manchester's sales were negatively impacted by the General Motors strike
in March 1996. The strike impact was partially offset by increased sales to the
Honda Civic. In addition, sales to the Ford Taurus/Sable and Chevrolet C/K
truckdecreased during the quarter.
Convertible top system sales increased 80.0% in the first quarter of 1996 over
the prior year period principally due to increased shipments of the Chrysler
Sebring and Alfa Romeo Spider. These increases were partially offset by the
planned discontinuance of the Chrysler LeBaron convertible.
Molded carpet sales increased 4.8% in the first quarter of 1996 over the prior
year period. Increased sales to the Chrysler Caravan/Voyager, T300 pickup,
Sebring and Breeze were partially offset by reduced sales to General Motors due
to the March 1996 strike and reduced sales to the Chrysler Stratus.
Accessory mat sales increased 11.3% in the first quarter of 1996 over the prior
year period. The overall increase is attributable to increased sales to the
Chrysler Minivan and T-300, the Honda Civic, Subaru Outback, Toyota 4-Runner and
RAV-4. These increases were partially offset by the General Motors strike and
lower Nissan build requirements.
I-11
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
Luggage compartment trim sales increased 2.7% in the first quarter of 1996 over
the prior year period. Increased sales to the Honda Civic and the Chrysler
Sebring and Breeze were partially offset by decreased General Motors sales and
by reduced sales to the Ford Explorer and the Chrysler Stratus.
Automotive bodycloth sales declined 22.6% in the first quarter of 1996 over the
prior year period. The decreased sales resulted primarily from the General
Motors strike and from reduced sales to the Ford Mustang, Thunderbird, Escort,
and F-Series truck and the Honda Civic. These decreases were partially offset by
increased sales to the Mercury Sable and the Chrysler Grand Cherokee, Breeze and
Concorde.
Of the segment's sales, approximately 12.9% in the first quarter of 1996 were
attributable to products utilized in vehicles not built in North America.
The above factors resulted in the Company's average sales content per vehicle
built in North America of approximately $64 for the first quarter of 1996
compared to an average of approximately $54 for the fiscal 1995 year.
Gross Margin: For the first quarter of 1996, gross margin was 18.3%, down from
18.8% in the comparable period in 1995. The decrease in gross margin is
attributable primarily to the impact of the General Motors strike in March 1996
and anticipated lower margins in plastic components partially offset by the
increase in higher margin convertible top system sales. The Company currently
anticipates margins in its plastic interior trim business will increase afterthe
second quarter unless new programs fail to launch.
Selling, General and Administrative Expenses: Automotive Products' selling,
general and administrative expenses increased 48.3% to $21.7 million in the
first quarter of 1996, up $7.1 million over the comparable 1995 period. The
increase is primarily due to the acquisition of Manchester Plastics and Amco
Convertible Fabrics and the expansion of the Company's carpet business in
Austria and convertible top system business in Mexico.
Interior Furnishings
<TABLE>
<CAPTION>
Quarter Ended
April 27, 1996 April 29, 1995
Amount Percent Amount Percent
(amounts in thousands)
<S> <C> <C> <C> <C>
Net sales.......................................... $ 90,909 100.0% $ 91,196 100.0%
Cost of goods sold................................. 64,827 71.3 63,341 69.5
Gross margin....................................... 26,082 28.7 27,855 30.5
Selling, general & administrative expenses......... 15,621 17.2 16,659 18.2
Operating income................................... $ 10,461 11.5% $ 11,196 12.3%
</TABLE>
I-12
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
Net Sales: Interior Furnishings' net sales decreased .3% to $90.9 million in the
first quarter of 1996, down $.3 million compared to the first quarter of 1995.
The Decorative Fabrics group experienced a net sales decline of 5.2% and the
Floorcoverings group experienced a net sales increase of 13.5% during the first
quarter of fiscal 1996 as compared to the first quarter of the prior year.
Decorative Fabrics' sales decline was principally in the group's Mastercraft
division, which makes flatwoven upholstery fabrics. Mastercraft's sales volumes
remained basically unchanged in the first quarter of 1996 as compared to the
prior year period, while the average selling prices decreased due to changes in
sales mix towards the Company's lower priced Advantage product line.
Floorcoverings' sales increase for the first quarter is largely attributable to
a 12.5% increase in unit shipments, primarily in six-foot roll sales to all
market segments. The Company attributes the Floorcoverings' sales growth to its
strategy of increasing penetration of market segments by adding
specialistswithin its sales force for more focused coverage of those segments.
Gross Margin: Interior Furnishings' gross margin for the first quarter of 1996
declined to 28.7% of sales from 30.5% in the comparable prior year period. The
decline reflects the overall softness in the home furnishings market that the
Company's Mastercraft division serves and the impact of the decrease in the
division's average selling price as discussed above. In addition, Mastercraft
experienced an increase in raw material costs of approximately $1.0 million
during the first quarter of 1996 over the comparable prior year period.
Floorcoverings' gross margin for the first quarter of 1996 was 37.4% of net
sales compared to 43.0% of net sales in the comparable prior year period. The
decrease is primarily related to unfavorable overhead absorption and inventory
adjustments in the first quarter of 1996.
Selling, General and Administrative Expenses: Interior Furnishings' selling,
general and administrative expenses decreased 6.2% to $15.6 million in the first
quarter of 1996, down $1.0 million from the first quarter of 1995. This decrease
is primarily due to lower administrative costs in the group's Mastercraft
division.
Company As A Whole
Net Sales: Net sales increased 11.6% to $373.6 million in the first quarter of
1996, up $38.7 million over the first quarter of 1995. The overall net sales
increase reflects continued sales increases in the Company's Automotive Products
segment offset by sales decreases in the Interior Furnishings segment as
discussed above.
Gross Margin: Gross margin increased to $78.0 million or 20.9% of sales in the
first quarter of 1996, up from $73.6 million or 22.0% of sales in the first
quarter of 1995. The first quarter 1996 decrease in gross margin as a percentage
of sales results primarily from the General Motors strike in March 1996 and
lower margins in plastic interior trim components, offset by
increasedconvertible top system sales in the Automotive Products segment, and by
a decrease in the average selling prices of products in the Interior Furnishings
segment. To a lesser extent, the decline in gross margin is attributable to raw
material price increases. The Company expects that raw material price increases
announced in 1995 will affect operating results in the remainder of fiscal 1996,
although the Company believes that the impact can be somewhat reduced by price
increases to customers, the continued results ofthe Company's value
engineering/value analysis and cost improvement programs andby continued
reductions in the cost of non-conformance.
I-13
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
Selling, General and Administrative Expenses: Selling, general and
administrative expenses of $37.3 million in the first quarter of 1996 were $6.0
million higher than the comparable period in 1995. The increase is primarily
attributable to the acquisition of Manchester Plastics in January 1996 and of
Amco Convertible Fabrics in October 1995.
Interest Expense: Interest expense allocated to continuing operations, net of
interest income of $.3 million in the first quarter of 1996 and $.8 million in
the first quarter of 1995, increased $3.7 million to $15.1 million in the first
quarter of 1996 from $11.4 million in the first quarter of 1995. The overall
increase in interest expense was due to a higher amount of overall outstanding
indebtedness, primarily related to the $197 million Credit Facility that was
entered into in connection with the acquisition of Manchester Plastics in
January 1996 ("Term Loan B Facility").
Loss on the Sale of Receivables: The Company sells on a continuous basis,
through its Carcorp subsidiary, interests in a pool of accounts receivable. In
connection with the receivables sales, a loss of $2.1 million was incurred in
the first quarter of 1996 compared to a loss of $2.7 million in the prior year
quarter. See Note E to Condensed Consolidated Financial Report.
Other (Income) Expense: The Company in the first quarter of 1996 recognized $1.3
million in foreign currency transaction gains related to obligations to be
settled in currencies other than the functional currency of its foreign
operations.
Income Taxes: In the quarter ended April 27, 1996, the provision for income
taxes was $9.9 million compared with $3.4 million for the comparable 1995
period. The increase in the Company's tax expense and effective rate results
from the Company's 1995 recognition of net deferred tax assets of $150 million.
In the first quarter of 1996 and 1995 income tax expense consisted of foreign,
state, franchise and federal taxes.
Discontinued Operations: The Company's discontinued Wallcoverings subsidiary had
income of $.4 million in the first quarter of 1996 compared to income of $4.1
million in the prior year period. The decline in income of the discontinued
Wallcoverings subsidiary resulted from a 12.1% decrease in sales and a related
decline in operating results.
Net Income: The combined effect of the foregoing resulted in net income of $15.1
million in the first quarter of 1996 compared to net income of $28.9 million for
the comparable period of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company and its subsidiaries had cash and cash equivalents totaling
$5.5 million and $1.0 million at April 27, 1996 and January 27, 1996,
respectively. The Company had a total of $57.6 million of borrowing availability
under its credit arrangements as of April 27, 1996. The total was comprised of
$42.0 million under the Revolving Facility, $5.2 million under the Receivables
Facility and approximately $10.4 million under a demand line of credit in
Canada.
I-14
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
As part of the Recapitalization, in July 1994 the Company entered into
credit facilities consisting of (i) a Term Loan Facility, (ii) a Revolving
Facility (together with the Term Loan Facility, the "Credit Agreement
Facilities") and (iii) a bridge receivables facility, which was terminated and
replaced with the Receivables Facility described below. On December 22, 1995,
the Company and C&A Products entered into the Term Loan B Facility to finance
the January 1996 purchase of Manchester Plastics. The restrictive covenants
contained in the Term Loan B Facility were identical to those in the Credit
Agreement Facilities.
As discussed above, on June 10, 1996 C&A Products issued $400 million
principal amount of Subordinated Notes, which mature in 2006. The Subordinated
Notes are guaranteed by the Company. The indenture governing the Subordinated
Notes generally prohibits the Company, C&A Products and any Restricted
Subsidiary (as defined) from making certain payments and investments (generally,
dividends and distributions on their capital stock; repurchases or redemptions
of their capital stock; repayment prior to maturity of debt subordinated to the
Subordinated Notes; and investments (other than permitted investments))
("Restricted Payments") if (i) there is a default under the Subordinated Notes
or (ii) after giving pro forma effect to the Restricted Payment, C&A Products
could not incur at least $1.00 of additional indebtedness under the indenture's
general test for the incurrence of indebtedness, which is a specified ratio
(currently 2 to 1) of cash flow to interest expense or (iii) the aggregate of
all such Restricted Payments from the issue date exceeds a specified threshold
(based, generally, on 50% of cumulative consolidated net income since the issue
date plus 100% of the net proceeds of capital contributions to C&A Products from
stock issuances by the Company). The prohibition is subject to a number of
significant exceptions, including dividends to stockholders of the Company not
exceeding $10 million in any fiscal year or $20 million in the aggregate until
the maturity of the Subordinated Notes and dividends to the Company to permit it
to pay its operating and administrative expenses. The Subordinated Note
indenture also contains other restrictive covenants (including, among others,
limitations on the incurrence of indebtedness, asset dispositions and
transactions with affiliates) which are customary for such securities. These
covenants are also subject to a number of significant exceptions.
On June 3, 1996, the Company and C&A Products entered into an amendment
and restatement (the "Amendment") of the Credit Agreement Facilities and the
Term Loan B Facility (the "Bank Credit Facilities"). The Amendment was effected
in connection with the sale of the Subordinated Notes and the use of proceeds
from such sale to repay various outstanding loans under the Credit Agreement
Facilities. As a result of the Amendment, the Bank Credit Facilities consist of
(i) the Term Loan Facility, in an aggregate principal amount of $195 million
(including a $45 million facility in Canada), payable in installments until
final maturity on December 31, 2002, (ii) the Term Loan B Facility, in the
principal amount of $195.8 million, payable in installments until final maturity
on December 31, 2002, and (iii) the Revolving Facility, having an aggregate
principal amount of up to $250 million and maturing on July 13, 2001. The Bank
Credit Facilities, which are guaranteed by the Company and its U.S. subsidiaries
(subject to certain exceptions), contain restrictive covenants including
maintenance of EBITDA (i.e. earnings before interest, taxes, depreciation,
amortization and other non-cash charges) and interest coverage ratios, leverage
and liquidity tests and various other restrictive covenants which are customary
for such facilities. In addition, C&A Products is generally prohibited from
paying dividends or making other distributions to the Company except (x) to the
extent necessary to allow the Company to pay taxes and ordinary expenses,(y) for
permitted repurchases of shares or options from employees and (z) tomake
permitted investments in finance, foreign or acquired subsidiaries. In addition,
the Company and C&A Products are permitted to pay dividends and repurchase
shares of the Company in any fiscal year in an aggregate amount equal to the
greater of (i) $12 million and (ii) if certain financial ratios are satisfied,
25% of the Company's consolidated net income for the previous fiscal year, and
are permitted to pay additional dividends and repurchase shares in amounts
representing certain net proceeds from any sale of Wallcoverings in the event
the spin-off is not effected.
I-15
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
At the time of the closing of the sale of the Subordinated Notes, after
giving effect to the use of proceeds to repay certain borrowings under the
Revolving Facility and to the Amendment of the Bank Credit Facilities described
above, the Company had borrowing availability of approximately $215 million
under the Revolving Facility.
On March 31, 1995, C&A Products entered, through the Trust formed by
Carcorp, into the Receivables Facility, comprised of (i) term certificates,
which were issued on March 31, 1995, in an aggregate face amount of $110 million
and have a term of five years and (ii) variable funding certificates, which
represent revolving commitments of up to an aggregate of $75 million and have a
term of five years. Carcorp purchases on a revolving basis and transfers to the
Trust virtually all trade receivables generated by C&A Products and certain of
its subsidiaries (the "Sellers"). The certificates represent the right to
receive payments generated by the receivables held by the Trust.
In connection with the proposed spin-off of Wallcoverings,
Wallcoverings will be terminated as a seller of receivables under the
Receivables Facility. Receivables sold by Wallcoverings prior to such
termination will remain in the Trust. The Company anticipates that the Trust
will be required to redeem term certificates having a face value of
approximately $20 million as the Trust collects the Wallcoverings receivables.
Availability under the variable funding certificates at any time
depends primarily on the amount of receivables generated by the Sellers from
sales to the auto industry, the rate of collection on those receivables and
other characteristics of those receivables which affect their eligibility (such
as the bankruptcy or downgrading below investment grade of the obligor,
delinquency and excessive concentration). Based on these criteria, at April 27,
1996 approximately $24.2 million was available under the variable funding
certificates, of which approximately $19.0 million was utilized.
The proceeds received by Carcorp from collections on receivables, after
the payment of expenses and amounts due on the certificates, are used to
purchase new receivables from the Sellers. Collections on receivables are
required to remain in the Trust if at any time the Trust does not contain
sufficient eligible receivables to support the outstanding certificates. The
Receivables Facility contains certain other restrictions on Carcorp (including
maintenance of $25 million net worth) and on the Sellers (including limitations
on liens on receivables, modifications of the terms of receivables, and changes
in credit and collection practices) customary for facilities of this type. The
commitments under the Receivables Facility will terminate prior to their term
upon the occurrence of certain events, including payment defaults, breach of
covenants, bankruptcy, insufficient eligible receivables to support the
outstanding certificates, default by C&A Products in servicing the receivables
and, in the case of the variable funding certificates, failure of the
receivables to satisfy certain performance criteria.
The Company has a master equipment lease agreement for a maximum of $50
million of machinery and equipment. At April 27, 1996, the Company had $20.0
million of potential availability under this master lease for future machinery
and equipment requirements of the Company subject to the lessor's approval. The
Company has made lease payments of approximately $1.8 million in the first
quarter of 1996 for machinery and equipment sold and leased back under this
master lease. The Company expects lease payments, under this master lease to be
$6.3 million during the remainder of fiscal 1996.
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 provided by the
operating activities of the Company's continuing operations was $23.6 million
for the quarter ended April 27, 1996.
I-16
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
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, capital expenditures, and acquisitions. At April 27, 1996,
the Company had total outstanding indebtedness of $758.6 million (excluding
approximately $25.0 million of outstanding letters of credit and $.7 million of
indebtedness of the discontinued Wallcoverings segment) at an average interest
rate of 7.2% per annum. Of the total outstanding indebtedness, $734.0 million
relates to the Term Loan Facility, the Term Loan B Facility and the Revolving
Facility.
The Company's Board of Directors authorized the expenditure of up to
$12 million in 1996 to repurchase shares of the Company's common stock. The
Company believes it has sufficient liquidity under its existing credit
arrangements to effect the repurchase program. No repurchases were made during
the quarter ended April 27, 1996.
Indebtedness under the Credit Agreement Facilities, as amended, bears
interest at a per annum rate equal to the Company's choice of (i) Chemical
Bank'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%) plus a margin ranging from 0% to .75% or (ii) the offered rates
for Eurodollar deposits ("LIBOR") of one, two, three, six, nine or twelve
months, as selected by the Company, plus a margin ranging from 1% to 1.75%.
After giving effect to the Amendment, margins which are subject to adjustment
based on changes in the Company's ratios of senior funded debt to EBITDA and
cash interest expense to EBITDA, were 1.75% in the case of the "LIBOR Margin"
and .75% in the case of the "ABR Margin" on June 10, 1996. Such margins will
increase by .25% over the margins then in effect on July 13, 1999. Indebtedness
under the Term Loan B Facility bears interest at a per annum rate equal to the
Company's choice of (i) Chemical Bank's Alternate Base Rate (as described above)
plus a margin of 1.25% or (ii) LIBOR of one, two, three or six months, as
selected by the Company, plus a margin of 2.25%. The weighted average rate of
interest on the Credit Agreement Facilities and the Term Loan B Facility at
April 27, 1996 was 7.25%. The weighted average interest rate on the sold
interests under the Receivables Facility at April 27, 1996 was 6.02%. Under the
Receivables Facility, the term certificates bear interest at an average rate
equal to one month LIBOR plus .34% per annum and the variable funding
certificates bear interest, at Carcorp's option, at LIBOR plus .40% per annum or
a prime rate. Cash interest paid during the first quarter of fiscal 1996 and
1995 was $14.0 million and $11.0 million, respectively. The Subordinated Notes
bear interest at a rate of 11.5% per annum.
Due to the variable interest rates under the Bank Credit Facilities and
Receivables Facility, the Company is sensitive to increases in interest rates.
Accordingly, during September 1994, the Company entered into a program to reduce
its exposure to increases in interest rates through the use of interest rate
corridor and collar agreements. Under a corridor agreement, the Company limited
its exposure on $250 million of notional principal amount from October 17, 1995
through October 17, 1996 at an average LIBOR strike price of 7.50%. Based upon
amounts expected to be outstanding after the application of the net proceeds
from the sale of the Notes, a .5% increase in LIBOR (5.4% at April 27, 1996)
would impact interest costs by approximately $2.0 million annually on the Bank
Credit Facilities and $.6 million annually on the Receivables Facility. In April
1996, the Company limited its exposure through April 2, 1998 on $80 million of
notional principal amount utilizing zero cost collars with 4.75% floors and a
weighted average cap of 7.86%
The current maturities of long-term debt primarily consist of the
current portion of the Term Loan Facility and the Term Loan B Facility, vendor
financing, industrial revenue bonds and other miscellaneous debt. Repayments of
indebtedness under the Credit Agreement Facilities commenced in the third fiscal
quarter of 1995. Repayments of indebtedness under the Term Loan B Facility
commenced in the first quarter of 1996.
I-17
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
After giving effect to the Amendment of the Bank Credit Facilities in connection
with the sale of the Notes, the maturities of long-term debt of the Company's
continuing operations during 1996 and for 1997, 1998, 1999 and 2000 are $28.2
million, $36.2 million, $47.0 million $54.0 million and $58.1
million,respectively. In addition, the Term Loan Facility and the Term Loan B
Facility 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 certain sale/leaseback transactions and net cash
proceeds of certain issuances of debt obligations. The indenture governing the
Subordinated Notes provides that in the event of certain asset dispositions, C&A
Products must apply net proceeds (to the extent not reinvested in the business)
first to repay Senior Indebtedness (as defined, which includes the Bank Credit
Facilities) and then, to the extent of remaining net proceeds, to make an offer
to purchase outstanding Subordinated Notes at 100% of their principal amount
plus accrued interest. C&A Products must also make an offer to purchase
outstanding Subordinated Notes at 101% of their principal amount plus accrued
interest if a Change in Control (as defined) of the Company occurs.
The Company makes capital expenditures on a recurring basis for
replacements and improvements. As of April 27, 1996, the Company had
approximately $56.5 million in outstanding capital expenditure commitments. The
Company currently anticipates that its capital expenditures in fiscal 1996 will
aggregate approximately $60-70 million, a portion of which may be financed
through leasing. The Company's capital expenditures in future years will depend
upon demand for the Company's products and changes in technology.
The Company is sensitive to price movements in its raw material supply
base. During the first quarter of 1996, price trends for most of the Company's
primary raw materials remained constant with the previous quarter. The Company
currently does not anticipate significant price increases in 1996 in its primary
raw materials. The Company anticipates that announced 1995 price increases could
increase the cost of purchased raw materials in 1996 by approximately $20
million to $25 million on an annualized basis. While the Company may not be able
to pass on future raw material price increases to its customers, it believes
that a significant portion of the increased cost can be offset by continued
results of its value engineering/value analysis and cost improvement programs
and by continued reductions in the cost of nonconformance.
The Company estimates that Wallcoverings will experience net cash
requirements for working capital and capital expenditures, principally in
connection with Wallcoverings' reengineering program, of approximately $20
million in the first half of 1996. Additionally, the Company currently expects
to expend approximately $40 million to make a cash investment in
Wallcoveringsfor future working capital and capital expenditure requirements and
to fund Wallcoverings' receivables previously sold to Carcorp. Amounts actually
required for these purposes could differ from expected amounts due to, among
other things, changes in Wallcoverings' operating results and the availability
of outside financing for Wallcoverings.
The Company currently operates four facilities in Mexico to supply
automotive products primarily to Mexican subsidiaries of U.S.-based automobile
manufacturers. The Company believes that, based on the size of its Mexican
operations, fluctuations in the Mexican peso will not have a material impact on
the Company's financial position or results of operations.
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
I-18
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued).
purchasers are unable or unwilling to do so. Management currently anticipates
that the net cash requirements of its discontinued operations, excluding
Wallcoverings, will be approximately $25.0 million in fiscal 1996. 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 coulddiffer materially from
management's estimates. Management believes that the Company's cash needs
relating to discontinued operations can be provided by operating activities from
continuing operations and by borrowings under the amended Bank Credit
Facilities.
Tax Matters
The Company recognized a $150 million tax benefit in fiscal 1995 by
reducing the valuation allowance related to its deferred tax assets to reflect
the amount the Company expects to be realized in the future. The valuation
allowance was reduced as a result of management's reassessment of the Company's
improved financial performance since its recapitalization and initial public
offering in July 1994, management's outlook for the Company's continuing
businesses, and the planned spin-off of the Company's Wallcoverings subsidiary
to its shareholders. While the Company's effective tax rate in financial
statements subsequent to fiscal 1995 is expected to approximate the statutory
tax rate, the actual amount of taxes to be paid will be significantly less than
the Company's tax expense until the Company utilizes its remaining net operating
loss carryforwards ("NOL's") and tax credits.
At January 27, 1996, the Company had outstanding NOLs of approximately
$286.5 million for Federal income tax purposes, which excludes $9 million
related to the Company's discontinued Wallcoverings subsidiary. Substantially
all of these NOLs expire over the period from 2000 to 2008. The Company also has
unused Federal tax credits of approximately $15.6 million, $6.9 million of which
expire during the period 1996 to 2003. The Company estimates that it will
generate tax deductions of approximately $40.2 million in connection with the
ultimate disposition of assets and liabilities of its discontinued businesses
during the period 1996 to 1998, which were previously accrued for financial
reporting purposes. The Company anticipates that utilization of these NOLs, tax
credits and deductions will result in the payment of minimal Federal income
taxes until these NOLs and tax credits are exhausted.
Approximately $79.8 million of the Company's NOLs and $6.9 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. The Company believes that a substantial
portion of these tax benefits will be realized in the future. Future sales of
common stock by the Company or its principal shareholders, or changes in the
composition of its principal shareholders, could constitute a "change in
control" that would result in annual limitations on the Company's use of its
NOLs and unused tax credits. Management cannot predict whether such a "change in
control" will occur. If such a "change in control" were to occur, the resulting
annual limitations on the use of NOLs and tax credits would 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.
I-19
<PAGE>
COLLINS & AIKMAN CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Concluded).
ENVIRONMENTAL MATTERS
The Company is subject to 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.
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 United States 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 theory 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 if environmental problems and the
Company's share, if any, of liability for such problems, the selection of
alternative compliance approaches, 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. As of April 27, 1996, including sites relating
to the acquisition of Manchester Plastics and 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 16 sites where the Company is participating in the
investigation or remediation of the site, either directly or through financial
contribution, and 10 additional sites where the Company is alleged to be
responsible for costs of investigation or remediation. As of April 27, 1996, the
Company's estimate of its liability for these 26 sites which exclude sites
related to Wallcoverings, is approximately $30.8 million. As of April 27, 1996,
the Company has established reserves of approximately $41.5 million for the
estimated future costs related to all its known environmental sites, excluding
sites related to Wallcoverings. 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 liabilities arising
from the activities 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.
I-20
<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 27, 1996.
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. or Wickes Companies, Inc., if
such documents and filings were made prior to July 7, 1994.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C> <C>
3.1 - Restated Certificate of Incorporation of Collins & Aikman
Corporation is hereby incorporated by reference to Exhibit 4.1
of Collins & Aikman Corporation's Report on Form 10-Q for the
fiscal quarter ended July 30, 1994.
3.2 - By-laws of Collins & Aikman Corporation, as amended, is hereby
incorporated by reference Exhibit 3.2 of Collins & Aikman
Corporation's Report on Form 10-K for the fiscal year ended
January 27, 1996.
3.3 - Certificate of Elimination of Cumulative Exchangeable
Redeemable Preferred Stock of Collins & Aikman Corporation
is hereby incorporated by reference to Exhibit 3.3 of
Collins & Aikman Corporation's Report on Form 10-Q for the
fiscal quarter ended October 28, 1995.
4.1 - 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.
4.2 - Indenture, dated as of June 1, 1996, between Collins
& Aikman Products Co., Collins & Aikman Corporation and
First Union National Bank of North Carolina, as Trustee.
4.3 - First Supplemental Indenture dated as of June 1, 1996,
between Collins & Aikman Products Co., Collins & Aikman
Corporation and First Union National Bank of North
Carolina, as Trustee.
4.4 - Amended and Restated Credit Agreement, dated as of
June 3, 1996, among Collins & Aikman Products Co., as
Borrower, Collins & Aikman Canada Inc., as Canadian
Borrower, Collins & Aikman Corporation, as Guarantor, the
lenders named therein, Bank of America N.T.S.A. and
NationsBank, N.A., as Managing Agents, and Chemical Bank, as
Administrative Agent, is hereby
incorporated by Reference to Exhibit 4.1 of
Collins & Aikman Corporation's Current Report on
Form 8-K dated June 7, 1996.
II-1
<PAGE>
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 - Underwriting Agreement dated June 5, 1996 between Collins &
Aikman Products Co., Collins & Aikman Corporation,
Wasserstein Perella Securities, Inc., Chase Securities
Inc. and BA Securities, Inc. is hereby incorporated by
reference to Exhibit 1.1 of Collins & Aikman Corporation's
Current Report on Form 8-K dated June 7, 1996.
11 - Computation of Earnings Per Share.
27 - Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K.
During the quarter for which this report on Form 10-Q is filed, the
Company filed a Report on Form 8-K dated April 10, 1996, reporting in Item 5
thereof the proposed spin-off of the Company's Wallcoverings subsidiary. No
financial statements were filed with such Report on Form 8-K.
II-2
<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: June 11, 1996 By: /s/ J. Michael Stepp
J. Michael Stepp
Chief Financial Officer and
Executive Vice President
(On behalf of the Registrant and as
Principal Financial and Accounting Officer)
<PAGE>
COLLINS & AIKMAN PRODUCTS CO., as Issuer,
and
COLLINS & AIKMAN CORPORATION, as Guarantor,
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Trustee
---------------
INDENTURE
Dated as of June 1, 1996
---------------
Subordinated Debt Securities
<PAGE>
TABLE OF CONTENTS(1)
Page
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 1.01. Definitions.................................................... 1
SECTION 1.02. Compliance Certificates and Opinions...........................13
SECTION 1.03. Form of Documents Delivered to Trustee.........................13
SECTION 1.04. Acts of Holders................................................14
SECTION 1.05. Notices, etc., to Trustee, Company and Guarantor...............17
SECTION 1.06. Notices to Holders; Waiver.....................................17
SECTION 1.07. Language of Notices, Etc.......................................18
SECTION 1.08. Conflict with Trust Indenture Act..............................18
SECTION 1.09. Effect of Headings and Table of Contents.......................19
SECTION 1.10. Successors and Assigns.........................................19
SECTION 1.11. Separability Clause............................................19
SECTION 1.12. Benefits of Indenture..........................................19
SECTION 1.13. Legal Holidays.................................................19
SECTION 1.14. Governing Law..................................................19
ARTICLE TWO
Security Forms
SECTION 2.01. Form Generally.................................................19
SECTION 2.02. Form of Securities.............................................20
SECTION 2.03. Form of Trustee's Certificate of Authentication................21
SECTION 2.04. Global Securities..............................................21
- --------
(1)This Table of Contents is not part of the Indenture.
<PAGE>
2
ARTICLE THREE
The Securities Page
SECTION 3.01. Title and Terms................................................21
SECTION 3.02. Denominations..................................................24
SECTION 3.03. Execution, Authentication, Delivery and Dating.................25
SECTION 3.04. Temporary Securities...........................................27
SECTION 3.05. Registration, Registration of Transfer and Exchange............30
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities...............35
SECTION 3.07. Payment of Interest; Interest Rights Preserved.................36
SECTION 3.08. Persons Deemed Owners..........................................38
SECTION 3.09. Cancellation...................................................38
SECTION 3.10. Computation of Interest........................................39
SECTION 3.11. Forms of Certification.........................................39
SECTION 3.12. Judgments......................................................39
ARTICLE FOUR
Redemption of Securities
SECTION 4.01. Applicability of Article.......................................40
SECTION 4.02. Election To Redeem; Notice to Trustee..........................40
SECTION 4.03. Selection by Security Registrar of Securities To Be
Redeemed.......................................................40
SECTION 4.04. Notice of Redemption...........................................41
SECTION 4.05. Deposit of Redemption Price....................................42
SECTION 4.06. Securities Payable on Redemption Date..........................42
SECTION 4.07. Securities Redeemed in Part....................................43
SECTION 4.08. Redemption Suspended During Event of Default...................43
<PAGE>
3
ARTICLE FIVE
Covenants Page
SECTION 5.01. Payment of Principal, Premium and Interest.....................44
SECTION 5.02. Maintenance of Office or Agency................................44
SECTION 5.03. Money for Security Payments To Be Held in Trust................46
SECTION 5.04. Additional Amounts.............................................47
SECTION 5.05. Statement as to Compliance.....................................48
SECTION 5.06. Maintenance of Corporate Existence, Rights and
Franchises.....................................................48
ARTICLE SIX
Holders' Lists and Reports
by Trustee and Company
SECTION 6.01. Company To Furnish Trustee Names and Addresses of
Holders........................................................49
SECTION 6.02. Preservation of Information; Communications to
Holders........................................................49
SECTION 6.03. Reports by Trustee.............................................51
SECTION 6.04. Reports by Company.............................................51
ARTICLE SEVEN
Remedies
SECTION 7.01. Events of Default..............................................52
SECTION 7.02. Acceleration of Maturity; Rescission and Annulment.............53
SECTION 7.03. Collection of Indebtedness and Suits for Enforcement
by Trustee.....................................................54
SECTION 7.04. Trustee May File Proofs of Claim...............................55
SECTION 7.05. Trustee May Enforce Claims Without Possession of
Securities.....................................................56
SECTION 7.06. Application of Money Collected.................................56
SECTION 7.07. Limitation on Suits............................................57
<PAGE>
4
SECTION 7.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest...........................................58
SECTION 7.09. Restoration of Rights and Remedies.............................58
SECTION 7.10. Rights and Remedies Cumulative.................................58
SECTION 7.11. Delay or Omission Not Waiver...................................58
SECTION 7.12. Control by Holders.............................................58
SECTION 7.13. Waiver of Past Defaults........................................59
SECTION 7.14. Undertaking for Costs..........................................59
SECTION 7.15. Waiver of Stay or Extension Laws...............................60
ARTICLE EIGHT
The Trustee
SECTION 8.01. Certain Duties and Responsibilities............................60
SECTION 8.02. Notice of Default..............................................61
SECTION 8.03. Certain Rights of Trustee......................................62
SECTION 8.04. Not Responsible for Recitals or Issuance of Securities.........63
SECTION 8.05. May Hold Securities............................................63
SECTION 8.06. Money Held in Trust............................................63
SECTION 8.07. Compensation and Reimbursement.................................64
SECTION 8.08. Disqualification; Conflicting Interests........................64
SECTION 8.09. Corporate Trustee Required; Eligibility........................65
SECTION 8.10. Resignation and Removal; Appointment of Successor..............65
SECTION 8.11. Acceptance of Appointment by Successor.........................67
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee............................................68
SECTION 8.13. Preferential Collection of Claims Against Company..............68
SECTION 8.14. Appointment of Authenticating Agents...........................69
<PAGE>
5
ARTICLE NINE
Supplemental Indentures Page
SECTION 9.01. Supplemental Indentures Without Consent of Holders.............70
SECTION 9.02. Supplemental Indentures With Consent of Holders................72
SECTION 9.03. Execution of Supplemental Indentures...........................74
SECTION 9.04. Effect of Supplemental Indentures..............................74
SECTION 9.05. Conformity with Trust Indenture Act............................74
SECTION 9.06. Reference in Securities to Supplemental Indentures.............74
SECTION 9.07. Subordination Unimpaired.......................................74
ARTICLE TEN
Consolidation, Merger, Conveyance or Transfer
SECTION 10.01. Company May Consolidate, etc., Only on Certain
Terms.........................................................75
SECTION 10.02. Successor Corporation Substituted.............................75
ARTICLE ELEVEN
Satisfaction and Discharge
SECTION 11.01. Satisfaction and Discharge of Indenture........................76
SECTION 11.02. Application of Trust Money.....................................77
SECTION 11.03. Reinstatement..................................................77
ARTICLE TWELVE
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 12.01. Exemption from Individual Liability............................78
<PAGE>
6
ARTICLE THIRTEEN
Sinking Funds Page
SECTION 13.01. Applicability of Article.......................................78
SECTION 13.02. Satisfaction of Sinking Fund Payments with Securities..........79
SECTION 13.03. Redemption of Securities for Sinking Fund......................79
ARTICLE FOURTEEN
Subordination
SECTION 14.01. Agreement to Subordinate.......................................79
SECTION 14.02. Liquidation, Dissolution, Bankruptcy...........................80
SECTION 14.03. Default on Senior Indebtedness or Senior Subordinated
Indebtedness...................................................80
SECTION 14.04. Acceleration of Payment of Securities..........................81
SECTION 14.05. When Distributions Must Be Paid Over...........................82
SECTION 14.06. Subrogation....................................................82
SECTION 14.07. Relative Rights ...............................................82
SECTION 14.08. Subordination May Not Be Impaired by Company or
Guarantor......................................................83
SECTION 14.09. Rights of Trustee and Paying Agent.............................83
SECTION 14.10. Distribution or Notice to Representative.......................83
SECTION 14.11. Article Fourteen Not To Prevent Events of Default or
Limit Right To Accelerate......................................83
SECTION 14.12. Trust Moneys Not Subordinated..................................83
SECTION 14.13. Trustee Entitled To Rely.......................................84
SECTION 14.14. Trustee To Effectuate Subordination............................84
SECTION 14.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness...................................................84
SECTION 14.16. Reliance by Holders of Senior Indebtedness or Senior
Subordinated Indebtedness on Subordination
Provisions.....................................................85
<PAGE>
7
ARTICLE FIFTEEN
Guarantee
SECTION 15.01. Guarantee......................................................85
SECTION 15.02. Limitation on Liability .......................................87
SECTION 15.03. Successors and Assigns.........................................87
SECTION 15.04. No Waiver......................................................87
SECTION 15.05. Modification...................................................88
ARTICLE SIXTEEN
Repayment at The Option of Holders
SECTION 16.01. Applicability of Article.......................................88
SECTION 16.02. Repayment of Securities........................................88
SECTION 16.03. Exercise of Option; Notice.....................................88
SECTION 16.04. Election of Repayment by Remarketing Entities..................89
SECTION 16.05. Securities Payable on the Repayment Date.......................90
ARTICLE SEVENTEEN
Meetings of Holders of Securities
SECTION 17.01. Purposes for Which Meetings May Be Called......................90
SECTION 17.02. Call, Notice and Place at Meetings.............................90
SECTION 17.03. Persons Entitled To Vote at Meetings...........................91
SECTION 17.04. Quorum, Action.................................................91
SECTION 17.05. Determination of Voting Rights; Conduct and
Adjournment of Meetings........................................92
SECTION 17.06. Counting Votes and Recording Action of Meetings................93
<PAGE>
8
ARTICLE EIGHTEEN
Miscellaneous Page
SECTION 18.01. Counterparts..................................................94
SECTION 18.02. Notice of Refinancing.........................................94
Exhibits
EXHIBIT A Form of Certificate to be Given by Person Entitled to Receive
Bearer Security
EXHIBIT B Form of Certificate to be Given by Euroclear and CEDEL S.A.
in Connection with the Exchange of a Portion of a Temporary
Global Security
EXHIBIT C Form of Certificate to be Given by Euroclear and CEDEL S.A.
to Obtain Interest Prior to an Exchange Date
EXHIBIT D Form of Certificate to be Given by Beneficial Owners to Obtain
Interest Prior to an Exchange Date
<PAGE>
9
TABLE SHOWING REFLECTION IN INDENTURE OF CERTAIN PROVISIONS
OF TRUST INDENTURE ACT OF 1939
<TABLE>
<CAPTION>
Reflected in
Indenture Section
<S> <C>
TIA
ss.310(a)(1).......................................... 8.09
(a)(2).......................................... 8.09
(a)(3).......................................... Not Applicable
(a)(4).......................................... Not Applicable
(a)(5).......................................... 8.09
(b)............................................. 8.08, 8.10
(c)............................................. Not Applicable
ss.311(a)............................................. 8.13
(b)............................................. 8.13
ss.312(a)............................................. 6.01, 6.02(i)
(b)............................................. 6.02(ii)
(c)............................................. 6.02(iii)
ss.313(a)............................................. 6.03(i)
(b)............................................. 6.03(ii)
(c)............................................. 6.03(i),(ii) and (iii)
(d)............................................. 6.03(iii)
ss.314(a)............................................. 6.04, 5.05
(b)............................................. Not Applicable
(c)(1).......................................... 1.02
(c)(2).......................................... 1.02
(c)(3).......................................... Not Applicable
(d)............................................. Not Applicable
(e)............................................. 1.02
(f)............................................. Not Applicable
ss.315(a)............................................. 8.01(i), 8.01(iii)
(b)............................................. 8.02
(c)............................................. 8.01(ii)
(d)............................................. 8.01
(d)(1).......................................... 8.01(i)
(d)(2).......................................... 8.01(iii)(b)
(d)(3).......................................... 8.01(iii)(c)
<PAGE>
10
Reflected in
Indenture Section
(e)............................................. 7.14
ss.316(a)............................................. 1.01
ss.316(a)(1)(A)....................................... 7.02, 7.12
(a)(1)(B)....................................... 7.13
(a)(2).......................................... Not Applicable
(b)............................................. 7.08
(c)............................................. 1.04(viii)
ss.317(a)(1).......................................... 7.03
(a)(2).......................................... 7.04
(b)............................................. 5.03
ss.318(a)............................................. 1.08
(c)............................................. 1.08
</TABLE>
<PAGE>
THIS INDENTURE is entered into as of June 1,
1996, between COLLINS & AIKMAN PRODUCTS CO., a
Delaware corporation (the "Company"), COLLINS &
AIKMAN CORPORATION, a Delaware corporation (the
"Guarantor") and FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a national banking corporation (the
"Trustee").
RECITALS OF THE COMPANY
The Company deems it necessary from time to time to issue its
unsecured subordinated debentures, notes, bonds and other evidences of
indebtedness to be issued in one or more series (hereinafter called the
"Securities") as hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture.
All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:
ARTICLE ONE
Definitions and Other Provisions of General Application
SECTION 1.01. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(i) the term "this Indenture" means this instrument as
originally executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto entered into
pursuant to the applicable provisions hereof and shall include the
terms of particular series of Securities established as contemplated by
Section 3.01;
(ii) all references in this instrument to designated
"Articles", "Sections" and other subdivisions
<PAGE>
2
Subordinated Indenture
are to the designated
Articles, Sections and other subdivisions of this Indenture. The words
"herein", "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(iii) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(iv) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein; and
(v) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as may be otherwise expressly
provided herein or in one or more indentures supplemental hereto, the
term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized to act on
behalf of the Trustee to authenticate Securities pursuant to Section 8.14.
"Authorized Newspaper" means a newspaper, in an official
language of the country of publication or in the English language, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in the place in connection with which
the term is used or in the financial community of such place. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same city
meeting the foregoing requirements and in each case on any Business Day.
<PAGE>
3
Subordinated Indenture
"Authorized Officer" means the Chairman of the Board, the
President, any Vice Chairman of the Board, any Vice President, the Treasurer,
the Secretary, the Comptroller, any Assistant Comptroller, any Assistant
Treasurer or any Assistant Secretary of the Company.
"Bankruptcy Law" means the Federal Bankruptcy Code or any
other applicable Federal or State bankruptcy, insolvency or similar law.
"Bearer Security" means any Security in the form established
pursuant to Section 2.02 which is payable to bearer, including, without
limitation, unless the context otherwise indicates, a Security in global bearer
form.
"Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day, other than a Saturday or Sunday,
on which banking institutions in the City of New York, New York and any Place of
Payment for the Securities are open for business.
"CEDEL" or "CEDEL S.A." means Cedel Bank, societe anonymne or
its successors.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, or if any time after the execution and delivery
of this instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Common Depositary" has the meaning specified in Section
3.04(b)(ii).
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until any successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean any such successor corporation.
"Company Request" and "Company Order" mean, respectively, a
written request or order signed in the name of the Company by its Chairman of
the Board, its President, a Vice Chairman of the Board, or a Vice President, and
by its Treasurer, an
<PAGE>
4
Subordinated Indenture
Assistant Treasurer, its Comptroller, an Assistant Comptroller,
its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporation" includes corporations, associations, companies
and business trusts.
"Coupon" means any interest coupon appertaining to a Bearer
Security.
"Credit Agreement" means the collective reference to (i) the
Credit Agreement, dated as of June 22, 1994, by and among Collins & Aikman
Corporation, Collins & Aikman Products Co., Collins & Aikman Canada Inc., the
Lenders referred to therein, Continental Bank, N.A. and Nationsbank, N.A., as
Managing Agents, and Chemical Bank, as Administrative Agent, and (ii) the Credit
Agreement dated as of December 22, 1995, by and among Collins & Aikman
Corporation, Collins & Aikman Products Co., the Lenders named therein and
Chemical Bank, as Administrative Agent, 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, as each may be amended, extended, renewed, restated,
replaced, refinanced, supplemented or otherwise modified (in whole or in part,
and without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement governing Indebtedness incurred
to refund or refinance a portion of the borrowings and commitments then
outstanding or permitted to be outstanding under the 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 Subordinated Securities.
"Defaulted Interest" has the meaning specified in Section
3.07.
"Depositary" means, with respect to the Securities of any
series issuable or issued in the form of a Global Security, the Person
designated as Depositary by the Company pursuant to Section 3.01 until a
successor Depositary shall have been appointed pursuant to Section 3.05, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such Person,
"Depositary" as used with respect to the Securities of any such series shall
mean the Depositary with respect to the Securities of that series.
"Designated Currency" has the meaning specified in Section
3.12.
"Designated Senior Indebtedness" means (i) the Credit
Agreement and (ii) to the extent expressly so designated in the agreement or
instrument evidencing such Senior Indebtedness, each series of Senior
Indebtedness having an aggregate principal amount (or available commitments) of
at least $25 million.
<PAGE>
5
Subordinated Indenture
"Dollar" or "$" means the coin or currency of the United
States of America as at the time of payment which is legal tender for the
payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised
from time to time by the Council of the European Communities.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System.
"European Communities" means the European Economic Community,
the European Coal and Steel Community and the European Atomic Energy
Community.
"Event of Default" has the meaning specified in Section 7.01.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended from time to time, and any statute successor thereto.
"Exchange Rate" shall have the meaning specified as
contemplated in Section 3.01.
"Exchange Rate Agent" shall have the meaning specified as
contemplated in Section 3.01.
"Exchange Rate Officer's Certificate" with respect to any date
for the payment of principal of (and premium, if any) and interest on any series
of Securities, means a certificate setting forth the applicable Exchange Rate
and the amounts payable in Dollars and Foreign Currencies in respect of the
principal of (and premium, if any) and interest on Securities denominated in
ECU, any other composite currency or Foreign Currency, and signed by the
Chairman of the Board, a Vice Chairman of the Board, the President, any Vice
President, the Treasurer or any Assistant Treasurer of the Company or the
Exchange Rate Agent appointed pursuant to Section 3.01 and delivered to the
Trustee.
"Foreign Currency" means a currency issued by the government
of any country other than the United States of America.
"Global Exchange Date" has the meaning specified in
Section 3.04(b)(iv).
"Global Security" means a Security issued to evidence all or a
part of a series of Securities in accordance with Section 3.03.
<PAGE>
6
Subordinated Indenture
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part).
The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means Collins & Aikman Corporation.
"Holder", with respect to a Registered Security, means a
Person in whose name such Registered Security is registered in the Security
Register and, with respect to a Bearer Security (or any temporary Global
Security) or a coupon, means the bearer thereof.
"interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after Maturity, means
interest payable after Maturity.
"Interest Payment Date", when used with respect to any series
of Securities, means the Stated Maturity of an installment of interest on such
Securities.
"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. The term "Interest Swap Obligation" shall also include interest rate
exchange, collar, cap, swap, option or similar agreements providing interest
rate protection.
"Issue Date", with respect to any series of Securities, means
the date on which such Securities are originally issued.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security (or any installment of principal)
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Obligations" has the meaning given to it in Section 15.01.
<PAGE>
7
Subordinated Indenture
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, a Vice Chairman of the Board, or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Comptroller, an
Assistant Comptroller, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee. Each such certificate shall contain the statements
set forth in Section 1.02, if applicable.
"Opinion of Counsel" means a written opinion of counsel, who
may (except as otherwise expressly provided in this Indenture) be an employee of
the Company, and who shall be reasonably acceptable to the Trustee. Each such
opinion shall contain the statements set forth in Section 1.02, if applicable.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 7.02.
"Outstanding" when used with respect to Securities or
Securities of any series, means, as of the date of determination, all such
Securities theretofore authenticated and delivered under this Indenture, except:
(i) such Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) such Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) such Securities in lieu of which other Securities have
been authenticated and delivered pursuant to Section 3.06 of this
Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of such Securities Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether a
quorum is present at a meeting of Holders of Securities, the principal amount of
Original Issue Discount Securities that shall be deemed to be Outstanding for
such purposes shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon a declaration of acceleration
of the Maturity thereof pursuant to Section 7.02, and Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be
<PAGE>
8
Subordinated Indenture
Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, premium, if any, or interest on any Securities or any
coupons appertaining thereto on behalf of the Company.
"Permitted Junior Securities" means debt or equity securities
of the Company or the Guarantor or any successor corporation issued pursuant to
a plan of reorganization or readjustment of the Company or the Guarantor that
are subordinated at least to the same extent that the Securities (or the
Guarantee set forth in Article 15) are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company or Senior Guarantor
Indebtedness of the Guarantor, as the case may be, so long as the effect of any
exclusions employing this definition in this Indenture is not to cause the
Securities (or the Guarantee set forth in Article 15) to be treated as part of
the same class of claims as such Senior Indebtedness or Senior Guarantor
Indebtedness, as the case may be, or any class of claims pari passu with, or
senior to, such Senior Indebtedness or Senior Guarantor Indebtedness, as the
case may be, for any payment or distribution in any case or proceeding or
similar event relating to the liquidation, insolvency, bankruptcy, dissolution,
winding up or reorganization of the Company or the Guarantor, provided that (i)
if a new or successor corporation results from such reorganization or
readjustment, such corporation assumes any such Senior Indebtedness or Senior
Guarantor Indebtedness, as the case may be, not paid in full in cash prior to or
in connection with such reorganization or readjustment and (ii) the rights of
the holders of such Senior Indebtedness or Senior Guarantor Indebtedness, as the
case may be, are not altered or impaired pursuant to any such plan of
reorganization or readjustment without the consent of such holders.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities
of any series, means the place or places where, subject to the provisions of
Section 5.02, the principal of (and premium, if any) and interest on the
Securities of that series are payable as specified in accordance with Section
3.01.
<PAGE>
9
Subordinated Indenture
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in lieu of a mutilated,
destroyed, lost or stolen Security shall be deemed to evidence the same debt as
the mutilated, destroyed, lost or stolen Security.
"Principal Corporate Trust Office" means the principal office
of the Trustee, at which at any particular time its corporate trust business
shall be principally administered, which office at the date of execution of this
instrument is at Charlotte, North Carolina.
"Principal Paying Agent" means the Paying Agent, if any,
designated as such by the Company pursuant to Section 3.01 of this Indenture.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to
be redeemed, means the price specified in such Security at which it is to be
redeemed pursuant to this Indenture.
"Registered Security" means any Security in the form
established pursuant to Section 2.02 which is registered in the Security
Register.
"Regular Record Date" for the interest payable on any Security
on any Interest Payment Date means the date, if any, specified in such Security
as the "Regular Record Date".
"Remarketing Entity", when used with respect to the Securities
of any series which are repayable at the option of the Holders thereof before
their Stated Maturity, means any Person designated by the Company to purchase
any such Securities.
"Repayment Date", when used with respect to any Security to be
repaid upon exercise of option for repayment by the Holder, means the date fixed
for such repayment pursuant to this Indenture.
"Repayment Price", when used with respect to any Security to
be repaid upon exercise of option for repayment by the Holder, means the price
at which it is to be repaid pursuant to this Indenture.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness or Senior Subordinated
Indebtedness, as applicable.
<PAGE>
10
Subordinated Indenture
"Responsible Officer", when used with respect to the Trustee,
means any vice president, any assistant vice president, any senior trust
officer, any or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer of the Trustee to whom such matter is referred because of his knowledge
of and familiarity with the particular subject.
"Security" or "Securities" means any Security or Securities,
as the case may be, authenticated and delivered under this indenture; provided,
however, that, if at any time there is more than one Person acting as Trustee
under this Indenture, "Securities", with respect to any such Person, shall mean
Securities authenticated and delivered under this Indenture, exclusive, however,
of Securities of any series as to which such Person is not Trustee.
"Security Register" has the meaning specified in Section 3.05.
"Security Registrar" has the meaning specified in Section
3.05.
"Senior Guarantor Indebtedness" means, with respect to the
Guarantor, (i) all obligations of the Guarantor, whether direct or by guarantee,
to pay principal, interest (including all interest accruing after the filing of
a petition by or against the Company, the Guarantor or Collins & Aikman Canada
Inc. under any Bankruptcy Law, in accordance with and at the rate, including any
default rate, specified in the Credit Agreement, whether or not a claim for such
interest is allowed as a claim after such filing in any proceeding under such
Bankruptcy Law), fees, expenses, reimbursement obligations, indemnities and
other amounts payable under or in connection with the Credit Agreement, whether
outstanding on the date of this Indenture or thereafter created, assumed or
incurred, (ii) the principal of, premium, if any, and interest (including all
interest accruing after the filing of a petition by or against the Company or
the Guarantor under any Bankruptcy Law, in accordance with and at the rate,
including any default rate, specified with respect to such indebtedness, whether
or not a claim for such interest is allowed as a claim after such filing in any
proceeding under such Bankruptcy Law) on, (A) all the Guarantor's other
indebtedness for money borrowed (other than guarantees of other subordinated
securities issued under this Indenture), whether outstanding on the Issue Date
or thereafter created, assumed or incurred, except such indebtedness as is by
its terms expressly stated to be not superior in right of payment tothe
Guarantee set forth in Article Fifteen and (B) any deferrals, renewals
orextensions of any such Senior Guarantor Indebtedness; and (iii) all
guaranteesof Interest Swap Obligations of the Company or Collins & Aikman Canada
Inc. in respect of Senior Indebtedness, except that Senior Guarantor
Indebtedness will not include (1) any obligation of the Guarantor to any
Subsidiary of the Guarantor, (2) any liability for Federal, state, local or
other taxes owed or owing by the Guarantor, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of
<PAGE>
11
Subordinated Indenture
business
(including guarantees thereof or instruments evidencing such liabilities), (4)
any indebtedness, guarantee or obligation of the Guarantor which is expressly
subordinate or junior in right of payment in any respect to any other
indebtedness, guarantee or obligation of the Guarantor, including any senior
subordinated indebtedness and any other subordinated obligations, or (5) any
obligations with respect to any Capital Stock. The term "indebtedness for money
borrowed" as used in the foregoing sentence means any obligation of, or any
obligation guaranteed by, the Guarantor for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets.
"Senior Indebtedness" means (i) all obligations of the
Company, whether direct or by guarantee, to pay principal, interest (including
all interest accruing after the filing of a petition by or against the Company
or Collins & Aikman Canada Inc. under any Bankruptcy Law, in accordance with and
at the rate, including any default rate, specified in the Credit Agreement,
whether or not a claim for such interest is allowed as a claim after such filing
in any proceeding under such Bankruptcy Law), fees, expenses, reimbursement
obligations, indemnities and other amounts payable under or in connection with
the Credit Agreement, whether outstanding on the date of this Indenture or
thereafter created, assumed or incurred, (ii) the principal of, premium, if any,
and interest (including 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 default rate, specified with respect to such indebtedness,
whether or not a claim for such interest is allowed as a claim (after such
filing in any proceeding under such Bankruptcy Law) on, (A) all the Company's
other indebtedness for money borrowed, whether outstanding on the Issue Date or
thereafter created, assumed or incurred, except such indebtedness (including any
Securities issued hereunder) as is by its terms expressly stated to be not
superior in right of payment to the Securities and (B) any deferrals, renewals
or extensions of any such Senior Indebtedness and (iii) all Interest Swap
Obligations of the Company, either directly or by guarantee, in respect of
Senior Indebtedness; except that Senior Indebtedness shall not include (1) any
obligation of the Company to any Subsidiary, (2) any liability for Federal,
state, local or other taxes owed or owing by the Company, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing
suchliabilities), (4) any indebtedness, Guarantee or obligation of the
Companywhich is expressly subordinate or junior in right of payment in any
respect toany other indebtedness, Guarantee or obligation of the Company,
includingany Senior Subordinated Indebtedness and any other
subordinatedobligations, or (5) any obligations with respect to any Capital
Stock. The term "indebtedness for money borrowed" as used in the foregoing
sentence shall mean any obligation of, or any obligation Guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written
<PAGE>
12
Subordinated Indenture
instruments, and any deferred obligation for the payment of the purchase price
of property or assets.
"Senior Subordinated Indebtedness" means any indebtedness of
the Company that is not subordinated by its terms in right of payment to any
indebtedness or obligation of the Company which is not Senior Indebtedness and
which is senior in right of payment to the Securities. Senior Subordinated
Indebtedness of the Guarantor shall have a correlative meaning.
"Special Record Date" for the payment of any Defaulted
Interest means the date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security, or
any installment of principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which the principal of such
Security, or such installment of principal or interest, is due and payable.
"Subsidiary of the Company" or "Subsidiary" means a
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by the Company or by one or more Subsidiaries of
the Company, or by the Company and one or more Subsidiaries of the Company. As
used under this heading, the term "voting stock" means stock having ordinary
voting power for the election of directors irrespective of whether or not stock
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"Trust Indenture Act" or "TIA" (except as herein otherwise
expressly provided) means the Trust Indenture Act of 1939, as in force at the
date as of which this instrument was executed and, to the extent required by
law, as thereafter amended.
"United States" means the United States of America (including
the States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"United States Alien", except as otherwise provided in or
pursuant to this Indenture, means any Person who, for United States Federal
income tax purposes, is a
<PAGE>
13
Subordinated Indenture
foreign corporation, a nonresident alien individual, a non-resident alien
fiduciary of a foreign estate or trust, or a foreign partnership one or more of
the members of which is, for United States Federal income tax purposes, a
foreign corporation, a non-resident alien individual or a non-resident alien
fiduciary of a foreign estate or trust.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee, if
the Trustee so requests, an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except as otherwise
expressly provided in this Indenture) shall include:
(i) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the
<PAGE>
14
Subordinated Indenture
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.04. Acts of Holders. (i) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders or Holders of any series may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing.
If Securities of a series are issuable in whole or in part as Bearer Securities,
any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may,
alternatively, be embodied in and evidenced by the record of Holders of
Securities voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders of Securities duly called and
held in accordance with the provisions of Article Sixteen or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee, and, where it is hereby
expressly required, to the Company. Such instrument or instruments and any such
record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments and so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or the holding by any
Person of a Security, shall be sufficient for any purpose of this Indenture and
(subject to Section 8.01) conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Section. The record of any meeting of
Holders of Securities shall be proved in the manner provided in Section 17.06.
<PAGE>
15
Subordinated Indenture
(ii) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by or on behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute proof of the authority of the
Person executing the same. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(iii) The ownership of Registered Securities shall be proved
by the Security Register.
(iv) The principal amount and serial numbers of Bearer
Securities held by any Person, and the date of holding the same, may be proved
by the production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank or other depositary, wherever situated,
if such certificate shall be deemed by the Trustee to be satisfactory, showing
that at the date therein mentioned such Person had on deposit with such
depositary, or exhibited to it, the Bearer Securities therein described; or such
facts may be proved by the certificate or affidavit of the Person holding such
Bearer Securities, if such certificate or affidavit is deemed by the Trustee to
be satisfactory. The Trustee and the Company may assume that such ownership of
any Bearer Security continues until (1) another certificate or affidavit bearing
a later date issued in respect of the same Bearer Security is produced, or (2)
such Bearer Security is produced to the Trustee by some other Person, or (3)
such Bearer Security is surrendered in exchange for a Registered Security, or
(4) such Bearer Security is no longer Outstanding.
(v) The fact and date of execution of any such instrument or
writing, the authority of the Person executing the same and the principal amount
and serial numbers of Bearer Securities held by the Person so executing such
instrument or writing and the date of holding the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this Section.
(vi) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of any action taken, suffered or omitted by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
<PAGE>
16
Subordinated Indenture
(vii) For purposes of determining the principal amount of
Outstanding Securities of any series the Holders of which are required,
requested or permitted to give any request, demand, authorization, direction,
notice, consent, waiver or take any other Act under the Indenture, each Security
denominated in a Foreign Currency or composite currency shall be deemed to have
the principal amount determined by the Exchange Rate Agent by converting the
principal amount of such Security in the currency in which such Security is
denominated into Dollars at the Exchange Rate as of the date such Act is
delivered to the Trustee and, where it is hereby expressly required, to the
Company, by Holders of the required aggregate principal amount of the
Outstanding Securities of such series (or, if there is no such rate on such
date, such rate on the date determined as specified as contemplated in Section
3.01).
(viii) The Company may, in the circumstances permitted by the
Trust Indenture Act, set a record date for purposes of determining the identity
of Holders of Securities of any series entitled to give any request, demand,
authorization, direction, notice, consent, waiver or take any other Act, or to
vote or consent to any action by vote or consent authorized or permitted to be
given or taken by Holders of Securities of such series. If not set by the
Company prior to the first solicitation of a Holder of Securities of such Series
made by any Person in respect of any such action, or in the case of any such
vote, prior to such vote, such record date shall be the later of 30 days prior
to the first solicitation of such consent or the date of the most recent list of
Holders of such Securities furnished to the Trustee pursuant to Section 6.01
prior to such solicitation.
(ix) Without limiting the foregoing, a Holder entitled
hereunder to take any action hereunder with regard to any particular Security
may do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such principal
amount. Any notice given or action taken by a
Holder or its agents with regard to different parts of such principal amount
pursuant to this paragraph shall have the same effect as if given or taken by
separate Holders of each such different part.
(x) Without limiting the generality of the foregoing, unless
otherwise specified pursuant to Section 3.01 or pursuant to one or more
indentures supplemental hereto, a Holder, including a Depositary that is the
Holder of a Global Security, may make, give or take, by a proxy or proxies duly
appointed in writing, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in this Indenture to be made, given or
taken by Holders, and a Depositary that is the Holder of a Global Security may
provide its proxy or proxies to the beneficial owners of interests in any such
Global Security through such Depositary's standing instructions and customary
practices.
(xi) The Company may fix a record date for the purpose of
determining the Persons who are beneficial owners of interests in any Global
Security held by a
<PAGE>
17
Subordinated Indenture
Depositary entitled under the procedures of such Depositary to make, give or
take, by a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
this Indenture to be made, given or taken by Holders. If such a record date is
fixed, the Holders on such record date or their duly appointed proxy or proxies,
and only such Persons, shall be entitled to make, give or take such request,
demand, authorization, direction, notice, consent, waiver or other action,
whether or not such Holders remain Holders after such record date. No such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be valid or effective if made, given or taken more than 90 days
after such record date.
SECTION 1.05. Notices, etc., to Trustee, Company and
Guarantor. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(i) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Principal Corporate Trust Office, or
(ii) the Company or the Guarantor by any Holder or by the
Trustee shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class, postage prepaid, to
the Company or the Guarantor, to the attention of Treasurer, 701 McCullough
Drive, Charlotte, North Carolina 28262 or at any other address previously
furnished in writing to the Trustee by the Company or the Guarantor.
SECTION 1.06. Notices to Holders; Waiver. Where this Indenture
or any Security provides for notice to Holders of any event,
(1) such notice shall be sufficiently given (unless otherwise
herein or in such Security expressly provided) if in writing and
mailed, first-class, postage prepaid, to each Holder of Registered
Securities affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice.
(2) such notice shall be sufficiently given to Holders of
Bearer Securities if published in an Authorized Newspaper in The City
of New York and, if the Securities of such series are then listed on
The International Stock Exchange of the United Kingdom and the Republic
of Ireland Limited and such stock exchange shall so require, in London
and, if the Securities of such series are then listed on the Luxembourg
Stock Exchange and such stock exchange shall so require, in Luxembourg
and, if the Securities of such series are then listed on any other
stock
<PAGE>
18
Subordinated Indenture exchange and such stock exchange shall so
require, in any other required city outside the United States, or, if
not practicable, elsewhere in Europe on a Business Day at least twice,
the first such publication to be not earlier than the earliest date,
and not later than the latest date, prescribed for the giving of such
notice.
In case by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice to Holders of
Registered Securities by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder. In any case where notice to Holders of Registered Securities
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder of Registered Securities shall affect
the sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice by publication to Holders of Bearer
Securities given as provided above.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause it
shall be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as shall
be given with the approval of the Trustee shall constitute sufficient notice to
such Holders for every purpose hereunder. Neither the failure to give notice by
publication to Holders of Bearer Securities as provided above, nor any defect in
any notice so published, shall affect the sufficiency of any notice mailed to
Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 1.07. Language of Notices, Etc. Any request, demand,
authorization, direction, notice, consent, or waiver required or permitted under
this Indenture shall be in the English language, except that any published
notice may be in an official language of the country of publication.
SECTION 1.08. Conflict with Trust Indenture Act. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of Sections 310 and 318, inclusive, of
the TIA, such imposed duties or incorporated provision shall control.
<PAGE>
19
Subordinated Indenture
SECTION 1.09. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.10. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
SECTION 1.11. Separability Clause. In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 1.12. Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, the Holders and, to the
extent provided in Article Fourteen hereof, the holders of Senior Indebtedness,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 1.13. Legal Holidays. In any case where any Interest
Payment Date, Stated Maturity, Repayment Date or Redemption Date of any Security
or any date on which any Defaulted Interest is proposed to be paid shall not be
a Business Day at any Place of Payment, then (notwithstanding any other
provisions of the Securities or this Indenture) payment of the principal of,
premium, if any, or interest on any Securities need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date, Stated
Maturity, Repayment or Redemption Date or on the date on which Defaulted
Interest is proposed to be paid and, if such payment is made, no interest shall
accrue on such payment for the period from and after any such Interest Payment
Date, Stated Maturity, Repayment Date or Redemption Date or dateon which
Defaulted Interest is proposed to be paid, as the case may be.
SECTION 1.14. Governing Law. This Indenture and the Securities
shall be construed in accordance with and governed by the laws of the State of
New York.
ARTICLE TWO
Security Forms
SECTION 2.01. Form Generally. All Securities and any related
coupons shall have such appropriate insertions, omissions, substitutions and
other variations as
<PAGE>
20
Subordinated Indenture
are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities or coupons, as evidenced by their execution
of the Securities or coupons.
The Trustee's certificates of authentication shall be in
substantially the form set forth in this Article.
Unless otherwise provided as contemplated by Section 3.01 with
respect to any series of Securities, the Securities of each series shall be
issuable in registered form without coupons. If so provided as contemplated by
Section 3.01, the Securities of a series shall be issuable solely in bearer
form, or in both registered form and bearer form. Unless otherwise specified as
contemplated by Section 3.01, Securities in bearer form shall have interest
coupons attached.
Definitive Securities, if any, and coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers executing such Securities or coupons,
as evidenced by their execution of such Securities or coupons.
SECTION 2.02. Form of Securities. Each Security and coupon
shall be in one of the forms approved from time to time by or pursuant to a
Board Resolution. Upon or prior to the delivery of a Security or coupons in any
such form to the Trustee for authentication, the Company shall deliver to the
Trustee the following:
(i) the Board Resolution by or pursuant to which such form of
Security or coupons has been approved, certified by the Secretary or an
Assistant Secretary of the Company;
(ii) the Officers' Certificate required by Section 3.01 of
this Indenture;
(iii) the Company Order required by Section 3.03 of this
Indenture; and
(iv) the Opinion of Counsel required by Section 3.03 of this
Indenture.
If temporary Securities of any series are issued in global
form as permitted by Section 3.04, the form thereof shall be established as
provided in Section 2.02.
<PAGE>
21
Subordinated Indenture
SECTION 2.03. Form of Trustee's Certificate of Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
, as Trustee
by ____________________
Authorized Officer
SECTION 2.04. Global Securities. If Securities of a series are
issuable in whole or in part in global form, as specified as contemplated by
Section 3.01, then, notwithstanding clause (xii) of Section 3.01 and the
provisions of Section 3.02, such Global Security shall represent such of the
outstanding Securities of such series as shall be specified therein and may
provide that it shall represent the aggregate amount of Outstanding Securities
from time to time endorsed thereon and that the aggregate amount of Outstanding
Securities represented thereby may from time to time be reduced to reflect
exchanges or increased to reflect the issuance of additional uncertificated
securities of such series. Any endorsement of a Global Security to reflect the
amount, or any increase or decrease in the amount, of Outstanding Securities
represented thereby shall be made in such manner and upon instructions given by
such Person or Persons as shall be specified therein or in the Company Order to
be delivered to the Trustee pursuant to Section 3.03 or Section 3.04.
Global Securities may be issued in either registered or bearer
form and in either temporary or permanent form.
ARTICLE THREE
The Securities
SECTION 3.01. Title and Terms. The aggregate principal amount
of Securities which may be authenticated and delivered under this Indenture is
unlimited. The Securities may be issued up to the aggregate principal amount of
Securities from time to time authorized by or pursuant to a Board Resolution.
<PAGE>
22
Subordinated Indenture
The Securities may be issued in one or more series. All
Securities of each series issued under this Indenture shall in all respects be
equally and ratably entitled to the benefits hereof with respect to such series
without preference, priority or distinction on account of the actual time or
times of the authentication and delivery or Maturity of the Securities of such
series. There shall be established in or pursuant to a Board Resolution, and set
forth in, or determined in the manner provided in, an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(i) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(ii) any limit upon the aggregate principal amount or
aggregate initial public offering price of the Securities of the series
which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of
that series pursuant to this Article Three or Sections 4.07, 9.06 or
16.03);
(iii) the priority of payment, if any, of the Securities;
(iv) the price or prices (which may be expressed as a
percentage of the aggregate principal amount thereof) at which the
Securities will be issued;
(v) the date or dates on which the principal and premium, if
any, of the Securities of the series is payable;
(vi) the rate or rates at which the Securities of the series
shall bear interest, if any, or the method or methods by which such
rates may be determined, if any, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which such
interest shall be payable, the Regular Record Date for the interest
payable on any Interest Payment Date and the basis upon which interest
shall be calculated if other than that of a 360-day year consisting of
twelve 30-day months;
(vii) the extent to which any of the Securities will be
issuable in temporary or permanent global form, and in such case, the
Depositary for such Global Security or Securities, the terms and
conditions, if any, upon which such Global Security may be exchanged in
whole or in part for definitive securities, and the manner in which any
interest payable on a temporary or permanent Global Security will be
paid, whether or not consistent with Section 3.04 or 3.05;
(viii) the office or offices or agency where, subject to
Section 5.02, the Securities may be presented for registration of
transfer or exchange;
<PAGE>
23
Subordinated Indenture
(ix) the place or places where, subject to the provisions of
Section 5.02, the principal of (and premium, if any) and interest, if
any, on Securities of the series shall be payable;
(x) the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the series
may be redeemed, in whole or in part, at the option of the Company;
(xi) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(xii) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Registered Securities of
the series shall be issuable; and, if other than $5,000, the
denominations in which Bearer Securities of the series shall be
issuable;
(xiii) the currency or currencies of denominations of the
Securities of any series, which may be in Dollars, any Foreign Currency
or any composite currency, including but not limited to the ECU, and,
if any such currency of denomination is a composite currency other than
the ECU, the agency or organization, if any, responsible for overseeing
such composite currency;
(xiv) the currency or currencies in which payment of the
principal of (and premium, if any) and interest on the Securities will
be made, the currency or currencies, if any, in which payment of the
principal of (and premium, if any) or the interest on Registered
Securities, at the election of each of the Holders thereof, may also be
payable and the periods within which and the terms and conditions upon
which such election is to be made and the Exchange Rate and the
Exchange Rate Agent;
(xv) if the amount of payments of principal of (and premium,
if any) or any interest on Securities of the series may be determined
with reference to an index, the method or method by which such amounts
shall be determined;
(xvi) whether Securities of the series are to be issuable as
Registered Securities, Bearer Securities or both, whether Securities of
the series are to be issuable with or without coupons or both and, in
the case of Bearer Securities, the date as of which such Bearer
Securities shall be dated if other than the date of
<PAGE>
24
Subordinated Indenture
original issuance of the first Security of such series of like tenor
and term to be issued;
(xvii) whether, and under what conditions, additional amounts
will be payable to Holders of Securities of the series pursuant to
Section 5.04;
(xviii) whether any of the Securities will be issued as
Original Issue Discount Securities;
(xix) information with respect to book-entry procedures, if
any;
(xx) any addition to or change in the Events of Default or
covenants of the Company pertaining to the Securities of the series;
(xxi) the subordination of the Securities of such series to
any subordinated indebtedness of the Company, including without
limitation, the Securities of any other series; and
(xxii) any other terms of the series.
All Securities of any one series and the coupons appertaining
to Bearer Securities of such series, if any, shall be substantially identical
except, in the case of Registered Securities, as to denomination and except as
may otherwise be provided in or pursuant to such Board Resolution and setforth,
or determined in the manner provided in such Officers' Certificate orin any
indenture supplement hereto.
Securities of any particular series may be issued at various
times, with different dates on which the principal or any installment of
principal is payable, with different rates of interest, if any, or different
methods by which rates of interest may be determined, with different dates on
which such interest may be payable and with different Redemption Dates or
Repayment Dates and may be denominated in different currencies or payable in
different currencies.
All Securities shall be subordinate and junior in right of
payment to the obligations of the Company to holders of Senior Indebtedness as
provided in Article Fourteen.
SECTION 3.02. Denominations. The Securities of each series
shall be issuable in such form and denominations as shall be specified as
contemplated by Section 3.01. In the absence of any specification with respect
to the Securities of any series, the Registered Securities of each series shall
be issuable only as Securities without coupons in denominations of $1,000 and
any integral multiple thereof and the Bearer
<PAGE>
25
Subordinated Indenture
Securities of each series, if any,
shall be issuable with coupons and in denominations of $5,000.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman of the
Board, its President, a Vice Chairman of the Board, or one of its Vice
Presidents, or its Treasurer and by its Secretary or one of its Assistant
Secretaries. The signatures of any or all of these officers on the Securities
may be manual or facsimile. Coupons shall bear the facsimile signature of the
Company's Chairman of the Board, its President, a Vice Chairman of the Board or
one of its Vice Presidents, or its Treasurer.
Securities and coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series,
together with any coupons appertaining thereto, executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee shall, upon receipt of the
Company Order, authenticate and deliver such Securities as in this Indenture
provided and not otherwise; provided, however, that, in connection with its
original issuance, no Bearer Security shall be mailed or otherwise delivered to
any location in the United States; and provided further that a Bearer Security
may be delivered in connection with its original issuance only if the Person
entitled to receive such Bearer Security shall have delivered to the Trustee, or
such other Person as shall be specified in a temporary Global Security delivered
pursuant to Section 3.04, a certificate in the form required by Section 3.11(i).
If the Company shall establish pursuant to Section 3.01 that the
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities in registered or permanent bearer form, then the
Company shall execute and the Trustee shall, in accordance with this Section and
a Company Order for the authentication and delivery of such Global Securities
with respect to such series, authenticate and deliver one or more Global
Securities in permanent or temporary form that (i) shall represent and shall be
denominated in an aggregate amount equal to the aggregate principal amount of
the Outstanding Securities of such series to be represented by one or more
Global Securities, (ii) shall be registered, if in registered form, in the name
of the Depositary for such Global Security or Securities or the nominee of such
Depositary and (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions.
<PAGE>
26
Subordinated Indenture
Each Depositary designated pursuant to Section 3.01 for a
Global Security in registered form must, at the time of its designation and at
all times while it serves as Depositary, be a clearing agency registered under
the Exchange Act, and any other applicable statute or regulation.
In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 8.01) shall be
fully protected in relying upon, an Opinion of Counsel complying with Section
1.02 and stating that,
(i) the form of such Securities and coupons, if any, has been
established in conformity with the provisions of this Indenture;
(ii) the terms of such Securities and coupons, if any, or the
manner of determining such terms have been established in conformity
with the provisions of this Indenture;
(iii) that such Securities and coupons, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to or
affecting the enforcement of creditors' rights and to general
principles of equity; and
(iv) such other matters as the Trustee may reasonably request.
Notwithstanding the provisions of Section 3.01 and of this
Section 3.03, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Board Resolution or Officers'
Certificate otherwise required pursuant to Section 3.01 or the Company Order and
Opinion of Counsel otherwise required pursuant to this Section 3.03 at or prior
to the time of authentication of each Security of such series if such documents
are delivered at or prior to the authentication upon original issuance of the
first Security of such series to be issued and such documents reasonably
contemplate the issuance of all Securities of such series; provided that any
subsequent request by the Company to the Trustee to authenticate Securities of
such series upon original issuance shall constitute a representation and
warranty by the Company that as of the date of such request, the statements made
in the Officers' Certificate or other certificates delivered pursuant to
Sections 1.02 and 3.01 shall be true and correct as if made on such date.
<PAGE>
27
Subordinated Indenture
A Company Order, Officers' Certificate or Board Resolution or
supplemental indenture delivered by the Company to the Trustee in the
circumstances set forth in the preceding paragraph may provide that Securities
which are the subject thereof will be authenticated and delivered by the Trustee
or its agent on original issue from time to time in the aggregate principal
amount, if any, established for such series pursuant to such procedures
acceptable to the Trustee as may be specified from time to time by Company Order
upon the telephonic, electronic or written order of Persons designated in such
Company Order, Officers' Certificate, supplemental indenture or Board Resolution
and that such Persons are authorized to determine, consistent with such Company
Order, Officers' Certificate, supplemental indenture or Board Resolution, such
terms and conditions of said Securities as are specified in such Company Order,
Officers' Certificate, supplemental indenture or Board Resolution.
Each Registered Security shall be dated the date of its
authentication; and unless otherwise specified as contemplated by Section 3.01,
each Bearer Security and any temporary Global Security referred to in Section
3.04 shall be dated as of the date of original issuance of such Security.
No Security or coupon appertaining thereto shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose,
unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Except as
permitted by Section 3.06, the Trustee shall not authenticate and deliver any
Bearer Security unless all appurtenant coupons for interest then matured have
been detached and canceled. Notwithstanding the foregoing, if any Security or
portion thereof shall have been duly authenticated and delivered hereunder but
never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancelation as provided in Section 3.09 together
with a written statement (which need not comply with Section 1.02 and need not
be accompanied by an Opinion of Counsel) stating that such Security or portion
thereof has never been issued and sold by the Company, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 3.04. Temporary Securities. (a) Pending the
preparation of definitive Securities of any series, the Company may execute, and
upon Company Order and the receipt of the certifications and opinions required
under Sections 3.01 and 3.03, the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denominations, substantially of the
tenor of the definitive Securities in lieu of which they are issued in
registered form or, if authorized, in bearer form with one or more coupons or
<PAGE>
28
Subordinated Indenture
without coupons, and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities. In the case of any series which
may be issuable as Bearer Securities, such temporary Securities may be in global
form, representing such of the Outstanding Securities of such series as shall be
specified therein.
(b) Unless otherwise provided pursuant to Section 3.01:
(i) Except in the case of temporary Securities in global form,
each of which shall be exchanged in accordance with the provisions of
the following paragraphs, if temporary Securities of any series are
issued, the Company will cause definitive Securities of such series to
be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of
the temporary Securities of such series at the office or agency of the
Company in a Place of Payment for that series, without charge to the
Holder. Upon surrender for cancelation of any one or more temporary
Securities of any series (accompanied, if applicable, by all unmatured
coupons and all matured coupons in default appertaining thereto), the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of
such series of authorized denominations; provided, however, that no
definitive Bearer Security shall be
delivered in exchange for a temporary Registered Security; and provided
further that a definitive Bearer Security shall be delivered in
exchange for a temporary Bearer Security only in compliance with the
conditions set forth in Section 3.03. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such series.
(ii) If temporary Securities of any series are issued in
global form, any such temporary Global Security shall, unless otherwise
provided in such temporary Global Security, be delivered to the London
office of a depositary or common depositary (the "Common Depositary"),
for the benefit of the operator of Euroclear and CEDEL S.A., for credit
to the respective accounts of the beneficial owners of such Securities
(or to such other accounts as they may direct). Upon receipt of written
instructions (which need not comply with Section 1.02) signed on behalf
of the Company by any Person authorized to give such instructions, the
Trustee or any Authenticating Agent shall endorse such temporary Global
Security to reflect the initial principal amount, or an increase in the
principal amount, of Outstanding Securities represented thereby. Until
such initial endorsement, such temporary Global Security shall not
evidence any obligation of the Company. Such temporary Global Security
shall at any time represent the aggregate principal
<PAGE>
29
Subordinated Indenture
amount of
Outstanding Securities theretofore endorsed thereon as provided above,
subject to reduction to reflect exchanges as described below.
(iii) Unless otherwise specified in such temporary Global
Security, and subject to the second proviso in the following paragraph,
the interest of a beneficial owner of Securities of a series in a
temporary Global Security shall be exchanged for definitive Securities
(including a definitive Global Bearer Security) of such series and of
like tenor following the Global Exchange Date (as defined below) when
the account holder instructs Euroclear or CEDEL S.A., as the case may
be, to request such exchange on his behalf and delivers to Euroclear or
CEDEL S.A., as the case may be, a certificate in the form required by
Section 3.11(i), dated no earlier than 15 days prior to the Global
Exchange Date, copies of which certificate shall be available from the
offices of Euroclear and CEDEL S.A., the Trustee, any Authenticating
Agent appointed for such series of Securities and each Paying Agent.
Unless otherwise specified in such temporary Global Security, any such
exchange shall be made free of charge to the beneficial owners of such
temporary Global Security, except that a Person receiving definitive
Securities must bear the cost of insurance, postage, transportation and
the like in the event that such Person does not take delivery of such
definitive Securities in person at the offices of Euroclear or CEDEL
S.A. Definitive Securities in bearer form to be delivered in exchange
for any portion of a temporary Global Security shall be delivered only
outside the United States.
(iv) Without unnecessary delay but in any event not later than
the date specified in, or determined pursuant to the terms of, any such
temporary Global Security as the "Global Exchange Date" (the "Global
Exchange Date"), the Company shall deliver to the Trustee, or, if the
Trustee appoints an Authenticating Agent pursuant to Section 8.14, to
any such Authenticating Agent, definitive Securities in aggregate
principal amount equal to the principal amount of such temporary Global
Security, executed by the Company. Unless otherwise specified as
contemplated by Section 3.01, such definitive Securities shall be in
the form of Bearer Securities or Registered Securities, or any
combination thereof, as may be specified by the Company, the Trustee or
any such Authenticating Agent, as may be appropriate. On or after the
Global Exchange Date, such temporary Global Security shall be
surrendered by the Common Depositary to the Trustee or any such
Authenticating Agent, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive
Securities without charge and the Trustee or any such Authenticating
Agent shall authenticate and deliver, in exchange for each portion of
such temporary Global Security, an equal aggregate principal amount of
definitive Securities of the same series, of authorized denominations
and of like tenor as the portion of such temporary Global Security to
be exchanged, which, except as otherwise specified as
<PAGE>
30
Subordinated Indenture
contemplated by Section 3.01, shall be in the form of Bearer Securities
or Registered Securities, or any combination thereof; provided,
however, that unless otherwise specified in such temporary Global
Security, upon such presentation by the Common Depositary, such
temporary Global Security is accompanied by a certificate dated the
Global Exchange Date or a subsequent date and signed by Euroclear as to
the portion of such temporary Global Security held for its account then
to be exchanged and a certificate dated the Global Exchange Date or a
subsequent date and signed by CEDEL S.A., as to the portion of such
temporary Global Security held for its account then to be exchanged,
each in the form required by Section 3.11(ii); and provided further
that a definitive Bearer Security (including a definitive global Bearer
Security) shall be delivered in exchange for a portion of a temporary
Global Security only in compliance with the conditions set forth in
Section 3.03.
(v) Upon any exchange of a portion of any such temporary
Global Security, such temporary Global Security shall be endorsed by
the Trustee or any such Authenticating Agent, as the case may be, to
reflect the reduction of the principal amount evidenced thereby,
whereupon its remaining principal amount shall be reduced for all
purposes by the amount so exchanged. Until
so exchanged in full, such temporary Global Security shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities of such series authenticated and delivered
hereunder, except that, unless otherwise specified as contemplated by
Section 3.01, interest payable on such temporary Global Security on an
Interest Payment Date for Securities of such series occurring prior to
the applicable Global Exchange Date shall be payable, without interest,
to Euroclear and CEDEL S.A. on or after such Interest Payment Date upon
delivery by Euroclear and CEDEL S.A. to the Trustee or the Paying
Agent, as the case may be, of a certificate or certificates in the form
required by Section 3.11(iii), for credit on or after such Interest
Payment Date to the respective accounts of the Persons who are the
beneficial owners of such temporary Global Security on such Interest
Payment Date and who have each delivered to Euroclear or CEDEL S.A., as
the case may be, a certificate in the form required by Section
3.11(iv). Any interest so received by Euroclear and CEDEL S.A. and not
paid as herein provided prior to the Global Exchange Date shall be
returned to the Trustee or Paying Agent, as the case may be, which,
upon expiration of two years after such Interest Payment Date, shall
repay such interest on Company Request in accordance with Section 5.03.
SECTION 3.05. Registration, Registration of Transfer and
Exchange. With respect to Registered Securities, the Company shall keep or cause
to be kept a register (sometimes referred to as the "Security Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Registered Securities and the registration
of transfers of Registered Securities and the
<PAGE>
31
Subordinated Indenture
Company shall appoint a "Security
Registrar", and may appoint any "Co-Security Registrar", as may be appropriate,
to keep the Security Register. Such Security Register shall be in written form
or in any other form capable of being converted into written form within a
reasonable time. At all reasonable times the information contained in such
Security Register shall be available for inspection by the Trustee at the office
of the Security Registrar. In the event that any Registered Securities issued
hereunder have the City of New York as a Place of Payment, the Company shall
appoint either a Security Registrar or Co-Security Registrar located in the City
of New York.
Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency of the Company maintained
pursuant to Section 5.02 for such purpose in a Place of Payment for such series,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Registered
Securities of such series of any authorized denominations and of a like
aggregate principal amount, tenor and Stated Maturity.
At the option of the Holder, Registered Securities of any
series may be exchanged for other Registered Securities of such series, of any
authorized denominations and of like aggregate principal amount, tenor and
Stated Maturity, upon surrender of the Securities to be exchanged at such office
or agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Registered Securities may not be exchanged for Bearer
Securities.
At the option of the Holder, Bearer Securities of any series
may be exchanged for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default thereto appertaining. If
the Holder of a Bearer Security is unable to produce any such unmatured coupon
or coupons or matured coupon or coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds acceptable
to the Company in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by the
Company and the Trustee if there be furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Security shall surrender to any Paying Agent any
such missing coupon in respect of which such a payment shall have been made,
such Holder shall be entitled to receive the amount of any such payment from the
Company; provided, however, that interest represented by coupons shall be
payable only upon presentation and surrender of those coupons at an office or
agency of a Paying Agent, maintained pursuant to Section 5.02 for such purpose,
located outside the United States. Notwithstanding the
<PAGE>
32
Subordinated Indenture
foregoing, in case a
Bearer Security of any series is surrendered at any such office or agency in
exchange for a Registered Security of the same series and like tenor after the
close of business at such office or agency on (i) any Regular Record Date and
before the opening of business at such office or agency on the relevant Interest
Payment Date, or (ii) any Special Record Date and before the opening of business
at such office or agency on the related date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date or proposed date for payment, as the case may be.
Notwithstanding any other provision of this Section, unless
and until it is exchanged in whole or in part for individual Securities
represented thereby, a Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor Depositary.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
If at any time the Depositary for the Securities of a series
notifies the Company that it is unwilling or unable to continue as Depositary
for the Securities of such series or if at any time the Depositary for the
Securities of such series shall no longer be eligible under Section 3.03, the
Company shall appoint a successor Depositary with respect to the Securities of
such series. If a successor Depositary for the Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such ineligibility, the Company's election pursuant to
Section 3.01(vi) shall no longer be effective with respect to the Securities of
such series and the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of definitive Securities of
such series, will authenticate and deliver Securities of such series of like
tenor and terms in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion
determine that the Securities of any series issued in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities. In such event, the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of definitive
Securities of such series, will deliver, Securities of such series of like tenor
and terms in definitive form in an aggregate principal amount equal to the
principal
<PAGE>
33
Subordinated Indenture
amount of the Global Security or Securities representing such series in
exchange for such Global Security or Securities.
If specified by the Company pursuant to Section 3.01 with
respect to a series of Securities, the Depositary for such series of Securities
may surrender a Global Security for such series of Securities in exchange in
whole or in part for Securities of such series of like tenor and terms and in
definitive form on such terms as are acceptable to the Company, the Trustee and
such Depositary. Thereupon, the Company shall execute, and the Trustee upon
receipt of a Company Order for the authentication and delivery of definitive
Securities of such series, shall authenticate and deliver, without service
charge:
(a) to the Depositary or to each Person specified by such
Depositary a new Security or Securities of the same series, of like
tenor and terms and of any authorized denomination as requested by such
Person in aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Global Security; and
(b) to such Depositary a new Global Security of like tenor and
terms and in an authorized denomination equal to the difference, if
any, between the principal amount of the surrendered Global Security
and the aggregate principal amount of Securities delivered to Holders
thereof.
In any exchange provided for in any of the preceding three
paragraphs, the Company will execute and the Trustee, pursuant to a Company
Order, will authenticate and deliver, Securities (a) in definitive registered
form in authorized denominations, if the Securities of such series are issuable
as Registered Securities, (b) in definitive bearer form in authorized
denominations, with coupons attached, if the Securities of such series are
issuable as Bearer Securities or (c) as either Registered or Bearer Securities,
if the Securities of such series are issuable in either form; provided, however,
that no definitive Bearer Security shall be delivered in exchange for a
temporary Global Security other than in accordance with the provisions of
Sections 3.03 and 3.04.
Upon the exchange of Global Securities for Securities in
definitive form, such Global Securities shall be canceled by the Trustee.
Registered Securities issued in exchange for a Global Security pursuant to this
Section 3.05 shall be registered in such names and in such authorized
denominations, and delivered to such addresses, as the Depositary for such
Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee in writing. The Trustee
shall deliver such Registered Securities to the Persons in whose names such
Securities are so registered or to the Depositary. The Trustee shall deliver
Bearer Securities issued in exchange for a Global Security pursuant to this
Section 3.05 to the Depositary or to the Persons at such addresses, and in such
authorized denominations, as the Depositary for such Global
<PAGE>
34
Subordinated Indenture
Security, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing; provided, however, that no definitive Bearer
Security shall be delivered in exchange for a temporary Global Security other
than in accordance with the provisions of Sections 3.03 and 3.04.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar
dulyexecuted, by the Holder thereof or his attorney duly authorized in writing.
Unless otherwise provided in the Securities to be registered
for transfer or exchanged, no service charge shall be made for any registration
of transfer or exchange of Securities, but the Company may (unless otherwise
provided in such Securities) require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
expressly provided in this Indenture to be made at the Company's own expense or
without expense or without charge to Holders.
Neither the Company, the Security Registrar nor any
Co-Security Registrar shall be required (i) to issue, register the transfer of
or exchange any Securities of any series during a period beginning at the
opening of business 15 days before the day of selection of Securities of such
series to be redeemed and ending at the close of business on (A) if Securities
of the series are issuable only as Registered Securities, the day of the mailing
of the relevant notice of redemption of Registered Securities of such series so
selected for redemption or (B) if Securities of the series are issuable as
Bearer Securities, the day of the first publication of the relevant notice of
redemption or, if Securities of the series are also issuable as Registered
Securities and there is no publication, the mailing of the relevant notice of
redemption, or (ii) to register the transfer or exchange of any Securities or
portions thereof so selected for redemption.
Notwithstanding anything herein to the contrary, the exchange
of Bearer Securities into Registered Securities shall be subject to applicable
laws and regulations in effect at the time of exchange; none of the Company, the
Trustee nor the Security Registrar shall exchange any Bearer Securities into
Registered Securities if it has received an Opinion of Counsel that as a result
of such exchanges the Company would suffer adverse consequences under the United
States federal income tax laws and regulations
<PAGE>
35
Subordinated Indenture
then in effect and the Company
has delivered to the Trustee a Company Order directing the Trustee not to make
such exchanges unless and until the Trustee receives a subsequent Company Order
to the contrary. The Company shall deliver copies of such Company Orders to the
Security Registrar.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen
Securities. If (i) any mutilated Security or Security with a mutilated coupon is
surrendered to the Trustee or the Security Registrar, or if the Company, the
Trustee and the Security Registrar receive evidence to their satisfaction of the
destruction, loss or theft of any Security or coupon and (ii) there is delivered
to the Company, the Trustee and the Security Registrar such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice to the Company, the Trustee or
the Security Registrar that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such mutilated, destroyed, lost or
stolen Security or in exchange for the Security to which a mutilated, destroyed,
lost or stolen coupon appertains (with all appurtenant coupons not mutilated,
destroyed, lost or stolen), a new Security of the same series and Stated
Maturity and of like tenor and principal amount, bearing a number not
contemporaneously outstanding and, if applicable, with coupons corresponding to
the coupons appertaining thereto; provided, however, that any new Bearer
Security will be delivered only in compliance with the conditions set forth in
Section 3.05.
In case any such mutilated, destroyed, lost or stolen Security
or coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security; provided,
however, that payment of principal of (and premium, if any) and any interest on
Bearer Securities shall be payable only at an office or agency located outside
the United States, and, in the case of interest, unless otherwise specified as
contemplated by Section 3.01, only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee, including attorney's
fees and expenses) connected therewith.
Every new Security of any series, with its coupons, if any,
issued pursuant to this Section in exchange for any mutilated Security or in
lieu of any destroyed, lost or stolen Security, or in exchange for a Security
with a mutilated, destroyed, lost or stolen coupon, shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security and its coupons, if any, or the mutilated,
destroyed, lost or stolen coupon shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with
<PAGE>
36
Subordinated Indenture
any and all other Securities of the same series and their coupons, if any,
duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities or
coupons.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Unless otherwise provided as contemplated by Section 3.01, interest on any
Registered Security which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall unless otherwise provided in such
Security be paid to
the Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest. Unless otherwise specified as contemplated by Section 3.01, in case a
Bearer Security of any series is surrendered in exchange for a Registered
Security of such series after the close of business (at an office or agency
referred to in Section 3.05) on any Regular Record Date and before the opening
of business (at such office or agency) on the next succeeding Interest Payment
Date, such Bearer Security shall be surrendered without the coupon relating to
such Interest Payment Date and interest will not be payable on such Interest
Payment Date in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such coupon when due
in accordance with the provisions of this Indenture. At the option of the
Company, payment of interest on any Registered Security may be made by check in
the currency designated for such payment pursuant to the terms of such
Registered Security mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or by wire transfer to an account
in such currency designated by such Person in writing not later than ten days
prior to the date of such payment.
Any interest on any Registered Security which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of his having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (i) or clause (ii) below.
(i) The Company may elect to make payments of any Defaulted
Interest to the Persons in whose names any such Registered Securities (or their
respective Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each Registered
Security and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money
<PAGE>
37
Subordinated Indenture
equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 nor less than 10 days
prior to the date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first
class,
postage prepaid, to each Holder at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names such Registered Securities (or their respective
Predecessor Securities) are registered on such Special Record Date and shall no
longer be payable pursuant to the following clause (ii). In case a Bearer
Security of any series is surrendered at the office or agency in a Place of
Payment for such series in exchange for a Registered Security of such series
after the close of business at such office or agency on any Special Record Date
and before the opening of business at such office or agency on the related
proposed date of payment of Defaulted Interest, such Bearer Security shall be
surrendered without the coupon relating to such proposed date for payment and
Defaulted Interest will not be payable on such proposed date for payment in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture.
(ii) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities with respect to which there exists such default
may be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of, or in
exchange for, or in lieu of, any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Subject to the limitations set forth in Section 5.02, the
Holder of any coupon appertaining to a Bearer Security shall be entitled to
receive the interest payable on such coupon upon presentation and surrender of
such coupon on or after the Interest
<PAGE>
38
Subordinated Indenture
Payment Date of such coupon at an office or agency maintained for such purpose
pursuant to Section 5.02.
SECTION 3.08. Persons Deemed Owners. Title to any Bearer
Security, any coupons appertaining thereto and any temporary Global Security
shall pass by delivery.
Prior to due presentment for registration of transfer of any
Registered Security, the Company, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name such Security is registered as
the owner of such Security for the purpose of receiving payment of principal of,
premium, if any, and
(subject to Section 3.07) interest on such Security, and for all purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security and the bearer of any coupon
as the absolute owner of such Security or coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever
whether or not such Security or coupon be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
None of the Company, the Trustee, any Paying Agent, any
Authenticating Agent or the Security Registrar will have the responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interest of a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest, and they shall be fully protected in acting or refraining from acting
on any such information provided by the Depositary.
SECTION 3.09. Cancellation. Unless otherwise provided with
respect to a series of Securities, all Securities and coupons surrendered for
payment, registration of transfer, exchange, repayment or redemption shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee.
All Securities so delivered or surrendered directly to the Trustee for any such
purpose shall be promptly cancelled by it. The Company may at any time deliver
to the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture or such Securities. All cancelled Securities or coupons held
by the Trustee shall be destroyed by the Trustee and the Trustee shall deliver a
certificate of such destruction to the Company.
<PAGE>
39
Subordinated Indenture
SECTION 3.10. Computation of Interest. Interest on the
Securities of each series shall be computed as shall be specified as
contemplated by Section 3.01.
SECTION 3.11. Form of Certification. Unless otherwise provided
pursuant to Section 3.01:
(i) Whenever any provision of this Indenture or the forms of
Securities contemplate that certification be given by a Person entitled
to receive a Bearer Security, such certification shall be provided
substantially in the form of
Exhibit A hereto, with only such changes as shall be approved by the
Company.
(ii) Whenever any provision of this Indenture or the forms of
Securities contemplate that certification be given by Euroclear and
CEDEL S.A. in connection with the exchange of a portion of a temporary
Global Security, such certification shall be provided substantially in
the form of Exhibit B hereto, with only such changes as shall be
approved by the Company.
(iii) Whenever any provision of the Indenture or the forms of
Securities contemplate that certification be given by Euroclear and
CEDEL S.A. in connection with payment of interest with respect to a
temporary Global Security prior to the related Global Exchange Date,
such certification shall be provided substantially in the form of
Exhibit C hereto, with only such changes as shall be approved by the
Company.
(iv) Whenever any provision of the Indenture or the forms of
Securities contemplate that certification be given by a beneficial
owner of a portion of a temporary Global Security in connection with
payment of interest with respect to a temporary Global Security prior
to the related Global Exchange Date, such certification shall be
provided substantially in the form of Exhibit D hereto, with only such
changes as shall be approved by the Company.
SECTION 3.12. Judgments. The Company may provide, pursuant to
Section 3.01, for the Securities of any series that, to the fullest extent
possible under applicable law and except as may otherwise be specified as
contemplated in Section 3.01, (a) the obligation, if any, of the Company to pay
the principal of (and premium, if any) and interest of the Securities of any
series and any appurtenant coupons in a Foreign Currency, composite currency or
Dollars (the "Designated Currency") as may be specified pursuant to Section 3.01
is of the essence and agrees that judgments in respect of such Securities shall
be given in the Designated Currency; (b) the obligation of the Company to make
payments in the Designated Currency of the principal of (and premium, if any)
and interest on such Securities and any appurtenant coupons shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the
<PAGE>
40
Subordinated Indenture
extent of the amount in the Designated Currency that the Holder receiving such
payment may, in accordance with normal banking procedures, purchase with the sum
paid in such other currency (after any premium and cost of exchange) in the
country of issue of the Designated Currency in the case of Foreign Currency or
Dollars or in the international banking community in the case of a composite
currency on the Business Day immediately following the day on which such Holder
receives such payment; (c) if the amount in the Designated Currency that may be
so purchased for any reason falls short of the amount originally due, the
Company shall pay such additional amounts as may be necessary to compensate for
such shortfall; and (d) any obligation of the Company not discharged by
suchpayment shall be due as a separate and independent obligation and, until
discharged as provided herein, shall continue in full force and effect.
ARTICLE FOUR
Redemption of Securities
SECTION 4.01. Applicability of Article. Securities of any
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and, except as otherwise specified as contemplated
by Section 3.01 for Securities of any series, in accordance with this Article.
SECTION 4.02. Election To Redeem; Notice to Trustee. The
election of the Company to redeem any Securities redeemable at the option of the
Company shall be evidenced by an Officers' Certificate. In case of any
redemption at the election of the Company of the Securities of any series, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee and the Security Registrar of such Redemption Date and of the
principal amount of Securities of such series to be redeemed. In the case of any
redemption of Securities (i) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, or (ii) pursuant to an election of the Company which is subject to a
condition specified in the terms of such Securities, the Company shall furnish
the Trustee with an Officers' Certificate evidencing compliance with such
restriction.
SECTION 4.03. Selection by Security Registrar of Securities To
Be Redeemed. If less than all the Securities of any series with the same terms
are to be redeemed, the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Security Registrar
from the Outstanding Securities of such series having such terms not previously
called for redemption, by such method as the Security Registrar shall deem fair
and appropriate and which may provide for the selection for redemption of
portions of the principal amount of Securities of such series of a
<PAGE>
41
Subordinated Indenture
denomination
equal to or larger than the minimum authorized denomination for Securities of
such series. Unless otherwise provided by the terms of the Securities of any
series so selected for partial redemption, the portions of the principal of
Securities of such series so selected for partial redemption shall be, in the
case of Registered Securities, equal to $1,000 or an integral multiple
thereof or, in the case of Bearer Securities, equal to $5,000 or an integral
multiple thereof, and the principal amount of any such Security which remains
outstanding shall not be less than the minimum authorized denomination for
Securities of such series.
The Security Registrar shall promptly notify the Company, the
Trustee and the Co-Security Registrar, if any, in writing of the Securities
selected for redemption and, in the case of any Security selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal of such Security which has been or is to
be redeemed.
SECTION 4.04. Notice of Redemption. Notice of redemption shall
be given in the manner provided in Section 1.06, not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) if less than all Outstanding Securities of any series
having the same terms are to be redeemed, the identification (and, in
the case of partial redemption, the respective principal amounts) of
the particular Securities to be redeemed;
(iv) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed, and that
interest, if any, thereon shall cease to accrue on and after said date;
(v) the place or places where such Securities, together in the
case of Bearer Securities with all remaining coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price;
(vi) that the redemption is for a sinking fund, if such is the
case; and
<PAGE>
42
Subordinated Indenture
(vii) the CUSIP number or the Euroclear or the CEDEL reference
number (or any other number used by a Depositary to identify such
Securities), if any, of the Securities to be redeemed.
A notice of redemption published as contemplated by Section
1.06(2) need not identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, on Company Request, by
the Trustee in the name and at the expense of the Company.
SECTION 4.05. Deposit of Redemption Price. At or prior to the
opening of business on any Redemption Date, the Company shall deposit or cause
to be deposited with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 5.03) an amount of money sufficient to pay the Redemption Price of all
the Securities which are to be redeemed on that date; provided, however, that
deposits with respect to Bearer Securities shall be made with a Paying Agent or
Paying Agents located outside the United States except as otherwise provided in
Section 5.02, unless otherwise specified as contemplated by Section 3.01.
SECTION 4.06. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified and from and after such date (unless the Company shall default
in the payment of the Redemption Price) such Securities shall cease to bear
interest and the coupons for such interest appertaining to any Bearer Securities
so to be redeemed, except to the extent provided below, shall be void. Upon
surrender of any such Securities for redemption in accordance with said notice,
such Securities shall be paid by the Company at the Redemption Price; provided,
however, that installments of interest on Bearer Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 3.01, only upon presentation and surrender
of coupons for such interest. Installments of interest on Registered Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such on the close of business on the relevant Regular Record Dates
according to their terms and the provisions of Section 3.07.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or
<PAGE>
43
Subordinated Indenture
coupons may be waived by the Company and the Trustee if there be furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Security shall surrender
to the Trustee or any Paying Agent any such missing coupon in respect of which a
deduction shall have been made from the Redemption Price, such Holder shall be
entitled to receive the amount so deducted; provided, however, that interest
represented by coupons shall be payable only at an office or agency located
outside the United States and, unless otherwise specified as contemplated by
Section 3.01, only upon presentation and surrender of those coupons.
If any Security called for redemption shall not be paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by such Security, or as otherwise
provided in such Security.
SECTION 4.07. Securities Redeemed in Part. Any Security which
is to be redeemed only in part shall be surrendered at the office or agency of
the Company in a Place of Payment therefor (with, if the Company or the Security
Registrar so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed by,
the Holder of such Security or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of
the same series and Stated Maturity, containing identical terms and conditions,
of any authorized denominations as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
SECTION 4.08. Redemption Suspended During Event of Default.
The Trustee shall not redeem any Securities (unless all Securities then
Outstanding are to be redeemed) or commence the giving of any notice of
redemption of Securities during the continuance of any Event of Default known to
the Trustee, except that where the giving of notice of redemption of any
Securities shall theretofore have been made, the Trustee shall, subject to the
provisions of Article Fourteen, redeem such Securities, provided funds are
deposited with it for such purpose. Subject to the rights of the holders of
Senior Indebtedness, except as aforesaid, any moneys theretofore or thereafter
received by the Trustee shall, during the continuance of such Event of Default,
be held in trust for the benefit of the Holders and applied in the manner set
forth in Section 7.06; provided, however, that in case such Event of Default
shall have been waived as provided herein or otherwise cured, such moneys shall
thereafter be held and applied in accordance with the provisions of this
Article.
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Subordinated Indenture
ARTICLE FIVE
Covenants
SECTION 5.01. Payment of Principal, Premium and Interest. The
Company covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay the principal of, premium, if any, and interest
on the Securities of such series in accordance with the terms of the Securities
of such series, any coupons appertaining thereto and this Indenture. Unless
otherwise specified as contemplated by Section 3.01 with respect to any series
of Securities, any interest due on Bearer Securities on or before Maturity shall
be payable only outside the United States upon presentation and surrender of the
several coupons for such interest installments as are evidenced thereby as they
severally mature.
SECTION 5.02. Maintenance of Office or Agency. If Securities
of a series are issuable only as Registered Securities, the Company will
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and of
any change in the location, of such office or agency. If Securities of a series
may be issuable as Bearer Securities, the Company will maintain (A) in the
Borough of Manhattan, the City of New York an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Securities of that series may be surrendered for
exchange and where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served, (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
which is located outside the United States, an office or agency where Securities
of that series and related coupons may be presented and surrendered for payment
(including payment of any additional amounts payable on Securities of that
series pursuant to Section 5.04); provided, however, that if the Securities of
that series are listed on The International Stock Exchange of the United Kingdom
and the Republic of Ireland Limited or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent for the Securities of
that series in London or Luxembourg or any other required city located outside
the United States, as the case may be, so long as the Securities of that series
are listed on such exchange, and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for such series located outside the
United States an office or agency where any Registered Securities of that series
may be surrendered for registration of transfer, where Securities of that series
may be surrendered
<PAGE>
45
Subordinated Indenture
for exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency in respect of any
series of Securities or shall fail to furnish the Trustee with the address
thereof, such presentations, and surrenders of Securities of that series may be
made and notices and demands may be made or served at the Principal Corporate
Trust Office of the Trustee, except that Bearer Securities of that series and
the related coupons may be presented and surrendered for payment (including
payment of any additional amounts payable on Bearer Securities of that series
pursuant to Section 5.04) at the place specified for the purpose as contemplated
by Section 3.01, and the Company hereby appoints the Trustee as its agent to
receive such respective presentations, surrenders, notices and demands.
Except as otherwise provided in the form of Bearer Security of
any particular series pursuant to the provisions of this Indenture, no payment
of principal, premium or interest on Bearer Securities shall be made at any
office or agency of the Company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States; provided, however, payment of principal of and any
premium and interest denominated in Dollars (including additional amounts
payable in respect thereof) on any Bearer Security may be made at an office or
agency of, and designated by, the Company located in the United States if (but
only if) payment of the full amount of such principal, premium, interest or
additional amounts in Dollars at all offices outside the United States
maintained for the purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or similar restrictions
and the Trustee receives an Opinion of Counsel that such payment within the
United States is legal. Unless otherwise provided as contemplated by Section
3.01 with respect to any series of Securities, at the option of the Holder of
any Bearer Security or related coupon, payment may be made by check in the
currency designated for such payment pursuant to the terms of such Bearer
Security presented or mailed to an address outside the United States or by
transfer to an account in such currency maintained by the payee with a bank
located outside the United States.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all of such purposes specified above in this
Section and may constitute and appoint one or more Paying Agents for the payment
of such Securities, in one or more other cities, and may from time to time
rescind such designations and appointments; provided, however, that no such
designation, appointment or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in each Place of Payment for
Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any
<PAGE>
46
Subordinated Indenture
change in the location of any such other office or
agency. Unless and until the Company rescinds one or more such appointments, the
Company hereby appoints First Union National Bank of North Carolina as its
Paying Agent in the City of New York with respect to all series of Securities
having a Place of Payment in the City of New York.
SECTION 5.03. Money for Security Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent for any series of
Securities, it will, on or before each due date of the principal of, premium, if
any, or interest on any of the Securities of such series and any appurtenant
coupons, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, at or prior to the opening of business on
each due date of the principal of, premium, if any, or interest on any
Securities of such series and any appurtenant coupons, deposit with a Paying
Agent a sum sufficient to pay the principal, premium or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the
Trustee for any series of Securities to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee subject to
the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of principal of,
premium, if any, or interest on Securities of such series and any
appurtenant coupons in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(ii) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of such series) in the making of
any payment of principal, premium or interest on the Securities of such
series or any appurtenant coupons; and
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
<PAGE>
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Subordinated Indenture
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent, and, upon such payments by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Security of any series or any appurtenant coupons and
remaining unclaimed for two years after such principal, premium or interest has
become due and payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust, and the Holder of
such Security or any coupon appertaining thereto shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 5.04. Additional Amounts. If the Securities of a
series provide for the payment of additional amounts, the Company will pay to
the Holder of any Security of any series or any coupon appertaining thereto
additional amounts as provided therein. Whenever in this Indenture there is
mentioned, in any context, the payment of the principal of (or premium, if any)
or interest on, or in respect of, any Security of any series or payment of any
related coupon or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of additional amounts provided for in this Section to the extent that,
in such context, additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of the
payment of additional amounts (if applicable) in any provisions hereof shall not
be construed as excluding additional amounts in those provisions hereof where
such express mention is not made.
If the Securities of a series provide for the payment of
additional amounts, at least 10 days prior to the first Interest Payment Date
with respect to that series of Securities (or if the Securities of that series
will not bear interest prior to Maturity, the first day on which a payment of
principal (and premium, if any) is
made), and at least 10 days prior to each date of payment of principal (and
premium, if any) or interest if there
<PAGE>
48
Subordinated Indenture
has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company will
furnish the Trustee and the Company's Principal Paying Agent or Paying Agents,
if other than the Trustee, with an Officers' Certificate instructing the Trustee
and such Paying Agent or Paying Agents whether such payment of principal of (and
premium, if any) or interest on the Securities of that series shall be made to
Holders of Securities of that series or any related coupons who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of that series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Securities or coupons and the Company will pay to the Trustee
or such Paying Agent the additional amounts required by this Section. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against, any loss, liability or expense reasonably incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.
SECTION 5.05. Statement as to Compliance. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company, an Officers' Certificate (provided, however, that one of the
signatories of which shall be the Company's principal executive officer,
principal financial officer or principal accounting officer) stating, as to each
signer thereof, that:
(i) a review of the activities of the Company during such year
and of performance under this Indenture and under the terms of the
Securities has been made under his supervision; and
(ii) to the best of his knowledge, based on such review, (a)
the Company has fulfilled all its obligations and complied with all
conditions and covenants under this Indenture and under the terms of
the Securities throughout such year, or, if there has been a default in
the fulfillment of any such obligation, condition or covenant
specifying each such default known to him and the nature and status
thereof, and (b) no event has occurred and is occurring which is, or
after notice or lapse of time or both would become, a Default, or if
such an event has occurred and is continuing, specifying such event
known to him and the nature and status thereof.
For purposes of this Section, compliance or default shall be
determined without regard to any period of grace or requirement of notice
provided for herein.
SECTION 5.06. Maintenance of Corporate Existence, Rights and
Franchises. So long as any of the Securities shall be Outstanding, the Company
will do or cause
<PAGE>
49
Subordinated Indenture
to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises to carry on its
business; provided, however, that nothing in this Section 5.06 shall (i) require
the Company to preserve any such right or franchise if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders, (ii) prevent any
consolidation or merger of the Company, or any conveyance or transfer of its
property and assets substantially as an entirety to any person, permitted by
Article Ten, (iii) prevent the liquidation or dissolution of the Company after
any conveyance or transfer of its property and assets substantially as an
entirety to any person permitted by Article Ten.
ARTICLE SIX
Holders' Lists and Reports by Trustee and Company
SECTION 6.01. Company To Furnish Trustee Names and Addresses
of Holders. The Company will furnish or cause to be furnished to the Trustee (i)
semiannually, not more than 10 days after each March 1 and September 1, a list,
in such form as the Trustee may reasonably require, containing all the
information in the possession or control of the Company, any of its Paying
Agents (other than the Trustee) or the Security Registrar, if other than the
Trustee, as to the names and addresses of the Holders of Securities as of the
preceding February 15 and August 15, as the case may be, and (ii) at such other
times as the Trustee may request in writing, within 30 days after receipt by the
Company of any such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is requested to be furnished;
provided, however, that if and so long as the Trustee is the Security Registrar
for Securities of a series, no such list need be furnished with respect to such
Series of Securities.
SECTION 6.02. Preservation of Information; Communications to
Holders. (i) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Securities contained in the
most recent list furnished to the Trustee as provided in Section 6.01 and the
names and addresses of Holders of Securities received by the Trustee in its
capacity as the Security Registrar, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 6.01 upon receipt of a new list so
furnished.
(ii) If three or more Holders of Securities of any series
(hereinafter referred to as "applicants") apply in writing to the Trustee, and
furnish to the Trustee
reasonable proof that each such applicant has owned a Security of such series
for a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of such series
<PAGE>
50
Subordinated Indenture
or with the Holders of all Securities with
respect to their rights under this Indenture or under such Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either:
(a) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 6.02(i); or
(b) inform such applicants as to the approximate number of
Holders of Securities of such series or all Securities, as the case may
be, whose names and addresses appear in the information preserved at
the time by the Trustee in accordance with Section 6.02(i), and as to
the approximate cost of mailing to such Holders the form of proxy or
other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of a Security of such series or all Holders of
Securities, as the case may be, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with Section
6.02(i), a copy of the form of proxy or other communication which is specified
in such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and payment, or provision for the payment, of the
reasonable expenses of mailing, unless, within five days after such tender, the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Securities of such series or all Securities, as the
case may be, or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Holders of Securities with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise, the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(iii) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders of Securities in
accordance with Section 6.02(ii), regardless of the source from which such
information was derived, and that the Trustee shall not be held
<PAGE>
51
Subordinated Indenture
accountable by
reason of mailing any material pursuant to a request made under Section
6.02(ii).
SECTION 6.03. Reports by Trustee. (i) Within 60 days after May
l5 of each year commencing with the year 1996, the Trustee shall mail to each
Holder reports concerning the Trustee and its action under the Indenture as may
be required pursuant to the Trust Indenture Act if and to the extent and in the
manner provided pursuant thereto.
(ii) Reports pursuant to this Section shall be transmitted by
mail (1) to all Holders of Registered Securities, as their names and addresses
appear in the Security Register and (2) to such Holders of Bearer Securities as
have, within the two years preceding such transmission, filed their names and
addresses with the Trustee for that purpose, and (3) except in the cases of
reports under Section 313(b)(2) of the Trust Indenture Act, to each Holder of a
Security of any series whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 6.02(i).
(iii) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which any Securities are listed, and also with the Commission. The Company
will notify the Trustee when any Securities are listed on any securities
exchange.
SECTION 6.04. Reports by Company. The Company will:
(i) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either of said
Sections, then it will file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Exchange Act in respect of a security listed and registered on a
national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(ii) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
<PAGE>
52
Subordinated Indenture
(iii) transmit by mail to Holders of Securities, in the manner
and to the extent provided in Section 6.03(ii), within 30 days after
the filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (i) and (ii) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE SEVEN
Remedies
SECTION 7.01. Events of Default. "Event of Default", with
respect to any series of Securities, wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body), unless it is either inapplicable to
a particular series or it is specifically deleted or modified in the
supplemental indenture or Board Resolution under which such series of Securities
is issued or in the form of Security for such series:
(i) default in the payment of the principal of or premium, if
any, on any Security of such series at its Maturity; or
(ii) default in the payment of any interest upon any Security
of such series as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
(iii) failure on the part of the Company or the Guarantor duly
to observe or perform any of the other covenants or agreements on its
part in the Securities of such series or in this Indenture and
continuance of such failure for a period of 90 days after the date on
which written notice of such failure, requiring the Company or the
Guarantor to remedy the same and stating that
such notice is a "Notice of Default" hereunder, shall have been given
by registered mail to the Company and the Guarantor by the Trustee, or
to the Company, the Guarantor and the Trustee by the holders of at
least 25% in aggregate principal amount of the Securities of such
series at the time Outstanding; or
(iv) the entry of a decree or order by a court having
jurisdiction in the premises granting relief in respect of the Company
or the Guarantor in an involuntary case under the Federal Bankruptcy
Code, adjudging the Company or the Guarantor a bankrupt, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the
<PAGE>
53
Subordinated Indenture
Company or the
Guarantor under any Bankruptcy Law, or appointing a receiver,
liquidator, custodian, assignee, trustee, sequestrator (or other
similar official) of the Company or the Guarantor, or of substantially
all of its properties, or ordering the winding up or liquidation of its
affairs under any such law, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(v) the institution by the Company or the Guarantor of
proceedings to be adjudicated a bankrupt, or the consent of the Company
or the Guarantor to the institution of bankruptcy proceedings against
it, or the filing by the Company or the Guarantor of a petition or
answer or consent seeking reorganization or relief under any Bankruptcy
Law, or the consent by the Company or the Guarantor to the filing of
any such petition or to the appointment of a receiver, liquidator,
custodian, assignee, trustee, sequestrator (or other similar official)
of the Company or the Guarantor, or of substantially all of its
properties under any such law; or
(vi) any other Event of Default provided with respect to
Securities of that series.
SECTION 7.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default with respect to any series of Securities for
which there are Securities Outstanding occurs and is continuing, then, and in
every such case, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of such series may declare the principal of
all the Securities of such series (or, if the Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) to be immediately due and payable, by
a notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration the same shall become immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of such series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences, and any Event of Default giving rise to such declaration shall not
be deemed to have occurred, if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(a) all overdue installments of interest on all
Securities of such series;
<PAGE>
54
Subordinated Indenture
(b) the principal of and premium, if any, on any
Securities of such series which have become due otherwise than
by such declaration of acceleration and interest thereon at
the rate or rates prescribed therefor by the terms of the
Securities of such series;
(c) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at the
rate or rates prescribed therefor by the terms of the
Securities of such series; and
(d) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, the Security
Registrar, any Paying Agent, and their agents and counsel and
all other amounts due the Trustee under Section 8.07.
(ii) all other Events of Default with respect to Securities of
that series, other than the nonpayment of the principal of Securities
of that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 7.13.
No such recession shall affect any subsequent default or
impair any right consequent thereon.
SECTION 7.03. Collection of Indebtedness and Suits for
Enforcement by Trustee. The Company covenants that if:
(i) default is made in the payment of any installment of
interest on any Security of any series when such interest becomes due
and payable and such default continues for a period of 30 days, or
(ii) default is made in the payment of the principal of or
premium, if any, on any Security of any series at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holder of any such Security or coupon appertaining thereto, if any, the whole
amount then due and payable on any such Security or coupon for principal,
premium, if any, and interest, with interest upon the overdue principal and
premium, if any, and (to the extent that payment of such interest shall be
lawful) upon overdue installments of interest, at the rate or rates prescribed
therefor by the terms of any such Security; and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel and any other amounts due
the Trustee under Section 8.07.
<PAGE>
55
Subordinated Indenture
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to any series of
Securities occurs and is continuing, the Trustee may in its discretion proceed
to protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 7.04. Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of any Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal, premium, if any, or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal, premium, if any, and interest owing and unpaid in respect of
the Securities and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and any other amounts due the Trustee
under Section 8.07) and of the Holders allowed in such judicial
proceeding; and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same,
and any receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the
<PAGE>
56
Subordinated Indenture
reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 8.07.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder of
a Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding.
SECTION 7.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or under the
Securities of any series, or coupons (if any) appertaining thereto, may be
prosecuted and enforced by the Trustee without the possession of any of the
Securities of such series or coupons appertaining thereto or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under Section 8.07,
be for the ratable benefit of the Holders of the Securities of such series and
coupons appertaining thereto in respect of which such judgment has been
recovered.
SECTION 7.06. Application of Money Collected. Any money
collected by the Trustee with respect to a series of Securities pursuant to this
Article shall be applied in the following order, at the date or dates fixed by
the Trustee, and, in case of the distribution of such money on account of
principal, premium, if any, or interest, upon presentation of the Securities of
such series or coupons appertaining
thereto, if any, or both, as the case may be, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 8.07;
SECOND: To holders of Senior Indebtedness or Senior
Subordinated Indebtedness, as the case may be, to the extent required
by Article Fourteen;
THIRD: To the payment of the amounts then due and unpaid upon
the Securities of such series and coupons for principal, premium, if
any, and interest, in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on Securities of
such series and coupons, if any, for principal, premium, if any, and
interest, respectively. The Holders of each series of Securities
denominated in ECU, any other composite currency or a Foreign
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Subordinated Indenture
Currency
and any matured coupons relating thereto shall be entitled to receive a
ratable portion of the amount determined by the Exchange Rate Agent by
converting the principal amount Outstanding of such series of
Securities and matured but unpaid interest on such series of Securities
in the currency in which such series of Securities is denominated into
Dollars at the Exchange Rate as of the Business Day immediately
preceding the date of payment; and
FOURTH: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 7.07. Limitation on Suits. No Holder of any Security
of any series or any related coupons shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to Securities of
such series;
(ii) the Holders of not less than a majority in principal
amount of the Outstanding Securities of such series shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of such
series;
it being understood and intended that no one or more Holders of Securities of
such series shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the
rights of any other Holders of Securities of such series or to obtain or to seek
to obtain priority or preference over any other such Holders or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all the Holders of Securities of such series.
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Subordinated Indenture
SECTION 7.08. Unconditional Right of Holders To Receive
Principal, Premium and Interest. Notwithstanding any other provision in this
Indenture, the Holder of any Security or coupon shall have the right, which is
absolute and unconditional, to receive payment of the principal of, premium, if
any, and (subject to Section 3.07) interest on such Security or payment of such
coupon on the respective Stated Maturities expressed in such Security or coupon
(or, in the case of redemption or repayment on the Redemption Date or Repayment
Date) and to institute suit for the enforcement of such payment, and such rights
shall not be impaired without the consent of such Holder.
SECTION 7.09. Restoration of Rights and Remedies. If the
Trustee or any Holder of a Security or coupon has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 7.10. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
lost, destroyed or stolen Securities or coupons in the last paragraph of Section
3.06, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 7.11. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder of any Security or coupon to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 7.12. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities of any series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to the Securities of such series; provided that
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Subordinated Indenture
(i) such direction shall not be in conflict with any rule of
law or with this Indenture,
(ii) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not taking part
in such direction,
(iii) subject to the provisions of Section 8.01, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer or Officers of
the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability, and
(iv) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 7.13. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series waive any past
default hereunder and its consequences, except a default not theretofore cured
(i) in the payment of the principal of, premium, if any, or
interest on any Security of such series, or
(ii) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of the Securities of such series under this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 7.14. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Security by his acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
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Subordinated Indenture
Outstanding Securities of any series, or to any suit instituted by any Holder
Securities or coupons for the enforcement of the payment of the principal of,
premium, if any, or interest on any Security or payment of any coupon on or
after the respective Stated Maturities expressed in such Security or coupon (or,
in the case of redemption or repayment, on or after the Redemption Date or
Repayment Date).
SECTION 7.15. Waiver of Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE EIGHT
The Trustee
SECTION 8.01. Certain Duties and Responsibilities. (i) Except
during the continuance of an Event of Default with respect to any series of
Securities:
(a) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture with
respect to Securities of such
series, and no implied covenants or obligations shall be read into this
Indenture against the Trustee with respect to such series; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely with respect to such series, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificate
or opinions which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform as to form to
the requirements of the Indenture.
(ii) In case an Event of Default with respect to any series of
Securities has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture with respect to such
series, and use the same degree of care and skill
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Subordinated Indenture
in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(iii) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
(a) this Subsection shall not be construed to limit the effect
of Subsection (i) of this Section;
(b) the Trustee shall not be liable for any error or judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in principal
amount of the Outstanding Securities of any series relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to Securities of
such series.
(iv) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(v) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 8.02. Notice of Default. Within 90 days after the
occurrence of any Event of Default hereunder with respect to Securities of any
series, the Trustee shall transmit by mail to all Holders of Securities of such
series entitled to receive reports pursuant to Section 6.03(ii) notice of such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived; provided, however, that, except in the case of
a default in the payment of the principal of, premium, if any, or interest on
any Security of such series, or any related coupons or in the payment of any
sinking fund installment with respect to Securities of such series the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of
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Subordinated Indenture
the Holders of Securities of
such series; and provided further that in the case of any default of the
character specified in Section 7.07(d) with respect to Securities of such
series, no such notice to Holders of Securities of such series shall be given
until at least 90 days after the occurrence thereof. For the purpose of this
Section, the term "default", with respect to Securities of any series, means any
event which is, or after notice or lapse of time, or both, would become, an
Event of Default with respect to Securities of such series.
SECTION 8.03. Certain Rights of Trustee. Except as otherwise
provided in Section 8.01:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(ii) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(iii) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(iv) the Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(v) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(vi) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, security or other paper or document, but the
Trustee, in its discretion, may make further inquiry or
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Subordinated Indenture
investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney and, if so requested to do so by any
of the Holders, at the sole cost and expense of the Holders;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(viii) in the event that the Trustee is also acting as Paying
Agent, Authenticating Agent or Security Registrar hereunder, the rights
and protections afforded to the Trustee pursuant to this Article Eight
shall also be afforded to such Paying Agent, Authenticating Agent or
Security Registrar.
SECTION 8.04. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. The Trustee
shall not be accountable for the use or application by the Company of Securities
or the proceeds thereof. The Trustee did not participate in the preparation of
the registration statement on Form S-3 filed with respect to the Securities and
shall not be held responsible for the contents thereof.
SECTION 8.05. May Hold Securities. The Trustee, any
Authenticating Agent, any Paying Agent, the Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 8.08 and 8.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 8.06. Money Held in Trust. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
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Subordinated Indenture
SECTION 8.07. Compensation and Reimbursement. The Company
agrees
(i) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder as the Company
and the Trustee may agree to from time to time in writing (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(iii) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the
Company under this Section the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of, premium, if any, or
interest on particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in 7.01, the expenses (including
the reasonable fees
and expenses of its counsel) and the compensation for the services are intended
to constitute expenses of administration under any Bankruptcy Law.
The obligations of the Company set forth in this Section 8.07
and any lien arising hereunder shall survive the resignation or removal of any
Trustee, the discharge of the Company's obligations pursuant to Article Eleven
of this Indenture and the termination of this Indenture and the repayment of the
Securities whether at the Stated Maturity or otherwise.
SECTION 8.08. Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of
Section 310 of the Trust Indenture Act, the Trustee shall either eliminate such
conflicting interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture
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Subordinated Indenture
Act and this Indenture. To the
extent permitted by the Trust Indenture Act, the Trustee shall not be deemed to
have a conflicting interest with respect to the indentures relating to the
Securities of any series by virtue of being Trustee with respect to the
Securities of any particular series of Securities other than that series.
SECTION 8.09. Corporate Trustee Required; Eligibility. There
shall at all times be a Trustee with respect to each series of Securities
hereunder which shall be a corporation organized and doing business under the
laws of the United States of America, any State thereof or the District of
Columbia, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least $50,000,000, subject to supervision
or examination by Federal or State authority; provided, however, that if Section
310(a) of the Trust Indenture Act or the rules and regulations of the Commission
under the Trust Indenture Act at any time permit a corporation organized and
doing business under the laws of any other jurisdiction to serve as trustee of
an indenture qualified under the Trust Indenture Act, this Section 8.09 shall be
automatically deemed amended to permit a corporation organized and doing
business under the laws of any such jurisdiction to serve as Trustee hereunder.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any person directly or indirectly controlling,
controlled by or under common control with the Company may serve as Trustee. If
at any time the Trustee with respect to any series of Securities shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 8.10. Resignation and Removal; Appointment of
Successor. (i) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 8.11.
(ii) The Trustee may resign with respect to any series of
Securities at any time by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the resigning Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to
Securities of such series.
(iii) The Trustee may be removed with respect to any series of
Securities at any time by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
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Subordinated Indenture
(iv) If at any time:
(a) the Trustee shall fail to comply with Section 8.08 with
respect to any series of Securities after written request therefor by
the Company or by any Holder who has been a bona fide Holder of a
Security of such series for at least six months, or
(b) the Trustee shall cease to be eligible under Section 8.09
with respect to any series of Securities and shall fail to resign after
written request therefor by the Company or by any Holder of Securities
of such series, or
(c) the Trustee shall become incapable of acting with respect
to any series of Securities or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (1) the Company by a Board Resolution may remove the
Trustee with respect to such series, or (2) subject to Section 7.14, any Holder
who has been a bona fide Holder of a Security of such series for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee with respect to such series.
(v) If the Trustee shall resign, be removed or become
incapable of acting with respect to any series of Securities, or if a vacancy
shall occur in the office of Trustee with respect to any series of Securities
for any cause, the Company, by a
Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 8.11. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to such series of Securities shall be appointed
by the Act of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring Trustee with
respect to such series, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee with respect to
such series and to that extent supersede the successor Trustee appointed by the
Company with respect to such series. If no successor Trustee with respect to
such series shall have been so appointed by the Company or the Holders of
Securities of such series and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security of such
series for at
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Subordinated Indenture
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to such series.
(vi) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Registered Securities of such series as their names
and addresses appear in the Security Register and, if Securities of such series
are issuable as Bearer Securities, by publishing notice of such event once in an
Authorized Newspaper in each Place of Payment located outside the United States.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Principal Corporate Trust
Office.
SECTION 8.11. Acceptance of Appointment by Successor. (i) In
the case of the appointment hereunder of a successor Trustee with respect to any
series of Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective with respect to all or any series as to
which it is resigning as Trustee, and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee with respect to all or any
such series; but, on request of the Company or such successor Trustee, such
retiring Trustee shall upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of such retiring Trustee with respect to all or any such series; and
shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to all or any such
series.
(ii) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (a) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (b) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (c) shall add to or change any of the provisions of this
Indenture as
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Subordinated Indenture
shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be Trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates, subject nevertheless to its lien, if any,
provided for in Section 8.07.
(iii) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in Paragraph (i) or (ii) of this Section, as the case may be.
(iv) No successor Trustee with respect to a series of
Securities shall accept its appointment unless at the time of such acceptance
such successor Trustee shall be qualified and eligible with respect to such
series under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession
to Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 8.13. Preferential Collection of Claims Against
Company. If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of Section 311 of the Trust Indenture Act regarding the collection of
such claims against the Company (or any
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such other obligor). A Trustee that has
resigned or been removed shall be subject to and comply with said Section 311 to
the extent required thereby.
SECTION 8.14. Appointment of Authenticating Agents. The
Trustee may appoint an Authenticating Agent or Agents, which may include any
Affiliate of the Company, with respect to one or more series of Securities. Such
Authenticating Agent or Agents at the option of the Trustee shall be authorized
to act on behalf of the Trustee to authenticate Securities of such series issued
upon original issuance, exchange, registration of transfer or partial redemption
thereof or pursuant to Section 3.06, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Whenever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication or the delivery of
Securities to the Trustee for authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent, a certificate of authentication executed on behalf of the
Trustee by an Authenticating Agent and delivery of Securities to the
Authenticating Agent on behalf of the Trustee. Each Authenticating Agent shall
be acceptable to the Company and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$5,000,000 and subject to supervision or examination by Federal or State
authority. Notwithstanding the foregoing, an Authenticating Agent located
outside the United States may be appointed by the Trustee if previously approved
in writing by the Company and if such Authenticating Agent meets the
minimum capitalization requirements of this Section 8.14. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of an
Authenticating Agent by giving written notice thereof to such Authenticating
Agent and to the Company. Upon receiving such a notice of resignation or upon
such termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
may appoint a successor Authenticating Agent which shall be acceptable to the
Company. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
, as Trustee,
by ___________________
As Authenticating Agent
by ___________________
Authorized Officer
ARTICLE NINE
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Holders. Without the consent of any Holder of any Securities or coupons, the
Company, when authorized by a Board Resolution, and the Trustee, at any time and
from time to time, may
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enter into one or more indentures supplemental hereto, in
form satisfactory to the Trustee, for any of the following purposes:
(i) to evidence the succession of another corporation or
Person to the Company or the Guarantor, and the assumption by any such
successor of the covenants of the Company or the Guarantor, as the case
may be, herein and in the Securities contained; or
(ii) to evidence and provide for the acceptance of appointment
by another corporation as a successor Trustee hereunder with respect to
one or more series of Securities and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to Section 8.11; or
(iii) to add to the covenants of the Company or the Guarantor,
for the benefit of the Holders of Securities of all or any series of
Securities or coupons (and if such covenants are to be for the benefit
of less than all series of Securities or coupons, stating that such
covenants are expressly being included solely for the benefit of such
series), or to surrender any right or power herein conferred upon the
Company or the Guarantor; or
(iv) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under the Indenture; provided that such action shall
not adversely affect the interests of the Holders of Securities of any
series or any related coupons in any material respect; or
(v) to add any additional Events of Default with respect to
all or any series of the Securities (and, if such Event of Default is
applicable to less than all series of Securities, specifying the series
to which such Event of Default is applicable); or
(vi) to add to, change or eliminate any of the provisions of
this Indenture to provide that Bearer Securities may be registrable as
to principal, to change or eliminate any restrictions on the payment of
principal of (or premium, if any) or any interest on Bearer Securities,
to permit Bearer Securities to be issued in exchange for Registered
Securities, to permit Bearer Securities to be issued in exchange for
Bearer Securities of other authorized denominations or to permit or
facilitate the issuance of Securities in uncertificated form; provided
any such action shall not adversely affect the interests of the Holders
of Securities of any series or any related coupons in any material
respect; or
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Subordinated Indenture
(vii) to add to, change or eliminate any of the provisions of
this Indenture, provided that any such addition, change or elimination
(a) shall become effective only when there is no Security Outstanding
of any series created prior to the execution of such supplemental
indenture which is adversely affected by such addition, change or
elimination or (b) shall not apply to any Securities Outstanding; or
(viii) to establish the form or terms of Securities of any
series as permitted by Sections 2.01 and 3.01; or
(ix) to add to or change any provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance
of Securities convertible into other securities; or
(x) to evidence any changes to Section 8.09 as permitted by
the terms thereof; or
(xi) to add to or change or eliminate any provision of this
Indenture as shall be necessary or desirable in accordance with any
amendments to the Trust Indenture Act, provided such action shall not
adversely affect the interest of Holders of Securities of any series or
any related coupons in any material respect; or
(xii) to make any change in Article Fourteen that would limit
or terminate the benefits available to any holder of Senior
Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness under Article Fourteen.
An amendment under this Section may not make any change that
adversely affects the rights under Article Fourteen of any holder of Senior
Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness then outstanding unless the holders of such Senior
Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness (or any Representative thereof authorized to give
consent), consent to such change.
SECTION 9.02. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of all series affected by such
supplemental indenture or indentures (acting as one class), by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of each such
series and any
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Subordinated Indenture
related coupons under this Indenture; provided, however, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby;
(i) change the Maturity of the principal of, or the Stated
Maturity of any installment of interest (or premium, if any) on, any
Security, or reduce the principal amount thereof or any premium thereon
or the rate of interest thereon, or change the obligation of the
Company to pay additional amounts pursuant to Section 5.04 (except as
contemplated by Section 10.01(i) and permitted by Section 9.01), or
reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 7.02, or
change the method of calculating interest thereon or the coin or
currency in which any Security (or premium, if any, thereon) or the
interest thereon is payable, or reduce the minimum rate of interest
thereon, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the
case of redemption or repayment, on or after the Redemption Date or
Repayment Date); or
(ii) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or of certain defaults hereunder and their
consequences) provided for in this Indenture or reduce the requirements
of Section 17.04 for a quorum; or
(iii) change any obligation of the Company to maintain an
office or agency in the places and for the purposes specified in
Section 5.02; or
(iv) modify any of the provisions of this Section or Section
7.13, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived; or
(v) make any change in Article Fourteen that adversely affects
the rights of any Holder under Article Fourteen.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more particular series of Securities, or which
modifies the rights of the Holders of Securities of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
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Subordinated Indenture
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article Fourteen of any holder of Senior
Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness then outstanding unless the holders of such Senior
Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness (or any Representative thereof authorized to give
consent), consent to such change.
SECTION 9.03. Execution of Supplemental Indentures. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 8.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by and complies with this Indenture. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, liabilities, duties or immunities under this
Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture shall
be modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the TIA as then in effect.
SECTION 9.06. Reference in Securities to Supplemental
Indentures. Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall, if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 9.07. Subordination Unimpaired. No supplemental
indenture executed pursuant to this Article shall directly or indirectly modify
the provisions of Article Fourteen in any manner which might alter the
subordination of the Securities.
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Subordinated Indenture
ARTICLE TEN
Consolidation, Merger, Conveyance or Transfer
SECTION 10.01. Company May Consolidate, etc., Only on Certain
Terms. The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any single Person, unless
(i) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Company substantially as an
entirety shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of, premium, if
any, and interest (including all additional amounts, if any, payable
pursuant to Section 5.04) on all the Securities and the performance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(ii) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time, or
both, would become an Event of Default, shall have happened and be
continuing; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied
with.
SECTION 10.02. Successor Corporation Substituted. Upon any
consolidation or merger, or any conveyance or transfer of the properties and
assets of the Company substantially as an entirety in accordance with Section
10.01, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance or transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein. In the event of any such conveyance or
transfer, the Company as the predecessor corporation and the Guarantor shall be
relieved of all obligations and covenants under this Indenture and may be
dissolved, wound up and liquidated at any time thereafter.
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Subordinated Indenture
ARTICLE ELEVEN
Satisfaction and Discharge
SECTION 11.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect (except as to any surviving rights
of registration of transfer or exchange of Securities herein expressly provided
for and rights to receive payments thereon and any right to receive additional
amounts, as provided in Section 5.04), and the Trustee, on receipt of a Company
Request and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(i) either
(a) all Securities theretofore authenticated and
delivered (other than (1) coupons appertaining to Bearer
Securities surrendered for exchange for Registered Securities
and maturing after such exchange, whose surrender is not
required or has not been waived as provided in Section 3.05,
(2) coupons appertaining to Bearer Securities called for
redemption and maturing after the relevant Redemption Date,
whose surrender has been waived as provided in Section 4.07,
(3) Securities and coupons which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 3.06, and (4) Securities for whose payment money has
theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as
provided in Section 5.03) have been delivered to the Trustee
for cancelation; or
(b) all such Securities not theretofore
delivered to the Trustee for cancelation
(1) have become due and payable, or
(2) will become due and payable at their
Maturity within one year, or
(3) are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Company,
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Subordinated Indenture
and the Company, in the case of (b) (1), (2) or (3) above, has
deposited or caused to be deposited (and such deposit does not violate
Article Fourteen) with the Trustee, as trust funds in trust for the
purpose, an amount (said amount to be immediately due and payable to
the Holders) sufficient to pay and discharge the entire indebtedness on
such Securities and coupons not theretofore delivered to the Trustee
for cancelation, for principal, premium, if any, and interest to the
date of such deposit (in the case of Securities which have become due
and payable), or to the Maturity or Redemption Date, as the case may
be;
(ii) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (b) of clause (i) of
this Section, the obligations of the Trustee under Section 11.02 and the last
paragraph of Section 5.03 shall survive. The Trustee may give notice at the
Company's expense to the Holders of Securities Outstanding of the immediate
availability of the amount referred to in clause (i) of this Section 11.01.
Funds held pursuant to this Section shall not be subject to the provisions of
Article Fourteen.
SECTION 11.02. Application of Trust Money. Subject to the
provisions of the last paragraph of Section 5.03, all money deposited with the
Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons, if any, and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), as the Trustee may
determine, to the Persons entitled thereto, of the principal, premium, if any,
and interest for whose payment such money has been deposited with the Trustee;
but such money need not be segregated from other funds except to the extent
required by law.
SECTION 11.03. Reinstatement. If the Trustee or any Paying
Agent is unable to apply any money in accordance with Section 11.02 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 11.01 until such time as the Trustee or any Paying Agent is permitted to
apply all such money in accordance with Section 11.02.
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Subordinated Indenture
ARTICLE TWELVE
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 12.01. Exemption from Individual Liability. No
recourse under or upon any obligation, covenant or agreement of this Indenture,
or of any Security or coupon, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations of the Company,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors, as such, of
the Company or of any successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Securities or coupons or implied therefrom; and that any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer or director, as such, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements
contained in this Indenture or in any of the Securities or coupons or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of the
Securities.
ARTICLE THIRTEEN
Sinking Funds
SECTION 13.01. Applicability of Article. The provisions of
this Article shall be applicable to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by Section
3.01 for Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount provided
for by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities of
any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 13.02. Each sinking fund
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Subordinated Indenture
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 13.02. Satisfaction of Sinking Fund Payments with
Securities. The Company (i) may deliver Outstanding Securities of a series
(other than any previously called for redemption), together in the case of any
Bearer Securities of such series with all unmatured coupons appertaining thereto
and (ii) may apply as a credit Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Securities
or through the application of permitted optional sinking fund payments pursuant
to the terms of such Securities, in each case in satisfaction of all or any part
of any sinking fund payment with respect to the Securities of such series
required to be made pursuant to the terms of such Securities as provided for by
the terms of such series; provided that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 13.03. Redemption of Securities for Sinking Fund. Not
less than 60 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee and the Security Registrar
an Officers' Certificate specifying (i) the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of that series, (ii) the
portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 13.02, and (iii) that none of such Securities has theretofore been so
credited and stating the basis for such credit, and will also deliver to the
Trustee any Securities to be so delivered. Not less than 30 days before each
sinking fund payment date the Security Registrar shall select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in
Section 4.03 and cause notice of the redemption thereof to be given in the name
of and at the expense of the Company in the manner provided in Section 4.04.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 4.06 and 4.07.
ARTICLE FOURTEEN
Subordination
SECTION 14.01. Agreement To Subordinate. Each of the Company
and the Guarantor agrees, and each Holder by accepting a Security and the
related Guarantee agrees, that the indebtedness evidenced by the Securities and
the Guarantee and other payment obligations of the Company and the Guarantor in
respect of the Securities and the Guarantee are subordinated in right ofpayment,
to the extent and in the manner provided in this Article
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Subordinated Indenture
Fourteen, to the prior payment in cash of all Senior Indebtedness and Senior
Guarantor Indebtedness and, if applicable, Senior Subordinated Indebtedness, and
that such subordination is for the benefit of and enforceable by the holders of
Senior Indebtedness, Senior uarantor Indebtedness and, if applicable, Senior
Subordinated Indebtedness. Only indebtedness of the Company which is Senior
Indebtedness and, if applicable, Senior Subordinated Indebtedness, and
Guarantees of Senior Indebtedness and, if applicable, Senior Subordinated
Indebtedness by the Guarantor shall rank senior to the Securities and the
Guarantee in accordance with the provisions set forth herein. All provisions of
this Article Fourteen shall be subject to Section 14.12.
SECTION 14.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets or securities of the Company or the
Guarantor to creditors upon a total or partial liquidation or a total or partial
dissolution of the
Company or the Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or the Guarantor or
their respective properties, or in connection with a bankruptcy, insolvency,
receivership or similar proceeding relating to the Company or the Guarantor or
their respective properties, or in connection with an assignment for the benefit
of creditors or any marshalling of assets and liabilities of the Company or the
Guarantor:
(1) holders of Senior Indebtedness, Senior Guarantor
Indebtedness and, if applicable, Senior Subordinated Indebtedness shall
be entitled to receive payment in full in cash of the Senior
Indebtedness, Senior Guarantor Indebtedness and, if applicable, Senior
Subordinated Indebtedness before the Holders of Securities shall be
entitled to receive any payment of principal of or interest on other
amounts with respect to the Securities or the Guarantee or a
distribution with respect thereto; and
(2) until the Senior Indebtedness, the Senior Guarantor
Indebtedness and, if applicable, the Senior Subordinated Indebtedness
are paid in full in cash, any payment or distribution to which the
Holders of Securities would be entitled but for this Article Fourteen
shall be made to holders of Senior Indebtedness, Senior Guarantor
Indebtedness and, if applicable, Senior Subordinated Indebtedness as
their interests may appear, except that Holders of Securities may
receive Permitted Junior Securities.
SECTION 14.03. Default on Senior Indebtedness or Senior
Subordinated Indebtedness. Neither the Company nor the Guarantor may directly or
indirectly (nor shall any direct or indirect payment or distribution be made by
or on behalf of the Company or the Guarantor in respect of the following) pay
the principal or premium (if any) of or interest on the Securities and other
payment obligations of the Company or the Guarantor in respect of the
Securities or the Guarantee, make any deposit pursuant to Section 11.01 or
repurchase, redeem or otherwise retire any Securities (collectively, "pay the
Securities") if (i) any
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Subordinated Indenture
Senior Indebtedness, Senior Guarantor Indebtedness and, if applicable, Senior
Subordinated Indebtedness is not paid in cash when due or (ii) any other default
on Senior Indebtedness, Senior Guarantor ndebtedness and, if applicable, Senior
Subordinated Indebtedness occurs and the maturity of such Senior Indebtedness,
Senior Guarantor Indebtedness and, if applicable, Senior Subordinated
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Senior Indebtedness, Senior Guarantor Indebtedness and, if
applicable, Senior Subordinated Indebtedness has been paid in full in cash;
provided, however, that the Company and the Guarantor may pay the Securities
without regard to the foregoing if the Company, the Guarantor and the Trustee
receive written notice approving such payment from the Representatives of the
Senior Indebtedness, Senior Guarantor Indebtedness and, if applicable, the
Senior Subordinated Indebtedness with respect to which either of the events set
forth in clause (i) or (ii) of the immediately preceding sentence has occurred
or is continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness and, if applicable, Senior Subordinated
Indebtedness, pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
neither the Company nor the Guarantor may pay the Securities for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company and the Guarantor) of written notice (a "Blockage Notice")
of such default from the Representative of such Designated Senior Indebtedness
and, if applicable, Senior Subordinated Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (A) by written notice to the Trustee,
the Company and the Guarantor from the Person or Persons who gave such Blockage
Notice, (B) because the default giving rise to such Blockage Notice is no longer
continuing, or (C) by repayment in full in cash of such Senior Indebtedness and,
if applicable, Senior Subordinated Indebtedness. Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section), unless one of the events
described in clause (i) or (ii) of this Section 14.03 is then continuing, the
Company and the Guarantor may resume payments on the Securities after such
Payment Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness
during such period.
SECTION 14.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company, the Guarantor or the Trustee shall promptly notify the holders of the
Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness (or
their Representatives) of the acceleration. If any Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness is outstanding, neither the Company
nor the Guarantor may pay the Securities until five Business days after the
Representatives of the Senior Indebtedness
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Subordinated Indenture
and, if applicable, the Senior
receive notice of such acceleration and, thereafter,
may pay the Securities only if this Article Fourteen otherwise permits payments
at that time.
SECTION 14.05. When Distribution Must Be Paid Over. If a
payment or distribution is made to the Holders of Securities that because of
this Article Fourteen should not have been made to them, the Holders of
Securities who receive the payment or distribution shall hold it in trust for
holders of Senior Indebtedness, Senior Guarantor Indebtedness and, if
applicable, Senior Subordinated Indebtedness and pay it over to them as their
interests may appear.
SECTION 14.06. Subrogation. After all Senior Indebtedness and,
if applicable, Senior Subordinated Indebtedness is paid in full in cash and
until the Securities are paid in full, Holders of Securities shall be subrogated
to the rights of
holders of Senior Indebtedness and, if applicable, Senior Subordinated
Indebtedness to receive distributions applicable to Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness. A distribution made under this
Article Fourteen to holders of Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness which otherwise would have been made to Holders of
Securities is not, as between the Company and Holders of Securities, a payment
by the Company on Senior Indebtedness or, if applicable, Senior Subordinated
Indebtedness or, as between the Guarantor and Holders of Securities, a payment
by the Guarantor on Senior Indebtedness or, if applicable, Senior Subordinated
Indebtedness.
SECTION 14.07. Relative Rights. This Article Fourteen defines
the relative rights of Holders of Securities and holders of Senior
Indebtedness,Senior Guarantor Indebtedness and, if applicable, Senior
Subordinated Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company or the Guarantor, as the
case may be, and Holders of Securities, the obligation of the Company
or the Guarantor, as the case may be, which is absolute and
unconditional, to pay principal of and interest on the Securities in
accordance with their terms; or
(2) prevent the Trustee or any Holder of Securities from
exercising its available remedies upon an Event of Default, subject to
the rights of holders of Senior Indebtedness, Senior Guarantor
Indebtedness and, if applicable, Senior Subordinated Indebtedness to
receive payments and distributions otherwise payable to Holders of
Securities.
SECTION 14.08. Subordination May Not Be Impaired by Company or
Guarantor. No right of any holder of Senior Indebtedness and, if applicable,
Senior Subordinated Indebtedness to enforce the subordination of the
indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or the Guarantor or by the failure of either of them to
comply with this Indenture.
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Subordinated Indenture
SECTION 14.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 14.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than one Business Day prior to the date of such payment, a trust
officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article Fourteen. The Company, the Registrar or co-registrar,
the Paying Agent, a Representative or a holder of Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness may give the notice; provided,
however, that, if an issuer of Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness has a Representative, only the Representative may give
the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness or, if applicable, Senior Subordinated Indebtedness with the
same rights it would have if it were not Trustee. The Registrar and co-registrar
and the Paying Agent may do the same with like rights. The Trustee shall be
entitled to all the rights set forth in this Article Fourteen with respect to
any Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness,
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness; and
nothing in Article Eight shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article Fourteen shall apply to claims of, or payments
to, the Trustee under or pursuant to Article Eight.
SECTION 14.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness and, if applicable, Senior Subordinated Indebtedness the
distribution may be made and the notice given to their Representatives (if any).
SECTION 14.11. Article Fourteen Not To Prevent Events of
Default or Limit Right To Accelerate. The failure to make a payment pursuant to
the Securities by reason of any provision in this Article Fourteen shall not be
construed as preventing the occurrence of an Event of Default. Nothing in this
Article Fourteen shall have any effect on the right of the Holders of Securities
or the Trustee to accelerate the maturity of the Securities.
SECTION 14.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. government obligations held in trust under Section 11.01 by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or, if applicable,
Senior Subordinated Indebtedness, or subject to the restrictions set forth in
this Article Fourteen, and none of the Holders of Securities shall be obligated
to pay over any such amount to the Company, the Guarantor, any holder
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Subordinated Indenture
of Senior
Indebtedness or, if applicable, Senior Subordinated Indebtedness of the Company
or any other creditor of the Company.
SECTION 14.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article Fourteen, the Trustee and the Holders of
Securities shall be entitled to rely (i) upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred to in
Section 14.02 are pending, (ii) upon a certificate of the liquidating trustee or
agent or other Person making such payment or distribution to the Trustee or to
the Holders of Securities or (iii) upon the Representatives for the holders of
Senior Indebtedness, Senior Guarantor Indebtedness and, if applicable, Senior
Subordinated Indebtedness for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness, the holders of the enior Guarantor Indebtedness, the holders of
Senior Subordinated Indebtedness, if applicable, and other indebtedness of the
Company or the Guarantor, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article Fourteen. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness or, if applicable, Senior
Subordinated Indebtedness to participate in any payment or distribution pursuant
to this Article Fourteen, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness or, if applicable, Senior Subordinated Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article Fourteen, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 14.14. Trustee To Effectuate Subordination. Each
Holder of Securities by accepting a Security authorizes and directs the Trustee
on his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Security holders and the
holders of Senior Indebtedness, Senior Guarantor Indebtedness and, if
applicable, Senior Subordinated Indebtedness as provided in this Article
Fourteen and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 14.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness, Senior Guarantor Indebtedness or Senior Subordinated Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness, and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders of Securities or the Company,
the Guarantor or any other Person, money or assets to which any holders of
Senior Indebtedness, Senior Guarantor Indebtedness or, if applicable, Senior
Subordinated Indebtedness shall be entitled by virtue of this Article Fourteen
or otherwise.
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Subordinated Indenture
SECTION 14.16. Reliance by Holders of Senior Indebtedness,
Senior Guarantor Indebtedness or
Senior Subordinated Indebtedness on Subordination Provisions. Each Holder of
Securities by accepting a Security acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness, Senior Guarantor
ndebtedness and, if applicable, Senior Subordinated Indebtedness whether such
Senior Indebtedness, Senior uarantor Indebtedness and, if applicable, Senior
Subordinated Indebtedness was created or acquired before or after the issuance
of the Securities, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness, Senior Guarantor Indebtedness nd, if applicable, Senior
Subordinated Indebtedness and such holder of Senior Indebtedness, Senior
uarantor Indebtedness and, if applicable, Senior Subordinated Indebtedness shall
be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness, Senior Guarantor ndebtedness and, if applicable, the Senior
Subordinated Indebtedness.
ARTICLE FIFTEEN
Guarantee
SECTION 15.01. Guarantee. The Guarantor hereby irrevocably,
fully and unconditionally guarantees on an unsecured senior subordinated or
unsecured junior subordinated basis, as the case may be, to each Holder and to
the Trustee and its successors and assigns (a) the full and punctual payment of
principal of and interest on the Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under this Indenture (including obligations to the Trustee) and the
Securities and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company under this Indenture and the
Securities (all the foregoing being hereinafter collectively called the
"Obligations"). The Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
the Guarantor, and that the Guarantor shall remain bound under this Article
Fifteen notwithstanding any extension or renewal of any Obligation.
The Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Securities or the Obligations. The obligations of the Guarantor hereunder shall
not be affected by (a) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the Company or any
other Person under this Indenture, the Securities or any other agreement or
otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder
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Subordinated Indenture
or Trustee to exercise any right or remedy against
any other guarantor of the Obligations; or (f) any change in ownership of the
Guarantor.
The Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Obligations.
Such Guarantee is, to the extent and in the manner set forth
in Article Fourteen, subordinated and subject in right of payment to the prior
payment in full in cash of all Senior Guarantor Indebtedness the principal of
and premium, if any, and interest on senior subordinated indebtedness, as the
case may be, of the Guarantor and such Guarantee is made subject to provisions
of Article Fourteen of this Indenture.
The obligations of the Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of set off, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Guarantor herein shall not
be discharged or impaired or otherwise affected by the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the Securities or any other agreement, by any waiver or modification
of any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of the Guarantor or would otherwise operate as a discharge
of the Guarantor as a matter of law or equity.
The Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Obligation when and as the same shall become due, whether
at maturity, by acceleration, by redemption or otherwise, or to perform or
comply with any other Obligation, the Guarantor hereby promises to and shall,
upon receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i)
the unpaid principal amount of such Obligations, (ii) accrued and unpaid
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Subordinated Indenture
interest on such Obligations (but only to the extent not prohibited by law) and
(iii) all other monetary Obligations of the Company to the Holders and the
Trustee.
The Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Obligations
guaranteed hereby until payment in full of all Obligations. The Guarantor
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article Seven for the purposes of the
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article Seven, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantor for the purposes of this Section.
The Guarantor also agrees to pay (on a subordinated basis to
the same extent the Guarantee of the Securities is subordinated n right or
payment to Senior Guarantor Indebtedness) any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section.
SECTION 15.02. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the obligations guaranteed hereunder by the Guarantor shall not exceed the
maximum amount that can be hereby guaranteed without rendering this Indenture,
as it relates to the Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer.
SECTION 15.03. Successors and Assigns. This Article Fifteen
shall be binding upon the Guarantor and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 15.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article Fifteen 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 rights, remedies and benefits of
the Trustee and the Holders herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which either may have under
this Article Fifteen at law, in equity, by statute or otherwise.
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Subordinated Indenture
SECTION 15.05. Modification. No modification, amendment or
waiver of any provision of this Article Fifteen, nor the consent to any
departure by the Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, 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 the Guarantor in any case shall entitle
the Guarantor to any other or further notice or demand in the same, similar or
other circumstances.
ARTICLE SIXTEEN
Repayment at the Option of Holders
SECTION 16.01. Applicability of Article. Securities of any
series which are repayable at the option of the Holders thereof before their
Stated Maturity shall be repaid in accordance with their terms and (except as
otherwise specified pursuant to Section 3.01 for Securities of such series) in
accordance with this Article.
SECTION 16.02. Repayment of Securities. Each Security which is
subject to repayment in whole or in part at the option of the Holder thereof on
a Repayment Date shall be repaid at the applicable Repayment Price together with
interest accrued to such Repayment Date as specified pursuant to Section 3.01.
SECTION 16.03. Exercise of Option; Notice. Each Holder
desiring to exercise such Holder's option for repayment shall, as conditions to
such repayment, surrender the Security to be repaid in whole or in part together
with written notice of the exercise of such option at any office or agency of
the Company in a Place of Payment, not less than 30 nor more than 45 days prior
to the Repayment Date; provided, however, that surrender of Bearer Securities
together with written notice of exercise of such option shall be made at an
office or agency located outside the United States except as otherwise provided
in Section 5.02. Such notice, which shall be irrevocable, shall specify the
principal amount of such Security to be repaid, which shall be equal to the
minimum authorized denomination for such Security or an integral multiple
thereof, and shall identify the Security to be repaid and, in the case of a
partial repayment of the Security, shall specify the denomination or
denominations of the Security or Securities of the same series to be issued to
the Holder for the portion of the principal of the Security surrendered which is
not to be repaid.
If any Bearer Security surrendered for repayment shall not be
accompanied by all unmatured coupons and all matured coupons in default, such
Bearer Security may be paid after deducting from the Repayment Price an amount
equal to the face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be
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Subordinated Indenture
waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Repayment
Price, such Holder shall be entitled to receive the amount so deducted without
interest thereon; provided, however, that interest represented by coupons shall
be payable only at an office or agency located outside the United States except
as otherwise provided in Section 5.02.
The Company shall execute and the Trustee shall authenticate
and deliver at the Company's expense, without service charge to the Holder of
any Registered Security so surrendered, a new Registered Security or Securities
of the same series and tenor of any authorized denomination specified in the
foregoing notice, in an aggregate principal amount equal to any portion of the
principal of the Registered Security so surrendered which is not to be repaid.
The Company shall execute and the Trustee shall authenticate
and deliver without service charge to the Holder of any Bearer Security so
surrendered a new Registered Security or Securities or new Bearer Security or
Securities (and all appurtenant unmatured coupons and matured coupons in
default) or any combination thereof of the same series and tenor of any
authorized denomination or denominations specified in the foregoing notice, in
an aggregate principal amount equal to any portion of the principal of the
Security so surrendered which is not to be repaid; provided, however, that the
issuance of a Registered Security therefor shall be subject to applicable laws
and regulations, including provisions of the United States federal income tax
laws and regulations in effect at the time of the exchange; neither the Company,
the Trustee nor the Security Registrar shall issue Registered Securities for
Bearer Securities if it has received an Opinion of Counsel that as a result of
such issuance the Company would suffer adverse consequences under the United
States federal income tax laws then in effect and the Company has delivered to
the Trustee a Company Order directing the Trustee not to make such issuances
thereafter unless and until the Trustee receives a subsequent Company Order to
the contrary. The Company shall deliver copies of such Company Order to the
Security Registrar.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the repayment of Securities shall relate,
in the case of any Security repaid or to be repaid only in part, to the portion
of the principal of such Security which has been or is to be repaid.
SECTION 16.04. Election of Repayment by Remarketing Entities.
The Company may elect, with respect to Securities of any series which are
repayable at the option of the Holders thereof before their Stated Maturity, at
any time prior to any
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Subordinated Indenture
Repayment Date to designate one or more Remarketing
Entities to purchase, at a price equal to the Repayment Price, Securities of
such series from the Holders thereof who give notice and surrender their Debt
Securities in accordance with Section 16.03.
SECTION 16.05. Securities Payable on the Repayment Date.
Notice of exercise of the option of repayment having been given and the
Securities so to be repaid having been surrendered as aforesaid, such Securities
shall, unless purchased in accordance with Section 16.04, on the Repayment Date
become due and payable at the price therein specified and from and after the
Repayment Date such Securities shall cease to bear interest and shall be paid on
the Repayment Date, and the coupons
for such interest appertaining to Bearer Securities so to be repaid, except to
the extent provided above, shall be void, unless the Company shall default in
the payment of such price, in which case the Company shall continue to be
obligated for the principal amount of such Securities and shall be obligated to
pay interest on such principal amount at the rate prescribed therefor by such
Securities from time to time until payment in full of such principal amount.
ARTICLE SEVENTEEN
Meetings of Holders of Securities
SECTION 17.01. Purposes for Which Meetings May Be Called. If
Securities of a series are issuable in whole or in part as Bearer Securities, a
meeting of Holders of Securities of such series may be called at any time and
from time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other Act provided
by this Indenture to be made, given or taken by Holders of Securities of such
series.
SECTION 17.02. Call, Notice and Place of Meetings. (i) The
Trustee may at any time call a meeting of Holders of Securities of any series
issuable as Bearer Securities for any purpose specified in Section 17.01, to be
held at such time and at such place in the City of Charlotte, North Carolina,
the Borough of Manhattan, The City of New York, or in London as the Trustee
shall determine. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 1.06, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(ii) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified in
Section 17.01, by written request setting forth in
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Subordinated Indenture
reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities of such series in
the amount above specified, as the case may be, may determine the time and the
place in the City of Charlotte, North Carolina, the Borough of Manhattan, The
City of New York, or in London for such meeting and may call such meeting for
such purposes by giving notice thereof as provided in subsection (i) of this
Section.
SECTION 17.03. Persons Entitled To Vote at Meetings. To be
entitled to vote at any meeting of Holders of Securities of any series, a Person
shall be (1) a Holder of one or more Outstanding Securities of such series, or
(2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder or
Holders. The only Persons who shall be entitled to be present or to speak at any
meeting of Holders of Securities of any series shall be the Persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Company and its counsel.
SECTION 17.04. Quorum, Action. The Persons entitled to vote a
majority in principal amount of the Outstanding Securities of a series shall
constitute a quorum for a meeting of Holders of Securities of such series;
provided, however, that if any action is to be taken at such meeting with
respect to a consent or waiver which this Indenture expressly provides may be
given by the Holders of a greater percentage in principal amount of the
Outstanding Securities of a series, the Persons entitled to vote such greater
percentage in principal amount of the Outstanding Securities of such series
shall constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series, be dissolved. In the absence of
a quorum in any other case the meeting may be adjourned for a period of not less
than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairperson of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 17.02(i), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Except as limited by the provisos to Section 9.02, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted only by the affirmative vote of
the Holders of a majority in
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Subordinated Indenture
principal amount of the Outstanding Securities of
the series; provided, however, that, except as limited by the provisos to
Section 9.02, any resolution with respect to any consent or waiver which this
Indenture expressly provides may be given by the Holders of a greater percentage
in principal amount of the Outstanding Securities of a series may be adopted at
a meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid only by the affirmative vote of the Holders of such greater
percentage in principal amount of the Outstanding Securities of that series; and
provided further that, except as limited by the provisos
to Section 9.02, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other Act which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage, which is less than a majority in principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
SECTION 17.05. Determination of Voting Rights; Conduct and
Adjournment of Meetings. (a) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities of such series in regard to
proof of the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 1.04 and the appointment of any proxy shall be proved in the manner
specified in Section 1.04 or, in the case of Bearer Securities, by having the
signature of the person executing the proxy witnessed or guaranteed by any trust
company, bank or banker authorized by Section 1.04 to certify to the holding of
Bearer Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 1.04 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairperson of the meeting, unless the meeting shall have been called
by the Company or by Holders of Securities as provided in Section 17.02(ii), in
which case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairperson. A permanent chairperson and a permanent secretary of the meeting
shall be elected by vote of the Persons entitled to vote a majority
<PAGE>
93
Subordinated Indenture
in principal
amount of the Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount (or the
equivalent in ECU, any other composite currency or a Foreign Currency) of
Securities of such
series held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairperson of the meeting not to be Outstanding.
The chairperson of the meeting shall have no right to vote, except as a Holder
of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 17.02 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 17.06. Counting Votes and Recording Action of
Meetings. The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairperson of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 17.02 and, if
applicable, Section 17.04. Each copy shall be signed and verified by the
affidavits of the permanent chairperson and secretary of the meeting and one
such copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
<PAGE>
94
Subordinated Indenture
ARTICLE EIGHTEEN
Miscellaneous
SECTION 18.01. Counterparts. This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 18.02. Notice of Refinancing. The Company shall
promptly notify the Trustee of any refunding or refinancing of the Credit
Agreement which by its terms states that it is intended to be senior in right of
payment to the Securities; provided, however, that failure to give such notice
shall not impair the subordination provisions hereof.
<PAGE>
95
Subordinated Indenture
FIRST UNION NATIONAL BANK OF NORTH CAROLINA hereby accepts the
trusts in this Indenture declared and provided, upon the terms and conditions
hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
COLLINS & AIKMAN PRODUCTS CO.,
by /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Chief Financial Officer
and Executive Vice President
COLLINS & AIKMAN CORPORATION,
by /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Chief Financial Officer
and Executive Vice President
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, Trustee,
by /s/ Karen E. Atkinson
Name: Karen E. Atkinson
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
CERTIFICATE
..........................
[Insert title or sufficient description of
Securities to be delivered]
This is to certify that the above-captioned Securities are not
being acquired by or on behalf of a United States person, or, if a beneficial
interest in the Securities is being acquired by or on behalf of a United States
person, that such United States person is a financial institution within the
meaning of Section 1.165- 12(c)(1)(v) of the United States Treasury regulations
which agrees to comply with the requirements of Section 1650(j)(3)(A), (B) or
(C) of the Internal Revenue Code of 1986, as amended and the regulations
thereunder. If the undersigned is a dealer, the undersigned agrees to obtain a
similar certificate from each person entitled to delivery of any of the
above-captioned Securities in bearer form purchased from it; provided, however,
that if the undersigned has actual knowledge that the information contained in
such a certificate is false, the undersigned will not deliver a Security in
temporary or definitive bearer form to the person who signed such certificate
notwithstanding the delivery of such certificate to the undersigned.
As used herein, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States and any estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source, and "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
We undertake to advise you by telex if the above statement as
to beneficial ownership is not correct on the date of delivery of the
above-captioned Securities in bearer form as to all of such Securities.
We understand that this certificate is required in connection
with certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we
<PAGE>
irrevocably authorize you to produce this certificate or a copy
thereof to any interested party in such proceedings.
Dated: , 19
[To be dated no earlier than
15 days prior to the Exchange
Date]
[Name of Person Entitled to Receive
Bearer Security]
by
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND
CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF A
PORTION OF A TEMPORARY GLOBAL SECURITY
CERTIFICATE
..........................
[Insert title or sufficient description of
Securities to be delivered]
This is to certify with respect to $ principal amount of the
above-captioned Securities (i) that we have received from each of the persons
appearing in our records as persons entitled to a portion of such principal
amount (our "Qualified Account Holders") a certificate with respect to such
portion substantially in the form attached hereto, and (ii) that we are not
submitting herewith for exchange any portion of the temporary global Security
representing the above-captioned Securities excepted in such certificates.
We further certify that as of the date hereof we have not
received any notification from any of our Qualified Account Holders to the
effect that the statements made by such Qualified Account Holders with respect
to any portion of the part submitted herewith for exchange are no longer true
and cannot be relied upon as of the date hereof.
Dated: , 19
[To be dated no earlier
than the Exchange Date]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, Brussels
Office, as Operator of the Euroclear
System]
[CEDEL S.A.]
by
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR AND
CEDEL S.A. TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE
CERTIFICATE
..........................
[Insert title or sufficient description of Securities]
This is to certify that, as of the Interest Payment Date on
[Insert Date], the undersigned, which is a holder of an interest in the
temporary global Security representing the above Securities, is not a United
States person.
As used herein, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States and any estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source, and "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
We confirm that the interest payable on such Interest Payment
Date will be paid to each of the persons appearing in our records as being
entitled to interest to be paid on the above date from whom we have received a
written certification dated not earlier than 15 days prior to such Interest
Payment Date to the effect that the beneficial owner of such portion with
respect to which interest is to be paid on such date either is not a United
States person or is a United States person which is a financial institution
which has provided an Internal Revenue Service Form W-9 or is an exempt
recipient as defined in United States Treasury Regulations ss. 1.6049-
4(c)(1)(ii). We undertake to retain certificates received from our member
organizations in connection herewith for four years from the end of the calendar
year in which such certificates are received.
<PAGE>
2
The foregoing reflects any advice received subsequent to the
date of any certificate stating that the statements contained in such
certificate are no longer correct.
Dated: , 19
[To be dated on or after the
relevant Interest Payment Date]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, Brussels
Office, as Operator of the Euroclear
System]
[CEDEL S.A.]
by
Name:
Title:
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE TO BE GIVEN BY
BENEFICIAL OWNERS TO OBTAIN
INTEREST PRIOR TO AN EXCHANGE DATE
CERTIFICATE
..........................
[Insert title or sufficient description of Securities]
This is to certify that as of the date hereof, no portion of
the temporary global Security representing the above-captioned Securities and
held by you for our account is beneficially owned by a United States person or,
if any portion thereof held by you for our account is beneficially owned by a
United States person, such United States person is a financial institution
within the meaning of Section 1.165-12(c)(1)(v) of the United States Treasury
regulations which agrees to comply with Section 1656(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended and the regulations thereunder, and
certifies that either it has provided an Internal Revenue Service Form W-9 or is
an exempt recipient as defined in Section 1.6049- 4(c)(1)(ii) of the United
States Treasury regulations.
As used herein, "United States person" means any citizen or
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States and any estate or
trust the income of which is subject to United States Federal income taxation
regardless of its source, and "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
We undertake to advise you by telex if the above statement as
to beneficial ownership is not correct on the Interest Payment Date on [Insert
Date] as to any such portion of such temporary global Security.
We understand that this certificate is required in connection
with certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we
<PAGE>
irrevocably authorize you to produce this certificate or a copy
thereof to any interested party in such proceedings.
Dated: , 19
[To be dated on or after the
15th day before the relevant
Interest Payment Date]
[Name of Account Holder]
(Authorized Signatory)
Name:
Title:
THIS FIRST SUPPLEMENTAL INDENTURE (this
"Supplement") is entered into as of June 1, 1996,
between COLLINS & AIKMAN PRODUCTS CO., a Delaware
corporation (the "Company"), COLLINS & AIKMAN
CORPORATION, a Delaware corporation (the
"Guarantor"), and FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a national banking corporation (the
"Trustee"), as trustee under an Indenture dated as of
June 1, 1996 (the "Indenture").
RECITALS
The Company has previously executed and delivered to the
Trustee the Indenture. Section 9.01 of the Indenture provides, among other
things, that the Company, when authorized by a Board Resolution, and the Trustee
at any time and from time to time, may enter into one or more indentures
supplemental to the Indenture for the purpose of, among other things,
establishing the form or terms of Securities of any series as permitted by
Sections 2.01 and 3.01 of the Indenture. The Board of Directors of the Company
has duly authorized the creation, issuance, execution and delivery of a series
of Securities consisting of the 11-1/2% Senior Subordinated Notes Due 2006 (the
"11-1/2% Notes") in the aggregate principal amount of $400,000,000. The Company,
the Guarantor and the Trustee are executing and delivering this Supplement in
order to provide for the 11-1/2% Notes.
All things necessary to make this Supplement a valid and
legally binding agreement of the Company and the Guarantor have been done.
The additional terms provided for herein apply only to the
11-1/2% Notes and do not apply to any other series of Securities previously
issued or to be issued under the Indenture. Except as otherwise set forth
herein, all provisions of the Indenture apply to the 11-1/2% Notes.
A. Provisions Supplemental to Article I of the Indenture.
1. Terms Defined in the Indenture.
All capitalized terms used in this Supplement that are defined
in the Indenture have the meanings assigned to them in the Indenture, except to
the extent that such terms are otherwise defined in this Supplement, in which
event the definition appearing in this Supplement shall govern with respect to
the 11-1/2% Notes.
<PAGE>
2
2. Additional Definitions.
Section 1.01 of the Indenture is hereby supplemented for
purposes of the 11-1/2% Notes to provide additional definitions in the
appropriate alphabetical sequence, as follows:
"Asset Disposition" means any transfer, conveyance, sale,
lease or other disposition (including a consolidation or merger or other sale of
a Restricted Subsidiary with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary, but
excluding Receivables Sales and a disposition by a Restricted Subsidiary to the
Company or another Restricted Subsidiary or by the Company to a Restricted
Subsidiary; provided, however, that any disposition to a Restricted Subsidiary
that is not a Wholly Owned Subsidiary of the Company shall be an "Asset
Disposition" unless no Affiliate of the Company (other than a Wholly Owned
Subsidiary) holds Capital Stock in such Restricted Subsidiary) of (i) shares of
Capital Stock (other than directors' qualifying shares) or other ownership
interests of a Restricted Subsidiary, (ii) substantially all of the assets of
the Company or any of its Restricted Subsidiaries representing a division or
line of business or (iii) other assets or rights of the Company or any of its
Restricted Subsidiaries outside of the ordinary course of business, provided in
each case that the aggregate consideration for such transfer, conveyance, sale,
lease or other disposition is equal to $10 million or more; provided, however,
that (a) for purposes of Section 5.12 hereof, the term "Asset Disposition" shall
exclude any disposition constituting a Permitted Investment or permitted by
Section 5.10 hereof and (b) the term "Asset Disposition" shall exclude
transactions permitted under Section 10.01 hereof.
"Bank Credit Facilities" means the Term Loan Facility, the
Revolving Facility and the Term Loan B Facility, collectively.
"Blackstone Partners" means Blackstone Capital Partners L.P.,
a Delaware limited partnership, and its successors.
"C&A Co. Subsidiary" means a Subsidiary of the Guarantor that
is not also a Subsidiary of the Company.
"Capital Lease Obligation" of any Person means the obligation
to pay rent or other payment amounts under a lease of (or other Indebtedness
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles. The stated maturity of such obligation
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which
<PAGE>
3
such lease may be terminated by the lessee without payment of a penalty. The
principal amount of such obligation shall be the capitalized amount thereof that
would appear on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) the equity, including
Preferred Stock and partnership interests, whether general or limited, of such
Person.
"Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness issued or directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof (provided that the
full faith and credit of the United States of America is pledged in support
thereof), (ii) certificates of deposit, money market deposit accounts and
acceptances with a maturity of 180 days or less from the date of acquisition of
any financial institution that is a member of the Federal Reserve System or
organized under the laws of the United Kingdom, Canada, France, Germany or Japan
having combined capital and surplus and undivided profits of not less than $250
million, (iii) commercial paper with a maturity of 180 days or less from the
date of acquisition issued by a corporation that is not an Affiliate of the
Company and is organized under the laws of any state of the United States of
America or the District of Columbia or any foreign country recognized by the
United States of America whose debt rating, at the time as of which such
investment is made, is at least "A-1" by Standard & Poor's Corporation or at
least "P-1" by Moody's Investors Service, Inc. or rated at least an equivalent
rating category of another nationally recognized securities rating agency, (iv)
repurchase agreements and reverse repurchase agreements having a term of not
more than 30 days for underlying securities of the types described in clause (i)
above entered into with a financial institution meeting the qualifications
described in clause (ii) above, (v) any security, maturing not more than 180
days after the date of acquisition, backed by standby or direct pay letters of
credit issued by a bank meeting the qualifications described in clause (ii)
above and (vi) any security, maturing not more than 180 days after the date of
acquisition, issued or fully guaranteed by any state, commonwealth, or territory
of the United States of America, or by any political subdivision thereof, and
rated at least "A" by Standard & Poor's Corporation or at least "A" by Moody's
Investors Service, Inc. or rated at least an equivalent rating category of
another nationally recognized securities rating agency.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
<PAGE>
4
"Consolidated Assets" of any Person as of any date of
determination means the total assets of such Person as reflected on the most
recently prepared balance sheet of such Person, determined on a consolidated
basis in accordance with generally accepted accounting principles.
"Consolidated Cash Flow Available for Fixed Charges" for any
period means the Consolidated Net Income for such period increased by the sum of
(i) Consolidated Interest Expense for such period, plus (ii) Consolidated Income
Tax Expense for such period, plus (iii) the consolidated depreciation and
amortization expense included in the income statement of the Company and its
Subsidiaries for such period plus (iv) all other expenses reducing Consolidated
Net Income for such period that do not represent cash disbursements for such
period (excluding any expense to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to the Stated
Maturity of the 11-1/2% Notes) less, to the extent included in the calculation
of Consolidated Net Income, items of income increasing Consolidated Net Income
for such period that do not represent cash receipts for such period (excluding
any expense to the extent it represents an accrual for cash receipts reasonably
expected to be received prior to the Stated Maturity of the 11-1/2% Notes) in
each case for such period; provided, however, that the provision for taxes based
on the income or profits of, the consolidated depreciation and amortization
expense and such items of expense or income attributable to, a Restricted
Subsidiary shall be added to or subtracted from Consolidated Net Income to
compute Consolidated Cash Flow Available for Fixed Charges only to the extent
(and in the same proportion) that the net income of such Restricted Subsidiary
was included in calculating Consolidated Net Income; provided further, however,
that the contribution to Consolidated Cash Flow Available for Fixed Charges of a
Restricted Subsidiary which is restricted in its ability to pay dividends to the
Company for any period shall not exceed the amount that would have been
permitted to be distributed to the Company by such Restricted Subsidiary as a
dividend or other distribution during such period.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) Consolidated Cash Flow Available for Fixed Charges for
the period of the most recently completed four consecutive fiscal quarters for
which quarterly or annual financial statements are available to (ii)
Consolidated Interest Expense for such period; provided, however, that (a) if
the Company or any Restricted Subsidiary has Incurred any Indebtedness since the
beginning of such period that remains outstanding (other than Indebtedness to
finance seasonal fluctuations in working capital needs Incurred under a
revolving credit (or similar arrangement) to the extent of the commitment
thereunder in effect on the last day of such period unless any portion of such
Indebtedness is projected in the reasonable judgment of senior management of the
Company to remain outstanding for a period in excess of 12 months from the date
of Incurrence of such Indebtedness) or if the transaction giving rise to the
need to
<PAGE>
5
calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, Consolidated Cash Flow Available for Fixed Charges and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (1) such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and (2) the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such period, (b) if since the beginning of such period any Indebtedness
of the Company or any Restricted Subsidiary has been repaid, repurchased,
defeased or otherwise discharged (other than Indebtedness under a revolving
credit or similar arrangement unless such revolving credit Indebtedness has been
permanently repaid and has not been replaced), Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis as if
such Indebtedness had been repaid, repurchased, defeased or otherwise discharged
on the first day of such period, (c) if since the beginning of such period the
Company or any Restricted Subsidiary shall have made any Asset Disposition or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Asset Disposition, the Consolidated Cash Flow Available for Fixed
Charges for such period shall be reduced by an amount equal to the Consolidated
Cash Flow Available for Fixed Charges (if positive) attributable to the assets
which are the subject of such Asset Disposition for such period or increased by
an amount equal to the Consolidated Cash Flow Available for Fixed Charges (if
negative) attributable thereto for such period, and Consolidated Interest
Expense for such period shall be reduced by an amount equal to the Consolidated
Interest Expense attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and its continuing Restricted Subsidiaries in connection
with such Asset Disposition for such period (or, if the Capital Stock of any
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no longer
liable for such Indebtedness after such sale), (d) if since the beginning of
such period the Company or any Restricted Subsidiary (by merger or otherwise)
shall have made an Investment in any Restricted Subsidiary (or any Person which
becomes a Restricted Subsidiary) or an acquisition of assets, including any
Investment in a Restricted Subsidiary or any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of a line of business, Consolidated Cash
Flow Available for Fixed Charges and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period and (e) if since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Asset Disposition, Investment or acquisition of
assets that would
<PAGE>
6
have required an adjustment pursuant to clause (c) or (d) above if made by
the Company or a Restricted Subsidiary during such period, Consolidated Cash
Flow Available for Fixed Charges and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting officer of
the Company and such calculations may include such pro forma adjustments for
non-recurring items that the Company considers reasonable in order to reflect
the ongoing impact of any such transaction on the Company's results of
operations. If the Indebtedness to be incurred bears a floating rate of
interest, the interest expense on such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate, Currency or Commodity
Price Agreement applicable to such Indebtedness if such Interest Rate, Currency
or Commodity Price Agreement has a remaining term in excess of 12 months).
"Consolidated Income Tax Expense" for any period means the
consolidated provision for income taxes of the Company and its Subsidiaries for
such period calculated on a consolidated basis in accordance with generally
accepted accounting principles.
"Consolidated Interest Expense" means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest income) of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles, including without limitation or
duplication (or, to the extent not so included, with the addition of), (i) the
amortization of debt discounts; (ii) to the extent included in the calculation
of net income under generally accepted accounting principles, any payments or
fees with respect to letters of credit, bankers' acceptances or similar
facilities; (iii) to the extent included in the calculation of net income under
generally accepted accounting principles, net costs with respect to interest
rate swap or similar agreements or, to the extent related to non-U.S. dollar
denominated Indebtedness, foreign currency hedge, exchange or similar
agreements; (iv) Preferred Dividends in respect of all Preferred Stock of
Subsidiaries and Redeemable Stock of the Company held by Persons other than the
Company or a Wholly Owned Subsidiary whether or not declared or paid; (v)
interest on Indebtedness guaranteed by the Company and its Restricted
Subsidiaries and actually paid by the Company or its Restricted Subsidiaries;
(vi) capitalized interest; (vii) the portion of any rental obligation
attributable to Capital Lease Obligations allocable to interest expense and
<PAGE>
7
(viii) the loss on Receivables Sales, and excluding, to the extent
included in such consolidated interest expense, interest expense of any Person
acquired by the Company or a Subsidiary of the Company in a pooling-of-interests
transaction for any period prior to the date of such transaction.
Notwithstanding the foregoing, the Consolidated Interest Expense with respect to
any Restricted Subsidiary, not all the net income of which was included in
calculating Consolidated Net Income by reason of the fact that such Restricted
Subsidiary was not a Wholly Owned Subsidiary, shall be included only to the
extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Net Income" for any period means the
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (i) the
net income (or loss) of any Person acquired by the Company or a Subsidiary of
the Company in a pooling-of-interests transaction for any period prior to the
date of such transaction, (ii) the net income (or loss) of any Person that is
not a Restricted Subsidiary except to the extent of the amount of dividends or
other distributions actually paid to the Company or a Restricted Subsidiary by
such Person during such period (subject, in the case of a dividend or
distribution to a Restricted Subsidiary, to the limitations contained in clause
(iii) below), (iii) any net income of any Restricted Subsidiary to the extent
such Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that the Company's
equity in a net loss of any such Restricted Subsidiary for such period shall be
included in determining such Consolidated Net Income, (iv) gains or losses on
Asset Dispositions by the Company or its Subsidiaries, (v) all extraordinary
gains and extraordinary losses, (vi) the cumulative effect of changes in
accounting principles, (vii) non-cash gains or losses resulting from
fluctuations in currency exchange rates, (viii) gains attributable to any
decrease in the valuation allowance for the Company's deferred tax assets
relating to the utilization of net operating losses recognized after the Issue
Date, and (ix) the tax effect of any of the items described in clauses (i)
through (viii) above; provided, further, that for any period an amount equal to
the product of (I) the Net Deferred Tax Asset at January 27, 1996 as reflected
in Note 19 to the Consolidated Financial Statements of the Guarantor at January
27, 1996 and (II) a fraction, the numerator of which is the Net Operating Losses
(regular tax) utilized during such period and the denominator of which is the
total Net Operating Losses (regular tax) at January 27, 1996 as reflected in
Note 19 to the Consolidated Financial Statements of the Guarantor at January 27,
1996 (such product, the "Excess Tax Expense") shall be added to "Consolidated
Net Income" for such period; provided, however, that the maximum amount of
Excess Tax Expense that may be added to Consolidated Net Income
pursuant to this clause is $20 million in any fiscal year and any
Excess Tax Expense
<PAGE>
8
in any fiscal year in excess of such annual limitation may be carried
forward and added to "Consolidated Net Income" in any succeeding fiscal year.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with generally accepted accounting principles, less amounts
attributable to Redeemable Stock of such Person; provided that, with respect to
the Company, adjustments following the Issue Date to the accounting books and
records of the Company in accordance with Accounting Principles Board Opinions
Nos. 16 and 17 (or successor opinions thereto) or otherwise resulting from the
acquisition of control of the Company by another Person shall not be given
effect.
"Core Automotive Assets" means assets utilized, directly or
indirectly, in the production or sale of products in one of the six primary
product lines in the Company's Automotive Products segment existing on the Issue
Date or otherwise related to interior trim products for consumption by
automotive original equipment manufacturers.
"Designated Senior Indebtedness" means (i) the Credit
Agreement and (ii) to the extent expressly so designated in the agreement or
instrument evidencing such Senior Indebtedness, each series of Senior
Indebtedness having an aggregate principal amount (or available commitments) of
at least $25 million.
"Domestic Subsidiary" means a Restricted Subsidiary other than
a Foreign Subsidiary.
"Equity Offering" means a primary sale of Common Stock of the
Company or, to the extent the net cash proceeds thereof are paid to the Company
as a capital contribution, Common Stock or Preferred Stock (other than
Redeemable Preferred Stock) of the Guarantor, for cash to Persons other than
Affiliates or Related Persons of the Company or the Guarantor.
"Foreign Subsidiary" means a Restricted Subsidiary that is
organized under the laws of any country other than the United States and Canada
and substantially all the assets of which are located outside the United States
and Canada.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to
<PAGE>
9
maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation (including by acquisition of Subsidiaries if
such Indebtedness directly or indirectly becomes an obligation of such Person)
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Indebtedness or other obligation on the
balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming Indebtedness
shall not be deemed an Incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (i) the principal of and premium, if any, in
respect of any indebtedness of such Person for money borrowed, (ii) the
principal of and premium, if any, of such Person with respect to obligations
evidenced by bonds, debentures, notes or other similar instruments, including
obligations Incurred in connection with the acquisition of property, assets or
businesses, (iii) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with respect
thereto) (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i), (ii), and (v)) entered
into in the ordinary course of business of such Person to the extent that such
letters of credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the third business day following receipt by
such Person of a demand for reimbursement following payment on the letter of
credit), (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith), which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) every Capital Lease Obligation
of such Person, (vi) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Redeemable Stock or,
with respect to any Subsidiary, any Preferred Stock (but excluding, in each
case, any accrued
<PAGE>
10
dividends) but only to the extent such obligations arise on or prior to the
Stated Maturity of the 11-1/2% Notes, (vii) all Indebtedness of other Persons
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person; provided, however, that the amount of such
Indebtedness shall be the lesser of (a) the fair market value of such asset at
such date of determination and (b) the amount of such Indebtedness of such other
Persons, (viii) the present value (discounted using the interest rate on the
11-1/2% Notes) as of the date of determination of every obligation to pay rent
or other payment amounts of such Person with respect to any Sale and Leaseback
Transaction to which such Person is a party, payable through the stated maturity
of such Sale and Leaseback Transaction, (ix) every obligation under Interest
Rate, Currency or Commodity Price Agreements of such Person and (x) every
obligation of the type referred to in clauses (i) through (ix) of another Person
the payment of which, in any case, such Person has Guaranteed or is responsible
or liable, directly or indirectly, as obligor, Guarantor or otherwise. The
"amount" or "principal amount" of Indebtedness at any time of determination as
used herein represented by (a) any contingent Indebtedness, shall be the maximum
principal amount thereof, (b) any indebtedness issued at a price that is less
than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (c) any Redeemable Stock, shall be the maximum fixed
redemption or repurchase price in respect thereof, and (d) any Preferred Stock,
shall be the maximum voluntary or involuntary liquidation preference, in each
case as of such time of determination.
"Interest Rate, Currency or Commodity Price Agreement" of any
Person means any forward contract, futures contract, swap, option or other
financial agreement or arrangement (including caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest
rates, currency exchange rates or commodity prices or indices (excluding
contracts for the purchase or sale of goods in the ordinary course of business).
"Issue Date" means the date on which the 11-1/2% Notes are
originally issued.
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Indebtedness issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but shall not include trade
accounts receivable in the ordinary course of business. For purposes of Sections
5.10 and 5.15 and the definition of "Permitted Investments", (i)
with respect to a Restricted Subsidiary that is designated as an Unrestricted
Subsidiary,
<PAGE>
11
"Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time that such Subsidiary is designated an
Unrestricted Subsidiary and with respect to a Person that is designated as an
Unrestricted Subsidiary simultaneously with its becoming a Subsidiary of the
Company or as a C&A Co. Subsidiary simultaneously with its becoming a Subsidiary
of the Guarantor, "Investment" shall mean the Investment made by the Company and
its Restricted Subsidiaries or the Guarantor, as the case may be, to acquire
such Subsidiary; provided, however, that in either case upon a redesignation of
such Subsidiary as a Restricted Subsidiary, or upon the acquisition of the
Capital Stock of a Person such that such Person becomes a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary or such other Person in an amount (if positive) equal to
(a) the Company's "Investment" in such Subsidiary at the time of such
redesignation or in such Person immediately prior to such acquisition less (b)
the portion (proportionate to the Company's interest in such Subsidiary after
such redesignation or acquisition) of the fair market value of the net assets of
such Subsidiary at the time that such Subsidiary is so redesignated a Restricted
Subsidiary or of such Person immediately following such acquisition; and (ii)
any property transferred to or from an Unrestricted Subsidiary shall be valued
at its fair market value at the time of such transfer, in each case as
determined in good faith by the Board of Directors.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or Cash Equivalents received (including by way of sale or
discounting of a note, instalment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiror of
Indebtedness or other obligations relating to such properties or assets)
therefrom by such Person, net of (i) all legal, accounting, financial advisory,
title and recording tax expenses, commissions and other fees and expenses
Incurred and all federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Asset Disposition, (ii) all
payments made by such Person or its Subsidiaries on any Indebtedness which is
secured by such assets in accordance with the terms of any Lien
upon or with respect to such assets or which must by the terms of such Lien, or
in
<PAGE>
12
order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments made to minority interest holders in
Subsidiaries of such Person or joint ventures as a result of such Asset
Disposition, (iv) appropriate amounts to be provided by such Person or any
Subsidiary thereof, as the case may be, as a reserve in accordance with
generally accepted accounting principles against any liabilities associated with
such assets and retained by such Person or any Subsidiary thereof, as the case
may be, after such Asset Disposition, in each case as determined by the Board of
Directors as evidenced by a resolution of the Board filed with the Trustee;
provided, however, that any reduction in such reserve within 12 months following
the consummation of such Asset Disposition shall be treated for all purposes of
the Indenture and the 11-1/2% Notes as a new Asset Disposition at the time of
such reduction with Net Available Proceeds equal to the amount of such reduction
and (v) any amount needed to effect a reduction of the amount outstanding under
a Permitted Receivables Financing Facility as a result of such Asset
Disposition.
"Non-Core Automotive Assets" means assets not constituting
Core Automotive Assets.
"Obligor" shall mean, with respect to any Receivable, the
party obligated to make payments with respect to such Receivable, including any
guarantor thereof.
"Offer to Purchase" means a written offer (the "Offer") sent
by the Company by first class mail, postage prepaid, to each Holder of 11-1/2%
Notes at his address appearing in the Security Register on the date of the Offer
offering to purchase up to the principal amount of 11-1/2% Notes specified in
such Offer at the purchase price specified in such Offer (as determined pursuant
to the Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not less
than 30 days or more than 60 days after the date of such Offer and a settlement
date (the "Purchase Date") for purchase of 11-1/2% Notes within five Business
Days after the Expiration Date. The Company shall notify the Trustee at least 15
Business Days (or such shorter period as is acceptable to the Trustee) prior to
the mailing of the Offer of the Company's obligation to make an Offer to
Purchase, and the Offer shall be mailed by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The Offer
shall contain information concerning the business of the Company and its
Subsidiaries which the Company in good faith believes will enable such Holders
of 11-1/2% Notes to make an informed decision with respect to the Offer to
Purchase (which at a minimum shall include (i) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
<PAGE>
13
Financial Condition and Results of Operations" contained in the documents
required to be filed with the Trustee pursuant to the Indenture (which
requirements may be satisfied by delivery of such documents together with the
Offer), (ii) a description of material developments, if any, in the Company's
business subsequent to the date of the latest of such financial statements
referred to in clause (i) (including a description of the events requiring the
Company to make the Offer to Purchase), (iii) if applicable, appropriate pro
forma financial information concerning the Offer to Purchase and the events
requiring the Company to make the Offer to Purchase and (iv) any other
information required by applicable law to be included therein. The Offer shall
contain all instructions and materials necessary to enable such Holders of
11-1/2% Notes to tender 11-1/2% Notes pursuant to the Offer to Purchase. The
Offer shall also state:
(i) the Section of the Indenture pursuant to which the Offer
to Purchase is being made;
(ii) the Expiration Date and the Purchase Date;
(iii) the aggregate principal amount of the Outstanding
11-1/2% Notes offered to be purchased by the Company pursuant to the
Offer to Purchase (including, if less than 100%, the manner by which
such has been determined pursuant to the Section hereof requiring the
Offer to Purchase) (the "Purchase Amount");
(iv) the purchase price to be paid by the Company for each
$1,000 aggregate principal amount of 11-1/2% Notes accepted for payment
(as specified pursuant to the Indenture) (the "Purchase Price");
(v) that the Holder of 11-1/2% Notes may tender all or any
portion of the 11-1/2% Notes registered in the name of such Holder of
11-1/2% Notes and that any portion of a 11-1/2% Note tendered must be
tendered in an integral multiple of $1,000 principal amount;
(vi) the place or places where 11-1/2% Notes are to be
surrendered for tender pursuant to the Offer to Purchase;
(vii) that interest on any 11-1/2% Note not tendered or
tendered but not purchased by the Company pursuant to the Offer to
Purchase will continue to accrue;
(viii) that on the Purchase Date the Purchase Price will
become due and payable upon each 11-1/2% Note being accepted for
payment pursuant to the
<PAGE>
14
Offer to Purchase and that interest thereon will cease to accrue on
and after the Purchase Date;
(ix) that each Holder of 11-1/2% Notes electing to tender a
11-1/2% Note pursuant to the Offer to Purchase will be required to
surrender such 11-1/2% Note at the place or places specified in the
Offer prior to the close of business on the Expiration Date (such
11-1/2% Note being, if the Company or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder of 11-1/2% Notes or his attorney duly authorized in writing);
(x) that Holders of 11-1/2% Notes will be entitled to withdraw
all or any portion of 11-1/2% Notes tendered if the Company (or the
Paying Agent) receives, not later than the close of business on the
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
11-1/2% Note the Holder tendered, the certificate number of the 11-1/2%
Note the holder tendered and a statement that such Holder of 11-1/2%
Notes is withdrawing all or a portion of his tender;
(xi) that (a) if 11-1/2% Notes in an aggregate principal
amount less than or equal to the Purchase Amount are duly tendered and
not withdrawn pursuant to the Offer to Purchase, the Company will
purchase all such 11-1/2% Notes and (b) if 11-1/2% Notes in an
aggregate principal amount in excess of the Purchase Amount are
tendered and not withdrawn pursuant to the Offer to Purchase, the
Company will purchase 11-1/2% Notes having an aggregate principal
amount equal to the Purchase Amount on a pro rata basis (with such
adjustments as may be deemed appropriate so that only 11-1/2% Notes in
denominations of $1,000 or integral multiples thereof shall be
purchased); and
(xii) that in the case of any Holder of 11-1/2% Notes whose
11-1/2% Note is purchased only in part, the Company will execute, and
the Trustee shall authenticate and deliver to the Holder of such
11-1/2% Note without service charge, a new 11-1/2% Note or 11-1/2%
Notes, of any authorized denomination as requested by such Holder, in
an aggregate principal amount equal to and in exchange for the
unpurchased portion of the 11-1/2% Note so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
<PAGE>
15
"Permitted Interest Rate, Currency or Commodity Price
Agreement" of any Person means any Interest Rate, Currency or Commodity Price
Agreement entered into with one or more financial institutions that is designed
to protect such Person (i) against fluctuations in interest rates or currency
exchange rates with respect to Indebtedness of the Company and its Restricted
Subsidiaries and which shall have a notional amount no greater than the
principal payments due with respect to the Indebtedness being hedged thereby, or
(ii) in the case of currency or commodity protection agreements, against
currency exchange rate or commodity price fluctuations in the ordinary course of
the Company's and its Restricted Subsidiaries' business relating to then
existing financial obligations or then existing or sold production and not for
purposes of speculation.
"Permitted Investments" means (i) Investments in Cash
Equivalents, (ii) any Investments included in the definition of Permitted
Indebtedness (except Indebtedness incurred pursuant to clause (i) of such
definition), (iii) Investments in existence on the Issue Date, (iv) Investments
in any Restricted Subsidiary by the Company or any Restricted Subsidiary,
including any Investment made to acquire such Restricted Subsidiary; provided
that the primary business of such Restricted Subsidiary is in a Related Business
or is to sell Receivables pursuant to a Permitted Receivables Financing
Facility, (v) Investments in the Company by the Guarantor or any Restricted
Subsidiary, (vi) sales of goods or services on trade credit terms consistent
with the Company's and its Subsidiaries' past practices or otherwise consistent
with trade credit terms in common use in the industry and recorded as accounts
receivable on the balance sheet of the Person making such sale, (vii) loans or
advances to employees for purposes of purchasing common stock of the Guarantor
in an aggregate amount outstanding at any one time not to exceed $5 million and
other loans and advances to employees of the Company in the ordinary course of
business and on terms consistent with the Company's practices in effect prior to
the Issue Date, including travel, moving and other like advances, (viii) loans
or advances to vendors or contractors of the Company (other than Affiliates of
the Company) in the ordinary course of a Related Business, (ix) lease, utility
and other similar deposits in the ordinary course of business, (x) stock,
obligations or securities received in the ordinary course of business in
settlement of debts owing to the Company or a Subsidiary thereof as a result of
foreclosure, perfection, enforcement of any Lien or in a bankruptcy proceeding,
(xi) Investments in Unrestricted Subsidiaries, C&A Co. Subsidiaries (including
dividends to the Guarantor for the purpose of making such Investments),
partnerships or joint ventures involving the Company or its Restricted
Subsidiaries, in each case primarily engaged in a Related Business, if the
amount of such Investment (after taking into account the amount of all other
Investments made pursuant to this clause (xi), less any return of capital
realized or any repayment of principal received on such Permitted
Investments, or any release or other cancellation of any Guarantee constituting
such Permitted Investment, which has not at such time been reinvested in
<PAGE>
16
Permitted Investments made pursuant to this clause (xi)), does not exceed $75
million, provided that the aggregate amount of all such Investments in
Unrestricted Subsidiaries and C&A Co. Subsidiaries shall not exceed $50 million
at any one time outstanding, and (xii) Investments in Persons to the extent any
such Investment represents the non-cash consideration otherwise permitted to be
received by the Company or its Restricted Subsidiaries in connection with an
Asset Disposition.
"Permitted Receivables Financing Facility" means the
receivables financing facility established pursuant to the Amended and Restated
Receivables Sales Agreement dated as of March 30, 1995, as amended from time to
time, among the Company, as master servicer, the Sellers parties thereto and
Carcorp, Inc. and one or more receivables financing facilities pursuant to which
the Company or any of its Subsidiaries sells, transfers, assigns or pledges its
Receivables to a special purpose entity or a trust and in connection therewith
such entity or trust incurs Indebtedness secured by such Receivables with
customary limited repurchase obligations for breaches of certain
representations, warranties or covenants or limited recourse based upon the
collectibility of the Receivables sold.
"Preferred Dividends" for any Person means for any period the
quotient determined by dividing the amount of dividends and distributions paid
or accrued (whether or not declared) on Preferred Stock of such Person during
such period calculated in accordance with generally accepted accounting
principles, by 1 minus the actual combined Federal, state, local and foreign
income tax rate of the Company on a consolidated basis (expressed as a decimal)
for such period.
"Preferred Stock" of any Person means Capital Stock of such
Person of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Prospectus Supplement" means the Prospectus Supplement dated
June 5, 1996, relating to the offering and sale of the 11-1/2% Notes.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money. "Receivables" shall include the indebtedness and payment obligations of
any Person to the Company or a Subsidiary arising from a sale of merchandise or
services by the Company or such Subsidiary in the ordinary course of its
business, including any right to payment for goods sold or for services
rendered, and including the right to payment of any interest, finance charges,
returned check or late charges and other obligations of such Person with respect
thereto. Receivables shall also include (a) all of the Company's or
<PAGE>
17
such Subsidiary's interest in the merchandise (including returned merchandise),
if any, relating to the sale which gave rise to such Receivable, (b) all other
security interests or Liens and property subject thereto from time to time
purporting to secure payment of such Receivable, whether pursuant to the
contract related to such Receivable or otherwise, together with all financing
statements signed by an Obligor describing any collateral securing such
Receivable, and (c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the contract related to
such Receivable or otherwise.
"Receivables Sale" of any Person means any sale, transfer,
assignment or pledge of Receivables by such Person (pursuant to a Permitted
Receivables Financing Facility, a purchase facility or otherwise), other than
(i) in connection with a disposition of the business operations of such Person
relating thereto or (ii) a disposition of defaulted Receivables for purpose of
collection and not as a financing arrangement.
"Redeemable Stock" of any Person means any Capital Stock of
such Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise (including upon the
occurrence of an event) (i) matures or (ii) is required to be redeemed (pursuant
to any sinking fund obligation or otherwise) or (iii) is convertible into or
exchangeable for Indebtedness or is redeemable at the option of the holder
thereof, in each case in whole or in part, at any time prior to the final Stated
Maturity of the 11-1/2% Notes.
"Related Business" means any business related, ancillary or
complementary to any of the businesses of the Company and the Restricted
Subsidiaries on the Issue Date, as determined by the Company's Board of
Directors.
"Related Person" of any Person means any other Person directly
or indirectly owning (i) 10% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person) or (ii) 10% or more of the combined voting
power of the Voting Stock of such Person.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Revolving Facility" means a certain seven-year senior secured
revolving credit facility of the Company and the Guarantor in an aggregate
principal amount of up to $250 million pursuant to the Credit Agreement.
<PAGE>
18
"Sale and Leaseback Transaction" means an arrangement by any
Person with any lender or investor or to which such lender or investor is a
party providing for the leasing by such Person of any property or asset of such
Person which has been or is being sold or transferred by such Person not more
than 270 days after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset. The stated maturity of such arrangement
shall be the date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be terminated
by the lessee without payment of a penalty.
"Senior Subordinated Indebtedness" means the 11-1/2% Notes and
any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the 11-1/2% Notes in right of payment
and is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any Security, the
date specified in such Security as the fixed date on which the payment of
principal of such Security is due and payable, including pursuant to any
mandatory redemption provision.
"Subordinated Indebtedness" means Indebtedness of the Company
as to which the payment of principal of (and premium, if any) and interest and
other payment obligations in respect of such Indebtedness is subordinate to the
prior payment in full of the 11-1/2% Notes.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interest (including partnership
interest) entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by such Person or by one or more
Subsidiaries of such Person, or by such Person and one or more Subsidiaries of
such Person.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated
as of November 1, 1989, as amended from time to time, among the Guarantor, the
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19
Company and the Subsidiaries of the Company, or any successor or replacement tax
sharing agreement.
"Term Loan B Facility" means a certain credit facility of the
Company in the principal amount of $195.8 million, originally entered into
onDecember 22, 1995, as amended and restated.
"Term Loan Facility" means a certain eight-year senior secured
term loan facility of the Company and Collins & Aikman Canada, Inc. in
anaggregate principal amount of $475 million pursuant to the Credit Agreement.
"U.S. Government Obligation" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only so long as no senior class of securities has such voting power by reason of
any contingency.
"Wallcoverings" means Imperial Wallcoverings, Inc., a
subsidiary of the Company.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Redeemable Stock, as the case may be at any date, the number of
years obtained by dividing (i) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment,
by (ii) the then outstanding principal amount or liquidation preference, as
applicable, of such Indebtedness or Redeemable Stock, as the case may be.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
<PAGE>
20
"WP Partners" means Wassertein Perella Partners, L.P., a
Delaware limited partnership.
B. Title and Terms of the 11-1/2% Notes Pursuant to Section 3.01.
1. Title.
The 11-1/2% Notes are hereby created and shall be issuable in
one series. The 11-1/2% Notes shall be designated as the "11-1/2% Senior
Subordinated Notes Due 2006".
2. Dating of the 11-1/2% Notes.
All 11-1/2% Notes shall be dated the date of their
authentication.
3. Maximum Aggregate Principal Amount.
The maximum aggregate principal amount of the 11-1/2% Notes
that may be authenticated and delivered under this Supplement is limited to
$400,000,000, except for 11-1/2% Notes authenticated and delivered upon transfer
of, or in exchange for, or in lieu of, other 11-1/2% Notes pursuant to Section
3.05, 3.06 or 4.07 of the Indenture.
4. Priority of Payment.
The 11-1/2% Notes are unsecured senior subordinated
obligations of the Company. The payment of the principal of, premium (if any)
and interest on the 11-1/2% Notes and other payment obligations of the Company
in respect of the 11-1/2% Notes are subordinated in right of payment to the
prior payment in cash when due of all Senior Indebtedness of the Company. The
11-1/2% Notes rank pari passu with all other Senior Subordinated Indebtedness of
the Company.
5. Price to Public.
The 11-1/2% Notes will be issued at a price to public of 100%
of the principal amount.
6. Payment of Principal.
The principal amount of the 11-1/2% Notes shall be due and
payable on April 15, 2006. The principal of each 11-1/2% Note shall be payable
on the date due upon delivery and surrender of such 11-1/2% Note to the Trustee
at the principal
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21
office of the Trustee in lawful money of the United States of
America by check or by wire transfer of immediately available funds.
7. Interest, Interest Payment Dates, Record Dates
Each 11-1/2% Note shall bear interest on its outstanding
principal balance from June 10, 1996 at 11-1/2% per annum until payment of the
principal thereof has been made or duly provided for. Interest on the 11-1/2%
Notes shall be paid semi-annually on April 15, and October 15, commencing on
October 15, 1996 (each an "Interest Payment Date"). Interest on the 11-1/2%
Notes shall be computed on the basis of a 360-day year of twelve 30-day months,
from the later of: (1) June 10, 1996 or (2) the most recent Interest Payment
Date to which interest has been paid or provided for to the end of the next
Interest Payment Date. Interest on the 11-1/2% Notes shall be payable in lawful
money of the United States of America.
The Regular Record Date for each Interest Payment Date shall
be the close of business on the April 1 and October 1 next preceding each
Interest Payment Date, whether or not such date shall be a Business Day.
8. Global Securities.
The 11-1/2% Notes shall initially be represented by one or
more global securities (the "Global Securities") deposited with The Depository
Trust Company ("DTC"), as depositary, and registered in the name of DTC or a
nominee of DTC. Except as set forth in the Indenture, the 11-1/2% Notes will be
available for purchase in denominations of $1,000 and integral multiples thereof
in book-entry form only. The term "Depositary" refers to DTC or any successor
depository, as depositary.
9. Registration of Transfer or Exchange.
Until otherwise designated by the Company, the office or
agency where, subject to Section 5.02, the 11-1/2% Notes may be presented for
registration of transfer or exchange shall be the corporate trust office of the
Trustee, as Paying Agent and Registrar.
10. Place of Payment of Principal and Interest.
Principal of, premium (if any) and interest on the 11-1/2%
Notes will be payable at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, the City of New York, provided that at the
option of the Company, payment of interest on the 11-1/2% Notes may be made by
check mailed to the address of the Person entitled thereto as it appears in the
Security Register. Until
<PAGE>
22
otherwise designated by the Company, such office or agency will be the corporate
trust office of the Trustee, as Paying Agent and Registrar.
11. Redemption.
The 11-1/2% Notes are redeemable from time to time prior to
April 15, 2001 only in the event that on or before April 15, 1999 the Company
receives net cash proceeds from one or more Equity Offerings, in which case the
Company may, at its option, use all or a portion of any such net cash proceeds
to redeem the 11-1/2% Notes in a principal amount of at least $5,000,000 and up
to an aggregate principal amount equal to 40% of the original principal amount
of the 11-1/2% Notes, provided, however, that 11-1/2% Notes in an aggregate
principal amount equal to at least 60% of the original principal amount of the
11-1/2% Notes remain outstanding after each such redemption. Any such redemption
must occur within 120 days of any such sale and upon not less than 30 nor more
than 60 days' notice mailed to each Holder of 11-1/2% Notes to be redeemed at
such Holder's address appearing in the Security Register, in amounts of $1,000
or an integral multiple of $1,000, at a Redemption Price of 110% of the
principal amount of the 11-1/2% Notes plus accrued interest to but excluding the
Redemption Date.
The 11-1/2% Notes are subject to redemption, at the option of
the Company, in whole or in part, at any time on or after April 15, 2001 and
prior to maturity, upon not less than 30 nor more than 60 days' notice mailed to
each Holder of 11-1/2% Notes to be redeemed at such Holder's address appearing
in the Security Register, in amounts of $1,000 or an integral multiple of
$1,000, at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued interest to but excluding the Redemption Date, if
redeemed during the 12-month period commencing on or after April 15 of the years
set forth below:
Redemption
Year Price
2001................................... 105.750%
2002................................... 103.833%
2003................................... 101.917%
2004 and thereafter.................... 100.000%
The 11-1/2% Notes may also be redeemed as a whole at the
option of the Company upon the occurrence of a Change of Control, upon not less
than 30 nor more than 60 days' notice (but in no event more than 180 days after
the occurrence of such Change of Control) mailed to each Holder of 11-1/2% Notes
at such Holder's
<PAGE>
23
address appearing in the Security Register, at a redemption price equal to 100%
of the principal amount thereof plus the Applicable Premium at the time plus
accrued interest to but excluding the Redemption Date. "Applicable Premium"
means, with respect to a 11-1/2% Note at any time, the greater of (i) 1.0% of
the principal amount of such 11-1/2% Note and (ii) the excess of (a) the present
value at such time of the principal amount of such 11-1/2% Note plus all
required interest payments due on such 11-1/2% Note through the first date on
which the 11-1/2% Notes may be redeemed at the option of the Company plus the
amount of any premium due on such date, computed using a discount rate equal to
the Treasury Rate plus 100 basis points, over (b) the then outstanding principal
amount of such 11-1/2% Note. "Treasury Rate" means the yield to maturity at the
time of computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) which has become publicly available at least two
Business Days prior to the date fixed for repayment (or, if such Statistical
Release is no longer published, any publicly available source or similar market
data)) most nearly equal to the then remaining Weighted Average Life to Maturity
of the 11-1/2% Notes (calculated as if the first date on which the 11-1/2% Notes
can be redeemed at the option of the Company were the final maturity of the
11-1/2% Notes); provided, however, that if such Weighted Average Life to
Maturity of the 11-1/2% Notes is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if such Weighted Average
Life to Maturity of the 11-1/2% Notes is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year will be used. If less than all the 11-1/2% Notes
are to be redeemed, the Trustee will select, in such manner as it shall deem
fair and appropriate, the particular 11-1/2% Notes to be redeemed or any portion
thereof that is an integral multiple of $1,000.
12. Form of 11-1/2% Notes.
The form of the 11-1/2% Notes and the Trustee's certificate of
authentication are attached hereto as Exhibit A, which is hereby incorporated in
and expressly made a part of the Indenture. Each of the 11-1/2% Notes shall be
numbered consecutively from A-1 upward. The 11-1/2% Notes shall bear a CUSIP
number, but any failure to indicate or any error in such CUSIP number shall not
in any way affect the validity of the 11-1/2% Notes. The terms of the 11-1/2%
Notes set forth in Exhibit A are part of the terms of this Indenture.
<PAGE>
24
13. Sinking Fund.
There will be no mandatory sinking fund payments for the
11-1/2% Notes.
C. Provisions Supplemental to Article V of Indenture.
Article V of the Indenture is hereby supplemented with respect
to the 11-1/2% Notes by inserting, following the final sentence of Section 5.06,
the following:
SECTION 5.07. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness; provided, however, that the Company may Incur Indebtedness if,
after giving pro forma effect to the Incurrence of such Indebtedness and the
receipt and application of the proceeds thereof, the Consolidated Coverage Ratio
would be greater than 2.00 to 1.00, if such Indebtedness is Incurred on or prior
to June 30, 1998, or 2.25 to 1.00 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing, the following Indebtedness
may be Incurred (collectively, "Permitted Indebtedness"):
(i) (A) Indebtedness of the Company or any Restricted
Subsidiary under the Revolving Facility or one or more other revolving
credit facilities (including related Guarantees, notes, letters of
credit and security documents) in an aggregate principal amount which,
when taken together with all other Indebtedness Incurred pursuant to
this clause (A) and then outstanding, does not exceed $250 million, (B)
Indebtedness of the Company or any Restricted Subsidiary under the Term
Loan Facility and the Term Loan B Facility (including related
Guarantees, notes, letters of credit and security documents) and under
any agreement or instrument effecting a renewal, extension,
refinancing, replacement, amendment, restatement or refunding of any
Indebtedness permitted to be Incurred pursuant to this clause (B) in an
aggregate principal amount which, when taken together with all
Indebtedness Incurred pursuant to this clause (B) and then outstanding,
does not exceed an amount equal to (x) $391 million less (y) the
aggregate sum as of the date of such Incurrence of (1) the amount of
all scheduled principal amortization payments that, pursuant to the
terms of the Term Loan Facility and the Term Loan B Facility as in
effect on the Issue Date, were required to be made through such date
plus (2) the amount of all mandatory prepayments of principal of
Indebtedness under the Term Loan Facility or the Term Loan B Facility
or Indebtedness otherwise Incurred pursuant to this clause (B) that
have
<PAGE>
25
been made through such date with the proceeds of any Asset
Disposition by the Company or its Restricted Subsidiaries (other than
any Asset Disposition of Non-Core Automotive Assets so long as an
amount equal to 100% of the Net Available Proceeds from such Asset
Disposition was invested within 365 days prior to, or is invested
within 365 days after, the date of such Asset Disposition in additional
Core Automotive Assets) and (C) Indebtedness of the Company or any
Restricted Subsidiary under one or more receivables financing
facilities pursuant to which the Company or any Domestic Subsidiary
pledges or otherwise borrows solely against its Receivables (to the
extent Receivables are not being financed pursuant to a Permitted
Receivables Financing Facility) in an aggregate principal amount which,
when taken together with all other Indebtedness Incurred pursuant to
this clause (C) and then outstanding, does not exceed 80% of the
consolidated book value of the accounts receivable of the Company and
its Domestic Subsidiaries then being pledged or otherwise financed
pursuant to this clause (C) (determined at the time of the respective
Incurrence in accordance with generally accepted accounting
principles);
(ii) the original issuance by the Company of the Indebtedness
represented by the 11-1/2% Notes;
(iii) any Indebtedness (other than Indebtedness described in
another clause of this paragraph) of the Company or any Restricted
Subsidiary outstanding on the Issue Date;
(iv) Indebtedness owed by the Company to any Restricted
Subsidiary or Indebtedness owed by any Restricted Subsidiary to the
Company or any other Restricted Subsidiary; provided, however, that (A)
any such Indebtedness owing by the Company to a Restricted Subsidiary
must be unsecured Indebtedness and (B) upon either (1) the transfer or
other disposition by a Restricted Subsidiary or the Company of any
Indebtedness so permitted to a Person other than the Company or another
Restricted Subsidiary or (2) the issuance (other than directors'
qualifying shares), sale, transfer or other disposition of shares of
Capital Stock (including by consolidation or merger) of a Restricted
Subsidiary holding such Indebtedness to a Person other than the Company
or another Restricted Subsidiary, the provisions of this clause (iv)
shall no longer be applicable to such Indebtedness and such
Indebtedness shall be deemed to have been Incurred at the time of such
transfer or other disposition; provided further, however, that
Indebtedness under this clause (iv) held by a Restricted Subsidiary
that is not a Wholly Owned Subsidiary of the Company shall be permitted
by this clause (iv) only if no Affiliate of the Company (other than a
Wholly Owned Subsidiary) holds Capital Stock in such Restricted
Subsidiary;
<PAGE>
26
(v) Indebtedness of the Company or any Restricted Subsidiary
consisting of Permitted Interest Rate, Currency or Commodity Price
Agreements;
(vi) Indebtedness which is exchanged for or the proceeds of
which are used to refinance or refund, or any extension or renewal of,
outstanding Indebtedness Incurred pursuant to paragraph (a) above or
clauses (ii), (iii) or (ix) of this paragraph (each of the foregoing, a
"refinancing", and including any successive refinancing of such
Indebtedness) in an aggregate principal amount not to exceed the
principal amount of the Indebtedness so refinanced plus the amount of
any premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness so refinanced or the amount
of any premium reasonably determined by the Company as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the expenses of the Guarantor, the Company
or any Restricted Subsidiary, as the case may be, Incurred in
connection with such refinancing; provided, however, that (A)
Indebtedness the proceeds of which are used to refinance the 11-1/2%
Notes or Indebtedness which is pari passu with or subordinate in right
of payment to the 11-1/2% Notes shall only be permitted if (1) in the
case of the refinancing of the 11-1/2% Notes or Indebtedness which is
pari passu with the 11-1/2% Notes, the refinancing Indebtedness is
Incurred by the Company and made pari passu with the 11-1/2% Notes or
subordinated to the 11-1/2% Notes, and (2) in the case of any
refinancing of Indebtedness which is subordinated to the 11-1/2% Notes,
the refinancing Indebtedness is Incurred by the Company and is
subordinated to the 11-1/2% Notes to the same extent as the
Indebtedness being refinanced; (B) the refinancing Indebtedness by its
terms, or by the terms of any agreement or instrument pursuant to which
such Indebtedness is issued, (1) provides that the Weighted Average
Life to Maturity of such refinancing Indebtedness at the time such
refinancing Indebtedness is Incurred is equal to or greater than the
lesser of the Weighted Average Life to Maturity of either the 11-1/2%
Notes or the Indebtedness being refinanced and (2) does not permit
redemption or other retirement (including pursuant to an offer to
purchase) of such debt at the option of the holder thereof prior to the
earlier of the Stated Maturity of the 11-1/2% Notes and the final
stated maturity of the Indebtedness being refinanced, other than a
redemption or other retirement at the option of the holder of such
Indebtedness (including pursuant to an offer to purchase) which is
conditioned upon provisions substantially similar to those described in
Sections 5.12 and 5.14 hereof; and (C) in the case of any refinancing
of Indebtedness Incurred by the Company, the refinancing Indebtedness
may be Incurred only by the Company, and in the case of any refinancing
of Indebtedness
<PAGE>
27
may be Incurred only by such Restricted Subsidiary or the
Company; provided, further, that Indebtedness Incurred pursuant to this
clause (vi) may not be Incurred more than 60 days prior to the
application of the proceeds to repay the Indebtedness to be refinanced;
(vii) Indebtedness consisting of (A) Guarantees by the Company
or any Restricted Subsidiary of Indebtedness Incurred by a Restricted
Subsidiary without violation of the Indenture, (B) Guarantees by any
Restricted Subsidiary (in addition to Guarantees permitted by clause
(i) above) of Senior Indebtedness Incurred by the Company (so long as
such Restricted Subsidiary could have Incurred such Indebtedness
directly without violation of the Indenture) without violation of the
Indenture, (C) Guarantees by any Restricted Subsidiary of Indebtedness
of any of its Restricted Subsidiaries Incurred without violation of the
Indenture; provided, however, that a Guarantee under this clause (C) of
Indebtedness owed by a Restricted Subsidiary that is not a Wholly Owned
Subsidiary of the Company shall be permitted by this clause (C) only if
no Affiliate of the Company (other than a Wholly Owned Subsidiary)
holds Capital Stock in such Restricted Subsidiary and (D) Guarantees by
any Restricted Subsidiary of Senior Subordinated Indebtedness of the
Company so long as such Restricted Subsidiary provides an equal (or
superior) and ratable Guarantee for the benefit of the Holders of the
11-1/2% Notes;
(viii) Indebtedness of the Company or any Restricted
Subsidiary represented by Capitalized Lease Obligations, rental
obligations described in clause (viii) of the definition of
"Indebtedness", mortgage financings or other purchase money obligations
or obligations under other financing transactions relating to capital
expenditures, in each case Incurred for the purpose of financing all or
any part of the purchase price or cost of construction or improvement
of property used in a Related Business ("Capital Spending") and
Incurred no later than 270 days after the date of such acquisition or
the date of completion of such construction or improvement, or
Indebtedness Incurred to renew, extend, refinance or refund any such
Indebtedness then outstanding; provided further, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause
(viii) (other than Indebtedness Incurred to refinance other
Indebtedness) at any time during a single fiscal year shall not exceed
40% of the total Capital Spending of the Company and its Restricted
Subsidiaries made during the period of the most recently completed four
consecutive fiscal quarters prior to the date of such Incurrence;
(ix) Indebtedness of any Restricted Subsidiary Incurred by a
Person prior to the time (A) such Person became a Restricted
Subsidiary, (B) such Person merged into or consolidated with a
Restricted Subsidiary or (C) another
<PAGE>
28
Restricted Subsidiary merged into or consolidated with such
Person (in a transaction in which such Person became a Restricted
Subsidiary), which Indebtedness was not Incurred in anticipation of
such transaction and was outstanding prior to such transaction;
provided, however, that to the extent the principal amount of such
Indebtedness in any single transaction or series of related
transactions exceeds $10 million at the time such Restricted Subsidiary
is acquired by the Company, the Company would have been able to Incur
$1.00 of additional Indebtedness pursuant to paragraph (a) above after
giving effect to the Incurrence of such Indebtedness pursuant to this
clause;
(x) (A) Indebtedness of any Foreign Subsidiary Incurred for
working capital purposes if, at the time of Incurrence of such
Indebtedness, and after giving effect thereto, the aggregate principal
amount of all Indebtedness of such Foreign Subsidiary Incurred pursuant
to this clause (A) and then outstanding does not exceed the amount (the
"Borrowing Base") equal to the sum of (x) 80% of the consolidated book
value of the accounts receivable of such Foreign Subsidiary and (y) 60%
of the consolidated book value of the inventories of such Foreign
Subsidiary; provided, however, that at the time such Indebtedness is
Incurred, the Company would have been able to Incur $1.00 of additional
Indebtedness pursuant to paragraph (a) above after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (A); and (B)
Indebtedness consisting of working capital financing of any Foreign
Subsidiary, if at the time such Indebtedness is Incurred the Company
would not be able to Incur $1.00 of additional Indebtedness pursuant to
paragraph (a) above after giving effect to the Incurrence of such
Indebtedness, in an aggregate principal amount which does not exceed
such Foreign Subsidiary's Borrowing Base and which, together with all
other Indebtedness Incurred by Foreign Subsidiaries pursuant to this
clause (B) and then outstanding, has an aggregate principal amount not
in excess of $25 million;
(xi) Indebtedness of any Restricted Subsidiary in an aggregate
principal amount which, together with any other Indebtedness Incurred
pursuant to this clause (xi) and then outstanding, does not exceed the
sum of $100 million plus 3% of the Company's Consolidated Assets as of
the date of such Incurrence; provided, however, that at the time such
Indebtedness is Incurred, the Company would have been able to Incur
$1.00 of additional Indebtedness pursuant to paragraph (a) above after
giving effect to the Incurrence of such Indebtedness pursuant to this
clause (xi); and
(xii) Indebtedness of the Company, in addition to any
Indebtedness Incurred pursuant to clauses (i) through (xi) above,
which, together with any
<PAGE>
29
other Indebtedness Incurred pursuant to this clause (xii) and then
outstanding, has an aggregate principal amount not in excess of $50
million.
(c) For purposes of determining compliance with this Section
5.07, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described herein, the Company, in its sole
discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(ii) an item of Indebtedness may be divided and classified in more than one of
the types of Indebtedness described herein.
(d) The Guarantor may not Incur any Indebtedness; provided,
however, that the foregoing shall not prohibit the Incurrence of any of the
following Indebtedness: (i) Guarantees of Indebtedness of the Company or any
Restricted Subsidiary Incurred under the Credit Agreement or otherwise
without violation of the Indenture; provided, however, that such Guarantees do
not guarantee (A) any Subordinated Indebtedness except on a subordinated basis
or (B) any Senior Subordinated Indebtedness on a senior basis; and (ii)
Indebtedness owing to and held by the Company or any Wholly Owned Subsidiary of
the Guarantor; provided, however, that any subsequent issuance or transfer of
any Capital Stock or any other event which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary of the Guarantor or any
subsequent transfer of any such Indebtedness (except to the Guarantor or to a
Wholly Owned Subsidiary of the Guarantor) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the Guarantor
SECTION 5.08. Limitation on Ranking of Certain Indebtedness.
The Company may not Incur any Indebtedness which by its terms is both (i)
subordinate in right of payment to any Senior Indebtedness and (ii) senior in
right of payment to the 11-1/2% Notes (it being understood that Indebtedness
shall not be deemed subordinate in right of payment to other Indebtedness solely
by reason of such other Indebtedness having the benefit of a security interest
in property of the Company).
SECTION 5.09. Limitation on Liens Securing Subordinated
Indebtedness. The Company may not, and may not permit any Restricted Subsidiary
to, directly or indirectly, Incur or suffer to exist any Lien on or with respect
to any property or assets now owned or hereafter acquired to secure any
Indebtedness of the Company that is expressly by its terms subordinate or junior
in right of payment to any other Indebtedness of the Company without making, or
causing such Subsidiary to make, effective provision for securing the 11-1/2%
Notes (x) equally and ratably with such Indebtedness as to such property or
assets for so long as such Indebtedness shall be so secured or (y) in the event
such Indebtedness is subordinate in right of payment
<PAGE>
30
to the 11-1/2% Notes, prior to such Indebtedness as to such property or assets
for so long as such Indebtedness shall be so secured.
SECTION 5.10. Limitation on Restricted Payments and Restricted
Investments. (a) Neither the Company nor the Guarantor may, nor may any
Restricted Subsidiary be permitted to, directly or indirectly, (i) declare or
pay any dividend or make any distribution on or in respect of the Capital Stock
of the Company or the Guarantor (including any payment in connection with any
merger or consolidation involving the Company or the Guarantor) except dividends
or distributions payable solely in Capital Stock of the Company, the Guarantor
or such Restricted Subsidiary (other than Redeemable Stock), (ii) purchase,
redeem or otherwise retire or acquire for value any Capital Stock (including any
option or warrant to purchase Capital Stock) of the Company or the Guarantor or
any Capital Stock of a Restricted Subsidiary held by an Affiliate of the Company
(other than another Restricted Subsidiary), (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment any Indebtedness of the
Company which is subordinate in right of payment to the 11-1/2% Notes (other
than the purchase, repurchase or other acquisition of Subordinated Indebtedness
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition),
or (iv) make any Investment in any Person (other than Permitted Investments)
(each of clauses (i) through (iv) being a "Restricted Payment") if: (a) an Event
of Default, or an event that with the passing of time or the giving of notice,
or both, would constitute an Event of Default, shall have occurred and is
continuing or would result from such Restricted Payment, or (b) after giving pro
forma effect to such Restricted Payment as if such Restricted Payment had been
made at the beginning of the applicable four-fiscal-quarter period, the Company
could not Incur at least $1.00 of additional Indebtedness pursuant to Section
5.07(a), or (c) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from the Issue Date exceeds the sum of: (1) 50% of
cumulative Consolidated Net Income (or, in the case Consolidated Net Income
shall be negative, less 100% of such deficit) of the Company since the beginning
of the fiscal quarter during which the 11-1/2% Notes were originally issued
through the last day of the last fiscal quarter ending immediately preceding the
date of such Restricted Payment for which quarterly or annual financial
statements are available (taken as a single accounting period); plus (2) 100% of
the aggregate net proceeds received by the Company after the Issue Date,
including the fair market value of property other than cash (determined in good
faith by the Board of Directors as evidenced by a resolution of the Board of
Directors filed with the Trustee), from contributions of capital from the
Guarantor from the issuance and sale (other than to a Subsidiary of the
Guarantor or the Company) of Capital Stock (other than Redeemable Stock) of the
Guarantor or options, warrants or other rights to acquire Capital Stock (other
than Redeemable Stock) of the Guarantor or the issuance and sale (other than to
a Subsidiary of the Guarantor or the Company) of Capital Stock (other than
Redeemable Stock) of the Company or options, warrants or other rights to acquire
Capital Stock (other than Redeemable
<PAGE>
31
Stock) of the Guarantor or the issuance and sale (other than to a Subsidiaryof
the Guarantor or the Company) of Capital Stock (other than Redeemable Stock)of
the Company or options, warrants or other rights to acquire Capital Stock(other
than Redeemable Stock) of the Company, provided that any such net proceeds
received, directly or indirectly, by the Company from an employee stock
ownership plan financed by loans from the Guarantor, the Company or a Subsidiary
of the Company shall be included only to the extent such loans have been repaid
with cash on or prior to the date of determination; plus (3) the amount by which
Indebtedness of the Company or its Restricted Subsidiaries is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary) subsequent to the Issue Date of any Indebtedness of the Company or
its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other
than Redeemable Stock) of the Company or the Guarantor (less the amount of any
cash or other property (other than such Capital Stock) distributed by the
Company or any Restricted Subsidiary upon such conversion or exchange); plus (4)
to the extent not included in Consolidated Net Income, the net reduction
(received by the Company or any Restricted Subsidiary in cash) in Investments
(other than Permitted Investments) made by the Company and its Restricted
Subsidiaries since the Issue Date (including if such reduction occurs by reason
of the return of equity capital, the repayment of the principal of loans or
advances or the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries), not to exceed, in the case of any Investments in any Person, the
amount of Investments (other than Permitted Investments) made by the Company and
its Restricted Subsidiaries in such Person since the Issue Date.
(b) So long as no Event of Default, or event that with the
passing of time or the giving of notice, or both, would constitute an Event of
Default, shall have occurred and is continuing or would result therefrom (except
as to clauses (ii) through (v) below), the foregoing shall not prohibit:
(i) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this Section 5.10;
(ii) the purchase or redemption of Subordinated Indebtedness
made by the exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company Incurred pursuant to
Section 5.07(a) or (b)(vi) hereof or in exchange for or out of the net
proceeds of the substantially concurrent sale (other than from or to a
Subsidiary of the Company or from or to an employee stock ownership
plan financed by loans from the Guarantor, the Company or a Subsidiary
of the Company) of shares of Capital Stock (other than Redeemable
Stock) of the Company or the Guarantor, to the extent the net cash
proceeds thereof are paid to the Company as a capital contribution,
<PAGE>
32
provided that the amount of such purchase or redemption and the amount
of net proceeds from such exchange or sale shall be excluded from the
calculation of the amount available for Restricted Payments pursuant to
Section 5.10(a);
(iii) the purchase, redemption, acquisition or retirement of
any shares of Capital Stock of the Company or the Guarantor solely in
exchange for or out of the net proceeds of the substantially concurrent
sale (other than from or to a Subsidiary of the Company or from or to
an employee stock ownership plan financed by loans from the Guarantor,
the Company or a Subsidiary of the Company) of shares of Capital Stock
(other than Redeemable Stock) of the Company or the Guarantor, to the
extent the net cash proceeds thereof are received by the Company or are
paid to the Company by the Guarantor as a capital contribution,
provided that the amount of such purchase, redemption, acquisition or
retirement and the amount of net proceeds from such exchange or sale
shall be excluded from the calculation of the amount available for
Restricted Payments pursuant to Section 5.10(a);
(iv) the purchase or redemption of any Indebtedness from Net
Available Proceeds to the extent permitted by Section 5.12 hereof,
provided that such purchase or redemption shall be excluded from the
calculation of the amount available for Restricted Payments pursuant to
Section 5.10(a);
(v) the purchase or redemption of any Indebtedness following a
Change of Control pursuant to provisions applicable to such
Indebtedness substantially similar to those described in Section 5.14
hereof after the Company shall have complied with the provisions of
Section 5.14 hereof, including payment of the applicable Purchase
Price;
(vi) the purchase, redemption, acquisition or retirement of
Capital Stock of the Guarantor from full-time employees, former
full-time employees, directors, or former directors of the Guarantor,
the Company or any of its Subsidiaries pursuant to the terms of
agreements (including employment agreements) or plans approved by the
Board of Directors under which such persons purchase or sell or are
granted the option to purchase such shares of Capital Stock to the
extent that such payments do not exceed $5 million in any fiscal year
which, to the extent not used in any fiscal year, may be carried
forward to the next succeeding fiscal year, provided that the aggregate
amount of such payments that may be made pursuant to this clause (vi)
may not exceed $25 million;
(vii) dividends or other Restricted Payments (including tax
sharing payments) to the Guarantor to the extent used by the Guarantor
to pay its
<PAGE>
33
operating and administrative expenses incurred in the ordinary course
of its business, including directors' fees, legal and audit expenses,
listing fees, judgments, awards or settlements payable by the Guarantor
arising from a Related Business or the Guarantor's status as a public
company, Commission compliance expenses and corporate franchise and
other taxes; provided that such dividends or payments shall be excluded
from the calculation of the amount available for Restricted Payments
pursuant to Section 5.10(a);
(viii) the dividend to the Guarantor for the purpose of
enabling it to make a distribution to its stockholders of the Capital
Stock of Wallcoverings substantially in the manner described in the
Prospectus Supplement, provided that to the extent the amount (the "Net
Investment") equal to (a) the aggregate amount of all Investments made
by the Company, directly or indirectly, in Wallcoverings since the
Issue Date less (b) the aggregate amount of dividends paid, repayments
of loans or advances or other transfers of assets (valued at their fair
market value, as determined in good faith by the Board of Directors)
made, directly or indirectly, to the Company from Wallcoverings since
the Issue Date, exceeds $75 million, then the distribution described in
this clause (viii) shall be permitted only to the extent that the
Company at such time is permitted to make a Restricted Payment pursuant
to Section 5.10(a) in an amount equal to the excess of such Net
Investment over $75 million; provided further, however, that no part of
the value of such distribution (other than the amount of Net Investment
in excess of $50 million) shall be included in the calculation of the
amount available for Restricted Payments pursuant to Section 5.10(a);
(ix) the dividend to the Guarantor for the purpose of enabling
it to make a dividend or distribution to its stockholders of an amount
equal to (A) the Net Available Proceeds (after repayment of all
intercompany Indebtedness owed by Wallcoverings) from the sale or other
disposition of Wallcoverings less (B) the amount of any tax savings
generated by the use of net operating losses or other tax assets in
connection with such sale or other disposition; provided that no
portion of such dividend or distribution (other than the amount of Net
Investment in Wallcoverings in excess of $50 million) shall be included
in the calculation of the amount available for Restricted Payments
pursuant to Section 5.10(a);
(x) Restricted Payments to the Guarantor, to the extent used
by the Guarantor within 30 days of such payment, to pay dividends in
respect of the Capital Stock of the Guarantor or to purchase or
otherwise acquire any Capital Stock of the Guarantor to the extent that
such dividends, purchases and other
<PAGE>
34
acquisitions do not exceed $10 million in any fiscal year or $20
million in the aggregate; and
(xi) Restricted Payments by the Guarantor to the extent
dividends are otherwise permitted to be, and are actually, made
pursuant to this Section 5.10 to the Guarantor from the Company;
provided that such Restricted Payments made by the Guarantor shall be
excluded from the calculation of the amount available for Restricted
Payments pursuant to Section 5.10(a).
(c) Any payment made pursuant to clause (i), (v), (vi) or (x)
of Section 5.10(b) shall, without duplication, be a Restricted Payment for
purposes of calculating aggregate Restricted Payments pursuant to Section
5.10(a).
SECTION 5.11. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries. The Company may not, and may not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Company (i) to pay dividends (in
cash or otherwise) or make any other distributions in respect of its Capital
Stock owned by the Company or any other Restricted Subsidiary or pay any
Indebtedness or other obligation owed to the Company or any other Restricted
Subsidiary; (ii) to make loans or advances to the Company or any other
Restricted Subsidiary; or (iii) to transfer any of its property or assets to the
Company or any other Restricted Subsidiary. Notwithstanding the foregoing, the
Company may, and may permit any Restricted Subsidiary to, create or otherwise
cause or suffer to exist or become effective any such encumbrance or restriction
(A) pursuant to any agreement in effect on the Issue Date (including the Bank
Credit Facilities and the Permitted Receivables Financing Facility); (B)
pursuant to an agreement relating to any Indebtedness Incurred by a Person
(other than a Subsidiary of the Company that is a Subsidiary of the Company on
the Issue Date or any Subsidiary carrying on any of the businesses of any such
Subsidiary) prior to the date on which such Person became a Subsidiary of the
Company and outstanding on such date and not Incurred in anticipation of
becoming a Subsidiary, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person so
acquired; (C) pursuant to an agreement effecting a renewal, refunding or
extension of the Permitted Receivables Financing Facility or of Indebtedness
Incurred pursuant to an agreement referred to in clause (A) or (B) above or this
clause (C), provided, however, that the provisions contained in such renewal,
refunding or extension agreement relating to such encumbrance or restriction are
not, in the aggregate, more restrictive in any material respect than the
provisions contained in the agreement the subject thereof, as determined in good
faith by and in the reasonable judgment of the Board of Directors and evidenced
by a resolution of the Board of Directors filed with the Trustee; (D) in the
case of
<PAGE>
35
clause (iii) above, restrictions contained in any mortgage or security agreement
(including a capital lease) securing Indebtedness of a Subsidiary otherwise
permitted under the Indenture, but only to the extent such restrictions restrict
the transfer of the property subject to such mortgage or security agreement; (E)
in the case of clause (iii) above, customary nonassignment provisions entered
into in the ordinary course of business consistent with past practice in leases
and other contracts to the extent such provisions restrict the transfer or
subletting of any such lease or the assignment of rights under such contract;
(F) any restriction with respect to a Subsidiary of the Company imposed pursuant
to an agreement which has been entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Subsidiary, provided
that consummation of such transaction would not result in an Event of Default or
an event that, with the passing of time or the giving of notice or both, would
constitute an Event of Default, that such restriction terminates if such
transaction is closed or abandoned and that the closing or abandonment of such
transaction occurs within one year of the date such agreement was entered into;
or (G) any encumbrance or restriction with respect to a Foreign Subsidiary
pursuant to an agreement relating to Indebtedness Incurred by such Foreign
Subsidiary which is permitted under Section 5.07(b)(x) hereof.
SECTION 5.12. Limitation on Asset Dispositions. The Company
may not, and may not permit any Restricted Subsidiary to, make any Asset
Disposition in one or more related transactions unless: (i) the Company or the
Restricted Subsidiary, as the case may be, receives consideration for such
disposition at least equal to the fair market value for the assets sold or
disposed of as determined by the Board of Directors in good faith and evidenced
by a resolution of the Board of Directors filed with the Trustee; (ii) at least
75% of the consideration for such disposition consists of cash or Cash
Equivalents or the assumption of Indebtedness of the Company or any Restricted
Subsidiary (other than Indebtedness that is subordinated to the 11-1/2% Notes)
relating to such assets and release of the Company and its Restricted
Subsidiaries from all liability on the Indebtedness assumed; and (iii) all Net
Available Proceeds, less any amounts invested within 360 days of such
disposition in a Related Business, are applied within 360 days of such
disposition (1) first, to the permanent repayment or reduction of Senior
Indebtedness then outstanding under any agreements or instruments which would
require such application or prohibit payments pursuant to clause (2) following,
and to the extent the Company elects, any other Senior Indebtedness then
outstanding, (2) second, to the extent any such amounts remain after application
in accordance with clause (1) above, to make an Offer to Purchase outstanding
11-1/2% Notes at 100% of their principal amount plus accrued interest to the
date of purchase and, to the extent the Company elects or is otherwise required
by the terms thereof, to make an offer to purchase any other Indebtedness of the
Company that is pari passu with the 11-1/2% Notes at a price no greater than
100% of the principal amount thereof plus accrued interest to the date of
purchase, (3) third, to
<PAGE>
36
the extent any such amounts remain after application in accordance with clauses
(1) and (2) above, to the repayment of other Indebtedness of the Guarantor, the
Company or Indebtedness of a Subsidiary of the Company, and (4) fourth, to the
extent any such amounts remain after application in accordance with clauses (1),
(2) and (3) above, to any other use as determined by the Company which is not
otherwise prohibited by the Indenture. For purposes of the preceding sentence,
in the event of a sale of Wallcoverings, the term "Net Available Proceeds" shall
mean only an amount equal to the tax savings generated by the use of net
operating losses or other tax assets in connection with such sale. The Company
shall not be required to make an offer for 11-1/2% Notes pursuant to this
Section 5.12 if the Net Available Proceeds less invested amounts pursuant to
clause (iii) above available therefor (after application of the proceeds as
provided in clause (1)) are less than $10 million for any particular Asset
Disposition (which lesser amounts shall be carried forward for purposes of
determining whether an Offer to Purchase is required with respect to the Net
Available Proceeds from any subsequent Asset Disposition). The Company may apply
as a credit in satisfaction of all or any part of the Company's obligation to
make an Offer to Purchase 11-1/2% Notes pursuant to clause (2) above the
aggregate principal amount of 11-1/2% Notes purchased by the Company in
open-market transactions (i.e., excluding 11-1/2% Notes optionally redeemed, or
required to be purchased by the Company, pursuant to the terms of the Indenture)
within the previous 24 consecutive months.
SECTION 5.13. Limitation on Transactions with Affiliates and
Related Persons. (a) The Company may not, and may not permit any Restricted
Subsidiary to, enter into any transaction (or series of related transactions)
with an Affiliate or Related Person of the Company (other than the Guarantor,
the Company or any Restricted Subsidiary), including any Investment, either
directly or indirectly, unless such transaction is on terms no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate or
Related Person; provided, however, that transactions with a Restricted
Subsidiary that is not a Wholly Owned Subsidiary of the Company shall be subject
to this Section 5.13(a) unless no Affiliate of the Company (other than a Wholly
Owned Subsidiary) holds Capital Stock in such Restricted Subsidiary. For any
transaction that involves in excess of $1,000,000, a majority of the
disinterested members of the Board of Directors shall determine that the
transaction satisfies the above criteria and shall evidence such a determination
by a Board Resolution. For any transaction that involves in excess of
$25,000,000, the Company shall also obtain an opinion from a nationally
recognized independent investment banking firm or other expert with experience
in evaluating or appraising the terms and conditions of the type of transaction
(or series of related transactions) for which the opinion is required stating in
substance that such transaction (or series of related transactions) is on terms
no less favorable to the Company or such Restricted
<PAGE>
37
Subsidiary than those that could be obtained in a comparable arm's-length
transaction with an entity that is not an Affiliate or Related Person of the
Company (or on terms that are otherwise fair to the Company or such Restricted
Subsidiary from a financial point of view), which shall be deemed to satisfy the
requirement in the first sentence of this Section 5.13(a).
(b) The provisions of Section 5.13(a) shall not apply to: (i)
any Permitted Investment or any Restricted Payment permitted to be paid pursuant
to Section 5.10 above; (ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment, compensation or indemnification arrangements, stock options and
stock ownership plans in the ordinary course of business or approved by the
Board of Directors; (iii) loans or advances to employees, the payment of fees
and indemnities to directors, officers and full-time employees and employment
agreements entered into in the ordinary course of business; (iv) monitoring fees
paid to Blackstone Partners and WP Partners not in excess of $2 million in the
aggregate in any fiscal year; (v) payments pursuant to the Tax Sharing
Agreement; (vi) any management, service, purchase, supply or similar agreement
relating to the operations of a Related Business entered into in the ordinary
course of the Company's business between the Company or any Restricted
Subsidiary and any Unrestricted Subsidiary or any C&A Co. Subsidiary, in each
case primarily engaged in a Related Business, so long as any such agreement is
on terms no less favorable to the Company than those that could be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate or a
Related Person and (vii) corporate service agreements, tax sharing agreements
and other agreements customary in connection with spin-off transactions entered
into between the Company or any Restricted Subsidiary and Wallcoverings
following the distribution of the Capital Stock of Wallcoverings to the
stockholders of the Guarantor.
SECTION 5.14. Change of Control. Within 30 days of the
occurrence of a Change of Control, unless the Company theretofore has mailed a
redemption notice with respect to all of the Outstanding 11-1/2% Notes, the
Company shall be required to make an Offer to Purchase all Outstanding 11-1/2%
Notes at a purchase price equal to 101% of their principal amount plus accrued
interest to the date of purchase. A "Change in Control" shall be deemed to have
occurred if (i) (a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 35% of the total voting
power of the Voting Stock of the Guarantor and (b) the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of the Guarantor
than such other person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the Board
of
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38
Directors of the Guarantor (for the purposes of this clause (i), such other
person shall be deemed to beneficially own any Voting Stock of a corporation
(the "specified corporation") held by another corporation (the "parent
corporation"), if such other person beneficially owns, directly or indirectly,
more than 35% of the voting power of the Voting Stock of such parent corporation
and the Permitted Holders beneficially own, directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the board
of directors of such parent corporation); or (ii) during any period of two
consecutive years (or, in the case this event occurs within the first two years
after the Issue Date, such shorter period as shall have begun on such date),
individuals who at the beginning of such period constituted the Board of
Directors of the Guarantor or the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Guarantor or the Company was approved by a vote of 66 2/3%
of the directors of the Guarantor or the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Guarantor or the Company then in
office. The term "Permitted Holder" shall mean Blackstone Partners, Blackstone
Family Investment Partnership I L.P., Blackstone Advisory Directors Partnership
L.P. and Blackstone Capital Company II, L.L.C. and any of their Affiliates (the
"Blackstone Entities") and Wasserstein/C&A Holdings, L.L.C. and any of its
Affiliates ("Wasserstein Holdings"). For purposes of clause (b) of this Section
5.14, the term "Permitted Holders" shall be deemed to include any other holder
or holders of shares of the Guarantor having ordinary voting power if any
Blackstone Entity or Wasserstein Holdings shall hold the irrevocable general
proxy of each such holder in respect of the shares held by such holder.
SECTION 5.15. Unrestricted Subsidiaries. The Company may
designate any Subsidiary of the Company to be an "Unrestricted Subsidiary" as
provided in this Section 5.15 in which event such Subsidiary and each other
Person that is then or thereafter becomes a Subsidiary of such Subsidiary shall
be deemed to be an Unrestricted Subsidiary. "Unrestricted Subsidiary" means (1)
any Subsidiary designated as such by the Board of Directors as set forth in this
Section 5.15 and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary,
provided that either (A) the Subsidiary to be so designated has total assets of
$1,000 or less or (B) if such Subsidiary has assets greater than $1,000, the
Investment resulting from such designation would be
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39
permitted either as a Permitted Investment or in compliance with Section 5.10
hereof. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (x) the Company could Incur $1.00 of additional Indebtedness
under Section 5.07(a) hereof and (y) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with this Section 5.15.
D. Provisions Supplemental to Article VI of the Indenture.
Article VI of the Indenture is hereby supplemented with
respect to the 11-1/2% Notes by deleting Section 6.04 and substituting the
following therefor:
SECTION 6.04. Provision of Certain Information. Whether or not
the Guarantor or the Company is required to be subject to Section 13(a) or 15(d)
of the Exchange Act, or any successor provision thereto, the Guarantor or the
Company shall file with the Commission the annual reports, quarterly reports and
other documents which the Guarantor or the Company would have been required to
file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provision thereto if the Guarantor or the Company were so required,
such documents to be filed with the Commission on or prior to the respective
dates (the "Required Filing Dates") by which the Guarantor or the Company would
have been required so to file such documents if the Guarantor or the Company
were so required. The Guarantor or the Company shall also in any event (i)
within 15 days of each Required Filing Date (a) transmit by mail to all Holders
of 11-1/2% Notes, as their names and addresses appear in the Security Register,
without cost to such Holders of 11-1/2% Notes, and (b) file with the Trustee,
copies of the annual reports, quarterly reports and other documents which the
Guarantor or the Company files with the Commission pursuant to such Section
13(a) or 15(d) or any successor provision thereto or would have been required to
file with the Commission pursuant to such Section 13(a) or 15(d) or any
successor provisions thereto if the Guarantor or the Company were required to be
subject to such Sections and (ii) if filing such documents by the Guarantor or
the Company with the Commission is not permitted under the Exchange Act,
promptly upon written request of a Holder of 11-1/2% Notes supply copies of such
documents to any prospective Holder of 11-1/2% Notes.
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40
E. Provisions Supplemental to Article VII of the Indenture.
Article VII of the Indenture is hereby supplemented with
respect to the 11-1/2% Notes by deleting Sections 7.01 and 7.02 and substituting
the following therefor:
SECTION 7.01. Events of Default. "Event of Default", with
respect to the 11-1/2% Notes, wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of the principal of or premium, if
any, on any 11-1/2% Note at its Maturity, whether or not such payment
is prohibited by Article XIV hereof; or
(ii) default in the payment of any interest upon any 11-1/2%
Note as and when the same shall become due and payable, whether or not
such payment is prohibited by Article XIV hereof, and continuance of
such default for a period of 30 days; or
(iii) default in the payment of principal and interest on any
11-1/2% Note required to be purchased pursuant to an Offer to Purchase
as set forth in Section 5.12 or 5.14 hereof when due and payable,
whether or not such payment is prohibited by Article XIV hereof; or
(iv) failure on the part of the Company or the Guarantor to
perform or comply with the provisions of Section 10.01 hereof;
(v) failure on the part of the Company or the Guarantor duly
to observe or perform the covenants set forth in Section 5.07, 5.08,
5.09, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15 or 6.04 hereof and continuance
of such failure for a period of 30 days after the date on which written
notice of such failure, requiring the Company or the Guarantor to
remedy the same and stating that such notice is a "Notice of Default"
hereunder, shall have been given by registered mail to the Company and
the Guarantor by the Trustee, or to the Company, the Guarantor and the
Trustee by the holders of at least 25% in aggregate principal amount of
the 11-1/2% Notes at the time Outstanding; or
(vi) failure on the part of the Company or the Guarantor duly
to observe or perform any of the other covenants or agreements on its
part in the
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41
11-1/2% Notes or in this Indenture and continuance of such failure for
a period of 60 days after the date on which written notice of such
failure, requiring the Company or the Guarantor to remedy the same and
stating that such notice is a "Notice of Default" hereunder, shall have
been given by registered mail to the Company and the Guarantor by the
Trustee, or to the Company, the Guarantor and the Trustee by the
holders of at least 25% in aggregate principal amount of the 11-1/2%
Notes at the time Outstanding; or
(vii) default under the terms of any instrument or instruments
evidencing or securing Indebtedness for money borrowed by the Company
or any Significant Subsidiary having an outstanding principal amount of
$20 million individually or in the aggregate which default results in
the acceleration of the payment of such Indebtedness or constitutes the
failure to pay such indebtedness when due at final maturity after the
lapse of any applicable grace period; or
(viii) the Guarantee with respect to the 11-1/2% Notes shall
for any reason (other than as described in the second sentence of
Section 10.01(b)) cease to be, or shall be asserted in writing by the
Guarantor or the Company not to be, in full force and effect and
enforceable in accordance with its terms; or
(ix) the rendering of a final judgment or judgments (not
subject to appeal) against the Guarantor, the Company or any
Significant Subsidiary in an amount in excess of $20 million
(calculated net of any insurance available to pay such judgment) which
remains undischarged or unstayed for a period of 60 days after the date
on which the right to appeal has expired; or
(x) the entry of a decree or order by a court having
jurisdiction in the premises granting relief in respect of the Company
or the Guarantor or any Significant Subsidiary in an involuntary case
under the Federal Bankruptcy Code, adjudging the Company or the
Guarantor or such Significant Subsidiary a bankrupt, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or the
Guarantor or any Significant Subsidiary under any Bankruptcy Law, or
appointing a receiver, liquidator, custodian, assignee, trustee,
sequestrator (or other similar official) of the Company or the
Guarantor or any Significant Subsidiary, or of substantially all of its
properties, or ordering the winding up or liquidation of its affairs
under any such law, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
<PAGE>
42
(xi) the institution by the Company or the Guarantor or any
Significant Subsidiary of proceedings to be adjudicated a bankrupt, or
the consent of the Company or the Guarantor or any Significant
Subsidiary to the institution of bankruptcy proceedings against it, or
the filing by the Company or the Guarantor or any Significant
Subsidiary of a petition or answer or consent seeking reorganization or
relief under any Bankruptcy Law, or the consent by the Company or the
Guarantor or any Significant Subsidiary to the filing of any such
petition or to the appointment of a receiver, liquidator, custodian,
assignee, trustee, sequestrator (or other similar official) of the
Company or the Guarantor or any Significant Subsidiary, or of
substantially all of its properties under any such law.
SECTION 7.02. Acceleration of Maturity; Rescission and
Annulment. (a) If an Event of Default with respect to the 11-1/2% Notes, other
than an Event of Default described in Section 7.01(x) or (xi), occurs and is
continuing, then, and in every such case, the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding 11-1/2% Notes may declare the
principal of all the 11-1/2% Notes to be immediately due and payable, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration the same shall become immediately due and payable.
(b) At any time after such a declaration of acceleration with
respect to the 11-1/2% Notes has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in
principal amount of the Outstanding 11-1/2% Notes, by written notice to
the Company and the Trustee, may rescind and annul such declaration and
its consequences, and any Event of Default giving rise to such
declaration shall not be deemed to have occurred, if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on all the
11-1/2% Notes;
(B) the principal of and premium, if any, on any
11-1/2% Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
or rates prescribed therefor by the terms of the 11-1/2%
Notes;
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at the
rate or rates prescribed therefor by the terms of the 11-1/2%
Notes; and
<PAGE>
43
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, the Security
Registrar, any Paying Agent, and their agents and counsel and
all other amounts due the Trustee under Section 8.07; and
(ii) all other Events of Default with respect to the 11-1/2%
Notes, other than the nonpayment of the principal of 11-1/2% Notes
which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 7.13.
No such recession shall affect any subsequent default or impair any right
consequent thereon.
(c) If an Event of Default described in Section 7.01(x) or
(xi) occurs and is continuing with respect to the 11-1/2% Notes, then the
principal of all the 11-1/2% Notes shall become immediately due and payable
without further action by the Trustee or any Holder of 11-1/2% Notes.
F. Provisions Supplemental to Article IX of the Indenture.
Article IX of the Indenture is hereby supplemented with
respect to the 11-1/2% Notes by replacing the first paragraph of Section 9.02
with the following:
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding 11-1/2% Notes, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of 11-1/2% Notes; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding 11-1/2% Note so affected:
(i) change the Maturity of the principal of, or the Stated
Maturity of any installment of interest (or premium, if any) on, any
11-1/2% Note, or reduce the principal amount thereof or any premium
thereon or the rate of interest thereon or reduce the minimum rate of
interest thereon); or
(ii) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture or the consent of whose
Holders is required for any
<PAGE>
44
waiver (of compliance with certain provisions of this Indenture or of
certain defaults hereunder and their consequences) provided for in this
Indenture or reduce the requirements of Section 17.04 for a quorum; or
(iii) change the place or currency of payment of principal (or
premium) of, or interest on, any 11-1/2% Note; or
(iv) reduce the redemption premium of any 11-1/2% Note; or
(v) reduce the time before any 11-1/2% Note may be redeemed;
or
(vi) impair the right to institute suit for the enforcement of
any payment on or with respect to any 11-1/2% Note; or
(vii) modify any of the provisions of this Section or Section
7.13, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived; or
(viii) following the mailing of any Offer to Purchase, make
any change to any Offer to Purchase the 11-1/2% Notes required by
Section 5.12 or 5.14 hereof in a manner materially adverse to the
Holders of 11-1/2% Notes; or
(ix) make any change in Article Fourteen that adversely
affects the rights of any Holder under Article Fourteen in any material
respect.
G. Provisions Supplemental to Article X of the Indenture.
Article X of the Indenture is hereby supplemented with respect
to the 11-1/2% Notes by deleting such Article in its entirety and substituting
the following therefor:
SECTION 10.01. Mergers, Consolidations and Certain Sales of
Assets. (a) The Company may not (i) consolidate with or merge into any other
Person or permit any other Person to consolidate with or merge into the Company
or (ii) directly or indirectly, transfer, sell, lease or otherwise dispose of
the Company's assets substantially as an entirety to any Person, unless: (A) in
a transaction in which the Company does not survive or in which the Company
sells, leases or otherwise disposes of its assets substantially as an entirety,
the successor entity to the Company is organized under the laws of the United
States of America or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture executed and delivered to the
Trustee in form satisfactory to the Trustee, all of the Company's obligations
under the Indenture; (B) immediately before and after giving effect to such
<PAGE>
45
transaction and treating any Indebtedness which becomes an obligation of the
Company or a Subsidiary as a result of such transaction as having been Incurred
by the Company or such Subsidiary at the time of the transaction, no Event of
Default or event that with the passing of time or the giving of notice, or both,
would constitute an Event of Default shall have occurred and be continuing; (C)
immediately after giving effect to such transaction, the Consolidated Net Worth
of the Company (or other successor entity to the Company) is equal to or greater
than that of the Company immediately prior to the transaction; (D) immediately
after giving effect to such transaction and treating any Indebtedness which
becomes an obligation of the Company or a Subsidiary as a result of such
transaction as having been Incurred by the Company or such Subsidiary at the
time of such transaction, the Company (including any successor entity to the
Company) could Incur at least $1.00 of additional Indebtedness pursuant to
Section 5.07(a) hereof and (E) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental indenture
comply with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
(b) The Guarantor may not (i) consolidate with or merge into
any other Person or (ii) directly or indirectly, transfer, sell, lease or
otherwise dispose of the Guarantor's assets substantially as an entirety to any
Person, unless: (A) in a transaction in which the Guarantor does not survive or
in which the Guarantor sells or otherwise disposes of its assets substantially
as an entirety, the successor entity to the Guarantor is organized under the
laws of the United States of America or any state thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture executed and
delivered to the Trustee in form satisfactory to the Trustee, all of the
Guarantor's obligations under the Indenture; (B) immediately before and after
giving effect to such transaction and treating any Indebtedness which becomes an
obligation of the Guarantor at the time of the transaction as having been
Incurred by the Guarantor at the time of the transaction, no Event of Default or
event that with the passing of time or the giving of notice, or both, would
constitute an Event of Default shall have occurred and be continuing; and (C)
the Guarantor has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger, conveyance or
transfer and such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with. If a transaction described in this Section 10.01(b) occurs and
such transaction is also described in Section 10.01(a), the terms of Section
10.01(a) shall apply exclusively, and the Guarantee with respect to the 11-1/2%
Notes shall lapse without further action by any Person.
SECTION 10.02. Successor Corporation Substituted. In the event
of any transaction described in and complying with the conditions listed in
<PAGE>
46
Section 10.01(a) or 10.01(b), in which the Company or the Guarantor is not the
continuing corporation, the successor Person formed or remaining shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company or the Guarantor, as the case may be, and the Company or the Guarantor,
as the case may be, shall be released and discharged from all obligations and
covenants under the Indenture and any indenture supplemental thereto and the
11-1/2% Notes.
H. Provisions Supplemental to Article XI.
Article XI is hereby supplemented with respect to the 11-1/2%
Notes by deleting such Article in its entirety and substituting the following
therefor:
SECTION 11.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all Outstanding
11-1/2% Notes (other than 11-1/2% Notes replaced pursuant to Section 3.06) for
cancellation or (ii) all outstanding 11-1/2% Notes have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article Four hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
11-1/2% Notes, including interest thereon to maturity or such redemption date
(other than 11-1/2% Notes replaced pursuant to Section 3.06), and if in either
case the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 11.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.
(b) Subject to Sections 11.01(c) and 11.02, the Company at any
time may terminate (i) all its obligations under the 11-1/2% Notes and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16 and 6.04, Article
Fourteen, the Guarantor's obligations under Article Fifteen, the operation of
Sections 7.01(v), (vii), (viii), (ix), (x) and (xi) (but in the case of Sections
7.01(x) or (xi), with respect only to Significant Subsidiaries) and the
applicability of the conditions set forth in Section 10.01(a) (C) and (D)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the 11-1/2% Notes may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the 11-1/2% Notes may not be accelerated because of an Event of
Default specified in Sections 7.01(v),(vii), (viii), (ix), (x) or (xi) (but, in
the case of Sections 7.01(x) or
<PAGE>
47
(xi)), with respect only to Significant Subsidiaries) or because of the failure
of the Company to comply with Section 10.01(a)(C) or (D).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 3.05 and 3.06 shall survive until the 11-1/2% Notes have
been paid in full.
SECTION 11.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the 11-1/2% Notes to maturity or redemption, as the
case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the 11-1/2% Notes to maturity or redemption, as the
case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 7.01(x) or (xi) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company or the Guarantor;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the
48
<PAGE>
applicable Federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders will not recognize income,
gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not
occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such covenant defeasance and will be
subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant
defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the 11-1/2% Notes as
contemplated by this Article Eleven have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of 11-1/2% Notes at a future date
in accordance with Article Four.
SECTION 11.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article Eleven. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the 11-1/2% Notes.
Money and securities so held in trust are not subject to Article Fourteen.
SECTION 11.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to the money must look to the Company
for payment as general creditors.
SECTION 11.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
<PAGE>
49
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 11.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article Eleven by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the 11-1/2% Notes shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Eleven until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article Eleven; provided, however, that, if
the Company has made any payment of interest on or principal of any 11-1/2%
Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such 11-1/2% Notes to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
I. Counterparts.
This Supplement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all of which
shall together constitute but one and the same instrument.
J. Miscellaneous.
(a) Except as expressly supplemented by this Supplement, the
Indenture shall remain unchanged and in full force and effect.
(b) This Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof with respect to the 11-1/2% Notes.
(c) All references in the Indenture to any Section of the
Indenture shall be deemed, for purposes of the 11-1/2% Notes, to refer to such
Section of the Indenture as supplemented by the relevant provisions of this
Supplement.
<PAGE>
50
(d) This Supplement and the 11-1/2% Notes shall be construed
in accordance with and governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
COLLINS & AIKMAN PRODUCTS CO.,
by /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President and CFO
COLLINS & AIKMAN CORPORATION,
by /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President and CFO
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, Trustee,
by /s/ Karen E. Atkinson
Name: Karen E. Atkinson
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF GLOBAL SECURITY
COLLINS & AIKMAN PRODUCTS CO.
No. CUSIP No. 194832 AA 9
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO COLLINS & AIKMAN PRODUCTS
CO. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE HEREINAFTER
REFERENCED. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF SUCH
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
2
COLLINS & AIKMAN PRODUCTS CO.
Registered $200,000,000
No. CUSIP No. 194832 AA 9
COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation,
promises to pay CEDE & CO., or registered assigns, the principal sum of TWO
HUNDRED MILLION Dollars on April 15, 2006.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Additional provisions of this Security are set forth below.
Dated: COLLINS & AIKMAN PRODUCTS CO.
by
Executive Vice President
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of
the Securities of
the series designated
therein referred
to in the within-mentioned
Indenture.
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
by
Authorized Signatory
<PAGE>
3
COLLINS & AIKMAN PRODUCTS CO.
1. Interest.
Collins & Aikman Products Co., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay the principal
amount of and interest on this Security at the rate per annum shown above. The
Company will pay interest semiannually on April 15 and October 15 of each year.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or provided for or, if no interest has been paid, from
June 10, 1996. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment.
The Regular Record Date for any interest payment is the close
of business on April 1 or October 1, as the case may be, whether or not such
date is a Business Day, immediately preceding the Interest Payment Date on which
such interest is payable. The Company will pay interest on the Securities
(except Defaulted Interest (as herein defined)) to the persons who are
registered holders of Securities on the relevant Regular Record Date even if
Securities are cancelled after the Regular Record Date and on or before the
relevant Interest Payment Date. Holders must surrender Securities to the Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money. The Company may mail an interest check
to a Holder's registered address. Any interest which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of his having been such Holder and
shall be paid as provided in the Indenture referenced herein.
3. Paying Agent and Registrar.
Initially, First Union National Bank of North Carolina, a
national banking association, will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
<PAGE>
4
4. Indenture.
The Company issued the Securities under a Subordinated
Indenture dated as of June 1, 1996, between the Company and First Union National
Bank of North Carolina, a national banking association, as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of June
1, 1996 (collectively, as amended from time to time, the "Indenture"). The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Holders are referred to the Indenture and the Act for a statement of those
terms.
The Securities are general unsecured obligations of the
Company limited to $400,000,000 aggregate principal amount (subject to Sections
3.05, 3.06 and 4.07 of the Indenture). The Indenture imposes certain limitations
on (i) the Incurrence of Indebtedness by the Company or its Restricted
Subsidiaries or by the Guarantor, (ii) the ability of the Company or any of its
Restricted Subsidiaries to incur or suffer to exist any Lien on or with respect
to property or assets or to secure any Indebtedness of the Company, (iii) the
payment of dividends and other distributions on the Capital Stock of the Company
or the Guarantor, (iv) the purchase or redemption of Capital Stock of the
Company and the Guarantor and of certain Capital Stock of the Company's
Restricted Subsidiaries, (v) certain purchases or redemptions of Subordinated
Indebtedness of the Company or the Guarantor, (vi) certain Investments by the
Company, its Restricted Subsidiaries or the Guarantor, (vii) certain Asset
Dispositions by the Company and its Restricted Subsidiaries and (viii) the
business activities, investments and transactions by the Company and its
Restricted Subsidiaries with Affiliates. In addition, the Indenture limits the
ability of the Company and its Restricted Subsidiaries to restrict the ability
of any Restricted Subsidiary to pay dividends and other distributions on its
Capital Stock owned by, or pay any Indebtedness owed to, the Company or any
other Restricted Subsidiary. The limitations are subject to a number of
important qualifications and exceptions.
5. Optional Redemption.
Except as set forth in this paragraph 5, the Securities will
not be redeemable prior to April 15, 2001. On or after that date, and prior to
maturity, the Company may redeem the Securities in whole or in part at the
following redemption prices (expressed in percentages of principal amount), plus
accrued interest to but
<PAGE>
5
excluding the redemption date, if redeemed during the 12-month period beginning
on or after April 15 of the years set forth below:
Redemption
Year Price
2001.................................... 105.750%
2002.................................... 103.833%
2003.................................... 101.917%
2004 and thereafter .................... 100.000%
The Securities will be redeemable from time to time prior to
April 15, 2001 only in the event that on or before April 15, 1999 the Company
receives net cash proceeds from one or more Equity Offerings, in which case the
Company may, at its option, use all or a portion of any such net cash proceeds
to redeem the Securities, at a Redemption Price of 110% of the principal amount
of the Securities plus accrued interest to but excluding the date of redemption,
in a principal amount of at least $5 million and up to an aggregate principal
amount equal to 40% of the original principal amount of the Securities,
provided, however, that Securities in an aggregate principal amount equal to at
least 60% of the original principal amount of the Securities remain outstanding
after each such redemption. Any such redemption must occur within 120 days of
any such sale.
The Securities may also be redeemed as a whole at the option
of the Company upon the occurrence of a Change of Control, upon not less than 30
nor more than 60 days' prior notice (but in no event more than 180 days after
the occurrence of such Change of Control) mailed to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium at the time plus accrued but unpaid interest, if
any, to but excluding the date of redemption.
6. Notice of Redemption.
Notice of redemption must be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
<PAGE>
6
7. Subordination.
The indebtedness evidenced by the Securities and the Guarantee
is subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in cash of all Senior Indebtedness and
Senior Guarantor Indebtedness. Except to the extent provided in the
Indenture,neither the Company nor the Guarantor may directly or indirectly (nor
shall anydirect or indirect payment or distribution be made by or on behalf of
theCompany or the Guarantor in respect of the following) pay the principal
orpremium (if any) of or interest on the Securities and other payment
obligationsof the Company or the Guarantor in respect of the Securities, make
any deposit pursuant to Section 11.01 of the Indenture or repurchase, redeem or
otherwise retire any Securities if (i) any Senior Indebtedness and Senior
GuarantorIndebtedness is not paid in cash when due or (ii) any other default on
Senior Indebtedness and Senior Guarantor Indebtedness occurs and the maturity of
such Senior Indebtedness and Senior Guarantor Indebtedness is accelerated i
accordance with its terms. Each of the Company and the Guarantor agrees, and
each Holder by accepting a Security and the related Guarantee agrees, to th
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact forany and all
such purposes.
8. Put Provisions.
Within 30 days of the occurrence of a Change of Control,
unless the Company has mailed a redemption notice with respect to all
outstanding Securities, any Holder of Securities will have the right to causethe
Company to repurchase all or any part of the Securities of such Holder ata
repurchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued interest to the date of purchase as provided in, and
subject to the terms of, the Indenture.
9. Guarantee.
The Guarantor has irrevocably, fully and unconditionally
guaranteed on an unsecured senior subordinated basis the performance and
punctual payment when due, whether at stated maturity, by acceleration, by
redemption or otherwise, of all obligations of the Company under theIndenture
and this Security, whether for principal of or interest on th Securities, to the
extent provided in the Indenture. The Guarantor also agrees to pay, in addition
to the amount stated above, on an unsecured senior subordinated basis, any and
all expenses (including reasonable counsel fees and
<PAGE>
7
expenses) incurred
by the Trustee or the Holders in enforcing any rights under the Guarantee with
respect to the Guarantor. Such Guarantee, however, will be limited in amount to
an amount not to exceed the maximum amount that can be guaranteed by the
Guarantor without rendering the Guarantee, as it relates to the Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer.
10. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples thereof in book-entry form only.
A Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar or the Company may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar shall not be
required (i) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
selection of Securities to be redeemed and ending at the close of business on
the day of the mailing of the relevant notice of redemption of the Securities so
selected for redemption, or (ii) to register the transfer or exchange of the
Securities or portions thereof so selected for redemption.
11. Persons Deemed Owners.
The registered holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
13. Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and Indenture (and
in certain instances, the Guarantor's obligations under the Indenture) if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal, premium (if any) and interest on the Securities to
redemption or maturity, as the case may be.
<PAGE>
8
14. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any holder of Securities, the Company and the Trustee, at
any time and from time to time, may amend the Indenture to, among other things,
(i) evidence the succession of another corporation or person to the Company or
the Guarantor, as the case may be, in the Indenture and in the Securities, (ii)
evidence and provide for a successor Trustee, (iii) add to the covenants of the
Company or the Guarantor for the benefit of the holders of Securities or to
surrender any right or power conferred upon the Company or the Guarantor in the
Indenture, (iv) cure any ambiguity, correct or supplement any provision which
may be inconsistent or make any other provisions with respect to matters or
questions arising under the Indenture, provided the interests of the holders of
the Securities are not adversely affected in any material respect, (v) add any
additional Events of Default, (vi) add to or change provisions to permit or
facilitate the issuance of Securities convertible into other securities, (vii)
evidence any changes to corporate Trustee eligibility authorized by the Trust
Indenture Act of 1939, or (viii) add to or change or eliminate any provision of
the Indenture as necessary to comply with the Trust Indenture Act provided such
action does not adversely affect the interests of the holders of Securities of
any series in any material respect, or (ix) make any changes in the
subordination provision to limit or terminate the benefits available to holders
of Senior Indebtedness, Senior Guarantor Indebtedness, or, if applicable, Senior
Subordinated Indebtedness.
15. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default in
the payment of the principal of or premium, if any, on the Securities at
maturity, upon redemption pursuant to paragraph 5 hereof, by declaration of
acceleration or otherwise (whether or not such payment is prohibited by the
subordination provisions of the Indenture); (ii) default in the payment of any
interest upon any Security as and when the same shall become due and payable
(whether or not such payment is prohibited by the subordination provisions of
the Indenture), and continuance of such default for a period of 30 days; (iii)
default in the payment of principal and interest on any Security required to
purchased pursuant to an Offer to Purchase as set forth in certain provisions of
the Indenture when due and payable (whether or not such payment is prohibited by
the subordination provisions of the Indenture); (iv) failure on the part of the
Company or the Guarantor to perform or comply with other agreements and
covenants of the Indenture, in certain instances subject to notice or lapse of
time or both; (v) acceleration of payment under the terms of any instrument(s)
evidencing or securing Indebtedness for money borrowed by the Company or any
Significant Subsidiary
<PAGE>
9
having an outstanding principal amount of $20 million individually or in the
aggregate; (vi) the Guarantee with respect to the Securities shall for certain
reasons cease to be, or shall be asserted in writing by the Guarantor or the
Company not to be, in full force and effect and enforceable in accordance with
its terms; (vii) certain judgment(s) against the Guarantor, the Company or any
Significant Subsidiary in an amount in excess of $20 million which remains
undischarged or unstayed for a period of 60 days after the date on which the
right to appeal has expired; and (viii) certain events of bankruptcy or
insolvency with respect to the Company, the Guarantor or any Significant
Subsidiary;
If an Event of Default occurs and is continuing (other than
certain Events of Default contemplated in the Indenture), the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately by notice in writing to the
Company (or to the Trustee if given by the Holders). Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default without further action by the Trustee or any Holder of the
Securities.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations. Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power.
16. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company, any Guarantor or the Trustee shall not have any liability for any
obligations of the Company, such Guarantor or the Trustee, respectively, under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder waives and releases all such liability. The waivers and release are part
of the consideration for the issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the second page of this Security.
<PAGE>
10
18. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No representations
is made as to the accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Security in large type. Requests may be made to:
Collins & Aikman Products Co.
Address: 701 McCullough Drive
City, State: Charlotte, NC 28262
Attn: Treasurer
<PAGE>
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Security)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
(Please print name and address of transferee)
this Security, together with all right, title and interest herein, and does
hereby irrevocably constitute and appoint __________________ Attorney to
transfer this Security on the Security Register, with full power of
substitution.
Dated: _____________
- ------------------------------ ------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[ ] In connection with the Change of Control Offer made pursuant to
Section 5.14 of the Indenture, the undersigned hereby elects to have
[ ] the entire principal amount
[ ] $_____________ ($1,000 in principal amount or an integral
multiple thereof) principal amount of this Security
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or _________________ an amount in cash equal
to 101% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest thereon to the date of purchase.
[ ] In connection with an Asset Disposition made pursuant to Section 5.12
of the Indenture, the undersigned hereby elects to have
[ ] the entire principal amount
[ ] $____________ ($1,000 in principal amount or an integral
multiple thereof) principal amount of this Security
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or ______________ an amount in cash equal to
100% of the principal amount indicated in the preceding sentence, plus
accrued and unpaid interest thereon, if any, to the date of purchase.
Dated:___________
- ------------------------------ ------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Security in every particular, without alteration or any
change whatsoever.
<PAGE>
FORM OF GLOBAL SECURITY
COLLINS & AIKMAN PRODUCTS CO.
No. 2 CUSIP No. 194832 AA 9
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO COLLINS & AIKMAN PRODUCTS
CO. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE HEREINAFTER
REFERENCED. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF SUCH
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
2
COLLINS & AIKMAN PRODUCTS CO.
Registered $200,000,000
No. 2 CUSIP No. 194832 AA 9
COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation,
promises to pay CEDE & CO., or registered assigns, the principal sum of TWO
HUNDRED MILLION Dollars on April 15, 2006.
Interest Payment Dates: April 15 and October 15.
Record Dates: April 1 and October 1.
Additional provisions of this Security are set forth below.
Dated: COLLINS & AIKMAN PRODUCTS CO.
by
Executive Vice President
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of
the Securities of
the series designated
therein referred
to in the within-mentioned
Indenture.
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
by
Authorized Signatory
<PAGE>
3
COLLINS & AIKMAN PRODUCTS CO.
1. Interest.
Collins & Aikman Products Co., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to the principal
amount of and interest on this Security at the rate per annum shown above. The
Company will pay interest semiannually on April 15 and October 15 of each year.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or provided for or, if no interest has been paid, from
June 10, 1996. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment.
The Regular Record Date for any interest payment is the close
of business on April 1 or October 1, as the case may be, whether or not such
date is a Business Day, immediately preceding the Interest Payment Date on which
such interest is payable. The Company will pay interest on the Securities
(except Defaulted Interest (as herein defined)) to the persons who are
registered holders of Securities on the relevant Regular Record Date even if
Securities are cancelled after the Regular Record Date and on or before the
relevant Interest Payment Date. Holders must surrender Securities to the Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money. The Company may mail an interest check
to a Holder's registered address. Any interest which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of his having been such Holder and
shall be paid as provided in the Indenture referenced herein.
3. Paying Agent and Registrar.
Initially, First Union National Bank of North Carolina, a
national banking association, will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
<PAGE>
4
4. Indenture.
The Company issued the Securities under a Subordinated
Indenture dated as of June 1, 1996, between the Company and First Union National
Bank of North Carolina, a national banking association, as trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture dated as of June
1, 1996 (collectively, as amended from time to time, the "Indenture"). The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Holders are referred to the Indenture and the Act for a statement of those
terms.
The Securities are general unsecured obligations of the
Company limited to $400,000,000 aggregate principal amount (subject to Sections
3.05, 3.06 and 4.07 of the Indenture). The Indenture imposes certain limitations
on (i) the Incurrence of Indebtedness by the Company or its Restricted
Subsidiaries or by the Guarantor, (ii) the ability of the Company or any of its
Restricted Subsidiaries to incur or suffer to exist any Lien on or with respect
to property or assets or to secure any Indebtedness of the Company, (iii) the
payment of dividends and other distributions on the Capital Stock of the Company
or the Guarantor, (iv) the purchase or redemption of Capital Stock of the
Company and the Guarantor and of certain Capital Stock of the Company's
Restricted Subsidiaries, (v) certain purchases or redemptions of Subordinated
Indebtedness of the Company or the Guarantor, (vi) certain Investments by the
Company, its Restricted Subsidiaries or the Guarantor, (vii) certain Asset
Dispositions by the Company and its Restricted Subsidiaries and (viii) the
business activities, investments and transactions by the Company and its
Restricted Subsidiaries with Affiliates. In addition, the Indenture limits the
ability of the Company and its Restricted Subsidiaries to restrict the ability
of any Restricted Subsidiary to pay dividends and other distributions on its
Capital Stock owned by, or pay any Indebtedness owed to, the Company or any
other Restricted Subsidiary. The limitations are subject to a number of
important qualifications and exceptions.
5. Optional Redemption.
Except as set forth in this paragraph 5, the Securities will
not be redeemable prior to April 15, 2001. On or after that date, and prior to
maturity, the Company may redeem the Securities in whole or in part at the
following redemption prices (expressed in percentages of principal amount), plus
accrued interest to but
<PAGE>
5
excluding the redemption date, if redeemed during the 12-month period beginning
on or after April 15 of the years set forth below:
Redemption
Year Price
2001.................................. 105.750%
2002.................................. 103.833%
2003.................................. 101.917%
2004 and thereafter .................. 100.000%
The Securities will be redeemable from time to time prior to
April 15, 2001 only in the event that on or before April 15, 1999 the Company
receives net cash proceeds from one or more Equity Offerings, in which case the
Company may, at its option, use all or a portion of any such net cash proceeds
to redeem the Securities, at a Redemption Price of 110% of the principal amount
of the Securities plus accrued interest to but excluding the date of redemption,
in a principal amount of at least $5 million and up to an aggregate principal
amount equal to 40% of the original principal amount of the Securities,
provided, however, that Securities in an aggregate principal amount equal to at
least 60% of the original principal amount of the Securities remain outstanding
after each such redemption. Any such redemption must occur within 120 days of
any such sale.
The Securities may also be redeemed as a whole at the option
of the Company upon the occurrence of a Change of Control, upon not less than 30
nor more than 60 days' prior notice (but in no event more than 180 days after
the occurrence of such Change of Control) mailed to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium at the time plus accrued but unpaid interest, if
any, to but excluding the date of redemption.
6. Notice of Redemption.
Notice of redemption must be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
<PAGE>
6
7. Subordination.
The indebtedness evidenced by the Securities and the Guarantee
is subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in cash of all Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness. Except to the extent provided in
the Indenture, neither the Company nor the Guarantor may directly or indirectly
(nor shall any direct or indirect payment or distribution be made by or on
behalf of the Company or the Guarantor in respect of the following) pay the
principal or premium (if any) or interest on the Securities and other payment
obligations of the Company in respect of the Securities, make any deposit
pursuant to Section 11.01 of the Indenture or repurchase, redeem or otherwise
retire any Securities if (i) any Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness is not paid when due or (ii) any other default on
Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness occurs
and the maturity of such Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness is accelerated in accordance with its terms. Each of
the Company and the Guarantor agrees, and each Holder by accepting a Security
and the related Guarantee agrees, to the subordination provisions contained in
the Indenture and authorizes the Trustee to give them effect and appoints the
Trustee as attorney-in-fact for any and all such purposes.
8. Put Provisions.
Within 30 days of the occurrence of a Change of Control,
unless the Company has mailed a redemption notice with respect to all
outstanding Securities in connection with such Change of Control, any Holder of
Securities will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued interest to
the date of repurchase as provided in, and subject to the terms of, the
Indenture.
9. Guarantee.
The Guarantor has irrevocably, fully and unconditionally
guaranteed on an unsecured senior, unsecured senior subordinated and unsecured
junior subordinated basis, as the case may be, the performance and punctual
payment when due, whether at stated maturity, by acceleration, by redemption or
otherwise, of all obligations of the Company under the Indenture and this
Security, whether for principal of or interest on the Securities, to the extent
provided in the Indenture. The Guarantor also agrees to pay, in addition to the
amount stated above, on an unsecured senior subordinated basis, any and all
expenses (including reasonable counsel fees and expenses) incurred
<PAGE>
7
by the Trustee or the Holders in enforcing any rights under the Guarantee with
respect to the Guarantor. Such Guarantee, however, will be limited in amount to
an amount not to exceed the maximum amount that can be guaranteed by the
Guarantor without rendering the Guarantee, as it relates to the Guarantor,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer.
10. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples thereof in book-entry form only.
A Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar or the Company may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar shall not be
required (i) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
selection of Securities to be redeemed and ending at the close of business on
the day of the mailing of the relevant notice of redemption of the Securities so
selected for redemption, or (ii) to register the transfer or exchange of the
Securities or portions thereof so selected for redemption.
11. Persons Deemed Owners.
The registered holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
13. Defeasance.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and Indenture (and
in certain instances, the Guarantor's obligations under the Indenture) if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal, premium (if any) and interest on the Securities to
redemption or maturity, as the case may be.
<PAGE>
8
14. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any holder of Securities, the Company and the Trustee, at
any time and from time to time, may amend the Indenture to, among other things,
(i) evidence the succession of another corporation or person to the Company or
the Guarantor, as the case may be, in the Indenture and in the Securities, (ii)
evidence and provide for a successor Trustee, (iii) add to the covenants of the
Company or the Guarantor for the benefit of the holders of Securities or to
surrender any right or power conferred upon the Company or the Guarantor in the
Indenture, (iv) cure any ambiguity, correct or supplement any provision which
may be inconsistent or make any other provisions with respect to matters or
questions arising under the Indenture, provided the interests of the holders of
the Securities are not adversely affected in any material respect, (v) add any
additional Events of Default, (vi) add to or change provisions to permit or
facilitate the issuance of Securities convertible into other securities, (x)
evidence any changes to corporate Trustee eligibility authorized by the Trust
Indenture Act of 1939, or (xi) add to or change or eliminate any provision of
the Indenture as necessary to comply with the Trust Indenture Act provided such
action does not adversely affect the interests of the holders of Securities of
any series in any material respect.
15. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default in
the payment of the principal of or premium, if any, on the Securities at
maturity, upon redemption pursuant to paragraph 5 hereof, by declaration of
acceleration or otherwise (whether or not such payment is prohibited by the
subordination provisions of the Indenture); (ii) default in the payment of any
interest upon any Security as and when the same shall become due and payable
(whether or not such payment is prohibited by the subordination provisions of
the Indenture), and continuance of such default for a period of 30 days; (iii)
default in the payment of principal and interest on any Security required to
purchased pursuant to an Offer to Purchase as set forth in certain provisions of
the Indenture when due and payable (whether or not such payment is prohibited by
the subordination provisions of the Indenture); (iv) failure on the part of the
Company or the Guarantor to perform or comply with other agreements and
covenants of the Indenture, in certain instances subject to notice or lapse of
time or both; (v) certain defaults under the terms of any instrument(s)
evidencing or securing Indebtedness for money borrowed by the Company or any
Significant Subsidiary
<PAGE>
9
having an outstanding principal amount of $20 million individually or in the
aggregate; (vi) the Guarantee with respect to the Securities shall for certain
reasons cease to be, or shall be asserted in writing by the Guarantor or the
Company not to be, in full force and effect and enforceable in accordance with
its terms; (vii) certain judgment(s) against the Guarantor, the Company or any
Significant Subsidiary in an amount in excess of $20 million which remains
undischarged or unstayed for a period of 60 days after the date on which the
right to appeal has expired; and (viii) certain events of bankruptcy or
insolvency with respect to the Company, the Guarantor or any Significant
Subsidiary;
If an Event of Default occurs and is continuing (other than
certain Events of Default contemplated in the Indenture), the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately by notice in writing to the
Company (or to the Trustee if given by the Holders). Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default without further action by the Trustee or any Holder of the
Securities.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations. Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power.
16. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company, any Guarantor or the Trustee shall not have any liability for any
obligations of the Company, such Guarantor or the Trustee, respectively, under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Holder waives and releases all such liability. The waivers and release are part
of the consideration for the issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the second page of this Security.
<PAGE>
10
18. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No representations
is made as to the accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture which has in it the
text of this Security in large type. Requests may be made to:
Collins & Aikman Products Co.
Address: 701 McCullough Drive
City, State: Charlotte, NC 28262
Attn: Treasurer
<PAGE>
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Security)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
(Please print name and address of transferee)
this Security, together with all right, title and interest herein, and does
hereby irrevocably constitute and appoint __________________ Attorney to
transfer this Security on the Security Register, with full power of
substitution.
Dated: _____________
- ------------------------------ ------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[ ] In connection with the Change of Control Offer made pursuant to
Section 5.14 of the Indenture, the undersigned hereby elects to have
[ ] the entire principal amount
[ ] $_____________ ($1,000 in principal amount or an integral multiple
thereof) principal amount of this Security
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or _________________ an amount in cash equal
to 101% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest thereon to the date of purchase.
[ ] In connection with an Asset Disposition made pursuant to Section 5.12
of the Indenture, the undersigned hereby elects to have
[ ] the entire principal amount
[ ] $____________ ($1,000 in principal amount or an integral multiple
thereof) principal amount of this Security
repurchased by the Company. The undersigned hereby directs the Trustee
or Paying Agent to pay it or ______________ an amount in cash equal to
100% of the principal amount indicated in the preceding sentence, plus
accrued and unpaid interest thereon, if any, to the date of purchase.
Dated:___________
- ------------------------------ ------------------------------
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Security in every particular, without alteration or any
change whatsoever.
<PAGE>
Exhibit 11
Collins & Aikman Corporation
Computation of Earnings Per Share
In thousands, except per share data
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
April 27, April 29,
1996 1995
<S> <C> <C>
Average shares outstanding during the period ................................... 69,074 70,521
Incremental shares under stock options computed under the treasury stock method
using the average market price of issuer's stock during the period ............. 961 1,227
Total shares for primary EPS .............................................. 70,035 71,748
Additional shares under stock options computed under the treasury stock method
using the ending price of issuer's stock........................................ 82 --
Total shares for fully diluted EPS ........................................ 70,117 71,748
Income (loss) applicable to common shareholders:
Continuing operations (1) ................................................. $14,786 $24,767
Discontinued operations ................................................... 356 4,134
Net income (loss) ......................................................... $15,142 $28,901
Income (loss) per primary and fully diluted common share:
Continuing operations ..................................................... $ .21 $ .35
Discontinued operations ................................................... .01 .05
Net income (loss) ......................................................... $ .22 $ .40
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-25-1997
<PERIOD-END> APR-27-1996
<CASH> 5,493
<SECURITIES> 0
<RECEIVABLES> 157,535
<ALLOWANCES> 3,665
<INVENTORY> 147,243
<CURRENT-ASSETS> 443,407
<PP&E> 522,791
<DEPRECIATION> 230,729
<TOTAL-ASSETS> 1,068,405
<CURRENT-LIABILITIES> 291,939
<BONDS> 704,739
0
0
<COMMON> 705
<OTHER-SE> (212,936)
<TOTAL-LIABILITY-AND-EQUITY> 1,068,405
<SALES> 373,611
<TOTAL-REVENUES> 373,611
<CGS> 295,655
<TOTAL-COSTS> 295,655
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 390
<INTEREST-EXPENSE> 15,163
<INCOME-PRETAX> 24,686
<INCOME-TAX> 9,900
<INCOME-CONTINUING> 14,786
<DISCONTINUED> 356
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,142
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
