SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): June 3, 1996
COLLINS & AIKMAN CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 1-10218 13-3489233
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
701 McCullough Drive
Charlotte, North Carolina 28262
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 547-8500
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Item 5. Other Events
(a) On June 3, 1996, Collins & Aikman Corporation (the "Company")
executed an Amended and Restated Credit Agreement (the "Amendment"), among
Collins & Aikman Products Co. ("C&A"), as Borrower, Collins & Aikman Canada Inc.
("C&A Canada"), as Canadian Borrower, the Company, as Guarantor, the Lenders
named therein, and Chemical Bank, as Administrative Agent ("Chemical"). The
Amendment amends and restates Credit Agreements dated as of June 22, 1994
between C&A, C&A Canada, the Company and Chemical and as of December 22, 1995
between C&A, the Company and Chemical. The effectiveness of the Amendment is
subject to customary conditions, as well as the consummation of the public
offering by C&A of $400 million of 11 1/2% Senior Subordinated Notes Due 2006
(the "Subordinated Notes"). The Subordinated Notes will be issued pursuant to a
supplemental indenture, to be dated as of June 1, 1996, between C&A, the Company
and First Union National Bank of North Carolina, as Trustee under an Indenture
dated as of June 1, 1996, and will be guaranteed on an unsecured senior
subordinated basis by the Company.
(b) On June 5, 1996, the Company and C&A entered into an Underwriting
Agreement providing for the sale of the Subordinated Notes to Wasserstein
Perella Securities, Inc., Chase Securities Inc. and BA Securities, Inc., as
Underwriters. The consummation of the sale of the Subordinated Notes is subject
to customary closing conditions. The Company currently anticipates the sale of
the Subordinated Notes will be consummated on or about June 10, 1996.
Item 7. Financial Statements and Exhibits.
(c) The exhibits furnished in connection with this report are as
follows:
1.1 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.
4.1 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.
4.2 Form of 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 relating to 11 1/2% Senior
Subordinated Notes due 2006 of Collins & Aikman Products Co.
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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)
Date: June 7, 1996 By: /s/ J. Michael Stepp
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J. Michael Stepp
Executive Vice President
& Chief Financial Officer
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Execution Copy
Collins & Aikman Products Co.
$400,000,000 11 1/2% Senior Subordinated Notes
Due 2006
Guaranteed on a Senior Subordinated Basis by
Collins & Aikman Corporation
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Underwriting Agreement
June 5, 1996
Wasserstein Perella Securities, Inc.
Chase Securities Inc.
BA Securities, Inc.
c/o Wasserstein Perella Securities, Inc.
31 West 52nd Street
New York, NY 10019
Dear Sirs:
Collins & Aikman Products Co., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to Wasserstein Perella Securities, Inc. ("WP Securities"), Chase Securities Inc.
("Chase") and BA Securities, Inc. ("BASI" and collectively, the "Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 11) $400,000,000 aggregate principal amount of 11 1/2%
Senior Subordinated Notes Due 2006 (the "Notes") to be unconditionally
guaranteed on a senior subordinated basis (the "Guarantee" and, together with
the Notes, the "Securities") by Collins & Aikman Corporation, a Delaware
corporation (the "Guarantor"), in the amounts set forth in Schedule I hereto.
1. (a) The Company and the Guarantor, jointly and severally,
represent and warrant to, and agree with, each of the
Underwriters that:
(i) A registration statement on Form S-3 (File No. 333-05159),
which also constitutes Post-Effective Amendment No. 1 to the
registration statement on Form S-3 (File No. 33-62665), including a
prospectus in respect of the debt securities of the Company and the
related guarantees of the Guarantor, has been filed with the Securities
and Exchange Commission (the "Commission"); such registration statement
in the form heretofore delivered to the Underwriters, including all
documents incorporated by reference in the prospectus contained
therein, has been declared
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effective by the Commission in such form; no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission; the various parts of such registration statement, including
all exhibits thereto and including the documents incorporated by
reference in the prospectus contained in the registration statement at
the time such part of the registration statement became effective, each
as amended at the time such part of the registration statement became
effective, are hereinafter collectively called the "Registration
Statement"; the prospectus included in the registration statement on
Form S-3 (File No. 33-62665) as supplemented by a preliminary
prospectus supplement in respect of the Securities, has been filed with
the Commission pursuant to Rule 424(b) of the rules and regulations of
the Commission under the Securities Act of 1933, as amended (the "Act")
and is hereinafter called the "Preliminary Prospectus"; the prospectus
contained in the Registration Statement, as supplemented by a final
prospectus supplement relating to the distribution of the Securities in
an underwritten public offering in the form first filed pursuant to
Rule 424(b) under the Act, is hereinafter called the "Prospectus"; any
reference herein to the Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of
the date of such Preliminary Prospectus or Prospectus, as the case may
be any reference to any amendment or supplement; to the Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be as of the
date of such filing; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of
the Guarantor or the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement; and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the Securities in the form in which such
amended or supplemented Prospectus is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 6(a)
hereof, including any documents incorporated by reference therein as of
the date of such filing;
(ii) The Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the requirements of the
Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to (a)
any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of
any Underwriter expressly for use therein or (b) information contained
in the Statement of Eligibility and Qualification of the Trustee (as
defined below) on Form T-1 (the "Form T-1") under the Trust Indenture
Act;
(iii) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading;
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to (a) any statements or omissions made in reliance
upon and in conformity with
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information furnished in writing to the Company by or on behalf of any
Underwriter expressly for use therein or (b) information contained in
the Form T-1;
(v) Each of the Guarantor and the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; the
Guarantor has no direct subsidiaries other than the Company; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(vi) The Guarantor has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of each of the Guarantor and the Company have been duly and validly
authorized and issued and are fully paid and non-assessable; and all of
the issued shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; and all such shares of capital stock of the Company are
owned beneficially and of record by the Guarantor and all of such
shares of capital stock of each subsidiary of the Company are owned
beneficially and of record by the Company or one of its subsidiaries,
in each case, free and clear of all liens, encumbrances, equities or
claims (other than such of the foregoing as arise under the New Credit
Agreement, as defined in the Prospectus);
(vii) The Indenture between the Guarantor, the Company and
First Union National Bank of North Carolina, as Trustee (the
"Trustee"), as supplemented by the first supplemental indenture
relating to the Securities (such indenture, as so supplemented, the
"Indenture"), has been duly authorized by the Guarantor and the Company
and duly qualified under the Trust Indenture Act and, when duly
executed by the proper officers of the Guarantor and the Company and
assuming due authorization, execution and delivery thereof by the
Trustee, will constitute a valid and legally binding obligation of the
Guarantor and the Company, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(viii) The Notes have been duly authorized by the Company for
issuance and sale pursuant to this Agreement, the Guarantee has been
duly authorized by the Guarantor for issuance pursuant to this
Agreement and, when duly executed, authenticated and delivered pursuant
to the Indenture and upon payment therefor pursuant to this Agreement,
the Securities will be validly issued and will constitute valid and
legally binding obligations of the Guarantor and the Company
enforceable in accordance with their terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles, entitled to the benefits provided by the Indenture,
which will be substantially in the form heretofore provided to the
Underwriters;
(ix) The issue and sale of the Securities being delivered at
the Time of Delivery (as defined below) to be sold by the Company and
the compliance by each of the Company and the Guarantor with all of the
provisions of the Securities, the Indenture and this Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Guarantor, the Company or any of its
subsidiaries is a party or by which the Guarantor, the Company or any
of its subsidiaries is bound or to which any of the property or assets
of the Guarantor, the Company or any of its subsidiaries is subject,
nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-Laws of the Guarantor, the Company
or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Guarantor, the Company or any of its subsidiaries
or any of their respective
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properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Securities or
the consummation by the Guarantor or the Company of the transactions
contemplated by this Agreement or the Indenture, except the
registration under the Act of the Securities, such as have been
obtained under the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Securities by the Underwriters;
(x) The New Credit Agreement has been duly authorized and, at
the Time of Delivery, will have been, duly executed and delivered by
the Guarantor, the Company and its subsidiaries that are parties
thereto, and will constitute a valid and legally binding obligation of
the Guarantor, the Company and its subsidiaries, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(xi) Neither the Guarantor nor the Company is and, after
giving effect to the offering and sale of the Securities, will be an
open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company
Act"); and none of the Guarantor, the Company nor any affiliated entity
is directly or indirectly controlled by or acting on behalf of any
person that is such a company or trust;
(xii) None of the Guarantor, the Company nor any of their
affiliates does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section 517.075 of
Florida Statutes (Chapter 92-198, Laws of Florida); and
(xiii) Arthur Andersen LLP, who have certified certain
financial statements of the Guarantor, the Company and its
subsidiaries, are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 97.0% of the principal amount thereof, plus accrued
interest, if any, from June 10, 1996 to the Time of Delivery hereunder, the
principal amount of Securities set forth opposite the name of such Underwriter
in Schedule I hereto.
3. Upon the authorization by WP Securities on behalf of the
Underwriters of the release of the Securities, the several Underwriters propose
to offer the Securities for sale upon the terms and conditions set forth in the
Prospectus.
4. (a) The Guarantor, the Company and the Underwriters, in accordance
with the requirements of Schedule E ("Schedule E") of the By-laws of the
National Association of Securities Dealers, Inc. (the "NASD") and subject to the
terms and conditions stated herein, hereby confirm the engagement of the
services of Chase Securities Inc. (the "Independent Underwriter") as, and the
Independent Underwriter hereby confirms its agreement with the Guarantor, the
Company and the Underwriters to render services as, a "qualified independent
underwriter" within the meaning of Section 2(o) of Schedule E in connection with
the offering and sale of the Securities. All references to the Underwriters
herein shall include Chase in its role as the Independent Underwriter.
(b) The Independent Underwriter hereby represents and warrants
to, and agrees with, the Guarantor, the Company and the Underwriters that with
respect to the offering and sale of the Securities as described in the
Prospectus:
(i) The Independent Underwriter constitutes a
"qualified independent underwriter" within the meaning of Section
2(o) of Schedule E; and
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(ii) The Independent Underwriter shall have furnished
to the Underwriters at the date of this Agreement, and, subject to the
provisions of Section 8 hereof, at the Time of Delivery, letters, dated
the respective dates of delivery thereof, in form and substance
satisfactory to the Underwriters, to the effect that the Independent
Underwriter recommends, as of the date of this Agreement, that the
yield on the Securities be not less than 11 1/2%.
(c) The Guarantor, the Company, the Underwriters and the
Independent Underwriter each agree to comply in all material respects with all
of the requirements of Schedule E applicable to them in connection with the
offering and sale of the Securities. The Guarantor and the Company agree to
cooperate with the Underwriters and the Independent Underwriter to enable the
Underwriters to comply with Schedule E and the Independent Underwriter to
perform the services contemplated by this Agreement.
5. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global certificates in book-entry
form which will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver the
Securities to WP Securities, for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
certified or official bank check or checks, payable to the order of the Company
in Federal (same day) funds, or by a wire transfer of Federal (same day) funds
to the account specified by the Company, by causing DTC to credit the Securities
to the account of WP Securities at DTC. The Company will cause the certificates
representing the Securities to be made available to WP Securities for checking
at least twenty-four hours prior to the Time of Delivery at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on June 10, 1996 or
such other time and date as WP Securities and the Company may agree upon in
writing. Such time and date are herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 8 hereof, will be delivered at the offices of
Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 2:00 p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of documents
to be delivered pursuant to the preceding sentence will be available for review
by the parties hereto. For the purposes of this Section 5, "New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
6. The Guarantor and the Company jointly and severally agree
with each of the Underwriters:
(a) To prepare the Prospectus as amended and supplemented in relation
to the Securities in a form approved by the Underwriters and to file the
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 424(b) under the Act; to make no further amendment or any
supplement to the Registration Statement or Prospectus as amended or
supplemented after the date of this Agreement and prior to the Time of Delivery
which shall be disapproved by the Underwriters promptly after reasonable notice
thereof; to advise the Underwriters promptly of any such amendment or supplement
after the Time of Delivery and to furnish the Underwriters with copies thereof;
to file promptly all reports and any definitive proxy or information statements
required to be filed by the Company or the Guarantor with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as
the delivery of a prospectus is required in connection with the offering or sale
of such Securities, and during such same period to advise WP Securities promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed with the Commission; to
advise WP Securities promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of any prospectus relating to the Securities, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
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of the initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending
the use of any prospectus relating to the Securities or suspending any such
qualification, to promptly use its best efforts to obtain the withdrawal of such
order;
(b) Promptly from time to time to take such action as the Underwriters
may reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as the Underwriters may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Securities, provided that in connection therewith neither
the Guarantor nor the Company shall be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Underwriters with copies of the Registration
Statement and of the Prospectus as amended or supplemented in such quantities as
the Underwriters may from time to time reasonably request, and, if the delivery
of a prospectus is required at any time in connection with any offering or sale
of the Securities by the Underwriters, and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act,
Exchange Act or the Trust Indenture Act, to notify the Underwriters and upon the
request of the Underwriters to file such document and to prepare and furnish
without charge to each Underwriter as many copies as the Underwriters may from
time to time reasonably request an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance and to furnish without charge to the Underwriters as many copies as
the Underwriters may from time to time reasonably request of such amended
Prospectus or supplement;
(d) To make generally available to their securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Guarantor, the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158 under the Act);
(e) Not to offer, issue, sell or otherwise dispose of, directly or
indirectly, any debt securities with maturities longer than one year (other than
the Securities) without the written consent of the Underwriters for a period of
60 days after the date of this Agreement;
(f) During a period of three years from the effective date of the
Registration Statement, to furnish to WP Securities on behalf of the
Underwriters copies of all reports or other communications (financial or other)
furnished to their stockholders, and deliver to WP Securities on behalf of the
Underwriters (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Guarantor or of the
Company is listed; and (ii) such additional information concerning the business
and financial condition of the Guarantor, the Company and its subsidiaries as WP
Securities on behalf of the Underwriters may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Guarantor, the Company and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission).
7. The Company and the Guarantor covenant and agree with the several
Underwriters that the Company and the Guarantor will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Securities under the Act
and all other expenses in connection with the preparation, printing and filing
of the Registration Statement, the Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) all expenses
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in connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 6(b) hereof, including the
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey; (iii) any fees charged
by securities rating services for rating the Securities; (iv) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities; (v) the
fees and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; (vi) the cost of preparing the Securities; and (vii) all other
costs and expenses incident to the performance of their obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood, however, that, except as provided in this Section, Section 10 and
Section 13 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them and any advertising expenses connected with any offers
they may make.
8. The respective obligations of the Underwriters hereunder, as to the
Securities to be delivered at the Time of Delivery, shall be subject, in the
sole discretion of the Underwriters, to the condition that all representations
and warranties and other statements of the Guarantor and the Company herein are,
at and as of the Time of Delivery, true and correct, the condition that the
Guarantor and the Company shall have performed all of their respective
obligations hereunder theretofore to be performed and the following additional
conditions:
(a) The Prospectus as amended or supplemented in relation to the
Securities shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 6(a) hereof; no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to the
reasonable satisfaction of the Underwriters;
(b) Jones, Day, Reavis & Pogue, counsel for the Underwriters, shall
have furnished to the Underwriters such opinion, dated the Time of Delivery,
with respect to the matters covered in paragraphs (i), (iii), (v), (vi) and
(vii) of subsection (c) below, as well as such other matters relating to the
transactions contemplated hereby as the Underwriters may request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Cravath, Swaine & Moore, counsel for the Guarantor and the Company,
shall have furnished to the Underwriters their written opinion, dated the Time
of Delivery, in form and substance satisfactory to the Underwriters, to the
effect that:
(i) Each of the Guarantor and the Company is a corporation
validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own its properties
and conduct its business as described in the Prospectus;
(ii) The Guarantor has an authorized capitalization as set
forth in the Prospectus;
(iii) This Agreement has been duly authorized, executed and
delivered by each of the Guarantor and the Company;
(iv) No authorization, approval or other action by, and no
notice to, consent of, order of, or filing with, any United States
Federal, New York or, to the extent required under the General
Corporation Law of the State of Delaware, Delaware governmental
authority or regulatory body is required for the consummation of the
transactions contemplated by the Underwriting Agreement, except such as
have been obtained under the Act or the Trust Indenture Act and such as
may be required under blue sky laws of any such jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters;
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(v) The statements made in the Prospectus under the caption
"Description of the Notes", insofar as they purport to constitute
summaries of the terms of the Securities and under the captions
"Existing Credit Facilities" and "Amendment to Credit Facilities",
insofar as they purport to describe the documents therein described,
fairly summarize such terms or documents, as the case may be;
(vi) The Indenture has been duly authorized, executed and
delivered by the Guarantor and the Company and duly qualified under the
Trust Indenture Act and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes a legal, valid and binding
obligation of the Guarantor and the Company, enforceable against the
Guarantor and the Company in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether
considered in a proceeding in equity or at law);
(vii) The Notes and the Guarantee have been duly authorized
and, when executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Underwriters
pursuant to this Agreement, will constitute legal, valid and binding
obligations of the Company and the Guarantor, respectively, entitled to
the benefits of the Indenture and enforceable against the Company and
the Guarantor, respectively, in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights
generally from time to time in effect and to general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law);
(viii) The Securities and the Indenture conform in all
material respects as to legal matters to the statements relating to
them in the Registration Statement and the Prospectus;
(ix) Neither the Guarantor nor the Company is an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act; and
(x) The issue and sale of the Securities and the compliance by
each of the Company and the Guarantor with all of the provisions of the
Securities, the Indenture and this Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, either the New Credit Agreement or
the receivables financing facility established pursuant to the Amended
and Restated Receivables Sales Agreement dated as of March 30, 1995,
among the Company, the Sellers party thereto and Carcorp Inc. (the
"Receivables Facility").
In rendering such opinion, such counsel may state that they express no
opinion as to any laws other than the laws of the State of New York, the
Delaware General Corporation Law and the Federal laws of the United States.
Such counsel shall state that the Registration Statement has become
effective under the Act; any required filing of any Preliminary Prospectus and
the Prospectus, and any supplement thereto, pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b) or to the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or threatened.
Such counsel shall also state that such counsel has no reason to
believe that: (i) the Registration Statement, at the time the Registration
Statement became effective, or the Prospectus, as amended or supplemented as of
its date and as of the Time of Delivery, (except the financial statements,
including the notes thereto and related schedules, and other information of an
accounting or financial nature included therein, as to which such counsel need
not express any view) was not appropriately responsive in all material respects
to the requirements of the Act and the Trust Indenture Act and the applicable
rules and
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regulations of the Commission thereunder or that the documents incorporated by
reference in the Prospectus as amended or supplemented (except the financial
statements, including the notes thereto, and related schedules and other
information of an accounting or financial nature included therein, as to which
such counsel need not express any view), when they became effective or were
filed with the Commission, as the case may be, were appropriately responsive in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, or (ii)
the Registration Statement, at the time the Registration Statement became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as amended or
supplemented at the Time of Delivery, includes an untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case except for the financial statements, including the
notes thereto and related schedules, and other information of an accounting or
financial nature included therein, as to which such counsel need not express any
view).
(d) Elizabeth R. Philipp, Esq., Executive Vice President, General
Counsel and Secretary of the Guarantor, shall have furnished to the Underwriters
her written opinion, dated the Time of Delivery, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) Each of the Guarantor and the Company has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other domestic jurisdiction
in which it owns or leases properties, or conducts any business so as
to require such qualification, or is subject to no material liability
or disability by reason of failure to be so qualified in any such
jurisdiction (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel; provided that
such counsel shall state that she believes that such local counsel is
qualified to render an opinion of the nature of the opinions on which
she has relied);
(ii) Each significant subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and
are owned beneficially and of record by the Guarantor and all of the
issued shares of capital stock of each such subsidiary have been duly
and validly authorized and issued, are fully paid and non-assessable
and are owned beneficially and of record by the Company or one of its
subsidiaries;
(iii) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which the Guarantor, the Company or any of its subsidiaries
is a party or of which any property of the Guarantor, the Company or
any of its subsidiaries is the subject which such counsel has
reasonable cause to believe would individually or in the aggregate have
any Material Adverse Effect; and, to such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(iv) This Agreement has been duly authorized, executed and
delivered by each of the Guarantor and the Company;
(v) The Indenture has been duly authorized, executed and
delivered by the Guarantor and the Company;
(vi) The Notes have been duly authorized, executed and issued
by the Company and the Guarantee has been duly authorized, executed and
issued by the Guarantor; and
(vii) The issue and sale of the Securities and the compliance
by each of the Company and the Guarantor with all of the provisions of
the Securities, the Indenture and this Agreement and the consummation
of the transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any
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agreement or instrument set forth under Item 10 of the Guarantor's
Annual Report on Form 10-K for the fiscal year ended January 27, 1996
(File No. 1-10218) (other than the New Credit Agreement and the
Receivables Facility, as to which such counsel need not express any
opinion), nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-Laws of the
Guarantor, the Company or any of its significant subsidiaries or any
statute or any order, rule or regulation known to such counsel of any
court or governmental agency or body of the United States, the State of
Delaware or the State of New York having jurisdiction over the
Guarantor, the Company or any of its subsidiaries or any of their
respective properties (except with respect to any state securities or
Blue Sky laws as to which such counsel need not express any opinion).
In rendering such opinion, such counsel may state that she expresses no
opinion as to laws other than the laws of the State of New York, the Delaware
General Corporation Law and the Federal law of the United States, and, in
respect of matters of fact, she may rely upon certificates of officers of the
Guarantor, the Company or its subsidiaries.
Such counsel shall also state that such counsel has no reason to
believe that: (i) the Registration Statement, at the time the Registration
Statement became effective, or the Prospectus, as amended or supplemented as of
its date and as of the Time of Delivery, (except the financial statements,
including the notes thereto and related schedules, and other information of an
accounting or financial nature included therein, as to which such counsel need
not express any view) was not appropriately responsive in all material respects
to the requirements of the Act and the Trust Indenture Act and the applicable
rules and regulations of the Commission thereunder, or that the documents
incorporated by reference in the Prospectus as amended or supplemented (except
the financial statements, including the notes thereto and related schedules, and
other information of an accounting or financial nature included therein, as to
which such counsel need not express any view), when they became effective or
were filed with the Commission, as the case may be, were appropriately
responsive in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, or (ii) the Registration Statement, at the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as amended
or supplemented at the Time of Delivery, includes an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case except for the financial statements,
including the notes thereto and related schedules, and other information of an
accounting or financial nature included therein, as to which such counsel need
not express any view).
(e) With respect to the letter of Arthur Andersen LLP delivered to the
Underwriters concurrently with the execution of this Agreement (the "initial
letter"), the Guarantor and the Company shall have caused to be furnished to the
Underwriters a letter (the "bring-down letter") of such accountants, addressed
to the Underwriters and dated the Time of Delivery (i) confirming that they are
independent public accountants within the meaning of the Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and other
matters covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter; and
further stating that with respect to the 13-week periods ended April 27, 1996
and April 29, 1995, they have (x) performed the procedures specified by the
American Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, Interim Financial Information,
on the unaudited condensed consolidated balance sheet as of April 27, 1996, and
unaudited condensed consolidated statements of operations, stockholders' deficit
and cash flows for the 13-week periods ended April 27, 1996 and April 29, 1995
attached as an exhibit to such bring-down letter (the "Interim Financial
Statements") and (y) inquired of certain officials of the Guarantor who have
responsibility for financial and accounting matters whether the Interim
Financial Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published rules
and regulations, and nothing has come to their attention as a result of
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the foregoing that causes them to believe that (A) any material modifications
should be made to the Interim Financial Statements for them to be in conformity
with generally accepted accounting principals or (B) the Interim Financial
Statements do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related rules and regulations
thereunder;
(f) (i) None of the Guarantor, the Company nor any of its subsidiaries
shall have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Guarantor, the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Guarantor, the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the Underwriters so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities on the terms and in the
manner contemplated in the Prospectus;
(g) The Securities shall have been assigned a rating of at least B3
from Moody's Investors Service, Inc. ("Moody's"), and B from Standard & Poor's
Ratings Group, a division of McGraw Hill, Inc. ("S&P"), and on or after the date
hereof (i) no downgrading shall have occurred in such ratings assigned to the
Securities by Moody's or S&P and (ii) neither Moody's nor S&P shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities;
(h) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the securities of the Guarantor on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities in New
York declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war if the effect of
any such event specified in this Clause (iv) which, in the judgment of the
Underwriters, makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus; and
(i) The Guarantor and the Company shall have furnished or caused to be
furnished to the Underwriters at the Time of Delivery certificates of officers
of the Guarantor and the Company, satisfactory to the Underwriters as to the
accuracy of the representations and warranties of the Guarantor and the Company
herein at and as of the Time of Delivery, as to the performance by the Guarantor
and the Company of all of their respective obligations hereunder to be performed
at or prior to the Time of Delivery, and as to such other matters as the
Underwriters may reasonably request, and the Guarantor and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (f) of this Section, and as to such other matters
as the Underwriters may reasonably request.
9. The Independent Underwriter hereby consents to the references to it
as set forth under the caption "Underwriting" in the Prospectus and in any
amendment or supplement thereto made in accordance with Section 6(a) hereof.
10. (a) The Guarantor and the Company jointly and severally will
indemnify and hold harmless (i) each Underwriter, against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the
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<PAGE>
statements therein not misleading and (ii) the Independent Underwriter against
any other losses, claims, damages or liabilities to which the Independent
Underwriter may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise solely out of, or are based
solely upon, the Independent Underwriter having acted, failed to act or alleged
to have failed to act in its capacity as the "qualified independent underwriter"
with respect to the offering and sale of the Securities, except for any losses,
claims, damages or liabilities which are finally judicially determined to have
resulted from the bad faith, gross negligence or willful misconduct of the
Independent Underwriter, and will reimburse each Underwriter or the Independent
Underwriter, as the case may be, for any legal or other expenses reasonably
incurred by such Underwriter, or the Independent Underwriter, as the case may
be, in connection with investigating or defending any such action or claim as
such expenses are incurred; provided, however, that, with respect to clause (i)
above, neither the Guarantor nor the Company shall be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon, an untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Prospectus, the Registration Statement
or the Prospectus, or any such amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Guarantor or the
Company by any Underwriter or the Independent Underwriter through WP Securities
expressly for use therein, including any reference to the Independent
Underwriter consented to by it pursuant to Section 9 hereof; and provided
further that as to the Preliminary Prospectus this indemnity agreement shall not
inure to the benefit of any Underwriter on account of any such loss, claim,
damage or liability arising from the sale of Securities to any person by that
Underwriter if that Underwriter failed to send or give a copy of the Prospectus,
or any amendment or supplement thereto, to that person within the time required
by the Act, and the untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by the Company with
Section 6(c). For purposes of the last proviso to the immediately preceding
sentence, the term "Prospectus" shall not be deemed to include the documents
incorporated therein by reference, and no Underwriter shall be obligated to send
or give any supplement or amendment to any document incorporated by reference in
the Preliminary Prospectus or the Prospectus to any person other than a person
to whom such Underwriter had delivered such incorporated document or documents
in response to a written request therefor.
(b) Each Underwriter will indemnify and hold harmless each of the
Guarantor and the Company against any losses, claims, damages or liabilities to
which the Guarantor or the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Preliminary Prospectus, the Registration
Statement or the Prospectus, or any such amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Guarantor or the Company by such Underwriter through WP Securities expressly for
use therein; and will reimburse the Guarantor or the Company for any legal or
other expenses reasonably incurred by the Guarantor or the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be
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satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding. An indemnifying party shall not be liable under this Section
10 to any indemnified party regarding any settlement or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent is consented to by such indemnifying party, which consent shall not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Guarantor or the Company on the one hand and
the Underwriters on the other from the offering of the Securities. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Guarantor and the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Guarantor and the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities purchased under this Agreement (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Securities purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Guarantor and the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such
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Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 (f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Guarantor and of the Company under this
Section 10 shall be in addition to any liability which the Guarantor and the
Company may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section 10 shall be in
addition to any liability which the respective Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Guarantor or of the Company and to each person, if any, who
controls the Guarantor or Company within the meaning of the Act.
(f) Each Underwriter severally confirms that (i) the legend relating to
over-allotment and stabilization of the Securities on page S-2 of the
Preliminary Prospectus and the Prospectus and (ii) the list of Underwriters and
the corresponding principal amounts of Securities set forth with respect to each
such Underwriter listed and the information relating to concessions and
discounts to securities dealers in the third paragraph under the caption
"Underwriting" on page S-75 of the Preliminary Prospectus and the Prospectus are
correct and WP Securities confirms that the information set forth in the second
sentence of the last paragraph on the cover page of the Prospectus is correct
and that the foregoing constitutes the only information furnished in writing
through WP Securities to the Company or the Guarantor by or on behalf of such
Underwriter specifically for inclusion in the Preliminary Prospectus and the
Prospectus. The Independent Underwriter confirms that the information set forth
in the third sentence of the fourth paragraph under the caption "Underwriting"
on page S-75 of the Preliminary Prospectus and the Prospectus is correct and
constitutes the only information furnished in writing through WP Securities to
the Company or the Guarantor by or on behalf of the Independent Underwriter in
its capacity as such specifically for inclusion in the Preliminary Prospectus
and the Prospectus.
11. If any one or more Underwriters shall fail to purchase and pay for
any of the Securities agreed to be purchased by such Underwriter or Underwriters
hereunder and such failure to purchase shall constitute a default in the
performance of its or their obligations under this Agreement, the remaining
Underwriters shall be obligated severally to take up and pay for (in the
respective proportions which the amount of Securities set forth opposite their
names in Schedule I hereto bears to the aggregate principal amount of Securities
set forth opposite the names of all the nondefaulting Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; except that the nondefaulting Underwriters shall not be obligated to
purchase any of the Securities if the aggregate principal amount of the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase exceeds 10% of the aggregate principal amount of the Securities set
forth in Schedule I hereto, and any nondefaulting Underwriter shall not be
obligated to purchase more than 110% of the principal amount of Securities set
forth opposite its name in Schedule I hereto. If the foregoing maximums are
exceeded, the nondefaulting Underwriters, and any other underwriters
satisfactory to the Company and the Guarantor who so agree, shall have the right
to purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters or such other underwriters do
not purchase all the Securities, this Agreement will terminate without liability
to any nondefaulting Underwriter or the Guarantor or the Company except for the
expenses to be borne by the Guarantor and the Company and the Underwriters as
provided in Section 7 hereof and the indemnity and contribution agreements in
Section 10 hereof. In the event of a default by any Underwriter as set forth in
this Section 10, the Time of Delivery shall be postponed for such period, not
exceeding seven days, as the WP Securities shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter or its liability, if any, to
the Company, the Guarantor and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
12. The respective indemnities, agreements, representations, warranties
and other statements of the Guarantor and the Company and the several
Underwriters, as set forth in this Agreement or made by
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or on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Guarantor or the Company, or any officer or
director or controlling person of the Guarantor or the Company, and shall
survive delivery of and payment for the Securities.
13. If this Agreement shall be terminated pursuant to Section 11
hereof, the Guarantor and the Company shall not then be under any liability to
any Underwriter except as provided in Sections 7 and 10 hereof; but, if for any
other reason any Securities are not delivered by or on behalf of the Company as
provided herein, the Guarantor and the Company will reimburse the Underwriters
through WP Securities for all out-of-pocket expenses approved in writing by WP
Securities, including fees and disbursements of counsel, reasonably incurred by
the Underwriters in making preparations for the purchase, sale and delivery of
the Securities not so delivered, but the Guarantor and the Company shall then be
under no further liability to any Underwriter except as provided in Sections 7
and 10 hereof.
14. In all dealings hereunder, WP Securities shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by the Underwriters jointly or by WP Securities on
behalf of the Underwriters.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission in care of Wasserstein Perella Securities, Inc., at 31
West 52nd Street, New York, NY 10019, Attention: Lee Siegel, Esq.; and if to the
Company or the Guarantor shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company and the Guarantor set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 10 hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by the Underwriters
upon request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
15. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Guarantor, the Company and, to the extent
provided in Sections 10 and 12 hereof, the officers and directors of the
Guarantor, the Company and each person who controls the Guarantor, the Company
or any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Securities from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
16. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
18. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
-15-
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by WP
Securities, on behalf of each of the Underwriters, this letter and such
acceptance hereof shall constitute a binding agreement among each of the
Underwriters, the Guarantor and the Company. It is understood that the
acceptance of WP Securities of this letter on behalf of each of the Underwriters
is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Collins & Aikman Products Co.
By: /s/ J. Michael Stepp
_____________________________
J. Michael Stepp
Executive Vice President and
Chief Financial Officer
Collins & Aikman Corporation
By: /s/ J. Michael Stepp
___________________________
J. Michael Stepp
Executive Vice President and
Chief Financial Officer
-16-
<PAGE>
Accepted as of the date hereof
at New York, New York:
Wasserstein Perella Securities, Inc.
Chase Securities Inc.
BA Securities, Inc.
By: Wasserstein Perella Securities, Inc.
By: /s/ James C. Kingsbery
________________________
James C. Kingsbery
Vice President
For itself and on behalf of each of the other Underwriters.
-17-
<PAGE>
Schedule I
Underwriters
________________
Principal
Amount of
Name Notes
_______ ------------
Wasserstein Perella Securities, Inc. ...........................$180,000,000
Chase Securities Inc. .......................................... 180,000,000
BA Securities, Inc. ..............................................40,000,000
============
TOTAL .....................................................$400,000,000
<PAGE>
EXECUTION COPY
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 HEREIN,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
NATIONSBANK, N.A.,
as Managing Agents,
And
CHEMICAL BANK,
as Administrative Agent
<PAGE>
<TABLE>
<CAPTION>
Article Section Page
TABLE OF CONTENTS
Article Section Page
<S> <C> <C> <C>
I. DEFINITIONS
SECTION 1.01. Defined Terms......................................................................... 1
SECTION 1.02. Terms Generally....................................................................... 20
II. THE CREDITS
SECTION 2.01. Loans; Revolving Credit Commitments................................................... 20
SECTION 2.02. Loans................................................................................. 23
SECTION 2.03. Notice of Revolving Borrowings........................................................ 24
SECTION 2.04. Notes; Repayment of Loans............................................................. 24
SECTION 2.05. Fees.................................................................................. 25
SECTION 2.06. Interest on Loans..................................................................... 26
SECTION 2.07. Default Interest...................................................................... 26
SECTION 2.08. Alternate Rate of Interest............................................................ 26
SECTION 2.09. Termination and Reduction of Revolving Credit Commitments............................. 27
SECTION 2.10. Conversion and Continuation of Tranche A Term, Tranche B Term and
Canadian Term Borrowings............................................................ 27
SECTION 2.11. Repayment of Tranche A Term, Tranche B Term and Canadian Term
Borrowings.......................................................................... 28
SECTION 2.12. Prepayment............................................................................ 29
SECTION 2.13. Reserve Requirements; Change in Circumstances......................................... 31
SECTION 2.14. Change in Legality.................................................................... 32
SECTION 2.15. Indemnity............................................................................. 32
SECTION 2.16. Pro Rata Treatment.................................................................... 33
SECTION 2.17. Payments.............................................................................. 33
SECTION 2.18. Taxes................................................................................. 33
SECTION 2.19. Issuance of Letters of Credit......................................................... 36
SECTION 2.20. Participations; Unconditional Obligations............................................. 36
SECTION 2.21. Letter of Credit Fee.................................................................. 37
SECTION 2.22. Agreement To Repay Letter of Credit Disbursements..................................... 37
SECTION 2.23. Letter of Credit Operations........................................................... 38
SECTION 2.24. Cash Collateralization................................................................ 38
SECTION 2.25. Termination and Reduction of Letter of Credit Commitment.............................. 38
III. REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization, Corporate Powers........................................................ 39
SECTION 3.02. Authorization......................................................................... 39
SECTION 3.03. Enforceability........................................................................ 40
SECTION 3.04. 1996 Transactions..................................................................... 40
SECTION 3.05. Use of Proceeds....................................................................... 40
SECTION 3.06. Federal Reserve Regulations........................................................... 40
SECTION 3.07. Capitalization of the Borrower and Holdings........................................... 40
SECTION 3.08. Pledge Agreement...................................................................... 41
SECTION 3.09. Financial Statements.................................................................. 41
SECTION 3.10. No Material Adverse Change............................................................ 41
i
<PAGE>
Article Section Page
SECTION 3.11. Title to Properties; Possession Under Leases.......................................... 41
SECTION 3.12. Subsidiaries.......................................................................... 42
SECTION 3.13. Litigation; Compliance with Laws...................................................... 42
SECTION 3.14. Agreements............................................................................ 42
SECTION 3.15. Investment Company Act................................................................ 42
SECTION 3.16. Public Utility Holding Company Act.................................................... 43
SECTION 3.17. Tax Returns........................................................................... 43
SECTION 3.18. No Material Misstatements............................................................. 43
SECTION 3.19. Employee Benefit Plans................................................................ 43
SECTION 3.20. Labor Matters......................................................................... 44
SECTION 3.21. Environmental Matters................................................................. 44
SECTION 3.22. Solvency.............................................................................. 45
SECTION 3.23. Absence of Certain Restrictions....................................................... 45
SECTION 3.24. No Foreign Assets Control Regulation Violation........................................ 45
SECTION 3.25. Insurance............................................................................. 46
SECTION 3.26. Certain Other Representations......................................................... 46
SECTION 3.27. Senior Debt........................................................................... 46
IV. CONDITIONS
SECTION 4.01. All Credit Events..................................................................... 46
SECTION 4.02. Conditions to Effectiveness........................................................... 47
V. AFFIRMATIVE COVENANTS
SECTION 5.01. Existence; Businesses and Properties.................................................. 49
SECTION 5.02. Insurance............................................................................. 49
SECTION 5.03. Taxes................................................................................. 50
SECTION 5.04. Financial Statements, Reports, Amendments, etc........................................ 50
SECTION 5.05. Litigation and Other Notices.......................................................... 52
SECTION 5.06. ERISA................................................................................. 52
SECTION 5.07. Maintaining Records; Access to Properties and Inspections............................. 52
SECTION 5.08. Use of Proceeds....................................................................... 52
SECTION 5.09. Further Assurances.................................................................... 53
SECTION 5.10. Change in Ownership................................................................... 53
SECTION 5.11. Fiscal Year; Accounting............................................................... 53
SECTION 5.12. Dividends............................................................................. 53
SECTION 5.13. Rate Protection Agreements............................................................ 53
SECTION 5.14. Corporate Separateness................................................................ 53
SECTION 5.15. Business of Restricted Subsidiaries................................................... 53
VI. NEGATIVE COVENANTS
SECTION 6.01. Indebtedness.......................................................................... 54
SECTION 6.02. Dividends and Distributions........................................................... 56
SECTION 6.03. Capital Expenditures.................................................................. 57
SECTION 6.04. Liens................................................................................. 57
SECTION 6.05. Priority of Loan Payments............................................................. 59
SECTION 6.06. Sale and Lease-Back Transactions...................................................... 60
SECTION 6.07. Investments, Loans and Advances....................................................... 60
SECTION 6.08. Mergers, Consolidations, Sales of Assets and Acquisitions............................. 61
SECTION 6.09. Transactions with Affiliates and Stockholders......................................... 63
ii
<PAGE>
Article Section Page
SECTION 6.10. Subordinated Indebtedness............................................................. 63
SECTION 6.11. Amendment of Constitutive Documents; Change in Corporate Structure.................... 63
SECTION 6.12. Business of Holdings and Restricted Subsidiaries...................................... 63
SECTION 6.13. Restrictive Agreements................................................................ 63
SECTION 6.14. Interest Coverage Ratio............................................................... 63
SECTION 6.15. EBITDA................................................................................ 64
SECTION 6.16. Leverage Ratio........................................................................ 64
SECTION 6.17. Current Ratio......................................................................... 64
SECTION 6.18. Tax Sharing........................................................................... 64
SECTION 6.19. Significant Subsidiaries.............................................................. 64
SECTION 6.20. Inactive Subsidiaries................................................................. 64
VII. EVENTS OF DEFAULT
VIII. THE ADMINISTRATIVE AGENT
IX. MISCELLANEOUS
SECTION 9.01. Notices............................................................................... 69
SECTION 9.02. Survival of Agreement................................................................. 70
SECTION 9.03. Binding Effect........................................................................ 70
SECTION 9.04. Successors and Assigns................................................................ 70
SECTION 9.05. Expenses; Indemnity................................................................... 72
SECTION 9.06. Right of Setoff; Sharing.............................................................. 74
SECTION 9.07. Applicable Law........................................................................ 74
SECTION 9.08. Waivers; Amendment.................................................................... 74
SECTION 9.09. Interest Rate Limitation.............................................................. 75
SECTION 9.10. Entire Agreement...................................................................... 75
SECTION 9.11. Waiver of Jury Trial.................................................................. 75
SECTION 9.12. Severability.......................................................................... 75
SECTION 9.13. Counterparts.......................................................................... 76
SECTION 9.14. Headings.............................................................................. 76
SECTION 9.15. Jurisdiction; Consent to Service of Process........................................... 76
SECTION 9.16. Conversion of Currencies.............................................................. 76
SECTION 9.17. Confidentiality....................................................................... 76
iii
<PAGE>
Exhibits
Exhibit A-1 Revolving Credit Note
Exhibit A-2 Tranche A Term Note
Exhibit A-3 Tranche B Term Note
Exhibit A-4 Swingline Note
Exhibit A-5 Canadian Term Note
Exhibit A-6 Intercompany Note
Exhibit B Assignment and Acceptance
Exhibit C Administrative Questionnaire
Exhibit D Form of Opinion of Cravath, Swaine & Moore,
Elizabeth R. Philipp, Esq. and Stikeman, Elliott
Exhibit E Form of Compliance Certificate
Exhibit F Form of Acknowledgement and Consent
Schedules
1.01(A) Applicable Margin
1.01(B) Applicable Prepayment Percentage
1.01(C) Additional Designated Persons
1.01(D) Subordination Terms
2.01 Commitments
2.11(a) Term Loan Amortization Schedule; Canadian Term Loan
Amortization Schedule
3.07(b)(1) Holdings Common Stock By Designated Persons
3.07(b)(2) Options and Rights Regarding Holdings
Capital Stock
3.12(a) Subsidiaries of Holdings
3.12(b) Outstanding Commitments Relating to Capital Stock
3.17 Tax Matters
6.01 Existing Indebtedness
6.04 Existing Liens
6.07 Existing Investments
iv
<PAGE>
1
AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 3,
1996, among COLLINS & AIKMAN PRODUCTS CO., a Delaware corporation
(the "Borrower"), COLLINS & AIKMAN CANADA INC. (f/k/a WCA Canada
Inc.), a Canadian corporation (the "Canadian Borrower"), COLLINS &
AIKMAN CORPORATION, a Delaware corporation ("Holdings"), the
financial institutions parties hereto (the "Lenders"), and
CHEMICAL BANK, a New York banking corporation ("Chemical"), as
administrative agent for the Lenders and the Issuing Banks (in
such capacity, the "Administrative Agent").
The Borrower, the Canadian Borrower, Holdings, the Lenders parties
thereto (the "1994 Lenders") and the Administrative Agent are parties to the
Credit Agreement, dated as of June 22, 1994 (as amended, supplemented or
otherwise modified to the date hereof, the "1994 Credit Agreement") pursuant to
which the 1994 Lenders have made loans and other extensions of credit to the
Borrower and the Canadian Borrower. The Borrower, Holdings, the Lenders parties
thereto (the "Larizza Lenders") and the Administrative Agent are parties to the
Credit Agreement, dated as of December 22, 1995 (as amended, supplemented or
otherwise modified to the date hereof, the "Larizza Credit Agreement"; and
together with the 1994 Credit Agreement, the "Existing Credit Agreements")
pursuant to which the Larizza Lenders have made term loans to the Borrower. In
connection with a series of transactions (the "1996 Transactions") involving,
inter alia, (i) the issuance by the Borrower of its Senior Subordinated Notes
due 2006 and (ii) the spin-off to the shareholders of Holdings, or the sale, of
the Borrower's Wallcoverings business, the Borrower, the Canadian Borrower and
Holdings have requested the Administrative Agent, the Issuing Banks and the
Lenders to amend and restate the Existing Credit Agreements as set forth herein.
The Administrative Agent, the Issuing Banks and the Lenders are willing to so
amend and restate the Existing Credit Agreements.
Accordingly, the Borrower, the Canadian Borrower, Holdings, the
Lenders, the Issuing Banks and the Administrative Agent amend and restate the
Existing Credit Agreements as follows effective as of the Effective Date:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Defined Terms. In addition to the terms defined above, as
used in this Agreement the following terms shall have the meanings specified
below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Canadian Term Loan" shall mean any Canadian Term Loan bearing
interest at a rate determined by reference to the Alternate Base Rate
in accordance with the provisions of Article II.
"ABR Loan" shall mean any ABR Tranche A Term Loan, ABR Tranche B
Term Loan, ABR Revolving Loan, ABR Canadian Term Loan or Swingline
Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Alternate Base Rate
in accordance with the provisions of Article II.
"ABR Tranche A Term Loan" shall mean any Tranche A Term Loan
bearing interest at a rate determined by reference to the Alternate
Base Rate in accordance with the provisions of Article II.
"ABR Tranche B Term Loan" shall mean any Tranche B Term Loan
bearing interest at a rate determined by reference to the Alternate
Base Rate in accordance with the provisions of Article II.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory
Reserves. For purposes hereof, (a)
<PAGE>
2
if at least two offered rates for deposits in dollars for a period
comparable to the applicable Interest Period appear on page 3750 (or
any successor page) of the Dow Jones Telerate Screen as of 11:00 a.m.,
London time, on the day that is two Business Days prior to the first
day of such Interest Period, the term "LIBO Rate" shall mean the
arithmetic mean of all such offered rates and (b) if fewer than two
such offered rates so appear on page 3750 (or any successor page) of
the Dow Jones Telerate Screen, the term "LIBO Rate" shall mean the rate
(rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits approximately equal in principal amount to Chemical's portion
(or, if Chemical shall not have any portion, the portion of the Lender
having the largest applicable Type of Loan) of the applicable
Eurodollar Borrowing and for a period comparable to the applicable
Interest Period are offered to Chemical's office in which its
eurodollar operations in respect of eurodollar loans are being
conducted in immediately available funds in the eurodollar market at
approximately 11:00 a.m., New York time, on the day that is two
Business Days prior to the first day of such Interest Period.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire substantially in the form of Exhibit C.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the person specified.
"Agency Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Agents" shall mean the collective reference to the Administrative
Agent and the Managing Agents.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime
Rate" shall mean the rate of interest per annum publicly announced from
time to time by Chemical as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being
effective. "Base CD Rate" shall mean the sum of (a) the product of (i)
the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b)
the Assessment Rate. "Three-Month Secondary CD Rate" shall mean, for
any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day (or, if such
day shall not be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable to ascertain the Base CD Rate or the Federal Funds Effective
Rate or both for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Base CD Rate or the Federal
<PAGE>
3
Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds
Effective Rate, respectively.
"Amendment Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Applicable Asset Sale Prepayment Percentage" shall mean 50%.
"Applicable Excess Cash Flow Prepayment Percentage" shall mean
initially 50% or, if the Applicable Level at any time is higher than
Level I, the Excess Cash Flow Prepayment Percentage set forth in
Schedule 1.01(B) opposite the Applicable Level in effect on the last
day of the fiscal year to which the prepayment relates.
"Applicable Level" shall mean at any time the highest of Level I,
Level II, Level III and Level IV in effect determined in accordance
with Schedule 1.01(A).
"Applicable Margin" means (i) for any date on or after the
Effective Date to but excluding the first day of the second full fiscal
quarter commencing after the Effective Date, with respect to Eurodollar
Loans, 1- 3/4% and with respect to ABR Loans, 3/4 of 1%, and (ii) for
any date on or after the first day of the second full fiscal quarter
commencing after the Effective Date, with respect to any Eurodollar
Loans or ABR Loans, as the case may be, the applicable margin set forth
on Schedule 1.01(A) opposite the Applicable Level, in each case as of
the last day of the Borrower's fiscal quarter most recently ended as of
such date; provided that, notwithstanding the foregoing, for Tranche B
Term Loans the Applicable Margin with respect to Eurodollar Loans shall
be 2-1/4% and with respect to ABR Loans shall be 1-1/4%.
Notwithstanding anything herein to the contrary, from and after the
fifth anniversary of the 1994 Closing Date the Applicable Margin except
in respect of Tranche B Term Loans shall be 1/4 of 1% higher than the
rate otherwise determined pursuant to this definition.
"Applicable Percentage" shall mean, with respect to any Revolving
Lender, the percentage of the aggregate Revolving Credit Commitments
represented by such Revolving Lender's Revolving Credit Commitment.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Administrative Agent as the then current net annual assessment
rate that will be employed in determining amounts payable by Chemical
to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made
in dollars at Chemical's domestic offices.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by
the Administrative Agent, substantially in the form of Exhibit B or
such other form as shall be approved by the Administrative Agent.
"Available Wallcoverings Proceeds" shall mean the Net Proceeds of
any sale (in whole or in part) of Wallcoverings Subsidiaries other than
Net Proceeds required to be applied in accordance with Section 6.08(k).
"Blackstone" shall mean Blackstone Capital Partners L.P., a
Delaware limited partnership.
"Blackstone Entities" shall mean Blackstone, Blackstone Group,
Blackstone Management Partners, L.P., Blackstone Management Associates,
L.P. or any of their Affiliates.
"Blackstone Group" shall mean The Blackstone Group L.P., a
Delaware limited partnership.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States (or any successor).
<PAGE>
4
"Borrower Common Stock" shall have the meaning assigned to that
term in Section 3.07(a).
"Borrowing" shall mean a group of Loans of a single Type made to
the Borrower or the Canadian Borrower on a single date and as to which
a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which
banks are open for business in New York City; provided, however, that,
when used in connection with a Eurodollar Loan, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.
"Canadian Term Borrowing" shall mean a Borrowing comprised of
Canadian Term Loans.
"Canadian Term Loan Maturity Date" shall mean July 13, 2002.
"Canadian Term Loan Repayment Date" shall have the meaning
assigned to such term in Section 2.11.
"Canadian Term Loans" shall mean the term loans made to the
Canadian Borrower pursuant to Section 2.01(e) of the 1994 Credit
Agreement. Each Canadian Term Loan shall be a Eurodollar Canadian Term
Loan or an ABR Canadian Term Loan.
"Canadian Term Note" shall mean a promissory note of the Canadian
Borrower, substantially in the form of Exhibit A-5, evidencing Canadian
Term Loans.
"Capital Expenditures" shall mean, for any person in any period,
the aggregate amount of all capital expenditures of such person during
such period (but not including Permitted Business Acquisitions or
Investments permitted pursuant to subsection 6.07(l)). For the purposes
hereof, the amount of any Capital Expenditure shall not include (i) an
amount equal to that portion of the proceeds received upon any sale,
transfer or other disposition of assets or properties pursuant to
Section 6.08(a), (g) or (i) which is applied to the purchase of
replacement assets or properties within 12 months of the receipt
thereof, (ii) expenditures that are accounted for as capital
expenditures of such person and that actually are paid for by a third
party (excluding Holdings or any subsidiary thereof) and for which
neither Holdings nor any subsidiary thereof has provided or is required
to provide, directly or indirectly, any consideration to such third
party or any other person (whether before, during or after such
period), (iii) the book value of any asset owned by such person prior
to or during such period to the extent that such book value is included
as a capital expenditure during such period as a result of such person
reusing or beginning to reuse such asset during such period without a
corresponding expenditure actually having been made in such period,
provided that any expenditure necessary in order to permit such asset
to be reused shall be included as a Capital Expenditure during the
period that such expenditure actually is made or (iv) expenditures of
insurance proceeds or condemnation awards received in connection with
the loss, damage, destruction or condemnation of property of Holdings
or its subsidiaries.
"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts under any lease
of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of
such person under GAAP and, for the purposes hereof, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Cash Interest Expense" shall mean Interest Expense paid or
required to be paid in cash (but excluding any amortization of debt
discounts and fees included in the calculation of Interest Expense).
A "Change in Control" shall be deemed to have occurred if (a)
Holdings shall cease to directly own, beneficially and of record, free
and clear of any and all Liens (other than Liens in favor of the
Collateral Agent pursuant to the Pledge Agreement), 100% of the issued
and outstanding capital stock of the Borrower;
<PAGE>
5
(b) any person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof)
(other than (i) any Designated Person or (ii) any combination of
Designated Persons) shall own beneficially, directly or indirectly,
shares representing more than 25% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of
Holdings at a time when Designated Persons or any combination of
Designated Persons do not beneficially own shares representing at least
50% of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of Holdings; or (c) the Continuing
Directors shall cease to occupy a majority of the seats (excluding
vacant seats) on the Board of Directors of Holdings. For purposes of
clause (b) of this definition, the term "Designated Person" shall be
deemed to include any other holder or holders of shares of Holdings
having ordinary voting power if any Blackstone Entity or WP Entity
shall hold the irrevocable general proxy of each such holder in respect
of the shares held by such holder.
"Charges" shall have the meaning assigned to that term in Section
9.09.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Agent" shall mean Chemical, as Collateral Agent under
the Pledge Agreement and the Guarantee Agreement.
"Commitment" shall mean, with respect to any Lender, such Lender's
Swingline Loan Commitment and Revolving Credit Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Compliance Certificate" shall have the meaning assigned to such
term in Section 5.04(c).
"Contaminants" means those substances which are regulated by or
form the basis of liability under any Environmental Law, including
asbestos, polychlorinated biphenyls, Hazardous Materials, pollutants or
solid wastes.
"Continuing Directors" shall mean the collective reference to (i)
all members of the Board of Directors of Holdings who have held office
continuously since the 1994 Closing Date and (ii) all members of the
Board of Directors of Holdings who assumed office after the 1994
Closing Date and whose election and nomination for election by
Holdings' shareholders was approved by a vote of a majority of the then
Continuing Directors.
"Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting
securities, by contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Credit Agreement Creditors" shall mean the Administrative Agent,
the Issuing Banks and the Lenders.
"Current Assets" shall mean, with respect to any person at any
date, the consolidated aggregate amount of all assets of such person
which would be classified as current assets at such date, other than
cash and cash equivalents.
"Current Liabilities" shall mean, with respect to any person at
any date, the consolidated aggregate amount of all liabilities of such
person (including tax and other proper accruals) which would be
classified as current liabilities at such date, other than (without
duplication) (i) the current portion of long-term debt, (ii) accruals
of Interest Expense (excluding Interest Expense which is due and
unpaid) and losses or expenses on the sale of receivables to the
Finance Subsidiary, (iii) Revolving Loans classified as current, (iv)
accruals of transaction costs resulting from the Recapitalization
Transactions and (v) accruals of any costs or expenses related to
severance or termination of employees accrued prior to the date hereof.
<PAGE>
6
"Current Ratio" shall mean, with respect to Holdings on any date,
the ratio of (a) Current Assets plus (without duplication) the accounts
receivable owned by any Finance Subsidiary or related trust to (b)
Current Liabilities.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Designated Persons" shall mean any one or more of the Blackstone
Entities, the WP Entities and the persons listed on Schedule 1.01(C).
"Dividend Condition" shall mean that the Applicable Level is at
least Level II.
"dollars" or "$" shall mean lawful money of the United States of
America. All Loans and Letters of Credit shall be denominated in
dollars and all payment obligations of the Borrower and the Canadian
Borrower under the Loan Documents shall be in dollars.
"Dollar Equivalent Amount" shall mean with respect to the amount
of any Indebtedness of a Foreign Restricted Subsidiary under Section
6.01(r) or (s) (i) denominated in a Foreign Currency on any date, the
equivalent amount in dollars of such amount of Foreign Currency, as
determined by the Administrative Agent using the Exchange Rate and (ii)
denominated in dollars, such amount in dollars.
"Domestic Restricted Subsidiary" means any Restricted Subsidiary
incorporated or organized under the laws of the United States of
America or any state thereof at least 90% of the capital stock of which
is owned directly or indirectly by the Borrower.
"EBITDA" shall mean, without duplication, for any fiscal period,
the sum of the amounts for such fiscal period of (i) Net Income, (ii)
provision for taxes based on income, (iii) depreciation expense, (iv)
total interest expense (whether shown as interest expense or as loss
and expenses on sales of receivables), (v) amortization expense and
(vi) other non-cash items reducing Net Income, all as determined on a
consolidated basis for Holdings and its Restricted Subsidiaries in
conformity with GAAP; provided, however, that for purposes of
calculating the Leverage Ratio under Section 6.16, EBITDA shall
include, in addition, the pro forma EBITDA of any person (calculated as
aforesaid but with respect to such person and its subsidiaries on a
consolidated basis and after giving effect to pro forma adjustments)
prior to the date it becomes a Restricted Subsidiary of Holdings or is
merged into or is consolidated with Holdings or any of the Restricted
Subsidiaries or that person's assets are acquired by Holdings or any of
the Restricted Subsidiaries.
"Effective Date" shall mean the date on which the conditions in
Section 4.01 and 4.02 are satisfied.
"Environmental Claim" means any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery
action or proceeding by any Governmental Authority or, if any
Responsible Officer of Holdings has knowledge of it, by any person for
damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), remedial action costs, tangible or
intangible property damage, damage to the environment or natural
resources, nuisance, pollution, contamination or other adverse effects
on the environment, or for fines, penalties or restrictions, resulting
from or based upon (i) the existence, or the continuation of the
existence, of a Release (including sudden or non-sudden, accidental or
non-accidental Releases) of, or exposure to, any Contaminant or odor,
(ii) the presence, use, handling, transportation, storage, treatment or
the disposal of Contaminants in connection with the operation of the
facilities to which such Release relates or (iii) the violation or
alleged violation of any Environmental Law.
"Environmental Law" means any and all applicable treaties, laws,
regulations, enforceable requirements, binding determinations, orders,
decrees, judgments, injunctions, permits, approvals, authorizations,
licenses, variances, permissions, notices or binding agreements issued,
promulgated or entered by any Governmental Authority, relating to the
environment, preservation or reclamation of natural resources or to the
<PAGE>
7
management, Release or threatened Release of Contaminants or noxious
odor, including the Hazardous Materials Transportation Act, 49 U.S.C.
ss.ss. 1801 et seq., Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. ss.ss. 9601 et seq., Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act
of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
ss.ss. 6901, et seq., Federal Water Pollution Control Act, as amended
by the Clean Water Act of 1977, 33 U.S.C. ss.ss. 1251 et seq., Clean
Air Act of 1970, as amended 42 U.S.C. ss.ss. 7401 et seq., Toxic
Substances Control Act of 1976, 15 U.S.C. ss.ss. 2601 et seq.,
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
ss.ss. 11001 et seq., National Environmental Policy Act of 1975, 42
U.S.C. ss.ss. 4321 et seq., Safe Drinking Water Act of 1974, as
amended, 42 U.S.C. ss.ss. 300(f) et seq., and any similar or
implementing state or foreign law, and all amendments or regulations
promulgated thereunder.
"Environmental Permit" means any permit, approval, authorization,
license, variance, or permission required from any Governmental
Authority pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" with respect to any person shall mean any trade
or business (whether or not incorporated) that is a member of a group
of which such person is a member and which is treated as a single
employer under Section 414 of the Code.
"ESOP" shall mean any employee stock ownership plan to be
established by the Borrower or a subsidiary Guarantor thereof to make
the ESOP Investment.
"ESOP Investment" shall mean the issuance and sale of shares of
Holdings Common Stock to, or the purchase of shares of Holdings Common
Stock in open market or privately negotiated transactions by, the ESOP
from time to time.
"ESOP Loans" shall mean a loan or loans to be made from time to
time by the Borrower to the ESOP in an aggregate amount not to exceed
$25,000,000, solely to enable the ESOP to effect the ESOP Investment.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Canadian Term Loan" shall mean any Canadian Term Loan
bearing interest at a rate determined by reference to the Adjusted LIBO
Rate in accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Tranche A Term Loan,
Eurodollar Tranche B Term Loan, Eurodollar Canadian Term Loan or
Eurodollar Revolving Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Tranche A Term Loan" shall mean any Tranche A Term
Loan bearing interest at a rate determined by reference to the Adjusted
LIBO Rate in accordance with the provisions of Article II.
"Eurodollar Tranche B Term Loan" shall mean any Tranche B Term
Loan bearing interest at a rate determined by reference to the Adjusted
LIBO Rate in accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean for any period (i) the Net Income
for such period plus (minus) (ii) the amount of depreciation,
depletion, amortization of intangibles, deferred taxes, accreted and
zero coupon
<PAGE>
8
bond interest and other noncash expenses (revenues) which, pursuant to
GAAP, were deducted (added) in determining such Net Income minus (plus)
(iii) additions (reductions, other than reductions attributable solely
to Specified Asset Sales) to working capital for such period (i.e., the
increase or decrease in Current Assets of Holdings and the Restricted
Subsidiaries minus Current Liabilities of Holdings and the Restricted
Subsidiaries from the beginning to the end of such period, as adjusted
to exclude reductions attributable solely to Specified Asset Sales)
minus (iv) the amount of Capital Expenditures for such period paid by
Holdings and the Restricted Subsidiaries in cash from funds other than
from the proceeds of Borrowings minus (v) the sum of (a) scheduled
Tranche A Term Loan, Canadian Term Loan and Tranche B Term Loan
repayments made during such period pursuant to Section 2.11, (b)
optional prepayments of the Tranche A Term Loans, the Canadian Term
Loans and the Tranche B Term Loans made during such period pursuant to
Section 2.12(a) and (c) Revolving Loan repayments made during such
period that were required to be made as a result of voluntary
reductions of the Revolving Commitment pursuant to Section 2.09(b)
minus (vi) scheduled mandatory payments of principal of Indebtedness of
Holdings and the Restricted Subsidiaries other than the Loans made
during such period minus (vii) fees and expenses paid in cash in
connection with the Recapitalization Transactions and fees and expenses
related to the Transactions to the extent not deducted in determining
Net Income and provided that such amounts are paid from reserves
established by the Borrower on the 1994 Closing Date (in the case of
the Recapitalization Transactions) or on the Effective Date (in the
case of the Transactions) minus (viii) amounts paid in cash for
liabilities relating to discontinued operations which were discontinued
prior to the 1994 Closing Date to the extent not deducted in
determining Net Income, provided that such amounts are paid from
reserves established by the Borrower for such liabilities prior to the
1994 Closing Date minus (ix) cash payments described in the Preliminary
Prospectus related to the Wallcoverings Disposition.
"Exchange Rate" shall mean with respect to any Foreign Currency on
any Business Day, the rate at which such Foreign Currency may be
exchanged into dollars, as set forth in the Wall Street Journal on such
Business Day. In the event that such rate does not appear in the Wall
Street Journal on such Business Day, the "Exchange Rate" with respect
to such Foreign Currency shall be determined by reference to such
publicly available service for displaying exchange rates as may be
agreed upon by the Administrative Agent and the Borrower or, in the
absence of such agreement, such "Exchange Rate" shall instead be the
Administrative Agent's spot rate of exchange in the interbank market
where its foreign currency exchange operations in respect of such
Foreign Currency are then being conducted, at or about 10:00 A.M.,
local time, at such date for the purchase of dollars with such Foreign
Currency, for delivery two Business Days later; provided, that if at
the time of any such determination, no such spot rate can reasonably be
quoted, the Administrative Agent may use any reasonable method as it
deems applicable to determine such rate, and such determination shall
be conclusive absent manifest error (without prejudice to the
determination of the reasonableness of such method).
"Executive Officer" of any corporation shall mean the president,
any senior vice president or any vice president of such person.
"Existing Credit Agreements" have the meaning given thereto in the
recitals hereto.
"Fees" shall mean the Agency Fees, the Amendment Fees, the
Fronting Fees, the Commitment Fees and the Letter of Credit Fees.
"Finance Subsidiary" shall mean Carcorp, Inc. and any other
wholly-owned subsidiary of the Borrower that is formed for the sole
purpose of engaging in Permitted Receivables Financings.
"Financial Officer" of any corporation shall mean the chief
financial officer, Senior Vice President-Finance and Accounting, Vice
President-Finance, Controller, or Treasurer of such corporation.
"Foreign Currency" shall mean any available and freely-convertible
non-dollar currency selected by the Borrower and approved by the
Administrative Agent.
<PAGE>
9
"Foreign Currency Fluctuation Amount" means, with respect to any
Indebtedness of a Foreign Restricted Subsidiary incurred pursuant to
Section 6.01(r) or (s), an increase in the Dollar Equivalent Amount of
the principal amount of such Indebtedness resulting from foreign
currency fluctuations after the incurrence of such Indebtedness not to
exceed 5% of the original Dollar Equivalent Amount of the principal
amount of such Indebtedness.
"Foreign Restricted Subsidiary" shall mean any Restricted
Subsidiary not organized or incorporated under the laws of the United
States of America or any state thereof at least 90% of the capital
stock of each class of which is owned directly or indirectly by the
Borrower.
"Foreign Subsidiary Letter of Credit" shall mean a Letter of
Credit issued to support Indebtedness of a Foreign Subsidiary incurred
pursuant to Section 6.01(r).
"Fronting Fees" shall have the meaning assigned to such term in
Section 2.05(d).
"Funded Debt" shall mean, as applied to any person, all
Indebtedness for borrowed money (including, without limitation, Capital
Lease Obligations and unreimbursed drawings under letters of credit) or
evidenced by a note, bond, debenture or similar instrument of that
person (it being understood that all Loans shall at all times
constitute "Funded Debt" for all purposes hereunder) but excluding all
intercompany obligations that would be eliminated in a consolidated
balance sheet of such person determined in accordance with GAAP.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Authority" shall mean any international, Federal,
state, regional, local or foreign court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantors" shall mean Holdings and each Restricted Subsidiary
(other than Inactive Subsidiaries) incorporated or organized under the
laws of the United States or any State thereof.
"Guarantee" of or by any person shall mean (i) any obligation,
contingent or otherwise, of such person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other person
(the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation of such person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness (whether arising by virtue of partnership
arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay or otherwise) or to purchase (or
to advance or supply funds for the purchase of) any security for the
payment of such Indebtedness, (b) to purchase property, securities or
services for the purpose of assuring the owner of such Indebtedness of
the payment of such Indebtedness, (c) to maintain working capital,
equity capital or other financial statement conditions or liquidity of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or (d) entered into for the purpose of assuring in any
other manner the holders of such Indebtedness of the payment thereof or
to protect such holders against loss in respect thereof (in whole or in
part), or (ii) any Lien on any assets of such person securing any
Indebtedness of any other person, whether or not such Indebtedness is
assumed by such person; provided, however, that the term Guarantee
shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement dated as
of July 13, 1994 made by Holdings, the Borrower and each other
Guarantor in favor of the Collateral Agent, as amended and in effect
from time to time.
"Hazardous Materials" means all explosive or regulated radioactive
materials or substances, hazardous or toxic wastes or substances,
petroleum (including crude oil or any fraction thereof) or petroleum
distillates, asbestos or material containing asbestos and all materials
regulated pursuant to any Environmental Law,
<PAGE>
10
including materials listed in 49 C.F.R. Section 172.101 and materials
defined as hazardous pursuant to Section 101(14) of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended.
"Holdings Common Stock" shall mean the Common Stock, par value
$.01 per Share, of Holdings.
"Inactive Subsidiary" shall mean the Restricted Subsidiaries
listed as Inactive Subsidiaries on Schedule 3.12(a) and which
Restricted Subsidiaries (i) individually and in the aggregate have no
material net assets and (ii) do not engage in any operating activity
(other than payroll or the leasing of immaterial property).
"Indebtedness" of any person shall mean, without duplication, (a)
all indebtedness of such person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business), (b) any other
indebtedness of such person which is evidenced by a note, bond,
debenture or similar instrument, (c) all Capital Lease Obligations of
such person, (d) all obligations of such person in respect of bankers'
acceptances issued or created for the account of such person, (e) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on any property owned or acquired by such person
even though such person has not assumed or otherwise become liable for
the payment thereof, (f) all obligations of such person in respect of
Interest Rate Agreements which, in accordance with the definition of
Interest Rate Agreement, constitute (or would upon early termination
constitute) Indebtedness and (g) all Guarantees by such person of
Indebtedness of others. The Indebtedness of any person shall include
the Indebtedness of any partnership in which such person is a general
partner; provided that, if the sole asset of such person is its general
partnership interest in such partnership, the amount of such
Indebtedness shall be deemed equal to the value of such general
partnership interest and the amount of any Indebtedness in respect of
any Guarantee of such partnership Indebtedness shall be limited to the
same extent as such Guarantee may be limited.
"Indemnitee" shall have the meaning assigned to that term in
Section 9.05(b).
"Intercompany Loan" shall mean a loan made by any subsidiary of
the Borrower to the Borrower or any Domestic Restricted Subsidiary or
by any Restricted Subsidiary to any other Restricted Subsidiary,
evidenced by an Intercompany Note pledged pursuant to the Pledge
Agreement in the case of such loans from any such person to another
such person aggregating more than $10,000,000 (or in the case of a
borrower which is a Foreign Restricted Subsidiary, $5,000,000).
"Intercompany Note" shall mean an intercompany note evidencing
Indebtedness owed by the Borrower or any of its wholly-owned
subsidiaries to the Borrower or any of its wholly-owned subsidiaries
and pledged pursuant to the Pledge Agreement in accordance with Section
6.01(d), in substantially the form of Exhibit A-6 annexed hereto (or to
the 1994 Credit Agreement).
"Intercreditor Agreement" shall mean the Master Collateral and
Intercreditor Agreement dated as of July 13, 1994 among the Guarantors,
the Administrative Agent and the Collateral Agent, as amended and in
effect from time to time.
"Interest Coverage Ratio" shall mean, for any period of four
consecutive fiscal quarters, the ratio of (a) EBITDA on a consolidated
basis for such period to (b) the sum of Cash Interest Expense of
Holdings and the Restricted Subsidiaries on a consolidated basis for
such period and losses or expenses on the sale of receivables to the
Finance Subsidiary.
"Interest Expense" shall mean, with respect to any person for any
period, the gross interest expense of such person for such period
determined on a consolidated basis in accordance with GAAP consistently
applied, including (a) the amortization of debt discounts, (b) the
amortization of all fees (including fees with respect to interest rate
protection agreements) payable in connection with the incurrence of
Indebtedness to the extent included in interest expense and (c) the
portion of any payments or accruals with respect to
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11
Capital Lease Obligations allocable to interest expense, net of all
interest income for such period (except for purposes of the definition
of Cash Interest Expense, in which case only interest income paid or
required to be paid in cash shall be netted against cash interest
expense). For purposes of the foregoing, gross interest expense shall
be determined after giving effect to any net payments made or received
by such person with respect to interest rate protection agreements
entered into as a hedge against interest rate exposure.
"Interest Payment Date" shall mean, (a)(i) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration,
each day that would have been an Interest Payment Date had successive
Interest Periods of three months' duration been applicable to such
Borrowing, and, in addition, the date of any prepayment, refinancing or
conversion of such Borrowing with or to a Borrowing of a different Type
and (ii) with respect to any ABR Loan or Swingline Loan, the last day
of each March, June, September and December and (b) the Revolving
Credit Maturity Date, the Tranche A Term Loan Maturity Date, the
Canadian Term Loan Maturity Date or the Tranche B Term Loan Maturity
Date, as applicable.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing or on the last day
of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on
the last day) in the calendar month that is 1, 2, 3 or 6 (or, except
with respect to Tranche B Loans, subject to availability (as determined
by all applicable Lenders), 9 or 12) months thereafter, as the Borrower
or the Canadian Borrower, as the case may be, may elect and (b) as to
any ABR Borrowing or Swingline Loan, the period commencing on the date
of such Borrowing or Loan or on the last day of the immediately
preceding Interest Period applicable to such Borrowing or Loan, as the
case may be, and ending on the earliest of (i) the next succeeding
March 31, June 30, September 30 or December 31, (ii) the Revolving
Credit Maturity Date, the Tranche A Term Loan Maturity Date, the
Canadian Term Loan Maturity Date or the Tranche B Term Loan Maturity
Date, as applicable, and (iii) the date such Borrowing is converted to
a Borrowing of a different Type in accordance with Section 2.10 or
repaid or prepaid in accordance with Section 2.01(d), 2.11 or 2.12;
provided, however, that if any Interest Period would end on a day other
than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing
only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such
Interest Period.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
currency hedge agreement or other similar agreement or arrangement
designed to protect the Borrower or any of its Restricted Subsidiaries
against fluctuations in interest rates or currency exchange rates;
provided that the calculation of payments for early termination shall
be made on a reasonable basis in accordance with customary industry
practices; provided further that all obligations to make such payments
for early termination (guaranteed or unguaranteed) shall, to the extent
matured, constitute Indebtedness.
"Issuing Bank" shall mean, with respect to any Letter of Credit,
the Revolving Lender which has agreed to issue such Letter of Credit.
"Larizza Acquisition" shall mean the acquisition of Larizza
Industries, Inc. by the Borrower pursuant to the Larizza Merger
Agreement.
"Larizza" shall mean Larizza Industries, Inc., an Ohio
corporation, which immediately after the Larizza Acquisition was
reincorporated in Delaware under the name Manchester Plastics, Inc.
"Larizza Closing Date" shall mean January 3, 1996.
<PAGE>
12
"Larizza Credit Agreement" shall have the meaning given thereto in
the recitals hereto.
"Larizza Lenders" shall have the meaning given thereto in the
recitals hereto.
"Letter of Credit" shall mean any letter of credit issued by an
Issuing Bank pursuant to Section 2.19(a) (including, without
limitation, any Foreign Subsidiary Letter of Credit).
"Letter of Credit Commitment" shall mean $50,000,000, as the same
may be reduced from time to time pursuant to Section 2.25.
"Letter of Credit Disbursement" shall mean a payment or
disbursement made by an Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" shall mean at any time the sum of (a)
the aggregate undrawn amount of all outstanding Letters of Credit and
(b) the aggregate amount of all Letter of Credit Disbursements not yet
reimbursed by the Borrower as provided in Section 2.22.
"Letter of Credit Fee" shall have the meaning assigned to such
term in Section 2.21.
"Leverage Ratio" shall mean, with respect to Holdings and the
Restricted Subsidiaries on the last day of any fiscal quarter, the
ratio of (a) Funded Debt of Holdings and the Restricted Subsidiaries
(other than the Permitted Subordinated Indebtedness) as of such date to
(b) EBITDA for the period of twelve consecutive fiscal months then
ended.
"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement
relating to such asset and (c) in the case of securities, any purchase
option, call or similar right of a third party with respect to such
securities.
"Loans" shall mean the Revolving Loans, the Tranche A Term Loans,
the Swingline Loans, the Canadian Term Loans and the Tranche B Term
Loans.
"Loan Documents" shall mean this Agreement and the Notes, the
Letters of Credit (and any instrument or document executed by the
Borrower relating to any Letter of Credit), the Pledge Agreement, the
Guarantee Agreement and the Intercreditor Agreement.
"Managing Agents" shall mean Bank of America National Trust and
Savings Association and NationsBank, N.A.
"Margin Stock" shall have the meaning assigned to such term under
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse
effect on the business, assets, properties, operations or financial
condition of Holdings and the Restricted Subsidiaries, taken as a
whole, (b) a material impairment of the ability of Holdings or any
Subsidiary of Holdings to perform any of its material obligations under
any Loan Document to which it is or will be a party or to consummate
the Recapitalization Transactions or (c) an impairment of the validity
or enforceability of, or material impairment of the rights, remedies or
benefits available to the Credit Agreement Creditors under, any Loan
Document.
"Maximum Rate" shall have the meaning assigned to such term in
Section 9.09.
"Multiemployer Plan" with respect to any person shall mean a
multiemployer plan as defined in Section 4001(a)(3) of ERISA to which
such person or any ERISA Affiliate of such person (other than one
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making
<PAGE>
13
or accruing an obligation to make contributions, or has within any of
the preceding five plan years made or accrued an obligation to make
contributions.
"Net Income" shall mean, for any fiscal period, the net income (or
loss) of Holdings and its Restricted Subsidiaries and the Finance
Subsidiary on a consolidated basis for such fiscal period taken as a
single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any
Unrestricted Subsidiary (other than the Finance Subsidiary) or any
person (other than a Restricted Subsidiary) in which any other person
(other than Holdings or any of the Restricted Subsidiaries) has a joint
interest, but shall include the amount of dividends or other
distributions (including return of capital or any other cash receipt in
respect of ownership or beneficial interest) actually paid to Holdings
or any of the Restricted Subsidiaries by such Unrestricted Subsidiary
or such person during such period, (ii) the income (or loss) of any
person accrued prior to the date it becomes a Restricted Subsidiary of
Holdings or is merged into or consolidated with Holdings or any of the
Restricted Subsidiaries or that person's assets are acquired by
Holdings or any of the Restricted Subsidiaries and (iii) the income of
any Restricted Subsidiary of Holdings to the extent that the
declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation after
tax gains or losses attributable to Specified Asset Sales; provided
further, that, solely for the purposes of determining EBITDA, there
shall be excluded any charges, losses, fees or expenses to Net Income
incurred in connection with the consummation of the Recapitalization
Transactions and the Transactions.
"Net Proceeds" shall mean with respect to any sale, transfer or
other disposition (including by casualty, loss or condemnation) of any
assets or properties or any other Prepayment Event (a "Proceeds
Transaction") (i) the gross amount of any cash paid to or received by
Holdings or any of the Restricted Subsidiaries in respect of such
Proceeds Transaction (including insurance proceeds, condemnation awards
and payments from time to time in respect of installment obligations,
if applicable), less (ii) the amount, if any, of (a) Holdings' good
faith best estimate of all taxes attributable to such Proceeds
Transaction which it in good faith expects to be paid in the taxable
year in which such Proceeds Transaction shall occur or in the next
taxable year, (b) reasonable and customary fees, discounts,
commissions, costs and other expenses (other than those payable to
Holdings or any Affiliate of Holdings, except that Blackstone and WP
and their respective Affiliates may receive customary fees on terms no
less favorable to Holdings or any of the Restricted Subsidiaries than
would be obtained in a comparable arm's-length transaction for acting
as financial advisor in connection with such Proceeds Transaction)
which are incurred in connection with such Proceeds Transaction and are
payable by Holdings or any of the Restricted Subsidiaries and (c) in
the case of a Proceeds Transaction that is a sale, transfer or other
disposition of assets or properties, proceeds required to (x) discharge
Liens in respect of such assets or properties permitted by Section 6.04
or (y) to repay, or compensate for reductions in availability under,
any Permitted Receivables Financing as a result thereof; provided,
however, that Net Proceeds shall not include (1) any amount that
otherwise would constitute Net Proceeds to the extent such amount is
excluded from the definition of the term "Capital Expenditures"
pursuant to clause (i) or (iv) of the second sentence thereof; or (2)
any amount being reserved for application as contemplated in clause (i)
or (iv) of such second sentence, except that in the event any amount so
reserved is not in fact so applied or contractually committed to be
applied within the permitted 12-month period, such amount shall be
deemed for all purposes (including the definition of Excess Cash Flow
and Section 2.12(f)) to be Net Proceeds of a Proceeds Transaction
received upon such Proceeds Transaction.
"1994 Closing Date" shall mean July 13, 1994.
"1994 Credit Agreement" shall have the meaning given thereto in
the recitals hereto.
"1994 Delayed Draw Term Loans" shall have the meaning given to the
term "Delayed Draw Term Loans" in the 1994 Credit Agreement.
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14
"1994 Lenders" shall have the meaning given thereto in the
recitals hereto.
"1996 Transactions" shall have the meaning given thereto in the
recitals hereto.
"Notes" shall mean the Tranche A Term Notes, the Tranche B Term
Notes, the Canadian Term Notes, the Swingline Note and the Revolving
Credit Notes.
"Obligations" shall mean all obligations defined as "Guaranteed
Obligations" in the Guarantee Agreement and "Secured Obligations" in
the Pledge Agreement in each case owing by the Borrower, the Canadian
Borrower and the other Guarantors, or any of them, as the context may
require, to any Credit Agreement Creditor.
"Operating Lease" shall mean a lease which is not required to be
accounted for or classified as a capital lease under GAAP. The "amount"
of any Operating Lease shall be the amount that, if such Operating
Lease were accounted for as a Capital Lease Obligation, would be
recorded as a liability in accordance with GAAP.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.18.
"Overallotment Option" shall mean the option granted to the
underwriters in connection with the Public Offering pursuant to which
the underwriters may elect to purchase pursuant to the Holdings
Underwriting Agreement up to 2,250,000 additional shares of Holdings
Common Stock to cover overallotments.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA (or any such successor).
"Permitted Acquisition Indebtedness" shall mean Indebtedness of
the Borrower permitted by Section 6.01(l).
"Permitted Business Acquisitions" shall mean acquisitions of all
or substantially all of the assets of, or shares or other equity
interests in, a person or division or line of business of a person
engaged in the same business as Holdings and the Restricted
Subsidiaries or in a related business if immediately after giving
effect thereto: (i) no Default or Event of Default shall have occurred
and be continuing, (ii) all transactions related thereto shall be
consummated in accordance with applicable laws, (iii) at least 90% of
the outstanding capital stock or other ownership interests of any
acquired or newly formed corporation or other entity must be owned
directly by the Borrower or a Domestic Restricted Subsidiary and such
corporation or entity shall become a Restricted Subsidiary and a
Guarantor and execute a counterpart to the Guarantee Agreement, and all
capital stock or other equity interest created or acquired in
connection with such acquisition shall be duly and validly pledged to
the Collateral Agent for the ratable benefit of the Lenders, and (iv)
(A) Holdings shall be in compliance, on a pro forma basis, with the
covenants contained in Sections 6.14, 6.16 and 6.17 recomputed as at
the last day of the most recently ended fiscal quarter of Holdings, and
the Borrower shall have delivered to the Administrative Agent an
officers' certificate to such effect, together with all relevant
financial information for such acquired corporation, entity or assets,
and (B) the acquired corporation or entity shall not be liable for any
Indebtedness (except for Indebtedness permitted by Section 6.01 and the
Guarantee Agreement). For purposes of Section 6, any Restricted
Subsidiary satisfying the requirements of clause (iii) above shall be
deemed to be a "wholly owned subsidiary".
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
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15
(b) marketable general obligations issued by any state of the
United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within six months from
the date of acquisition thereof and, at the time of acquisition, having
one of the two highest ratings generally obtainable from either
Standard & Poor's Ratings Group or Moody's Investors Service, Inc.;
(c) investments in commercial paper maturing no more than six
months from the date of acquisition thereof and having, at such date of
acquisition, a credit rating of A-1 or higher from Standard & Poor's
Ratings Group or P-1 or higher from Moody's Investors Service, Inc.;
(d) investments in domestic and Eurodollar certificates of
deposit, banker's acceptances and time deposits maturing within six
months from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by (w)
any domestic office of any commercial bank organized or licensed under
the laws of the United States of America or any State thereof which has
a combined capital and surplus and undivided profits of not less than
$500,000,000, (x) any Lender, (y) any branch of any Lender or any
commercial bank organized under the laws of the United Kingdom, Canada,
France or Japan having combined capital, surplus and undivided profits
(less any undivided losses) of not less than $500,000,000 or (z) other
than in the case of banker's acceptances, any domestic commercial bank
whose deposits are guaranteed by the Federal Deposit Insurance
Corporation (or any successor) and with whom deposits maintained by
Holdings or any of its subsidiaries do not exceed the amount so
guaranteed; and
(e) investments in money market funds or other mutual funds that
invest in the types of Permitted Investments described in clauses (a)
through (d) above.
"Permitted Receivables Financing" shall mean any sale by the
Borrower or a Restricted Subsidiary of accounts receivable to a Finance
Subsidiary intended to be (and which shall be treated for the purposes
hereof as) a true sale transaction with customary limited recourse
based upon the collectibility of the receivables sold and the
corresponding sale or pledge of such accounts receivable (or an
interest therein) by the Finance Subsidiary, in each case without any
Guarantee by Holdings or any other subsidiary thereof, including,
without limitation, the transactions contemplated by the Amended and
Restated Receivables Sales Agreement dated as of March 30, 1995 among
the Borrower, as master servicer, the Sellers parties thereto and
Carcorp, Inc., as amended from time to time, and the documents executed
in connection therewith; provided, however, that the terms, conditions
and structure (including the legal and organizational structure of the
Finance Subsidiary and the restrictions imposed on its activities) of
and the documentation incident to any such transactions entered into
after the date hereof must be reasonably acceptable to the
Administrative Agent.
"Permitted Subordinated Indebtedness" shall mean the collective
reference to (a) the Senior Subordinated Notes and (b) additional
unsecured subordinated indebtedness of the Borrower or Holdings having
no amortization of principal and a scheduled final maturity no earlier
than December 31, 2003 and having subordination terms at least as
favorable to the Lenders as set forth on Schedule 1.01(D) and other
terms and conditions (including, covenants, events of default, interest
rate) as shall be reasonably satisfactory to the Required Lenders in
the exercise of their sole discretion.
"Permitted Tax Payment" means for any taxable year of the Borrower
in which it joins in filing a consolidated federal income tax return
with Holdings, a payment by the Borrower to Holdings in an amount not
in excess of the amount required to be paid by the Borrower under the
Tax Sharing Agreement, dated as of November 1, 1989, between Holdings
and the Borrower, as in effect on the date hereof, as amended solely to
reflect the mergers described in clauses (iii) of the definition of
Recapitalization Transactions; provided that within 20 days of receipt
of such payment Holdings applies the amount thereof to satisfy such tax
liability or its obligations under the Tax Sharing Agreement or to make
an equity contribution or loan to the Borrower.
<PAGE>
16
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
"Plan" with respect to any person shall mean any pension plan
(other than a Multiemployer Plan) subject to the provisions of Title IV
of ERISA or Section 412 of the Code which is maintained for employees
of such person or any ERISA Affiliate of such person.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
July 13, 1994 made by Holdings, the Borrower and each other Pledgor
named therein in favor of the Collateral Agent, as amended and in
effect from time to time.
"Pledged Securities" shall have the meaning assigned to such term
in the Pledge Agreement.
"Preliminary Prospectus" shall mean the preliminary prospectus of
the Borrower dated May 14, 1996, filed with the Securities and Exchange
Commission in connection with the offering of the Senior Subordinated
Notes, as amended or supplemented from time to time.
"Prepayment Event" shall mean (i) any Specified Asset Sale, (ii)
any Sale and Lease-Back Transaction deemed to be a Prepayment Event
pursuant to Section 6.06, and (iii) the incurrence by Holdings or any
Restricted Subsidiary of any Indebtedness (other than Indebtedness
permitted by Section 6.01), provided, however, that for purposes of
Section 2.12(e) (a) a Prepayment Event shall not be deemed to occur
until the aggregate Net Proceeds from Prepayment Events not yet applied
pursuant to Section 2.12(e) by reason of this proviso equals or exceeds
$5,000,000, at which time a Prepayment Event shall, except as set forth
in clause (b) below, be deemed to occur having Net Proceeds equal to
the aggregate Net Proceeds from Prepayment Events not yet so applied
and (b) with respect to Specified Asset Sales, a Prepayment Event shall
be deemed to occur only with respect to that portion of the Net
Proceeds thereof required to be repaid pursuant to Section 6.08(i).
"Purchase Money Indebtedness" shall mean Indebtedness incurred for
capital expenditures, which may be secured in compliance with Section
6.04(i).
"Recapitalization Transactions" shall have the meaning given
thereto in the 1994 Credit Agreement.
"Register" shall have the meaning given such term in Section
9.04(d).
Regulation D" shall mean Regulation D of the Board as from time to
time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulation G" shall mean Regulation G of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time
to time in effect and all official rulings and interpretations
thereunder or thereof.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, emanation
or migration in, into, onto or through the environment (including
ambient air, surface water, ground water, land surface, subsurface
strata or workplace), including the movement of any Contaminant through
or in the air, soil, surface water or ground water.
<PAGE>
17
"Remedial Action" means (i) "remedial action" as such term is
defined in 42 U.S.C. Section 9601(24) and (ii) all other actions
required or voluntarily undertaken to (x) clean up, remove, treat,
abate or in any other way address any Contaminant in the environment or
workplace, (y) prevent the Release or threat of Release, or minimize
the further Release of any Contaminant so it does not migrate or
endanger or threaten to endanger public health or welfare of the
environment or workplace, or (z) perform studies and investigations in
connection with (x) or (y) above.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with
respect to a Plan (other than a Plan maintained by an ERISA Affiliate
which is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Code).
"Required Lenders" shall mean, at any time, Lenders with Loans
(other than Swingline Loans), Letter of Credit Exposure and unused
Commitments representing at least a majority of the sum of the
aggregate principal amount of the Loans (other than Swingline Loans)
outstanding, the aggregate amount of the Letter of Credit Exposure and
unused Commitments at such time.
"Responsible Officer" of any corporation shall mean any Executive
Officer or Financial Officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement. Unless
the context otherwise requires, Responsible Officer shall mean a
Responsible Officer of Holdings.
"Restricted Subsidiary" shall mean each Subsidiary in existence as
of the 1994 Closing Date and any direct or indirect Subsidiary formed
or acquired after the 1994 Closing Date, in each case, other than
Unrestricted Subsidiaries.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment, if any, of such Lender to make Revolving Loans
hereunder as set forth in Schedule 2.01, as the same may be reduced
from time to time pursuant to Section 2.09.
"Revolving Credit Maturity Date" shall mean July 13, 2001.
"Revolving Credit Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-1, evidencing
Revolving Loans.
"Revolving Lender" shall mean any Lender with a Revolving Credit
Commitment.
"Revolving Loans" shall mean the revolving loans made to the
Borrower pursuant to Section 2.01(c). Each Revolving Loan shall be a
Eurodollar Revolving Loan or an ABR Revolving Loan.
"Sale and Lease-Back Transaction" shall have the meaning assigned
to that term in Section 6.06.
"Secured Parties" shall mean the Credit Agreement Creditors and
any holders, if any, of any Permitted Acquisition Indebtedness which
have executed and delivered to the Collateral Agent an Acknowledgement
to the Intercreditor Agreement in the form of Exhibit A thereto.
"Senior Subordinated Notes" shall mean the unsecured Senior
Subordinated Notes of the Borrower in an aggregate initial principal
amount of $400,000,000 and having terms and conditions satisfactory to
the Administrative Agent; provided that (a) such notes shall have a
maturity of at least 10 years on their date of issue, (b) such notes
shall not be subject to any mandatory prepayment, amortization, sinking
fund or repurchase (other than a customary subordinated change of
control put and a subordinated offer to purchase upon an asset sale),
(c) such notes shall not have any financial covenants or maintenance
tests, (d) such
<PAGE>
18
notes may be guaranteed on a senior subordinated basis by Domestic
Restricted Subsidiaries of the Borrower and by Holdings.
"Senior Subordinated Notes Documents" shall mean the Senior
Subordinated Notes, the Senior Subordinated Notes Indenture and each
other document and agreement executed in connection with the Senior
Subordinated Notes.
"Senior Subordinated Notes Indenture" shall mean the Indenture
dated as of June 1, 1996 among First Union Bank of North Carolina, as
trustee, the Borrower, as issuer, and Holdings, as guarantor, pursuant
to which the Senior Subordinated Notes are issued.
"Significant Subsidiary" shall mean the Borrower, the Canadian
Borrower and any subsidiary of Holdings that at the date of any
determination (i) accounts for 5% or more of the consolidated assets of
Holdings, (ii) has accounted for 5% or more of the consolidated EBITDA
of Holdings for each of the two consecutive periods of four fiscal
quarters immediately preceding the date of determination or (iii) has
been designated by the Borrower in writing to the Administrative Agent
as a Significant Subsidiary.
"Specified Asset Sale" shall mean any sale, lease, transfer,
assignment or other disposition of assets, business units or property
of Holdings or any of its subsidiaries for Net Proceeds in excess of
$100,000 in any transaction or series of related transactions described
in paragraph (i) or (k) (only to the extent required by the proviso
thereto) of Section 6.08.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board and any other
banking authority to which the Administrative Agent is subject (a) with
respect to the Base CD Rate (as such term is used in the definition of
"Alternate Base Rate"), for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three
months, and (b) with respect to the Adjusted LIBO Rate, for
Eurocurrency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets which
may be available from time to time to any Lender under such Regulation
D. Statutory Reserves shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, association
or other business entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned,
controlled or held, or (b) which is, at the time any determination is
made, otherwise Controlled, by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of Holdings.
"Swingline Lender" shall mean Chemical, in its capacity as
Swingline Lender hereunder and under the other Loan Documents.
"Swingline Loan Commitment" shall mean the commitment of the
Swingline Lender to make Swingline Loans as set forth in Section
2.01(d).
"Swingline Loans" shall mean the swingline loans made by the
Swingline Lender to the Borrower pursuant to Section 2.01(d).
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19
"Swingline Note" shall mean a promissory note of the Borrower,
substantially in the form of Exhibit A-4, evidencing the Swingline
Loans.
"Taxes" shall have the meaning assigned to such term in Section
2.18.
"Total Indebtedness" shall mean, without duplication, all
outstanding Indebtedness of Holdings and its subsidiaries, on a
consolidated basis.
"Tranche A Term Borrowing" shall mean a Borrowing comprised of
Tranche A Term Loans.
"Tranche A Term Loan Maturity Date" shall mean January 13, 2002.
"Tranche A Term Loan Repayment Date" shall have the meaning
assigned to such term in Section 2.11.
"Tranche A Term Loans" shall mean the "Term Loans" made to the
Borrower pursuant to Section 2.01(a) of the 1994 Credit Agreement. Each
Tranche A Term Loan shall be a Eurodollar Tranche A Term Loan or an ABR
Tranche A Term Loan.
"Tranche A Term Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-2, evidencing Tranche
A Term Loans.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of
Tranche B Term Loans.
"Tranche B Term Loan Maturity Date" shall mean December 31, 2002.
"Tranche B Term Loan Repayment Date" shall have the meaning
assigned to such term in Section 2.11.
"Tranche B Term Loans" shall mean the "Loans" made to the Borrower
pursuant to Section 2.01 of the Larizza Credit Agreement. Each Tranche
B Term Loan shall be a Eurodollar Tranche B Term Loan or an ABR Tranche
B Term Loan.
"Tranche B Term Note" shall mean a promissory note of the
Borrower, substantially in the form of Exhibit A-3, evidencing Tranche
B Term Loans.
"Transactions" shall have the meanings assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate"
shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"UCC" shall mean the Uniform Commercial Code of New York.
"Unrestricted Subsidiary" shall mean (i) each Finance Subsidiary,
(ii) any Subsidiary of Holdings (other than the Borrower) none of the
Capital Stock or other ownership interest of which is owned by the
Borrower or any of its Subsidiaries, provided that Holdings has
notified the Administrative Agent of its acquisition or creation of
such Subsidiary and its ownership interest therein concurrently with
such acquisition or creation and the intended purposes of such
Subsidiary and (iii) any Subsidiary of an Unrestricted Subsidiary. Each
Unrestricted Subsidiary, other than a non-U.S. Unrestricted Subsidiary,
shall have entered into the existing Tax Sharing Agreement with
Holdings and the Borrower (or another tax sharing agreement containing
terms which, in the reasonable judgment of the Administrative Agent,
are customary in similar circumstances to provide an appropriate
allocation of tax liabilities and benefits).
The Unrestricted Subsidiaries shall be capitalized solely
from the following sources: (a) any Investment in such Unrestricted
Subsidiary by any Person other than Holdings and the Restricted
<PAGE>
20
Subsidiaries; (b) Indebtedness issued by such Unrestricted Subsidiary,
or proceeds thereof; (c) capital stock of any Unrestricted Subsidiary,
or proceeds thereof; (d) capital stock of Holdings issued by Holdings
after the 1994 Closing Date, or proceeds thereof; and (e) Investments
permitted to be made in Unrestricted Subsidiaries pursuant to Section
6.07(l).
"Wallcoverings Disposition" shall mean (a) the sale of, or
distribution to Holdings shareholders of, the stock of the
Wallcoverings Subsidiaries or the assets and liabilities of the
Borrower's wallcoverings business and (b) concurrently with such sale
or distribution, the release of (x) the stock of the Wallcoverings
Subsidiaries from the Pledge Agreement and (y) the Wallcoverings
Subsidiaries from the Guarantee Agreement and (c) related transactions
as described in the Preliminary Prospectus or to effectuate
Wallcoverings' acquisition of the stock of Imperial Wallcoverings
(Canada) Inc. owned by the Canadian Borrower or of the stock of
Imperial Wallcoverings Limited from Collins & Aikman United Kingdom
Limited or to repay the Wallcoverings Subsidiaries' indebtedness to the
Canadian Borrower or to Collins & Aikman United Kingdom Limited;
provided that the aggregate net Investment by Holdings and the other
Restricted Subsidiaries in the Wallcoverings Subsidiaries subsequent to
the Effective Date does not exceed $55,000,000, plus an amount equal to
all operating losses or capital expenditures funded by the Borrower
prior to the Wallcoverings Disposition.
"Wallcoverings Subsidiaries" shall mean Imperial Wallcoverings,
Inc., a Delaware corporation ("Wallcoverings"), Imperial Wallcoverings
(Canada) Inc., a Canadian corporation, Imperial Wallcoverings Limited,
a United Kingdom corporation, and Marketing Service, Inc., a Delaware
corporation.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E
of Title IV of ERISA.
"WP" shall mean Wasserstein Perella Partners, L.P.
"WP Entities" shall mean WP, WPMP or any of their Affiliates.
"WPMP" shall mean Wasserstein Perella Management Partners, Inc.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. For all purposes of
this Agreement (other than preparation of the financial statements to be
delivered pursuant to Section 5.04), all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect on the date of
this Agreement applied on a basis consistent with the application used in
preparing Holdings' audited financial statements for its fiscal year ended
January 27, 1996 referred to in Section 3.09.
ARTICLE II.
THE CREDITS
SECTION 2.01. Loans; Revolving Credit Commitments. (a) Subject to the
terms and conditions and relying upon the representations and warranties set
forth in the 1994 Credit Agreement, certain of the 1994 Lenders have made
Tranche A Term Loans to the Borrower. The Borrower acknowledges the Tranche A
Term Loans made to it and confirms and agrees that, as of the Effective Date,
the Tranche A Term Loans are absolutely and unconditionally repayable in
accordance with the terms hereof and are not subject to any defense, setoff or
counterclaim. Amounts paid or prepaid in respect of Tranche A Term Loans may not
be reborrowed.
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21
(b) Subject to the terms and conditions and relying upon the
representations and warranties set forth in the Larizza Credit Agreement, the
Larizza Lenders have made Tranche B Term Loans to the Borrower. The Borrower
acknowledges the Tranche B Term Loans made to it and confirms and agrees that,
as of the Effective Date, the Tranche B Term Loans are absolutely and
unconditionally repayable in accordance with the terms hereof and are not
subject to any defense, setoff or counterclaim. Amounts paid or prepaid in
respect of Tranche B Term Loans may not be reborrowed.
(c) Subject to the terms and conditions and relying upon the
representations and warranties set forth in the 1994 Credit Agreement, each
Revolving Lender has, severally and not jointly, made, and subject to the terms
and conditions and relying upon the representations and warranties set forth
herein, each Revolving Credit Lender agrees, severally and not jointly, to make,
Revolving Loans to the Borrower, at any time and from time to time on or after
the 1994 Closing Date and until the earlier of the Revolving Credit Maturity
Date and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding not to exceed the excess of (i) its Revolving Credit Commitment set
forth opposite its name in Schedule 2.01, as the same may be reduced from time
to time pursuant to Section 2.09, minus (ii) its Applicable Percentage of the
sum of the Letter of Credit Exposure and Swingline Loans plus the Dollar
Equivalent Amount of the Indebtedness of Foreign Subsidiaries outstanding under
Section 6.01(r) not supported by a Foreign Subsidiary Letter of Credit at such
time. Within the foregoing limits, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans on or after the 1994 Closing Date and prior to the
Revolving Credit Maturity Date, subject to the terms, conditions and limitations
set forth herein. As provided in Section 2.19, the Revolving Credit Commitment
may be utilized for the issuance of Letters of Credit.
(d) (i) The Swingline Lender hereby agrees, subject to the limitations
set forth below with respect to the maximum amount of Swingline Loans permitted
to be outstanding from time to time, to make a portion of the Revolving Credit
Commitments available to the Borrower from time to time during the period from
the 1994 Closing Date through and excluding the earlier of Revolving Credit
Maturity Date and the termination of the Revolving Credit Commitments in an
aggregate principal amount not to exceed the Swingline Loan Commitment, by
making Swingline Loans to the Borrower. Swingline Loans may be made
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Lender's outstanding Revolving Loans and outstanding Swingline Loans,
may exceed the Swingline Lender's Revolving Credit Commitment. The Swingline
Lender's commitment to make Swingline Loans to the Borrower pursuant to this
Section 2.01(d) is herein called its "Swingline Loan Commitment." The original
amount of the Swingline Lender's Swingline Loan Commitment is $10,000,000. The
Swingline Lender's Swingline Loan Commitment shall expire on the date the
Revolving Credit Commitments are terminated and all Swingline Loans and all
other amounts owed hereunder with respect to Swingline Loans shall be paid in
full no later than that date. Amounts borrowed under this Section 2.01(d) may be
repaid and reborrowed to but excluding the date of termination of the Revolving
Credit Commitments.
(ii) In no event shall (a) the aggregate principal amount of
Swingline Loans outstanding at any time exceed the aggregate Swingline Loan
Commitment in effect at such time, (b) the aggregate principal amount of
Revolving Loans and Swingline Loans outstanding at any time exceed the Revolving
Credit Commitments as reduced by the aggregate Letter of Credit Exposure plus
the Dollar Equivalent Amount of the Indebtedness of Foreign Subsidiaries
outstanding under Section 6.01(r) not supported by a Foreign Subsidiary Letter
of Credit at such time or (c) the aggregate Swingline Loan Commitment exceed at
any time the aggregate Revolving Loan Commitments in effect at such time.
Swingline Loans may only be made as ABR Loans.
(iii) With respect to any Swingline Loans which have not been
voluntarily prepaid by the Borrower, the Swingline Lender (by request to the
Administrative Agent) or Administrative Agent at any time may, on one Business
Day's notice, require each Lender, including the Swingline Lender, and each
Lender hereby agrees, subject to the provisions of this Section 2.01(d), to make
a Revolving Loan (which shall be funded as an ABR Loan) in an amount equal to
such Lender's Applicable Percentage of the amount of the Swingline Loans
("Refunded Swingline Loans") outstanding on the date notice is given which
Swingline Lender requests the Lenders to prepay; provided
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22
that so long as no Default or Event of Default shall have occurred and be
continuing, Lenders shall not be required to make such Revolving Loans if the
aggregate principal amount of Swingline Loans outstanding as of any Tuesday of
each week (or the first Business Day occurring after any such Tuesday if such
Tuesday is not a Business Day) is less than $1,000,000.
(iv) In the case of Revolving Loans made by Lenders other than
the Swingline Lender under the immediately preceding paragraph (iii), each such
Lender shall make the amount of its Revolving Loan available to the
Administrative Agent, in same day funds, at the office of the Administrative
Agent located at 270 Park Avenue, New York, New York, not later than 1:00 P.M.
(New York time) on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Loans shall be immediately delivered to
the Swingline Lender (and not to the Borrower) and applied to repay the Refunded
Swingline Loans. On the day such Revolving Loans are made, the Swingline
Lender's Applicable Percentage of the Refunded Swingline Loans shall be deemed
to be paid with the proceeds of a Revolving Loan made by the Swingline Lender
and such portion of Swingline Loans deemed to be so paid shall no longer be
outstanding as Swingline Loans and shall be outstanding as Revolving Loans of
Lenders. The Borrower authorizes the Administrative Agent and the Swingline
Lender to charge the Borrower's account with Administrative Agent (up to the
amount available in such account) in order to pay immediately to the Swingline
Lender the amount of such Refunded Swingline Loans to the extent amounts
received from Lenders, including amounts deemed to be received from the
Swingline Lender, are not sufficient to repay in full such Refunded Swingline
Loans. If any portion of any such amount paid (or deemed to be paid) to the
Swingline Lender should be recovered by or on behalf of the Borrower from the
Swingline Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared among all
Lenders in the manner contemplated by Section 9.06(b). Subject to the proviso
contained in the first sentence of the preceding paragraph and to the compliance
by the Swingline Lender with the provisions of Section 2.01(d)(vii), each
Lender's obligation to make the Revolving Loans referred to in this paragraph
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of an Event of Default or a Default; (iii)
any adverse change in the condition (financial or otherwise) of Holdings or any
of its subsidiaries; (iv) any breach of this Agreement by Holdings, the Borrower
or any other Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. Nothing in this
Section 2.01(d) shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that the Borrower
may have against any Lender as a result of any default by such Lender hereunder.
(v) A copy of each notice given by the Swingline Lender or the
Administrative Agent pursuant to this Section 2.01(d) shall be promptly
delivered by the Swingline Lender to the Administrative Agent and the Borrower.
Upon the making of a Revolving Loan by a Lender pursuant to this Section
2.01(d), the amount so funded shall no longer be owed in respect of Swingline
Loans.
(vi) If as a result of any bankruptcy or similar proceeding,
Revolving Loans are not made pursuant to this Section 2.01(d) sufficient to
repay any amounts owed to the Swingline Lender as a result of a nonpayment of
outstanding Swingline Loans, each Lender agrees to purchase, and shall be deemed
to have purchased, a participation in such outstanding Swingline Loans in an
amount equal to its Applicable Percentage of the unpaid amount together with
accrued interest thereon. Upon one Business Day's notice from the Swingline
Lender, each Lender shall deliver to the Swingline Lender an amount equal to its
respective participation in same day funds at the office of the Swingline Lender
in New York, New York. In order to evidence such participation each Lender
agrees to enter into a participation agreement at the request of the Swingline
Lender in form and substance reasonably satisfactory to all parties. In the
event any Lender fails to make available to the Swingline Lender the amount of
such Lender's participation as provided in this Section 2.01(d), the Swingline
Lender shall be entitled to recover such amount on demand from such Lender
together with interest at the customary rate set by the Swingline Lender for
correction of errors among banks in New York City for one Business Day and
thereafter at the Alternate Base Rate plus the Applicable Margin then in effect.
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23
(vii) Notwithstanding anything herein to the contrary, the
Swingline Lender shall not make any Swingline Loans after the occurrence and
during the continuation of a Default or Event of Default of which it is aware
unless the Required Lenders have consented thereto.
(e) Subject to the terms and conditions and relying upon the
representations and warranties set forth in the 1994 Credit Agreement, certain
of the 1994 Lenders have made Canadian Term Loans to the Canadian Borrower. The
Canadian Borrower acknowledges the Canadian Term Loans made to it and confirms
and agrees that, as of the Effective Date, the Canadian Term Loans are
absolutely and unconditionally repayable in accordance with the terms hereof and
are not subject to any defense, setoff or counterclaim. Amounts paid or prepaid
in respect of Canadian Term Loans may not be reborrowed.
(f) Each Lender which is increasing its outstanding loans on the
Effective Date will pay to the Administrative Agent for the accounts of the
appropriate 1994 Lenders and the Larizza Lenders the difference between its
Loans shown on Schedule 2.01 and its outstanding Loans on the Effective Date.
SECTION 2.02. Loans. (a) Each Loan was or shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective commitments; provided, however, that the failure of any
Revolving Lender to make any Revolving Loan shall not in itself relieve any
other Revolving Lender of its obligation to lend hereunder (it being understood,
however, that no Lender shall be responsible for the failure of any other Lender
to make any Revolving Loan required to be made by such other Lender). The Loans
comprising each ABR Borrowing shall be in an aggregate principal amount which is
an integral multiple of $1,000,000 (or, in the case of Swingline Loans,
$500,000) and not less than $5,000,000 (or, in the case of Swingline Loans,
$500,000) (or an aggregate principal amount equal to the remaining balance of
the Revolving Credit Commitments); provided that the aggregate amount of any
Loans comprising a Eurodollar Borrowing shall be subject to a minimum principal
amount of $5,000,000 and shall be an integral multiple of $1,000,000.
(b) Each Borrowing shall be comprised of ABR Loans, or (except in the
case of Swingline Loans) Eurodollar Loans, as the Borrower or the Canadian
Borrower, as the case may be, may request pursuant to Section 2.03. Each Lender
may at its option fulfill its Commitment with respect to any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower or the Canadian Borrower, as the case may be, to repay such Loan
in accordance with the terms of this Agreement and the applicable Note.
Borrowings of more than one Type may be outstanding at the same time; provided,
however, that (except in the case of Swingline Loans) the Borrower or the
Canadian Borrower, as the case may be, shall not be entitled to request any
Borrowing which, if made, would result in an aggregate of more than 15 separate
Loans of any Lender being outstanding hereunder at any one time. For purposes of
the foregoing, Loans having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Loans.
(c) Subject to paragraph (e) below, each Lender shall make a Loan in
the amount of its pro rata portion, as determined under Section 2.16, of each
Borrowing hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Administrative Agent in New York, New York, not later
than 11:00 a.m., New York City time, and the Administrative Agent shall credit
the amounts so received to the general deposit account of the Borrower, with the
Administrative Agent or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so received to the respective Lenders. Unless the Administrative Agent shall
have received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's portion
of such Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date of such Borrowing
in accordance with this paragraph (c) and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have made
such portion available to the Administrative Agent, such Lender and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid by either the Borrower or such Lender to the Administrative Agent at (i)
in the case of the Borrower, the interest rate applicable at the time to the
Loans comprising such Borrowing
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24
and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount
together with the applicable interest thereon, such amount shall constitute such
Lender's Loan as part of such Borrowing for purposes of this Agreement and the
Borrower's obligations under the preceding sentence shall terminate. If the
Borrower shall repay to the Administrative Agent such corresponding amount
together with the applicable interest thereon, then such amount shall not
constitute a Loan hereunder and the Borrower shall have no further obligations
hereunder in respect thereof.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Revolving Credit Borrowing if the Interest
Period requested with respect thereto would end after the Revolving Credit
Maturity Date.
(e) The Borrower may refinance all or any part of any Revolving Credit
Borrowing with a Revolving Credit Borrowing of the same or a different Type,
subject to the conditions and limitations set forth in this Agreement. Any
Revolving Credit Borrowing or part thereof so refinanced shall be deemed to be
repaid or prepaid in accordance with Section 2.04 or 2.12, as applicable, with
the proceeds of a new Revolving Credit Borrowing, and the proceeds of the new
Revolving Credit Borrowing, to the extent they do not exceed the principal
amount of the Revolving Credit Borrowing being refinanced, shall not be paid by
the Lenders to the Administrative Agent or by the Administrative Agent to the
Borrower pursuant to paragraph (c) above.
(f) If the Administrative Agent has not received from the Borrower the
payment required by Section 2.22(a) by 12:00 noon, New York City time, on the
date on which an Issuing Bank has notified the Borrower and the Administrative
Agent that payment of a draft presented under any Letter of Credit will be made
(or such later time permitted by Section 2.22(a)), as provided in Section 2.22,
the Administrative Agent will promptly notify such Issuing Bank and each
Revolving Lender of the Letter of Credit Disbursement and, in the case of each
such Lender, its Applicable Percentage of such Letter of Credit Disbursement.
Each Revolving Lender (other than the applicable Issuing Bank) will pay to the
Administrative Agent not later than 2:00 p.m., New York City time, on such date
(or, if payment by the Borrower is not required until after 11:00 a.m., New York
City time, on such date, by 10:00 a.m. on the immediately following Business
Day) such Lender's Applicable Percentage of such Letter of Credit Disbursement,
which the Administrative Agent will promptly pay to such Issuing Bank. The
Administrative Agent will promptly remit to each Revolving Lender its Applicable
Percentage of any amounts subsequently received by the Administrative Agent from
the Borrower in respect of such Letter of Credit Disbursement.
SECTION 2.03. Notice of Revolving Borrowings. The Borrower shall give
the Administrative Agent written notice (or telephone notice promptly confirmed
in writing) (a) in the case of a Eurodollar Borrowing, not later than 12:00
noon, New York City time, three Business Days before a proposed borrowing and
(b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City
time, one Business Day before a proposed borrowing. Such notice shall be
irrevocable and shall in each case refer to this Agreement and specify (i) the
date of such Borrowing (which shall be a Business Day) and the amount thereof;
and (ii) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period
with respect thereto. If no election as to the Type of Borrowing is specified in
any such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. If the Borrower shall not have given notice in
accordance with this Section 2.03 of its election to refinance a Revolving
Credit Borrowing prior to the end of the Interest Period in effect for such
Borrowing, then the Borrower shall (unless such Borrowing is repaid at the end
of such Interest Period) be deemed to have given notice of an election to
refinance such Borrowing with an ABR Borrowing. The Administrative Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.03
and of each Lender's portion of the requested Borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender (i) the then unpaid principal amount of each Revolving Loan and
Swingline Loan of such Lender on the Revolving Credit Maturity Date (or such
earlier date on which the Revolving Loans and Swing Line Loans become due and
payable pursuant to Article VII), (ii) the remaining principal amount of the
Tranche A Term Loan of such Lender, in 23 consecutive quarterly installments,
respectively, payable on each quarterly anniversary of the 1994 Closing Date in
accordance with Section 2.11 (or the then unpaid
<PAGE>
25
principal amount of such Tranche A Term Loan, on the date that such Tranche A
Term Loan becomes due and payable pursuant to Article VII) and (iii) the
remaining principal amount of the Tranche B Term Loan of such Lender, in 27
consecutive quarterly installments, payable on each March 31, June 30, September
30 and December 31 in accordance with Section 2.11 (or the then unpaid principal
amount of such Loan, on the date that such Tranche B Term Loan becomes due and
payable pursuant to Article VII). The Canadian Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
principal amount of the Canadian Term Loan of such Lender, in 3 consecutive
quarterly installments, payable on each quarterly anniversary of the 1994
Closing Date, commencing on January 13, 2002 (or the then unpaid principal
amount of such Canadian Term Loan on the date that the Canadian Term Loans
become due and payable pursuant to Article VII). Each of the Borrower and the
Canadian Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans made to it from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in Section 2.06.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower and the
Canadian Borrower to such Lender resulting from each Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant
to Section 9.04(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Revolving Credit Loan, Swingline Loan, Tranche A
Term Loan, Canadian Term Loan and Tranche B Term Loan made hereunder, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower or the Canadian Borrower to each Lender hereunder and (iii) both the
amount of any sum received by the Administrative Agent hereunder from the
Borrower or the Canadian Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.04(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower and the Canadian Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Borrower or the Canadian Borrower to
repay (with applicable interest) the Loans made to the Borrower or the Canadian
Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender (i) a Revolving Credit Note with appropriate insertions as to date
and principal amount, and/or (ii) a Tranche A Term Note with appropriate
insertions as to date and principal amount, and/or (iii) a Tranche B Term Note
with appropriate insertions as to date and principal amount, and/or (iv) in the
case of the Swingline Lender, a Swingline Note with appropriate insertions as to
date and principal amount. The Canadian Borrower agrees that, upon the request
to the Administrative Agent by any Lender, the Canadian Borrower will execute
and deliver to such Lender a Canadian Term Note with appropriate insertions as
to date and principal amount.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Revolving
Lender, through the Administrative Agent, on the last day of March, June,
September and December in each year, and on the date on which the Revolving
Credit Commitment of such Lender shall be terminated as provided herein, a
commitment fee (a "Commitment Fee") of 1/2 of 1% (or, at any time when the
Applicable Level is higher than Level I, 3/8 of 1%) per annum on the average
daily unused amount of the Revolving Commitment of such Lender during the
preceding quarter (or shorter period ending with the Revolving Credit Maturity
Date or the date on which the Revolving Credit Commitment of such Lender shall
be terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days. For purposes of calculating
any Lender's Commitment Fee, the outstanding Swingline Loans and Foreign
Subsidiary Indebtedness under Section 6.01(r) not supported by Foreign
Subsidiary Letters of Credit during the period for which such Lender's
Commitment Fee is calculated shall be
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26
deemed to be zero. The Commitment Fee due to each Lender shall cease to
accrue on the date on which the Commitment of such Lender shall be terminated as
provided herein.
(b) The Borrower agrees to pay to the Lenders, through the
Administrative Agent, on the Effective Date, the amendment fees (the "Amendment
Fees") in the amounts previously agreed to be payable to the Lenders.
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, at the times previously agreed, the fees (the "Agency Fees") in the
amounts previously agreed to be payable to the Administrative Agent for its own
account in accordance with the fee letter between Chemical and Holdings dated
April 19, 1994.
(d) The Borrower agrees to pay to each Issuing Bank, for its own
account, a fronting fee for each Letter of Credit issued by such Issuing Bank,
in the amount agreed upon between the Borrower and such Issuing Bank, payable as
agreed to by the Borrower and such Issuing Bank for such Letter of Credit, and
negotiation, amendment, issuing, payment and other customary fees (collectively,
the "Fronting Fees") in the amounts separately agreed to by such Issuing Bank
and the Borrower.
(e) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders or to the applicable Issuing Banks, as the case may be.
Once paid, none of the Fees shall be refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing and Swingline Loans shall
bear interest (computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be, when determined by reference to the
Prime Rate and over a year of 360 days at all other times) at a rate per annum
equal to the Alternate Base Rate plus the Applicable Margin.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Margin.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan and as otherwise provided in this Agreement. The
applicable Alternate Base Rate and Adjusted LIBO Rate for each Interest Period
or day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
(d) For purposes of the Interest Act (Canada) (i) whenever any interest
or fee under this Agreement with respect to credit extended thereunder, is
calculated using a rate based on a year of 360 days, such rate determined
pursuant to such calculation, when expressed as an annual rate, is equivalent to
(x) the applicable rate based on a year of 360 days multiplied by (y) the actual
number of days in the calendar year in which the period for which such interest
or fee is payable (or compounded) ends, and (z) divided by 360 and (ii) the
principle of deemed reinvestment of interest does not apply to any such interest
calculation under this Agreement, and (iii) the rates of interest stipulated in
this Agreement are intended to be nominal rates and not effective rates or
yields.
SECTION 2.07. Default Interest. If the Borrower or the Canadian
Borrower, as the case may be, shall default in the payment of the principal of
or interest on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, the Borrower or the Canadian Borrower, as the case
may be, shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount up to (but not including) the date of actual
payment (after as well as before judgment) at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the Alternate Base Rate plus the
Applicable Margin plus 2% per annum.
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27
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the interbank eurodollar market,
or that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telex or telecopy notice of
such determination to the Borrower, the Canadian Borrower and the Lenders. In
the event of any such determination, any request by the Borrower or the Canadian
Borrower, as the case may be, for a Eurodollar Borrowing pursuant to Section
2.03 or 2.10 shall, until the Administrative Agent shall have advised the
Borrower, the Canadian Borrower and the Lenders that the circumstances giving
rise to such notice no longer exist, be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Revolving Credit
Commitments. (a) The Revolving Credit Commitments shall be automatically
terminated on the Revolving Credit Maturity Date. The Letter of Credit
Commitment shall be automatically terminated at 5:00 p.m., New York City time,
on the date that is five Business Days prior to the Revolving Credit Maturity
Date.
(b) Upon at least three Business Days' prior irrevocable written notice
to the Administrative Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Revolving Credit
Commitments; provided, however, that (i) each partial reduction of the Revolving
Credit Commitments shall be in an integral multiple of $1,000,000 and in a
minimum principal amount of $5,000,000 and (ii) the Revolving Credit Commitments
shall not be reduced to an amount which is less than the Letter of Credit
Exposure and the outstanding Revolving Credit Loans and Swingline Loans at such
time.
(c) Each reduction in the Revolving Credit Commitments hereunder shall
be made ratably among the applicable Lenders in accordance with their respective
applicable Revolving Credit Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, on the date of
each termination or reduction, the Commitment Fees on the amount of the
Commitments so terminated or reduced accrued through the date of such
termination or reduction.
SECTION 2.10. Conversion and Continuation of Tranche A Term, Tranche B
Term and Canadian Term Borrowings. The Borrower or the Canadian Borrower, as the
case may be, shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (i) not later than 12:00 (noon), New York City time,
one Business Day prior to conversion, to convert any Eurodollar Tranche A Term
Borrowing into an ABR Tranche A Term Borrowing, or to convert any Eurodollar
Tranche B Term Borrowing into an ABR Tranche B Term Borrowing, or to convert any
Eurodollar Canadian Term Borrowing into an ABR Canadian Term Borrowing, (ii) not
later than 10:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Tranche A Term Borrowing into a
Eurodollar Tranche A Term Borrowing, or convert any ABR Tranche B Term Borrowing
into a Eurodollar Tranche B Term Borrowing, or convert any ABR Canadian Term
Borrowing to a Eurodollar Canadian Term Borrowing or to continue any Eurodollar
Tranche A Term Borrowing or Eurodollar Tranche B Term Borrowing or Eurodollar
Canadian Term Borrowing as a Eurodollar Tranche A Term Borrowing or Eurodollar
Tranche B Term Borrowing or Eurodollar Canadian Term Borrowing, as applicable,
for an additional Interest Period and (iii) not later than 10:00 a.m., New York
City time, three Business Days prior to conversion, to convert the Interest
Period with respect to any Eurodollar Tranche A Term Borrowing or Eurodollar
Tranche B Term Borrowing or Eurodollar Canadian Term Borrowing to another
permissible Interest Period, subject to the following conditions:
(a) each conversion or continuation shall be made pro rata among
the applicable Lenders in accordance with the respective principal
amounts of the Loans comprising the converted or continued Borrowing;
<PAGE>
28
(b) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, the aggregate principal
amount of such Borrowing converted or continued shall be not less than
$1,000,000; provided that the aggregate principal amount of each
Eurodollar Borrowing resulting from any such conversion or continuation
shall not be less than $1,000,000;
(c) each conversion shall be effected by each applicable Lender by
such Lender converting its applicable Loan (or portion thereof), and
accrued interest on a Loan (or portion thereof) being converted shall
be paid by the Borrower or the Canadian Borrower, as the case may be,
at the time of conversion;
(d) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the applicable Lenders pursuant to
Section 2.15;
(e) any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Borrowing;
(f) any portion of a Eurodollar Borrowing which cannot be
converted into or continued as a Eurodollar Borrowing by reason of
clause (e) above shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing;
(g) no Interest Period may be selected for any Eurodollar
Borrowing that would end later than a Tranche A Term Loan Repayment
Date, Canadian Term Loan Repayment Date or Tranche B Term Loan
Repayment Date, as applicable, occurring on or after the first day of
such Interest Period if, after giving effect to such selection, the
aggregate outstanding amount of (i) the Eurodollar Tranche A Term
Borrowings, the Eurodollar Canadian Term Borrowings or the Eurodollar
Tranche B Term Borrowings, as the case may be, with Interest Periods
ending on or prior to such Tranche A Term Loan Repayment Date, Canadian
Term Loan Repayment Date or Tranche B Term Loan Repayment Date and (ii)
the ABR Tranche A Term Borrowings, ABR Canadian Term Borrowings or ABR
Tranche B Term Borrowings, as the case may be, would not be at least
equal to the principal amount of Tranche A Term Borrowings, Canadian
Term Borrowings or Tranche B Borrowings to be paid on such Tranche A
Term Loan Repayment Date, Canadian Term Loan Repayment Date or Tranche
B Term Loan Repayment Date; and
(h) a Borrowing may not be converted into or continued as a
Eurodollar Borrowing if a Default or an Event of Default has occurred
and is continuing and the Required Lenders have determined such
conversion or continuation is not appropriate.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower or the Canadian Borrower, as the case may be,
requests be converted or continued, (ii) whether such Borrowing is to be
converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii)
if such notice requests a conversion, the date of such conversion (which shall
be a Business Day) and (iv) if such Borrowing is to be converted to or continued
as a Eurodollar Borrowing, the Interest Period with respect thereto. If no
Interest Period is specified in any such notice with respect to any conversion
to or continuation as a Eurodollar Borrowing, the Borrower shall be deemed to
have selected an Interest Period of one month's duration. The Administrative
Agent shall promptly advise the other Lenders of any notice given pursuant to
this Section 2.10 and of each Lender's portion of any converted or continued
Borrowing. If the Borrower or the Canadian Borrower, as the case may be, shall
not have given notice in accordance with this Section 2.10 to continue any
Borrowing into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this Section 2.10 to convert such Borrowing), such
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a new
Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Tranche A Term, Tranche B Term and Canadian
Term Borrowings. (a) The Tranche A Term Borrowings shall be payable as to
principal in such number of consecutive installments, payable
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on such dates (each a "Tranche A Term Loan Repayment Date") and in such amounts
as set forth on Schedule 2.11(a).
(b) The Tranche B Term Borrowings shall be payable as to principal in
such number of consecutive installments, payable on such dates (each a "Tranche
B Loan Repayment Date") and in such amounts as set forth on Schedule 2.11(a).
(c) The Canadian Term Borrowings shall be payable as to principal in
such number of consecutive installments, payable on such dates (each a "Canadian
Term Loan Repayment Date") and in such amounts as set forth on Schedule 2.11(a).
(d) To the extent not previously paid, all Tranche A Term Borrowings
shall be due and payable on the Tranche A Term Loan Maturity Date, all Canadian
Term Borrowings shall be due and payable on the Canadian Term Loan Maturity Date
and all Tranche B Term Borrowings shall be due and payable on the Tranche B Term
Loan Maturity Date. Each payment of Eurodollar Tranche A Term Borrowings,
Canadian Eurodollar Term Borrowings or Eurodollar Tranche B Term Borrowings
repaid pursuant to this Section 2.11 shall be accompanied by accrued interest on
the principal amount paid to but excluding the date of payment.
SECTION 2.12. Prepayment. (a) The Borrower or the Canadian Borrower, as
the case may be, shall have the right at any time and from time to time to
prepay any Borrowing, in whole or in part, upon, in the case of Eurodollar
Borrowings, at least three Business Days', and in the case of ABR Borrowings, at
least one Business Day's, prior written notice (or telephone notice promptly
confirmed by written notice) to the Administrative Agent; provided, however,
that each partial prepayment (other than of a Swingline Loan) of ABR Loans shall
be in a minimum principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.
(b) On the date of any termination or reduction of the Revolving Credit
Commitments pursuant to Section 2.09, the Borrower shall pay or prepay so much
of, first, the Swingline Loans and, second, the Revolving Credit Borrowings as
shall be necessary in order that the aggregate principal amount of the Revolving
Loans and Swingline Loans outstanding will not exceed the excess, if any, of (i)
the aggregate Revolving Credit Commitments after giving effect to such
termination or reduction, minus (ii) the Letter of Credit Exposure plus the
Dollar Equivalent Amount of the Indebtedness of Foreign Subsidiaries outstanding
under Section 6.01(r) not supported by a Foreign Subsidiary Letter of Credit at
the time.
(c) The Borrower and the Canadian Borrower shall prepay the Borrowings
at the times and in the amounts required pursuant to Section 2.12(e) and
2.12(f).
(d) The Borrower's and the Canadian Borrower's prepayment obligations
under any paragraph of this Section 2.12 shall be in addition to, and shall not
be discharged by the performance of, its obligations under any other such
paragraph. Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower or the Canadian Borrower, as the case
may be, to prepay such Borrowing by the amount stated therein on the date stated
therein. All prepayments under this Section 2.12 shall be subject to Section
2.15 but otherwise without premium or penalty. All prepayments under this
Section 2.12 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
(e) In the event and on each occasion that a Prepayment Event occurs,
the Borrower or the Canadian Borrower, as the case may be, shall apply an amount
equal to the Applicable Asset Sale Prepayment Percentage of the Net Proceeds
therefrom to prepay (x) the Tranche A Term Loans and the Canadian Term Loans and
(y) the Tranche B Term Loans, in each case ratably according to the aggregate
outstanding amounts thereof in accordance with Section 2.12(g) below.
Substantially simultaneously with (and in any event not later than the Business
Day next following) the occurrence of a Prepayment Event, the Borrower or the
Canadian Borrower, as the case may be, shall pay to the Administrative Agent
(for application to the prepayment of Loans in accordance with this Section
2.12(e)) an amount equal to the Applicable Asset Sale Prepayment Percentage of
the Net Proceeds from such Prepayment Event.
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30
(f) Not later than 90 days after the end of each fiscal year of the
Borrower or the Canadian Borrower, as the case may be, commencing with the first
full fiscal year beginning after the date hereof, the Borrower or the Canadian
Borrower, as the case may be, shall pay to the Administrative Agent (for
application to the prepayment of (x) the Tranche A Term Loans and the Canadian
Term Loans and (y) the Tranche B Term Loans, in each case ratably according to
the aggregate outstanding amounts thereof in accordance with Section 2.12(g)) an
amount equal to the Applicable Excess Cash Flow Prepayment Percentage (as of the
last day for the fiscal year for which Excess Cash Flow is calculated) of the
amount of the Excess Cash Flow for such fiscal year.
(g) Each prepayment of principal of the Tranche A Term Borrowings or
the Tranche B Term Borrowings pursuant to this Section 2.12 shall be applied to
reduce scheduled payments of principal of the applicable Borrowings due under
paragraph (a) or (b), as applicable, of Section 2.11 after the date of such
prepayment pro rata in accordance with the remaining scheduled amount of each
such payment; provided, however, that in the case of any prepayment of the
Tranche A Term Borrowings and the Tranche B Term Borrowings pursuant to Section
2.12(f) or Section 2.12(a), the principal amount of such prepayment shall be
applied to reduce scheduled payments of principal due under Section 2.11 after
the date of such prepayment in the chronological order of maturity. Each
prepayment of principal of the Canadian Term Borrowings pursuant to this Section
2.12 shall be applied to reduce scheduled payments of principal of the Canadian
Term Borrowings due under paragraph (c) of Section 2.11 after the date of such
prepayment pro rata in accordance with the remaining scheduled amount of each
such payment; provided, however, that in the case of any prepayment of the
Canadian Term Borrowings pursuant to Section 2.12(f) or Section 2.12(a), the
principal amount of such prepayment shall be applied to reduce scheduled
payments of principal due under Section 2.11 after the date of such prepayment
in the chronological order of maturity. Prepayments of the Tranche A Term Loans
and Canadian Term Loans shall be applied first to the repayment in full of the
Tranche A Term Loans and second to the repayment of the Canadian Term Loans in
accordance with Section 2.12(h). Notwithstanding anything in this Section 2.12
to the contrary, so long as any Tranche A Term Loans or Canadian Term Loans are
outstanding, each prepayment with respect to the Tranche B Term Loans shall be
applied in accordance with Section 2.12(j).
(h) Notwithstanding anything herein to the contrary, the Canadian
Borrower shall not have any mandatory obligation under this Section 2.12 (i) to
prepay any Canadian Term Loans until such time as the Tranche A Term Loans have
been repaid in full or (ii) to prepay more than 25% of the original principal
amount of the Canadian Term Loans prior to the fifth anniversary of the 1994
Closing Date. Any mandatory prepayment of the Canadian Term Loans which would be
made but for the provisions of clause (ii) of the preceding sentence shall be
due and payable on the first Business Day following the fifth anniversary of the
1994 Closing Date.
(i) In the event the amount of any prepayment required to be made above
shall exceed the aggregate principal amount of the applicable outstanding ABR
Loans (the amount of any such excess being called the "Excess Amount"), the
Borrower or the Canadian Borrower, as the case may be, shall have the right, in
lieu of making such prepayment in full, to prepay all the outstanding applicable
ABR Loans and to deposit an amount equal to the Excess Amount with the
Collateral Agent in a cash collateral account maintained (pursuant to
documentation satisfactory to the Administrative Agent) by and in the sole
dominion and control of the Collateral Agent. Any amounts so deposited shall be
held by the Collateral Agent as collateral for the Obligations and applied to
the prepayment of the applicable Eurodollar Loans at the end of the current
Interest Periods applicable thereto. On any Business Day on which (x) collected
amounts remain on deposit in or to the credit of such cash collateral account
after giving effect to the payments made on such day pursuant to this Section
2.12(i) and (y) the Borrower or the Canadian Borrower, as the case may be, shall
have delivered to the Collateral Agent a written request or a telephonic request
(which shall be promptly confirmed in writing) that such remaining collected
amounts be invested in the Permitted Investments specified in such request, the
Collateral Agent shall use its reasonable efforts to invest such remaining
collected amounts in such Permitted Investments; provided, however, that the
Collateral Agent shall have continuous dominion and full control over any such
investments (and over any interest that accrues thereon) to the same extent that
it has dominion and control over such cash collateral account and no Permitted
Investment shall mature after the end of the Interest Period for which it is to
be applied. Neither the Borrower nor the Canadian Borrower shall have the right
to withdraw any amount from such cash collateral account until the applicable
Eurodollar Loans and accrued interest thereon are paid in full or if a Default
or Event of Default then exists or would result.
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31
(j) The Borrower shall at least four Business Days prior to any
expected prepayment pursuant to this Section 2.12 notify the Administrative
Agent of such prepayment and the approximate amount and date thereof. Upon
receipt of any such notice, the Administrative Agent shall promptly provide to
each Tranche B Lender a notice (each, a "Tranche B Prepayment Option Notice")
(i) setting forth the amount of such prepayment to be applied to the Tranche B
Term Loans (the "Tranche B Prepayment Amount") and the estimated portion thereof
that the applicable Tranche B Lender will be entitled to receive if it accepts
such prepayment on the prepayment date (each, a "Tranche B Prepayment Date"),
(ii) requesting such Tranche B Lender to notify the Administrative Agent in
writing, no later than the Business Day preceding the Tranche B Prepayment Date,
of such Tranche B Lender's acceptance or rejection (in each case, in whole and
not in part) of such prepayment and (iii) informing such Tranche B Lender that
failure by such Tranche B Lender to accept prepayment in writing on or before
the Business Day prior to the Tranche B Prepayment Date shall be deemed an
acceptance of such prepayment. On the Tranche B Prepayment Date, the
Administrative Agent shall apply that portion of the Tranche B Prepayment Amount
in respect of which Tranche B Lenders have accepted or been deemed to have
accepted prepayment in accordance with Section 2.12(g). The remaining amount of
the Tranche B Prepayment Amount after the payment described in the immediately
preceding sentence shall be allocated to the then-outstanding Tranche A Term
Loans and Canadian Term Loans in accordance with Section 2.12(g) for prepayments
of the same type.
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or any Issuing
Bank in respect of any Letter of Credit or of the principal of or interest on
any Eurodollar Loan made by such Lender or any Fees or other amounts payable
hereunder (other than changes in respect of (i) taxes imposed on the overall net
income of such Lender or such Issuing Bank by the jurisdiction in which such
Lender or such Issuing Bank has its principal office or by any political
subdivision or taxing authority therein and (ii) any Taxes described in Section
2.18), or shall impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets or deposits with or for the account of or
credit extended by or, in the case of the Letters of Credit, participated in by
such Lender (except any such reserve requirement which is reflected in the
Adjusted LIBO Rate) or such Issuing Bank or shall impose on such Lender or such
Issuing Bank or the interbank eurodollar market any other condition affecting
this Agreement, any Letter of Credit (or any participation with respect
thereto), the Letter of Credit Exposure, the Letter of Credit Commitment or
Eurodollar Loans made by such Lender, and the result of any of the foregoing
shall be to increase the cost to such Lender or such Issuing Bank of making or
maintaining the Letter of Credit Exposure, the Letter of Credit Commitment or
any Eurodollar Loan (or, in the case of such Issuing Bank, of making any payment
or maintaining the Letter of Credit Commitment) or to reduce the amount of any
sum received or receivable by such Lender or such Issuing Bank hereunder or
under the Notes (whether of principal, interest or otherwise) by an amount
deemed by such Lender or such Issuing Bank to be material, then the Borrower
will pay to such Lender or such Issuing Bank upon demand such additional amount
or amounts as will compensate such Lender or such Issuing Bank for such
additional costs incurred or reduction suffered.
(b) If any Lender or Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or Issuing Bank or any Lender's or Issuing Bank's
holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) made or issued after the date hereof by
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or Issuing Bank's capital
or on the capital of such Lender's or Issuing Bank's holding company, if any, as
a consequence of this Agreement or its obligations pursuant hereto to a level
below that which such Lender or Issuing Bank or such Lender's or Issuing Bank's
holding company would have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or Issuing Bank's policies and the
policies of such Lender's or Issuing Bank's holding company with respect to
capital adequacy) by an amount deemed by such Lender or Issuing Bank to be
material, then from time to time the Borrower shall pay to such Lender or
Issuing Bank such
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32
additional amount or amounts as will compensate such Lender or Issuing Bank or
such Lender's or Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of each Lender or Issuing Bank setting forth such
amount or amounts as shall be necessary to compensate such Lender or Issuing
Bank or its holding company as specified in paragraph (a) or (b) above, as the
case may be, shall be delivered to the Borrower through the Administrative Agent
and shall be conclusive absent manifest error. The Borrower shall pay each
Lender or Issuing Bank the amount shown as due on any such certificate delivered
by it within 10 days after its receipt of the same.
(d) In the event any Lender or Issuing Bank delivers a notice pursuant
to paragraph (e) below, the Borrower may require, at the Borrower's expense and
subject to Section 2.15, such Lender or Issuing Bank to assign, at par plus
accrued interest and fees, without recourse (in accordance with Section 9.04)
all its interests, rights and obligations hereunder (including, in the case of a
Lender, all of its Commitment and the Loans at the time owing to it and its
Notes and participations in Letters of Credit held by it and its obligations to
acquire such participations) to a financial institution specified by the
Borrower provided that (i) such assignment shall not conflict with or violate
any law, rule or regulation or order of any court or other Governmental
Authority, (ii) the Borrower shall have received the written consent of the
Administrative Agent, which consent shall not unreasonably be withheld, to such
assignment, (iii) the Borrower shall have paid to the assigning Lender or
Issuing Bank all monies accrued and owing hereunder to it (including pursuant to
this Section) and (iv) in the case of a required assignment by an Issuing Bank,
all outstanding Letters of Credit issued by such Issuing Bank shall be canceled
and returned to such Issuing Bank.
(e) Promptly after any Lender or Issuing Bank has determined, in its
sole judgment, that it will make a request for increased compensation pursuant
to this Section, such Lender or Issuing Bank will notify the Borrower thereof.
Failure on the part of any Lender or Issuing Bank so to notify the Borrower or
to demand compensation for any increased costs or reduction in amounts received
or receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of such Lender's or Issuing Bank's right to demand
compensation with respect to such period or any other period; provided that the
Borrower shall not be under any obligation to compensate any Lender or Issuing
Bank under Section 2.13(b) with respect to increased costs or reductions with
respect to any period prior to the date that is six months prior to such request
if such Lender or the Issuing Bank knew or could reasonably have been expected
to be aware of the circumstances giving rise to such increased costs or
reductions and of the fact that such circumstances would in fact result in such
increased costs or reduction; provided, further, that, the foregoing limitation
shall not apply to any increased costs or reductions arising out of the
retroactive application of any law, regulation, rule, guideline or directive as
aforesaid within such six month period. The protection of this Section shall be
available to each Lender and Issuing Bank regardless of any possible contention
of the invalidity or inapplicability of the law, rule, regulation, guideline or
other change or condition which shall have occurred or been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
provision herein, if the adoption of or any change in any law or regulation or
in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon any request by the Borrower for a
Eurodollar Borrowing shall, as to such Lender only, be deemed a request
for an ABR Loan unless such declaration shall be subsequently
withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall
be automatically converted to ABR Loans as of the effective date of
such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender
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33
or the converted Eurodollar Loans of such Lender shall instead be applied to
repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense (other than taxes) which such Lender may sustain or
incur as a consequence of (a) any failure by the Borrower or the Canadian
Borrower to fulfill on the date of any Borrowing or proposed Borrowing hereunder
the applicable conditions set forth in Article IV, (b) any failure by the
Borrower or the Canadian Borrower to borrow or to refinance, convert or continue
any Loan hereunder after irrevocable notice of such Borrowing, refinancing,
conversion or continuation has been given pursuant to Section 2.03 or 2.10, (c)
any payment, prepayment or conversion of a Eurodollar Loan required by any other
provision of this Agreement or otherwise made or deemed made on a date other
than the last day of the Interest Period applicable thereto, (d) any default in
payment or prepayment of the principal amount of any Loan or any part thereof or
interest accrued thereon, as and when due and payable (at the due date thereof,
whether by scheduled maturity, acceleration, irrevocable notice of prepayment or
otherwise) or (e) the occurrence of any Event of Default, including, in each
such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall exclude loss of margin hereunder but
shall include an amount equal to the excess, if any, as reasonably determined by
such Lender, of (i) its cost of obtaining the funds for the Loan being paid,
prepaid, converted or not borrowed, converted or continued (assumed to be the
Adjusted LIBO Rate applicable thereto) for the period from the date of such
payment, prepayment, conversion or failure to borrow, convert or continue to the
last day of the Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the Interest Period for such Loan which would have
commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, converted or not borrowed, converted or
continued for such period or Interest Period, as the case may be. A certificate
of any Lender setting forth any amount or amounts which such Lender is entitled
to receive pursuant to this Section (and the reasons therefor) shall be
delivered to the Borrower through the Administrative Agent and shall be
conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under Section
2.14, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the Commitment Fees or
Letter of Credit Fees, each reduction of the Revolving Credit Commitments and
each refinancing of any Borrowing with, conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type shall be allocated
(except in the case of Swingline Loans) pro rata among the Lenders in accordance
with their respective Revolving Credit Commitments or, if applicable outstanding
Loans, as the case may be. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing, computed in
accordance with Section 2.01, to the next higher or lower whole dollar amount.
SECTION 2.17. Payments. (a) Each of the Borrower and the Canadian
Borrower shall make each payment without set-off or counterclaim (including
principal of or interest on any Borrowing or any Fees or other amounts) required
to be made by it hereunder and under any other Loan Document not later than
12:00 noon, New York City time, on the date when due in dollars to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York,
Attention of Wholesale Loan Services, in immediately available funds, for credit
to Chemical Bank, ABA Number 021000128, Account Number 323-5-02059.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day
(except in the case of payment of principal of a Eurodollar Borrowing if the
effect of such extension would be to extend such payment
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into the next succeeding month, in which event such payment shall be due on the
immediately preceding Business Day), and such extension of time shall in such
case be included in the computation of interest or Fees, if applicable.
SECTION 2.18. Taxes. (a) Any and all payments by the Borrower and the
Canadian Borrower to the Administrative Agent, the Issuing Banks or the Lenders
hereunder or under the other Loan Documents shall be made, in accordance with
Section 2.17 free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) in the case of each Lender, each
Issuing Bank and the Administrative Agent, taxes that would not be imposed but
for a connection between such Lender, such Issuing Bank or the Administrative
Agent (as the case may be) and the jurisdiction imposing such tax, other than a
connection arising solely by virtue of the activities of such Lender, such
Issuing Bank or the Administrative Agent (as the case may be) pursuant to or in
respect of this Agreement or under any other Loan Document, including, without
limitation, entering into, lending money or extending credit pursuant to,
receiving payments under, or enforcing, this Agreement or any other Loan
Document, and (ii) in the case of each Lender, each Issuing Bank and the
Administrative Agent, any United States withholding taxes payable with respect
to payments hereunder or under the other Loan Documents under laws (including,
without limitation, any statute, treaty, ruling, determination or regulation) in
effect on the Initial Date (as hereinafter defined) for such Lender, such
Issuing Bank or the Administrative Agent, as the case may be, but not excluding
any United States withholding taxes payable solely as a result of any change in
such laws occurring after the Initial Date (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). For purposes of this Section 2.18, the term "Initial
Date" shall mean (i) in the case of the Administrative Agent, any Issuing Bank
or any Lender, the date on which such person became a party to this Agreement
and (ii) in the case of any assignment including any assignment by a Lender or
an Issuing Bank to a new lending office, the date of such assignment. If any
Taxes shall be required by law to be deducted from or in respect of any sum
payable hereunder or under any other Loan Document to any Lender, any Issuing
Bank or the Administrative Agent (i) the sum payable by the Borrower or the
Canadian Borrower, as the case may be, shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.18) such Lender, such Issuing Bank
or the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
or the Canadian Borrower, as the case may be, shall make such deductions and
(iii) the Borrower or the Canadian Borrower, as the case may be, shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. The Borrower and the Canadian Borrower shall
not, however, be required to pay any amounts pursuant to clause (i) of the
preceding sentence to any Lender, any Issuing Bank or the Administrative Agent
(in the case of payments to be made by the Borrower) not organized under the
laws of the United States of America or a state thereof (or, in the case of
payments to be made by the Canadian Borrower, not organized under the laws of
Canada) if such Lender, such Issuing Bank or the Administrative Agent fails to
comply with the requirements of paragraphs (f) or (g), as the case may be, and
paragraph (h) of this Section 2.18.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower will indemnify each Lender, each Issuing Bank and the
Administrative Agent for the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.18) paid by such Lender, such Issuing Bank or the Administrative
Agent, as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto whether or not such Taxes or
Other Taxes were correctly or legally asserted. Such indemnification shall be
made within 10 days after the date any Lender, any Issuing Bank or the
Administrative Agent, as the case may be, makes written demand therefor. If a
Lender, an Issuing Bank or the Administrative Agent shall become aware that it
is entitled to receive a refund or is reasonably requested by the Borrower to
pursue a claim for a refund in respect of Taxes or Other Taxes, it shall
promptly notify the Borrower of the availability of such refund (unless
instructed to pursue a claim by the Borrower) and shall, within 30 days after
receipt of a request by the Borrower, pursue or timely claim such refund at the
Borrower's expense; provided that such Lender shall not be required to pursue or
claim such refund if such Lender reasonably determines that the pursuit or claim
of such refund will have a disadvantageous impact upon such Lender. If any
Lender, any Issuing Bank or the Administrative Agent receives a refund in
respect
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35
of any Taxes or Other Taxes for which such Lender, such Issuing Bank or the
Administrative Agent has received payment from the Borrower hereunder, it shall
promptly notify the Borrower of such refund and shall, within 30 days after
receipt of a request by the Borrower (or promptly upon receipt, if the Borrower
has requested application for such refund pursuant hereto), repay such refund
(plus any interest received) to the Borrower, provided that the Borrower, upon
the request of such Lender, such Issuing Bank or the Administrative Agent,
agrees to return such refund (plus any penalties, interest or other charges
required to be paid) to such Lender, such Issuing Bank or the Administrative
Agent in the event such Lender, such Issuing Bank or the Administrative Agent is
required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower or the Canadian Borrower, as the case may be, in
respect of any payment to any Lender, any Issuing Bank or the Administrative
Agent, the Borrower or the Canadian Borrower, as the case may be, will furnish
to the Administrative Agent, at its address referred to in Schedule 2.01, the
original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.18 shall
survive the payment in full of principal and interest hereunder and the
termination of the Commitments.
(f) In the case of any Borrowing by the Borrower, this paragraph (f)
shall apply. Each Lender, each Issuing Bank and the Administrative Agent that is
not organized under the laws of the United States of America or a state thereof
agrees that at least 10 days prior to the first Interest Payment Date following
the Initial Date in respect of such Issuing Bank or such Lender, it will deliver
to the Borrower and the Administrative Agent (if appropriate) two duly completed
copies of either (i) United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each case that the
Issuing Bank or such Lender or the Administrative Agent, as the case may be, is
entitled to receive payments under this Agreement and the Notes payable to it
without deduction or withholding of any United States federal income taxes and
backup withholding taxes or is entitled to receive such payments at a reduced
rate pursuant to a treaty provision or (ii) in the case of a Lender that is not
a "bank" within the meaning of Section 881(c)(3) of the Code, United States
Internal Revenue Service Form W-8 or successor applicable form and a statement
from such Lender certifying to the fact that interest payable to it hereunder
(A) will not be described in Section 871(h)(3)(A) or Section 881(c)(3)(A), (B)
or (C) of the Code and (B) will not be effectively connected with a trade or
business carried on in the United States by such Lender. Each Lender, each
Issuing Bank and the Administrative Agent required to deliver to the Borrower
and the Administrative Agent a Form 1001, 4224 or W-8 pursuant to the preceding
sentence further undertakes to deliver to the Borrower and the Administrative
Agent (if appropriate) two further copies of Form 1001, 4224 or W-8, or
successor forms, or other similar manner of certification and such extensions or
renewals thereof as may reasonably be requested by the Borrower and, in the case
where a Form W-8 has been delivered, a further statement certifying to the fact
set forth in clause (B) of the preceding sentence (i) at the times reasonably
requested by the Borrower, (ii) after the occurrence of an event requiring a
change in the most recent form or statement previously delivered by it to the
Borrower or (iii) in the case of Form 1001, 4224 or W-8, on or before the date
that any such form expires or becomes obsolete, and, in the case of Form 1001 or
4224, certifying that such Issuing Bank or such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes and backup withholding taxes or is entitled to
receive such payments at a reduced rate pursuant to a treaty provision, unless
such Issuing Bank or such Lender advises the Borrower that it is unable lawfully
to provide such forms and other certifications and notifies the Borrower to such
effect. Unless the Borrower and the Administrative Agent have received forms,
certificates and other documents satisfactory to them indicating that payments
hereunder or under or in respect of the Notes or the Letters of Credit to or for
any Issuing Bank or Lender not incorporated under the laws of the United States
or a state thereof are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the Borrower
or the Administrative Agent shall withhold such taxes from such payments at the
applicable statutory rate.
(g) In the event the Canadian Borrower is required to pay additional
amounts pursuant to this Section 2.18, this paragraph (g) shall apply. Each
Lender, each Issuing Bank and the Administrative Agent that is not incorporated
within or under the laws of Canada and that is claiming such additional amounts
agrees that within a reasonable
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36
period of time following the request of the Canadian Borrower, it will, to the
extent it is legally entitled to a reduction in the rate of or exemption from
Canadian withholding taxes, deliver to the Canadian Borrower and the
Administrative Agent (if appropriate) any form or document required under the
laws, regulations, official interpretations or treaties enacted by, made or
entered into with Canada properly completed and duly executed by such Issuing
Bank, such Lender or Administrative Agent establishing that any payments
hereunder are exempt from Canadian withholding tax or subject to a reduced rate
of Canadian withholding tax, as the case may be; provided that, in the sole
determination of such Lender, such Issuing Bank or the Administrative Agent,
such form or document shall not be otherwise disadvantageous to such Lender,
such Issuing Bank or the Administrative Agent.
(h) Any Issuing Bank and any Lender claiming any additional amounts
payable pursuant to this Section 2.18 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Canadian Borrower to change the jurisdiction of
its applicable lending office if the making of such a filing or change would
avoid the need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such Issuing Bank
or such Lender, be otherwise disadvantageous to such Issuing Bank or such
Lender.
SECTION 2.19. Issuance of Letters of Credit.
(a) Each Issuing Bank agrees, upon the terms and subject to the
conditions herein set forth, to issue Letters of Credit (including Foreign
Subsidiary Letters of Credit), in a form reasonably acceptable to the
Administrative Agent and such Issuing Bank, appropriately completed, for the
account of the Borrower, at any time and from time to time on and after the 1994
Closing Date until the earlier of the date five Business Days prior to the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitments in accordance with the terms hereof; provided, however, that any
Letter of Credit shall be issued by an Issuing Bank only if, and each request by
the Borrower for the issuance of any Letter of Credit shall be deemed a
representation and warranty of the Borrower that, immediately following the
issuance of any such Letter of Credit, (i)(x) the Letter of Credit Exposure
(other than in respect of Foreign Subsidiary Letters of Credit) shall not exceed
the Letter of Credit Commitment in effect at the time and (y) the Letter of
Credit Exposure in respect of Foreign Subsidiary Letters of Credit shall not
exceed $200,000,000 and (ii) the sum of the Letter of Credit Exposure and the
aggregate principal amount of outstanding Revolving Loans and Swingline Loans
plus the Dollar Equivalent Amount of the Indebtedness of Foreign Subsidiaries
outstanding under Section 6.01(r) not supported by a Foreign Subsidiary Letter
of Credit shall not exceed the aggregate Revolving Credit Commitments in effect
at the time. In determining whether the issuance of a Letter of Credit will
comply with clauses (i) and (ii) of the preceding sentence, each Issuing Bank
may rely conclusively on information obtained from the Administrative Agent
regarding the aggregate principal amount of outstanding Revolving Loans and the
aggregate Revolving Credit Commitments, Letter of Credit Exposure and Swingline
Loans.
(b) Each Letter of Credit shall expire no later than the fifth Business
Day preceding the Revolving Credit Maturity Date, unless such Letter of Credit
expires by its terms on an earlier date. Each Letter of Credit shall provide for
payments of drawings in dollars. Each Letter of Credit shall reduce availability
under the Revolving Credit Commitments.
(c) Each issuance of any Letter of Credit shall be made on at least
three Business Days' prior written notice from the Borrower to the applicable
Issuing Bank and the Administrative Agent (which shall give prompt notice
thereof to each Revolving Lender) specifying the date of issuance, the date on
which such Letter of Credit is to expire (which shall not be later than the
earlier of (i) the fifth Business Day preceding the Revolving Credit Maturity
Date and (ii) subject to extension, two years after the date of any such Letter
of Credit), the amount of such Letter of Credit, the name and address of the
beneficiary of such Letter of Credit and such other information as may be
necessary or desirable to complete such Letter of Credit. Such Issuing Bank will
give the Administrative Agent and the Administrative Agent shall give each
Revolving Lender prompt notice of the issuance and amount of each Letter of
Credit and the expiration of each Letter of Credit.
(d) No Issuing Bank shall be required to issue a Letter of Credit
unless it has agreed with the Borrower upon the Fronting Fees to be paid by the
Borrower in connection with such Letter of Credit and the form of such Letter of
Credit is reasonably acceptable to such Issuing Bank.
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37
(e) Holdings has identified to the Administrative Agent certain letters
of credit aggregating not more than $11,000,000 (the "Existing Letters of
Credit") which were issued for the account of Holdings or certain of its
subsidiaries prior to the 1994 Closing Date by financial institutions which are
Lenders under this Agreement. The parties hereto wish to treat the Existing
Letters of Credit as if they had been issued under this Agreement. Therefore,
the Existing Letters of Credit shall be deemed to be Letters of Credit issued on
the 1994 Closing Date for all purposes of this Agreement, including, without
limitation, Section 2.20. The Borrower agrees to take any action reasonably
requested by the applicable Issuing Bank (including delivering new letter of
credit applications) in order to implement this paragraph (e) and make the
Borrower the account party of record for the Existing Letters of Credit. Each
Letter of Credit issued by an Issuing Bank under the 1994 Credit Agreement and
outstanding on the Effective Date shall be a Letter of Credit hereunder for all
purposes of this Agreement, including, without limitation, Section 2.20.
SECTION 2.20. Participations; Unconditional Obligations. (a) By the
issuance of a Letter of Credit and without any further action on the part of the
applicable Issuing Bank or the Revolving Lenders in respect thereof, each
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby agrees to acquire from such Issuing Bank, a participation in such Letter
of Credit equal to such Revolving Lender's Applicable Percentage of the face
amount of such Letter of Credit, effective upon the issuance of such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of such Issuing Bank, in accordance with Section 2.02(f),
such Revolving Lender's Applicable Percentage of each Letter of Credit
Disbursement made by such Issuing Bank; provided, however, that the Revolving
Lenders shall not be obligated to make any such payment to an Issuing Bank with
respect to any wrongful payment or disbursement made as a result of the gross
negligence or willful misconduct of such Issuing Bank in determining whether
documents presented in connection with such Letter of Credit Disbursement
conform to the requirements of the applicable Letter of Credit.
(b) Each Revolving Lender acknowledges and agrees that its obligation
to acquire participations pursuant to paragraph (a) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of an Event of
Default or Default hereunder, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever other than in the
case of any wrongful payment made as a result of the gross negligence or willful
misconduct of the Issuing Bank in determining whether documents presented in
connection with such Letter of Credit conform to the requirements of the
applicable Letter of Credit.
SECTION 2.21. Letter of Credit Fee. The Borrower agrees to pay to the
Administrative Agent for the account of the Revolving Lenders for each calendar
quarter (or shorter period ending with the first date on which the Letter of
Credit Commitment shall have expired or been terminated and there shall be no
outstanding Letters of Credit) a fee (the "Letter of Credit Fee") on the average
daily amount of the outstanding Letters of Credit at a per annum rate equal to
the Applicable Margin at such time for Eurodollar Revolving Loans; provided that
with respect to any Letter of Credit as to which the Borrower has failed to make
a payment required by Section 2.22, interest calculated at the rate set forth in
Section 2.07 from the date such payment was due through the date such payment is
made shall be paid by the Borrower in lieu of the Letter of Credit Fee on the
date such payment is made. The Letter of Credit Fee shall be computed on the
basis of the actual number of days elapsed over a year of 360 days. The
Administrative Agent agrees to disburse to each Revolving Lender its pro rata
portion of such Letter of Credit Fee promptly upon receipt. The Letter of Credit
Fee shall be paid in arrears on the last day of March, June, September and
December of each year and on the Revolving Credit Maturity Date (or the first
date on which the Letter of Credit Commitment shall have expired or been
terminated and there shall be no outstanding Letters of Credit, if earlier).
Once paid the Letter of Credit Fee paid or payable shall not be refundable in
any circumstances whatsoever, absent manifest error.
SECTION 2.22. Agreement To Repay Letter of Credit Disbursements. (a) If
an Issuing Bank shall pay any draft presented under a Letter of Credit, the
Borrower shall pay to the Administrative Agent, on behalf of such Issuing Bank,
an amount equal to the amount of such draft before 11:00 a.m., New York City
time, on the Business Day on which such Issuing Bank shall have notified the
Borrower that payment of such draft will be made (or such later time as is not
later than one hour after the Borrower shall have received such notice or, if
the Borrower shall
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38
have received such notice later than 4:00 p.m., New York City time, on any
Business Day, not later than 10:00 a.m., New York City time, on the immediately
following Business Day). The Administrative Agent will promptly pay any such
amounts received by it to such Issuing Bank.
(b) The Borrower's obligation to repay each Issuing Bank for payments
and disbursements made by such Issuing Bank under the outstanding Letters of
Credit shall be absolute, unconditional and irrevocable under any and all
circumstances and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any other person may at any time have against the
beneficiary under any Letter of Credit, any Issuing Bank, the
Administrative Agent or any Lender (other than the defense of payment
in accordance with the terms of this Agreement or a defense based on
the gross negligence or wilful misconduct of any Issuing Bank) or any
other person in connection with this Agreement or any other agreement
or transaction;
(iii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; provided that payment by an Issuing Bank under such Letter of
Credit against presentation of such draft or document shall not have
constituted gross negligence or wilful misconduct of such Issuing Bank;
(iv) payment by an Issuing Bank under a Letter of Credit against
presentation of a draft or other document which does not comply with
the terms of such Letter of Credit; provided that such payment shall
not have constituted gross negligence or wilful misconduct of such
Issuing Bank; and
(v) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance
or event shall not have been the result of gross negligence or wilful
misconduct of the applicable Issuing Bank.
It is understood that in making any payment under a Letter of Credit
(x) each Issuing Bank's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary equals the amount of
such draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (y) any noncompliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
each case, not be deemed willful misconduct or gross negligence of such Issuing
Bank.
SECTION 2.23. Letter of Credit Operations. Each Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under an outstanding Letter of Credit to
ascertain that the same appear on their face to be in substantial conformity
with the terms and conditions of such outstanding Letter of Credit. Such Issuing
Bank shall (i) as promptly as possible after such demand for payment give oral
notification, confirmed by telecopy, to the Administrative Agent and the
Borrower of such demand for payment and (ii) as promptly as possible after such
Issuing Bank determines whether such demand for payment was in accordance with
the terms and conditions of such outstanding Letter of Credit, give notice in
the same manner to the Administrative Agent and the Borrower as to such
determination and as to whether such Issuing Bank has made or will make a Letter
of Credit Disbursement thereunder, provided that the failure to give such
notices shall not relieve the Borrower of its obligation to reimburse such
Issuing Bank with respect to any such Letter of Credit Disbursement, and the
Administrative Agent shall promptly give each Revolving Lender notice thereof.
SECTION 2.24. Cash Collateralization. If any Event of Default shall
occur and be continuing, the Borrower shall, on the Business Day it receives
notice from the Administrative Agent or the Required Lenders therefor, deposit
in an account with the Collateral Agent, for the benefit of the Lenders, an
amount in cash equal to
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39
its Letter of Credit Exposure as of such date. Such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations. So long as such Event of Default is continuing, the Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall automatically be
applied by the Collateral Agent to reimburse the applicable Issuing Bank and the
Revolving Lenders for Letter of Credit Disbursements and, if the maturity of the
Loans has been accelerated, to satisfy the Obligations. All remaining amounts on
deposit shall be returned to the Borrower within three Business Days after all
Events of Default have been cured or waived.
SECTION 2.25. Termination and Reduction of Letter of Credit Commitment.
(a) Notwithstanding any other provision hereof, in the event that any
restrictions or limitations are imposed upon or determined or held to be
applicable to any Issuing Bank, any Revolving Lender or the Borrower by, under
or pursuant to any law or regulation (Federal, state or local) now or hereafter
in effect or by reason of any interpretation thereof by any court or
Governmental Authority (including any interpretation by the Comptroller of the
Currency as to the applicability of 12 U.S.C. ss. 84 or any substitute statute,
as now or hereafter in effect, to the transactions contemplated hereby), which
would prevent such Revolving Lender from legally incurring liability under or in
connection with a Letter of Credit issued or to be issued pursuant hereto, then
such Revolving Lender shall give prompt written notice thereof to the
Administrative Agent (which shall notify the Borrower, each Issuing Bank and
each other Revolving Lender thereof as soon as reasonably practicable),
whereupon the obligation of each Issuing Bank to issue additional Letters of
Credit pursuant hereto shall be reduced by the Applicable Percentage of such
Revolving Lender (and, as to any Letter of Credit thereafter issued, the
Applicable Percentages of the other Revolving Lenders shall be determined as
though such Revolving Lender does not have a Revolving Credit Commitment) until
the Administrative Agent shall be advised that such event is no longer
continuing or until such Revolving Lender shall have assigned its Commitment
pursuant to the provisions of this Agreement.
(b) The Borrower may permanently terminate, or from time to time in
part permanently reduce, the Letter of Credit Commitment, in each case upon at
least three Business Days' prior written or telex notice to the Administrative
Agent; provided that the Letter of Credit Commitment shall not be reduced to an
amount that is less than the Letter of Credit Exposure at the time.
(c) In the event that the Revolving Credit Commitments are at any time
reduced pursuant to Section 2.09 to an amount that is less than the Letter of
Credit Commitment, the Letter of Credit Commitment shall be permanently reduced
to an amount equal to the Revolving Credit Commitments.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Each of Holdings, the Canadian Borrower and the Borrower represents and
warrants to each of the Lenders and each Issuing Bank that:
SECTION 3.01. Organization, Corporate Powers. Each of Holdings and each
Restricted Subsidiary (i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated,
(ii) has all requisite corporate power and authority, and all material licenses,
permits, franchises, consents and approvals, to own or lease its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (iii) is qualified and in good standing as a foreign corporation to
do business in every jurisdiction where such qualification is necessary, except
where the failure so to qualify would not have a Material Adverse Effect and
(iv) has the corporate power and authority to execute, deliver and perform each
of the Loan Documents and each agreement or instrument contemplated hereby or
thereby to which it is or will be a party. As of the Effective Date, none of
Holdings or any Restricted Subsidiary of Holdings has any assets or business, or
is a party to any material contract within the meaning of Item 6.01(b)(10) of
Regulation S-K of the Securities and
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Exchange Commission, other than as disclosed or referred to or incorporated by
reference in the registration statement of which the Preliminary Prospectus is a
part or as contemplated hereby and thereby.
SECTION 3.02. Authorization. The execution, delivery and performance of
each of the Loan Documents, the borrowings hereunder and the consummation of the
1996 Transactions and the other transactions contemplated by any of the
foregoing (collectively, the "Transactions") (i) have been (or, in the case of
the Wallcoverings Disposition, will be prior to consummation) duly authorized by
all requisite corporate and, if required, stockholder action and (ii) will not
(x) violate (A) any provision of law, statute, rule or regulation (including,
without limitation, Regulations G, T, U and X) or the certificate of
incorporation or by-laws (or similar governing documents) of any of Holdings and
the Restricted Subsidiaries, (B) any applicable order of any court or any rule,
regulation or order of any Governmental Authority or (C) any indenture,
certificate of designation for preferred stock, agreement or other instrument to
which any of Holdings or any Restricted Subsidiary is a party or by which any of
them or any of their property is bound, (y) be in conflict with, result in a
breach of or constitute (with notice or lapse of time or both) a default under
any such indenture, agreement or other instrument where any such conflict,
violation, breach or default referred to in clause (ii)(x) or (ii)(y) of this
Section, individually or in the aggregate, would have a Material Adverse Effect
or (z) result in the creation or imposition of any Lien upon any property or
assets of Holdings or any subsidiary of Holdings, except for Liens created by
the Pledge Agreement.
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by each of Holdings, the Canadian Borrower and the Borrower and
constitutes, and each other Loan Document executed and delivered by any of
Holdings, the Borrower, the Canadian Borrower or the Subsidiary Guarantors
constitutes, a legal, valid and binding obligation of such party enforceable
against such party in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting creditors' rights generally and except as enforceability may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.04. 1996 Transactions. (a) All consents and approvals of,
filings and registrations with, and other actions in respect of, all
Governmental Authorities required in order to make or consummate the 1996
Transactions have been obtained, given, filed or taken and are in full force and
effect, other than (i) filings and other actions required pursuant to the
Securities Act of 1933, the Securities Exchange Act of 1934 and the respective
rules and regulations thereunder, and filings and other actions required
pursuant to state securities or blue sky laws, in each case to the extent that
such filings and other actions are not required to have been made or taken prior
to the date hereof, (ii) any such consents, approvals or filings or other
actions which may be required to effectuate the Wallcoverings Disposition (which
will be obtained or made prior to the consummation thereof) and (iii) any such
consents, approvals, filings or other actions, the failure to obtain or make
which could not reasonably be expected to result in a Material Adverse Effect.
(b) The Preliminary Prospectus at the time of its dissemination to the
public did not and on the Effective Date will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. Copies of the Preliminary Prospectus have been delivered
to the Lenders.
(c) The final prospectus filed with the Securities and Exchange
Commission in connection with the offering of the Senior Subordinated Notes and
any amendments or supplements thereto will not at the time of its dissemination
to the public or on the Effective Date contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. Copies of such final prospectus and any amendments or
supplements thereto will be delivered to the Lenders promptly following the time
they are made available to the public or filed with the Securities and Exchange
Commission.
SECTION 3.05. Use of Proceeds. The Borrower will use the proceeds of
the Revolving Loans only for the purposes set forth in Section 5.08.
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SECTION 3.06. Federal Reserve Regulations. (a) None of Holdings or any
subsidiary of Holdings is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) The making of the Loans hereunder and the use of the proceeds
thereof as contemplated hereby and the other Transactions will not violate or be
inconsistent with the provisions of the Regulations of the Board, including
Regulations G, T, U and X.
SECTION 3.07. Capitalization of the Borrower and Holdings. (a) As of
the Effective Date, the authorized capital stock of the Borrower consists of
2,000 shares of common stock, par value $1.00 per share ("Borrower Common
Stock"), of which 1,000 shares will be issued and outstanding as of the
Effective Date. All such outstanding shares of Borrower Common Stock are fully
paid and nonassessable and, are owned beneficially and of record by Holdings,
free and clear of all Liens and encumbrances whatsoever (other than the Lien of
the Pledge Agreement). Except for the Pledge Agreement, there are no outstanding
subscriptions, options, warrants, calls, rights (including preemptive rights) or
other agreements or commitments of any nature relating to any capital stock of
the Borrower.
(b) As of the Effective Date, the authorized capital stock of Holdings
consists of (i) 150,000,000 shares of Holdings Common Stock, of which
approximately 69,000,000 shares will be issued and outstanding as of the
Effective Date and (ii) 16,000,000 shares of preferred stock, par value $0.01
per share, of which no shares will be outstanding as of the Effective Date. On
the Effective Date, all such outstanding shares of Holdings Common Stock will be
fully paid and nonassessable. On the Effective Date, each Designated Person (or
group of Designated Persons) will be the owner, beneficially and of record, of
the number of shares of Holdings Common Stock specified on Schedule 3.07(b)(1).
Except as provided in Schedule 3.07(b)(2) hereto, neither Holdings nor any
Subsidiary is a party to any outstanding subscriptions, options, warrants,
calls, rights (including preemptive rights) or other agreements or commitments
(other than stock options granted to employees, consultants or directors and
directors' qualifying shares) of any nature relating to any capital stock of
Holdings.
(c) As of the Effective Date, the authorized capital stock of the
Canadian Borrower consists of an unlimited number of common shares without par
value ("Canadian Borrower Common Stock"), of which 612 shares will be issued and
outstanding as of the Effective Date and an unlimited number of voting,
nonparticipating preferred shares, no shares of which will be issued and
outstanding as of the Effective Date. All such outstanding shares of Canadian
Borrower Common Stock are fully paid and nonassessable and are owned directly or
indirectly, beneficially and of record by the Borrower free and clear of all
Liens and encumbrances whatsoever.
SECTION 3.08. Pledge Agreement. The security interests created in favor
of the Collateral Agent, for the benefit of the Lenders, under the Pledge
Agreement will at all times constitute first-priority, perfected security
interests in the Pledged Securities, and such Pledged Securities will be subject
to no Liens or security interests of any other person. No filings or recordings
are or will be required in order to perfect the security interests in the
Pledged Securities created under the Pledge Agreement.
SECTION 3.09. Financial Statements. (a) Holdings has heretofore
furnished to each of the Lenders consolidated balance sheets and consolidated
statements of income and cash flow of Holdings and its consolidated subsidiaries
as of and for the fiscal years ended January 27, 1996 and January 28, 1995,
certified by Arthur Andersen L.L.P., independent public accountants for
Holdings. Such balance sheet and statement of income and cash flows present
fairly the financial condition and results of operations of Holdings and its
consolidated subsidiaries on a consolidated basis as of the dates and for the
periods indicated. Except as disclosed in the Preliminary Prospectus, neither
Holdings nor any of its Subsidiaries had, at the date of the most recent balance
sheet referred to above, any material Guarantee, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. The financial statements referred to in this Section
3.09(a) have been prepared in accordance with GAAP applied on a consistent
basis.
(b) The pro forma consolidated balance sheet of Holdings as of January
27, 1996 included in the Preliminary Prospectus is the audited consolidated
balance sheet of Holdings as of such date, adjusted to give effect
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42
(as if such
events had occurred on such date) to all the 1996 Transactions (excluding the
Wallcoverings Disposition) and other identified pro forma adjustments set forth
in the Preliminary Prospectus, including the payment of all fees and expenses
expected to be incurred in connection therewith (as estimated at the time of the
preparation of such balance sheet), based upon the assumptions specified
therein. Such pro forma consolidated balance sheet presents fairly, on a pro
forma basis, the consolidated financial position of Holdings as of such date
assuming that the events specified in the preceding sentence had actually
occurred or are true, as the case may be, on such date and has been prepared
based upon reasonable assumptions and in accordance with GAAP applied on a
consistent basis.
SECTION 3.10. No Material Adverse Change. There has been no material
adverse change in the business, properties, assets, operations or financial
condition of Holdings and its Restricted Subsidiaries, taken as a whole, since
January 27, 1996.
SECTION 3.11. Title to Properties; Possession Under Leases. (a) Each of
Holdings, the Borrower and the Significant Subsidiaries has good and marketable
title to, or valid leasehold interests in, or easements on or other limited
property interests in, all their respective material properties and assets,
except for minor defects in title and limitations on property interests that do
not interfere with their respective ability to conduct their respective business
as currently conducted or to utilize such properties and assets for their
intended purposes. All such material properties and assets are free and clear of
Liens, other than Liens expressly permitted by Section 6.04.
(b) Each of Holdings, the Borrower and the Significant Subsidiaries has
complied with all obligations under all material leases to which it is a party,
except where the failure to comply would not have a Material Adverse Effect, and
all such leases are in full force and effect, except leases in respect of which
the failure to be in full force and effect would not have a Material Adverse
Effect. Each of Holdings, the Borrower and the Significant Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases.
(c) Each of Holdings, the Borrower and the Significant Subsidiaries
owns or possesses, or could obtain ownership or possession of, on terms not
materially adverse to it, all patents, trademarks, service marks, trade names,
copyrights, licenses and rights with respect thereto necessary for the present
conduct of its business, without any known conflict with the rights of others,
and free from any burdensome restrictions, except where such conflicts and
restrictions would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.12. Subsidiaries. (a) Schedule 3.12(a) sets forth as of the
Effective Date a list of all Subsidiaries of Holdings and the percentage
ownership interest of Holdings therein and whether such Subsidiaries are
Significant Subsidiaries.
(b) There are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees, consultants or directors and directors' qualifying shares) of any
nature relating to any capital stock of any subsidiary of Holdings, except for
the Pledge Agreement or as provided in Schedule 3.12(b).
SECTION 3.13. Litigation; Compliance with Laws. (a) Except as described
or incorporated by reference in the registration statement of which the
Preliminary Prospectus is a part, there are not any actions, suits or
proceedings at law or in equity or by or before any court or Governmental
Authority now pending or, to the knowledge of Holdings, the Borrower or the
Canadian Borrower, threatened against or affecting Holdings or any of its
subsidiaries or any property or rights of Holdings or any of its subsidiaries as
to which there is a reasonable possibility of an adverse determination and which
(i) if adversely determined, could individually or in the aggregate result in a
Material Adverse Effect or (ii) involve the Loan Documents or (iii) if adversely
determined could materially adversely affect the 1996 Transactions.
(b) None of Holdings or any of its Subsidiaries is in default with
respect to any law, order, judgment, writ, injunction, decree, rule or
regulation of any Governmental Authority where such default could have a
Material Adverse Effect. The Borrowings hereunder, the use of the proceeds
thereof as described in Section 5.08 and the other 1996 Transactions will not
violate any applicable law or regulation or violate or be prohibited by any
judgment,
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43
writ, injunction, decree or order of any court or Governmental Authority
or subject Holdings or any of its subsidiaries to any civil or criminal penalty
or fine.
SECTION 3.14. Agreements. (a) None of Holdings or any of its
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) None of Holdings or any of its Subsidiaries is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, in either case where such default could result in a Material Adverse
Effect. After giving effect to the 1996 Transactions, no Default or Event of
Default shall have occurred and be continuing.
SECTION 3.15. Investment Company Act. None of Holdings or any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 3.16. Public Utility Holding Company Act. None of Holdings or
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 3.17. Tax Returns. Each of Holdings and its Subsidiaries has
filed or caused to be filed all Federal, and all material state and local, tax
returns required to have been filed by it and has paid or caused to be paid all
taxes shown thereon to be due and payable, and any assessments in excess of
$2,000,000 in the aggregate received by it, except taxes that are being
contested in accordance with Section 5.03 and taxes, assessments, charges,
levies or claims in respect of property taxes for property that Holdings or one
of its Subsidiaries has determined to abandon where the sole recourse for such
tax, assessment, charge, levy or claim is to such property. Each of Holdings and
its Subsidiaries has paid in full or made adequate provision (in accordance with
GAAP) for the payment of all taxes due with respect to the periods ending on or
before January 27, 1996, which taxes, if not paid or adequately provided for,
would have a Material Adverse Effect. The tax returns of Holdings and its
Subsidiaries have been examined by relevant Federal tax authorities for all
periods through January 25, 1992, and all deficiencies asserted as a result of
such examinations have been paid. Except as set forth on Schedule 3.17 or in the
Preliminary Prospectus, as of the Effective Date, with respect to each of
Holdings and its Subsidiaries, (i) no material claims are being asserted in
writing with respect to any taxes, (ii) no presently effective waivers or
extensions of statutes of limitation with respect to taxes have been given or
requested, (iii) no tax returns are being examined by, and no written
notification of intention to examine has been received from, the Internal
Revenue Service or any other taxing authority and (iv) no currently pending
issues have been raised in writing by the Internal Revenue Service or any other
taxing authority. For purposes hereof, "taxes" shall mean any present or future
tax, levy, impost, duty, charge, assessment or fee of any nature (including
interest, penalties and additions thereto) that is imposed by any Governmental
Authority.
SECTION 3.18. No Material Misstatements. (a) The information, reports,
financial statements, exhibits and schedules furnished by or on behalf of
Holdings or any of its Subsidiaries or Affiliates to the Administrative Agent or
any Lender in connection with the negotiation of any Loan Document or included
therein or delivered pursuant thereto (including the Preliminary Prospectus),
when taken as a whole, did not contain, and as they may be amended, supplemented
or modified from time to time, will not contain, as of the Effective Date any
material misstatement of fact and did not omit, and as they may be amended,
supplemented or modified from time to time, will not omit, to state as of the
Effective Date any material fact necessary to make the statements therein, in
the light of the circumstances under which they were, are or will be made, not
materially misleading.
(b) All financial projections concerning Holdings and its Subsidiaries
that are or have been made available to the Administrative Agent or any Lender
by Holdings or any of its Subsidiaries or Affiliates, unless otherwise
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44
disclosed, have been or will be prepared in good faith based upon assumptions
believed by Holdings and the Borrower to be reasonable.
SECTION 3.19. Employee Benefit Plans. Each of Holdings and the
Restricted Subsidiaries and each of their ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder except for such
noncompliance which would not be expected to result in a Material Adverse
Effect. No Reportable Event has occurred as to which Holdings or any of the
Restricted Subsidiaries or any of their ERISA Affiliates was required to file a
report with the PBGC, other than reports for which the 30 day notice requirement
is waived, reports that have been filed and reports the failure of which to file
would not result in a Material Adverse Effect and as of the Effective Date, the
present value of all benefit liabilities under each Plan of Holdings and the
Restricted Subsidiaries or any of their ERISA Affiliates (on a termination basis
and based on those assumptions used to fund such Plan) did not, as of the last
annual valuation report applicable thereto, exceed by more than $15,000,000 the
value of the assets of such Plan on a termination basis. None of Holdings or any
of the Restricted Subsidiaries or any of their ERISA Affiliates has incurred or
could reasonably be expected to incur any Withdrawal Liability that could result
in a Material Adverse Effect. None of Holdings or any of the Restricted
Subsidiaries or any of their ERISA Affiliates has received any notification that
any Multiemployer Plan is in reorganization or has been terminated within the
meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected
to be in reorganization or to be terminated where such reorganization or
termination has resulted or could reasonably be expected to result, through
increases in the contributions required to be made to such Plan or otherwise, in
a Material Adverse Effect.
SECTION 3.20. Labor Matters. There are no strikes against Holdings or
any of its Subsidiaries pending, other than any strikes which, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The hours worked and payment made to employees of Holdings and
each of its Subsidiaries have not been in violation in any material respect of
the Fair Labor Standards Act or any other applicable law dealing with such
matters. All material payments due from Holdings or any of its Subsidiaries, or
for which any claim may be made against Holdings or any of its Subsidiaries, on
account of wages and employee health and welfare insurance and other benefits
have been paid or accrued as a liability on the books of Holdings or such
subsidiary to the extent required by GAAP. The consummation of the 1996
Transactions will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which Holdings or any of its Subsidiaries (or any predecessor) is a party or
by which Holdings or any of its subsidiaries (or any predecessor) is bound,
other than collective bargaining agreements which, individually or in the
aggregate, are not material to Holdings and its Subsidiaries taken as a whole.
SECTION 3.21. Environmental Matters. (a) Except as disclosed in writing
to the Administrative Agent, each Lender and the Issuing Bank prior to the date
of this Agreement, which disclosed matters individually and in the aggregate are
not reasonably expected by Holdings or the Borrower to have a Material Adverse
Effect, (i) Holdings and each of its Subsidiaries has complied in all respects
with all applicable Federal, state, local and other statutes, ordinances,
orders, judgments, rulings and regulations relating to environmental pollution
or to environmental regulation or control, except to the extent of any failure
so to comply which alone and together with other such failures is not reasonably
expected to result in a Material Adverse Effect; (ii) none of Holdings or any
Subsidiary of Holdings has received notice of any failure so to comply which
alone or together with other such failures is reasonably expected to result in a
Material Adverse Effect; and (iii) none of Holdings or any of its Subsidiaries
manages, transports or stores any hazardous wastes, hazardous substances,
hazardous materials, toxic substances or toxic pollutants, as those terms are
used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act or the
Clean Water Act, in violation of any applicable regulations promulgated pursuant
thereto or of any other applicable law where such violation is reasonably likely
to result, individually or together with other violations, in a Material Adverse
Effect.
(b) Except with respect to matters that, individually and in the
aggregate, Holdings and the Borrower reasonably believe would not have a
Material Adverse Effect, as of the Effective Date: (i) the operations of
Holdings and each of its Subsidiaries comply in all respects with all
Environmental Laws and, to the knowledge of Holdings, the Canadian Borrower or
the Borrower after inquiry, no conditions exist (including at properties leased
or subleased
<PAGE>
45
to third persons) which would subject Holdings or its Subsidiaries to damages,
liabilities, penalties, injunctive relief or clean-up costs under any
Environmental Law or which require or are reasonably likely to require any
Remedial Action under any Environmental Law; (ii) each of Holdings and its
Subsidiaries has obtained all Environmental Permits necessary for its operation
or required by any Environmental Law, and all such Environmental Permits are in
good standing, and none of Holdings or its Subsidiaries has been cited by a
Governmental Authority for violating any terms or conditions of such
Environmental Permits within the five-year period prior to the Effective Date;
(iii) none of Holdings or its Subsidiaries is subject or a party to any
Environmental Claim; (iv) with respect to present facilities and operations,
none of Holdings or its Subsidiaries, or, to the knowledge of Holdings, the
Canadian Borrower or the Borrower, any predecessor of such persons, is subject
to any outstanding written order or agreement with any Governmental Authority or
private party respecting (A) any Environmental Law, (B) any Remedial Action
under any Environmental Law, or (C) any Environmental Claim; (v) to the
knowledge of Holdings, the Canadian Borrower or the Borrower, none of the
operations of any of Holdings or its Subsidiaries is the subject of any
investigation by a Governmental Authority evaluating whether any Remedial Action
under any Environmental Law is needed; (vi) none of Holdings or its Subsidiaries
or, to the knowledge of Holdings, the Canadian Borrower or the Borrower, any
predecessor of such persons has filed any notice under any Environmental Law
indicating past or present treatment, storage or disposal of a hazardous waste
as defined under 40 C.F.R. Parts 260 through 270 (in effect as of the Effective
Date) or any state equivalent, or reporting a Release of a Contaminant; (vii) to
the knowledge of Holdings, the Canadian Borrower or the Borrower except as
permitted under any Environmental Law, none of Holdings or its Subsidiaries has
experienced a Release of any Contaminant, and there has been no voluntary
disposal, use, storage, recycling or treatment on, under or at any property of
such person (or in tanks or other facilities thereon) of any Contaminant which,
if known to be present on such property, or present in soils or groundwater,
would require Remedial Action under any Environmental Law; and (viii) no Lien in
favor of any Governmental Authority for (A) any liability under any
Environmental Law or (B) damages arising from or costs incurred by such
Governmental Authority in response to a Release of a Contaminant into the
environment has been recorded with respect to any property of Holdings or any of
its Subsidiaries. For purposes of this Section 3.21(b), "knowledge" means the
actual knowledge of any Responsible Officer of Holdings or any Restricted
Subsidiary, any officer of Holdings or any Restricted Subsidiary with
responsibility for environmental compliance, or any plant or facilities manager
with responsibility for overall management of such plant or facility of Holdings
or any of its Subsidiaries.
(c) Each of Holdings and its Subsidiaries reasonably believes that
Holdings and its Subsidiaries on a consolidated basis have made adequate
provision (in accordance with GAAP) for all damages, liabilities, penalties or
costs that they reasonably expect to incur in connection with any Environmental
Claim or any Remedial Action existing or, to the knowledge of Holdings or the
Borrower, reasonably anticipated as of the date of this Agreement.
SECTION 3.22. Solvency. (a) The fair salable value of the assets of the
Borrower exceeds the amount that will be required to be paid on or in respect of
the existing debts and other liabilities (including contingent liabilities) of
the Borrower as they mature. The assets of the Borrower do not constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. The Borrower does not intend to, or believe that it will, incur
debts beyond its ability to pay such debts as they mature (taking into account
the 1996 Transactions).
(b) Upon consummation of the 1996 Transactions, the fair salable
value of the assets of the Borrower and its subsidiaries taken as a whole will
exceed the amount that will be required to be paid on or in respect of the
existing debts and other liabilities (including contingent liabilities) of the
Borrower and its subsidiaries.
(c) The assets of the Borrower and its subsidiaries taken as a
whole do not, and upon consummation of the 1996 Transactions will not,
constitute unreasonably small capital for the Borrower and its subsidiaries to
carry out their respective businesses as now conducted and as proposed to be
conducted including the capital needs of the Borrower and its subsidiaries
taking into account the particular capital requirements of the business
conducted by the Borrower and each of its subsidiaries, and projected capital
requirements and capital availability thereof.
(d) The Borrower does not intend to, or intend to permit any of
its subsidiaries to, incur debts beyond their respective ability to pay such
debts as they mature, taking into account the timing and amounts of cash to be
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46
received by the Borrower and each of such subsidiaries, and of amounts to be
payable on or in respect of debt of the Borrower and each of such subsidiaries.
SECTION 3.23. Absence of Certain Restrictions. No indenture,
certificate of designation for preferred stock, agreement or other instrument to
which Holdings or any Restricted Subsidiary is a party will prohibit or
materially restrain, or have the effect of prohibiting or materially
restraining, or imposing materially adverse conditions upon, the incurrence of
Indebtedness, the granting of Liens, the provision of Guarantees or the payment
of dividends by subsidiaries of Holdings except for restrictions (a) on the
granting of Liens on assets that are encumbered by Liens permitted under clause
(a), (b), (i), (k), (l), (r) or (t) of Section 6.04, to the extent that such
restrictions apply only to the assets so encumbered and are imposed by the
agreements under which such Liens were granted or (b) contained in agreements
relating to Indebtedness permitted by Section 6.01.
SECTION 3.24. No Foreign Assets Control Regulation Violation. None of
the 1996 Transactions will result in a violation of any of the foreign assets
control regulations of the United States Treasury Department, 31 C.F.R.,
Subtitle B, Chapter V, as amended (including the Foreign Assets Control
Regulations, the Transaction Control Regulations, the Cuban Assets Control
Regulations, the Foreign Funds Control Regulations, the Iranian Assets Control
Regulations, the Nicaraguan Trade Control Regulations, the South African
Transactions Regulations, the Libyan Sanctions Regulations, the Soviet Gold Coin
Regulations, the Panamanian Transactions Regulations, the Kuwaiti Assets Control
Regulations and the Iraqi Sanctions Regulations contained in said Chapter V), or
any ruling issued thereunder or any enabling legislation or Presidential
Executive Order granting authority therefor, nor will the proceeds of the Loans
be used by the Borrower in a manner that would violate any thereof.
SECTION 3.25. Insurance. Each of Holdings and the Restricted
Subsidiaries carries and maintains with respect to its insurable properties
insurance (including self insurance) with financially sound and reputable
insurers of the types, to such extent and against such risks as is customary
with companies in the same or similar businesses, including fire and other risks
insured against by extended coverage and public liability insurance against
claims for personal injury or death or property damages occurring upon, in,
about or in connection with the use of any properties owned, occupied or
controlled by it.
SECTION 3.26. Certain Other Representations. All representations and
warranties contained in any other Loan Document and made by any of Holdings or
any of its Subsidiaries are true and correct as of the date made or deemed to
have been made.
SECTION 3.27. Senior Debt. All payment obligations of the Borrower
under the Loan Documents constitute Senior Indebtedness (as defined in the
Senior Subordinated Notes Indenture), and all payment obligations of Holdings
under the Loan Documents constitute Senior Guarantor Indebtedness (as defined in
the Senior Subordinated Notes Indenture).
ARTICLE IV.
CONDITIONS
The obligations of the Lenders to make Loans hereunder and the
obligation of the Issuing Banks to issue Letters of Credit hereunder are subject
to the satisfaction of the following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing, other
than a Borrowing in which Revolving Credit Loans are refinanced with new
Revolving Credit Loans (without any increase in the aggregate principal amount
of Revolving Credit Loans outstanding) as contemplated by Section 2.02(e), and
on the date of each issuance or renewal of a Letter of Credit:
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47
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03, or the Administrative Agent and
the applicable Issuing Bank shall have received a notice regarding the
issuance or renewal of such Letter of Credit as required by Section
2.19(c), as applicable.
(b) The representations and warranties set forth in each Loan
Document shall be true and correct in all material respects on and as
of the date of such Borrowing, issuance or renewal with the same effect
as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing, issuance
or renewal no Event of Default or Default shall have occurred and be
continuing.
Each Borrowing and each issuance or renewal of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date
of such Borrowing as to the matters specified in paragraphs (b) and (c) of this
Section 4.01.
SECTION 4.02. Conditions to Effectiveness. On the Effective Date:
(a) Each Lender, if it so requests in accordance with subsection
2.04(e), shall have received a duly executed Revolving Credit Note,
Tranche A Term Note and Tranche B Term Note and the Swingline Lender,
if it so requests in accordance with subsection 2.04(e), shall have
received a Swingline Note, in each case, complying with the provisions
of Section 2.04. Each Lender, if it so requests in accordance with
subsection 2.04(e), shall have received a duly executed Canadian Term
Note, complying with the provisions of Section 2.04; provided Lenders
which are also 1994 Lenders or Larizza Lenders will only receive new
Notes in exchange for their old Notes.
(b) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Effective Date,
including reimbursement of any out-of-pocket expenses referred to in
Section 9.05 (to the extent that notice thereof is given to the
Borrower prior to the Effective Date).
(c) The issuance by the Borrower of the Senior Subordinated Notes
for aggregate gross proceeds of not less than $400,000,000 shall have
occurred or shall occur simultaneously with the effectiveness hereof
and the Net Proceeds of the Senior Subordinated Notes shall have been
applied as follows: first to the prepayment in full of the 1994 Delayed
Draw Term Loans under the 1994 Credit Agreement, second to the
prepayment of the Tranche A Term Loans in excess of $150,000,000, third
to the repayment of outstanding Revolving Loans as contemplated by the
Preliminary Prospectus (but not the reduction of the Revolving Credit
Commitments) and fourth the balance will be used for general corporate
purposes. Prepayments shall be applied so that after giving effect to
the purchases in Section 2.01(f) each Lender has outstanding Loans as
set forth on Schedule 2.01.
(d) The Administrative Agent shall have received the favorable
written opinions of (i) Cravath, Swaine & Moore, special counsel for
Holdings and its subsidiaries, (ii) Elizabeth R. Philipp, Esq., general
counsel for Holdings and its subsidiaries, and (iii) Stikeman, Elliott
special Canadian Counsel for the Canadian Borrower, each dated the
Effective Date and addressed to the Lenders, and in form and substance
satisfactory to the Administrative Agent and covering the matters set
forth in Exhibit D. In addition, the Administrative Agent shall have
received the favorable written opinions of such local counsel
(including Canadian counsel) with respect to legal matters relating
hereto as the Administrative Agent may reasonably have requested, in
such form and to such effect as shall be satisfactory to the Lenders
and to Simpson Thacher & Bartlett, special counsel for the
Administrative Agent.
(e) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments
thereto, of each of the Borrower, the Canadian Borrower and Holdings,
certified as of a recent date by the Secretary of State of the state of
its organization (or, in the case of the Canadian Borrower, the
Ministry of Consumer and Commercial Relations of the Province of
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48
Ontario), and a certificate as to the good standing of each of the
Borrower, the Canadian Borrower and Holdings as of a recent date, from
such Secretary of State (or, in the case of the Canadian Borrower, the
Ministry of Consumer and Commercial Relations of the Province of
Ontario); (ii) a certificate of the Secretary or Assistant Secretary of
each of the Borrower, the Canadian Borrower and Holdings dated the
Effective Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of such entity as in effect on the
Effective Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is
a true and complete copy of resolutions duly adopted by the Board of
Directors of such entity authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, the granting
of the Liens thereunder and, in the case of the Borrower and the
Canadian Borrower, the borrowings hereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles of incorporation of such
entity have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature
of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such entity; (iii) a
certificate of another officer as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; (iv) a certificate or equivalent
documentation from the Secretary of State of each state (or, in the
case of the Canadian Borrower, the Ministry of Consumer and Commercial
Relations of the Province of Ontario and the Inspector General of
Financial Institutions of the Province of Quebec) in which any of the
Borrower , the Canadian Borrower or Holdings conducts material business
or owns material assets as to the qualification of such entity to do
business and its good standing in such state; and (v) such other
documents as the Lenders or their counsel or Simpson Thacher &
Bartlett, special counsel for the Administrative Agent, may reasonably
request.
(f) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by a Financial Officer of Holdings
and the Borrower, confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of Section 4.01 and those set forth
in paragraphs (c), (h), (i) and (n) of this Section 4.02 (disregarding,
for this purpose, the provisions of any such paragraph that refer to
the satisfaction of the Administrative Agent, its counsel or the
Lenders with any matter).
(g) Except as contemplated by the 1996 Transactions, there shall
not have occurred any material change in the capitalization (whether in
debt or equity), corporate structure or assets of Holdings or any of
its subsidiaries, or any changes in the certificate of incorporation or
by-laws of Holdings or any of its Subsidiaries.
(h) The consummation of the offering of the Senior Subordinated
Notes shall have been approved or exempted by all requisite
Governmental Authorities, and all such approvals or exemptions,
including any conditions imposed thereby, shall be in form and
substance acceptable to the Required Lenders in their sole discretion.
No action shall have been taken by any Governmental Authority which
restrains or prevents or seeks to restrain or prevent, or imposes or
seeks to impose materially adverse conditions upon, any of the 1996
Transactions. Without limiting the generality of the foregoing, the
Required Lenders shall be satisfied, in their sole discretion, that all
governmental approvals have been obtained which, if not obtained, could
render the obligations to the Lenders under the Loan Documents either
void or voidable or subordinate them to other claims or obligations or
could impair or subject to subordination the security interests of, or
the exercise of remedies by, the Lenders.
(i) No action, suit, litigation or similar proceeding at law or in
equity or by or before any court or Governmental Authority shall exist
or, in the case of litigation by a Governmental Authority, be
threatened, with respect to any of the 1996 Transactions which would in
the reasonable opinion of the Required Lenders be likely to have a
Material Adverse Effect.
(j) The Effective Date shall occur prior to June 30, 1996.
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49
(k) Each Lender and the Administrative Agent shall have received
the pro forma consolidated balance sheet of Holdings described in
Section 3.09(b).
(l) Holdings, the Borrower and each Guarantor shall have executed
and delivered to the Administrative Agent an Acknowledgement and
Consent substantially in the form of Exhibit F.
(m) All aspects of the structure and documentation of the offering
of the Senior Subordinated Notes and all corporate and other
proceedings taken or to be taken in connection therewith and all
documents incidental thereto shall be reasonably satisfactory in form
and substance to the Administrative Agent and to Simpson Thacher &
Bartlett, special counsel for the Administrative Agent, and each Lender
shall have received copies of all such documents as such Lender, acting
through the Administrative Agent, may reasonably request. All legal
matters incident to this Agreement and the borrowings hereunder shall
be reasonably satisfactory to the Agents and to Simpson Thacher &
Bartlett, special counsel for the Administrative Agent.
(n) The conditions precedent in Section 4.01 shall be satisfied on
the Effective Date.
(o) All unpaid interest, fees and commissions accrued under the
1994 Credit Agreement through the Effective Date shall be paid to the
Administrative Agent on the Effective Date.
Each of Holdings, the Borrower and the Canadian Borrower hereby directs
its counsel referred to in clause (d) above to deliver the opinions to be
delivered by such counsel pursuant to such paragraph, it being understood that
the Lenders will and may rely thereon.
ARTICLE V.
AFFIRMATIVE COVENANTS
Each of Holdings, the Canadian Borrower and the Borrower covenants and
agrees that from and after the 1994 Closing Date, so long as this Agreement or
any Letter of Credit shall remain in effect or the principal of or interest on
any Loan, any Fees or any other expenses or amounts payable under or in respect
of any Loan Document or Letter of Credit shall be unpaid, unless the Required
Lenders shall otherwise consent in writing, Holdings, the Canadian Borrower and
the Borrower will, and will cause each of the Restricted Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.08 and except for the liquidation or dissolution of Restricted
Subsidiaries (other than Significant Subsidiaries) if the assets of such
corporations to the extent they exceed estimated liabilities are acquired by a
wholly owned Restricted Subsidiary in such liquidation or dissolution; provided
that Subsidiaries which are Guarantors may not be liquidated into Subsidiaries
that are not Guarantors and domestic Subsidiaries may not be liquidated into
foreign Subsidiaries.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; comply in all material respects with
all applicable laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted; and at all times maintain
and preserve all property material to the conduct of such business and keep such
property in good repair, working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith, if any, may be properly conducted at all
times.
(c) Without limiting the generality of the provisions of Section
5.01(b), each of Holdings, the Canadian Borrower and the Borrower shall (i)(A)
undertake reasonable efforts to comply, and to cause each Subsidiary to
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50
comply, in all material respects with all Environmental Laws and any order,
decree or similar requirements of any Governmental Authority concerning (1) a
material violation of any Environmental Law, (2) a financial contribution by
Holdings or any of its Subsidiaries under any Environmental Law or (3) a
Remedial Action by or on the part of Holdings or any of its Subsidiaries under
any Environmental Law and (B) undertake reasonable efforts to remedy and to
cause each of its Subsidiaries to remedy, as soon as reasonably practicable, any
material violation of Environmental Laws, except in any case that compliance or
remedy shall not be required insofar as any failure to undertake such efforts
cannot reasonably be expected by Holdings, the Canadian Borrower or the Borrower
to have a Material Adverse Effect, or so long as (x) the validity of the same
shall be contested diligently and in good faith, (y) the subject property does
not contain a material plant or other facility or shall then be in no danger of
being sold, forfeited or lost pursuant to such contest and (z) reserves have
been established in accordance with GAAP by Holdings or such subsidiary in
connection therewith; and (ii) undertake reasonable efforts to require and to
cause each of its subsidiaries to require, to the extent practicable and
appropriate, that a lease for any renewing or new tenant contain terms
substantially equivalent to those of clause (i) above.
SECTION 5.02. Insurance. Keep its insurable properties insured
(including through self-insurance) at all times by financially sound and
reputable insurers in such amounts as shall be customary for similar businesses
and maintain such other insurance, of such types, to such extent and against
such risks, as is customary with companies in the same or similar businesses,
including insurance against fire and other risks insured against by extended
coverage and public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with the use
of any properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
SECTION 5.03. Taxes. Pay and discharge promptly all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits
or in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof; provided, however, that such payment and discharge shall not
be required with respect to any such tax, assessment, charge, levy or claim so
long as (a) the validity or amount thereof shall be contested in good faith by
appropriate proceedings and Holdings or any Restricted Subsidiary, as
applicable, shall set aside on its books adequate reserves as required by GAAP
with respect thereto, (b) such tax, assessment, charge, levy or claim is in
respect of property taxes for property that Holdings or one of the Restricted
Subsidiaries has determined to abandon and the sole recourse for such tax,
assessment, charge, levy or claim is to such property or (c) the amount of such
taxes assessments, charges, levies and claims and interest and penalties thereon
does not exceed $1,000,000 in the aggregate.
SECTION 5.04. Financial Statements, Reports, Amendments, etc. In the
case of Holdings, furnish to the Administrative Agent for distribution to each
Credit Agreement Creditor (with sufficient copies for each Credit Agreement
Creditor).
(a) within 90 (or, in the case of clause (ii) below, 105) days
after the end of each fiscal year (x) consolidated balance sheets and
related statements of income and cash flows, showing the consolidated
financial condition of each of (i) Holdings and its Subsidiaries and
(ii) unless Carcorp, Inc. is the only Unrestricted Subsidiary, Holdings
and the Restricted Subsidiaries, in each case as of the close of such
fiscal year and the results of their operations during such year,
audited in the case of clause (i) above by Arthur Andersen LLP or other
independent public accountants of recognized national standing (who
shall be reasonably acceptable to the Administrative Agent) and
accompanied by (1) in the case of clause (i), an opinion of such
accountants (which shall not be qualified in any material respect) to
the effect that such consolidated financial statements fairly present
the financial condition and results of operations of Holdings and its
consolidated subsidiaries and Holdings and the Restricted Subsidiaries,
respectively, in accordance with GAAP and (2) a certificate of a
Financial Officer certifying that such consolidated financial
statements fairly present the financial condition and results of
operations of Holdings and its consolidated subsidiaries and Holdings
and the Restricted Subsidiaries, respectively, in accordance with GAAP
consistently applied (except as disclosed in such certificate, in
reasonable detail, which detail shall be reasonably acceptable to the
Administrative Agent) and (y) a statement of stockholders' equity of
Holdings, presented on a basis consistent with the financial statements
furnished pursuant to clause (x) above, and certified by one of
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51
Holdings' Financial Officers as fairly presenting the stockholders'
equity of Holdings in accordance with GAAP consistently applied (except
as disclosed in such certificate in reasonable detail, which detail
shall be reasonably acceptable to the Administrative Agent);
(b) within 45 (or, in the case of clause (ii) below, 60) days
after the end of each of the first three fiscal quarters of each fiscal
year, the consolidated balance sheets and related statements of income
and cash flows, showing the consolidated financial condition of each of
(i) Holdings and its Subsidiaries and (ii) unless Carcorp., Inc. is the
only Unrestricted Subsidiary, Holdings and the Restricted Subsidiaries,
in each case as of the close of such fiscal quarter and the results of
their operations during such fiscal quarter and the then elapsed
portion of the fiscal year, together with the balance sheets and
related statements of income and cash flows as of the corresponding
dates and for the corresponding periods in the prior year, all
certified by one of its Financial Officers as fairly presenting the
consolidated financial condition and results of operations of Holdings
and its consolidated subsidiaries and Holdings and the Restricted
Subsidiaries, respectively, in accordance with GAAP (other than the
absence of footnotes in accordance with GAAP) consistently applied
(except as disclosed in such certificate in reasonable detail, which
detail shall be reasonably acceptable to the Administrative Agent),
subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
(a) or (b) above, a certificate (a "Compliance Certificate") of the
accounting firm or Financial Officer (which certificate shall be in the
form of Exhibit E if delivered by a Financial Officer) opining on or
certifying such statements (which certificate, when furnished by an
accounting firm, may be limited to accounting matters and disclaim
responsibility for legal interpretations) (i) certifying that no
Default or Event of Default has occurred or, if such Default or Event
of Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect
thereto and (ii) setting forth computations in reasonable detail (which
detail shall be reasonably satisfactory to the Administrative Agent)
demonstrating compliance with the covenants contained in Sections 6.14,
6.15 (in the case of Section 5.04(a) only), 6.16 and 6.17 and showing
the Applicable Level;
(d) if, as a result of any change in accounting principles and
policies from those as in effect on the date of this Agreement, the
consolidated financial statements of Holdings and the Subsidiaries or
Holdings and the Restricted Subsidiaries, as the case may be, delivered
pursuant to clauses (a) and (b) above will differ in any material
respect from the consolidated financial statements that would have been
delivered pursuant to such clauses had no such change in accounting
principles and policies been made, then, together with the first
delivery of financial statements pursuant to clauses (a) and (b) above
following such change, a schedule prepared by a Financial Officer
reconciling such changes to what the financial statements would have
been without such changes;
(e) promptly after the same become publicly available, copies of
all periodic reports and proxy statements and, to the extent requested
by the Administrative Agent, any other materials filed by Holdings or
any of its Subsidiaries with the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or any Governmental
Authority succeeding to any of or all the functions of said Commission,
or with any national securities exchange, or distributed to its
shareholders generally, as the case may be;
(f) within 90 days after the beginning of each fiscal year, a copy
of the annual income and capital expenditure budget for such fiscal
year;
(g) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of Holdings or
any of its Restricted Subsidiaries, or compliance with the terms of any
Loan Document, as any Credit Agreement Creditor, acting through the
Administrative Agent, may reasonably request;
(h) promptly, a copy of any amendment or waiver of any provisions
of any agreement which amendment or waiver is described in Section 6.10
or 6.11;
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52
(i) promptly following the creation or acquisition of any
Subsidiary, a certificate from a Responsible Officer, identifying such
new Subsidiary and the ownership interest of Holdings and its
Subsidiaries therein; and concurrently with the delivery of financial
statements under (a) or (b) above, a description of the Investments in
Unrestricted Subsidiaries made during the fiscal quarter ending on the
date of such financial statements and the amount thereof; provided,
that with respect to the Subordinated Notes owed by Carcorp, Inc. under
the receivables financing facility (the "Sub Notes"), the Borrower
shall not be required to report any changes in the outstanding
principal amount of the Sub Notes, unless the aggregate outstanding
principal amount of such Sub Notes exceeds $75,000,000;
(j) if requested by the Administrative Agent, within 105 days
following the end of any fiscal year of any Unrestricted Subsidiary, a
balance sheet and related statements of income and cash flow for such
Unrestricted Subsidiary at the end of and for such fiscal year; and
(k) promptly, a copy of all reports submitted in connection with
any interim or special audit made by independent accountants of the
books of Holdings or any of its Subsidiaries.
SECTION 5.05. Litigation and Other Notices. Furnish to each Credit
Agreement Creditor prompt written notice of the following:
(a) any Default or Event of Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority,
against Holdings or any Subsidiary in respect of which there is a
reasonable possibility of an adverse determination and which, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
(c) any development specific to Holdings and its Subsidiaries and
not otherwise publicly disclosed known to a Responsible Officer that
has resulted in, or could reasonably be anticipated to result in, a
Material Adverse Effect.
SECTION 5.06. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and (b) furnish to each Credit Agreement Creditor
(i) as soon as possible, and in any event within 30 days after any Responsible
Officer of the Borrower, any Guarantor or any ERISA Affiliate of any of them
knows or has reason to know that any Reportable Event has occurred that alone or
together with any other Reportable Event could reasonably be expected to result
in liability of the Borrower, any Guarantor or any of their ERISA Affiliates to
the PBGC in an aggregate amount exceeding $10,000,000, a statement of a
Financial Officer setting forth details as to such Reportable Event and the
action proposed to be taken with respect thereto, together with a copy of the
notice, if any, of such Reportable Event given to the PBGC, (ii) promptly after
any Responsible Officer learns of receipt thereof, a copy of any notice the
Borrower or any Guarantor or any of their ERISA Affiliates may receive from the
PBGC relating to the intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by any of their ERISA Affiliates which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code) or to appoint a trustee to administer any Plan or Plans, (iii) within 20
days after the due date for filing with the PBGC pursuant to Section 412(n) of
the Code a notice of failure to make a required installment or other payment
with respect to a Plan, a statement of a Financial Officer setting forth details
as to such failure and the action proposed to be taken with respect thereto,
together with a copy of such notice given to the PBGC and (iv) promptly after
any Responsible Officer learns thereof and in any event within 30 days after
receipt thereof by the Borrower, any Guarantor or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by the Borrower,
any Guarantor or such ERISA Affiliate concerning (A) the imposition of
Withdrawal Liability or (B) a determination that a Multiemployer Plan is, or is
expected to be, terminated or in reorganization, in each case within the meaning
of Title IV of ERISA.
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53
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with GAAP and permit
any persons designated by the Administrative Agent (or, during the continuance
of an Event of Default, any Lender) to visit and inspect the financial records
and the properties of Holdings or any Restricted Subsidiary at reasonable times,
upon reasonable notice and as often as reasonably requested and to make extracts
from and copies of such financial records, and permit any persons designated by
the Administrative Agent (or, during the continuance of an Event of Default, any
Lender) to discuss the affairs, finances and condition of Holdings or any
Restricted Subsidiary with the officers thereof and independent accountants
therefor (subject to reasonable requirements of confidentiality, including
requirements imposed by law or by contract).
SECTION 5.08. Use of Proceeds. (a) Use the proceeds of Revolving Loans
for general corporate purposes (including to make Permitted Business
Acquisitions and Investments under Section 6.07(l)); provided no Revolving Loans
or Foreign Subsidiary Letters of Credit shall be used to finance any portion of
a Permitted Business Acquisition or Investment under Section 6.07(l) unless
immediately after giving effect thereto the unused Revolving Credit Commitments
are at least $50,000,000.
(b) Use Letters of Credit (other than Foreign Subsidiary Letters of
Credit) solely for general corporate purposes in the ordinary course of business
of the Borrower and its subsidiaries; and use Foreign Subsidiary Letters of
Credit to support Indebtedness of Foreign Restricted Subsidiaries permitted
under subsection 6.01(r).
SECTION 5.09. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing UCC financing statements, mortgages and deeds
of trust), which may be required under applicable law, or which the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents, and in order to grant, preserve, protect and
perfect the validity and first priority (subject to Liens permitted by Section
6.04) of the security interests created or intended to be created pursuant to
the Pledge Agreement. In addition, from time to time, Holdings and the
Restricted Subsidiaries will, at their cost and expense, subject to the
obtaining of any required regulatory authorizations (which Holdings and Borrower
agree to use their best efforts to obtain) promptly secure the Obligations by
causing the following to occur: (i) promptly upon creating or acquiring any
additional subsidiary, the stock of such subsidiary will (unless such subsidiary
is a subsidiary of an Unrestricted Subsidiary or of a foreign subsidiary) be
pledged pursuant to the Pledge Agreement, provided that no more than 65% of the
capital stock of any foreign subsidiary shall be required to be pledged pursuant
to this Section 5.09, and (ii) such subsidiary will (unless such subsidiary is
an Unrestricted Subsidiary or a foreign subsidiary) become a party to the
Guarantee Agreement. All such security interests and Liens will be created under
the Pledge Agreement and other security agreements and other instruments and
documents in form and substance reasonably satisfactory to the Collateral Agent,
and Holdings and the Restricted Subsidiaries shall deliver or cause to be
delivered to the Administrative Agent all such instruments and documents
(including legal opinions and lien searches) as the Required Lenders shall
reasonably request to evidence compliance with this Section 5.09. Holdings and
the Restricted Subsidiaries agree to provide such evidence as the Administrative
Agent shall reasonably request as to the perfection and priority status of each
such security interest and Lien.
SECTION 5.10. Change in Ownership. In the case of Holdings, own
directly at all times, legally and beneficially, 100% of the capital stock of
the Borrower, free of Liens except Liens in favor of the Collateral Agent; and,
in the case of Borrower, own (a) directly at all times, legally and
beneficially, 100% of the capital stock of the Finance Subsidiary free of Liens
except Liens in favor of the Collateral Agent and (b) directly or indirectly at
all times, legally and beneficially, 100% of the capital stock of the Canadian
Borrower free of Liens except Liens, if any, in favor of the Collateral Agent.
SECTION 5.11. Fiscal Year; Accounting. In the case of each of Holdings
and its subsidiaries, cause its respective fiscal year to end on the last
Saturday in January; provided Holdings and its Subsidiaries may change to a
fiscal year ending on the last Saturday in December (except that the fiscal year
end may vary for any foreign subsidiary domiciled in a jurisdiction that
prohibits such last Saturday year end).
SECTION 5.12. Dividends. In the case of the Borrower, permit its
subsidiaries to pay dividends and cause such dividends to be paid to the extent
required to pay the monetary Obligations.
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54
SECTION 5.13. Rate Protection Agreements. Maintain in effect, the
interest rate protection agreements entered into pursuant to Section 5.13 of
either Existing Credit Agreement to the extent originally required therein.
SECTION 5.14. Corporate Separateness. Cause the management, business
and affairs of each of Holdings and the Subsidiaries to be conducted in such a
manner so that each of Holdings and the Unrestricted Subsidiaries will be
perceived as a legal entity separate and distinct from each other and the
Restricted Subsidiaries.
SECTION 5.15. Business of Restricted Subsidiaries. Not permit any
material portion of the business and activities of the Restricted Subsidiaries
to be performed and conducted by the Unrestricted Subsidiaries.
ARTICLE VI.
NEGATIVE COVENANTS
Each of Holdings, the Canadian Borrower and the Borrower covenants and
agrees that from and after the 1994 Closing Date, so long as this Agreement or
any Letter of Credit shall remain in effect or any monetary Obligation shall be
unpaid, unless the Required Lenders shall otherwise consent in writing,
Holdings, the Canadian Borrower and the Borrower will not, and will not cause or
permit any Restricted Subsidiary to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness of the Borrower and the Restricted Subsidiaries
for borrowed money in an amount not to exceed $35,000,000 under
agreements existing on the date of this Agreement and set forth in
Schedule 6.01 and other Indebtedness existing on the Effective Date,
but not any extensions, renewals or refinancings of such Indebtedness
except (i) renewals and extensions expressly provided for in the
agreements evidencing any such Indebtedness as the same are in effect
on the date of this Agreement and (ii) refinancings and extensions of
any such Indebtedness if the interest rate with respect thereto and
other terms thereof are no less favorable than the Indebtedness being
refinanced or extended and the average life to maturity thereof is
greater than or equal to the Indebtedness being refinanced or extended
(provided that such Indebtedness permitted under clause (i) or clause
(ii) above shall not be (A) Indebtedness of an obligor that was not an
obligor with respect to the Indebtedness being extended, renewed or
refinanced, (B) in a principal amount which exceeds the Indebtedness
being renewed, extended or refinanced or (C) incurred, created or
assumed if any Default or Event of Default has occurred and is
continuing or would result therefrom);
(b) Indebtedness of the Borrower consisting of contingent
liabilities arising from indemnities and other contractual obligations
of the Borrower existing from the sale of properties prior to the date
hereof by Holdings and the Borrower and their predecessors;
(c) So long as immediately after giving effect to the incurrence
thereof no Default or Event of Default shall have occurred and be
continuing, Permitted Subordinated Indebtedness and unsecured
subordinated Guarantees of such Permitted Subordinated Indebtedness;
(d) Indebtedness of (i) the Borrower to any subsidiary of the
Borrower evidenced, if the amount of such Indebtedness owing to a
Domestic Restricted Subsidiary exceeds $10,000,000, by an Intercompany
Note pledged to the Collateral Agent under the Pledge Agreement, (ii)
any Domestic Restricted Subsidiary to the Borrower evidenced, if the
amount of such Indebtedness exceeds $10,000,000, by an Intercompany
Note pledged to the Collateral Agent under the Pledge Agreement, (iii)
any Domestic Restricted Subsidiary to any other Restricted Subsidiary
evidenced, if the amount of such Indebtedness owing to a Domestic
Restricted Subsidiary exceeds $10,000,000, by an Intercompany Note
pledged to the Collateral Agent under the Pledge Agreement, (iv) any
Foreign Restricted Subsidiaries to the Borrower or to any other
Domestic Restricted Subsidiary in an aggregate principal amount,
together with Investments under Section 6.07(l) and Indebtedness
outstanding under Section 6.01(r), not at any time in excess of
$200,000,000 plus the Foreign
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55
Currency Fluctuation Amount and evidenced by one or more Intercompany
Notes pledged to the Collateral Agent under the Pledge Agreement if the
outstanding amount of such Indebtedness exceeds $5,000,000 in the
aggregate, (v) Holdings to Borrower, in an amount not greater than
$2,000,000 at any time, (vi) Manchester Plastics, Ltd. to any Domestic
Restricted Subsidiary in an aggregate principal amount not to exceed
$35,000,000, evidenced by one or more Intercompany Notes pledged to the
Collateral Agent under the Pledge Agreement and (vii) any Foreign
Restricted Subsidiary to any other foreign Subsidiary;
(e) Capital Lease Obligations and Purchase Money Indebtedness
incurred by the Borrower (or any other Restricted Subsidiary in the
case of Purchase Money Indebtedness incurred, together with
Indebtedness under clause (o) below, not in excess of $30,000,000 in
the aggregate at any time outstanding) prior to or within 270 days
after a Capital Expenditure permitted under Section 6.03 in order to
finance such Capital Expenditure, and extensions, renewals and
refinancings thereof if the interest rate with respect thereto and
other terms thereof are no less favorable than the Indebtedness being
refinanced and the average life to maturity thereof is greater than or
equal to the Indebtedness being refinanced (provided that such
Indebtedness shall not be (A) Indebtedness of an obligor that was not
an obligor with respect to the Indebtedness being extended, renewed or
refinanced, (B) in a principal amount which exceeds the Indebtedness
being renewed, extended or refinanced or (C) incurred, created or
assumed if any Default or Event of Default has occurred and is
continuing or would result therefrom).
(f) Capital Lease Obligations incurred by the Borrower or any
Restricted Subsidiary in respect of any Sale and Leaseback Transaction
that is permitted under Section 6.06;
(g) Indebtedness of the Borrower and its subsidiaries in the
nature of Interest Rate Agreements and other interest rate and foreign
currency hedging transactions entered into in order to fix the
effective rate of interest, or to hedge against currency fluctuations,
on the Loans and other Indebtedness (it being understood that such
transactions shall be entered into for business purposes and not for
the purpose of speculation);
(h) Indebtedness of a Domestic Restricted Subsidiary which
represents the assumption by such Domestic Restricted Subsidiary of
Indebtedness of a Restricted Subsidiary in connection with the merger
of such Restricted Subsidiary with or into the assuming Domestic
Restricted Subsidiary or the purchase of all or substantially all the
assets of such other Restricted Subsidiary;
(i) Indebtedness of the Restricted Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, bankers acceptances,
letters of credit and surety bonds provided in the ordinary course of
business, and any extension, renewal or refinancing thereof to the
extent not provided to secure the repayment of other Indebtedness and
to the extent that the amount of refinancing Indebtedness is not
greater than the amount of Indebtedness being refinanced;
(j) Indebtedness arising from the honoring by a bank or other
financial institutions of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business; provided
that such Indebtedness is extinguished within two Business Days of its
incurrence;
(k) (i) Indebtedness of a Restricted Subsidiary acquired after the
date hereof, (ii) indebtedness of a Restricted Subsidiary of the
Borrower incurred after the date hereof in connection with an
acquisition, and (iii) Indebtedness of a corporation merged or
consolidated with or into a Restricted Subsidiary after the date
hereof, which Indebtedness exists at the time of such acquisition,
merger or consolidation (whether or not created in contemplation of
such event) and such acquisition, merger or consolidation is permitted
by this Agreement; provided that the aggregate principal amount of
Indebtedness under this clause (k) shall not exceed $50,000,000 less
outstanding Indebtedness under paragraph (l) below;
(l) Indebtedness of the Borrower incurred after the date hereof,
which Indebtedness is created or incurred at the time of any Permitted
Business Acquisition to finance such acquisition; provided that the
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56
aggregate principal amount of Indebtedness which may be created or
incurred under this paragraph (l) shall not exceed $3,000,000;
(m) Indebtedness owed to (including obligations in respect of
letters of credit for the benefit of) any person providing worker's
compensation, health, disability or other employee benefits, property,
casualty, liability or other insurance to Holdings or any Subsidiary,
pursuant to reimbursement or indemnification obligations to such
person;
(n) (i) Indebtedness represented by the Loans, the Letters of
Credit and the Guarantees thereof by the Guarantors pursuant to the
Guarantee Agreement and (ii) Indebtedness represented by the Guarantees
of Indebtedness permitted under clause (l) above by the Guarantors
pursuant to the Guarantee Agreement;
(o) other Capital Lease Obligations of the Restricted Subsidiaries
in an aggregate principal amount at any time outstanding, together with
Indebtedness of Restricted Subsidiaries of the Borrower outstanding
under clause (e) above, not in excess of $30,000,000;
(p) other unsecured Indebtedness of the Borrower and the Canadian
Borrower in an aggregate principal amount at any time outstanding not
in excess of $40,000,000 and unsecured Guarantees by the Borrower of
any Indebtedness of the Canadian Borrower incurred in accordance with
this clause (p);
(q) other Indebtedness of the Borrower or any other Restricted
Subsidiary together with Indebtedness listed on Schedule 6.01 (as such
Indebtedness may be refinanced as permitted by Section 6.01(a)) in an
aggregate principal amount outstanding at any time not to exceed
$35,000,000 and unsecured Guarantees by the Borrower of any
Indebtedness of any Restricted Subsidiary incurred in accordance with
this clause (q);
(r) other Indebtedness of Foreign Restricted Subsidiaries
denominated in Dollars or in Foreign Currencies in an aggregate
outstanding amount at any one time not to exceed the Dollar Equivalent
Amount of, together with Investments under Section 6.07(l) and
outstanding Indebtedness under Section 6.01(d)(iv), $200,000,000 plus
the Foreign Currency Fluctuation Amount; and
(s) Indebtedness of Foreign Restricted Subsidiaries incurred for
the purpose of financing working capital in an aggregate outstanding
amount at any one time not to exceed the Dollar Equivalent Amount of
$35,000,000 plus the Foreign Currency Fluctuation Amount.
(t) all premium (if any), interest (including post-petition
interest), fees, expenses, indemnities, charges and additional or
contingent interest on obligations described in clauses (a) through (q)
above.
SECTION 6.02. Dividends and Distributions. Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its capital stock (other than dividends and
distributions on Holdings Common Stock payable solely by the issuance of
additional shares of Holdings Common Stock) or directly or indirectly redeem,
purchase, retire or otherwise acquire for value (or permit any Restricted
Subsidiary to purchase or acquire) any shares of any class of its capital stock
or any option, warrant or other right to acquire shares of such stock or set
aside any cash, property, securities or combination thereof amount for any such
purpose; provided, however, that:
(a) any Subsidiary may declare and pay dividends or make other
distributions to the Borrower or to wholly owned Restricted
Subsidiaries;
(b) if at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing,
Holdings may pay dividends in cash on its common stock or preferred
stock or may redeem, purchase, retire or otherwise acquire for value
its common stock or preferred stock provided that the sum of such
dividends and consideration paid for such redemptions, purchases,
retirements and other acquisitions in any fiscal year shall not exceed
$12,000,000;
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57
(c) if at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing and
the Dividend Condition shall have been met, Holdings may pay dividends
in cash on its common stock or any preferred stock and may redeem,
purchase, retire or otherwise acquire for value its common stock or any
preferred stock in any fiscal year in an amount not to exceed in the
aggregate for all such transactions 25% of Net Income for the prior
fiscal year less the amount of dividends and consideration (for
redemptions, purchases, retirements and other acquisitions) paid in
such current fiscal year pursuant to clause (b) above;
(d) if at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing,
Holdings may repurchase director's qualifying shares of Holdings and
capital stock of Holdings and options therefor of employees and
directors of Holdings and the Restricted Subsidiaries provided that (i)
no such repurchase may be made unless Holdings is obligated to do so at
the time of repurchase pursuant to contractual agreements between
Holdings and the applicable officer or director and (ii) the aggregate
amount paid by Holdings in connection with such repurchases at any time
shall not exceed $3,000,000 plus the aggregate amount (but only to the
extent such amount is simultaneously contributed by Holdings to the
Borrower) received by Holdings from the sale or issuance of its capital
stock or options therefor to officers and directors of Holdings and the
Restricted Subsidiaries after the 1994 Closing Date;
(e) the Borrower may pay dividends or make other distributions to
Holdings in amounts sufficient to allow Holdings to pay (i) Permitted
Tax Payments and state and local taxes and other governmental charges,
and administrative and routine expenses required to be paid by Holdings
in the ordinary course of its business, (ii) the dividends, other
consideration (for redemptions, purchases, retirements and other
acquisitions of common stock and preferred stock) and other amounts
contemplated by clauses (b) and (c) above; provided that dividends paid
to Holdings pursuant to this clause (ii) in order to permit Holdings to
pay dividends are used by Holdings for such purpose within 20 days of
the receipt of such dividends by Holdings, (iii) the repurchase price
for the capital stock and options therefor of Holdings contemplated by
clause (d) above provided that such dividends pursuant to clause (iii)
are used by Holdings for such purpose within 20 days of the receipt of
such dividends by Holdings and (iv) the amount of any Investment in an
Unrestricted Subsidiary if the Borrower and the Restricted Subsidiaries
could have made such Investment in Unrestricted Subsidiaries pursuant
to Section 6.07 (l) (but on the assumption that the Borrower could
otherwise invest in such Unrestricted Subsidiary); provided that such
dividends pursuant to clause (iv) are used by Holdings for such purpose
within 20 days of receipt of such dividends by Holdings; provided
further that no dividend may be paid to Holdings pursuant to clause
(ii) or (iii) or (iv) if at the time of such dividend or after giving
effect thereto a Default or Event of Default shall have occurred and be
continuing;
(f) the foregoing shall not prohibit the ESOP Investment or
employee-directed purchases of Holdings stock pursuant to any employee
benefit plan; and
(g) Holdings and the Restricted Subsidiaries may declare and pay
dividends (a) consisting of the stock of the Wallcoverings Subsidiaries
and (b) in amounts equal to the Available Wallcoverings Proceeds, in
connection with the consummation of the Wallcoverings Disposition.
SECTION 6.03. Capital Expenditures. Permit Capital Expenditures of the
Restricted Subsidiaries on a consolidated basis during any fiscal year to be
greater than the amount set forth below for such fiscal year:
Fiscal Year Amount
1994 85,000,000
1995 130,000,000
1996 80,000,000
1997 80,000,000
1998 80,000,000
1999 80,000,000
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58
2000 80,000,000
2001 80,000,000
2002 80,000,000
provided, however, that (i) to the extent Capital Expenditures made in
any fiscal year are less than the amount set forth above opposite such
fiscal year, Restricted Subsidiaries shall be permitted to carry
forward the unused amount to the succeeding fiscal years so long as
such aggregate Capital Expenditures in any fiscal year do not exceed
$130,000,000; (ii) Capital Expenditures may not be made by Holdings;
and (iii) Capital Expenditures that are refinanced with Sale and
Lease-Back Transactions within 270 days of acquisition which result in
Operating Leases shall be deemed not to be Capital Expenditures.
SECTION 6.04. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities) now owned or
hereafter acquired by it or on any income or rights in respect of any thereof,
except:
(a) Liens on property or assets of the Restricted Subsidiaries
existing on the date of this Agreement and, in the case of Liens
securing Indebtedness for borrowed money, set forth in Schedule 6.04;
provided that such Liens shall secure only those obligations which they
secure on such date (and extensions, renewals and refinancings of such
obligations permitted by Section 6.01(a)) and do not subsequently apply
to any other property or assets of Holdings or any Restricted
Subsidiary;
(b) any Lien on any property or asset used by a Restricted
Subsidiary in the ordinary course of business, which Lien existed prior
to the acquisition thereof by such subsidiary; provided that (i) such
Lien is not created in contemplation of or in connection with such
acquisition and (ii) such Lien does not apply to any other property or
assets of any other Restricted Subsidiary;
(c) any Lien on any property or asset of a Restricted Subsidiary
securing Indebtedness permitted by Section 6.01(k), provided that such
Lien does not apply to any other property or assets of Holdings or any
Restricted Subsidiary not securing such Indebtedness at the date of
acquisition of such property or asset;
(d) Liens for taxes, assessments or other governmental charges or
levies not yet due, or which are for less than $1,000,000 in the
aggregate, or which are being contested in compliance with Section 5.03
or for property taxes for property that the Borrower or one of its
Restricted Subsidiaries has determined to abandon if the sole recourse
for such tax, assessment, charge, levy or claim is to such property;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations which are not due or which are being
contested in good faith by appropriate proceedings and in respect of
which, if applicable, Holdings or the relevant Restricted Subsidiary
shall have set aside on its books reserves in accordance with GAAP;
(f) pledges and deposits made in the ordinary course of business
in compliance with the Federal Employers Liability Act or any other
workmen's compensation, unemployment insurance and other social
security laws or regulations and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements;
(g) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(h) zoning restrictions, easements, trackage rights, leases (other
than Capital Lease Obligations), licenses, special assessments,
rights-of-way, restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract
from the value of the property subject thereto or interfere in any
material respect with the ordinary conduct of the business of any
Restricted Subsidiary;
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59
(i) purchase money security interests in real property,
improvements thereto or equipment acquired (or, in the case of
improvements, constructed) by any Restricted Subsidiary (including
without limitation, the interests of vendors and lessors under
conditional sale and title retention agreements); provided that (i)
such security interests secure Indebtedness permitted by Section 6.01,
(ii) such security interests are incurred, and the Indebtedness secured
thereby is created, within 270 days after such acquisition (or
construction), (iii) the Indebtedness secured thereby does not exceed
100% of the cost of such real property, improvements or equipment at
the time of such acquisition (or construction), (iv) such expenditures
are Capital Expenditures permitted under Section 6.03 and (v) such
security interests do not apply to any other property or assets of any
Restricted Subsidiary (other than to accessions to such real property,
improvements or equipment and provided that individual financings of
equipment provided by a single lender may be cross-collateralized to
other financings of equipment provided solely by such lender);
(j) Liens created in favor of the Collateral Agent for the benefit
of the Secured Parties;
(k) Liens securing reimbursement obligations in respect of
commercial letters of credit permitted under Section 6.01 and covering
the goods (or the documents of title in respect of such goods) financed
by such letters of credit;
(l) Liens arising out of capitalized or operating lease
transactions permitted under Section 6.06, so long as such Liens (i)
attach only to the property sold in such transaction and any accessions
thereto and (ii) do not interfere with the business of Holdings and the
Restricted Subsidiaries in any material respect;
(m) any Lien on assets of a person securing Indebtedness of such
person permitted by Section 6.01(q);
(n) any Lien arising by operation of law pursuant to Section
107(1) of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss. 9607(l), or pursuant to analogous state
law, for costs or damages which are not yet due (by virtue of a written
demand for payment by a Governmental Authority) or which are being
contested in compliance with Section 5.03, or on property that a
Restricted Subsidiary has determined to abandon if the sole recourse
for such costs or damages is to such property, provided that the
liability of Holdings and the Restricted Subsidiaries with respect to
the matter giving rise to such Lien shall not, in the reasonable
estimate of the Borrower (in light of all attendant circumstances,
including the likelihood of contribution by third parties), exceed
$7,500,000;
(o) any leases or subleases to other persons of properties or
assets owned or leased by a Restricted Subsidiary;
(p) Liens consisting of interests of lessors under capital leases
permitted by Section 6.01;
(q) Liens securing judgements for the payment of money in an
aggregate amount not in excess of $7,500,000 (to the extent not covered
by insurance) which judgements shall not be undischarged or stayed for
a period of more than 30 consecutive days;
(r) the replacement, extension or renewal of any Lien permitted by
clause (b), (c) or (i) above, provided that such replacement, extension
or renewal Lien shall not cover any property other than the property
that was subject to such Lien prior to such replacement, extension or
renewal and provided further that the Indebtedness and other
obligations secured by such replacement, extension or renewal Lien are
permitted by this Agreement;
(s) other Liens with respect to property or assets not
constituting collateral for the Obligations with an aggregate fair
market value of not more than $25,000,000 at any time; and
(t) Permitted Receivables Financing
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SECTION 6.05. Priority of Loan Payments. (a) Until the Commitments have
been terminated and the Obligations have been paid in full, directly or
indirectly, make any payment, retirement, repurchase or redemption on account of
the principal of any Permitted Subordinated Indebtedness or directly or
indirectly prepay any Permitted Subordinated Indebtedness prior to the stated
maturity date of such Permitted Subordinated Indebtedness, make any payment or
prepayment of any Permitted Subordinated Indebtedness which would violate the
terms of this Agreement or of such Permitted Subordinated Indebtedness, any
agreement or document evidencing, related to or securing the payment or
performance of the Permitted Subordinated Indebtedness or any subordination
agreement applicable to such Permitted Subordinated Indebtedness.
(b) Until the Commitments have been terminated and the Obligations have
been paid in full, repay any Funded Debt of Holdings and the Restricted
Subsidiaries except:
(i) the Obligations;
(ii) payments of Funded Debt made in conformity with the
regularly scheduled maturity thereof or mandatory prepayment provisions
thereof;
(iii) if no Default or Event of Default has occurred and is
continuing or would result therefrom, refinancings permitted by Section
6.01;
(iv) if no Default or Event of Default has occurred and is
continuing or would result therefrom, prepayments by a Restricted
Subsidiary of its Funded Debt acquired in connection with a Permitted
Business Acquisition; and
(v) if no Default or Event of Default has occurred and is
continuing or would result therefrom, prepayments of up to $10,000,000
in the aggregate of other Funded Debt of the Restricted Subsidiaries.
SECTION 6.06. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby Holdings or any
Restricted Subsidiary shall sell or transfer any property, real or personal,
used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which it intends to use
for substantially the same purpose or purposes as the property being sold or
transferred (a "Sale and Lease-Back Transaction"), other than any Sale and
Lease-Back Transaction which involves a sale by the Borrower or a Restricted
Subsidiary solely for cash consideration on terms not less favorable than would
prevail in an arms'-length transaction and which (a) results in a Capital Lease
Obligation or an Operating Lease, in either case entered into to finance a
Capital Expenditure permitted by Section 6.03 consisting of the initial
acquisition by such subsidiary of the property sold or transferred in such Sale
and Lease-Back Transaction, provided that such Sale and Lease-Back Transaction
occurs within 270 days after such acquisition or (b) results in a Capital Lease
Obligation or an Operating Lease entered into for any other purpose (provided
that any such Sale and Lease-Back Transaction in reliance upon this clause (b)
shall be deemed to be a Prepayment Event).
SECTION 6.07. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in (collectively, an "Investment"), any other
person, except:
(a) Permitted Investments and Investments that were Permitted
Investments when made;
(b) Investments by Holdings in the Borrower, Investments by a
Restricted Subsidiary in a Domestic Restricted Subsidiary and
Investments by Foreign Restricted Subsidiaries in other Foreign
Restricted Subsidiaries;
(c) Investments arising out of the receipt by the Borrower of
noncash consideration for the sale of assets permitted under Section
6.08 provided that such consideration (if the stated amount or value
thereof is in excess of $1,000,000) is pledged upon receipt pursuant to
the Pledge Agreement;
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(d) intercompany loans permitted to be incurred as Indebtedness
under Section 6.01(d);
(e) Investments by a wholly-owned Restricted Subsidiary
constituting Permitted Business Acquisitions;
(f) (i) loans and advances to employees of any Restricted
Subsidiary not to exceed $300,000 at any time outstanding to any one
employee and not to exceed $2,000,000 in the aggregate at any time
outstanding and (ii) advances of payroll payments and expenses to
employees in the ordinary course of business;
(g) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction
or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit
loss;
(h) an Investment by the Borrower or any of the Restricted
Subsidiaries in any Finance Subsidiary that the Borrower is
incorporating, but only to the extent necessary to incorporate such
Finance Subsidiary and acquire its capital stock and subordinated
indebtedness in connection with sales of receivables, all with the
minimum capitalization necessary;
(i) investments, other than investments listed in clauses (a)
through (h) of this Section, existing on the Effective Date and set
forth on Schedule 6.07;
(j) the ESOP Loans;
(k) Investments the sole consideration for which by Holdings and
the Restricted Subsidiaries is capital stock of Holdings provided that,
after giving effect thereto, no Default or Event of Default under
paragraph (m) of Article VII shall have occurred;
(l) if no Default or Event of Default exists immediately before or
after giving effect to such Investment, other Investments, including
joint ventures, and Investments in Unrestricted Subsidiaries, provided
that (i) the consideration for all such Investments (whether cash or
property, as valued at the time of such Investment) does not exceed
(net of any return representing return of capital of (but not return
on) any such Investment) at any time, together with the amount of
outstanding intercompany loans under Section 6.01(d)(iv) and
outstanding Indebtedness under Section 6.01(r), $200,000,000 plus the
Foreign Currency Fluctuation Amount in the aggregate and (ii) the
consideration for Investments in Unrestricted Subsidiaries (whether
cash or property, as valued at the time of such Investment) does not
exceed (net of any return representing return of capital of (but not
return on) any such Investment) at any time $75,000,000 in the
aggregate; and
(m) Investments resulting from pledges and deposits referred to in
Section 6.04(f).
None of Holdings and the Restricted Subsidiaries may make any Investment in
Unrestricted Subsidiaries except as described in the definition of "Unrestricted
Subsidiaries" set forth in Section 1.01.
SECTION 6.08. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any part of its assets (whether now owned or hereafter acquired) or any capital
stock of any subsidiary, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that this Section 6.08 shall not prohibit:
(a) the purchase and sale of property and assets in the ordinary
course of business by any Restricted Subsidiary;
(b) Sale and Lease-Back Transactions permitted by Section 6.06;
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62
(c) Permitted Business Acquisitions;
(d) sales, leases or transfers from one Restricted Subsidiary of
the Borrower to the Borrower or to a Restricted Subsidiary provided any
sale, lease or transfer by a Domestic Restricted Subsidiary to a
Foreign Restricted Subsidiary shall not constitute a significant
portion of the assets of such Domestic Restricted Subsidiary;
(e) sales, leases or other dispositions of (i) inventory of the
Restricted Subsidiaries determined by the Board of Directors of the
Borrower to be no longer useful or necessary in the operation of the
businesses of the Restricted Subsidiaries and (ii) assets of operations
that were discontinued prior to the 1994 Closing Date;
(f) any Permitted Receivables Financing;
(g) sales, leases or other dispositions of equipment or real
property of the Restricted Subsidiaries determined by the Board of
Directors of the Borrower to be no longer useful or necessary in the
operation of the business of the Restricted Subsidiaries, provided that
the Net Proceeds thereof in excess of $1,000,000 shall be used to
prepay the Tranche A Term Loans, the Canadian Term Loans and the
Tranche B Term Loans in accordance with Section 2.12(e) or used to
purchase replacement assets or properties used for the same purpose as
the equipment or real property disposed of within 12 months of the
receipt thereof;
(h) any Restricted Subsidiary may merge with any other Restricted
Subsidiary, provided that (i) at the time of and immediately after
giving effect to any such merger no Default or Event of Default shall
have occurred, (ii) the Borrower shall be the surviving corporation of
any merger involving the Borrower, and the Canadian Borrower shall be
the surviving corporation of any merger involving the Canadian Borrower
and (iii) no Restricted Subsidiary organized under the laws of a
jurisdiction outside the United States may merge with a Domestic
Restricted Subsidiary unless the Domestic Restricted Subsidiary is the
surviving corporation;
(i) the Restricted Subsidiaries may sell or otherwise dispose of
assets having a fair market value, for all such transactions, not in
excess of 25% of the fair market value as determined by the Board of
Directors of the Borrower of the assets of the Restricted Subsidiaries
at the 1994 Closing Date, provided that (i) each such sale shall be for
a consideration determined in good faith by the Board of Directors of
the Borrower to be at least equal to the fair market value (if any) of
the asset sold, (ii) the aggregate amount of all noncash consideration
included in such sale proceeds may not exceed 15% of the fair market
value of the aggregate amount of all such sale proceeds; provided,
however, that obligations of the type referred to in clauses (a) and
(b) of the definition of "Permitted Investments" (without regard to the
maturity or the credit rating thereof) shall not be deemed non-cash
proceeds if such obligations are promptly sold for cash and the
proceeds of such sale are included in the calculation of Net Proceeds
from such sale, (iii) the aggregate Net Proceeds of all such sales and
dispositions since the Effective Date under this clause (i) in excess
of $75,000,000 are applied to repay the Tranche A Term Loans, the
Canadian Term Loans and the Tranche B Term Loans in accordance with
Section 2.12(e) and the first $75,000,000 of such aggregate Net
Proceeds since the Effective Date are either applied to the purchase of
assets or properties used in the business of the Borrower and its
Restricted Subsidiaries as permitted by Section 6.12 within 12 months
of the receipt thereof or are applied to repay the Tranche A Term
Loans, the Canadian Term Loans and the Tranche B Term Loans in
accordance with Section 2.12(e) and (iv) no Default or Event of Default
shall have occurred and be continuing immediately prior to or after
such sale. Upon receipt by Holdings or any Restricted Subsidiary of Net
Proceeds of any Specified Asset Sale occurring after the Effective
Date, Borrower shall promptly deliver a certificate of a Responsible
Officer to the Administrative Agent setting forth the amount of the Net
Proceeds which Borrower expects to reinvest in replacement assets or
property during the subsequent 12-month period which are not required
to be applied to the repayment of the Tranche A Term Loans, the
Canadian Term Loans and the Tranche B Term Loans. On the first
anniversary of the receipt of such Net Proceeds, Borrower shall (i)
deliver a certificate of a Responsible Officer to the Administrative
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63
Agent certifying as to the amount and use of such Net Proceeds actually
reinvested in replacement assets or property during the preceding
12-month period and (ii) deliver to the Administrative Agent, for
application in accordance with Section 2.12(e), an amount equal to the
remaining uninvested Net Proceeds;
(j) Investments permitted by Section 6.07; and
(k) Holdings and the Restricted Subsidiaries may consummate the
Wallcoverings Disposition; provided if the Wallcoverings Disposition is
an asset sale and Holdings or any Restricted Subsidiary shall apply any
net operating loss carry forwards ("NOLS") to reduce the taxes payable
in respect of the gain on such sale, an amount equal to the taxes
reduced by the application of any NOLS shall either (i) be reinvested
in the business within twelve months or (ii) applied to prepay the
Loans in accordance with Section 2.12, and the remaining Net Proceeds
from any such sale shall be Available Wallcoverings Proceeds which the
Borrower may retain in its sole discretion.
SECTION 6.09. Transactions with Affiliates and Stockholders. Sell or
transfer any property or assets to, or purchase or acquire any property or
assets of, or otherwise engage in any other transactions with, any of its
Affiliates (including Unrestricted Subsidiaries but excluding Restricted
Subsidiaries) or any known holder of 10% or more of any class of capital stock
of Holdings or any Unrestricted Subsidiary, except that Holdings or any of the
Restricted Subsidiaries may engage in any of the foregoing transactions at
prices and on terms and conditions not less favorable to each than would prevail
on an arm's-length basis from unrelated third parties; provided that Holdings
and the Restricted Subsidiaries may not pay any fees to an Affiliate (including
an Unrestricted Subsidiary) for the provision of financial or advisory services
if after giving effect thereto a Default or Event of Default shall have occurred
and is continuing; and provided, further, that Holdings and the Restricted
Subsidiaries may consummate the Wallcoverings Disposition.
SECTION 6.10. Subordinated Indebtedness. Amend or modify any
instruments, agreements or documents evidencing or related to any Permitted
Subordinated Indebtedness or designate any Indebtedness (other than Indebtedness
incurred hereunder) "Designated Senior Indebtedness" under the Senior
Subordinated Notes, unless, in the judgement of the Required Lenders, any such
amendment or modification or designation does not substantially affect either
the rights or security interests granted to the Credit Agreement Creditors or
the Collateral Agent or the first and superior position of the Obligations owed
to the Credit Agreement Creditors relative to the second and inferior position
of the holders of the notes or other instruments evidencing the Permitted
Subordinated Indebtedness (without limiting the generality of the foregoing, it
is understood that any increase in interest, fees or other amounts payable in
connection therewith, or any amendment that imposes additional covenants or
events of default or makes more restrictive the covenants or events of default
contained therein, shall require the consent of the Required Lenders).
SECTION 6.11. Amendment of Constitutive Documents; Change in Corporate
Structure. (i) Permit any amendment or modification to be made to the
certificate of incorporation or By-laws of Holdings or of any Restricted
Subsidiary if such amendment or modification is materially adverse to the
interests of the Lenders or (ii) permit any Restricted Subsidiary to issue any
capital stock or other equity interest to any person other than the Borrower or
its wholly owned subsidiaries; provided that Holdings and the Restricted
Subsidiaries may consummate the Wallcoverings Disposition.
SECTION 6.12. Business of Holdings and Restricted Subsidiaries. (a)
Engage at any time in any business or business activity other than the business
currently conducted by it and business activities reasonably incidental or
related thereto or (b) fail to maintain and operate such business in
substantially the manner in which it is presently conducted and operated (other
than as contemplated herein) if such failure would materially adversely affect
the Credit Agreement Creditors; provided, however, that the activities of
Holdings shall be limited to (i) the ownership of the stock of the Borrower
together with activities directly related thereto, (ii) the ownership of the
stock of Unrestricted Subsidiaries described in clause (ii) of the definition of
such term set forth in Section 1.01 together with activities directly related
thereto, (iii) performance of its obligations under the Loan Documents and (iv)
actions required by law to maintain its status as a public company.
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SECTION 6.13. Restrictive Agreements. Enter into any indenture,
agreement, instrument or other arrangement which, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining, or
imposes materially adverse conditions upon, the granting of Liens, the provision
of Guarantees or the payment of dividends or the making of loans or advances or
transfers of property or assets by Holdings or any of the Restricted
Subsidiaries other than restrictions (i) on the granting of Liens on assets that
are encumbered by Liens permitted under clauses (b), (i), (k), (l), (r) or (t)
of Section 6.04 or (ii) contained in agreements relating to Indebtedness not in
excess of $10,000,000 in the aggregate or (iii) contained in agreements relating
to Indebtedness permitted by Section 6.01.
SECTION 6.14. Interest Coverage Ratio. In the case of Holdings, permit
the Interest Coverage Ratio for any period of four consecutive fiscal quarters
to be less than the ratio set forth below opposite the period which includes the
last day of such period of consecutive fiscal quarters:
Period: Amount:
Effective Date - Fiscal year end 1997 2.25 to 1.00
Fiscal year 1998 2.75 to 1.00
Thereafter 3.00 to 1.00
SECTION 6.15. EBITDA. In the case of Holdings, permit its EBITDA for
any period of twelve consecutive fiscal months ending on the last day of a
fiscal year to be less than $175,000,000.
SECTION 6.16. Leverage Ratio. In the case of Holdings, permit the
Leverage Ratio as of the last day of any fiscal quarter occurring during any
period set forth below to be greater than the ratio set forth below for such
period:
Quarter Ending: Ratio:
Effective Date - Fiscal year end 1996 2.75 to 1.00
Fiscal year 1997 2.50 to 1.00
Fiscal year 1998 2.25 to 1.00
Thereafter 2.00 to 1.00
SECTION 6.17. Current Ratio. In the case of Holdings, permit the
Current Ratio to be less than 1.25:1.00 on the last day of any fiscal quarter.
SECTION 6.18. Tax Sharing. File or consent to the filing of any
consolidated income tax return with any person (other than Holdings, the
Restricted Subsidiaries and Unrestricted Subsidiaries that have entered into the
existing Tax Sharing Agreements).
SECTION 6.19. Significant Subsidiaries. Permit the Significant
Subsidiaries to account for less than 85% of the consolidated assets of Holdings
at any time or 90% of the consolidated EBITDA of Holdings for any two
consecutive periods of four fiscal quarters.
SECTION 6.20. Inactive Subsidiaries. Permit any Inactive Subsidiary, at
any time, to fail to satisfy any of the criteria set forth in the definition of
Inactive Subsidiary in Section 1.01.
Notwithstanding anything in the Loan Documents to the contrary, but subject to
the proviso to the definition of Wallcoverings Disposition, Holdings and the
Restricted Subsidiaries may engage in transactions in preparation for the
Wallcoverings Disposition substantially as described or contemplated in the
Preliminary Prospectus and may effectuate the Wallcoverings Disposition.
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ARTICLE VII.
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in any Loan
Document, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Loan or reimbursement of any Letter of Credit Disbursement or any Fee
or any other amount (other than an amount referred to in (b) above) due
under any Loan Document, when and as the same shall become due and
payable, and such default shall continue unremedied for a period of
five Business Days;
(d) default shall be made in the due observance or performance by
the Borrower, the Canadian Borrower or Holdings or any subsidiary
thereof of any covenant, condition or agreement contained in Section
2.12(e), 5.01(a), 5.05(a), 5.08 or 5.10 or in Article VI;
(e) default shall be made in the due observance or performance by
the Borrower, the Canadian Borrower or Holdings or any subsidiary
thereof of any covenant, condition or agreement contained in any Loan
Document (other than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30 days in the case
of Sections 5.01(b), 5.02, 5.09 and 5.13 and 15 days in the case of all
others, in each case after notice thereof from the Administrative Agent
or any Lender to Holdings, the Canadian Borrower or the Borrower;
(f) Holdings, any Restricted Subsidiary or any Significant
Subsidiary shall (i) fail to pay any principal or interest, regardless
of amount, due in respect of Indebtedness having an aggregate principal
or notional amount in excess of $7,500,000, when and as the same shall
become due and payable, or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreements or
instruments evidencing or governing any Indebtedness having an
aggregate principal amount in excess of $7,500,000 if the effect of any
failure referred to in this clause (ii) is to cause, or to permit the
holder or holders of such Indebtedness or a trustee on its or their
behalf to cause, such Indebtedness to become due prior to its stated
maturity; or a termination event or comparable event shall occur under
the documents governing the Permitted Receivables Financing entitling
the persons financing the receivables owned by the Finance Subsidiary
to stop funding the purchase of receivables of all sellers of
receivables to the Finance Subsidiary;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower or Holdings or any Significant
Subsidiary, or of a substantial part of the property or assets of the
Borrower or Holdings or any Significant Subsidiary, under Title 11 of
the United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law or comparable foreign law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Borrower or Holdings or any Significant Subsidiary or for a
substantial part of the property or assets of the Borrower or Holdings
or any Significant Subsidiary or (iii) the winding-up or liquidation of
the Borrower or Holdings or any Significant Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be
entered;
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66
(h) the Borrower or Holdings or any Significant Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law or comparable foreign law, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower or Holdings or any Significant Subsidiary or
for a substantial part of the property or assets of the Borrower or
Holdings or any Significant Subsidiary, (iv) file an answer admitting
the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $7,500,000 (to the extent not covered by insurance)
shall be rendered against Holdings, any Restricted Subsidiary or any
Significant Subsidiary or any combination thereof and the same shall
remain undischarged or stayed for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to levy upon assets or
properties of Holdings or any Restricted Subsidiary to enforce any such
judgment;
(j) a Reportable Event or Reportable Events, or a failure to make
a required installment or other payment (within the meaning of Section
412(n)(1) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the
Borrower, any Guarantor or any of their ERISA Affiliates to the PBGC or
to a Plan in an aggregate amount exceeding $5,000,000 and, within 30
days after the reporting of any such Reportable Event to the
Administrative Agent or after the receipt by the Administrative Agent
of the statement required pursuant to Section 5.06(b)(iii), the
Administrative Agent shall have notified the Borrower in writing that
(i) the Required Lenders have made a determination that, on the basis
of such Reportable Event or Reportable Events or the failure to make a
required payment, there are reasonable grounds (A) for the termination
of such Plan or Plans by the PBGC, (B) for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan or Plans or (C) for the imposition of a lien in favor of a
Plan and (ii) as a result thereof an Event of Default exists hereunder;
or a trustee shall be appointed by a United States District Court to
administer any such Plan or Plans; or the PBGC shall institute
proceedings to terminate any Plan or Plans;
(k) (i) the Borrower, any Guarantor or any of their ERISA
Affiliates shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred Withdrawal Liability to such Multiemployer
Plan, (ii) the Borrower, any Guarantor or such ERISA Affiliate does not
have reasonable grounds for contesting such Withdrawal Liability or is
not in fact contesting such Withdrawal Liability in a timely and
appropriate manner and (iii) the amount of the Withdrawal Liability
specified in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date or dates of such
notification), exceeds $7,500,000 or requires payments exceeding
$7,500,000 in any year;
(l) the Borrower, any Guarantor or any of their ERISA Affiliates
shall have been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is being terminated,
within the meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination the aggregate annual contributions of the
Borrower, the Guarantors and their ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or have been or are
being terminated have been or will be increased over the amounts
required to be contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding $7,500,000;
(m) there shall have occurred a Change in Control;
(n) (i) any Loan Document shall for any reason be asserted by
Holdings or any of its subsidiaries not to be a legal, valid and
binding obligation of the respective parties thereto, (ii) any security
interest or
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Lien purported to be created by the Pledge Agreement and to extend to
assets which are not immaterial to Holdings and its subsidiaries on a
consolidated basis shall for any reason (except to the extent resulting
from the negligent or wilful failure of the Collateral Agent to retain
possession of the applicable collateral) cease to be, or any security
interest or Lien purported to be created by the Pledge Agreement and to
extend to any assets of Holdings or its subsidiaries shall for any
reason be asserted by Holdings or any of its subsidiaries not to be, a
valid, first priority perfected security interest (subject to no Liens
other than Liens not prohibited by any applicable provision of the Loan
Documents) in such collateral (other than cash proceeds which are not
identifiable proceeds) or (iii) the Obligations and the guarantees
thereof pursuant to the Guarantee Agreement shall cease to constitute
senior indebtedness under the subordination provisions of any document
or instrument evidencing any Permitted Subordinated Indebtedness or
such subordination provisions shall be invalidated or otherwise cease
to be a legal, valid and binding obligation of the parties thereto,
enforceable in accordance with its terms; or
(o) the Finance Subsidiary shall engage in any business or
activity other than the purchase of receivables from the Restricted
Subsidiaries and the sale of such receivables and activities incidental
thereto;
then, and in every such event (other than an event with respect to the Borrower
or the Canadian Borrower described in paragraph (g) or (h) above), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders, shall, by notice to the
Borrower and the Canadian Borrower, take either or both of the following
actions, at the same or different times: (i) terminate forthwith the Commitments
and (ii) declare the Loans then outstanding to be forthwith due and payable in
whole or in part, whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid accrued Fees and
all other liabilities of the Borrower and the Canadian Borrower accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower and the Canadian
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to the Borrower or the
Canadian Borrower described in paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower and the Canadian Borrower accrued hereunder and
under any other Loan Document, shall automatically become due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower and the Canadian Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding.
ARTICLE VIII.
THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this Agreement,
Chemical Bank is hereby appointed to act as Administrative Agent and Collateral
Agent on behalf of the Lenders and the Issuing Banks. Each of the Lenders, and
each subsequent holder of any Note by its acceptance thereof, and each Issuing
Bank hereby irrevocably authorizes the Administrative Agent to take such actions
on behalf of such Lender or holder or the Issuing Bank, as applicable, and to
exercise such powers as are specifically delegated to the Administrative Agent
by the terms and provisions hereof and of the other Loan Documents (including
the power to execute and deliver the Intercreditor Agreement if and when
requested to do so by any holders of any Permitted Acquisition Indebtedness),
together with such actions and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized by the Lenders and the
Issuing Banks, without hereby limiting any implied authority, (a) to receive on
behalf of the Lenders all payments of principal of and interest on the Loans and
all other amounts due to the Lenders hereunder, and promptly to distribute to
each Lender its proper share of each payment so received; (b) to give notice on
behalf of each of the Lenders to the Borrower or the Canadian Borrower of any
Event of Default specified in this Agreement of which the Administrative Agent
has actual knowledge acquired in connection with its agency hereunder; and (c)
to distribute to each Lender and Issuing Bank copies of all notices, financial
statements and other materials delivered by the Borrower or the Canadian
Borrower pursuant to this Agreement as received by the Administrative Agent. In
acting as Collateral Agent Chemical Bank shall be entitled to the rights and
benefits, and
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68
subject to the obligations, set forth for the Administrative Agent under this
Article VIII, mutatis mutandis, which Article is hereby incorporated by
reference, mutatis mutandis, in each of the Guarantee Agreement and the Pledge
Agreement.
Neither the Administrative Agent nor any Issuing Bank nor any of their
respective affiliates, directors, officers, employees or agents shall be liable
as such for any action taken or omitted by any of them except for its or his own
gross negligence or wilful misconduct, or be responsible for any statement,
warranty or representation herein or the contents of any document delivered in
connection herewith, or be required to ascertain or to make any inquiry
concerning the performance or observance by the Borrower or the Canadian
Borrower or any Guarantor of any of the terms, conditions, covenants or
agreements contained in any Loan Documents. The Administrative Agent shall not
be responsible to the Lenders or the holders of the Notes or the Issuing Bank
for the due execution (other than by the Administrative Agent), genuineness,
validity, enforceability (other than against the Administrative Agent) or
effectiveness of this Agreement, the Notes or any other Loan Documents or other
instruments or agreements. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof until it shall have
received from the payee of such Note notice, given as provided herein, of the
transfer thereof in compliance with Section 9.04. The Administrative Agent shall
in all cases be fully protected in acting, or refraining from acting, in
accordance with written instructions signed by the Required Lenders (and the
Issuing Banks, with respect to Letters of Credit) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders and each subsequent holder
of any Note and the Issuing Banks. The Administrative Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have been
signed or sent by the proper person or persons. Neither the Administrative Agent
nor the Issuing Banks nor any of their respective directors, officers, employees
or agents shall have any responsibility to the Borrower or the Canadian Borrower
on account of the failure of or delay in performance or breach by any Lender
(or, in the case of the Administrative Agent, by any Issuing Bank) of any of its
obligations hereunder or to any Lender (or, in the case of the Administrative
Agent, to any Issuing Bank) on account of the failure of or delay in performance
or breach by any other Lender or the Borrower, the Canadian Borrower or any
Guarantor of any of their respective obligations hereunder or under any other
Loan Document or in connection herewith or therewith. Each of the Administrative
Agent and each Issuing Bank may execute any and all duties hereunder by or
through agents or affiliates and shall be entitled to rely upon the advice of
legal counsel selected by it with respect to all matters arising hereunder and
shall not be liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither the Administrative Agent
nor any Issuing Bank shall be under any duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement unless
it shall be requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank, the Canadian Borrower and the Borrower.
Upon any such resignation, the Required Lenders shall have the right to appoint
a successor, with the consent of the Borrower (not to be unreasonably withheld).
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may, on behalf of the Lenders, appoint a successor Administrative Agent, with
the consent of the Borrower (not to be unreasonably withheld), which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank which is also a bank.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
With respect to the Loans made by it hereunder and the Notes issued to
it and the Letter of Credit participations acquired by it, each of the
Administrative Agent and each Issuing Bank in its individual capacity and not as
Administrative Agent or Issuing Bank, as the case may be, shall have the same
rights and powers as any other
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69
Lender and may exercise the same as though it were not the Administrative Agent
or an Issuing Bank, as the case may be, and the Administrative Agent and its
Affiliates and each Issuing Bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with the Borrower,
the Canadian Borrower or any subsidiary or other Affiliate thereof as if it were
not the Administrative Agent or an Issuing Bank, as the case may be.
Each Lender recognizes that applicable laws, rules, regulations or
guidelines of Governmental Authorities may require the Administrative Agent to
determine whether the transactions contemplated hereby should be classified as
"highly leveraged" or assigned any similar or successor classification, and that
such determination may be binding upon the other Lenders. Each Lender
understands that any such determination shall be made solely by the
Administrative Agent based upon such factors (which may include, without
limitation, the Administrative Agent's internal policies and prevailing market
practices) as the Administrative Agent shall deem relevant and agrees that the
Administrative Agent shall have no liability for the consequences of any such
determination.
Each Lender agrees (i) to reimburse each of the Administrative Agent
and, if such Lender is a Revolving Lender, each Issuing Bank, on demand, in the
amount of its pro rata share (based on its Commitments hereunder or its
Revolving Credit Commitment, if any, in the case of reimbursement of any Issuing
Bank) of any reasonable expenses incurred for the benefit of the Lenders by the
Administrative Agent or, if applicable, such Issuing Bank, including counsel
fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders, which shall not have been reimbursed by the Borrower and
(ii) to indemnify and hold harmless each of the Administrative Agent and, if
such Lender is a Revolving Lender, each Issuing Bank and any of their respective
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against it in its capacity as the Administrative Agent or an Issuing
Bank, as the case may be, or any of them in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted by
it or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower or the Canadian
Borrower; provided that no Lender shall be liable to the Administrative Agent or
any Issuing Bank for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or wilful misconduct of the Administrative
Agent or such Issuing Bank, as the case may be, or any of their directors,
officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent, any Issuing Bank or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any Issuing Bank or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
The Managing Agents shall have no rights or duties except as expressly
set forth in this Agreement.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telex or telecopy, as follows:
(a) if to Holdings or to the Borrower, to it at 701 McCullough
Drive, Charlotte, North Carolina 28262, Attention of Chief Financial
Officer (Telecopy No. 704-548-2330) with copies to 210 Madison Avenue,
6th Floor, New York, New York 10016, Attention of General Counsel
(Telecopy No.
212-578-1269);
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(b) if to the Canadian Borrower, to it at 150 Collins Street,
Farnham, Quebec, J2N 2R6, Canada, Attention Controller (Telecopy No.
514-293-6657) with copies to the Borrower, Attention of Chief Financial
Officer (Telecopy No. 704-548-2330) and Elizabeth R. Philipp (Telecopy
No. 212-578-1269);
(c) if to the Administrative Agent, to it at 270 Park Avenue (10th
Floor), New York, New York 10017, Attention of Rosemary Bradley
(Telecopy No. 212-972-0009);
(d) if to a Lender, to it at its address (or telecopy number) set
forth on its signature page hereto or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telex or telecopy, or on the date five Business Days after dispatch by certified
or registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower, the Canadian Borrower and
the Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans, and the execution and delivery
to the Lenders of the Notes evidencing such Loans, and the issuance of the
Letters of Credit, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Commitments have not been terminated. Without
prejudice to the survival of any other agreements contained herein,
indemnification and reimbursement obligations contained herein (including
pursuant to Sections 2.13, 2.15 and 9.05) shall survive the payment in full of
the principal and interest hereunder and the termination of the Commitments or
this Agreement.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Canadian Borrower,
Holdings and the Administrative Agent and when the Administrative Agent shall
have received copies hereof which, when taken together, bear the signatures of
each Lender, and thereafter shall be binding upon and inure to the benefit of
the Borrower, Holdings, each Issuing Bank, the Administrative Agent and each
Lender and their respective successors and assigns, except that none of the
Borrower, the Canadian Borrower or Holdings shall have the right to assign its
rights hereunder or any interest herein without the prior consent of all the
Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrower, the Canadian Borrower, Holdings,
the Administrative Agent, the Issuing Banks or the Lenders that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it and the Notes
and participations in Letters of Credit held by it, it being understood that
Lenders shall not be required to assign pro rata amounts of their Revolving
Credit Commitments, Tranche A Term Loans, Canadian Term Loans and Tranche B Term
Loans); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of such Lender, (x) the Borrower and the Administrative
Agent must give their prior written consent to such assignment (which consents
shall not be unreasonably withheld or delayed) and (y) such assignment (unless
such assignment is of all of a Lender's Loans, Letter of Credit Exposure and
unused Commitments) shall be in an amount of at least $5,000,000 unless
otherwise agreed to by the Borrower and the Administrative Agent each in their
sole discretion, (ii) the parties to each such assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
the Note or Notes subject to such assignment and a processing and recordation
fee of $3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent
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71
an Administrative Questionnaire. Upon acceptance and recording pursuant to
paragraph (e) of this Section 9.04, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof unless agreed otherwise by the
Administrative Agent, (A) the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of Sections 2.13, 2.15, 2.18 and 9.05, as well as to
any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Revolving Credit Commitment, and the outstanding balances of its Tranche A
Term Loans, Tranche B Term Loans, Canadian Term Loans and Revolving Loans, in
each case without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except as
set forth in (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower,
the Canadian Borrower or any Guarantor or the performance or observance by the
Borrower, the Canadian Borrower or any Guarantor of any of its obligations under
this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance; (iv) such
assignee confirms that it has received copies of this Agreement, together with
copies of the most recent financial statements delivered pursuant to this
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon the
Administrative Agent, any Issuing Bank, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at its address referred to
in subsection 9.01 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amount of the Loans owing to,
each Lender from time to time. The Administrative Agent shall separately record
the names and addresses of each Lender that holds Notes in the Register. The
Administrative Agent shall also record the amount of the Commitments of, and the
aggregate principal amount of Loans owing to, and the Letter of Credit Exposure
of, such Lender in the Register. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Canadian
Borrower, the Administrative Agent and the Lenders shall treat each person whose
name is recorded in the Register as the owner of the Notes, the Commitments and
the Loans and Letter of Credit Exposures recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by the Borrower,
the Canadian Borrower the Issuing Bank and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee together with the Note or Notes
subject to such assignment, an Administrative Questionnaire completed in respect
of the assignee (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) above and, if
required, the written consent of the Borrower and the Administrative Agent to
such assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders. Within five
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72
Business Days after receipt of notice, the Borrower or the Canadian Borrower, as
the case may be, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for the surrendered Note or Notes, a new Note
or Notes to the order of such assignee in a principal amount equal to the
applicable Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained a Commitment, a new Note to the order
of such assigning Lender in a principal amount equal to the applicable
Commitment retained by it. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note; such new Notes shall be dated the date of the surrendered Notes which they
replace and shall otherwise be in substantially the form of Exhibit A-1, A-2,
A-3, A-4 or A-5 hereto, as appropriate. Canceled Notes shall be returned to the
Borrower or the Canadian Borrower, as the case may be. Notwithstanding anything
to the contrary contained herein, no assignment under Section 9.04(b) of any
rights or obligations under or in respect of the Notes or Loans evidenced by the
Notes shall be effective unless and until the Administrative Agent shall have
recorded such assignment in the Register. The Administrative Agent shall record
the name of the transferor, the name of the transferee, and the amount of the
transfer in the Register after receipt of all documents required pursuant to
this Section 9.04, including, without limitation, the Notes being assigned in
connection with such transfer, and such other documents as the Administrative
Agent may reasonably request.
(f) Each Lender may without the consent of the Borrower, the Canadian
Borrower, any Issuing Bank or the Administrative Agent sell participations to
one or more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it and the Notes and participations in Letters of Credit
held by it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating banks or other entities shall be entitled to the benefit
of the cost protection provisions contained in Sections 2.13, 2.15, 2.18 and
9.06(a) to the same extent as if they were Lenders, provided, that no such
participating bank or entity shall be entitled to receive any greater amount
pursuant to such Sections than a Lender would have been entitled to receive in
respect of the amount of the participation sold by such Lender to such
participating bank or entity had no sale occurred, and (iv) the Borrower, the
Canadian Borrower, the Administrative Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower or the Canadian Borrower, as the case may be, relating to the Loans and
participations in Letters of Credit and to approve any amendment, modification
or waiver of any provision of this Agreement or any other Loan Document (other
than amendments, modifications or waivers decreasing any fees payable hereunder
or the amount of principal of or the rate at which interest is payable on the
Loans, extending any final maturity date, in each case in respect of an
Obligation in which the relevant participating bank or entity is participating,
or releasing all or substantially all of the Pledged Securities or any Guarantor
from the Guarantee Agreement unless all or substantially all of the capital
stock of such subsidiary is sold in a transaction permitted by this Agreement).
Each Lender will disclose the identity of its participants to the Borrower and
Administrative Agent if requested by the Borrower or the Administrative Agent.
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or the Canadian Borrower
furnished to such Lender by or on behalf of the Borrower or the Canadian
Borrower; provided that, prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree to be bound by Section 9.17.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement and the Notes issued to it to a Federal Reserve Bank;
provided that no such assignment shall release a Lender from any of its
obligations hereunder.
(i) None of the Borrower, Holdings or the Canadian Borrower shall
assign or delegate any of its rights or duties hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent in
connection with the preparation of this Agreement and the other
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73
Loan Documents, or by the Administrative Agent in connection with the
syndication of the Commitments or the administration of this Agreement, or in
connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent or any Lender in connection
with the enforcement or protection of their rights in connection with this
Agreement and the other Loan Documents or in connection with the Loans made or
the Notes issued hereunder, including the reasonable fees, charges and
disbursements of Simpson Thacher & Bartlett, counsel for the Administrative
Agent, and, in connection with any such enforcement or protection, the
reasonable fees, charges and disbursements of any other counsel (including the
reasonable allocated costs of internal counsel if a Lender elects to use
internal counsel in lieu of outside counsel) for the Administrative Agent, any
Issuing Bank or any Lender (but no more than one such counsel for any Lender).
(b) The Borrower agrees to indemnify the Administrative Agent, each
Issuing Bank, each Lender and each of their respective directors, officers,
employees and agents (each such person being called an "Indemnitee") against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Recapitalization Transactions, the Larizza
Acquisition, the 1996 Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or the use of any Letter of
Credit or (iii) any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee (treating, for this purpose only, any Lender and its directors,
officers, employees and agents as a single Indemnitee). Subject to and without
limiting the generality of the foregoing sentence, the Borrower agrees to
indemnify each Indemnitee against, and hold each Indemnitee harmless from, any
Environmental Claim, and any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel or consultant fees, charges and
disbursements, incurred by or asserted against any Indemnitee (and arising out
of, or in any way connected with or as a result of, any of the events described
in clause (i), (ii) or (iii) of the preceding sentence) arising out of, in any
way connected with, or as a result of (i) any Environmental Claim, (ii) any
violation of any Environmental Law, or (iii) any act, omission, event or
circumstance (including the actual, proposed or threatened, release, removal,
disposition, discharge or transportation, storage, holding, existence,
generation, processing, abatement, handling or presence on, into, from or under
any present, past or future property of Holdings or any of its subsidiaries of
any Contaminant), regardless of whether the act, omission, event or circumstance
constituted a violation of Environmental Law at the time of its existence or
occurrence; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such Environmental Claim is, or such, losses,
claims, damages, liabilities or related expenses are, determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee or any of its
employers, officers, directors, employees or agents.
(c) The Borrower shall be entitled to assume the defense of any action
for which indemnification is sought hereunder with counsel of its choice at its
expense (in which case the Borrower shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by an Indemnitee except as
set forth below); provided, however, that such counsel shall be reasonably
satisfactory to each such Indemnitee. Notwithstanding the Borrower's election to
assume the defense of such action, each Indemnitee shall have the right to
employ separate counsel and to participate in the defense of such action, and
the Borrower shall bear the reasonable fees, costs, and expenses of such
separate counsel, if (i) the use of counsel chosen by the Borrower to represent
such Indemnitee would present such counsel with a conflict of interest; (ii) the
actual or potential defendants in, or targets of, any such action include both
the Borrower and such Indemnitee and such Indemnitee shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to the Borrower (in which case the
Borrower shall not have the right to assume the defense or such action on behalf
of such Indemnitee); (iii) the Borrower shall not have employed counsel
reasonably satisfactory to such Indemnitee to represent it within a reasonable
time after notice of the institution of such action; or (iv) the Borrower shall
authorize such Indemnitee to employ separate counsel at the Borrower's expense.
The Borrower will not be liable under this Agreement for
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any amount paid by an Indemnitee to settle any claims or actions if the
settlement is entered into without the Borrower's consent, which consent may not
be withheld unless such settlement is unreasonable in light of such claims or
actions against, and defenses available to, such Indemnitee.
(d) Holdings, the Canadian Borrower and the Borrower shall not, and
shall not permit any of their subsidiaries to, bring any demand, claim, cost
recovery or other action they may now or hereafter have against any Indemnitee
resulting from any Environmental Claim; provided that this paragraph (d) shall
not, as to any Indemnitee, apply to the extent that such Environmental Claim has
been determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee or any of its employers, directors, officers, employees or agents.
(e) Notwithstanding anything to the contrary in this Section 9.05, this
Section 9.05 shall not apply to taxes, it being understood that the Borrower's
only obligations with respect to taxes shall arise under Sections 2.13 and 2.18
and Section 19 of the Guarantee Agreement.
(f) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, any Issuing Bank
or any Lender. All amounts due under this Section 9.05 shall be payable on
written demand therefor.
SECTION 9.06. Right of Setoff; Sharing. (a) If an Event of Default
shall have occurred and be continuing, each Lender (including each Issuing Bank)
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender to or for the credit or the account of the
Borrower or the Canadian Borrower against any of and all the obligations of the
Borrower or the Canadian Borrower now or hereafter existing under this Agreement
and other Loan Documents held by such Lender, irrespective of whether or not
such Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of its Loans or interest in Letters of
Credit, or interest thereon, then due, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in paragraph (g) or (h) of Article VII, or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans
and interests in Letters of Credit, or interest thereon, then due, such
benefitted Lender shall purchase for cash from the other Lenders a participating
interest in such portion of each such other Lender's Loans and interests in
Letters of Credit, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Issuing Bank or any Lender in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Banks and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies which they would otherwise have. No
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waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower, the Canadian Borrower or Holdings therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Borrower, the Canadian Borrower or Holdings in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower, the Canadian Borrower and the Required Lenders;
provided, however, that no such agreement shall (i) decrease the principal
amount of, or extend the final maturity of, or waive or excuse any such payment
or any part thereof, or decrease the rate of interest on any Loan or any Letter
of Credit Disbursement or amend or modify the provisions of Section 2.09(c) or
2.16, without the prior written consent of each Lender affected thereby, (ii)
extend any Tranche A Term Loan Repayment Date or Tranche B Term Loan Repayment
Date or Canadian Term Loan Repayment Date (other than, in each case, final
maturity) or any other date on which principal of the Loans is due, or extend
any date on which payment of interest on any Loan or reimbursement of any Letter
of Credit Disbursement is due, without the prior written consent of (A) in the
case of Tranche A Term Loans, Canadian Term Loans or Tranche B Terms Loans,
Lenders with Tranche A Term Loans, Canadian Term Loans or Tranche B Term Loans,
as the case may be, representing at least 80% of the aggregate principal amount
of the Tranche A Term Loans, Canadian Term Loans or Tranche B Term Loans then
outstanding, as the case may be, or (B) in the case of Loans under the Revolving
Credit Commitments and Letter of Credit Disbursements, Lenders with Revolving
Credit Commitments representing at least 80% of the aggregate Revolving Credit
Commitments then in effect, (iii) increase or extend the Commitment or decrease
the Commitment Fees or Letter of Credit Fees or other fees of any Lender without
the prior written consent of such Lender or (iv) amend or modify the provisions
of Section 2.09(c) or 2.16, the provisions of this Section or the definition of
"Required Lenders", or release substantially all the Pledged Securities from the
Lien of the Pledge Agreement or release any Guarantor from the Guarantee
Agreement unless all or substantially all of the capital stock of such
subsidiary is sold or otherwise disposed of in a transaction permitted by this
Agreement, without the prior written consent of each Lender; provided further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent or the Issuing Banks hereunder without the
prior written consent of the Administrative Agent or the Issuing Banks acting as
such at the effective date of such agreement, as the case may be. Each Lender
and each holder of a Note shall be bound by any waiver, amendment or
modification authorized by this Section regardless of whether its Note shall
have been marked to make reference thereto, and any consent by any Lender or
holder of a Note pursuant to this Section shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall have been so marked.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein
or in the Notes to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by such Lender in accordance with applicable law, the rate
of interest payable under the Note held by such Lender, together with all
Charges payable to such Lender, shall be limited to the Maximum Rate, provided
that such excess amount shall be paid to such Lender on the subsequent payment
dates to the extent not exceeding the legal limitation.
SECTION 9.10. Entire Agreement. This Agreement, the other Loan
Documents and the agreements regarding certain Fees referred to herein
constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among or representations from the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. Waiver of Jury Trial. Each party hereto hereby waives, to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement or any of the other Loan Documents.
Each party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or
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otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement and
the other Loan Documents, as applicable, by, among other things, the mutual
waivers and certifications in this Section 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of
the Borrower, the Canadian Borrower and Holdings hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against the Borrower or Holdings or their properties in the
courts of any jurisdiction.
(b) Each of the Borrower, the Canadian Borrower and Holdings hereby
irrevocably and unconditionally waives, to the fullest extent they may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or the other Loan Documents in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due hereunder
or under any other Loan Document in dollars into another currency, the parties
hereto agree, to the fullest extent that they may legally and effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase dollars with such
other currency in New York, New York, on the Business Day immediately preceding
the day on which final judgment is given.
(b) The obligation of each of the Borrower and the Canadian Borrower in
respect of any sum due to the Administrative Agent, any Lender or any Issuing
Bank hereunder or under any other Loan Document in US dollars shall, to the
extent permitted by applicable law, notwithstanding any judgment in a currency
other than US dollars,
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be discharged only to the extent that on the Business Day following receipt of
any sum adjudged to be so due in the judgment currency the Administrative Agent,
such Lender or such Issuing Bank may in accordance with normal banking
procedures purchase US dollars in the amount originally due to the
Administrative Agent, such Lender or such Issuing Bank with the judgment
currency. If the amount of US dollars so purchased is less than the sum
originally due to the Administrative Agent, such Lender or such Issuing Bank,
the Borrower agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Administrative Agent, such Lender or such Issuing
Bank against the resulting loss.
SECTION 9.17. Confidentiality. Each of the Lenders, the Issuing Banks
and the Administrative Agent agrees that it shall maintain in confidence any
information relating to the Borrower and the Canadian Borrower furnished to it
by or on behalf of the Borrower or the Canadian Borrower (other than information
that (x) has become generally available to the public other than as a result of
a disclosure by such party, (y) has been independently developed by such party
without violating this Section or (z) was available to such party from a third
party having, to such party's knowledge, no obligation of confidentiality to the
Borrower or the Canadian Borrower) and shall not reveal the same other than (i)
to its directors, officers, employees and advisors with a need to know and (ii)
as contemplated by Section 9.04(g), except: (a) to the extent necessary to
comply with law or any legal process or the requirements of any Governmental
Authority, of the National Association of Insurance Commissioners (the "NAIC")
or of any securities exchange on which securities of the disclosing party or any
Affiliate of the disclosing party are listed or traded, (b) as part of normal
reporting or review procedures to Governmental Authorities to the NAIC or to its
parent companies, Affiliates or auditors and (c) in order to enforce its rights
under any Loan Document in a legal proceeding.
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IN WITNESS WHEREOF, the Borrower, the Canadian Borrower Holdings, the
Administrative Agent, and the Lenders have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
COLLINS & AIKMAN PRODUCTS CO.
by /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President & CFO
COLLINS & AIKMAN CORPORATION
by /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President & CFO
COLLINS & AIKMAN CANADA INC.
by /s/ Ronald T. Lindsay
Name: Ronald T. Lindsay
Title: Vice President
CHEMICAL BANK, as Administrative Agent
and Collateral Agent and as a Lender
by /s/ Rosemary Bradley
Name: Rosemary Bradley
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent
by /s/ Linda A. Carper
Name: Linda A. Carper
Title: Managing Director
NATIONSBANK, N.A., as Managing Agent
by /s/ J. Timothy Martin
Name: J. Timothy Martin
Title: Senior Vice President
<PAGE>
SUNTRUST BANK, ATLANTA, as a Lender
By /s/ Brian K. Peters
Name: Brian K. Peters
Title: Vice President
By /s/ Jarrette A. Whitein
Name: Jarrette A. Whitein
Title: Group Vice President
Address for Notices
25 Park Place N.E.
Atlanta, Georgia 30303
Attention: Marcella Howard
Telecopy: (404) 658-4905
<PAGE>
BANK OF IRELAND - GRAND CAYMAN
BRANCH, as a Lender
By /s/ John Cusack
Name: John Cusack
Title: A.V.P.
Address for Notices
640 Fifth Avenue
New York, New York 10019
Attention: John Cusack
Telecopy: (212) 586-7752
<PAGE>
THE BANK OF NEW YORK, as a Lender
By /s/ H. Stephen Griffith
Name: H. Stephen Griffith
Title: Senior Vice President
Address for Notices
One Wall Street
22nd Floor
New York, New York 10286
Attention: Ann Marie Beeble
Telecopy: (212) 635-6434
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ P.M. Brown
Name: P.M. Brown
Title: Relationship Manager
Address for Notices
The Bank of Nova Scotia
Atlanta Agency
Suite 2700
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: W.E. Zarrett
Telecopy: (404) 888-8998
<PAGE>
BANK OF SCOTLAND, as a Lender
By /s/ Catherine M. Onffrey
Name: Catherine M. Onffrey
Title: Vice President
Address for Notices
565 Fifth Avenue
New York, New York 10017
Attention: Janet Taffe
Telecopy: (212) 682-5720
<PAGE>
BANK OF TOKYO - MISTUBISHI TRUST
COMPANY, as a Lender
By /s/ Sharon L. Fountain
Name: Sharon L. Fountain
Title: Vice President
Address for Notices
1251 Avenue of the Americas
New York, New York 10020
Attention: Sharon Fountain
Telecopy: (212) 782-6445
<PAGE>
BANQUE PARIBAS, as a Lender
By /s/ Eric Green
Name: Eric Green
Title: VP
Address for Notices
787 Seventh Avenue
32nd Floor
New York, New York 10019
Attention: Eric Green
Telecopy: (212) 841-2535
<PAGE>
BRANCH BANKING AND TRUST COMPANY, as
a Lender
By /s/ Thatcher L. Townsend
Name: Thatcher L. Townsend
Title: Vice President
Address for Notices
110 South Stratford Road
Suite 301
Winston-Salem, North Carolina 27103
Attention: Thatcher Townsend
Telecopy: (910) 733-3254
<PAGE>
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V., as a Lender
By: Chancellor Senior Secured Management,
Inc., as Portfolio Advisor
By /s/ Stephen M. Alfieri
Name: Stephen M. Alfieri
Title: MD
Address for Notices
153 East 53rd Street
25th Floor
New York, New York 10022
Attention: Steve Alfieri
Telecopy: (212) 891-6619
<PAGE>
CHL HIGH YIELD LOAN PORTFOLIO
(a unit of Chemical Bank)
By /s/ Richard W. Stewart
Name: Richard W. Stewart
Title: Vice President
Address for Notices
380 Madison Avenue
12th Floor
New York, New York 10017
Attention: Richard W. Stewart
Telecopy: (212) 622-3797
<PAGE>
CIBC INC., as a Lender
By /s/ Roger Colden
Name: Roger Colden
Title: Director
Address for Notices
Two Paces West
2727 Paces Ferry Road
Suite 1200
Atlanta, Georgia 30339
Attention: Roger Colden
Telecopy: (770) 319-4954
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE, as a Lender
By /s/ Sean Mounier Marcus Edward
Name: Sean Mounier Marcus Edward
Title: First Vice President
Title: Vice President
Address for Notices
520 Madison Avenue
37th Floor
New York, New York 10022
Attention: Sean Mounier
Telecopy: (212) 715-4535
<PAGE>
CREDIT LYONNAIS, NEW YORK BRANCH AND
CREDIT LYONNAIS ATLANTA AGENCY, as a
Lender
By /s/ Robert Ivosevich
Name: Robert Ivosevich
Title:
By /s/ Robert Ivosevich
Name: Robert Ivosevich
Title:
Address for Notices
303 Peachtree Street, N.E.
Suite 4400
Atlanta, Georgia 30308
Attention: David Edge
Telecopy: (404) 584-5249
<PAGE>
CREDITANSTALT CORPORATE FINANCE, INC.,
as a Lender
By /s/ Robert M. Biringer
Name: Robert M. Biringer
Title: Senior Vice President
By /s/ W. Craig Stamm
Name: W. Craig Stamm
Title: Senior Associate
Address for Notices
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attention: Bob Birringer
Telecopy: (404) 390-1851
<PAGE>
CRESCENT/MACH I PARTNERS, L.P., as a Lender
By: TCW Asset Management Company
its Investment Manager
By /s/ Justine Driscoll
Name: Justine Driscoll
Title: Vice President
Address for Notices
200 Park Avenue, Suite 220
New York, New York 10166
Attention: Mark Gold
Telecopy: (212) 297-4159
<PAGE>
CRESTAR BANK, as a Lender
By /s/ C. Gray Key
Name: C. Gray Key
Title: Vice President
Address for Notices
919 East Main Street
Richmond, Virginia 23219
Attention: Gray Key
Telecopy: (804) 782-5413
<PAGE>
DRESDNER BANK, A.G. NEW YORK AND
GRAND CAYMAN BRANCHES, as a Lender
By /s/ Thomas J. Nadramia
Name: Thomas J. Nadramia
Title: Vice President
By /s/ John W. Sweeney
Name: John W. Sweeney
Title: Assistant Vice President
Address for Notices
190 South LaSalle Street
Suite 2700
Chicago, Illinois 60603
Attention: Brian Bodeur
Telecopy: (312) 444-1305
<PAGE>
SENIOR DEBT PORTFOLIO
BY: Boston Management and Research
as Investment Advisor, as a Lender
By /s/ Jeffrey S. Garner
Name: Jeffrey S. Garner
Title: Vice President
Address for Notices
24 Federal Street
6th Floor
Boston, Massachusetts 02110
Attention: Jane Nelson
Telecopy: (617) 695-9594
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as a Lender
By /s/ David Silander
Name: David Silander
Title: VP
Address for Notices
301 South Tryon Street
Floor M-2
Charlotte, North Carolina 28288-0145
Attention: David Trotter
Telecopy: (704) 374-4000
and
201 South College Street
Suite 1300
Charlotte, North Carolina 28288-0656
Attention: Portfolio Management
Telecopy: (704) 374-4820
<PAGE>
FUJI BANK, as a Lender
By /s/ Ratsunori Nozawa
Name: Ratsunori Nozawa
Title: Vice President & Manager
Address for Notices
2 World Trade Center
79th Floor
New York, New York 10028
Attention: Vincent Ingato
Telecopy: (212) 912-0516
<PAGE>
GIROCREDIT BANK, as a Lender
By /s/ John Redding Richard Stone
Name: John Redding Richard Stone
Title:
Address for Notices
65 East 55th Street
New York, New York 10022
Attention: John Redding
Telecopy: (212) 644-0644
<PAGE>
INDOSUEZ CAPITAL FUNDING II LTD., as a
Lender
By Indosuez Capital, as Portfolio Advisor
By /s/ F. Berthelot
Name: F. Berthelot
Title: VP
Address for Notices
1211 Avenue of the Americas
11th Floor
New York, New York 10036
Attention: Michael Arougheti
Telecopy: (212) 276-2203
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LTD., as a
Lender
By /s/ Junri Oda
Name: Junri Oda
Title: Senior Vice President
Address for Notices
245 Park Avenue
New York, New York 10167
Attention: Jennifer McNamara
Telecopy: (212) 682-2870
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN
LTD., NEW YORK BRANCH, as a Lender
By /s/ Jay Shankar
Name: Jay Shankar
Title: Vice President
Address for Notices
165 Broadway
49th Floor
New York, New York 10006
Attention: Jay Shankar
Telecopy: (212) 335-4524
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By /s/ R. Douglas Henderson
Name: R. Douglas Henderson
Title: Authorized Signatory
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management, L.P.,
as Investment Advisor
By /s/ R. Douglas Henderson
Name: R. Douglas Henderson
Title: Authorized Signatory
SENIOR HIGH INCOME PORTFOLIO, INC.
By /s/ R. Douglas Henderson
Name: R. Douglas Henderson
Title: Authorized Signatory
SENIOR HIGH INCOME PORTFOLIO, INC.,
as successor interest to
SENIOR HIGH INCOME PORTFOLIO II, INC.
By /s/ R. Douglas Henderson
Name: R. Douglas Henderson
Title: Authorized Signatory
SENIOR HIGH INCOME PORTFOLIO, INC.,
as successor interest to
SENIOR STRATEGIC INCOME FUND, INC.
By /s/ R. Douglas Henderson
Name: R. Douglas Henderson
Title: Authorized Signatory
Address for Notices
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attention: Doug Henderson
Telecopy: (609) 262-2756
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION, as a Lender
By /s/ Patricia Loret de Mola
Name: Patricia Loret de Mola
Title: Senior Vice President
Address for Notices
520 Madison Avenue
26th Floor
New York, New York 10022
Attention: Jay Kato
Telecopy: (212) 644-6825
<PAGE>
NBD BANK, as a Lender
By /s/ Russell H. Liebetrau, Jr.
Name: Russell H. Liebetrau, Jr.
Title: Vice President
Address for Notices
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Philip Lowman
Telecopy: (313) 225-2649
<PAGE>
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION, as a Lender
By /s/ Adam G. Clemens
Name: Adam G. Clemens
Title: Investment Vice President
Address for Notices
51 Madison Avenue
New York, New York 10010
Attention: Steven Benevento
Telecopy: (212) 447-4122
<PAGE>
THE NIPPON CREDIT BANK, LTD., as a Lender
By /s/ Clifford Abramsky
Name: Clifford Abramsky
Title: Vice President and Manager
Address for Notices
245 Park Avenue
30th Floor
New York, New York 10167
Attention: Cliff Abramsky
Telecopy: (212) 490-3895
<PAGE>
SOCIETE GENERALE, as a Lender
By /s/ Christopher Speitz
Name: Christopher Speitz
Title: Vice President
Address for Notices
Trammell Grow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Meredith Carlisle
Telecopy: (214-754-0171)
with a copy to:
303 Peachtree Street
Atlanta, Georgia 30308
Attention: Jerome Jacques
Telecopy: (404) 865-7419
<PAGE>
THE SUMITOMO TRUST & BANKING CO., LTD.,
as a Lender
By /s/ Suraj P. Bhatia
Name: Suraj P. Bhatia
Title: Senior Vice President
Address for Notices
527 Madison Avenue
New York, New York 10022
Attention: Kristin Condon
Telecopy: (212) 418-4848
<PAGE>
THE TORONTO-DOMINION BANK, as a Lender
By /s/ Debbie A. Greene
Name: Debbie A. Greene
Title: MGR. CR. ADMIN.
Address for Notices
909 Fannin Street
Houston, Texas 77010
Attention: Debbie Greene
Telecopy: (713) 951-9921
<PAGE>
THE TRAVELERS INSURANCE COMPANY, as a
Lender
By /s/ Craig H. Farnsworth
Name: Craig H. Farnsworth
Title: 2nd Vice President
THE TRAVELERS INDEMNITY COMPANY, as a
Lender
By /s/ Craig H. Farnsworth
Name: Craig H. Farnsworth
Title: 2nd Vice President
Address for Notices
1 Tower Square
Hartford, Connecticut 06183
Attention: Pam Westmoreland
Telecopy: (203) 954-5243
<PAGE>
UNITED STATES NATIONAL BANK OF
OREGON, as a Lender
By /s/ David Wynde
Name: David Wynde
Title: Senior Vice President
Address for Notices
555 SW Oak Street
Suite 400
Portland, Oregon 97204
Attention: Stephen Mitchell
Telecopy: (503) 275-4267
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST, as a Lender
By /s/ Brian W. Good
Name: Brian W. Good
Title: Vice President
Address for Notices
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Attention: Jeffrey Maillett
Telecopy: (708) 684-6740
<PAGE>
WACHOVIA BANK OF NORTH CAROLINA, N.A.,
as a Lender
By /s/ Sarah T. Warren
Name: Sarah T. Warren
Title: Vice President
Address for Notices
400 S. Tryon Street
6th Floor
Charlotte, North Carolina 28202-1915
Attention: Sarah Warren
Telecopy: (704) 378-5035
<PAGE>
WELLS FARGO BANK, as a Lender
By /s/ Kathleen J. Harrison
Name: Kathleen J. Harrison
Title: Vice President
Address for Notices
555 Montgomery Street
MAC0167-173
San Francisco, California 94111
Attention: Kathleen Harrison
Telecopy: (415) 362-5081
<PAGE>
THE YASUDA TRUST & BANKING CO., LTD., as
a Lender
By /s/ Makoto Tagawa
Name: Makoto Tagawa
Title: Deputy General Manager
Address for Notices
666 5th Avenue
Suite 801
New York, New York 10013
Attention: Richard Ortiz
Telecopy: (212) 373-5797
<PAGE>
SCHEDULE 1.01(A) TO
CREDIT AGREEMENT
Applicable Margin
Eurodollar
Ratios Loan Margin ABR Loan Margin
Leverage Ratio greater than 1-3/4% 3/4% of 1%
2.00:1.00
or
Interest Coverage Ratio less than
2.75:1.00 ("Level I")
Leverage Ratio less than or equal 1-1/2% 1/2 of 1%
to 2.00:1.00
and
Interest Coverage Ratio greater
than or equal to 2.75:1.00 ("Level
II")
Leverage Ratio less than or equal 1-1/4% 1/4 of 1%
to 1.50.1:00
and
Interest Coverage Ratio greater
than 3.25:1.00 ("Level III")
Leverage Ratio less than or equal to 1% 0%
1.00:1.00
and
Interest Coverage Ratio greater
than or equal to 3.75:1:00 ("Level
IV")
For purposes of the foregoing, the Applicable Margin for any date shall be
determined by reference to the Leverage Ratio and Interest Coverage Ratio as of
the last day of the Borrower's fiscal quarter most recently ended as of such
date and any change in the Applicable Margin shall become effective upon the
delivery to the Administrative Agent of a certificate of a Responsible Officer
of the Borrower (which certificate may be delivered prior to delivery of the
relevant financial statements) with respect to the financial statements to be
delivered, pursuant to Section 5.04 for the most recently ended fiscal quarter
(a) setting forth in reasonable detail the calculation of the Interest Coverage
Ratio and Leverage Ratio for and at the end of such fiscal quarter and (b)
stating that the signer has reviewed the terms of this Agreement and other Loan
Documents and has made, or caused to be made under his or her supervision, a
review in reasonable detail of the transactions and condition of Holdings and
its Subsidiaries during the accounting period, and that the signer does not have
knowledge of the existence as at the date of such officers' certificate of any
Event of Default or Default and shall apply (i) to ABR Loans outstanding on such
delivery date or made on and after such delivery date and (ii) to Eurodollar
Loans made on and after such delivery date; provided, however, that if the
proceeds of such Loans are used to finance a Permitted Business Acquisition, and
either the Leverage Ratio or Interest Coverage Ratio, after giving effect to
such Permitted Business Acquisition on a pro forma basis, would result in a
change in the Applicable Margin, such change shall become effective for all
purposes simultaneously with the making of such Loans and shall apply (i) to ABR
Loans outstanding on such date or made
<PAGE>
on or after such date and (ii) to Eurodollar Loans made on or after such date.
It is understood that the foregoing certificate of a Responsible Officer shall
be permitted to be delivered prior to, but in no event later than, the time of
the actual delivery of the financial statements required to be delivered
pursuant to Section 5.04. Notwithstanding the foregoing, at any time during
which the Borrower has failed to deliver the Compliance Certificate with respect
to a fiscal quarter following the date the delivery thereof is due, the Leverage
Ratio and Interest Coverage Ratio shall be deemed, solely for the purposes of
this definition, to be greater than 2.00:1.00 and less than 2.75:1.00,
respectively, until such time as Borrower shall deliver such Compliance
Certificate.
<PAGE>
SCHEDULE 1.01(B) TO
CREDIT AGREEMENT
Applicable Prepayment Percentage
Applicable Excess Cash Flow
Applicable Level Prepayment Percentage
Level I 50%
Level II 25%
Level III 25%
Level IV 10%
<PAGE>
SCHEDULE 2.01 TO
CREDIT AGREEMENT
ADDRESSES FOR NOTICES; COMMITMENTS
CHEMICAL BANK
Revolving Credit Commitment: $10,674,157.26
Tranche A Term Loan: $ 6,404,494.54
Canadian Term Loan: $1,921,348.20
SUNTRUST BANK
Revolving Credit Commitment: $ 5,617,977.53
Tranche A Term Loan: $ 3,370,786.51
Canadian Term Loan: $ 1,011,235.96
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
BANK OF IRELAND
Revolving Credit Commitment: $ 3,089,887.64
Tranche A Term Loan: $ 1,853,932.58
Canadian Term Loan: $ 556,179.78
THE BANK OF NEW YORK
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
THE BANK OF NOVA SCOTIA
Revolving Credit Commitment: $ 5,617,977.53
Tranche A Term Loan: $ 3,370,786.51
Canadian Term Loan: $ 1,011,235.96
BANK OF SCOTLAND
Revolving Credit Commitment: $ 5,617,977.53
Tranche A Term Loan: $ 3,370,786.51
Canadian Term Loan: $ 1,011,235.96
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
<PAGE>
BANQUE PARIBAS
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
BRANCH BANKING AND TRUST COMPANY
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
RESTRUCTURED OBLIGATIONS BACKED
BY SENIOR ASSETS B.V.
Tranche B Term Loan: $39,746,192.90
CHL HIGH YIELD LOAN PORTFOLIO
Revolving Credit Commitment:
Tranche B Term Loan: $14,904,622.34
CIBC INC.
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENE
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
CREDIT LYONNAIS NEW YORK BRANCH
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
CREDITANSTALT CORPORATE FINANCE, INC.
Revolving Credit Commitment: $ 3,089,887.64
Tranche A Term Loan: $ 1,853,932.58
Canadian Term Loan: $ 556,179.78
CRESCENT/MACH PARTNERS, L.P.
Tranche B Term Loan: $ 4,968,274.11
CRESTAR BANK
Revolving Credit Commitment: $ 5,617,977.53
Tranche A Term Loan: $ 3,370,786.51
Canadian Term Loan: $ 1,011,235.96
<PAGE>
DRESDNER BANK, A.G. CHICAGO AND
GRAND CAYMAN BRANCHES
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
EATON VANCE PRIME RATE
Revolving Credit Commitment:
Tranche B Term Loan: $24,841,370.56
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
FUJI BANK
Revolving Credit Commitment: $ 3,089,887.64
Tranche A Term Loan: $ 1,853,932.58
Canadian Term Loan: $ 556,179.78
GIROCREDIT BANK
Revolving Credit Commitment: $ 3,089,887.64
Tranche A Term Loan: $ 1,853,932.58
Canadian Term Loan: $ 556,179.78
INDOSUEZ CAPITAL FUNDING II LTD.
Revolving Credit Commitment:
Tranche B Term Loan: $12,917,512.69
THE INDUSTRIAL BANK OF JAPAN
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
Tranche B Term Loan: $24,841,370.56
MERRILL LYNCH PRIME RATE PORTFOLIO
Tranche B Term Loan: $12,117,512.69
SENIOR HIGH INCOME PORTFOLIO, INC.
Tranche B Term Loan: $11,923,857.86
<PAGE>
MITSUBISHI TRUST AND BANKING CORPORATION
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
NATIONSBANK, N.A.
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
NBD BANK, N.A.
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
Tranche B Term Loan: $29,809,644.68
THE NIPPON CREDIT BANK, LTD.
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
SOCIETE GENERALE
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
SUMITOMO TRUST AND BANKING
Revolving Credit Commitment: $ 3,089,887.64
Tranche A Term Loan: $ 1,853,932.58
Canadian Term Loan: $ 556,179.78
THE TORONTO-DOMINION BANK
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
THE TRAVELERS INSURANCE COMPANY
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
<PAGE>
UNITED STATES NATIONAL BANK OF OREGON
Revolving Credit Commitment: $ 5,617,977.53
Tranche A Term Loan: $ 3,370,786.51
Canadian Term Loan: $ 1,011,235.96
VAN KAMPEN MERRITT PRIME RATE INCOME TRUST
Tranche B Term Loan: $18,879,441.62
WACHOVIA BANK OF NORTH CAROLINA, N.A.
Revolving Credit Commitment: $10,393,258.43
Tranche A Term Loan: $ 6,235,955.05
Canadian Term Loan: $ 1,870,786.52
WELLS FARGO BANK N.A.
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
THE YASUDA TRUST & BANKING CO., LTD.
Revolving Credit Commitment: $ 7,865,168.54
Tranche A Term Loan: $ 4,719,101.12
Canadian Term Loan: $ 1,415,730.34
<PAGE>
SCHEDULE 2.11(a) TO
CREDIT AGREEMENT
Amortization Schedule
Date Tranche A Canadian Tranche B
June 30, 1996 $1,250,000
July 13, 1996 $2,333,333
September 30, 1996 $1,250,000
October 13, 1996 $2,333,333
December 31, 1996 $1,250,000
January 13, 1997 $2,333,333
March 31, 1997 $2,500,000
April 13, 1997 $5,500,000
June 30, 1997 $2,500,000
July 13, 1997 $5,500,000
September 30, 1997 $2,500,000
October 13, 1997 $5,500,000
December 31, 1997 $2,500,000
January 13, 1998 $5,500,000
March 31, 1998 $3,750,000
April 13, 1998 $7,000,000
June 30, 1998 $3,750,000
July 13, 1998 $7,000,000
September 30, 1998 $3,750,000
October 13, 1998 $7,000,000
December 31, 1998 $3,750,000
January 13, 1999 $7,000,000
March 30, 1999 $5,000,000
April 13, 1999 $7,750,000
June 30, 1999 $5,000,000
July 13, 1999 $7,750,000
September 30, 1999 $5,000,000
October 13, 1999 $7,750,000
<PAGE>
December 31, 1999 $5,000,000
January 13, 2000 $7,750,000
March 31, 2000 $6,250,000
April 13, 2000 $7,750,000
June 30, 2000 $6,250,000
July 13, 2000 $7,750,000
September 30, 2000 $6,250,000
October 13, 2000 $7,750,000
December 31, 2000 $6,250,000
January 13, 2001 $7,750,000
March 31, 2001 $6,250,000
April 13, 2001 $7,750,000
June 30, 2001 $6,250,000
July 13, 2001 $7,750,000
September 30, 2001 $6,250,000
October 13, 2001 $7,750,000
December 31, 2001 $6,250,000
January 13, 2002 $7,750,000 $5,000,000
March 31, 2002 $24,250,000
April 13, 2002 $20,000,000
June 30, 2002 $24,250,000
July 13, 2002 $20,000,000
September 30, 2002 $24,250,000
December 31, 2002 $24,250,000
Total: $150,000,000 $45,000,000 $195,750,000
<PAGE>
</TABLE>
[Draft--06/06/96]
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
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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
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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
<PAGE>
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 and the Guarantor in the principal amount of $195.8 million, originally
entered into on December 22, 1995, as amended and restated.
"Term Loan Facility" means a certain eight-year senior secured
term loan facility of the Company and the Guarantor in an aggregate 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
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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
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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;
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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
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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
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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
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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 Bank Credit Facilities 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
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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 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 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,
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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
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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
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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
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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
<PAGE>
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
<PAGE>
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
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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
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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 and deleting the fourth paragraph of Section 9.02:
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
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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
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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
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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
Name:
Title:
COLLINS & AIKMAN CORPORATION,
by
Name:
Title:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, Trustee,
by
Name:
Title:
<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 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
<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, (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>
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>
