-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CZAcl8XYFSOgPpqScfB+o8/dY1hsaw4AvVGBkBJScRKc4YU0AtLG2vKiiL2erQ/s afyQ5U8q1A62NddYFzx8/A== 0000950123-01-003010.txt : 20010409 0000950123-01-003010.hdr.sgml : 20010409 ACCESSION NUMBER: 0000950123-01-003010 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUILDING MATERIALS CORP OF AMERICA CENTRAL INDEX KEY: 0000927314 STANDARD INDUSTRIAL CLASSIFICATION: ASPHALT PAVING & ROOFING MATERIALS [2950] IRS NUMBER: 223276290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-81808 FILM NUMBER: 1590505 BUSINESS ADDRESS: STREET 1: 1361 ALPS RD CITY: WAYNE STATE: NJ ZIP: 07470 BUSINESS PHONE: 2016283000 MAIL ADDRESS: STREET 1: 1361 ALPS ROAD CITY: WAYNE STATE: NJ ZIP: 07470 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUILDING MATERIALS MANUFACTURING CORP CENTRAL INDEX KEY: 0001078706 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 333-69749-01 FILM NUMBER: 1590506 BUSINESS ADDRESS: STREET 1: 1361 ALPS ROAD CITY: WAYNE STATE: NJ ZIP: 07470 BUSINESS PHONE: 9736283000 MAIL ADDRESS: STREET 1: 1361 ALPS ROAD CITY: WAYNE STATE: NJ ZIP: 07470 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BUILDING MATERIALS INVESTMENT CORP CENTRAL INDEX KEY: 0001078820 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 333-69749-02 FILM NUMBER: 1590507 BUSINESS ADDRESS: STREET 1: 1361 ALPS RD CITY: WAYNE STATE: NJ ZIP: 07470 BUSINESS PHONE: 9736283000 MAIL ADDRESS: STREET 1: 1361 ALPS RD CITY: WAYNE STATE: NJ ZIP: 07470 10-K 1 y46546e10-k.txt BUILDING MATERIALS CORPORATION OF AMERICA 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 33-81808 BUILDING MATERIALS CORPORATION OF AMERICA (Exact name of registrant as specified in its charter) DELAWARE 22-3276290 (State of Incorporation) (I.R.S. Employer Identification No.) 1361 ALPS ROAD 07470 WAYNE, NEW JERSEY (Zip Code) (Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (973) 628-3000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE SEE TABLE OF ADDITIONAL REGISTRANTS BELOW Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of March 23, 2001, 1,015,353 shares of Class A Common Stock, $.001 par value, and 15,000 shares of Class B Common Stock, $.001 par value, of Building Materials Corporation of America were outstanding. There is no trading market for the common stock of Building Materials Corporation of America. As of March 23, 2001, each of the additional registrants had the number of shares outstanding which is shown on the table below. No shares were held by non-affiliates. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ADDITIONAL REGISTRANTS
STATE OR OTHER REGISTRATION NO./ ADDRESS, INCLUDING ZIP CODE AND JURISDICTION OF NO. OF I.R.S. EMPLOYER TELEPHONE NUMBER, INCLUDING EXACT NAME OF REGISTRANT INCORPORATION OR SHARES IDENTIFICATION AREA CODE, OF REGISTRANT'S AS SPECIFIED IN ITS CHARTER ORGANIZATION OUTSTANDING NUMBER PRINCIPAL EXECUTIVE OFFICE - --------------------------- ---------------- ----------- ----------------- ------------------------------- Building Materials Delaware 10 333-69749-01/ 1361 Alps Road Manufacturing Corporation 22-3626208 Wayne, New Jersey 07470 (973) 628-3000 Building Materials Delaware 10 333-69749-02/ 300 Delaware Avenue Investment Corporation 22-3626206 Wilmington, Delaware 19801 (302) 427-5960
3 PART I ITEM 1. BUSINESS GENERAL Building Materials Corporation of America ("BMCA") is a leading national manufacturer of a broad line of asphalt roofing products and accessories for the steep slope and low slope roofing markets (previously referred to as the residential and commercial roofing product lines). We also manufacture specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. BMCA, incorporated under the laws of Delaware in 1994, is a 99.9%-owned subsidiary of BMCA Holdings Corporation, which is a wholly-owned subsidiary of G-I Holdings Inc. In 1994, BMCA acquired the operating assets and certain liabilities of GAF Building Materials Corporation, whose name was changed to G-I Holdings Inc. Samuel J. Heyman beneficially owns (as defined in Rule 13d-3 of the Exchange Act) approximately 99% of G-I Holdings Inc. BMCA does business under the name "GAF Materials Corporation." To facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of BMCA, merged into its direct subsidiary, G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation (formerly known as GAF Fiberglass Corporation) merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now the parent of BMCA and of BMCA's direct parent, BMCA Holdings Corporation. We refer to G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation in this report as "G-I Holdings." On January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey in Newark, New Jersey due to its asbestos-related bodily injury claims relating to the inhalation of asbestos fiber. We refer to these claims in this report as "Asbestos Claims." G-I Holdings, the successor to GAF Corporation by merger, is a privately-held holding company, and we are its only operating subsidiary. We are not included in the bankruptcy filing. On December 22, 2000, we completed a series of transactions that included (1) entering into a new $100 million secured credit facility with the lenders under our existing revolving credit facility; (2) amending and restating our existing $110 million revolving credit facility and (3) receiving consents from holders of our outstanding senior notes to certain amendments to the indentures under which those notes were issued. We refer to the new secured credit facility in this report as the "New Credit Agreement" and the amended and restated existing revolving credit facility as the "Existing Credit Agreement." As a result of these transactions, all obligations under the New Credit Agreement and the Existing Credit Agreement, including the obligations under the subsidiary guarantees thereunder, and our obligations under a $7.0 million precious metal note and approximately $3.5 million of obligations under a standby letter of credit (which we refer to in this report collectively as the "Other Indebtedness") are secured by a first-priority lien on substantially all of our assets and the assets of our subsidiaries. We refer to these assets in this report as the "Collateral." The New Credit Agreement and the Existing Credit Agreement have been guaranteed by all of our current and future direct and indirect domestic subsidiaries, other than BMCA Receivables Corporation. In addition, our obligations under our outstanding senior notes are secured by a second-priority lien on the Collateral and have been guaranteed by the subsidiaries that guaranteed the New Credit Agreement and the Existing Credit Agreement. In connection with these transactions, we entered into a security agreement which grants a security interest in the Collateral in favor of the collateral agent on behalf of the lenders under the New Credit Agreement, the Existing Credit Agreement and the Other Indebtedness and the holders of our outstanding senior notes. We also entered into a collateral agent agreement which provides, among other things, for the sharing of proceeds with respect to any foreclosure or other remedy in respect of the Collateral. See Item 7, 1 4 "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Financial Condition" and Note 11 to Consolidated Financial Statements. Our executive offices are located at 1361 Alps Road, Wayne, New Jersey 07470 and our telephone number is (973) 628-3000. STEEP SLOPE ROOFING We are a leading manufacturer of a complete line of premium steep slope roofing products. Steep slope roofing product sales represented approximately 67% of our net sales in 2000. We have improved our sales mix of steep slope roofing products in recent years by increasing our emphasis on laminated shingles and accessory products which generally are sold at higher prices with more attractive profit margins than our standard strip shingle products. We believe that we are the largest manufacturer of laminated steep slope roofing shingles and the second largest manufacturer of strip shingles in the United States. (Statements contained in this report as to our competitive position are based on industry information which we believe is reliable.) Our two principal lines of steep slope roofing shingles are the Timberline(R) series and the Sovereign(R) series. We also produce certain specialty shingles. The Timberline(R) Series. The Timberline(R) series offers a premium laminated product line that adds dramatic shadow lines and substantially improves the appearance of a roof. The series includes: - the Timberline(R) 25 shingle, a mid-weight laminated shingle which serves as an economic trade-up for consumers, with a 25-year limited warranty; - the Timberline(R) shingle, with a 30-year limited warranty, a heavyweight laminated shingle with superior fire resistance and durability; and - the Timberline Ultra(R) shingle, with a 40-year limited warranty, a super heavyweight laminated shingle with the maximum durability of the Timberline(R) series. The Sovereign(R) Series. The Sovereign(R)series includes: - the standard 3-tab Sentinel(R) shingle with a 20-year limited warranty; - the Royal Sovereign(R) shingle, a heavier 3-tab shingle with a 25-year limited warranty, designed to capitalize on the "middle market" for quality shingles; and - the Marquis(R) Weathermax(R) shingle, a superior performing heavyweight 3-tab shingle with a 30-year limited warranty. Specialty Shingles. Our specialty asphalt shingles include: - the Slateline(R) shingle, offering the appearance of slate and labor savings in installation because of its larger size, with a 40-year limited warranty; - the Grand Sequoia(R) shingle, a premier architectural shingle with a 40-year limited warranty; - the Country Mansion(R) shingle, a distinctive high-end architectural shingle with a lifetime limited warranty; - the Country Estates(TM) shingle, a versatile style, high-end architectural shingle with a lifetime limited warranty; and - the Grand Canyon(TM) shingle, a super heavyweight architectural shingle with a rugged wood shake appearance with a lifetime limited warranty. 2 5 Weather Stopper(R) Roofing System. In addition to shingles, we supply all the components necessary to install a complete roofing system. Our Weather Stopper(R) Roofing System begins with Weather Watch(R) and Stormguard(R) waterproof underlayments for eaves, valleys and flashings to prevent water seepage between the roof deck and the shingles caused by ice build-up and wind-driven rain. Our Weather Stopper(R) Roofing System also includes Shingle-Mate(R) glass reinforced underlayment, Timbertex(R) and Pacific Ridge(TM) Hip and Ridge shingles, which are significantly thicker and larger than standard hip and ridge shingles and provide dramatic accents to the slopes and planes of a roof, and the Cobra(R) Ridge Vent, which provides attic ventilation. LOW SLOPE ROOFING We manufacture a full line of modified bitumen and asphalt built-up roofing products, liquid applied membrane systems and roofing accessories for use in the application of low slope roofing systems. We also market thermoplastic and elastomeric single-ply products, and in the first quarter of 2001, we began manufacturing thermoplastic polyolefin products at our new plant in Mount Vernon, Indiana. Low slope roofing represented approximately 26% of our net sales in 2000. We believe that we are the second largest manufacturer of asphalt built-up roofing products and the largest manufacturer of modified bitumen products in the United States. We manufacture fiberglass-based felts under the trademark GAFGLAS(R), which are made from asphalt impregnated glass fiber mat for use as a component in asphalt built-up roofing systems. Most of our GAFGLAS(R) products are assembled on the roof by applying successive layers of roofing with asphalt and topped, in some applications, with gravel. Thermal insulation may be applied beneath the membrane. We also manufacture base sheets, flashings and other roofing accessories for use in these systems; the TOPCOAT(R) roofing system, a liquid-applied membrane system designed to protect and waterproof existing roofing systems; and roof maintenance products. In addition, we market perlite roofing insulation products, which consist of low thermal insulation that is installed as part of a low slope roofing application below the roofing membrane, isocyanurate foam as roofing insulation, packaged asphalt and accessories such as vent stacks, roof insulation fasteners, cements and coatings. We sell modified bitumen products under the Ruberoid(R) and Brai(R) Supreme(TM) trademarks. Modified bitumen products are used primarily in re-roofing applications or in combination with glass membranes in GAF CompositeRoof(TM) systems. These products consist of a roofing membrane utilizing polymer-modified asphalt, which strengthens and increases flexibility and is reinforced with a polyester non-woven mat or a glass mat. Modified bitumen systems provide high strength characteristics, such as weatherability, water resistance and labor cost savings due to ease of application. SPECIALTY BUILDING PRODUCTS AND ACCESSORIES We manufacture and market a variety of specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. Specialty building products and accessories represented approximately 7% of our net sales in 2000. These products primarily consist of steep slope attic ventilation systems and metal and fiberglass air distribution products for the HVAC industry. On September 29, 2000, we sold certain manufacturing and other assets related to the Compton, California based security products division of LL Building Products Inc. for net cash proceeds of approximately $27.1 million. In connection with this transaction, we recorded a $17.5 million pre-tax operating gain during 2000. MARKETING AND SALES We have one of the industry's largest sales forces. A staff of technical professionals who work directly with architects, consultants, contractors and building owners provides support to the sales force. We market our roofing and specialty building products and accessories through our own sales force of approximately 230 experienced, full-time employees and independent sales representatives who operate from six regional sales offices located across the United States. A major portion of our roofing product sales are to wholesale 3 6 distributors who resell our products to roofing contractors and retailers. We believe that our nationwide coverage has contributed to certain of our roofing products being among the most recognized and requested brands in the industry. Our Customer Advantage(TM) Program offers marketing and support services to a nationwide network of MasterElite(TM) steep slope roofing contractors and Authorized Installers. We view the Master Elite(TM) contractors and Authorized Installers as an effective extension of our sales force which takes our products directly to the homeowner. We also have established programs with approved MasterSelect(TM), Platinum(TM) and Pride(TM) contractors to promote premium warranty systems and service programs for our low slope roofing products. No single customer accounted for 10% or more of our net sales in 2000, except for The Home Depot, Inc. and American Builders & Contractors Supply Company, Inc., which accounted for approximately 13% and 11%, respectively, of our 2000 net sales. RAW MATERIALS The major raw materials required for the manufacture of our roofing products are asphalt, mineral stabilizer, glass fiber, glass fiber mat, polyester mat and granules. Asphalt and mineral stabilizer are available from a large number of suppliers. We currently have contracts with several of these suppliers and others are available as substitutes. In 2000, prices of most raw materials other than asphalt and energy have been relatively stable, rising moderately with general industrial prices, while the price of asphalt tends to move in step with the price of crude oil. Energy costs increased significantly in 2000 due to increased demand for such items. The major raw materials required for the manufacture of our specialty building products and accessories are steel tubes, sheet metal products, aluminum, motors and cartons. These raw materials, other than motors, are commodity-type products, the pricing for which is driven by supply and demand. Prices of other raw materials used in the manufacture of specialty building products and accessories are more closely tied to movements in inflation rates. In 2000, substantially all of the motors used in our ventilation products were purchased from a domestic supplier. All of these raw materials, including motors, are available from a large number of suppliers. Five of our roofing plants have easy access to deep water ports thereby permitting delivery of asphalt by ship, the most economical means of transport. Our Nashville, Tennessee plant manufactures a significant portion of our glass fiber requirements for use in our Chester, South Carolina and Shafter, California plants which manufacture glass fiber mat substrate. We purchase all of our requirements for colored roofing granules from an affiliate, International Specialty Products Inc., under a requirements contract, except for the requirements of certain of our roofing plants which are supplied by third parties. This contract expires on December 31, 2001, unless extended by the parties. SEASONAL VARIATIONS AND WORKING CAPITAL Sales of roofing and specialty building products and accessories in the northern regions of the United States generally decline during the winter months due to adverse weather conditions. Generally, our inventory practice includes increasing inventory levels in the first and second quarters in order to meet peak season demand (June through November). WARRANTY CLAIMS We provide certain limited warranties covering most of our steep slope roofing products for periods generally ranging from 20 to 40 years, although certain of our styles provide for a lifetime limited warranty. Although terms of warranties vary, we believe that our warranties generally are consistent with those offered by our competitors. We also offer certain limited warranties and guarantees of varying duration covering most of our low slope roofing products and limited warranties covering most of our specialty building products and 4 7 accessories for periods ranging from 5 to 10 years. From time to time, we review the reserves established for estimated probable future warranty claims. COMPETITION The roofing products industry is highly competitive and includes a number of national competitors. These competitors in the steep slope roofing and accessories markets are Owens-Corning, Tamko, Elcor and Certainteed, and in the low slope roofing market are Johns Manville, Firestone and Carlisle. In addition, there are numerous regional competitors. Competition is based largely upon products and service quality, distribution capability, price and credit terms. We believe that we are well-positioned in the marketplace as a result of our broad product lines in both the steep slope and low slope markets, consistently high product quality, strong sales force and national distribution capabilities. As a result of the growth in demand for premium laminated shingles, a number of roofing manufacturers, including our company, have increased their laminated shingle production capacity in recent years. We have experienced increased competition in this area due to these factors. Our specialty roofing products and accessories business is highly competitive with numerous competitors due to the breadth of the product lines we market. Major competitors include Certainteed, Solar Group, ATCO Rubber Products and Standex Air Distribution Products. RESEARCH AND DEVELOPMENT We primarily focus our research and development activities on the development of new products, process improvements and the testing of alternative raw materials and supplies. Our research and development activities, dedicated to steep slope, low slope and fiberglass products, are located at technical centers at Wayne, New Jersey and Nashville, Tennessee. Our research and development expenditures were approximately $6.0, $6.5 and $5.9 million in 1998, 1999 and 2000, respectively. PATENTS AND TRADEMARKS We own or license approximately 100 domestic and 110 foreign patents or patent applications. In addition, we own or license approximately 220 domestic and 60 foreign trademark registrations or applications. While we believe the patent protection covering certain of our products to be material to those products, we do not believe that any single patent, patent application or trademark is material to our business or operations. We believe that the duration of the existing patents and patent licenses is consistent with our business needs. ENVIRONMENTAL COMPLIANCE Since 1970, federal, state and local authorities have adopted and amended a wide variety of federal, state and local environmental laws and regulations relating to environmental matters. These laws and regulations affect us because of the nature of our operations and that of our predecessor and certain of the substances that are, or have been used, produced or discharged at our or its plants or at other locations. We made capital expenditures of approximately $0.6, $2.7 and $2.5 million in 1998, 1999 and 2000, respectively, relating to environmental compliance. These expenditures are included in additions to property, plant and equipment. We anticipate that aggregate capital expenditures relating to environmental compliance in 2001 and 2002 will be approximately $1.0 million in each year. The environmental laws and regulations deal with air and water emissions or discharges into the environment, as well as the generation, storage, treatment, transportation and disposal of solid and hazardous waste, and the remediation of any releases of hazardous substances and materials to the environment. We believe that our manufacturing facilities comply in all material respects with applicable laws and regulations. Although we cannot predict whether more burdensome requirements will be adopted in the future, we believe that any potential liability for compliance with the laws and regulations will not materially affect our business, liquidity or financial position. See Item 3, "Legal Proceedings -- Environmental Litigation." 5 8 EMPLOYEES At December 31, 2000, we employed approximately 3,200 people worldwide, approximately 900 of which were subject to 13 union contracts. The contracts are effective for three- to four-year periods. During 2000, three labor contracts expired and were renegotiated. We believe that our relations with our employees and their unions are satisfactory. ITEM 2. PROPERTIES Our corporate headquarters and principal research and development laboratories are located at a 100-acre campus-like office and research park owned by a subsidiary of International Specialty Products Inc., at 1361 Alps Road, Wayne, New Jersey 07470. We occupy our headquarters pursuant to our management agreement with ISP. See Item 13, "Certain Relationships and Related Transactions -- Management Agreement." We own or lease the principal real properties described below. Unless otherwise indicated, the properties are owned in fee. In addition to the principal facilities listed below, we maintain sales offices and warehouses, substantially all of which are in leased premises under relatively short-term leases.
LOCATION FACILITY - -------- -------- Alabama Mobile.................................. Plant, Warehouses* California Fontana................................. Plant, Sales Office Hollister............................... Plant, Plant* Shafter................................. Plant Stockton................................ Plant, Plant, Warehouse* Florida Tampa................................... Plant, Sales Office Georgia Atlanta................................. Administrative Offices*, Sales Office* Savannah................................ Plant, Sales Office Indiana Mount Vernon............................ Plant, Plant, Sales Office Michigan City........................... Plant Illinois Romeoville.............................. Sales Office* Maryland Baltimore............................... Plant Massachusetts Millis.................................. Plant, Sales Office, Warehouse* Walpole................................. Plant* Minnesota Minneapolis............................. Plant, Sales Office Mississippi Purvis.................................. Plant New Jersey North Branch............................ Plant, Warehouse* North Brunswick......................... Sales Office*, Warehouse* Wayne................................... Headquarters*, Corporate Administrative Offices*, Research Center* North Carolina Burgaw.................................. Plant Goldsboro............................... Plant
6 9
LOCATION FACILITY - -------- -------- Ohio Wadsworth............................... Plant* Pennsylvania Erie.................................... Plant, Sales Office, Warehouse* Wind Gap................................ Plant South Carolina Chester................................. Plant Tennessee Nashville............................... Plant, Research Center* Texas Dallas.................................. Plant, Sales Office, Warehouse* Fannett................................. Warehouse
- --------------- * Leased Property In addition to the foregoing list, we have four manufacturing facilities in Monroe, Georgia; Corvallis, Oregon; Port Arthur, Texas; and Albuquerque, New Mexico that are currently closed. We believe that our plants and facilities, which are of varying ages and are of different construction types, have been satisfactorily maintained, are in good condition, are suitable for their respective operations and generally provide sufficient capacity to meet production requirements. Each plant has adequate transportation facilities for both raw materials and finished products. In 2000, we made capital expenditures of $61.5 million relating to plant, property and equipment. ITEM 3. LEGAL PROCEEDINGS Bodily Injury Claims. In connection with its formation, BMCA contractually assumed and agreed to pay the first $204.4 million of liabilities for asbestos-related bodily injury claims relating to the inhalation of asbestos fiber of its parent, G-I Holdings. We frequently refer to these claims in this report as "Asbestos Claims." As of March 30, 1997, BMCA had paid all of its assumed asbestos-related liabilities. G-I Holdings has agreed to indemnify BMCA against any other existing or future claims related to asbestos-related liabilities if asserted against BMCA. In January 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to its Asbestos Claims. This proceeding is in a preliminary stage. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy these indemnification obligations to us. Claimants in the G-I Holdings bankruptcy, including judgment creditors, might seek to satisfy their claims by asking the bankruptcy court to require the sale of G-I Holdings' assets, including its holdings of BMCA Holdings Corporation's common stock and its indirect holdings of BMCA's common stock. Such action could result in a change of control of our company. See Notes 11 and 16 to Consolidated Financial Statements. In addition, those claimants may seek to file Asbestos Claims against our company (with 2,147 Asbestos Claims having been filed against us as of December 31, 2000). We believe that we will not sustain any liability in connection with these or any other asbestos-related claims. Furthermore, on February 2, 2001, the United States Bankruptcy Court for the District of New Jersey issued a temporary restraining order enjoining any existing or future claimant from bringing Asbestos Claims against BMCA. The temporary restraining order expires on April 6, 2001. We are seeking to have this order renewed past this date. On February 7, 2001, G-I Holdings filed a defendant class action in the United States Bankruptcy Court for the District of New Jersey seeking a declaratory judgment that BMCA has no successor liability for Asbestos Claims against G-I Holdings and that it is not the alter ego of G-I Holdings. This action is in a preliminary stage and no trial date has been set by the court. As a result, it is not possible to predict the outcome of this litigation. While we cannot predict whether any additional Asbestos Claims will be asserted against us, or the outcome of any litigation relating to those claims, we believe that we have meritorious defenses to any claim that we have asbestos-related liability, although there can be no assurances in this regard. In addition, G-I 7 10 Holdings has indemnified us with respect to Asbestos Claims. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy these indemnification obligations to us. Actions Relating to G-I Holdings' Bankruptcy. On February 8, 2001, a creditors committee established in G-I Holdings' bankruptcy case filed a complaint in the United States Bankruptcy Court for the District of New Jersey against G-I Holdings and BMCA. The complaint requests substantive consolidation of BMCA with G-I Holdings or an order directing G-I Holdings to cause BMCA to file for bankruptcy protection. BMCA and G-I Holdings intend to vigorously defend the lawsuit. We believe that no basis exists for the court to grant the relief requested. The plaintiffs also filed for interim relief absent the granting of their requested relief described above. On February 21, 2001, G-I Holdings moved to dismiss the complaint. On March 21, 2001, the bankruptcy court refused to grant the requested interim relief. Asbestos-in-Building Claims. G-I Holdings has also been named as a co-defendant in asbestos-in-buildings cases for economic and property damage or other injuries based upon an alleged present or future need to remove asbestos containing materials from public and private buildings. We refer to the asbestos-in-building claims in this report as the "Building Claims." Since these actions were first initiated approximately 19 years ago, G-I Holdings has not only successfully disposed of approximately 145 of these cases, but is a co- defendant in only three remaining lawsuits, one of which has been dormant. These actions have been stayed as to G-I Holdings pursuant to the G-I Holdings bankruptcy case. No new Building Claims were filed in 2000. BMCA has not assumed any liabilities with respect to Building Claims, and G-I Holdings has agreed to indemnify BMCA against those liabilities in the event any claims are asserted against it. For a discussion of the possible consequences to us of the failure of G-I Holdings to satisfy judgments against it relating to Building Claims, see "-- Bodily Injury Claims" above. Insurance Matters. In January 1993, G-I Holdings filed an action with the United States District Court in Philadelphia against certain product liability insurers whose policies will or may be called upon to respond to Asbestos Claims. This action sought a declaratory judgment against various third-party defendant product liability insurers to the effect that those insurers are obligated to provide coverage for Asbestos Claims. In March 2000, G-I Holdings reached a settlement with the final remaining insurer who was a defendant in G-I Holdings' amended complaint and has dismissed this action. In January 2000 and May 2000, G-I Holdings filed summary actions in Superior Court of New Jersey, Middlesex County against several of its insurers which had indicated that the Center for Claims Resolution, a non-profit organization set up to administer and handle asbestos-related personal injury claims against the participating companies and in which G-I Holdings was a member, had claimed a right to G-I Holdings' insurance proceeds to satisfy what the CCR contends are G-I Holdings' share of settlements entered by the CCR while G-I Holdings was a member. On March 17, 2000 and July 28, 2000, the trial court granted summary judgment in favor of G-I Holdings, and the CCR's motions for a stay pending appeal were denied by both the trial court and the appellate division. All insurers in both actions have now paid the amounts in dispute to G-I Holdings. The CCR is appealing the court's grant of summary judgment. In October 1983, G-I Holdings filed a lawsuit in Los Angeles, California Superior Court against its past insurance carriers to obtain a judicial determination that those carriers were obligated to defend and indemnify it for Building Claims. G-I Holdings is seeking declaratory relief as well as compensatory damages. This action is presently in the pre-trial pleading stage. The parties have agreed to hold this action in abeyance until such time as they are better able to evaluate developments as they may occur in the Building Claims. Because this litigation is in early stages and evidence and interpretations of important legal questions are presently unavailable, it is not possible to predict the future of this litigation. In all the Building Claims, G-I Holdings' defense costs have been paid by one of its primary carriers. While G-I Holdings expects that this primary carrier will continue to defend and indemnify G-I Holdings, this primary carrier has reserved its rights to later refuse to defend and indemnify G-I Holdings and to seek reimbursement for some or all of the fees paid to defend and resolve the Building Claims. G-I Holdings believes that it will be able to resolve those cases for amounts within the total indemnity obligations available from this primary carrier. 8 11 ENVIRONMENTAL LITIGATION We, together with other companies, are a party to a variety of proceedings and lawsuits involving environmental matters under the Comprehensive Environmental Response Compensation and Liability Act and similar state laws, in which recovery is sought for the cost of cleanup of contaminated sites, a number of which are in the early stages or have been dormant for protracted periods. We refer to these proceedings and lawsuits below as "Environmental Claims." In connection with its formation, BMCA contractually assumed all environmental liabilities of G-I Holdings relating to existing plant sites and the business of BMCA as then conducted. The estimates referred to below reflect those environmental liabilities assumed by BMCA and other environmental liabilities of our company. The environmental liabilities of G-I Holdings which were not assumed by BMCA relate primarily to closed manufacturing facilities. G-I Holdings estimates that, as of December 31, 2000, its liability in respect of the environmental liabilities of G-I Holdings not assumed by BMCA was approximately $9.3 million, before insurance recoveries reflected on its balance sheet of $9.1 million. BMCA estimates its liability as of December 31, 2000 in respect of assumed and other environmental liabilities is $1.3 million, and expects insurance recoveries reflected on its balance sheet, as discussed below, of $0.8 million. Insurance recoveries reflected on these balance sheets relate to both past expenses and estimated future liabilities. We refer to these recoveries below as "estimated recoveries." At most sites, BMCA anticipates that liability will be apportioned among the companies found to be responsible for the presence of hazardous substances at the site. Although it is difficult to predict the ultimate resolution of these claims, based on BMCA's evaluation of the financial responsibility of the parties involved and their insurers, relevant legal issues and cost sharing arrangements now in place, BMCA estimates that its liability in respect of all Environmental Claims, including certain environmental compliance expenses, will be as discussed above. For information relating to other environmental compliance expenses, see Item 1, "Business -- Environmental Compliance" above. After considering the relevant legal issues and other pertinent factors, BMCA believes that it will receive the estimated recoveries and the legal expenses incurred by G-I Holdings on BMCA's behalf. We also believe that recoveries could be well in excess of the estimated recoveries for all Environmental Claims, although there can be no assurances in this regard. BMCA believes it is entitled to substantially full defense and indemnity under its insurance policies for most Environmental Claims, although BMCA's insurers have not affirmed a legal obligation under the policies to provide indemnity for those claims. In March 1995, G-I Holdings commenced litigation on behalf of itself and its predecessors, successors, subsidiaries and related corporate entities in the United States District Court for the District of New Jersey seeking amounts substantially in excess of the estimated recoveries. The court dismissed this action in December 1997 for lack of federal jurisdiction, and defendant insurers appealed the dismissal. The appeal was denied by the Third Circuit Court of Appeals in March 1999. In June 1997, G-I Holdings filed a similar action against the insurers in the Superior Court of New Jersey, Somerset County, which action was removed to the United States Bankruptcy Court for the District of New Jersey in February 2001 in conjunction with the G-I Holdings' bankruptcy case. The action is currently pending in the bankruptcy court, although the defendant insurers have filed a motion to remand the action to the Superior Court of New Jersey, Somerset County. While BMCA believes that its claims are meritorious, there can be no assurance that BMCA will prevail in its efforts to obtain amounts equal to, or in excess of, the estimated recoveries. We believe that we will not sustain any liability for environmental liabilities of G-I Holdings other than those that we have contractually assumed or that relate to the operations of our business. While we cannot predict whether any claims for non-assumed environmental liabilities will be asserted against us or our assets, or the outcome of any litigation relative to those claims, we believe that we have meritorious defenses to those claims. In addition, G-I Holdings has indemnified us with respect to those claims. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy these indemnification obligations. For the possible consequences to us of the failure of G-I Holdings to satisfy judgments against it in environmental-related lawsuits or otherwise, see "-- Bodily Injury Claims" above. 9 12 OTHER LITIGATION In November 2000, we settled litigation previously pending between us and Elk Corporation of Dallas in the United States District Court for the Northern District of Texas and the United States Court of Appeals for the Federal Circuit relating to certain aspects of our laminated shingles, which Elk claimed infringed design and utility patents issued to it. This settlement does not require us to make any current or future payments. Elk had asserted that we had appropriated the trade dress of Elk's product and had sought injunctive relief, damages and attorneys' fees. We sued for a declaration that Elk's patents were invalid and unenforceable and that our shingles did not infringe any of Elk's rights, and had sought money damages for Elk's unfair competition. On October 10, 1997, the court issued an opinion holding that Elk's design patent was unenforceable because it was obtained through inequitable conduct, which ruling was affirmed on February 11, 1999 by the United States Court of Appeals for the Federal Circuit. Elk filed a petition for rehearing on February 25, 1999, which was denied by the court, and subsequently filed a petition for a writ of certiorari in the United States Supreme Court, which also was denied. On or about April 29, 1996, an action was commenced in the Circuit Court of Mobile County, Alabama against G-I Holdings on behalf of a purported nationwide class of purchasers of, or current owners of, buildings with certain asphalt shingles manufactured by G-I Holdings and affiliated entities. The action alleged, among other things, that those shingles were defective and sought unspecified damages on behalf of the purported class. On September 25, 1998, we agreed to settle this litigation on a national, class-wide basis for asphalt shingles manufactured between January 1, 1973 and December 31, 1997. Following a fairness hearing, the court granted final approval of the class-wide settlement in April 1999. Under the terms of the settlement, we will provide property owners whose shingles were manufactured during this period and which suffer certain damages during the term of their original warranty period, and who file a qualifying claim, with an opportunity to receive certain limited benefits beyond those already provided in their existing warranty. In October and December 1998, the separate actions commenced in 1997 in the Superior Court of New Jersey, Middlesex County, the Superior Court of New Jersey, Passaic County and the Supreme Court of the State of New York, County of Nassau, and in 1996 in Pointe Coupee Parish, Louisiana, on behalf of purported classes alleging that our shingles were defective and seeking unspecified damages, were stayed pending the outcome of the fairness hearing on the settlement agreement in the Mobile County, Alabama action. The Middlesex County, New Jersey, the Pointe Coupee Parish, Louisiana and the Nassau County, New York actions have been dismissed in light of the final approval of the settlement agreement in the Mobile County, Alabama action, and we expect that the remaining action also will be dismissed. In October 1998, G-I Holdings brought suit in the Superior Court of New Jersey, Middlesex County, on our behalf, against certain of its insurers for recovery of the defense costs in connection with the Mobile County, Alabama class action and a declaration that the insurers are obligated to provide indemnification for all damages paid pursuant to the settlement of this class action and for other damages. This action is pending. * * * We believe that the ultimate disposition of the cases described above under "Environmental Litigation," "Asbestos-in-Building Claims" and "Other Litigation" will not, individually or in the aggregate, have a material adverse effect on our liquidity, financial position or results of operations. TAX CLAIM AGAINST G-I HOLDINGS On September 15, 1997, G-I Holdings received a notice from the Internal Revenue Service of a deficiency in the amount of $84.4 million (after taking into account the use of net operating losses and foreign tax credits otherwise available for use in later years) in connection with the formation in 1990 of Rhone-Poulenc Surfactants and Specialties, L.P., a partnership in which G-I Holdings held an interest. The claim of the IRS for interest and penalties, after taking into account the effect on the use of net operating losses and foreign tax credits, could result in G-I Holdings incurring liabilities significantly in excess of the deferred tax liability of $131.4 million that it recorded in 1990 in connection with this matter. G-I Holdings has advised us that it believes that it will prevail in this matter, although we cannot assure you of this result. 10 13 We believe that the ultimate disposition of this matter will not have a material adverse effect on our business, financial position or results of operations. G-I Holdings has agreed to indemnify us against any tax liability associated with the surfactants partnership. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy its indemnification obligation to us. For the possible consequences to us of the failure of G-I Holdings to satisfy this liability and other information relating to G-I Holdings, see "-- Bodily Injury Claims" above. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable PART II ITEM 5. MARKETS FOR REGISTRANT'S COMMON EQUITY AND RELATED MATTERS There is no trading market for BMCA's common stock. As of March 23, 2001, there were two holders of record of BMCA's Class A common stock and one holder of record of its Class B common stock. See Item 12, "Security Ownership of Certain Beneficial Owners and Management." ITEM 6. SELECTED FINANCIAL DATA See page F-8. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS See page F-2. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Financial Condition -- Market-Sensitive Instruments and Risk Management" on page F-6. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See Index on page F-1 and Financial Statements and Supplementary Data on pages F-10 to F-44. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth the name, age, position and other information with respect to the directors and executive officers of BMCA. Under BMCA's By-laws, each director and executive officer continues in office until the company's next annual meeting of stockholders and until his or her successor is elected and qualified. On July 15, 1998, International Specialty Products Inc. merged with and into its parent, ISP 11 14 Holdings Inc., and ISP Holdings changed its name to International Specialty Products Inc. As used in this section, "ISP" refers to both companies.
PRESENT PRINCIPAL OCCUPATION NAME AND POSITION HELD AGE AND FIVE-YEAR EMPLOYMENT HISTORY - ---------------------- --- -------------------------------- William W. Collins................... 50 Mr. Collins has been President and Chief Executive Director, Chief Executive Officer Officer of BMCA and certain of its subsidiaries since and President September 2000 and a director of these companies since July 1999. He was President and Chief Operating Officer of the same companies from February 2000 to September 2000 and was Executive Vice President and Chief Operating Officer of these companies from July 1999 to February 2000. Mr. Collins also was Senior Vice President -- Marketing and Sales, Residential Roofing Products of BMCA and certain of its subsidiaries from November 1997 to July 1999. He was Vice President -- Marketing and Sales, Commercial Roofing Products of BMCA from March 1996 to November 1997, and Vice President -- Sales, Commercial of BMCA from December 1995 to March 1996. Since July 1999, Mr. Collins also has been a director of G-I Holdings, a corporation that filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2001 due to its Asbestos Claims. Richard A. Weinberg.................. 41 Mr. Weinberg has been Executive Vice President, General Executive Vice President, General Counsel and Secretary of BMCA and its subsidiaries since Counsel and Secretary May 1998 and was Senior Vice President, General Counsel and Secretary of BMCA and its subsidiaries from May 1996 to May 1998. Since September 2000, he has been Chief Executive Officer, President, General Counsel and Secretary of G-I Holdings, a corporation that filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2001 due to its Asbestos Claims, and previously served as Executive Vice President, General Counsel and Secretary of G-I Holdings and its subsidiaries from May 1998 to September 2000. Prior to that time, he held the positions of Senior Vice President, General Counsel and Secretary of these companies from May 1996 to May 1998. Mr. Weinberg has served as a director of G-I Holdings since May 1996. He also has been Executive Vice President, General Counsel and Secretary of ISP and its subsidiaries since May 1998 and was Senior Vice President, General Counsel and Secretary of ISP and its subsidiaries from May 1996 to May 1998. He was Vice President and General Counsel of BMCA from September 1994 to May 1996.
12 15
PRESENT PRINCIPAL OCCUPATION NAME AND POSITION HELD AGE AND FIVE-YEAR EMPLOYMENT HISTORY - ---------------------- --- -------------------------------- David A. Harrison.................... 44 Mr. Harrison has been a director of BMCA and certain of Director, Senior Vice its subsidiaries since September 2000. He also has been President -- Marketing, Contractor Senior Vice President -- Marketing, Contractor Services Services and Corporate Development and Corporate Development of BMCA and certain of its subsidiaries since July 2000. He is also President of GAF Materials Corporation (Canada). Mr. Harrison was Vice President -- Corporate Marketing and Development of BMCA and certain of its subsidiaries from November 1999 to July 2000, Vice President -- Marketing Development of BMCA and certain of its subsidiaries from January 1997 to July 1999 and Senior Vice President -- Residential Marketing of BMCA and certain of its subsidiaries from April 1996 to January 1997. From July 1999 to November 1999, Mr. Harrison was Senior Vice President, Corporate Marketing of Centex Corporation, a company in the construction and related financial services industries. Prior to joining BMCA, Mr. Harrison was Vice President of Global Marketing of Armstrong World Industries Inc. from 1994 to 1996. Robert B. Tafaro..................... 50 Mr. Tafaro has been a director of BMCA and certain of Director, Senior Vice President and its subsidiaries since September 2000. He also has been General Manager -- Steep Slope Senior Vice President and General Manager -- Steep Slope Systems Systems of BMCA and certain of its subsidiaries since July 2000. He was Vice President -- Marketing and Sales, Commercial Roofing Products of BMCA and certain of its subsidiaries from November 1997 to July 2000. He was Vice President -- Residential Marketing of BMCA from May 1997 to November 1997, Director of Residential Marketing of BMCA from February 1997 to May 1997, and Eastern Regional Sales Manager of BMCA and its predecessor company from July 1993 to February 1997. Kenneth E. Walton.................... 44 Mr. Walton has been a director of BMCA and certain of Director, Senior Vice its subsidiaries since September 2000. He also has been President -- Operations Senior Vice President -- Operations of BMCA and certain of its subsidiaries since July 2000. He was Vice President -- Residential Operations of BMCA from March 1999 to July 2000, Vice President -- Manufacturing of U.S. Intec, Inc., a former subsidiary of BMCA, from December 1997 to March 1999, Director of Manufacturing-- Roofing and Felt Operations of BMCA from April 1996 to December 1997 and Plant Manager -- Mobile, Alabama roofing facility of BMCA and its predecessor company from May 1991 to April 1996.
13 16
PRESENT PRINCIPAL OCCUPATION NAME AND POSITION HELD AGE AND FIVE-YEAR EMPLOYMENT HISTORY - ---------------------- --- -------------------------------- Susan B. Yoss........................ 42 Ms. Yoss has been Senior Vice President and Treasurer of Senior Vice President and Treasurer BMCA and its subsidiaries since July 1999 and was Vice President and Treasurer of the same companies from February 1998 to July 1999. Since July 1999, she also has been Senior Vice President, Chief Financial Officer and Treasurer of G-I Holdings, a corporation that filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2001 due to its Asbestos Claims. Ms. Yoss has served as Executive Vice President -- Finance and Treasurer of ISP and certain of its subsidiaries since September 2000, was Senior Vice President and Treasurer of ISP and certain of its subsidiaries from July 1999 to September 2000 and was Vice President and Treasurer of ISP from February 1998 to July 1999. Ms. Yoss was Assistant Treasurer of Joseph E. Seagram & Sons, Inc., a global beverage and entertainment company, for more than five years until February 1998. John F. Rebele....................... 46 Mr. Rebele has been a director of BMCA since January Director, Vice President and Chief 2001 and of certain of BMCA's subsidiaries since March Financial Officer 2001. He also has been Vice President and Chief Financial Officer of BMCA and certain of its subsidiaries since January 2001. He was Vice President -- Finance of BMCA and certain of its subsidiaries from March 1998 to January 2001 and Vice President and Controller of BMCA and certain of its subsidiaries from February 1994 to March 1998.
14 17 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth the cash and non-cash compensation for each of the last three fiscal years awarded to or earned by the Chief Executive Officer and the four other most highly compensated executive officers of BMCA as of December 31, 2000, together with any person who served as BMCA's Chief Executive Officer in 2000. The salaries and other compensation of Messrs. Heyman and Weinberg and Ms. Yoss for services provided by them to our company are paid by ISP in accordance with a management agreement between ISP and our company. See Note (7) to the table below.
LONG-TERM COMPENSATION ------------- ANNUAL COMPENSATION OTHER SECURITIES --------------------------- ANNUAL UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS(1) COMPENSATION - --------------------------- ---- -------- -------- ------------ ------------- ------------ William W. Collins.................. 2000 $245,625 $150,000 6,500 $19,251(2) President and Chief Executive 1999 194,750 100,000 5,000 15,463(2) Officer 1998 168,000 69,871 3,000 14,899(2) William C. Lang..................... 2000 $257,500 $ 15,202 5,000 $21,400(3) Executive Vice President, 1999 242,500 100,000 5,000 20,871(3) Chief Administrative Officer 1998 207,083 94,145 4,200 17,965(3) and Chief Financial Officer(3) David A. Harrison................... 2000 $207,375 $ 39,995 $48,544(4) 4,500 $ 9,722(4) Senior Vice President -- 1999 115,578(4) 26,137(4) --(4) --(4) 11,037(4) Marketing, Contractor Services 1998 163,250 35,482 7,171(4) 1,000 16,681(4) and Corporate Development Robert B. Tafaro.................... 2000 $200,999 $ 44,071 1,500 $18,057(5) Senior Vice President and 1999 164,000 36,183 -- 15,099(5) General Manager -- Steep Slope Systems 1998 135,842 35,152 2,500 14,226(5) Kenneth E. Walton................... 2000 $164,375 $ 36,800 2,000 $15,011(6) Senior Vice President -- Operations 1999 151,018 34,110 2,500 16,372(6) 1998 127,310 21,735 1,500 19,214(6) Samuel J. Heyman.................... 2000 (7) (7) (7) (7) Former Chairman of the Board, 1999 (7) (7) (7) (7) President and Chief Executive 1998 (7) (7) (7) (7) Officer(7)
- --------------- (1) Bonus amounts are payable pursuant to BMCA's Executive Incentive Compensation Program, except that a portion of the bonus amounts paid to Mr. Lang in 1998 and 2000, Mr. Harrison in 1999 and Mr. Tafaro in 1998 represented special bonus awards to those executive officers. The options relate to shares of redeemable convertible preferred stock of BMCA. See "-- Options." (2) Included in "All Other Compensation" for Mr. Collins are: $12,150, $11,450 and $11,450, representing BMCA's contribution under its 401(k) plan in 2000, 1999 and 1998, respectively; $4,941, $2,484 and $2,122 for the premiums paid by BMCA for a life insurance policy in 2000, 1999 and 1998, respectively; and $2,160, $1,529 and $1,327 for the premiums paid by BMCA for a long-term disability policy in 2000, 1999 and 1998, respectively. In February 2000, Mr. Collins was elected President and Chief Operating Officer of BMCA and in September 2000 was elected as our President and Chief Executive Officer. (3) Included in "All Other Compensation" for Mr. Lang are: $12,400, $11,700 and $11,700, representing BMCA's contribution under its 401(k) plan in 2000, 1999 and 1998, respectively; $6,840, $7,267 and $4,459 for the premiums paid by BMCA for a life insurance policy in 2000, 1999 and 1998, respectively; and $2,160, $1,904 and $1,806 for the premiums paid by BMCA for a long-term disability policy in 2000, 1999 and 1998, respectively. Effective January 2001, Mr. Lang no longer holds the positions of Executive Vice President, Chief Administrative Officer and Chief Financial Officer of BMCA. We have entered into an agreement with Mr. Lang in connection with his separation from employment with our company pursuant to which, among other things, we will pay Mr. Lang nine months severance. (Footnotes continued on next page) 15 18 (Footnotes continued from previous page) (4) Included in "Other Annual Compensation" for Mr. Harrison are $48,544 and $7,171 in payment for moving-related expenses in 2000 and 1998, respectively. Included in "All Other Compensation" for Mr. Harrison are: $6,089, $9,188 and $11,450, representing BMCA's contribution under its 401(k) plan in 2000, 1999 and 1998, respectively; $1,574, $737 and $3,671 for the premiums paid by BMCA for a life insurance policy in 2000, 1999 and 1998, respectively; and $2,059, $1,112 and $1,560 for the premiums paid by BMCA for a long-term disability policy in 2000, 1999 and 1998, respectively. Mr. Harrison resigned from his employment with us in July 1999 and returned in November 1999. (5) Included in "All Other Compensation" for Mr. Tafaro are: $12,150, $11,450 and $11,283, representing BMCA's contribution under its 401(k) plan in 2000, 1999 and 1998, respectively; $3,913, $2,078 and $1,706 for the premiums paid by BMCA for a life insurance policy in 2000, 1999 and 1998, respectively; and $1,994, $1,571 and $1,237 for the premiums paid by BMCA for a long-term disability policy in 2000, 1999 and 1998, respectively. (6) Included in "All Other Compensation" for Mr. Walton are: $12,150, $11,503 and $11,450, representing BMCA's contribution under its 401(k) plan in 2000, 1999 and 1998, respectively; $1,223, $3,416 and $6,594 for the premiums paid by BMCA for a life insurance policy in 2000, 1999 and 1998, respectively; and $1,638, $1,453 and $1,170 for the premiums paid by BMCA for a long-term disability policy in 2000, 1999 and 1998, respectively. (7) The salary and other compensation of Messrs. Heyman and Weinberg and Ms. Yoss are paid by ISP pursuant to our management agreement with ISP, except that BMCA granted to Mr. Weinberg options to purchase 6,453 shares of redeemable convertible preferred stock of BMCA in 1999. See "-- Options." No allocation of compensation for services to BMCA is made pursuant to the management agreement, except that BMCA reimbursed ISP $400,000 and $230,000 under the management agreement in respect of bonus amounts earned by Mr. Weinberg and Ms. Yoss, respectively, for 2000 in connection with services performed by them for BMCA during that year. In addition, BMCA reimburses ISP, through payment of the management fees payable under the management agreement, for the estimated costs ISP incurs for providing the services of these officers. See Item 13, "Certain Relationships and Related Transactions -- Management Agreement." Mr. Heyman resigned as our President in February 2000 and as our Chief Executive Officer and Chairman of the Board in September 2000. OPTIONS The following table summarizes options to acquire BMCA's redeemable convertible preferred stock granted during 2000 to the executive officers named in the Summary Compensation Table above and the potential realizable value of options held by those persons. BMCA PREFERRED STOCK OPTION GRANTS IN 2000(1)
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES NUMBER OF % OF TOTAL OF BOOK VALUE SECURITIES OPTIONS GRANTED APPRECIATION UNDERLYING TO EMPLOYEES IN -------------------------- NAME OPTIONS GRANTED FISCAL 2000 5% 10% - ---- --------------- --------------- ----------- ----------- William W. Collins...................... 6,500 10.5% $311,620 $767,536 William C. Lang......................... 5,000 8.1 239,708 590,412 David A. Harrison....................... 4,500 7.3 215,737 531,371 Robert B. Tafaro........................ 1,500 2.4 71,912 177,124 Kenneth E. Walton....................... 2,000 3.2 95,883 236,165
- --------------- (1) The BMCA preferred stock options represent options to purchase shares of redeemable convertible preferred stock of BMCA. Each share of preferred stock is convertible, at the holder's option, into shares of Class A common stock of BMCA at a formula price based on Book Value (as defined in the option agreement) as of the date of grant. The options vest over five years from the date of grant. Dividends will 16 19 accrue on the preferred stock from the date of issuance at the rate of 6% per annum. The preferred stock is redeemable, at BMCA's option, for a redemption price equal to the exercise price per share plus accrued and unpaid dividends. The Class A common stock of BMCA issuable upon conversion of the preferred stock is subject to repurchase by BMCA under certain circumstances at a price equal to its then current Book Value. The exercise price of the options is equal to the fair value per share of the preferred stock at the date of grant. The options expire nine years after the date of grant. See Note 2 to the table below for additional information relating to outstanding stock options. BMCA PREFERRED STOCK OPTIONS AND OPTION EXERCISES AND VALUES AT DECEMBER 31, 2000
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED PREFERRED OPTIONS IN-THE-MONEY AT 12/31/00 PREFERRED OPTIONS SHARES ACQUIRED VALUE EXERCISABLE/ AT 12/31/00 NAME ON EXERCISE REALIZED UNEXERCISABLE(1)(2) EXERCISABLE/UNEXERCISABLE(3) - ---- --------------- -------- ----------------------- ---------------------------- William W. Collins.......... -- -- 8,031/15,587 $183,941/$98,998 William C. Lang............. -- -- 4,982/13,055 94,008/77,817 David A. Harrison........... -- -- 500/4,000 0/0 Robert B. Tafaro............ -- -- 2,237/3,424 64,584/29,106 Kenneth E. Walton........... -- -- 2,452/5,334 65,340/23,864
- --------------- (1) With respect to the stock options for 6,453 shares of preferred stock held by Mr. Weinberg, options for 2,581 shares of preferred stock were exercisable and options for 3,872 shares of preferred stock were unexercisable at December 31, 2000. (2) Effective December 31, 2000, we adopted the 2001 Long-Term Incentive Plan which, among other things, will allow certain employees participating in the preferred stock option program to also participate in the new incentive plan and to elect to exchange their outstanding stock options for incentive units under the new incentive plan. (3) Options for 12,118, 8,037, 0, 4,161 and 4,286 shares of preferred stock were in-the-money for Messrs. Collins, Lang, Harrison, Tafaro and Walton, respectively, at December 31, 2000. Options for 6,453 shares of preferred stock were in-the-money for Mr. Weinberg at December 31, 2000. The value of these unexercised in-the-money options held by Mr. Weinberg at December 31, 2000 was $10,410 and $15,614 for exercisable and unexercisable options, respectively. COMPENSATION OF DIRECTORS The directors of BMCA do not receive any compensation for their services as such. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONS We do not have a separate compensation committee. Compensation decisions are determined by our Board of Directors, each member of which is also one of our executive officers. See Item 13, "Certain Relationships and Related Transactions." 17 20 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of March 23, 2001, approximately 99.9% of our outstanding Class A common stock and all of our outstanding Class B common stock are owned of record by BMCA Holdings Corporation. All of the outstanding capital stock of BMCA Holdings Corporation is owned of record by G-I Holdings. The following table sets forth information with respect to the ownership of BMCA's common stock, as of March 23, 2001, by each other person known to us to own beneficially more than 5% of either class of the common stock outstanding on that date and by all of our directors and executive officers as a group.
AMOUNT AND NATURE OF TOTAL BENEFICIAL PERCENT VOTING TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP OF CLASS POWER - -------------- --------------------------------------- ---------- -------- ------ Class A Common Stock Samuel J. Heyman...................... 1,015,010(2) 99.9% 98.5% All directors and executive officers of BMCA as a group (7 persons)........... -- -- -- Class B Common Stock Samuel J. Heyman...................... 15,000(2) 100.0% 1.5% All directors and executive officers of BMCA as a group (7 persons)........... -- -- --
- --------------- (1) The business address for Mr. Heyman is 1361 Alps Road, Wayne, New Jersey 07470. (2) The number of shares shown as being beneficially owned (as defined in Rule 13d-3 of the Exchange Act) by Mr. Heyman attributes ownership of the shares of BMCA common stock owned by BMCA Holdings Corporation, a wholly-owned subsidiary of G-I Holdings, to Mr. Heyman. As of March 23, 2001, Mr. Heyman beneficially owned (as defined in Rule 13d-3 of the Exchange Act) approximately 99.4% of the capital stock of G-I Holdings. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS MANAGEMENT AGREEMENT Pursuant to a management agreement, International Specialty Products Inc. (of which Samuel J. Heyman beneficially owns (as defined in Rule 13d-3 of the Exchange Act) approximately 79%) provides certain general management, administrative, legal, telecommunications, information and facilities services to us, including the use of our headquarters in Wayne, New Jersey. ISP charged us $6.0 million in 2000 for providing these services. These charges consist of management fees and other reimbursable expenses attributable to us, or incurred by ISP for our benefit. They are based on an estimate of the costs ISP incurs to provide such services. Effective January 1, 2001, the management agreement was amended to extend the term of the agreement through March 31, 2001, to provide for the automatic extension of the agreement for successive quarterly periods unless the agreement is terminated by a party, and to adjust the management fees payable under the agreement. In addition, the management agreement was amended to provide that BMCA rather than ISP be responsible for providing management services to G-I Holdings and certain of its subsidiaries and that G-I Holdings pay to BMCA a management fee for these services. Based on the services provided to G-I Holdings in 2000 under the management agreement, the aggregate amount payable by G-I Holdings to us for services to be rendered under the management agreement in 2001 is expected to be approximately $0.6 million. We also allocate a portion of the management fees payable by us under the management agreement to separate lease payments for the use of our headquarters. Based on the services provided by ISP in 2000 to us and G-I Holdings under the management agreement, the aggregate amount payable by us to ISP under the management agreement for 2001 is expected to be approximately $6.6 million. Certain of our executive officers receive their compensation from ISP. ISP is indirectly reimbursed for this compensation through payment of the management fee and other reimbursable expenses payable under the management agreement. 18 21 Due to the unique nature of the services provided under the management agreement, comparisons with third party arrangements are difficult. However, we believe that the terms of the management agreement taken as a whole are no less favorable to us than could be obtained from an unaffiliated third party. CERTAIN PURCHASES We purchase all of our colored roofing granules requirements from ISP under a requirements contract, except for the requirements of certain of our roofing plants which are supplied by third parties. Effective January 1, 2001, this contract was amended and restated to provide, among other things, that the contract will expire on December 31, 2001, unless extended by the parties. In 2000, we purchased in the aggregate approximately $59.3 million of mineral products from ISP. TAX SHARING AGREEMENT We entered into a tax sharing agreement dated January 31, 1994 with G-I Holdings with respect to the payment of federal income taxes and certain related matters. During the term of the tax sharing agreement, which is effective for the period during which we or any of our domestic subsidiaries is included in a consolidated federal income tax return for the consolidated group that has included G-I Holdings as a member, we are obligated to pay G-I Holdings an amount equal to those federal income taxes we would have incurred if we, on behalf of ourselves and our domestic subsidiaries, filed our own federal income tax return. Unused tax attributes will carry forward for use in reducing amounts payable by us to G-I Holdings in future years, but cannot be carried back. If we ever were to leave the G-I Holdings consolidated tax group, we would be required to pay to G-I Holdings the value of any tax attributes to which we would succeed under the consolidated return regulations to the extent the tax attributes reduced the amounts otherwise payable by us under the tax sharing agreement. Under certain circumstances, the provisions of the tax sharing agreement could result in us having a greater liability under the agreement than we would have had if we and our domestic subsidiaries had filed our own separate federal income tax return. Under the tax sharing agreement, we and each of our domestic subsidiaries are responsible for any taxes that would be payable by reason of any adjustment to the tax returns of G-I Holdings or its subsidiaries for years prior to the adoption of the tax sharing agreement that relate to our business or assets or the business or assets of any of our domestic subsidiaries. Although, as a member of the G-I Holdings consolidated tax group, we are severally liable for certain federal income tax liabilities of the G-I Holdings consolidated tax group, including tax liabilities not related to our business, G-I Holdings has agreed to indemnify us and our subsidiaries for all tax liabilities of the G-I Holdings consolidated tax group other than tax liabilities arising from our operations and the operations of our domestic subsidiaries and tax liabilities for tax years pre-dating the tax sharing agreement that relate to our business or assets and the business or assets of any of our domestic subsidiaries. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy these indemnification obligations. See Item 3, "Legal Proceedings -- Bodily Injury Claims." The tax sharing agreement provides for analogous principles to be applied to any consolidated, combined or unitary state or local income taxes. Under the tax sharing agreement, G-I Holdings makes all decisions with respect to all matters relating to taxes of the G-I Holdings consolidated tax group. The provisions of the tax sharing agreement take into account both the federal income taxes we would have incurred if we filed our own separate federal income tax return and the fact that we are a member of the G-I Holdings consolidated tax group for federal income tax purposes. INTERCOMPANY BORROWINGS BMCA makes loans to, and borrows from, G-I Holdings and its subsidiaries from time to time at prevailing market rates. As of December 31, 2000, no loans were owed to BMCA by G-I Holdings and no loans were owed by us to affiliates. In addition, we make non-interest bearing advances to affiliates, of which no amount was outstanding at December 31, 2000. In 2000, we made a distribution of $106.2 million to our parent corporations, representing the write-off of outstanding advances to our parent corporations that we determined were uncollectible. See Note 15 to Consolidated Financial Statements. 19 22 PART IV ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. The following documents are filed as part of this report: (a)(1) Financial Statements: See Index on page F-1. (a)(2) Financial Statement Schedules: See Index on page F-1. (a)(3) Exhibits:
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.1 -- Reorganization Agreement, dated as of December 31, 1998, by and among BMCA, Building Materials Manufacturing Corporation and Building Materials Investment Corporation (incorporated by reference to Exhibit 2.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-69749) (the "2008 Notes S-4"). 3.1 -- Amended and Restated Certificate of Incorporation of BMCA (incorporated by reference to Exhibit 3.1 to BMCA's Form 10-K for the year ended December 31, 1999 (the "1999 Form 10-K")). 3.2 -- By-laws of BMCA (incorporated by reference to Exhibit 3.2 to BMCA's Registration Statement on Form S-4 (Registration No. 33-81808)) (the "Deferred Coupon Note Registration Statement"). 3.3 -- Certificate of Incorporation of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.3 to BMCA's Form 10-K for the fiscal year ended December 31, 1998 (the "1998 10-K")). 3.4 -- By-laws of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.4 to the 1998 10-K). 3.5 -- Certificate of Incorporation of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.5 to the 1998 10-K). 3.6 -- By-laws of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.6 to the 1998 10-K). 4.1 -- Indenture, dated as of December 9, 1996, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-20859)). 4.2 -- Indenture, dated as of October 20, 1997, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-41531)). 4.3 -- Indenture, dated as of July 17, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-60633)). 4.4 -- First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of December 9, 1996 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.7 of the 2008 Notes S-4). 4.5 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 9, 1996 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.6 -- First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of October 20, 1997 among BMCA, as issuer, Building Materials Manufacturing Corporation, as co-obligor, Building Materials Investment Corporation, as guarantor, and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.8 of the 2008 Notes S-4).
20 23
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.7 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of October 20, 1997 among BMCA and Building Materials Manufacturing Corporation, as issuers, Building Materials Investment Corporation, as guarantor, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.8 -- First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of July 17, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.9 of the 2008 Notes S-4). 4.9 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of July 17, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.10 -- Indenture, dated as of December 3, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the 2008 Notes S-4). 4.11 -- First Supplemental Indenture dated as of January 1, 1999 to Indenture dated as of December 3, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.4 to the 2008 Notes S-4). 4.12 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 3, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.13 -- Indenture, dated July 5, 2000, between BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee. 4.14 -- First Supplemental Indenture, dated as of December 4, 2000, to the Indenture dated as of July 5, 2000, between BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.15 -- Registration Rights Agreement, dated July 5, 2000, between BMCA and BNY Capital Markets Inc. 4.16 -- First Amendment to the Registration Rights Agreement, dated as of December 4, 2000, to Registration Rights Agreement dated July 5, 2000, among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and BNY Capital Markets, Inc., as initial purchaser. 10.1 -- Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, ISP, GAF Building Materials Corporation, GAF Broadcasting Company, Inc., BMCA and ISP Opco Holdings Inc. (incorporated by reference to Exhibit 10.1 to the 1998 10-K). 10.2 -- Amendment No. 1 to the Management Agreement, dated as of January 1, 2000 (incorporated by reference to Exhibit 10.2 to International Specialty Products Inc. Annual Report on Form 10-K for the year ended December 31, 1999). 10.3 -- Amendment No. 2 to the Management Agreement, dated as of January 1, 2001 (incorporated by reference to Exhibit 10.3 to International Specialty Products Inc. Annual Report on Form 10-K for the year ended December 31, 2000). 10.4 -- Form of Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.9 to BMCA's Form 10-K for the year ended December 31, 1996).*
21 24
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.5 -- Forms of Amendment to Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.12 to BMCA's Form 10-K for the year ended December 31, 1997 (the "1997 Form 10-K")).* 10.6 -- Form of Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.13 to the 1997 Form 10-K).* 10.7 -- BMCA Preferred Stock Option Plan (incorporated by reference to Exhibit 4.2 to BMCA's Registration Statement on Form S-8 (Registration No. 333-60589)).* 10.8 -- BMCA 2001 Long-Term Incentive Plan.* 10.9 -- Tax Sharing Agreement, dated as of January 31, 1994, among GAF, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.6 to the Deferred Coupon Note Registration Statement). 10.10 -- Amendment to Tax Sharing Agreement, dated as of March 19, 2001, between G-I Holdings and BMCA. 10.11 -- Reorganization Agreement, dated as of January 31, 1994, among GAF Building Materials Corporation, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.9 to the Deferred Coupon Note Registration Statement). 10.12 -- Credit Agreement, dated as of December 4, 2000, by and among BMCA, the lenders party thereto, and The Bank of New York, as agent for the lenders and as Swing Line Lender (the "Credit Agreement"). 10.13 -- Amendment No. 1, dated as of December 22, 2000, to the Credit Agreement. 10.14 -- Amendment No. 2, dated as of March 8, 2001, to the Credit Agreement. 10.15 -- Amended and Restated Credit Agreement, dated as of December 4, 2000, by and among BMCA, the lenders party thereto, Fleet National Bank as Documentation Agent, Bear Stearns Corporate Lending Inc. as Syndication Agent and the Bank of New York as Swing Line Lender and as Administration Agent with BNY Capital Markets Inc. as Lead Arranger and Bookrunner (the "Amended and Restated Credit Agreement"). 10.16 -- Amendment No. 1, dated as of December 22, 2000, to the Amended and Restated Credit Agreement. 10.17 -- Amendment No. 2, dated as of March 8, 2001, to the Amended and Restated Credit Agreement. 10.18 -- Security Agreement, dated December 22, 2000, by and among BMCA and each of the grantors party thereto and The Bank of New York as Collateral Agent. 10.19 -- Collateral Agent Agreement, dated December 22, 2000, by and among BMCA, such Subsidiary of BMCA a party thereto, the 1999 Administrative Agent (as defined therein), each Senior Note Trustee (as defined therein), the 2000 Administrative Agent (as defined therein), the Chase Manhattan Bank, Fleet National Bank and the Bank of New York, as Collateral Agent. 10.20 -- Separation and General Release Agreement between BMCA and William C. Lang.* 21 -- Subsidiaries of BMCA. 23.1 -- Consent of Arthur Andersen LLP.
- --------------- * Management and/or compensation plan or arrangement (b) Reports on Form 8-K The Company filed a report on Form 8-K, dated October 5, 2000, reporting events under Item 5 thereof. 22 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BUILDING MATERIALS CORPORATION OF AMERICA BUILDING MATERIALS MANUFACTURING CORPORATION DATE: MARCH 30, 2001 BY: /s/ WILLIAM W. COLLINS ------------------------------------ NAME: WILLIAM W. COLLINS TITLE: CHIEF EXECUTIVE OFFICER AND PRESIDENT Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ WILLIAM W. COLLINS President, Chief Executive Officer March 30, 2001 - --------------------------------------------------- and Director (Principal Executive William W. Collins Officer) /s/ JOHN F. REBELE Vice President and Chief Financial March 30, 2001 - --------------------------------------------------- Officer and Director (Principal John F. Rebele Financial Officer) /s/ DAVID A. HARRISON Director March 30, 2001 - --------------------------------------------------- David A. Harrison /s/ ROBERT B. TAFARO Director March 30, 2001 - --------------------------------------------------- Robert B. Tafaro /s/ KENNETH E. WALTON Director March 30, 2001 - --------------------------------------------------- Kenneth E. Walton /s/ JAMES T. ESPOSITO Vice President and Controller March 30, 2001 - --------------------------------------------------- (Principal Accounting Officer) James T. Esposito
23 26 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. BUILDING MATERIALS INVESTMENT CORPORATION Date: March 30, 2001 By: /s/ WILLIAM W. COLLINS ------------------------------------ Name: William W. Collins Title: President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ WILLIAM W. COLLINS President, Chief Executive Officer March 30, 2001 - --------------------------------------------------- and Director (Principal Executive William W. Collins Officer) /s/ BARRY A. CROZIER Director March 30, 2001 - --------------------------------------------------- Barry A. Crozier /s/ ARTHUR W. CLARK Director March 30, 2001 - --------------------------------------------------- Arthur W. Clark /s/ JOHN F. REBELE Vice President and Chief Financial March 30, 2001 - --------------------------------------------------- Officer (Principal Financial and John F. Rebele Accounting Officer)
24 27 BUILDING MATERIALS CORPORATION OF AMERICA FORM 10-K INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS, CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
PAGE ---- Management's Discussion and Analysis of Financial Condition and Results of Operations................................. F-2 Selected Financial Data..................................... F-8 Report of Independent Public Accountants.................... F-9 Consolidated Statements of Operations for the three years ended December 31, 2000................................... F-10 Consolidated Balance Sheets as of December 31, 1999 and 2000...................................................... F-11 Consolidated Statements of Cash Flows for the three years ended December 31, 2000................................... F-12 Consolidated Statements of Stockholders' Equity (Deficit) for the three years ended December 31, 2000............... F-14 Notes to Consolidated Financial Statements.................. F-15 Supplementary Data (Unaudited): Quarterly Financial Data (Unaudited)...................... F-44
SCHEDULES Consolidated Financial Statement Schedules: Schedule II -- Valuation and Qualifying Accounts.......... S-1
F-1 28 BUILDING MATERIALS CORPORATION OF AMERICA MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Building Materials Corporate of America ("BMCA"), a subsidiary of BMCA Holdings Corporation, was formed in January 1994 to acquire the operating assets and certain liabilities of GAF Building Materials Corporation, whose name was changed to G-I Holdings Inc., a parent of BMCA. See Note 1 to Consolidated Financial Statements. To facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of BMCA, merged into its direct subsidiary, G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation (formerly known as GAF Fiberglass Corporation) merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now the parent of BMCA and of BMCA's direct parent, BMCA Holdings Corporation. References herein to "G-I Holdings" mean G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation. RESULTS OF OPERATIONS 2000 Compared with 1999 We recorded a net loss in 2000 of $11.2 million compared with net income of $24.0 million in 1999. The net loss in 2000 included a one-time pre-tax gain of $17.5 million ($11.0 million after-tax), a one-time pre-tax charge of $15.0 million ($9.5 million after-tax), pre-tax losses from the sale of investment securities of $18.1 million ($11.4 million after-tax) and an after-tax extraordinary loss of $0.3 million. The net income in 1999 included a pre-tax nonrecurring charge of $2.7 million ($1.7 million after-tax) and an after-tax extraordinary loss of $1.3 million. Excluding the one-time gains and losses in both years, the net loss for 2000 would have been $1.0 million compared with net income of $27.0 million in 1999, with the decrease primarily the result of lower operating income, lower investment income and higher interest expense. Net sales for 2000 were $1,207.8 million, a 5.9% increase over net sales for 1999 of $1,140.0 million, with the increase due to net sales gains in premium steep slope roofing products, partially offset by slightly lower net sales of low slope roofing products. The increase in net sales of premium steep slope roofing products resulted from higher average selling prices and unit volumes, while the decrease in net sales of low slope roofing products primarily resulted from lower unit volumes, partially offset by higher average selling prices. Operating income for 2000 was $61.4 million compared with $85.7 million reported in 1999, excluding one-time items in both years. Lower operating results were primarily attributable to the higher cost of energy and raw material purchases, principally the cost of asphalt due to high oil prices and increased demand for asphalt by the paving industry, partially offset by higher average selling prices for steep slope and low slope roofing products, higher steep slope roofing products unit volumes and lower manufacturing costs. We recorded in 2000 a $17.5 million pre-tax gain from the sale of certain assets of the security products business of LL Building Products Inc. (see Note 4 to Consolidated Financial Statements), a pre-tax charge of $15.0 million related to an increase in product warranty reserves (see Note 2 to Consolidated Financial Statements), pre-tax losses from the sale of investment securities of $18.1 million, and an after-tax extraordinary loss of $0.3 million related to the write-off of unamortized deferred financing fees in connection with the extinguishment of debt. In 1999, we recorded pre-tax nonrecurring charges of $2.7 million related to the settlement of a legal matter and an after-tax extraordinary loss of $1.3 million representing the premium paid upon the extinguishment of debt. Interest expense increased from $48.3 million in 1999 to $53.5 million in 2000, primarily due to higher average borrowings and a higher average interest rate. Other expense, net was $27.6 million compared to other income, net of $5.4 million in 1999, with the decrease primarily due to the pre-tax loss of $18.1 million from the sale of investment securities, lower investment income and higher other expenses. F-2 29 1999 Compared with 1998 We recorded net income in 1999 of $24.0 million compared with a net loss of $9.8 million in 1998. The net income in 1999 and the net loss in 1998 included pre-tax nonrecurring charges of $2.7 million ($1.7 million after-tax) and $27.6 million ($17.1 million after-tax), respectively, and after-tax extraordinary losses of $1.3 million and $18.1 million, respectively. Excluding the extraordinary losses and nonrecurring charges in both years, net income would have been $27.0 million in 1999 compared with $25.4 million in 1998, an increase of 6.3%, with the increase primarily attributable to higher operating income and lower interest expense, partially offset by lower investment income. Net sales for 1999 were $1,140.0 million, a 4.8% increase over net sales for 1998 of $1,088.0 million. The sales growth was primarily due to the inclusion of the LL Building Products Inc. business, acquired in June 1998, for the full year (see Note 4 to Consolidated Financial Statements), together with net sales gains in premium steep slope roofing products, partially offset by lower net sales in low slope roofing products. The increase in net sales of premium steep slope roofing products resulted from higher sales volumes and average selling prices, while the decline in net sales of low slope roofing products resulted from lower average selling prices. Operating income, before the impact of nonrecurring charges, for 1999 was $85.7 million, a 14.2% increase over the $75.1 million for 1998 and, as a percentage of sales, improved to 7.5% in 1999 from 6.9% in 1998. The increase in operating income in 1999 was primarily attributable to higher net sales for our premium steep slope roofing products, the inclusion of the LL Building Products Inc. business, acquired in June 1998, for the full year, and a modest improvement in low slope roofing products, primarily the result of lower selling, general and administrative expenses and manufacturing costs. We recorded a pre-tax nonrecurring charge in 1999 of $2.7 million related to the settlement of a legal matter and, in 1998, a $27.6 million pre-tax charge of which $20.0 million related to the settlement of a national class action lawsuit involving asphalt shingles, and $7.6 million related to a grant to our former President and Chief Executive Officer of our restricted common stock and certain cash payments to be made over a specified period of time (substantially all of which was earned) in connection with the termination by an affiliate of preferred stock options and stock appreciation rights held by this officer (see Note 5 to Consolidated Financial Statements). Interest expense declined to $48.3 million for 1999 from $50.0 million in 1998, due primarily to a lower average interest rate, partially offset by higher average borrowings. The lower average interest rate resulted primarily from the refinancing of $310 million in aggregate principal amount at maturity of our 11 3/4% Senior Deferred Coupon Notes due 2004 (the "Deferred Coupon Notes") with substantially all of the net proceeds from the issuances of $150 million in aggregate principal amount of our 7 3/4% Senior Notes due 2005 (the "2005 Notes"), $155 million in aggregate principal amount of our 8% Senior Notes due 2008 (the "2008 Notes") and a $31.9 million bank term loan (the "Term Loan") in July 1998, December 1998 and August 1999, respectively. In connection with the above refinancing, we recorded after-tax extraordinary losses of $1.3 million in 1999 and $18.1 million in 1998 related to premiums paid to repurchase the Deferred Coupon Notes. Other income, net, was $5.4 million in 1999 compared with $15.9 million in 1998. The decline was principally due to $10.3 million lower investment income. LIQUIDITY AND FINANCIAL CONDITION Net cash inflow during 2000 was $70.2 million before financing activities, and included $41.1 million of cash generated from operations, the reinvestment of $61.5 million for capital programs, the generation of $59.0 million from net sales of available-for-sale securities and other short-term investments and $31.7 million from the sale of assets. Cash invested in additional working capital (excluding the non-cash leasing transactions described below) totaled $19.8 million during 2000, primarily reflecting increases in other current assets and decreases in accounts payable and accrued liabilities (after non-cash transactions) of $0.7, $26.8 and $8.8 million, F-3 30 respectively, partially offset by decreases in accounts receivable and inventories of $13.1 and $3.3 million, respectively. Cash from operating activities also reflected a $45.2 million increase from related party/parent corporation transactions (primarily due to the distribution to our parent corporations, representing the write-off of $106.2 million of outstanding advances to our parent corporations that we determined were uncollectible, $59.1 million of which was outstanding at December 31, 1999 and $47.1 million of which was advanced in 2000) and a $9.3 million increase in the reserve for product warranty claims (primarily resulting from a $15.0 million product warranty reserve adjustment, partially offset by claim payments). In connection with the construction of two new manufacturing facilities, in 1999 we entered into two leases for certain machinery and equipment to be utilized at our plants in Michigan City, Indiana and Shafter, California, which leases meet the criteria of operating leases under Statement of Financial Accounting Standards ("SFAS") No. 13 "Accounting for Leases." In connection with these leases, at December 31, 1999, property, plant and equipment, net and accrued liabilities included $65.6 million of assets under these leases. These amounts were reversed during 2000 when the manufacturing facilities became fully operational. This $65.6 million decrease in accrued liabilities was in addition to other reductions aggregating $8.8 million. In connection with the construction of our new manufacturing facility in Mount Vernon, Indiana, in December 2000 we entered into an operating lease for certain machinery and equipment to be utilized at this plant, at a total cost of approximately $15.5 million. Net cash used in financing activities totaled $43.4 million in 2000. We generated $41.0 million of proceeds from the issuance of long-term debt, including net proceeds of $34.0 million from our 10 1/2% Senior Notes due 2003 (the "2003 Notes") which were used to repay the Term Loan and for general corporate purposes, and the $7.0 million precious metal note due 2003 (the "Precious Metal Note") referred to below. In addition, we borrowed an additional $70 million under our amended and restated existing $110 million secured revolving credit facility (the "Existing Credit Agreement"). Offsetting these cash inflows was $38.1 million of repayments of long-term debt, principally the repayment of the Term Loan, a $106.2 million distribution to our parent corporations, representing the write-off of outstanding advances to our parent corporations which we determined were uncollectible, and $10.0 million in financing fees and expenses. See Note 15 to Consolidated Financial Statements. Our 8 5/8% Senior Notes due 2006, our 8% Senior Notes due 2007, the 2005 Notes, the 2008 Notes and the 2003 Notes are collectively referred to as the "Senior Notes." As a result of the foregoing factors, cash and cash equivalents (excluding securities at December 31, 1999) increased by $26.8 million during 2000 to $82.7 million. In December 2000, we entered into the new $100 million secured credit facility (the "New Credit Agreement"), which is to be used for working capital purposes subject to certain restrictions. The New Credit Agreement matures in August 2003. As of December 31, 2000, there were no outstanding borrowings or letters of credit under the New Credit Agreement. In connection with entering into the New Credit Agreement, the maturity date of our Existing Credit Agreement was extended for an additional year to August 2003. Our obligations under the Existing Credit Agreement and the New Credit Agreement, as well as our obligations under the Precious Metal Note and approximately $3.5 million of obligations under a standby letter of credit (collectively, the "Other Indebtedness"), aggregated $77.0 million of borrowings and $42.3 million of letters of credit outstanding at December 31, 2000. All of those obligations are secured by a first-priority lien on substantially all of our assets and the assets of our subsidiaries on a pro rata basis. We refer to these assets below as the "Collateral." The Senior Notes are secured by a second-priority lien on the same assets for so long as the first-priority lien remains in effect, subject to certain limited exceptions. Under the terms of the New Credit Agreement, the Existing Credit Agreement and the Senior Notes, we are subject to certain financial covenants, including, among others, interest coverage, minimum consolidated EBITDA (earnings before income taxes and extraordinary items increased by interest expense, depreciation, goodwill and other amortization), limitations on the amount of annual capital expenditures and indebtedness, restrictions on distributions to our parent corporations and on incurring liens, restrictions on investments and other payments. Dividends and other restricted payments, except for demand loans of specified amounts, made to any parent corporation are prohibited in 2001 and are subject to limitations, as described in those agreements, in future periods. As of December 31, 2000, after giving effect to the most restrictive of the F-4 31 aforementioned restrictions, we could not have paid dividends or made other restricted payments, except for demand loans of $2 million. In addition, if a change of control as defined in the New Credit Agreement and the Existing Credit Agreement occurs, those agreements could be terminated and the loans under those agreements accelerated by the holders of that indebtedness. If that event occurred, it would cause our outstanding Senior Notes to be accelerated. As of December 31, 2000, we were in compliance with all covenants under the New Credit Agreement, the Existing Credit Agreement and the Senior Notes. In connection with entering into the New Credit Agreement, we also issued a $7.0 million Precious Metal Note in order to finance precious metals used in certain of our manufacturing processes. The Existing Credit Agreement and the New Credit Agreement also provide that in the event we become the subject of any bankruptcy proceedings, the lenders will, subject to bankruptcy court approval, refinance and consolidate in full the indebtedness under the New Credit Agreement, the Existing Credit Agreement and the Other Indebtedness with a new debtor-in-possession facility. The terms and conditions of that debtor-in-possession facility would be substantially identical to the New Credit Agreement, the Existing Credit Agreement and the Other Indebtedness and would be in an aggregate amount equal to the then committed amount under the New Credit Agreement plus $110 million plus the principal amount of the Other Indebtedness. That facility would mature on August 18, 2004 and would be secured by a first-priority security interest in all of the Collateral. On July 5, 2000, we issued $35 million in aggregate principal amount at maturity of the 2003 Notes at 97.161% of the principal amount. We used the net proceeds from this issuance to repay the Term Loan and for general corporate purposes. In connection with entering into the New Credit Agreement, the maturity date of these notes was extended to September 2003. See Note 11 to Consolidated Financial Statements for further information regarding our debt instruments. At December 31, 2000, we had total outstanding consolidated indebtedness of $680.6 million, of which $5.9 million matures prior to December 31, 2001, and a stockholders' deficit of $77.9 million. We anticipate funding these obligations principally from our cash, operations and/or borrowings, which may include borrowings from affiliates. In March 1993, we sold our trade accounts receivable to a trust, without recourse, pursuant to an agreement which provided for a maximum of $75 million in cash to be made available to us based on eligible receivables outstanding from time to time. In November 1996, we repurchased the receivables sold pursuant to the 1993 agreement and sold them to a special purpose subsidiary of ours, BMCA Receivables Corporation, without recourse, which in turn sold them to a new trust, without recourse, pursuant to new agreements. The new agreements provide for a maximum of $115 million in cash to be made available to us based on eligible receivables outstanding from time to time. This facility expires in December 2001. We make loans to, and borrow from, G-I Holdings and its subsidiaries from time to time at prevailing market rates. As of December 31, 2000, no loans were owed to us by G-I Holdings and no loans were owed by us to affiliates. In addition, we make non-interest bearing advances to affiliates, of which no amounts were outstanding at December 31, 2000. See Note 15 to Consolidated Financial Statements. On January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to its asbestos-related bodily injury claims relating to the inhalation of asbestos fiber. See Item 3, "Legal Proceedings" for further information regarding asbestos-related matters. See Note 3 to Consolidated Financial Statements. Our parent corporations, G-I Holdings and BMCA Holdings Corporation, are essentially holding companies without independent businesses or operations. As a result, they are presently dependent upon the earnings and cash flows of their subsidiaries, principally our company, in order to satisfy their obligations, including various tax and other claims and liabilities including tax liabilities relating to Rhone-Poulenc Surfactants & Specialties, L.P., a Delaware limited partnership, in which G-I Holdings held an interest. We do not believe that the dependence of our parent corporations on the cash flows of their subsidiaries should F-5 32 have a material adverse effect on our operations, liquidity or capital resources. For further information, see Notes 3, 7, 11, 15 and 16 to Consolidated Financial Statements. We use capital resources to maintain existing facilities, expand our operations and make acquisitions. In 2000, we completed construction of a new fiberglass roofing mat manufacturing facility in Shafter, California and a new steep slope roofing shingle manufacturing facility in Michigan City, Indiana. We also have completed construction of a new manufacturing facility in Mount Vernon, Indiana for a single-ply low slope membrane roofing system. We commenced production at that facility in the first quarter of 2001. We expect to generate funding for our capital program from results of operations and leasing transactions. In response to current market conditions, to better service shifting customer demand and to reduce costs, we closed during 2000 four manufacturing facilities located in Monroe, Georgia; Port Arthur, Texas; Corvallis, Oregon; and Albuquerque, New Mexico. As market growth and customer demand improves, we may reinstate production at one or more of these manufacturing facilities in the future. The effect of closing these facilities was not material to our results of operations. We utilize interest rate swap agreements to lower funding costs, diversify sources of funding and manage interest rate exposure. In June 1998, we terminated our outstanding swaps related to a series of notes no longer outstanding with an aggregate ending notional principal amount of $60.0 million, resulting in gains of $0.7 million. The gains were deferred and amortized as a reduction of interest expense over the remaining original life of the swaps. By utilizing swaps, we reduced our interest expense by $1.9, $0.2 and $0 million in 1998, 1999 and 2000, respectively. See Note 11 to Consolidated Financial Statements. We do not believe that inflation has had an effect on our results of operations during the past three years. However, we cannot assure you that our business will not be affected by inflation in the future, or by the increase in cost of energy and asphalt purchases used in our manufacturing process principally due to rising oil prices and increased demand for asphalt by the paving industry. While 2000 net sales exceeded those of 1999, energy and asphalt cost increases, partially offset by price increases, had a negative impact on 2000 operating income. We expect that these energy and asphalt costs will continue to have an adverse impact on 2001 operating income as compared with the impact of these costs on operating income on a historical basis. Market-Sensitive Instruments and Risk Management During 2000 and in prior years, our investment strategy was to seek returns in excess of money market rates on our available cash while minimizing market risks. We invested primarily in international and domestic arbitrage and securities of companies involved in acquisition or reorganization transactions, including, at times, common stock short positions which were offset against long positions in securities which were expected, under certain circumstances, to be exchanged or converted into the short positions. With respect to our equity positions, we were exposed to the risk of market loss. See Note 2 to Consolidated Financial Statements. We are no longer permitted to engage in such activities under the terms of the Existing Credit Agreement and the New Credit Agreement. We also entered into financial instruments in the ordinary course of business in order to manage our exposure to market fluctuations on our short-term investments. The financial instruments we employed to reduce market risk included hedging instruments. The counterparties to these financial instruments were major financial institutions with high credit standings. The amounts subject to credit risk were generally limited to the amounts, if any, by which the counterparties' obligations exceeded our obligations. We controlled credit risk through credit approvals, limits and monitoring procedures.
DECEMBER 31, 1999 DECEMBER 31, 2000 ----------------- ----------------- NOTIONAL FAIR NOTIONAL FAIR AMOUNT VALUE AMOUNT VALUE -------- ----- -------- ----- (IN MILLIONS) Equity-related financial instruments...................... $0.9 $0.0 $0.0 $0.0
All of the financial instruments in the above table had a maturity of less than one year. Under the terms of the Existing Credit Agreement and the New Credit Agreement, we are only permitted to enter into hedging F-6 33 arrangements that protect against or mitigate the effect of fluctuations in interest rates, foreign exchange rates or prices of commodities used in our business. * * * FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act and section 21E of the Securities Exchange Act of 1934. These forward-looking statements are only predictions and generally can be identified by use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee" or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. Our operations are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. The forward-looking statements included herein are made only as of the date of this Annual Report on Form 10-K and we undertake no obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances. We cannot assure you that projected results or events will be achieved. F-7 34 BUILDING MATERIALS CORPORATION OF AMERICA SELECTED FINANCIAL DATA The following table presents the selected consolidated financial data of the Company. As of January 1, 1997, G-I Holdings contributed all of the capital stock of U.S. Intec, Inc. ("U.S. Intec") to BMCA. Accordingly, the Company's historical consolidated financial statements include U.S. Intec's results of operations from the date of its acquisition by G-I Holdings (October 20, 1995), including net sales of $99.0 million and net income of $1.3 million for the year ended December 31, 1996. The results for the year ended December 31, 1997 include the results of the Leatherback Industries business from the date of its acquisition (March 14, 1997), including net sales of $30.2 million. The results for the year ended December 31, 1998 include the results of the LL Building Products Inc. business from the date of its acquisition (June 1, 1998), including net sales of $53.3 million, and the results for the year ended December 31, 2000 include the results of the LL Building Products Inc. security products business, certain assets of which were sold in September 2000, including net sales of $22.9 million.
YEAR ENDED DECEMBER 31, ------------------------------------------------ 1996 1997 1998 1999 2000 ------ ------ -------- -------- -------- (MILLIONS) OPERATING DATA: Net sales................................... $852.0 $944.6 $1,088.0 $1,140.0 $1,207.8 Operating income............................ 61.4 73.2 47.5* 83.1* 63.9* Interest expense............................ 32.0 43.0 50.0 48.3 53.5 Income (loss) before income taxes and extraordinary losses..................... 27.9 45.7 13.5 40.2 (17.2) Income (loss) before extraordinary losses... 17.1 27.8 8.4 25.3 (10.8) Net income (loss)........................... 17.1 27.8 (9.8) 24.0 (11.2)
- --------------- * After non-recurring charges of $27.6 and $2.7 million in 1998 and 1999, respectively, and a one-time charge of $15.0 million and a gain on sale of assets of $17.5 million in 2000.
DECEMBER 31, ------------------------------------------------ 1996 1997 1998 1999 2000 ------ ------ -------- -------- -------- (MILLIONS) BALANCE SHEET DATA: Total working capital....................... $247.3 $283.1 $ 220.1 $ 109.9 $ 129.9 Total assets................................ 702.0 829.7 867.0 895.1 771.2 Long-term debt less current maturities...... 405.7 563.9 596.9 600.7 674.7 Total stockholders' equity (deficit)........ 143.2 89.5 52.2 21.7 (77.9)
YEAR ENDED DECEMBER 31, ------------------------------------------------ 1996 1997 1998 1999 2000 ------ ------ -------- -------- -------- (MILLIONS) OTHER DATA: Depreciation................................ $ 23.9 $ 25.0 $ 28.9 $ 33.0 $ 36.4 Goodwill amortization....................... 1.7 1.9 2.1 2.0 2.0 Capital expenditures and acquisitions....... 25.6 82.2 134.5 45.8 61.5
F-8 35 BUILDING MATERIALS CORPORATION OF AMERICA REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Building Materials Corporation of America: We have audited the accompanying consolidated balance sheets of Building Materials Corporation of America (a Delaware corporation and 99.9% owned subsidiary of BMCA Holdings Corporation) and subsidiaries as of December 31, 1999 and 2000, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2000. These financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above, appearing on pages F-10 to F-43 of this Form 10-K, present fairly, in all material respects, the financial position of Building Materials Corporation of America and subsidiaries as of December 31, 1999 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule appearing on page S-1 of this Form 10-K is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Roseland, New Jersey February 28, 2001 (except with respect to the matter discussed in Note 3, as to which the date is March 21, 2001) F-9 36 BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, --------------------------------------- 1998 1999 2000 ---------- ----------- ---------- (THOUSANDS) Net sales.............................................. $1,087,957 $1,140,039 $1,207,759 ---------- ---------- ---------- Costs and expenses: Cost of products sold................................ 774,339 812,697 893,776 Selling, general and administrative.................. 236,416 239,560 250,542 Goodwill amortization................................ 2,111 2,034 2,024 Gain on sale of assets............................... -- -- (17,505) Warranty reserve adjustment.......................... -- -- 15,000 Nonrecurring charges................................. 27,563 2,650 -- ---------- ---------- ---------- Total costs and expenses.......................... 1,040,429 1,056,941 1,143,837 ---------- ---------- ---------- Operating income....................................... 47,528 83,098 63,922 Interest expense....................................... (49,954) (48,317) (53,468) Other income (expense), net............................ 15,895 5,440 (27,640) ---------- ---------- ---------- Income (loss) before income taxes and extraordinary losses............................................... 13,469 40,221 (17,186) Income tax (provision) benefit......................... (5,118) (14,882) 6,359 ---------- ---------- ---------- Income (loss) before extraordinary losses.............. 8,351 25,339 (10,827) Extraordinary losses, net of income tax benefits of $11,101, $761, and $194, respectively................ (18,113) (1,296) (330) ---------- ---------- ---------- Net income (loss)...................................... $ (9,762) $ 24,043 $ (11,157) ========== ========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. F-10 37 BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED BALANCE SHEETS
DECEMBER 31, -------------------- 1999 2000 -------- -------- (THOUSANDS) ASSETS Current Assets: Cash and cash equivalents................................. $ 55,952 $ 82,747 Investments in trading securities......................... 687 -- Investments in available-for-sale securities.............. 29,702 -- Other short-term investments.............................. 1,590 -- Accounts receivable, trade, less reserve of $4,019 and $1,798, respectively.................................... 22,938 19,474 Accounts receivable, other................................ 62,892 51,843 Receivable from parent corporations....................... 59,132 -- Tax receivable from parent corporations................... -- 1,500 Inventories............................................... 108,615 101,702 Other current assets...................................... 4,239 3,925 -------- -------- Total Current Assets.................................... 345,747 261,191 Property, plant and equipment, net.......................... 410,703 362,464 Excess of cost over net assets of businesses acquired, net of accumulated amortization of $12,925 and $14,346, respectively.............................................. 70,408 65,317 Deferred income tax benefits................................ 45,561 42,897 Tax receivable from parent corporations..................... -- 7,500 Other assets................................................ 22,693 31,800 -------- -------- Total Assets................................................ $895,112 $771,169 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Current maturities of long-term debt...................... $ 6,149 $ 5,908 Accounts payable.......................................... 84,334 57,520 Payable to related parties................................ 15,024 10,052 Accrued liabilities....................................... 115,828 42,888 Reserve for product warranty claims....................... 14,500 14,900 -------- -------- Total Current Liabilities............................... 235,835 131,268 -------- -------- Long-term debt less current maturities...................... 600,745 674,698 -------- -------- Reserve for product warranty claims......................... 19,814 28,756 -------- -------- Other liabilities........................................... 17,029 14,312 -------- -------- Commitments and Contingencies............................... Stockholders' Equity (Deficit): Series A Cumulative Redeemable Convertible Preferred Stock, $.01 par value per share; 400,000 shares authorized; no shares issued............................ -- -- Class A Common Stock, $.001 par value per share; 1,300,000 shares authorized: 1,019,621 and 1,015,514 shares issued and outstanding, respectively........................... 1 1 Class B Common Stock, $.001 par value per share; 100,000 shares authorized; 15,000 shares issued and outstanding Additional paid-in capital................................ 40,632 -- Accumulated deficit....................................... -- (77,866) Accumulated other comprehensive loss...................... (18,944) -- -------- -------- Total Stockholders' Equity (Deficit).................... 21,689 (77,865) -------- -------- Total Liabilities and Stockholders' Equity (Deficit)........ $895,112 $771,169 ======== ========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. F-11 38 BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, ----------------------------------- 1998 1999 2000 --------- --------- --------- (THOUSANDS) Cash and cash equivalents, beginning of year................ $ 12,924 $ 24,989 $ 55,952 --------- --------- --------- Cash provided by (used in) operating activities: Net income (loss)......................................... (9,762) 24,043 (11,157) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Extraordinary losses.................................... 18,113 1,296 330 Gain on sale of assets.................................. -- -- (17,505) Depreciation............................................ 28,935 32,986 36,350 Goodwill and other amortization......................... 2,312 2,675 2,866 Deferred income taxes................................... 4,538 14,132 (7,475) Noncash interest charges................................ 23,877 3,321 2,648 Increase in working capital items......................... (15,962) (26,200) (19,791) Increase (decrease) in reserve for product warranty claims.................................................. 11,651 (14,318) 9,342 Purchases of trading securities........................... (189,197) (139,522) (980) Proceeds from sales of trading securities................. 124,931 243,097 2,172 (Increase) decrease in other assets....................... 282 (4,501) 1,264 Increase (decrease) in other liabilities.................. 3,267 (2,335) (2,676) Change in net receivable from/payable to related parties/parent corporations............................. 42,635 (48,793) 45,160 Other, net................................................ 11,272 (3,404) 517 --------- --------- --------- Net cash provided by operating activities................... 56,892 82,477 41,065 --------- --------- --------- Cash provided by (used in) investing activities: Capital expenditures...................................... (75,334) (45,322) (61,543) Acquisitions.............................................. (59,187) (515) -- Proceeds from sale of assets.............................. 29,019 -- 31,702 Purchases of available-for-sale securities................ (89,324) (76,048) (882) Purchases of held-to-maturity securities.................. (6,357) (2,349) -- Proceeds from sales of available-for-sale securities...... 170,055 97,400 58,284 Proceeds from held-to-maturity securities................. 499 7,758 -- Proceeds from sales of other short-term investments....... -- 21,421 1,590 --------- --------- --------- Net cash provided by (used in) investing activities......... (30,629) 2,345 29,151 --------- --------- --------- Cash provided by (used in) financing activities: Proceeds from sale of accounts receivable................. 30,578 5,640 925 Decrease in short-term debt............................... (26,944) -- -- Decrease in loan receivable from parent corporations...... 6,152 -- -- Proceeds from issuance of long-term debt.................. 304,019 37,943 41,046 Increase (decrease) in borrowings under revolving credit facility................................................ (34,000) -- 70,000 Repayments of long-term debt.............................. (287,904) (35,954) (38,056) Distributions to parent corporations...................... -- (60,000) (106,161) Net issuance (repurchase) of common stock................. -- 870 (1,180) Financing fees and expenses............................... (6,099) (2,358) (9,995) --------- --------- --------- Net cash used in financing activities....................... (14,198) (53,859) (43,421) --------- --------- --------- Net change in cash and cash equivalents..................... 12,065 30,963 26,795 --------- --------- --------- Cash and cash equivalents, end of year...................... $ 24,989 $ 55,952 $ 82,747 ========= ========= =========
F-12 39 BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
YEAR ENDED DECEMBER 31, ----------------------------------- 1998 1999 2000 --------- --------- --------- (THOUSANDS) Supplemental Cash Flow Information: Effect on cash from (increase) decrease in working capital items*: Accounts receivable..................................... $ (40,467) $ (11,309) $ 13,140 Inventories............................................. (10,707) (14,912) 3,292 Other current assets.................................... 2,032 1,423 (653) Accounts payable........................................ 10,062 9,917 (26,814) Accrued liabilities..................................... 23,118 (11,319) (8,756) --------- --------- --------- Net effect on cash from increase in working capital items................................................. $ (15,962) $ (26,200) $ (19,791) ========= ========= ========= Cash paid during the period for: Interest (net of amount capitalized)...................... $ 19,994 $ 44,109 $ 49,105 Income taxes (including taxes paid pursuant to the Tax Sharing Agreement)...................................... 1,174 1,250 10,121 Acquisition of LL Building Products Inc. business: Fair market value of assets acquired...................... $ 59,318 Purchase price of acquisition............................. 43,468 --------- Liabilities assumed....................................... $ 15,850 =========
- --------------- * Working capital items exclude cash and cash equivalents, short-term investments, short-term debt and net receivable from/payable to related parties/parent corporations. Working capital acquired in connection with acquisitions is reflected in "Acquisitions". The effects of reclassifications between noncurrent and current assets and liabilities are excluded from the amounts shown above. In addition, the increase in receivables shown above does not reflect the cash proceeds from the sale of certain of the Company's receivables (see Note 8); such proceeds are reflected in cash from financing activities. See Note 1 for a description of the non-cash contribution of certain assets, including the glass fiber manufacturing facility located in Nashville, Tennessee, and certain related liabilities. See Notes 5 and 15 for a description of non-cash capital contributions and distributions. See Note 10 for a description of non-cash leasing transactions. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. F-13 40 BUILDING MATERIALS CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
ACCUMULATED CAPITAL STOCK OTHER AND ADDITIONAL COMPREHENSIVE ACCUMULATED COMPREHENSIVE PAID-IN CAPITAL INCOME (LOSS) DEFICIT INCOME (LOSS) --------------- ------------- ----------- ------------- (THOUSANDS) Balance, December 31, 1997.................................. $ 91,700 $ 10,171 $(12,327) Comprehensive loss -- year ended December 31, 1998: Net loss................................................ -- -- (9,762) $ (9,762) -------- Other comprehensive income, net of tax: Unrealized holding losses arising during the period, net of income tax benefit of $10,409...................... -- (16,504) -- (16,504) Less: Reclassification adjustment for gains included in net loss, net of income tax effect of $7,064.......... -- 11,526 -- 11,526 -------- -------- Change in unrealized losses on available-for-sale securities............................................ -- (28,030) -- (28,030) Minimum pension liability adjustment.................... -- (2,025) -- (2,025) -------- Comprehensive loss........................................ $(39,817) ======== Issuance of 30,000 shares of restricted common stock...... 2,490 -- -- -------- -------- -------- Balance, December 31, 1998.................................. $ 94,190 $(19,884) $(22,089) Comprehensive income -- year ended December 31, 1999: Net income.............................................. -- -- 24,043 $ 24,043 -------- Other comprehensive income, net of tax: Unrealized holding gains arising during the period, net of income taxes of $1,270............................. -- 1,424 -- 1,424 Less: Reclassification adjustment for gains included in net income, net of income tax effect of $1,227........ -- 2,089 -- 2,089 -------- -------- Change in unrealized losses on available-for-sale securities............................................ (665) (665) Minimum pension liability adjustment.................... -- 1,605 -- 1,605 -------- Comprehensive income...................................... $ 24,983 ======== Distributions to parent corporations...................... (58,046) -- (1,954) Capital contributions..................................... 3,619 -- -- Exercise of stock options................................. 870 -- -- -------- -------- -------- Balance, December 31, 1999.................................. $ 40,633 $(18,944) $ -- Comprehensive income -- year ended December 31, 2000: Net loss................................................ -- -- (11,157) $(11,157) -------- Other comprehensive income, net of tax: Unrealized holding gains arising during the period, net of income taxes of $3,577............................. -- 6,091 -- 6,091 Less: Reclassification adjustment for losses included in net loss, net of income tax effect of $6,755.......... -- (11,502) -- (11,502) -------- -------- Change in unrealized losses on available-for-sale securities............................................ -- 17,593 -- 17,593 Minimum pension liability adjustment.................... -- 1,351 -- 1,351 -------- Comprehensive income...................................... $ 7,787 ======== Distributions to parent corporations...................... (39,452) -- (66,709) Net repurchase of common stock............................ (1,180) -- -- -------- -------- -------- Balance, December 31, 2000.................................. $ 1 $ -- $(77,866) ======== ======== ========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. F-14 41 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Building Materials Corporation of America (the "Company") was formed on January 31, 1994 and is a 99.9%-owned subsidiary of BMCA Holdings Corporation ("BHC"), which, as of December 31, 2000, was a 98.5%-owned subsidiary of G-I Holdings Inc. To facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of the Company, merged into its direct subsidiary, G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation (formerly known as GAF Fiberglass Corporation) merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now the parent of the Company and of the Company's direct parent, BHC. References below to "G-I Holdings" mean G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation. NOTE 1. FORMATION OF THE COMPANY The Company is a leading national manufacturer of a broad line of asphalt roofing products and accessories for the steep slope and low slope roofing markets. The Company also manufactures and markets specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. See Note 14. Effective as of January 31, 1994, G-I Holdings transferred to the Company all of its business and assets, other than three closed manufacturing facilities, certain deferred tax assets and receivables from affiliates. The Company recorded the assets and liabilities related to such transfer at G-I Holdings' historical costs. The Company contractually assumed all of G-I Holdings' liabilities, except (i) all of G-I Holdings' environmental liabilities, other than environmental liabilities relating to the Company's plant sites and its business as then-conducted, (ii) all of G-I Holdings' tax liabilities, other than tax liabilities arising from the operations or business of the Company and (iii) all of G-I Holdings' asbestos-related liabilities, other than the first $204.4 million of such liabilities (whether for indemnity or defense) relating to then-pending asbestos-related bodily injury cases and previously settled asbestos-related bodily injury cases which the Company contractually assumed and agreed to pay. G-I Holdings has agreed to indemnify the Company from liabilities not assumed by the Company, including asbestos-related and environmental liabilities not expressly assumed by the Company. See Note 3. Effective August 18, 1999, G-I Holdings, in a series of transactions, contributed certain assets, including the Company's glass fiber manufacturing facility in Nashville, Tennessee (the "Nashville facility"), and certain related liabilities to the Company. Accordingly, the Company's historical consolidated financial statements for 1998 have been restated to include the results of operations, cash flows and assets and liabilities of the Nashville facility. For financial reporting purposes, the contribution of the Nashville facility was recorded by the Company at the historical cost of $9.3 million. The increase in net income resulting from the contribution of the Nashville facility for the year ended December 31, 1998 was $0.8 million. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation All subsidiaries are consolidated and intercompany transactions have been eliminated. Financial Statement Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates. Actual results could differ from those estimates. In the F-15 42 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) opinion of management, the financial statements herein contain all adjustments necessary to present fairly the financial position and the results of operations and cash flows of the Company for the periods presented. The Company has a policy to review the recoverability of long-lived assets and identify and measure any potential impairments. The Company does not anticipate any changes in management estimates that would have a material impact on operations, liquidity or capital resources, subject to the matters discussed in Note 16. Cash and Cash Equivalents Cash and cash equivalents include cash on deposit and certain debt securities purchased with original maturities of three months or less. Short-term Investments For securities classified as "trading" (including short positions), unrealized gains and losses are reflected in income. For securities classified as "available-for-sale," unrealized gains and losses, net of income tax effect, are included in a separate component of stockholders' equity, "Accumulated other comprehensive loss," and were $(17.6) and $0 million as of December 31, 1999 and 2000, respectively. "Other income (expense), net" includes $21.5, $12.8 and $(18.1) million of net realized and unrealized gains (losses) on securities in 1998, 1999 and 2000, respectively. The determination of cost in computing realized and unrealized gains and losses is based on the specific identification method. As of December 31, 1999, the market value of the Company's equity securities held long was $30.5 million, and the Company had $1.5 million of short positions in common stocks, based on market value. As of December 31, 1999, the market value of equity-related long contracts was $0.9 million which have been marked-to-market each month, with unrealized gains and losses included in results of operations. The market values referred to above are based on quotations as reported by various stock exchanges and major broker-dealers. As of December 31, 1999, "other short-term investments" were investments in limited partnerships which were accounted for by the equity method. Gains and losses were reflected in "Other income (expense), net." Under the Company's new $100 million secured credit facility (the "New Credit Agreement") and the Company's amended and restated existing $110 million secured credit facility (the "Existing Credit Agreement") (see Note 11), the Company is limited to entering into hedging arrangements that protect against or mitigate the effect of fluctuations in interest rates, foreign exchange rates or prices of commodities used in the Company's business. Inventories Inventories are stated at the lower of cost or market. The LIFO (last-in, first-out) method is utilized to determine cost for a portion of the Company's inventories. All other inventories are determined principally based on the FIFO (first-in, first-out) method. Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is computed principally on the straight-line method based on the estimated economic lives of the assets. The Company uses an economic life of 5 to 25 years for land improvements, 10 to 40 years for buildings and building equipment F-16 43 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) and 3 to 20 years for machinery and equipment, which includes furniture and fixtures. Certain interest charges are capitalized during the period of construction as part of the cost of property, plant and equipment. Excess of Cost Over Net Assets of Businesses Acquired ("Goodwill") Goodwill is amortized on the straight-line method over a period of approximately 40 years. The Company believes that the goodwill is recoverable. To determine if goodwill is recoverable, the Company compares the net carrying amount to undiscounted projected cash flows of the underlying businesses to which the goodwill pertains. If goodwill is not recoverable, the Company would record an impairment based on the difference between the net carrying amount and fair value. Debt Issuance Costs Debt issuance costs are amortized to expense over the life of the related debt. Software Development Costs Included in other assets at December 31, 1999 and 2000 were $3.3 and $6.8 million, respectively, of capitalized purchased software development costs. Such costs are amortized over a 5 year period. For 1998, 1999 and 2000, the Company amortized $0.2, $0.6 and $0.8 million, respectively, related to such costs. Revenue Recognition Revenue is recognized at the time products are shipped to the customer. Shipping and Handling Costs Shipping and handling costs are included in "Selling, general and administrative" expenses and amounted to $76.3, $79.1 and $84.6 million in 1998, 1999 and 2000, respectively. Interest Rate Swaps Gains (losses) on interest rate swap agreements ("swaps") are deferred and amortized as a reduction (increase) of interest expense over the shorter of the remaining life of the swaps or the remaining period to maturity of the debt issue with respect to which the swaps were entered. Research and Development Research and development expenses are charged to operations as incurred and were $6.0, $6.5 and $5.9 million in 1998, 1999 and 2000, respectively. Warranty Claims The Company provides certain limited warranties covering most of its steep slope roofing products for periods generally ranging from 20 to 40 years, with lifetime limited warranties on certain specialty shingle products. The Company also offers certain limited warranties and guarantees of varying duration covering most of its low slope roofing products and limited warranties covering most of its specialty building products and accessories for periods ranging from 5 to 10 years. Income from warranty contracts related to low slope roofing products is recognized over the life of the agreements. The Company believes that the reserves established for estimated probable future warranty claims are adequate. F-17 44 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) The Company recorded a $15.0 million warranty reserve adjustment in the fourth quarter of 2000 based on an evaluation of claims activity for 2000. As this adjustment was recorded for a specific alleged product defect relating to prior production processes, it has been separately presented in the Consolidated Statements of Operations. Environmental Liability The Company, together with other companies, is a party to a variety of proceedings and lawsuits involving environmental matters. The Company estimates that its liability in respect of such environmental matters, and certain other environmental compliance expenses, as of December 31, 2000, is $1.3 million, before reduction for insurance recoveries reflected on its balance sheet of $0.8 million. The Company's liability is reflected on an undiscounted basis. See Item 3, "Legal Proceedings -- Environmental Litigation," which is incorporated herein by reference, for further discussion with respect to environmental liabilities and estimated insurance recoveries. Accumulated Other Comprehensive Income (Loss) Comprehensive income and its components in annual and interim financial statements include net income, unrealized gains and losses from investments in available-for-sale securities, net of income tax effect, and minimum pension liability adjustments. The Company has chosen to disclose comprehensive income in the Consolidated Statements of Stockholders' Equity (Deficit). Changes in the components of "Accumulated other comprehensive income (loss)" for the years 1998, 1999 and 2000 are as follows:
UNREALIZED GAINS (LOSSES) ON MINIMUM ACCUMULATED AVAILABLE-FOR-SALE PENSION LIABILITY OTHER COMPREHENSIVE SECURITIES ADJUSTMENT INCOME (LOSS) -------------------- ----------------- ------------------- (THOUSANDS) Balance, December 31, 1997............ $ 11,102 $ (931) $ 10,171 Change for the year 1998.............. (28,030) (2,025) (30,055) -------- ------- -------- Balance, December 31, 1998............ $(16,928) $(2,956) $(19,884) Change for the year 1999.............. (665) 1,605 940 -------- ------- -------- Balance, December 31, 1999............ $(17,593) $(1,351) $(18,944) Change for the year 2000.............. 17,593 1,351 18,944 -------- ------- -------- Balance, December 31, 2000............ $ -- $ -- $ -- ======== ======= ========
New Accounting Standard In 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No. 137 and 138, is effective for fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company adopted SFAS No. 133 on January 1, 2001. The impact of the initial adoption of SFAS No. 133 by the Company will not be material to the Company's results of operations or financial position. F-18 45 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Reclassifications Certain reclassifications have been made to conform to current year presentation. NOTE 3. RESERVE FOR ASBESTOS-RELATED BODILY INJURY CLAIMS In connection with its formation, the Company contractually assumed and agreed to pay the first $204.4 million of liabilities for asbestos-related bodily injury claims relating to the inhalation of asbestos fiber ("Asbestos Claims") of its parent, G-I Holdings. As of March 30, 1997, the Company had paid all of its assumed asbestos-related liabilities. See Note 1. G-I Holdings has agreed to indemnify the Company against any other existing or future claims related to asbestos-related liabilities if asserted against the Company. In January 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to its Asbestos Claims. This proceeding is in a preliminary stage. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy these indemnification obligations to the Company. Claimants in the G-I Holdings bankruptcy, including judgment creditors, might seek to satisfy their claims by asking the bankruptcy court to require the sale of G-I Holdings' assets, including its holdings of BHC's common stock and its indirect holdings of the Company's common stock. Such action could result in a change of control of the Company. See Notes 11 and 16. In addition, those claimants may seek to file Asbestos Claims against the Company (with 2,147 Asbestos Claims having been filed against the Company as of December 31, 2000). The Company believes that it will not sustain any liability in connection with these or any other asbestos-related claims. Furthermore, on February 2, 2001, the United States Bankruptcy Court for the District of New Jersey issued a temporary restraining order enjoining any existing or future claimant from bringing Asbestos Claims against the Company. The temporary restraining order expires on April 6, 2001. The Company is seeking to have this order renewed past this date. On February 7, 2001, G-I Holdings filed a defendant class action in the United States Bankruptcy Court for the District of New Jersey seeking a declaratory judgment that the Company has no successor liability for Asbestos Claims against G-I Holdings and that it is not the alter ego of G-I Holdings. This action is in a preliminary stage and no trial date has been set by the court. As a result, it is not possible to predict the outcome of this litigation. While the Company cannot predict whether any additional Asbestos Claims will be asserted against it, or the outcome of any litigation relating to those claims, the Company believes that it has meritorious defenses to any claim that it has asbestos-related liability, although there can be no assurances in this regard. In addition, G-I Holdings has indemnified the Company with respect to Asbestos Claims. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy these indemnification obligations to the Company. On February 8, 2001, a creditors committee established in G-I Holdings' bankruptcy case filed a complaint in the United States Bankruptcy Court for the District of New Jersey against G-I Holdings and the Company. The complaint requests substantive consolidation of the Company with G-I Holdings or an order directing G-I Holdings to cause the Company to file for bankruptcy protection. The Company and G-I Holdings intend to vigorously defend the lawsuit. The Company believes that no basis exists for the court to grant the relief requested. The plaintiffs also filed for interim relief absent the granting of their requested relief described above. On February 21, 2001, G-I Holdings moved to dismiss the complaint. On March 21, 2001, the bankruptcy court refused to grant the requested interim relief. For a further discussion with respect to the history of the foregoing litigation and asbestos-related matters, see Item 3, "Legal Proceedings," which is incorporated herein by reference, and Notes 11 and 16. F-19 46 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 4. ACQUISITIONS AND DISPOSITIONS Effective June 1, 1998, the Company purchased for approximately $43.5 million substantially all of the assets of Leslie-Locke Inc. ("LL Building Products Inc."), a wholly-owned subsidiary of Leslie Building Products Inc., which manufactured and marketed a variety of specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries from manufacturing facilities in Burgaw, North Carolina and Compton, California. The acquisition was accounted for under the purchase method of accounting. Accordingly, the purchase price was allocated to the estimated fair values of the identifiable net assets acquired, and the excess was recorded as goodwill. The results of the LL Building Products Inc. business, including net sales of $53.3 million for 1998, are included from the date of acquisition. The net effects of this acquisition were not material to 1998 results of operations. Effective December 1, 1998, the Company sold its perlite insulation manufacturing assets to Johns Manville Corporation for net cash proceeds of approximately $29.0 million. The pre-tax gain as a result of this sale was not significant to the Company's results of operations. In addition, as part of the transaction, Johns Manville and the Company entered into a long-term agreement to supply the Company with perlite insulation products, which will enable the Company to continue to serve its low slope roofing customers. As a result, the sale did not have a material impact on the Company's results of operations. On September 29, 2000, the Company sold certain manufacturing and other assets related to the Compton, California based security products business of LL Building Products Inc. for net cash proceeds of approximately $27.1 million, which resulted in a pre-tax gain of $17.5 million. The security products business did not have a material impact on the Company's results of operations. NOTE 5. NONRECURRING CHARGES The Company recorded pre-tax nonrecurring charges in the third quarter of 1998 aggregating $27.6 million, of which $20.0 million related to the settlement of a national class action lawsuit involving asphalt shingles manufactured between January 1, 1973 and December 31, 1997. Following a fairness hearing, the court granted final approval of the class-wide settlement in April 1999. Under the terms of the September 1998 settlement, the Company will provide property owners whose shingles were manufactured during this period and which suffer certain damages during the term of their original warranty period, and who file a qualifying claim, with an opportunity to receive certain limited benefits beyond those already provided in their existing warranty. Three of the four separate class actions that had been brought against G-I Holdings and stayed pending the outcome of the fairness hearing have been dismissed in light of the final approval of the settlement agreement described above, and the Company expects that the remaining action also will be dismissed. In July 1998, the Company recorded a pre-tax nonrecurring charge of $7.6 million related to a grant to its former President and Chief Executive Officer of 30,000 shares of restricted common stock of the Company (a portion of which such officer transferred to trusts for the benefit of his children) and related cash payments to be made over a period of time (substantially all of which was earned) in connection with the termination by an affiliate of preferred stock options and stock appreciation rights held by such officer. Of the $7.6 million charge, $2.5 million represented the value as of the date of grant of the 30,000 shares of restricted common stock, and $5.1 million represented the aggregate amount of the cash payments to which such officer was entitled (subject to certain future vesting requirements). The shares of restricted stock were subject to certain rights of the Company to purchase, and of such officer and the trusts to sell to the Company, such shares at Book Value (as defined). Effective June 30, 1999, such officer terminated his employment with the Company. For 1999 through the date of his termination, the net book value of the 30,000 shares of restricted common stock held by such officer appreciated $0.6 million. In connection with this termination, the Company's obligation to such officer to pay an aggregate of $3.0 million (representing the balance of the cash payments described above) was cancelled and was treated as an additional capital contribution. F-20 47 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 5. NONRECURRING CHARGES -- (CONTINUED) Effective September 30, 1999, the agreement between the Company and such former officer and the trusts relating to the restricted common stock was terminated. Such officer and the trusts contributed such stock to BHC in consideration for equity interests in BHC. As a result of this transaction, the $0.6 million appreciation in the net book value of the restricted common stock described above, was treated as an additional capital contribution. In connection with the settlement of a legal matter, the Company recorded a nonrecurring charge of $2.7 million in September 1999. Such amount includes legal expenses incurred to defend such action. NOTE 6. MANUFACTURING FACILITIES SHUTDOWN In response to current market conditions, to better service shifting customer demand and to reduce costs, the Company closed during 2000 four manufacturing facilities located in Monroe, Georgia; Port Arthur, Texas; Corvallis, Oregon; and Albuquerque, New Mexico. As of December 31, 2000, the net book value of the assets at these facilities was $31.2 million. As market growth and customer demand improves, the Company may reinstate production at one or more of these manufacturing facilities in the future. The effect of closing these facilities was not material to the Company's results of operations. NOTE 7. INCOME TAX (PROVISION) BENEFIT Income tax (provision) benefit, which has been computed on a separate return basis, consists of the following:
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1999 2000 ------- -------- ------- (THOUSANDS) Federal -- deferred.................................. $(4,513) $(13,682) $ 5,423 ------- -------- ------- State and local: Current............................................ (580) (750) (1,116) Deferred........................................... (25) (450) 2,052 ------- -------- ------- Total state and local........................... (605) (1,200) 936 ------- -------- ------- Income tax (provision) benefit....................... $(5,118) $(14,882) $ 6,359 ======= ======== =======
The differences between the income tax (provision) benefit computed by applying the statutory Federal income tax rate to pre-tax income and the income tax (provision) benefit reflected in the Consolidated Statements of Operations are as follows:
YEAR ENDED DECEMBER 31, ----------------------------- 1998 1999 2000 ------- -------- ------ (THOUSANDS) Statutory (provision) benefit......................... $(4,714) $(14,077) $6,015 Impact of: State and local taxes, net of Federal benefits...... (393) (780) 608 Nondeductible goodwill amortization................. (641) (275) (185) Other, net.......................................... 630 250 (79) ------- -------- ------ Income tax (provision) benefit........................ $(5,118) $(14,882) $6,359 ======= ======== ======
F-21 48 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. INCOME TAX (PROVISION) BENEFIT -- (CONTINUED) The components of the net deferred tax assets are as follows:
DECEMBER 31, ------------------- 1999 2000 -------- ------- (THOUSANDS) Deferred tax liabilities related to property, plant and equipment................................................. $(15,475) $(9,449) -------- ------- Deferred tax assets related to: Expenses not yet deducted for tax purposes................ 43,335 42,154 Net operating losses not yet utilized under the Tax Sharing Agreement...................................... 17,701 10,192 -------- ------- Total deferred tax assets................................. 61,036 52,346 -------- ------- Net deferred tax assets..................................... $ 45,561 $42,897 ======== =======
As of December 31, 2000, the Company had $27.5 million of net operating loss carryforwards available to offset future taxable income, as follows:
YEAR OF EXPIRATION (THOUSANDS) - ---------- ----------- 2011................................................... $27,545 =======
Management has determined, based on the Company's history of prior earnings and its expectations for the future, that future taxable income will more likely than not be sufficient to utilize fully the deferred tax assets recorded. As of December 31, 2000, included in current assets is a tax receivable from parent corporations of $1.5 million and included in long-term assets is a tax receivable from parent corporations of $7.5 million representing amounts paid to G-I Holdings under the Tax Sharing Agreement (as defined below), as amended, which the Company will apply under the Tax Sharing Agreement against future tax sharing payments due G-I Holdings over the next two years based on current income estimates. The Company entered into a tax sharing agreement (the "Tax Sharing Agreement") dated January 31, 1994 with G-I Holdings with respect to the payment of federal income taxes and certain related matters. During the term of the Tax Sharing Agreement, which is effective for the period during which the Company or any of its domestic subsidiaries is included in a consolidated federal income tax return for the consolidated group that has included G-I Holdings as a member (the "G-I Holdings Group"), the Company is obligated to pay G-I Holdings an amount equal to those federal income taxes it would have incurred if the Company, on behalf of itself and its domestic subsidiaries, filed its own federal income tax return. Unused tax attributes will carry forward for use in reducing amounts payable by the Company to G-I Holdings in future years, but cannot be carried back. If the Company ever were to leave the G-I Holdings Group, it would be required to pay to G-I Holdings the value of any tax attributes to which it would succeed under the consolidated return regulations to the extent the tax attributes reduced the amounts otherwise payable by the Company under the Tax Sharing Agreement. Under certain circumstances, the provisions of the Tax Sharing Agreement could result in the Company having a greater liability under the agreement than it would have had if it and its domestic subsidiaries had filed its own separate federal income tax return. Under the Tax Sharing Agreement, the Company and each of its domestic subsidiaries are responsible for any taxes that would be payable by reason of any adjustment to the tax returns of G-I Holdings or its subsidiaries for years prior to the adoption of the Tax Sharing Agreement that relate to the Company's business or assets or the business or assets of any of its domestic subsidiaries. Although, as a member of the G-I Holdings Group, the Company is severally liable for certain federal income tax liabilities of the G-I Holdings Group, including tax liabilities not related to its business, G-I Holdings has agreed to indemnify the Company and its subsidiaries for all tax liabilities of the F-22 49 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. INCOME TAX (PROVISION) BENEFIT -- (CONTINUED) G-I Holdings Group other than tax liabilities arising from the Company's operations and the operations of its domestic subsidiaries and tax liabilities for tax years pre-dating the Tax Sharing Agreement that relate to the Company's business or assets and the business or assets of any of its domestic subsidiaries. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may be not have sufficient assets to satisfy these indemnification obligations. For the possible consequences of the failure of G-I Holdings to satisfy these indemnification obligations, see Note 3. The Tax Sharing Agreement provides for analogous principles to be applied to any consolidated, combined or unitary state or local income taxes. Under the Tax Sharing Agreement, G-I Holdings makes all decisions with respect to all matters relating to taxes of the G-I Holdings Group. The provisions of the Tax Sharing Agreement take into account both the federal income taxes the Company would have incurred if it filed its own separate federal income tax return and the fact that the Company is a member of the G-I Holdings Group for federal income tax purposes. On September 15, 1997, G-I Holdings received a notice from the Internal Revenue Service (the "IRS") of a deficiency in the amount of $84.4 million (after taking into account the use of net operating losses and foreign tax credits otherwise available for use in later years) in connection with the formation in 1990 of Rhone-Poulenc Surfactants and Specialties, L.P. (the "surfactants partnership"), a partnership in which G-I Holdings held an interest. The claim of the IRS for interest and penalties, after taking into account the effect on the use of net operating losses and foreign tax credits, could result in G-I Holdings incurring liabilities significantly in excess of the deferred tax liability of $131.4 million that it recorded in 1990 in connection with this matter. G-I Holdings has advised the Company that it believes that it will prevail in this matter, although there can be no assurance in this regard. The Company believes that the ultimate disposition of this matter will not have a material adverse effect on its business, financial position or results of operations. G-I Holdings has agreed to indemnify the Company against any tax liability associated with the surfactants partnership. In light of G-I Holdings' recent bankruptcy filing, G-I Holdings may not have sufficient assets to satisfy its indemnification obligation to the Company. For the possible consequences to the Company of the failure of G-I Holdings to satisfy this liability and other information relating to G-I Holdings, see Note 3. NOTE 8. SALE OF ACCOUNTS RECEIVABLE In March 1993, the Company sold its trade accounts receivable ("receivables") to a trust, without recourse, pursuant to an agreement which provided for a maximum of $75 million in cash to be made available to the Company based on eligible receivables outstanding from time to time. In November 1996, the Company entered into new agreements, pursuant to which it sold the receivables to a special purpose subsidiary of the Company, BMCA Receivables Corporation, without recourse, which in turn sold them to a new trust, without recourse. The new agreements provide for a maximum of $115 million in cash to be made available to the Company based on eligible receivables outstanding from time to time. This facility expires in December 2001. The excess of accounts receivable sold over the net proceeds received is included in "Accounts receivable, other." BMCA Receivables Corporation is not a guarantor under the Company's debt obligations. See Notes 11 and 17. The effective cost to the Company varies with LIBOR and is included in "Other income (expense), net" and amounted to $5.1, $5.5 and $6.9 million in 1998, 1999 and 2000, respectively. F-23 50 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 9. INVENTORIES At December 31, 1999 and 2000, $8.9 and $11.2 million, respectively, of inventories were valued using the LIFO method. Inventories consist of the following:
DECEMBER 31, -------------------- 1999 2000 -------- -------- (THOUSANDS) Finished goods......................................... $ 68,878 $ 61,606 Work-in process........................................ 13,974 16,938 Raw materials and supplies............................. 27,462 27,743 -------- -------- Total............................................. 110,314 106,287 Less LIFO reserve...................................... (1,699) (4,585) -------- -------- Inventories............................................ $108,615 $101,702 ======== ========
NOTE 10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following:
DECEMBER 31, ---------------------- 1999 2000 --------- --------- (THOUSANDS) Land and land improvements........................... $ 29,005 $ 32,603 Buildings and building equipment:.................... 67,220 75,299 Machinery and equipment.............................. 300,846 369,102 Construction in progress............................. 115,458 20,776 --------- --------- Total........................................... 512,529 497,780 Less accumulated depreciation and amortization....... (101,826) (135,316) --------- --------- Property, plant and equipment, net................... $ 410,703 $ 362,464 ========= =========
Included in the net book value of machinery and equipment at December 31, 1999 and 2000 was $10,508 and $8,863, respectively, for assets under capital leases. During 1999, in connection with the construction of two new manufacturing facilities, the Company entered into two leases for certain machinery and equipment, which leases meet the criteria of operating leases under SFAS No. 13 "Accounting for Leases." In connection therewith, at December 31, 1999, property, plant, and equipment, net, and accrued liabilities included $65.6 million of assets under such leases. Such amounts were reversed during 2000 when the manufacturing facilities became fully operational. These leases require quarterly rental payments and are for a ten-year period expiring in December 2009. F-24 51 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11. LONG-TERM DEBT Long-term debt consists of the following:
DECEMBER 31, -------------------- 1999 2000 -------- -------- (THOUSANDS) 10 1/2% Senior Notes due 2003.......................... $ -- $ 34,235 7 3/4% Senior Notes due 2005........................... 149,493 149,584 8 5/8% Senior Notes due 2006........................... 99,654 99,704 8% Senior Notes due 2007............................... 99,418 99,492 8% Senior Notes due 2008............................... 154,249 154,334 Borrowings under Existing Credit Agreement............. -- 70,000 Term Loan due 2004..................................... 31,850 -- Industrial revenue bonds with various interest rates and maturity dates to 2029........................... 23,125 23,060 Obligations on equipment loans......................... 2,225 28 Precious Metal Note due 2003........................... -- 7,002 Obligations under capital leases (Note 16)............. 43,787 39,966 Other notes payable.................................... 3,093 3,201 -------- -------- Total............................................. 606,894 680,606 Less current maturities................................ (6,149) (5,908) -------- -------- Long-term debt less current maturities................. $600,745 $674,698 ======== ========
On July 5, 2000, the Company issued $35 million in aggregate principal amount of 10 1/2% Senior Notes due 2002 at 97.161% of the principal amount, the maturity date of which was extended to September 2003 (the "2003 Notes") in connection with the Company entering into the New Credit Agreement in December 2000 (see below). The Company used the net proceeds from the issuance of the 2003 Notes to repay a $31.9 million bank term loan due 2004 (the "Term Loan") with the remaining net proceeds used for general corporate purposes. In connection with the extinguishment of such debt, unamortized deferred financing fees of approximately $0.3 million, net of tax, were written-off as an after-tax extraordinary loss. The net proceeds of the Term Loan had been used, in 1999, to purchase, and subsequently cancel, the remaining $29.9 million in aggregate principal amount of the Company's outstanding 11 3/4% Senior Deferred Coupon Notes due 2004 (the "Deferred Coupon Notes"). The redemption price was 105.875% of the principal amount outstanding, and the premium was recorded as an after-tax extraordinary loss, net of tax, of approximately $1.3 million. On December 3, 1998, the Company issued $155 million in aggregate principal amount of 8% Senior Notes due 2008 (the "2008 Notes"). The Company used substantially all of the net proceeds from such issuance to purchase, and subsequently cancel, $147.1 million in aggregate principal amount at maturity of the Company's Deferred Coupon Notes. In connection with this purchase, the Company recorded an after-tax extraordinary loss of $8.8 million. On July 17, 1998, the Company issued $150 million in aggregate principal amount of 7 3/4% Senior Notes due 2005 (the "2005 Notes"). The Company used substantially all of the net proceeds from such issuance to purchase, and subsequently cancel, $132.6 million in aggregate principal amount at maturity of the Company's Deferred Coupon Notes. In connection with this purchase, the Company recorded an after-tax extraordinary loss of $9.3 million. F-25 52 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11. LONG-TERM DEBT -- (CONTINUED) In October 1997, the Company issued $100 million in aggregate principal amount of 8% Senior Notes due 2007 (the "2007 Notes"). In December 1996, the Company issued $100 million in aggregate principal amount of 8 5/8% Senior Notes due 2006 (the "2006 Notes"). Holders of the 2003 Notes, the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes (collectively, the "Senior Notes") have the right under the indentures governing such notes to require the Company to purchase the 2003 Notes, the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes at a price of 101% of the principal amount thereof, and the Company has the right to redeem the Senior Notes at a price of 101% of the principal amount thereof, plus, in each case, the Applicable Premium (as defined therein), together with any accrued and unpaid interest, in the event of a Change of Control (as defined therein). In August 1999, the Company entered into the Existing Credit Agreement. In December 2000, the Existing Credit Agreement was amended to extend its maturity until August 2003. The terms of the Existing Credit Agreement provide for a $110 million secured revolving credit facility, the full amount of which is available for letters of credit, provided that total borrowings and outstanding letters of credit may not exceed $110 million in the aggregate. The Existing Credit Agreement bears interest at a floating rate (9.39% on December 31, 2000) based on the lenders' base rate, the federal funds rate or the Eurodollar rate. As of December 31, 2000, $70 million of borrowings and $38.8 million of letters of credit were outstanding under the Existing Credit Agreement. In December 2000, the Company entered into a the New Credit Agreement, which is to be used for working capital purposes subject to certain restrictions. The New Credit Agreement matures in August 2003 and bears interest at rates similar to the Existing Credit Agreement. As of December 31, 2000, there were no outstanding borrowings or letters of credit under the New Credit Agreement. Obligations under the Existing Credit Agreement and the New Credit Agreement, as well as obligations under the Precious Metal Note (defined below) and approximately $3.5 million of obligations under a standby letter of credit (collectively, the "Other Indebtedness"), aggregating $77.0 million of borrowings and $42.3 million of letters of credit outstanding at December 31, 2000, are secured by a first-priority lien on substantially all of the Company's assets and the assets of its subsidiaries (collectively, the "Collateral") on a pro rata basis. The Senior Notes are secured by a second-priority lien on the Collateral for so long as the first-priority lien remains in effect, subject to certain limited exceptions. Under the terms of the New Credit Agreement, the Existing Credit Agreement and the Senior Notes, the Company is subject to certain financial covenants, including, among others, interest coverage, minimum consolidated EBITDA (earnings before income taxes and extraordinary items increased by interest expenses, depreciation, goodwill and other amortization), limitations on the amount of annual capital expenditures and indebtedness, restrictions on distributions to the Company's parent corporations and on incurring liens, restrictions on investments and other payments. Dividends and other restricted payments, except for demand loans of specified amounts, made to any parent corporation are prohibited in 2001 and are subject to limitations, as described in those agreements, in future periods. As of December 31, 2000, after giving effect to the most restrictive of the aforementioned restrictions, the Company could not have paid dividends or made other restricted payments, except for demand loans of $2 million. In addition, if a change of control as defined in the New Credit Agreement and the Existing Credit Agreement occurs, those agreements could be terminated and the loans thereunder accelerated by the holders of that indebtedness, an event that would cause the Company's outstanding Senior Notes to be accelerated. As of December 31, 2000, the Company was in compliance with all covenants under the New Credit Agreement, the Existing Credit Agreement and the Senior Notes. In connection with entering into the New Credit Agreement, the Company issued a $7.0 million note (the "Precious Metal Note") due August 2003 to finance precious metals used in certain of the Company's manufacturing processes. F-26 53 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11. LONG-TERM DEBT -- (CONTINUED) The Existing Credit Agreement and the New Credit Agreement also provide that in the event the Company shall become the subject of any bankruptcy proceedings, the lenders will, subject to bankruptcy court approval, refinance and consolidate in full the indebtedness under the New Credit Agreement, the Existing Credit Agreement and the Other Indebtedness with a new debtor-in-possession facility (the "DIP Facility") on terms and conditions substantially identical to the New Credit Agreement, the Existing Credit Agreement and the Other Indebtedness, as applicable, in an aggregate amount equal to the then committed amount under the New Credit Agreement plus $110 million plus the principal amount of the Other Indebtedness. The DIP Facility would mature on August 18, 2004 and would be secured by a first-priority security interest in all of the Collateral. In connection with the Deferred Coupon Notes, the Company entered into interest rate swap agreements ("swaps") with banks, with an aggregate ending notional principal amount of $142.0 million and a final maturity of July 1, 1999, all of which were terminated as of June 28, 1998. In June 1998, the Company terminated swaps with an aggregate ending notional principal amount of $60.0 million, resulting in gains of $0.7 million. The gains were deferred and were amortized as a reduction of interest expense over the remaining original life of the swaps. As a result of the swaps, the effective interest cost to the Company of the portion of the Deferred Coupon Notes covered by the swaps varied at a fixed spread over LIBOR. In December 1995, the Company consummated a $40 million sale-leaseback of certain equipment located at its Chester, South Carolina glass mat manufacturing facility, in a transaction accounted for as a capital lease, and the gain has been deferred. The lessor was granted a security interest in certain equipment at the Chester facility. The lease term extends to December 2005. In December 1994, the Company consummated a $20.4 million sale-leaseback of certain equipment located at its Baltimore, Maryland roofing facility, in a transaction accounted for as a capital lease, and the gain has been deferred. The lessor was granted a security interest in the land, buildings and certain equipment at the Baltimore facility. The lease term extends to December 2004. The Company has four industrial revenue bond issues outstanding, which bear interest at short-term floating rates. Interest rates on the foregoing obligations ranged between 4.20% and 4.75% as of December 31, 2000. The Company believes that the fair value of its non-public indebtedness approximates the book value of such indebtedness, because the interest rates on substantially all such indebtedness are at floating short-term rates. With respect to the Company's publicly traded debt securities, the Company has obtained estimates of the fair values from an independent source believed to be reliable. The estimated fair values of the Company's indebtedness at December 31, 1999 and 2000 are as follows:
DECEMBER 31, ------------------- 1999 2000 -------- ------- (THOUSANDS) 2005 Notes.............................................. $136,039 $47,867 2006 Notes.............................................. 94,671 31,905 2007 Notes.............................................. 89,973 31,837 2008 Notes.............................................. 139,210 49,387
The aggregate maturities of long-term debt as of December 31, 2000 for the next five years are as follows:
(THOUSANDS) ----------- 2001..................................................... $ 5,908 2002..................................................... 15,009 2003..................................................... 125,244 2004..................................................... -- 2005..................................................... 150,000
F-27 54 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11. LONG-TERM DEBT -- (CONTINUED) In the above table, maturities for the year 2002 include $11.7 million related to the Baltimore manufacturing facility capital lease. Maturities for the year 2003 include $35 million related to the 2003 Notes, $70 million related to the Existing Credit Agreement and $20.2 million related to the Chester glass mat manufacturing facility capital lease. Maturities for the year 2005 include $150 million related to the 2005 Notes. NOTE 12. BENEFIT PLANS Eligible, full-time employees of the Company are covered by various benefit plans, as described below. Defined Contribution Plan The Company provides a defined contribution plan for eligible employees. The Company contributes up to 7% of participants' compensation and also contributes fixed amounts, ranging from $50 to $750 per year depending on age, to the accounts of participants who are not covered by a Company-provided postretirement medical benefit plan. The aggregate contributions by the Company were $4.2, $4.4 and $4.9 million for 1998, 1999 and 2000, respectively. U.S. Intec, Inc., a wholly-owned subsidiary of the Company as of December 31, 2000, provided a defined contribution plan for eligible employees. U.S. Intec, Inc. contributed a discretionary matching contribution equal to 100% of each participant's eligible contributions each year up to a maximum of $750 for each participant. Such contributions by U.S. Intec, Inc. were $0.1, $0.2 and $0.1 million for 1998, 1999 and 2000, respectively. Defined Benefit Plans The Company provides noncontributory defined benefit retirement plans for certain hourly and salaried employees (the "Retirement Plans"). Benefits under these plans are based on stated amounts for each year of service. In 1998, the Company acquired LL Building Products Inc. which has pension plans for its hourly and salaried employees. The LL Building Products Inc. plans were curtailed in 1998. The Company's funding policy is consistent with the minimum funding requirements of ERISA. The Company's net periodic pension cost for the Retirement Plans included the following components:
YEAR ENDED DECEMBER 31, ----------------------------- 1998 1999 2000 ------- ------- ------- (THOUSANDS) Service cost.......................................... $ 754 $ 804 $ 751 Interest cost......................................... 842 949 1,066 Expected return on plan assets........................ (1,296) (1,270) (1,583) Amortization of unrecognized prior service cost....... 31 31 33 Amortization of net losses from earlier periods....... -- 107 14 ------- ------- ------- Net periodic pension cost............................. $ 331 $ 621 $ 281 ======= ======= =======
F-28 55 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. BENEFIT PLANS -- (CONTINUED) The following tables set forth, for the years 1999 and 2000, reconciliations of the beginning and ending balances of the benefit obligation, fair value of plan assets, funded status, amounts recognized in the Consolidated Balance Sheets and changes in accumulated other comprehensive (income) loss related to the Retirement Plans:
DECEMBER 31, ------------------ 1999 2000 ------- ------- (THOUSANDS) Change in benefit obligation: Benefit obligation at beginning of year................... $17,865 $17,601 Service cost.............................................. 804 751 Interest cost............................................. 1,243 1,379 Amendments................................................ -- 50 Actuarial losses (gains).................................. (1,739) 1,073 Benefits paid............................................. (572) (638) ------- ------- Benefit obligation at end of year......................... $17,601 $20,216 ======= ======= Change in plan assets: Fair value of plan assets at beginning of year............ $16,248 $18,348 Actual return on plan assets.............................. 1,920 3,100 Employer contributions.................................... 752 2,625 Benefits paid............................................. (572) (638) ------- ------- Fair value of plan assets at end of year.................. $18,348 $23,435 ======= ======= Reconciliation of funded status: Funded status............................................. $ 746 $ 3,219 Unrecognized prior service cost........................... 247 264 Unrecognized actuarial losses............................. 1,351 473 ------- ------- Net amount recognized in Consolidated Balance Sheets...... $ 2,344 $ 3,956 ======= ======= Amounts recognized in Consolidated Balance Sheets: Prepaid benefit cost...................................... $ 746 $ 3,956 Intangible asset.......................................... 247 -- Accumulated other comprehensive loss...................... 1,351 -- ------- ------- Net amount recognized..................................... $ 2,344 $ 3,956 ======= ======= Change for the year in accumulated other comprehensive (income) loss: Change in intangible asset................................ $ 30 $ 247 Change in additional minimum liability.................... (1,635) (1,598) ------- ------- Total..................................................... $(1,605) $(1,351) ======= =======
In determining the projected benefit obligation, the weighted average assumed discount rate was 7.75% and 7.50% for 1999 and 2000, respectively. The expected long-term rate of return on assets, used in determining net periodic pension cost, was 11% for 1999 and 2000. The Company also provides a nonqualified defined benefit retirement plan for certain key employees. Expense accrued for this plan was immaterial for 1998, 1999 and 2000. F-29 56 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. BENEFIT PLANS -- (CONTINUED) Book Value Appreciation Unit Plan A Book Value Appreciation Unit Plan was implemented effective January 1, 1996. Under the plan, employees were granted units which vest over five years. Upon exercise, employees were entitled to receive a cash payment based on the increase in Book Value (as defined in the plan). This plan was terminated in 1999 with all eligible employees receiving their respective vested cash payments. Expense accrued under this plan was $1.3 and $1.2 million for 1998 and 1999, respectively. Postretirement Medical and Life Insurance The Company generally does not provide postretirement medical and life insurance benefits, although it subsidizes such benefits for certain employees and certain retirees. Such subsidies were reduced or ended as of January 1, 1997. Net periodic postretirement benefit cost included the following components:
YEAR ENDED DECEMBER 31, ----------------------- 1998 1999 2000 ----- ----- ----- (THOUSANDS) Service cost............................................... $ 104 $ 114 $ 92 Interest cost.............................................. 467 476 354 Amortization of unrecognized prior service cost............ (88) (88) (94) Amortization of net gains from earlier periods............. (240) (209) (271) ----- ----- ----- Net periodic postretirement benefit cost................... $ 243 $ 293 $ 81 ===== ===== =====
The following table sets forth, for the years 1999 and 2000, reconciliations of the beginning and ending balances of the postretirement benefit obligation, funded status and amounts recognized in the Consolidated Balance Sheets related to postretirement medical and life insurance benefits:
DECEMBER 31, -------------------- 1999 2000 -------- -------- (THOUSANDS) Change in benefit obligation: Benefit obligation at beginning of year................... $ 7,135 $ 6,023 Service cost.............................................. 114 92 Interest cost............................................. 476 354 Amendments................................................ -- (122) Actuarial gains........................................... (1,179) (1,098) Benefits paid............................................. (523) (404) -------- -------- Benefit obligation at end of year......................... $ 6,023 $ 4,845 ======== ======== Change in plan assets: Fair value of plan assets at beginning of year............ $ -- $ -- Employer contributions.................................... 523 404 Participant contributions................................. -- 104 Benefits paid............................................. (523) (508) -------- -------- Fair value of plan assets at end of year.................. $ -- $ -- ======== ========
F-30 57 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. BENEFIT PLANS -- (CONTINUED)
DECEMBER 31, -------------------- 1999 2000 -------- -------- (THOUSANDS) Reconciliation of funded status: Funded status............................................. $ (6,023) (4,845) Unrecognized prior service cost........................... (614) (642) Unrecognized actuarial gains.............................. (4,400) (5,227) -------- -------- Net amount recognized in Consolidated Balance Sheets as accrued benefit cost................................... $(11,037) $(10,714) ======== ========
For purposes of calculating the accumulated postretirement benefit obligation, the following assumptions were made. Retirees as of December 31, 2000 who were formerly salaried employees (with certain exceptions) were assumed to receive a Company subsidy of $700 to $1,000 per year. For retirees over age 65, this subsidy may be replaced by participation in a managed care program. With respect to retirees who were formerly hourly employees, most such retirees are subject to a $5,000 per person lifetime maximum benefit. Subject to such lifetime maximum, a 9% and 6% annual rate of increase in the Company's per capita cost of providing postretirement medical benefits was assumed for 2000 for such retirees under and over age 65, respectively. To the extent that the lifetime maximum benefits have not been reached, the foregoing rates were assumed to decrease gradually to an ultimate rate of 4.5% and 6%, respectively, by the year 2009 and remain at that level thereafter. The weighted average assumed discount rate used in determining the accumulated postretirement benefit obligation was 7.75% and 7.50% for 1999 and 2000, respectively. The health care cost trend rate assumption has an effect on the amounts reported. To illustrate, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1999 and 2000 by $76,000 and $33,000, respectively, and the aggregate of the service and interest cost components of the net periodic postretirement benefit cost for the years 1999 and 2000 by $5,000 and $2,400, respectively. A decrease of one percentage point in each year would decrease the accumulated postretirement benefit obligation as of December 31, 1999 and 2000 by $68,000 and $31,000, respectively, and the aggregate of the service and interest cost components of the net periodic postretirement benefit cost for the years 1999 and 2000 by $5,000 and $2,400, respectively. NOTE 13. PREFERRED STOCK OPTION PLAN On January 1, 1996, the Company established a plan to issue options to certain employees to purchase shares of redeemable convertible preferred stock ("Preferred Stock") of the Company, exercisable at a price of $100 per share. Each share of Preferred Stock is convertible, at the holder's option, into shares of common stock of the Company at a formula price based on Book Value (as defined in the option agreement) as of the date of grant. The options vest rateably over five years and expire after nine years. Dividends will accrue on the Preferred Stock from the date of issuance at the rate of 6% per annum. The Preferred Stock is redeemable, at the Company's option, for a redemption price equal to $100 per share plus accrued and unpaid dividends. The Preferred Stock, and common stock issuable upon conversion of Preferred Stock into common stock, is subject to repurchase by the Company under certain circumstances, at a price equal to current Book Value (as defined in the option agreement). The exercise price of the options to purchase Preferred Stock was equal to the estimated fair value per share of the Preferred Stock at the date of grant. The options exercised in 1999 and 2000 were converted into 4,611 and 1,868 shares of common stock. During 1998 and 1999 no expense was recorded in connection with the Preferred Stock options. F-31 58 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 13. PREFERRED STOCK OPTION PLAN -- (CONTINUED) The following is a summary of transactions pertaining to the plan:
YEAR ENDED DECEMBER 31, ----------------------------- 1998 1999 2000 ------- ------- ------- (NUMBER OF SHARES) Outstanding, January 1................................ 102,595 140,052 167,811 Granted............................................... 57,073 81,405 61,700 Exercised............................................. -- (8,704) (3,653) Forfeited............................................. (19,616) (44,942) (27,749) ------- ------- ------- Outstanding, December 31.............................. 140,052 167,811 198,109 ------- ------- ------- Options exercisable, December 31...................... 20,663 45,337 66,405 ======= ======= =======
Effective December 31, 2000, the Company adopted the 2001 Long-Term Incentive Plan which allows certain employees participating in the preferred stock option program to also participate in the 2001 Long-Term Incentive Plan. Under the provisions of the 2001 Long-Term Incentive Plan, a $1.4 million charge was recorded in 2000. NOTE 14. BUSINESS SEGMENT INFORMATION The Company is a leading national manufacturer of a broad line of asphalt roofing products and accessories for the steep slope and low slope roofing markets. The Company also manufactures and markets specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. The steep slope roofing product line primarily consists of premium laminated shingles, strip shingles, and certain specialty shingles principally for regional markets. Sales of steep slope roofing products represented approximately 67% of the Company's net sales in 2000. The Company's low slope roofing product line includes a full line of modified bitumen products, asphalt built-up roofing, liquid applied membrane, and roofing accessories. Sales of low slope roofing products and accessories represented approximately 26% of the Company's net sales in 2000. Sales of the specialty building products and accessories product line represented approximately 7% of the Company's net sales in 2000. The Company aggregates the steep slope and low slope product lines into one operating segment since they have similar economic characteristics and are similar in each of the following areas: (i) the nature of the products and services are similar in that they perform the same function -- the protection and covering of steep slope and low slope roofs; (ii) the nature of the production processes are similar; (iii) the type or class of customer for their products and services are similar; (iv) the steep slope and low slope products have the same distribution channels, whereby the main customers are wholesalers or distributors; and (v) regulatory requirements are generally the same for both the steep slope and low slope product lines. The specialty building products and accessories product line did not meet quantitative thresholds in 2000 to be considered as a reportable segment. Net revenues in 1999 and 2000, respectively, included sales to The Home Depot, Inc. and American Builders & Contractors Supply Co., of approximately 11%, 13%, and 10% and 11%, respectively, of the Company's net sales. No other customer accounted for as much as 10% of net sales in 1999 or 2000. F-32 59 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 15. RELATED PARTY TRANSACTIONS Included in the Consolidated Balance Sheets are the following receivable (payable) balances with related parties, which arise from operating and financing transactions between the Company and its affiliates:
DECEMBER 31, -------------------- 1999 2000 -------- -------- (THOUSANDS) Receivable from G-I Holdings........................... $ 59,132 $ -- ======== ======== Tax receivable from parent corporations................ -- $ 9,000 ======== ======== Payable to ISP......................................... $(15,024) $(10,052) ======== ========
The Company makes loans to, and borrows from, G-I Holdings and its subsidiaries at prevailing market rates (between 5.82% and 5.96% during 1998); however, no loans to G-I Holdings were made during 1999 and 2000. In addition, no loans were made to the Company by G-I Holdings and its subsidiaries during 1999 and 2000. Loans to any parent corporation are subject to limitations as outlined in the New Credit Agreement, the Existing Credit Agreement and the Senior Notes. The Company advances funds on a non-interest bearing basis to G-I Holdings and its subsidiaries. The net balance of such advances as of December 31, 1999 and 2000 was $59.1 and $0 million, respectively. During 1999 and 2000, the Company made distributions of $60.0 and $106.2 million, respectively, to its parent corporations. The distribution of $106.2 million in 2000 represents the write-off of outstanding advances to the Company's parent corporations during 1999 and 2000 that the Company determined were uncollectible. Included in current assets is a tax receivable from parent corporations of $1.5 million and included in long-term assets is a tax receivable from parent corporations of $7.5 million representing amounts paid to G-I Holdings under the Tax Sharing Agreement. See Note 7. Mineral Products: The Company and its subsidiaries purchase all of their colored roofing granules requirements from ISP under a requirements contract, except for the requirements of certain of their roofing plants which are supplied by third parties. Effective January 1, 2001, this contract was amended and restated to provide, among other things, that the contract will expire on December 31, 2001, unless extended by the parties. Such purchases by the Company and its subsidiaries totaled $62.6, $57.3 and $59.3 million for 1998, 1999 and 2000, respectively. The amount payable to ISP at December 31, 1999 and 2000 for such purchases was $2.9 and $7.6 million, respectively. Management Agreement: The Company is a party to a Management Agreement with ISP (the "Management Agreement") pursuant to which ISP provides certain general management, administrative, legal, telecommunications, information and facilities services to the Company (including the use of the Company's headquarters in Wayne, New Jersey). Charges to the Company by ISP for providing such services aggregated $4.3, $5.3 and $6.0 million for 1998, 1999 and 2000, respectively. Such charges consist of management fees and other reimbursable expenses attributable to, or incurred by ISP for the benefit of the Company. The payable to ISP for management fees as of December 31, 1999 and 2000 was $4.1 and $1.0 million, respectively. Effective January 1, 2001, the Management Agreement was amended to extend the term of the agreement through March 31, 2001, to provide for the automatic extension of the agreement for successive quarterly periods unless the agreement is terminated by a party, and to adjust the management fees payable thereunder. In addition, the Management Agreement was amended to provide that the Company rather than ISP be responsible for providing management services to G-I Holdings and certain of its subsidiaries and that G-I Holdings pay to the Company a management fee for such services. Based on the services provided to G-I Holdings in 2000 under the Management Agreement, the aggregate amount payable by G-I Holdings to the Company for services to be rendered under the Management Agreement in 2001 is expected to be approximately $0.6 million. The Company and ISP also allocate a portion of the management fees payable by the Company under the Management Agreement to separate lease payments for the use of the Company's headquarters. Based on the services provided by ISP to the Company and G-I Holdings in 2000 F-33 60 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 15. RELATED PARTY TRANSACTIONS -- (CONTINUED) under the Management Agreement, the aggregate amount payable by the Company to ISP under the Management Agreement for 2001, is expected to be approximately $6.6 million. Certain of the Company's executive officers receive their compensation from ISP. ISP is indirectly reimbursed for this compensation through payment of the management fee and other reimbursable expenses payable under the Management Agreement. Tax Sharing Agreement: See Note 7. NOTE 16. COMMITMENTS AND CONTINGENCIES The discussions as to legal matters involving the Company contained in Item 3, "Legal Proceedings -- Environmental Litigation" and "-- Other Litigation" are incorporated herein by reference. G-I Holdings and BHC are presently dependent upon the earnings and cash flows of their subsidiaries, principally the Company, in order to satisfy their obligations, including various tax and other claims and liabilities (net of certain insurance receivables) including tax liabilities relating to the surfactants partnership (discussed in Note 7). G-I Holdings has advised the Company that it expects to obtain funds to satisfy G-I Holdings' operating expenses from, among other things, loans from subsidiaries (principally the Company). See Notes 3, 7 and 15. On January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to its Asbestos Claims. The Company is not included in such bankruptcy filing. There are restrictions under the indentures relating to the Senior Notes, the Existing Credit Agreement and the New Credit Agreement on payments by the Company to its parents. During the twelve months ended December 31, 2001, the Company expects to make distributions and/or advances to its parents to satisfy the obligations discussed above only to the extent permitted by the Existing Credit Agreement, the New Credit Agreement and the Senior Notes. The Company does not believe that the dependence of its parent corporations on the cash flows of their subsidiaries should have a material adverse effect on the operations, liquidity or capital resources of the Company. See Notes 3, 7 and 11. The leases for certain property, plant and equipment at certain of the Company's glass mat and roofing facilities are accounted for as capital leases (see Note 11). The Company is also a lessee under operating leases principally for warehouses, production machinery and equipment, and transportation and computer equipment. Rental expense on operating leases was $11.0, $15.5 and $18.7 million for 1998, 1999 and 2000, respectively. Future minimum lease payments for properties which were held under long-term noncancellable leases as of December 31, 2000 were as follows:
CAPITAL OPERATING LEASES LEASES ------- --------- (THOUSANDS) 2001.................................................... $ 8,108 $ 15,665 2002.................................................... 17,558 14,733 2003.................................................... 21,406 14,196 2004.................................................... -- 13,900 2005.................................................... -- 13,636 Thereafter.............................................. -- 43,361 ------- -------- Total minimum payments.................................. 47,072 $115,491 ======== Less interest included above............................ 7,106 ------- Present value of net minimum lease payments............. $39,966 =======
F-34 61 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION In connection with the Company entering into the New Credit Agreement, all of the Company's subsidiaries, other than BMCA Receivables Corporation (see Note 8), became guarantors under the New Credit Agreement, the Existing Credit Agreement and the Senior Notes. These guarantees are full, unconditional and joint and several. In addition, Building Materials Manufacturing Corporation ("BMMC"), a wholly-owned subsidiary of the Company, is a co-obligor on the 2007 Notes. The Company and BMMC entered into license agreements, effective January 1, 1999, for the right to use intellectual property, including patents, trademarks, know-how, and franchise rights owned by Building Materials Investment Corporation, a wholly-owned subsidiary of the Company, for a license fee stated as a percentage of net sales. The license agreements are for a period of one year and are subject to automatic renewal unless either party terminates with 60 days written notice. Also, effective January 1, 1999, BMMC sells all finished goods to the Company at a manufacturing profit. In January 2001, certain subsidiaries of the Company were merged into BMMC. Presented below is condensed consolidating financial information for the Company, the guarantor subsidiaries and the non-guarantor subsidiary prepared on a basis which retroactively reflects the formation of such companies for all periods presented. This financial information should be read in conjunction with the Consolidated Financial Statements and other notes related thereto. Separate financial information for the Company's guarantor subsidiaries and non-guarantor subsidiary is not included herein because management has determined that such information is not material to investors. F-35 62 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998 (THOUSANDS)
PARENT GUARANTOR COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------ ------------ Net sales......................................... $885,364 $202,593 $ -- $1,087,957 Intercompany net sales............................ 3,413 641,657 (645,070) -- -------- -------- --------- ---------- Total net sales.............................. 888,777 844,250 (645,070) 1,087,957 -------- -------- --------- ---------- Costs and expenses: Cost of products sold........................... 657,018 762,391 (645,070) 774,339 Selling, general and administrative............. 155,184 81,232 236,416 Goodwill amortization........................... 641 1,470 2,111 Nonrecurring charges............................ 27,563 27,563 -------- -------- --------- ---------- Total costs and expenses..................... 840,406 845,093 (645,070) 1,040,429 -------- -------- --------- ---------- Operating income (loss)........................... 48,371 (843) -- 47,528 Equity in loss of subsidiaries.................... (755) 755 -- Interest expense, net............................. (26,535) (23,419) (49,954) Other income (expense), net....................... (7,150) 23,045 15,895 -------- -------- --------- ---------- Income (loss) before income taxes and extraordinary losses............................ 13,931 (1,217) 755 13,469 Income tax (provision) benefit.................... (5,580) 462 (5,118) -------- -------- --------- ---------- Income (loss) before extraordinary losses......... 8,351 (755) 755 8,351 -------- -------- --------- ---------- Extraordinary losses, net of income tax benefits of $11,101...................................... (18,113) (18,113) -------- -------- --------- ---------- Net income (loss)................................. $ (9,762) $ (755) $ 755 $ (9,762) ======== ======== ========= ==========
F-36 63 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999 (THOUSANDS)
PARENT GUARANTOR COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------ ------------ Net sales......................................... $920,692 $219,347 $ -- $1,140,039 Intercompany net sales............................ 7,230 731,312 (738,542) -- -------- -------- --------- ---------- Total net sales.............................. 927,922 950,659 (738,542) 1,140,039 -------- -------- --------- ---------- Costs and expenses: Cost of products sold........................... 702,957 848,282 (738,542) 812,697 Selling, general and administrative............. 157,372 82,188 239,560 Goodwill amortization........................... 641 1,393 2,034 Transition service agreement (income) expense... (500) 500 -- Nonrecurring charges............................ 2,650 2,650 -------- -------- --------- ---------- Total costs and expenses..................... 863,120 932,363 (738,542) 1,056,941 -------- -------- --------- ---------- Operating income.................................. 64,802 18,296 -- 83,098 Equity in earnings of subsidiaries................ 23,370 (23,370) -- Intercompany licensing income (expense), net...... (27,622) 27,622 -- Interest expense, net............................. (26,565) (21,752) (48,317) Other income (expense), net....................... (7,489) 12,929 5,440 -------- -------- --------- ---------- Income (loss) before income taxes and extraordinary losses............................ 26,496 37,095 (23,370) 40,221 Income tax (provision) benefit.................... (1,157) (13,725) (14,882) -------- -------- --------- ---------- Income (loss) before extraordinary losses......... 25,339 23,370 (23,370) 25,339 Extraordinary losses, net of income tax benefits of $761......................................... (1,296) (1,296) -------- -------- --------- ---------- Net income (loss)................................. $ 24,043 $ 23,370 $ (23,370) $ 24,043 ======== ======== ========= ==========
F-37 64 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 (THOUSANDS)
PARENT GUARANTOR COMPANY SUBSIDIARIES ELIMINATIONS CONSOLIDATED ---------- ------------ ------------ ------------ Net sales....................................... $ 999,809 $ 207,950 $ -- $1,207,759 Intercompany net sales.......................... 11,111 817,219 (828,330) -- ---------- ---------- --------- ---------- Total net sales............................ 1,010,920 1,025,169 (828,330) 1,207,759 ---------- ---------- --------- ---------- Costs and expenses: Cost of products sold......................... 798,142 923,964 (828,330) 893,776 Selling, general and administrative........... 165,231 85,311 250,542 Goodwill amortization......................... 641 1,383 2,024 Transition service agreement (income) expense.................................... (100) 100 Gain on sale of assets........................ (17,505) (17,505) Warranty reserve adjustment................... 15,000 15,000 ---------- ---------- --------- ---------- Total costs and expenses................... 978,914 993,253 (828,330) 1,143,837 ---------- ---------- --------- ---------- Operating income................................ 32,006 31,916 -- 63,922 Equity in earnings of subsidiaries.............. 12,189 (12,189) -- Intercompany licensing income (expense), net.... (29,994) 29,994 Interest expense, net........................... (27,728) (25,740) (53,468) Other expense, net.............................. (10,818) (16,822) (27,640) ---------- ---------- --------- ---------- Income (loss) before income taxes and extraordinary losses.......................... (24,345) 19,348 (12,189) (17,186) Income tax (provision) benefit.................. 13,518 (7,159) 6,359 ---------- ---------- --------- ---------- Income (loss) before extraordinary losses....... (10,827) 12,189 (12,189) (10,827) Extraordinary losses, net of income tax benefits of $194....................................... (330) (330) ---------- ---------- --------- ---------- Net income (loss)............................... $ (11,157) $ 12,189 $ (12,189) $ (11,157) ========== ========== ========= ==========
F-38 65 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 1999 (THOUSANDS)
NON- PARENT GUARANTOR GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED -------- ------------ ---------- ------------ ------------ ASSETS Current Assets: Cash and cash equivalents.............. $ 81 $ 55,871 $ -- $ -- $ 55,952 Investments in trading securities...... 687 687 Investments in available-for-sale securities.......................... 29,702 29,702 Other short-term investments........... 1,590 1,590 Accounts receivable, trade, net........ 1,590 21,348 22,938 Accounts receivable, other............. 4,992 5,692 52,208 62,892 Receivable from parent corporations.... 59,132 59,132 Inventories............................ 52,903 55,712 108,615 Other current assets................... 1,208 3,031 4,239 -------- -------- -------- --------- -------- Total Current Assets................ 119,906 173,633 52,208 -- 345,747 Investment in subsidiaries............... 325,211 (325,211) -- Intercompany loans including accrued interest............................... 171,176 (166,762) (4,414) -- Due from (to) subsidiaries, net.......... (151,164) 146,942 4,222 -- Property, plant and equipment, net....... 32,821 377,882 410,703 Excess of cost over net assets of businesses acquired, net............... 18,739 51,669 70,408 Deferred income tax benefits............. 45,561 45,561 Other assets............................. 15,454 7,239 22,693 -------- -------- -------- --------- -------- Total Assets............................. $577,704 $590,603 $ 52,016 $(325,211) $895,112 ======== ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt... $ 2,333 $ 3,816 $ -- $ -- $ 6,149 Accounts payable....................... 41,799 42,535 84,334 Payable to related party............... 12,382 2,642 15,024 Accrued liabilities.................... 19,695 96,133 115,828 Reserve for product warranty claims.... 13,400 1,100 14,500 -------- -------- -------- --------- -------- Total Current Liabilities........... 89,609 146,226 -- -- 235,835 Long-term debt less current maturities... 435,398 165,347 600,745 Reserve for product warranty claims...... 16,127 3,687 19,814 Other liabilities........................ 14,881 2,148 17,029 -------- -------- -------- --------- -------- Total Liabilities................... 556,015 317,408 -- -- 873,423 -------- -------- -------- --------- -------- Total Stockholders' Equity, net.......... 21,689 273,195 52,016 (325,211) 21,689 -------- -------- -------- --------- -------- Total Liabilities and Stockholders' Equity................................. $577,704 $590,603 $ 52,016 $(325,211) $895,112 ======== ======== ======== ========= ========
F-39 66 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2000 (THOUSANDS)
NON- PARENT GUARANTOR GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARY ELIMINATIONS CONSOLIDATED --------- ------------ ---------- ------------ ------------ ASSETS Current Assets: Cash and cash equivalents............ $ 9,741 $ 73,006 $ -- $ -- $ 82,747 Accounts receivable, trade, net...... 19,474 19,474 Accounts receivable, other........... 5,027 2,947 43,869 51,843 Tax receivable from parent corporations...................... 1,500 1,500 Inventories.......................... 52,041 49,661 101,702 Other current assets................. 1,022 2,903 3,925 --------- --------- --------- --------- -------- Total Current Assets.............. 69,331 147,991 43,869 -- 261,191 Investment in subsidiaries............. 356,726 (356,726) -- Intercompany loans including accrued interest............................. 188,945 (184,531) (4,414) -- Due from (to) subsidiaries, net........ (190,285) 186,322 3,963 -- Property, plant and equipment, net..... 28,425 334,039 362,464 Excess of cost over net assets of businesses acquired, net............. 18,099 47,218 65,317 Deferred income tax benefits........... 42,897 42,897 Tax receivable from parent corporations......................... 7,500 7,500 Other assets........................... 16,026 15,774 31,800 --------- --------- --------- --------- -------- Total Assets........................... $ 537,664 $ 546,813 $ 43,418 $(356,726) $771,169 ========= ========= ========= ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities: Current maturities of long-term debt................................... $ 153 $ 5,755 $ -- $ -- $ 5,908 Accounts payable..................... 19,600 37,920 57,520 Payable to related party............. 7,522 2,530 10,052 Accrued liabilities.................. 21,627 21,261 42,888 Reserve for product warranty claims................................. 13,400 1,500 14,900 --------- --------- --------- --------- -------- Total Current Liabilities......... 62,302 68,966 -- -- 131,268 Long-term debt less current maturities........................... 514,880 159,818 674,698 Reserve for product warranty claims.... 24,248 4,508 28,756 Other liabilities...................... 14,099 213 14,312 --------- --------- --------- --------- -------- Total Liabilities................. 615,529 233,505 -- -- 849,034 --------- --------- --------- --------- -------- Total Stockholders' Equity (Deficit), net.................................. (77,865) 313,308 43,418 (356,726) (77,865) --------- --------- --------- --------- -------- Total Liabilities and Stockholders' Equity (Deficit).................. $ 537,664 $ 546,813 $ 43,418 $(356,726) $771,169 ========= ========= ========= ========= ========
F-40 67 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1998 (THOUSANDS)
NON- PARENT GUARANTOR GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARY CONSOLIDATED --------- ------------ ---------- ------------ Cash and cash equivalents, beginning of year....... $ 35 $ 12,889 $ -- $ 12,924 --------- --------- ------ --------- Cash provided by (used in) operating activities: Net loss......................................... (9,007) (755) (9,762) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Extraordinary losses.......................... 18,113 18,113 Depreciation.................................. 3,383 25,552 28,935 Goodwill and other amortization............... 641 1,671 2,312 Deferred income taxes......................... 4,538 4,538 Noncash interest charges...................... 23,877 23,877 (Increase) decrease in working capital items..... (34,741) 21,926 (3,147) (15,962) Increase (decrease) in product warranty claims... 13,220 (1,569) 11,651 Purchases of trading securities.................. (189,197) (189,197) Proceeds from sales of trading securities........ 124,931 124,931 (Increase) decrease in other assets.............. (482) 764 282 Increase in other liabilities.................... 1,487 1,780 3,267 Change in net receivable from/payable to related parties....................................... 23,681 15,807 3,147 42,635 Other, net....................................... 3,702 7,570 11,272 --------- --------- ------ --------- Net cash provided by operating activities.......... 48,412 8,480 -- 56,892 --------- --------- ------ --------- Cash provided by (used in) investing activities: Capital expenditures............................. (4,799) (70,535) (75,334) Acquisitions..................................... (59,187) (59,187) Proceeds from sale of assets..................... 29,019 29,019 Purchases of available-for-sale securities....... (89,324) (89,324) Purchases of held-to-maturity securities......... (6,357) (6,357) Proceeds from sales of available-for-sale securities.................................... 170,055 170,055 Proceeds from held-to-maturity securities........ 499 499 --------- --------- ------ --------- Net cash provided by (used in) investing activities....................................... (63,986) 33,357 -- (30,629) --------- --------- ------ --------- Cash provided by (used in) financing activities: Repayments from sale of accounts receivable...... 30,578 30,578 Decrease in short-term debt...................... (26,944) (26,944) Decrease in loan receivable from parent corporations.................................. 6,152 6,152 Proceeds from issuance of long-term debt......... 304,019 304,019 Decrease in borrowings under revolving credit facility...................................... (34,000) (34,000) Repayments of long-term debt..................... (285,108) (2,796) (287,904) Financing fees and expenses...................... (6,099) (6,099) --------- --------- ------ --------- Net cash provided by (used in) financing activities....................................... 15,542 (29,740) -- (14,198) --------- --------- ------ --------- Net change in cash and cash equivalents............ (32) 12,097 -- 12,065 --------- --------- ------ --------- Cash and cash equivalents, end of year............. $ 3 $ 24,986 $ -- $ 24,989 ========= ========= ====== =========
F-41 68 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1999 (THOUSANDS)
NON- PARENT GUARANTOR GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARY CONSOLIDATED -------- ------------ ------------ ------------ Cash and cash equivalents, beginning of year...... $ 3 $ 24,986 $ -- $ 24,989 -------- --------- ------- --------- Cash provided by (used in) operating activities: Net income...................................... 673 23,370 24,043 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Extraordinary losses......................... 1,296 1,296 Depreciation................................. 2,628 30,358 32,986 Goodwill and other amortization.............. 1,282 1,393 2,675 Deferred income taxes........................ 14,132 14,132 Noncash interest charges..................... 3,321 3,321 Decrease in working capital items............... (921) (23,952) (1,327) (26,200) Decrease in product warranty claims............. (13,771) (547) -- (14,318) Purchases of trading securities................. (139,522) (139,522) Proceeds from sales of trading securities....... 243,097 243,097 Increase in other assets........................ (828) (3,673) (4,501) Increase (decrease) in other liabilities........ (2,358) 23 (2,335) Change in net receivable from/payable to related parties...................................... 52,388 (102,508) 1,327 (48,793) Other, net...................................... (3,404) (3,404) -------- --------- ------- --------- Net cash provided by operating activities......... 57,842 24,635 -- 82,477 -------- --------- ------- --------- Cash provided by (used in) investing activities: Capital expenditures............................ (829) (44,493) (45,322) Acquisitions.................................... (515) (515) Purchases of available-for-sale securities...... (76,048) (76,048) Purchases of held-to-maturity securities........ (2,349) (2,349) Proceeds from sales of available-for-sale securities................................... 97,400 97,400 Proceeds from held-to-maturity securities....... 7,758 7,758 Proceeds from sales of other short-term investments.................................. 21,421 21,421 -------- --------- ------- --------- Net cash provided by (used in) investing activities...................................... (829) 3,174 -- 2,345 -------- --------- ------- --------- Cash provided by (used in) financing activities: Repayments from sale of accounts receivable..... 5,640 5,640 Proceeds from issuance of long-term debt........ 31,850 6,093 37,943 Repayments of long-term debt.................... (32,937) (3,017) (35,954) Distributions to parent corporations............ (60,000) (60,000) Proceeds from issuance of common stock.......... 870 870 Financing fees and expenses..................... (2,358) (2,358) -------- --------- ------- --------- Net cash provided by (used in) financing activities...................................... (56,935) 3,076 -- (53,859) -------- --------- ------- --------- Net change in cash and cash equivalents........... 78 30,885 -- 30,963 -------- --------- ------- --------- Cash and cash equivalents, end of year............ $ 81 $ 55,871 $ -- $ 55,952 ======== ========= ======= =========
F-42 69 BUILDING MATERIALS CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 17. GUARANTOR FINANCIAL INFORMATION -- (CONTINUED) BUILDING MATERIALS CORPORATION OF AMERICA CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2000 (THOUSANDS)
NON- PARENT GUARANTOR GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARY CONSOLIDATED --------- ------------ ------------ ------------ Cash and cash equivalents, beginning of year..... $ 81 $ 55,871 $ -- $ 55,952 --------- --------- ------ --------- Cash provided by (used in) operating activities: Net income (loss).............................. (23,346) 12,189 -- (11,157) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Extraordinary losses........................ 330 330 Gain on sale of assets...................... (17,505) (17,505) Depreciation................................ 2,878 33,472 36,350 Goodwill and other amortization............. 1,480 1,386 2,866 Deferred income taxes....................... (7,475) (7,475) Noncash interest charges.................... 1,922 726 2,648 (Increase) decrease in working capital items... (20,947) (7,183) 8,339 (19,791) Increase in product warranty claims............ 8,121 1,221 9,342 Purchases of trading securities................ (980) (980) Proceeds from sales of trading securities...... 2,172 2,172 (Increase) decrease in other assets............ 3,025 (1,761) 1,264 Decrease in other liabilities.................. (741) (1,935) (2,676) Change in net receivable from/payable to related parties/parent corporations......... 75,226 (21,727) (8,339) 45,160 Other, net..................................... 2,565 (2,048) 517 --------- --------- ------ --------- Net cash provided by (used in) operating activities..................................... 43,038 (1,973) -- 41,065 --------- --------- ------ --------- Cash provided by (used in) investing activities: Capital expenditures........................... (1,047) (60,496) (61,543) Proceeds from sale of assets................... 31,702 31,702 Purchases of available-for-sale securities..... (882) (882) Proceeds from sales of available-for-sale securities.................................. 58,284 58,284 Proceeds from sales of other short-term investments................................. 1,590 1,590 --------- --------- ------ --------- Net cash provided by (used in) investing activities..................................... (1,047) 30,198 -- 29,151 --------- --------- ------ --------- Cash provided by (used in) financing activities: Repayments from sale of accounts receivable.... 925 925 Proceeds from issuance of long-term debt....... 41,046 41,046 Increase in borrowings under revolving credit facility.................................... 70,000 70,000 Repayments of long-term debt................... (34,198) (3,858) (38,056) Distributions to parent corporations........... (106,161) (106,161) Net repurchase of common stock................. (1,180) (1,180) Financing fees and expenses.................... (2,763) (7,232) (9,995) --------- --------- ------ --------- Net cash used in financing activities............ (32,331) (11,090) -- (43,421) --------- --------- ------ --------- Net change in cash and cash equivalents.......... 9,660 17,135 -- 26,795 --------- --------- ------ --------- Cash and cash equivalents, end of year........... $ 9,741 $ 73,006 $ -- $ 82,747 ========= ========= ====== =========
F-43 70 BUILDING MATERIALS CORPORATION OF AMERICA SUPPLEMENTARY DATA (UNAUDITED) QUARTERLY FINANCIAL DATA (UNAUDITED)
1999 BY QUARTER 2000 BY QUARTER --------------------------------- --------------------------------- FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH ------ ------ ------ ------ ------ ------ ------ ------ (MILLIONS) Net sales........................ $262.9 $310.5 $312.8 $253.8 $289.8 $325.8 $330.9 $261.3 Cost of products sold............ 190.2 216.8 219.2 186.4 214.4 230.3 242.5 206.7 ------ ------ ------ ------ ------ ------ ------ ------ Gross profit..................... $ 72.7 $ 93.7 $ 93.6 $ 67.4 $ 75.4 $ 95.5 $ 88.4 $ 54.6 ====== ====== ====== ====== ====== ====== ====== ====== Operating income (loss)*......... $ 15.7 $ 30.4 $ 25.5 $ 11.5 $ 14.8 $ 28.6 $ 39.6 $(19.1) ====== ====== ====== ====== ====== ====== ====== ====== Interest expense................. $ 11.9 $ 12.9 $ 12.3 $ 11.2 $ 12.4 $ 12.5 $ 13.4 $ 15.1 ====== ====== ====== ====== ====== ====== ====== ====== Income (loss) before income taxes and extraordinary losses....... $ 3.3 $ 24.6 $ 13.7 $ (1.4) $ 1.2 $ 13.8 $ 23.5 $(55.7) Income tax (provision) benefit... (1.2) (9.1) (5.0) 0.4 (0.5) (5.1) (8.7) 20.6 ------ ------ ------ ------ ------ ------ ------ ------ Income (loss) before extraordinary losses........... 2.1 15.5 8.7 (1.0) 0.7 8.7 14.8 (35.1) Extraordinary losses............. -- -- (1.3) -- -- -- (0.3) -- ------ ------ ------ ------ ------ ------ ------ ------ Net income (loss)................ $ 2.1 $ 15.5 $ 7.4 $ (1.0) $ 0.7 $ 8.7 $ 14.5 $(35.1) ====== ====== ====== ====== ====== ====== ====== ======
- --------------- * The operating income for the third quarter of 1999 and 2000 reflect a $2.7 million non-recurring charge and a $17.5 million gain on sale of assets, respectively. The operating income in the fourth quarter of 2000 reflects a $15.0 million one-time charge related to a provision for warranty claims. See Notes 2, 4 and 5 to Consolidated Financial Statements. F-44 71 SCHEDULE II BUILDING MATERIALS CORPORATION OF AMERICA VALUATION AND QUALIFYING ACCOUNTS YEAR ENDED DECEMBER 31, 1998 (THOUSANDS)
BALANCE CHARGED TO BALANCE JANUARY 1, SALES OR DECEMBER 31, DESCRIPTION 1998 EXPENSES DEDUCTIONS OTHER 1998 - ----------- ---------- ---------- ---------- ----- ------------ Valuation and Qualifying Accounts Deducted from Assets To Which They Apply: Allowance for doubtful accounts........... $ 2,752 $ 1,419 $ 486(a) $ 350(c) $ 4,035(b) Allowance for discounts................... 19,403 91,569 87,109 -- 23,863 Reserve for inventory market valuation.... 1,506 1,458 918 500(c) 2,546
YEAR ENDED DECEMBER 31, 1999 (THOUSANDS)
BALANCE CHARGED TO BALANCE JANUARY 1, SALES OR DECEMBER 31, DESCRIPTION 1999 EXPENSES DEDUCTIONS OTHER 1999 - ----------- ---------- ---------- ---------- ----- ------------ Valuation and Qualifying Accounts Deducted from Assets To Which They Apply: Allowance for doubtful accounts........... $ 4,035 $ 484 $ 500(a) $ -- $ 4,019(b) Allowance for discounts................... 23,863 96,645 97,280 (33) 23,195 Reserve for inventory market valuation.... 2,546 2,794 3,623 -- 1,717
YEAR ENDED DECEMBER 31, 2000 (THOUSANDS)
BALANCE CHARGED TO BALANCE JANUARY 1, SALES OR DECEMBER 31, DESCRIPTION 2000 EXPENSES DEDUCTIONS OTHER 2000 - ----------- ---------- ---------- ---------- ----- ------------ Valuation and Qualifying Accounts Deducted from Assets To Which They Apply: Allowance for doubtful accounts........... $ 4,019 $ 413 $ 2,634(a) $ -- $ 1,798(b) Allowance for discounts................... 23,195 110,291 107,683 -- 25,803 Reserve for inventory market valuation.... 1,717 658 1,083 (289) 1,003
- --------------- Notes: (a) Represents write-offs of uncollectible accounts net of recoveries. (b) The balances at December 31, 1998, 1999 and 2000 primarily reflect a reserve for receivables sold to a trust (see Note 8 to Consolidated Financial Statements). (c) Represents balance acquired through acquisitions. S-1 72 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.1 -- Reorganization Agreement, dated as of December 31, 1998, by and among BMCA, Building Materials Manufacturing Corporation and Building Materials Investment Corporation (incorporated by reference to Exhibit 2.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-69749) (the "2008 Notes S-4"). 3.1 -- Amended and Restated Certificate of Incorporation of BMCA (incorporated by reference to Exhibit 3.1 to BMCA's Form 10-K for the year ended December 31, 1999 (the "1999 Form 10-K")). 3.2 -- By-laws of BMCA (incorporated by reference to Exhibit 3.2 to BMCA's Registration Statement on Form S-4 (Registration No. 33-81808)) (the "Deferred Coupon Note Registration Statement"). 3.3 -- Certificate of Incorporation of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.3 to BMCA's Form 10-K for the fiscal year ended December 31, 1998 (the "1998 10-K")). 3.4 -- By-laws of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.4 to the 1998 10-K). 3.5 -- Certificate of Incorporation of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.5 to the 1998 10-K). 3.6 -- By-laws of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.6 to the 1998 10-K). 4.1 -- Indenture, dated as of December 9, 1996, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-20859)). 4.2 -- Indenture, dated as of October 20, 1997, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-41531)). 4.3 -- Indenture, dated as of July 17, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-60633)). 4.4 -- First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of December 9, 1996 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.7 of the 2008 Notes S-4). 4.5 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 9, 1996 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.6 -- First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of October 20, 1997 among BMCA, as issuer, Building Materials Manufacturing Corporation, as co-obligor, Building Materials Investment Corporation, as guarantor and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.8 of the 2008 Notes S-4). 4.7 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of October 20, 1997 among BMCA and Building Materials Manufacturing Corporation, as issuers, Building Materials Investment Corporation, as original guarantor, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee.
73
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.8 -- First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of July 17, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.9 of the 2008 Notes S-4). 4.9 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of July 17, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.10 -- Indenture, dated as of December 3, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the 2008 Notes S-4). 4.11 -- First Supplemental Indenture dated as of January 1, 1999 to Indenture dated as of December 3, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.4 to the 2008 Notes S-4). 4.12 -- Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 3, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.13 -- Indenture, dated July 5, 2000, between BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of New York, as trustee. 4.14 -- First Supplemental Indenture, dated as of December 4, 2000, to the Indenture dated as of July 5, 2000, between BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee. 4.15 -- Registration Rights Agreement, dated July 5, 2000, between BMCA and BNY Capital Markets Inc. 4.16 -- First Amendment to the Registration Rights Agreement, dated as of December 4, 2000, to Registration Rights Agreement dated July 5, 2000, among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors and BNY Capital Markets, Inc., as initial purchaser. 10.1 -- Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, ISP, GAF Building Materials Corporation, GAF Broadcasting Company, Inc., BMCA and ISP Opco Holdings Inc. (incorporated by reference to Exhibit 10.1 to the 1998 10-K). 10.2 -- Amendment No. 1 to the Management Agreement, dated as of January 1, 2000 (incorporated by reference to Exhibit 10.2 to International Specialty Products Inc. Annual Report on Form 10-K for the year ended December 31, 1999). 10.3 -- Amendment No. 2 to the Management Agreement, dated as of January 1, 2001 (incorporated by reference to Exhibit 10.3 to International Specialty Products Inc. Annual Report on Form 10-K for the year ended December 31, 2000). 10.4 -- Form of Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.9 to BMCA's Form 10-K for the year ended December 31, 1996).* 10.5 -- Forms of Amendment to Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.12 to BMCA's Form 10-K for the year ended December 31, 1997 (the "1997 Form 10-K")).* 10.6 -- Form of Option Agreement relating to Series A Cumulative Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 10.13 to the 1997 Form 10-K).*
74
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.7 -- BMCA Preferred Stock Option Plan (incorporated by reference to Exhibit 4.2 to BMCA's Registration Statement on Form S-8 (Registration No. 333-60589)).* 10.8 -- BMCA 2001 Long-Term Incentive Plan.* 10.9 -- Tax Sharing Agreement, dated as of January 31, 1994, among GAF, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.6 to the Deferred Coupon Note Registration Statement). 10.10 -- Amendment to Tax Sharing Agreement, dated as of March 19, 2001, between G-I Holdings and BMCA. 10.11 -- Reorganization Agreement, dated as of January 31, 1994, among GAF Building Materials Corporation, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.9 to the Deferred Coupon Note Registration Statement). 10.12 -- Credit Agreement, dated as of December 4, 2000, by and among BMCA, the lenders party thereto, and The Bank of New York, as agent for the lenders and as Swing Line Lender (the "Credit Agreement"). 10.13 -- Amendment No. 1, dated as of December 22, 2000, to the Credit Agreement. 10.14 -- Amendment No. 2, dated as of March 8, 2001, to the Credit Agreement. 10.15 -- Amended and Restated Credit Agreement, dated as of December 4, 2000, by and among BMCA, the lenders party thereto, Fleet National Bank as Documentation Agent, Bear Stearns Corporate Lending Inc. as Syndication Agent and the Bank of New York as Swing Line Lender and as Administration Agent with BNY Capital Markets Inc. as Lead Arranger and Bookrunner (the "Amended and Restated Credit Agreement"). 10.16 -- Amendment No. 1, dated as of December 22, 2000, to the Amended and Restated Credit Agreement. 10.17 -- Amendment No. 2, dated as of March 8, 2001, to the Amended and Restated Credit Agreement. 10.18 -- Security Agreement, dated December 22, 2000, by and among BMCA and each of the grantors party thereto and The Bank of New York as Collateral Agent. 10.19 -- Collateral Agent Agreement, dated December 22, 2000, by and among BMCA, such Subsidiary of BMCA a party thereto, the 1999 Administrative Agent (as defined therein), each Senior Note Trustee (as defined therein), the 2000 Administrative Agent (as defined therein), the Chase Manhattan Bank, Fleet National Bank and the Bank of New York, as Collateral Agent. 10.20 -- Separation and General Release Agreement between BMCA and William C. Lang.* 21 -- Subsidiaries of BMCA. 23.1 -- Consent of Arthur Andersen LLP.
- --------------- * Management and/or compensation plan or arrangement EX-4.5 2 y46546ex4-5.txt SECOND SUPPLEMENTAL INDENTURE 1 Exhibit 4.5 ----------- SECOND SUPPLEMENTAL INDENTURE dated as of December 4, 2000 to INDENTURE dated as of December 9, 1996 among BUILDING MATERIALS CORPORATION OF AMERICA, as Issuer, BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, as Original Guarantors, THE ADDITIONAL GUARANTORS SIGNATORY HERETO and THE BANK OF NEW YORK, as Trustee 2 This SECOND SUPPLEMENTAL INDENTURE to the Indenture (as defined below) (the "Second Supplemental Indenture") dated as of December 4, 2000, is made among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, each a Delaware corporation wholly-owned by the Company (the "Original Guarantors"), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"), and the ADDITIONAL GUARANTORS listed on the signature pages hereto (the "Additional Guarantors," and together with the Original Guarantors, the "Guarantors") and amends the Indenture, dated as of December 9, 1996, between the Company and the Trustee, as amended by the First Supplemental Indenture, dated January 1, 1999, among the Company, the Guarantors and the Trustee (as further amended from time to time, the "Indenture"). R E C I T A L S: ---------------- A. Pursuant to the Indenture, the Company issued $100 million in aggregate principal amount at maturity of its 8 5/8 Senior Notes due 2006 (the "Securities"). B. The Company, the Guarantors, the Additional Guarantors and the Trustee desire by this Second Supplemental Indenture to amend certain provisions of the Indenture. C. Consent to the amendments set forth in Article I herein have been solicited from the holders of record as of November 27, 2000, of the Securities pursuant to a Consent Solicitation Statement dated the 6th day of December 2000, as supplemented by the Supplement to Consent Solicitation Statement dated the 20th day of December 2000 (the "Consent Solicitation Statement"). The effectiveness of this Second Supplemental Indenture is conditioned upon the receipt of the Requisite Consents (as defined in the Consent Solicitation Statement). D. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. NOW, THEREFORE, it is hereby agreed as follows: ARTICLE I AMENDMENTS SECTION 1.01. Certain Defined Terms. The following provisions set forth in the definitions in Section 1.01 of the Indenture are hereby amended as follows: 2 3 (a) The definition of "Credit Agreement" is hereby amended and restated in its entirety to read as follows: "Credit Agreement" means the amended and restated Credit Agreement, dated as of December 4, 2000, among the Company, the lenders party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time." (b) The following defined terms are added to Section 1.01 in the appropriate alphabetical order: "Collateral Agent Agreement" means the collateral agent agreement, dated as of December 4, 2000, among the Company, the Subsidiary Guarantors identified therein, The Chase Manhattan Bank, Fleet National Bank, The Bank of New York, as Collateral Agent, The Bank of New York, as Indenture Trustee, and The Bank of New York, as Administrative Agent under the Credit Agreement and the New Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Consent Solicitation Statement" means that certain consent solicitation statement of the Company and Building Materials Manufacturing Corporation dated December 6, 2000, as supplemented on December 20, 2000." "DIP Facility" has the meaning ascribed to such term in the New Credit Agreement. "New Credit Agreement" means the secured credit agreement, dated as of December 4, 2000, among the Company, the Lenders party thereto, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time. "Other Indebtedness" means the obligations under that certain promissory note issued by the Company to The Chase Manhattan Bank dated as of the effective date of the New Credit Agreement which was issued to replace the obligations of the 3 4 Company under that certain platinum bullion lease effective December 1, 2000 (and any subsequent confirmations of such lease entered into prior to the effective date of the New Credit Agreement) and approximately $3.5 million of obligations under a standby letter of credit, dated as of June 4, 1999, issued by Fleet National Bank in connection with the Company's Shafter, California facility, as each may be amended, supplemented, refinanced (including by the DIP Facility) or otherwise modified from time to time and any hedging obligations entered into with counterparties that are the lenders or affiliates of the lenders under the New Credit Agreement and the Credit Agreement. SECTION 1.02. Section 4.01 of the Indenture is hereby amended and restated in its entirety to read as follows: "The Company shall pay, or cause to be paid, the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities; provided, however, that Holders that consented to the Proposed Amendments (as defined in the Consent Solicitation Statement) will receive quarterly interest payments on March 15, June 15 and September 15 and December 15 of each year, commencing June 15, 2001. The record dates for such interest payments shall be the preceding March 1, June 1, September 1 and December1. Principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay all principal and interest payable in cash in each case as then due. The Company shall pay interest on overdue principal, as the case may be, at the rate specified therefor in the Securities." SECTION 1.03. Section 4.09(b) of the Indenture is hereby amended and restated in its entirety to read as follows: "(b) Notwithstanding the foregoing, there may be issued the following Debt: (1) The Securities; (2) Debt the proceeds of which are used to acquire assets of the Company and its Subsidiaries and such Debt is secured by purchase money Liens on such assets or improvements or additions thereto, or replacements thereof; provided that, after giving effect to the Issuance of any such Debt that otherwise complies with this clause (3), the aggregate amount of all Debt then outstanding at any time under this clause (3), including all Refinancings thereof then outstanding, shall not at any time exceed $50,000,000; (3) Acquired Debt; 4 5 (4) (x) Debt outstanding on the Issue Date (including the Deferred Coupon Notes) and (y) Debt Issued to Refinance any Debt permitted by clause (a), this clause (5) or by clauses (1), (3), (6), (8) and (9) of this Section 4.09(b); provided that, in the case of a Refinancing, (i) the amount of the Debt so Issued shall not exceed the principal amount or the accreted value (in the case of Debt Issued at a discount) of the Debt so Refinanced plus, in each case, the reasonable costs incurred by the issuer in connection with such Refinancing, (ii) the Average Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not bear interest in cash prior to a specified date, the Refinancing Debt shall not bear interest in cash prior to such specified date, (v) if the Debt being Refinanced is Debt permitted by clause (3), such Refinancing Debt is not secured by any assets not securing the Debt so Refinanced or improvements or additions thereto, or replacements thereof, and (vi) the obligors with respect to the Refinancing Debt shall not include any Persons who were not obligors (including predecessors thereof) with respect to the Debt being Refinanced; (5) Non-Recourse Debt of a Non-Recourse Subsidiary of the Company and Guarantees of Non-Recourse Debt of Non-Recourse Subsidiaries which Guarantees are recourse only to the stock of the Non-Recourse Subsidiaries; (6) Debt under the Credit Agreement in an aggregate principal amount not to exceed $110,000,000; (7) Debt secured by Receivables, including to Refinance the Receivables Financing Agreement, provided that the amount of such Debt does not exceed 85% of the face amount of the Receivables; (8) Debt represented by the Other Indebtedness or any Refinancing thereof; (9) Debt represented by the New Credit Agreement in an aggregate principal amount not to exceed $100,000,000; (10) Debt permitted to be incurred under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (11) Beginning on the first anniversary of the effective date of the New Credit Agreement, Debt (other than Debt identified in clauses (1) through (10) above) in an aggregate principal amount outstanding at any one time not to exceed $30,000,000." 5 6 SECTION 1.04. (a) Sections 4.10(a) and (b) of the Indenture are hereby amended by adding the clause "Subject to Section 4.10(c) below," at the beginning of each such section. (b) Section 4.10 of the Indenture is further amended by adding a new clause (c) to read as follows: "Notwithstanding the foregoing, until the date that is the third anniversary following the effective date of the New Credit Agreement, the Company will be permitted to make a Restricted Payment to the extent, and only to the extent, that such payment is permitted by the terms of the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement. Following the date that is the third anniversary of the effective date of the New Credit Agreement, the Company will only be permitted to make Restricted Payments pursuant to paragraph 4.10(a) above in an aggregate principal amount not to exceed $15,000,000 in any fiscal year." SECTION 1.05. Section 4.11 of the Indenture is hereby amended and restated in its entirety to read as follows: "Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur or suffer to exist any Liens upon their respective property or assets whether owned on the Issue Date or acquired after such date, or on any income or profits therefrom, unless the Securities are equally and ratably secured by such Lien; provided that if the Debt secured by such Lien is subordinate or junior in right of payment to the Securities then the Lien securing such Debt shall be subordinate or junior in priority to the Lien securing the Securities at least to the same extent as such Debt is subordinate or junior to the Securities. The foregoing restrictions shall not apply to: (1) Liens existing on the Issue Date; (2) Permitted Liens; (3) Purchase money Liens on assets of the Company and its Subsidiaries or improvements or additions thereto existing or created within 180 days after the time of acquisition of or improvements or additions to such assets, or replacements thereof; provided that (i) such acquisition, improvement or addition is otherwise permitted by this Indenture, (ii) the principal amount of Debt (including Debt in respect of Capitalized Lease Obligations) secured by each such Lien on each asset shall not exceed the cost (including all such Debt secured 6 7 thereby, whether or not assumed) of the item subject thereto, and such Liens shall attach solely to the particular item of property so acquired, improved or added and any additions or accessions thereto, or replacements thereof, and (iii) the aggregate amount of Debt secured by Liens permitted by this clause (3) shall not at any time exceed $30,000,000; (4) Liens to secure Refinancing of any Debt secured by Liens described in clauses (l)-(3) above and (5) below; provided that (i) Refinancing does not increase the principal amount of Debt being so Refinanced and (ii) the Lien of the Refinancing Debt does not extend to any asset not securing the Debt being Refinanced or improvements or additions thereto, or replacements thereof; (5) Liens securing Acquired Debt; provided that (i) any such Lien secured the Acquired Debt at the time of the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and such Lien and Acquired Debt were not incurred by the Company or any of its Subsidiaries or by the Person being acquired or from whom the assets were acquired in connection with, or in anticipation of, the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and (ii) any such Lien does not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Debt prior to the time such Debt became Acquired Debt of the Company or of one of its Subsidiaries; (6) Liens on Receivables securing Debt permitted by Section 4.09(b)(8); (7) Liens securing intercompany Debt permitted by Section 4.09(b)(2); (8) Liens securing the Credit Agreement, the New Credit Agreement and the Other Indebtedness (including Liens to be granted in connection with any Refinancing of the Credit Agreement, the New Credit Agreement and the Other Indebtedness); (9) Liens permitted under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (10) Beginning on the first anniversary of the effective date of the New Credit Agreement, Liens on assets of the Company and its Subsidiaries in addition to those referred to in clauses (1)-(9); provided that such Liens only secure Debt of the Company and its Subsidiaries in an aggregate amount not to exceed at any one time outstanding $30,000,000." SECTION 1.06. (a) Section 4.13(6) of the Indenture is hereby amended and restated in its entirety to read as follows: 7 8 "the Credit Agreement, the Receivables Financing Agreement, other Debt existing on the Issue Date or the New Credit Agreement; and" (b) Section 4.13(7) of the Indenture is hereby amended and restated in its entirety to read as follows: "any Refinancing of the Credit Agreement, the Receivables Financing Agreement, any such other Debt existing on the Issue Date or the New Credit Agreement; provided that the terms and conditions of any such Refinancing agreements relating to the terms described under clauses (a)-(d) above are no less favorable to the Company than those contained in the agreements governing the Debt being Refinanced." SECTION 1.07. A new Section 6.13 is hereby added to the Indenture to read as follows: "Notification to Collateral Agent. If an Event of Default occurs and is continuing, the Trustee shall notify the Collateral Agent (as defined in the Collateral Agent Agreement) of such default pursuant to the terms of the Collateral Trust Agent and take any action as may be required thereby." SECTION 1.08. Section 9.01 of the Indenture is hereby amended by adding a new paragraph (7) to read as follows: "(7) to secure the Securities as contemplated by the first paragraph of Section 4.11 hereof." ARTICLE II GUARANTEES SECTION 2.01. Guarantee. Subject to Section 2.07, each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to each Holder (a "Guaranty"), the following obligations: (a) the full and punctual payment of principal, premium, if any, and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under the Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture (including, without limitation, the compensation and other payment obligations to the Trustee thereunder) and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that 8 9 such Guarantor will remain bound under the terms hereof notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, the Company, any Subsidiary thereof or any other Person, and, subject to Section 2.05, a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, the Company any Subsidiary thereof or any other Person and whether or not any other Guarantor, the Company or any Subsidiary thereof be joined in any such action or actions. Any payment by the Company or any Subsidiary thereof or other circumstance which operates to toll any statute of limitations as to the Company or any such Subsidiary shall operate to toll the statute of limitations as to each Guarantor. SECTION 2.02. Unconditional Obligations. This Guaranty shall not be discharged except by complete performance of the Guaranteed Obligations as contemplated in the Indenture and the Securities. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any agreement referred to in clause (a) of this paragraph; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by or for the benefit of any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations or any other Person; or (f) except as provided in Section 2.08 of this Second Supplemental Indenture, any change in the ownership of such Guarantor. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or any right to require a proceeding or the taking of other action by the Trustee or any Holder against, and any other notice to, any other Guarantor or the Company. SECTION 2.03. Continuing Guaranty. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise 9 10 have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action to any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Company or any Subsidiary thereof or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 2.04. Subrogation; Acceleration. Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Guaranteed Obligations until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations may be accelerated as provided in Article VI of the Indenture for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes hereof. SECTION 2.05. Enforcement. The Holders agree that this Guaranty may be enforced only by the action of the Trustee in accordance with the terms of the Indenture and that no other Holders shall have any right individually to seek to enforce this Guaranty. The Holders further agree that this Guaranty may not be enforced against any director, officer, employee, or stockholder of any Guarantor (except to the extent such stockholder is also a Guarantor hereunder). SECTION 2.06. Covenants. Each Guarantor agrees that its Guaranteed Obligations hereunder are senior Indebtedness of such Guarantor and such Guaranteed Obligations shall not be subordinate to any existing or future obligations of such Guarantor. Each Guarantor further covenants and agrees that on and after the date hereof such Guarantor will comply (as a Recourse Subsidiary of the Company), and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in the Indenture, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in the Indenture, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries. Each Guarantor hereby jointly and severally agrees to pay all reasonable out-of-pocket costs and expenses of each Holder in connection with the enforcement of this Guaranty and of the Trustee in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by each Holder). 10 11 SECTION 2.07. Limitation on Liability. Each Guarantor hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act or any similar Federal or state law. Accordingly, each Additional Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance SECTION 2.08. Miscellaneous. (a) This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns. (b) Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and with the written consent of the holders of a majority in aggregate principal amount of the Securities then outstanding. (c) All notices, requests, demands or other communications pursuant hereto shall be made in accordance with Section 10.02 of the Indenture. (d) In the event that all of the capital stock of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of the Indenture and the proceeds of such sale, disposition or liquidation are applied, to the extent applicable, in accordance with the provisions of the Indenture, such Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to the Company or another Subsidiary thereof) be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor terminate, and have no further force or effect. At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release. ARTICLE III MISCELLANEOUS SECTION 3.01. Effectiveness. This Second Supplemental Indenture shall become effective immediately upon its execution and delivery by the Company, the Guarantors and the Trustee, but Articles I and II shall not become operative unless and until the Requisite Consents (as defined in the Consent Solicitation Statement) are received and the New Credit Agreement and the Credit Agreement become effective. In the event of any termination of the Consent Solicitation set forth in the Consent Solicitation Statement or in the event that Requisite Consents are not received, Articles I and II of this Second Supplemental Indenture shall be null and void and of no force or effect. 11 12 SECTION 3.02. Confirmation. This Second Supplemental Indenture and the Indenture shall henceforth be read together. Except as expressly set forth herein, the Indenture shall remain unchanged and is in all respects confirmed and preserved. SECTION 3.03. Counterparts. This Second Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. SECTION 3.04. Governing Law. This Second Supplemental Indenture shall be governed by the laws of the State of New York without regard to the principles of conflicts of laws. The Trustee, the Company, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or this Second Supplemental Indenture. 12 13 IN WITNESS WHEREOF, the parties hereto caused this Second Supplemental Indenture to be signed and acknowledged by their respective officers thereunto duly authorized as of the day and year first-above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss -------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS MANUFACTURING CORPORATION By: /s/ Susan B. Yoss -------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss -------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Signature Illegible -------------------------------------- Name: Title: 13 14 BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP., as Additional Guarantors By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer 14 EX-4.7 3 y46546ex4-7.txt SECOND SUPPLEMENTAL INDENTURE 1 Exhibit 4.7 ----------- SECOND SUPPLEMENTAL INDENTURE dated as of December 4, 2000 to INDENTURE dated as of October 20, 1997 among BUILDING MATERIALS CORPORATION OF AMERICA and BUILDING MATERIALS MANUFACTURING CORPORATION, as Issuers, and BUILDING MATERIALS INVESTMENT CORPORATION, as Original Guarantor, THE ADDITIONAL GUARANTORS SIGNATORY HERETO and THE BANK OF NEW YORK, as Trustee 2 This SECOND SUPPLEMENTAL INDENTURE to the Indenture (as defined below) (the "Second Supplemental Indenture") dated as of December 4, 2000, is made among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), BUILDING MATERIALS MANUFACTURING CORPORATION, a Delaware corporation wholly-owned by the Company ("BMIC," and together with the Company, the "Issuers"), BUILDING MATERIALS INVESTMENT CORPORATION, a Delaware corporation wholly-owned by the Company (the "Original Guarantor"), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"), and the ADDITIONAL GUARANTORS signatory hereto (the "Additional Guarantors," and together with the Original Guarantor, the "Guarantors") and amends the Indenture, dated as of October 20, 1997, between the Company and the Trustee, as amended by the First Supplemental Indenture, dated January 1, 1999, among the Issuers, the Original Guarantor and the Trustee (as further amended from time to time, the "Indenture"). R E C I T A L S: ---------------- A. Pursuant to the Indenture, the Issuers issued $100 million in aggregate principal amount at maturity of its 8% Senior Notes due 2007 (the "Securities"). B. The Issuers, the Guarantors and the Trustee desire by this Second Supplemental Indenture to amend certain provisions of the Indenture. C. Consent to the amendments set forth in Article I herein have been solicited from the holders of record as of November 27, 2000, of the Securities pursuant to a Consent Solicitation Statement dated the 6th day of December 2000, as supplemented by the Supplement to Consent Solicitation Statement dated the 20th day of December 2000 (the "Consent Solicitation Statement"). The effectiveness of this Second Supplemental Indenture is conditioned upon the receipt of the Requisite Consents (as defined in the Consent Solicitation Statement). D. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. NOW, THEREFORE, it is hereby agreed as follows: ARTICLE I AMENDMENTS SECTION 1.01. Certain Defined Terms. The following provisions set forth in the definitions in Section 1.01 of the Indenture are hereby amended as follows: 2 3 (a) The definition of "Credit Agreement" is hereby amended and restated in its entirety to read as follows: "Credit Agreement" means the amended and restated Credit Agreement, dated as of December 4, 2000, among the Company, the lenders party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time." (b) The following defined terms are added to Section 1.01 in the appropriate alphabetical order: "Collateral Agent Agreement" means the collateral agent trust agreement, dated as of December 4, 2000, among the Company, the Subsidiary Guarantors identified therein, The Chase Manhattan Bank, Fleet National Bank, The Bank of New York, as Collateral Agent, The Bank of New York, as Indenture Trustee, and The Bank of New York, as Administrative Agent under the Credit Agreement and the New Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Consent Solicitation Statement" means that certain consent solicitation statement of the Company and Building Materials Manufacturing Corporation dated December 6, 2000, as supplemented on December 20, 2000." "DIP Facility" has the meaning ascribed to such term in the New Credit Agreement. "New Credit Agreement" means the secured credit agreement, dated as of December 4, 2000, among the Company, the Lenders party thereto, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time. "Other Indebtedness" means the obligations under that certain promissory note issued by the Company to The Chase Manhattan Bank dated as of the effective date of the New Credit 3 4 Agreement which was issued to replace the obligations of the Company under that certain platinum bullion lease effective December 1, 2000 (and any subsequent confirmations of such lease entered into prior to the effective date of the New Credit Agreement) and approximately $3.5 million of obligations under a standby letter of credit, dated as of June 4, 1999, issued by Fleet National Bank in connection with the Company's Shafter, California facility, as each may be amended, supplemented, refinanced (including by the DIP Facility) or otherwise modified from time to time and any hedging obligations entered into with counterparties that are the lenders or affiliates of the lenders under the New Credit Agreement and the Credit Agreement. SECTION 1.02. Section 4.01 of the Indenture is hereby amended and restated in its entirety to read as follows: "The Company shall pay, or cause to be paid, the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities; provided, however, that Holders that consented to the Proposed Amendments (as defined in the Consent Solicitation Statement) will receive quarterly interest payments on January 15, April 15, July 15 and October 15 of each year, commencing April 15, 2001. The record dates for such interest payments shall be the preceding January 1, April 1, July 1 and October 1. Principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay all principal and interest payable in cash in each case as then due. The Company shall pay interest on overdue principal, as the case may be, at the rate specified therefor in the Securities." SECTION 1.03. Section 4.09(b) of the Indenture is hereby amended and restated in its entirety to read as follows: "(b) Notwithstanding the foregoing, there may be issued the following Debt: (1) The Securities; (2) (i) Debt of the Company Issued to and held by a Wholly-Owned Recourse Subsidiary of the Company and (ii) Debt of a Recourse Subsidiary of the Company Issued to and held by the Company or a Wholly-Owned Recourse Subsidiary of the Company; provided that any 4 5 subsequent transfer of such Debt (other than to the Company or to a Wholly-Owned Recourse Subsidiary of the Company) shall be deemed, in each case, to constitute the Issuance of such Debt by the Company or such Subsidiary; (3) Debt the proceeds of which are used to acquire assets of the Company and its Subsidiaries; provided that, after giving effect to the Issuance of any such Debt that otherwise complies with this clause (3), the aggregate amount of all Debt then outstanding at any time under this clause (3), including all Refinancings thereof then outstanding, shall not at any time exceed $60,000,000; (4) Acquired Debt; (5) (x) Debt outstanding on the Issue Date (including the Deferred Coupon Notes and the 2006 Notes) and (y) Debt Issued to Refinance any Debt permitted by clause (a), this clause (5) or by clauses (1), (3), (7), (9) and (10) of this Section 4.09(b); provided that, in the case of a Refinancing, (i) the amount of the Debt so Issued shall not exceed the principal amount or the accreted value (in the case of Debt Issued at a discount) of the Debt so Refinanced plus, in each case, the reasonable costs incurred by the issuer in connection with such Refinancing, (ii) the Average Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not bear interest in cash prior to a specified date, the Refinancing Debt shall not bear interest in cash prior to such specified date, (v) if the Debt being Refinanced is Debt permitted by clause (3), such Refinancing Debt is not secured by any assets not securing the Debt so Refinanced or improvements or additions thereto, or replacements thereof, and (vi) the obligors with respect to the Refinancing Debt shall not include any Persons who were not obligors (including predecessors thereof) with respect to the Debt being Refinanced; (6) Non-Recourse Debt of a Non-Recourse Subsidiary of the Company and Guarantees of Non-Recourse Debt of Non-Recourse Subsidiaries which Guarantees are recourse only to the stock of the Non-Recourse Subsidiaries; (7) Debt under the Credit Agreement in an aggregate principal amount not to exceed $110,000,000; (8) Debt secured by Receivables, including to Refinance the Receivables Financing Agreement, provided that the amount of such Debt does not exceed 85% of the face amount of the Receivables; (9) Debt represented by the Other Indebtedness or any Refinancing thereof; 5 6 (10) Debt represented by the New Credit Agreement in an aggregate principal amount not to exceed $100,000,000; (11) Debt permitted to be incurred under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (12) Beginning on the first anniversary of the effective date of the New Credit Agreement, Debt (other than Debt identified in clauses (1) through (11) above) in an aggregate principal amount outstanding at any one time not to exceed $30,000,000." SECTION 1.04. (a) Sections 4.10(a) and (b) of the Indenture are hereby amended by adding the clause "Subject to Section 4.10(c) below," at the beginning of each such section. (b) Section 4.10 of the Indenture is hereby further amended by adding a new clause (c) to read as follows: "Notwithstanding the foregoing, until the date that is the third anniversary following the effective date of the New Credit Agreement, the Company will be permitted to make a Restricted Payment to the extent, and only to the extent, that such payment is permitted by the terms of the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement. Following the date that is the third anniversary of the effective date of the New Credit Agreement, the Company will only be permitted to make Restricted Payments pursuant to paragraph 4.10(a) above in an aggregate principal amount not to exceed $15,000,000 in any fiscal year." SECTION 1.05. Section 4.11 of the Indenture is hereby amended and restated in its entirety to read as follows: "Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur or suffer to exist any Liens upon their respective property or assets whether owned on the Issue Date or acquired after such date, or on any income or profits therefrom, unless the Securities are equally and ratably secured by such Lien; provided that if the Debt secured by such Lien is subordinate or junior in right of payment to the Securities then the Lien securing such Debt shall be subordinate or junior in priority to the Lien securing the Securities at least to the same extent as such Debt is subordinate or junior to the Securities. The foregoing restrictions shall not apply to: 6 7 (1) Liens existing on the Issue Date; (2) Permitted Liens; (3) Purchase money Liens on assets of the Company and its Subsidiaries or improvements or additions thereto existing or created within 180 days after the time of acquisition of or improvements or additions to such assets, or replacements thereof; provided that (i) such acquisition, improvement or addition is otherwise permitted by this Indenture, (ii) the principal amount of Debt (including Debt in respect of Capitalized Lease Obligations) secured by each such Lien on each asset shall not exceed the cost (including all such Debt secured thereby, whether or not assumed) of the item subject thereto, and such Liens shall attach solely to the particular item of property so acquired, improved or added and any additions or accessions thereto, or replacements thereof, and (iii) the aggregate amount of Debt secured by Liens permitted by this clause (3) shall not at any time exceed $30,000,000; (4) Liens to secure Refinancing of any Debt secured by Liens described in clauses (l)-(3) above and (5) below; provided that (i) Refinancing does not increase the principal amount of Debt being so Refinanced and (ii) the Lien of the Refinancing Debt does not extend to any asset not securing the Debt being Refinanced or improvements or additions thereto, or replacements thereof; (5) Liens securing Acquired Debt; provided that (i) any such Lien secured the Acquired Debt at the time of the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and such Lien and Acquired Debt were not incurred by the Company or any of its Subsidiaries or by the Person being acquired or from whom the assets were acquired in connection with, or in anticipation of, the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and (ii) any such Lien does not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Debt prior to the time such Debt became Acquired Debt of the Company or of one of its Subsidiaries; (6) Liens on Receivables securing Debt permitted by Section 4.09(b)(8); (7) Liens securing intercompany Debt permitted by Section 4.09(b)(2); (8) Liens securing the Credit Agreement, the New Credit Agreement and the Other Indebtedness (including Liens to be granted in connection with any Refinancing of the Credit Agreement, the New Credit Agreement and the Other Indebtedness); 7 8 (9) Liens permitted under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (10) Beginning on the first anniversary of the effective date of the New Credit Agreement, Liens on assets of the Company and its Subsidiaries in addition to those referred to in clauses (1)-(9), provided that such Liens only secure Debt of the Company and its Subsidiaries in an aggregate amount not to exceed at any one time outstanding $30,000,000." SECTION 1.06. (a) Section 4.13(6) of the Indenture is hereby amended and restated in its entirety to read as follows: "the Credit Agreement, the Receivables Financing Agreement, other Debt existing on the Issue Date or the New Credit Agreement; and" (b) Section 4.13(7) of the Indenture is hereby amended and restated in its entirety to read as follows: "any Refinancing of the Credit Agreement, the Receivables Financing Agreement, any such other Debt existing on the Issue Date or the New Credit Agreement; provided that the terms and conditions of any such Refinancing agreements relating to the terms described under clauses (a)-(d) above are no less favorable to the Company than those contained in the agreements governing the Debt being Refinanced." SECTION 1.07. A new Section 6.13 is hereby added to the Indenture to read as follows: "Notification to Collateral Agent. If an Event of Default occurs and is continuing, the Trustee shall notify the Collateral Agent (as defined in the Collateral Agent Agreement) of such default pursuant to the terms of the Collateral Agent Agreement and take any action as may be required thereby." SECTION 1.08. Section 9.01 of the Indenture is hereby amended by adding a new paragraph (7) to read as follows: "(7) to secure the Securities as contemplated by the first paragraph of Section 4.11 hereof." 8 9 ARTICLE II GUARANTEES SECTION 2.01. Guarantee. Subject to Section 2.07, each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to each Holder (a "Guaranty"), the following obligations: (a) the full and punctual payment of principal, premium, if any, and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Issuers under the Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Issuers under the Indenture (including, without limitation, the compensation and other payment obligations to the Trustee thereunder) and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under the terms hereof notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, the Issuers, any Subsidiary thereof or any other Person, and, subject to Section 2.05, a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, the Issuers, any Subsidiary thereof or any other Person and whether or not any other Guarantor, the Issuers or any Subsidiary thereof be joined in any such action or actions. Any payment by the Issuers or any Subsidiary thereof or other circumstance which operates to toll any statute of limitations as to the Issuers or any such Subsidiary shall operate to toll the statute of limitations as to each Guarantor. SECTION 2.02. Unconditional Obligations. This Guaranty shall not be discharged except by complete performance of the Guaranteed Obligations as contemplated in the Indenture and the Securities. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Issuers or any other Person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any agreement referred to in clause (a) of this paragraph; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by or for the benefit of any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations or any other Person; or (f) except as provided in Section 2.08 of this Second Supplemental 9 10 Indenture, any change in the ownership of such Guarantor. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or any right to require a proceeding or the taking of other action by the Trustee or any Holder against, and any other notice to, any other Guarantor or the Issuers. SECTION 2.03. Continuing Guaranty. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action to any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Issuers or any Subsidiary thereof or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 2.04. Subrogation; Acceleration. Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Guaranteed Obligations until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations may be accelerated as provided in Article VI of the Indenture for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes hereof. SECTION 2.05. Enforcement. The Holders agree that this Guaranty may be enforced only by the action of the Trustee in accordance with the terms of the Indenture and that no other Holders shall have any right individually to seek to enforce this Guaranty. The Holders further agree that this Guaranty may not be enforced against any director, officer, employee, or stockholder of any Guarantor (except to the extent such stockholder is also a Guarantor hereunder). SECTION 2.06. Covenants. Each Guarantor agrees that its Guaranteed Obligations hereunder are senior Indebtedness of such Guarantor and such Guaranteed Obligations shall not be subordinate to any existing or future obligations of such Additional Guarantor. Each Guarantor further covenants and 10 11 agrees that on and after the date hereof such Guarantor will comply (as a Recourse Subsidiary of the Company), and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in the Indenture, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in the Indenture, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries. Each Guarantor hereby jointly and severally agrees to pay all reasonable out-of-pocket costs and expenses of each Holder in connection with the enforcement of this Guaranty and of the Trustee in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by each Holder). SECTION 2.07. Limitation on Liability. Each Guarantor hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act or any similar Federal or state law. Accordingly, each Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance SECTION 2.08. Miscellaneous. (a) This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns. (b) Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and with the written consent of the holders of a majority in aggregate principal amount of the Securities then outstanding. (c) All notices, requests, demands or other communications pursuant hereto shall be made in accordance with Section 10.02 of the Indenture. (d) In the event that all of the capital stock of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of the Indenture and the proceeds of such sale, disposition or liquidation are applied, to the extent applicable, in accordance with the provisions of the Indenture, such Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to the Company or another Subsidiary thereof) be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor terminate, and have no further force or effect. At the request of 11 12 the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release. ARTICLE III MISCELLANEOUS SECTION 3.01. Effectiveness. This Second Supplemental Indenture shall become effective immediately upon its execution and delivery by the Issuers, the Guarantors and the Trustee, but Articles I and II shall not become operative unless and until the Requisite Consents (as defined in the Consent Solicitation Statement) are received and the New Credit Agreement and the Credit Agreement become effective. In the event of any termination of the Consent Solicitation set forth in the Consent Solicitation Statement or in the event that Requisite Consents are not received, Articles I and II of this Second Supplemental Indenture shall be null and void and of no force or effect. SECTION 3.02. Confirmation. This Second Supplemental Indenture and the Indenture shall henceforth be read together. Except as expressly set forth herein, the Indenture shall remain unchanged and is in all respects confirmed and preserved. SECTION 3.03. Counterparts. This Second Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. SECTION 3.04. Governing Law. This Second Supplemental Indenture shall be governed by the laws of the State of New York without regard to the principles of conflicts of laws. The Trustee, the Issuers, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or this Second Supplemental Indenture. 12 13 IN WITNESS WHEREOF, the parties hereto caused this Second Supplemental Indenture to be signed and acknowledged by their respective officers thereunto duly authorized as of the day and year first-above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS MANUFACTURING CORPORATION By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Signature Illegible -------------------------------------------- Name: Title: 13 14 BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP., as Additional Guarantors By: /s/ Susan B. Yoss -------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer 14 EX-4.9 4 y46546ex4-9.txt SECOND SUPPLEMENTAL INDENTURE 1 Exhibit 4.9 ----------- SECOND SUPPLEMENTAL INDENTURE dated as of December 4, 2000 to INDENTURE dated as of July 17, 1998 among BUILDING MATERIALS CORPORATION OF AMERICA, as Issuer, BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, as Original Guarantors, THE ADDITIONAL GUARANTORS SIGNATORY HERETO and THE BANK OF NEW YORK, as Trustee 2 This SECOND SUPPLEMENTAL INDENTURE to the Indenture (as defined below) (the "Second Supplemental Indenture") dated as of December 4, 2000, is made among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, each a Delaware corporation wholly-owned by the Company (the "Original Guarantors"), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"), and the ADDITIONAL GUARANTORS listed on the signature pages hereto (the "Additional Guarantors," and together with the Original Guarantors, the "Guarantors"), and amends the Indenture, dated as of July 17, 1998, between the Company and the Trustee, as amended by the First Supplemental Indenture, dated January 1, 1999, among the Company, the Original Guarantors and the Trustee (as further amended from time to time, the "Indenture"). R E C I T A L S: ---------------- A. Pursuant to the Indenture, the Company issued $150 million in aggregate principal amount at maturity of its 7 3/4% Senior Notes due 2005 (the "Securities"). B. The Company, the Guarantors and the Trustee desire by this Second Supplemental Indenture to amend certain provisions of the Indenture. C. Consent to the amendments set forth in Article I herein have been solicited from the holders of record as of November 27, 2000, of the Securities pursuant to a Consent Solicitation Statement dated the 6th day of December 2000, as supplemented by the Supplement to Consent Solicitation Statement dated the 20th day of December 2000 (the "Consent Solicitation Statement"). The effectiveness of this Second Supplemental Indenture is conditioned upon the receipt of the Requisite Consents (as defined in the Consent Solicitation Statement). D. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. NOW, THEREFORE, it is hereby agreed as follows: ARTICLE I AMENDMENTS SECTION 1.01. Certain Defined Terms. The following provisions set forth in the definitions in Section 1.01 of the Indenture are hereby amended as follows: 2 3 (a) The definition of "Credit Agreement" is hereby amended and restated in its entirety to read as follows: "Credit Agreement" means the amended and restated Credit Agreement, dated as of December 4, 2000, among the Company, the lenders party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as Swing Line Lender and Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time." (b) The following defined terms are added to Section 1.01 in the appropriate alphabetical order: "Collateral Agent Agreement" means the collateral agent agreement, dated as of December 4, 2000, among the Company, the Subsidiary Guarantors identified therein, The Chase Manhattan Bank, Fleet National Bank, The Bank of New York, as Collateral Agent, The Bank of New York, as Indenture Trustee, and The Bank of New York, as Administrative Agent under the Credit Agreement and the New Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Consent Solicitation Statement" means that certain consent solicitation statement of the Company and Building Materials Manufacturing Corporation dated December 6, 2000, as supplemented on December 20, 2000." "DIP Facility" shall have the meaning ascribed to such term in the New Credit Agreement. "New Credit Agreement" means the secured credit agreement, dated as of December 4, 2000, among the Company, the Lenders party thereto, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time. "Other Indebtedness" means the obligations under that certain promissory note issued by the Company to The Chase Manhattan Bank dated as of the effective date of the New Credit Agreement which was issued to replace the obligations of the 3 4 Company under that certain platinum bullion lease effective December 1, 2000 (and any subsequent confirmations of such lease entered into prior to the effective date of the New Credit Agreement) and approximately $3.5 million of obligations under a standby letter of credit, dated as of June 4, 1999, issued by Fleet National Bank in connection with the Company's Shafter, California facility, as each may be amended, supplemented, refinanced (including by the DIP Facility) or otherwise modified from time to time and any hedging obligations entered into with counterparties that are the lenders or affiliates of the lenders under the New Credit Agreement and the Credit Agreement. SECTION 1.02. Section 4.01 of the Indenture is hereby amended and restated in its entirety to read as follows: "The Company shall pay, or cause to be paid, the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities; provided, however, that Holders that consented to the Proposed Amendments (as defined in the Consent Solicitation Statement) will receive quarterly interest payments on January 15, April 15, July 15 and October 15 of each year, commencing January 15, 2001. The record dates for such interest payments shall be the preceding January 1, April 1, July 1 and October 1. Principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay all principal and interest payable in cash in each case as then due. The Company shall pay interest on overdue principal, as the case may be, at the rate specified therefor in the Securities." SECTION 1.03. Section 4.09(b)of the Indenture is hereby amended and restated in its entirety to read as follows: "(b) Notwithstanding the foregoing, there may be issued the following Debt: (1) The Securities (other than the Additional Securities) and the guarantee thereof by the Guarantors; (2) Debt of the Company Issued to and held by a Wholly-Owned Recourse Subsidiary of the Company and (ii) Debt of a Recourse Subsidiary of the Company Issued to and held by the Company or a Wholly-Owned Recourse Subsidiary of the Company; provided that any subsequent transfer of such Debt (other than to the Company or to a Wholly-Owned Recourse Subsidiary of the Company) shall be deemed, in each case, to constitute the Issuance of such Debt by the Company or such Subsidiary; 4 5 (3) Debt the proceeds of which are used to acquire assets of the Company and its Subsidiaries; provided that, after giving effect to the Issuance of any such Debt that otherwise complies with this clause (3), the aggregate amount of all Debt then outstanding at any time under this clause (3), including all Refinancings thereof then outstanding, shall not at any time exceed $80,000,000; (4) Acquired Debt; (5) (x) Debt outstanding on the Issue Date (including the Deferred Coupon Notes, the 2006 Notes and the 2007 Notes) and (y) Debt Issued to Refinance any Debt permitted by clause (a), this clause (5) or by clauses (1), (3), (7), (9) and (10) of this Section 4.09(b); provided that, in the case of a Refinancing, (i) the amount of the Debt so Issued shall not exceed the principal amount or the accreted value (in the case of Debt Issued at a discount) of the Debt so Refinanced plus, in each case, the reasonable costs incurred by the issuer in connection with such Refinancing, (ii) the Average Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not bear interest in cash prior to a specified date, the Refinancing Debt shall not bear interest in cash prior to such specified date, (v) if the Debt being Refinanced is Debt permitted by clause (3), such Refinancing Debt is not secured by any assets not securing the Debt so Refinanced or improvements or additions thereto, or replacements thereof, and (vi) the obligors with respect to the Refinancing Debt shall not include any Persons who were not obligors (including predecessors thereof) with respect to the Debt being Refinanced; (6) Non-Recourse Debt of a Non-Recourse Subsidiary of the Company and Guarantees of Non-Recourse Debt of Non-Recourse Subsidiaries which Guarantees are recourse only to the stock of the Non-Recourse Subsidiaries; (7) Debt under the Credit Agreement in an aggregate principal amount not to exceed $100,000,000; (8) Debt secured by Receivables, including to Refinance the Receivables Financing Agreement, provided that the amount of such Debt does not exceed 85% of the face amount of the Receivables; (9) Debt represented by the Other Indebtedness or any Refinancing thereof; (10) Debt represented by the New Credit Agreement in an aggregate principal amount not to exceed $110,000,000; 5 6 (11) Debt permitted to be incurred under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (12) Beginning on the first anniversary of the effective date of the New Credit Agreement, Debt (other than Debt identified in clauses (1) through (11) above) in an aggregate principal amount outstanding at any one time not to exceed $30,000,000." SECTION 1.04. (a) Sections 4.10(a) and (b) of the Indenture are hereby amended by adding the clause "Subject to Section 4.10(c) below," to the beginning of each such section. (b) Section 4.10 of the Indenture is further amended by adding a new clause (c) to read as follows: "Notwithstanding the foregoing, until the date that is the third anniversary following the effective date of the New Credit Agreement, the Company will be permitted to make a Restricted Payment to the extent, and only to the extent, that such payment is permitted by the terms of the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement. Following the date that is the third anniversary of the effective date of the New Credit Agreement, the Company will only be permitted to make Restricted Payments pursuant to paragraph 4.10(a) above in an aggregate principal amount not to exceed $15,000,000 in any fiscal year." SECTION 1.05. Section 4.11 of the Indenture is hereby amended and restated in its entirety to read as follows: "Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur or suffer to exist any Liens upon their respective property or assets whether owned on the Issue Date or acquired after such date, or on any income or profits therefrom, unless the Securities are equally and ratably secured by such Lien; provided that if the Debt secured by such Lien is subordinate or junior in right of payment to the Securities then the Lien securing such Debt shall be subordinate or junior in priority to the Lien securing the Securities at least to the same extent as such Debt is subordinate or junior to the Securities. The foregoing restrictions shall not apply to: (1) Liens existing on the Issue Date; (2) Permitted Liens; (3) Purchase money Liens on assets of the Company and its Subsidiaries or improvements or additions thereto existing or created within 180 days after the time of acquisition of or improvements or additions to such assets, or replacements thereof; provided that (i) 6 7 such acquisition, improvement or addition is otherwise permitted by this Indenture, (ii) the principal amount of Debt (including Debt in respect of Capitalized Lease Obligations) secured by each such Lien on each asset shall not exceed the cost (including all such Debt secured thereby, whether or not assumed) of the item subject thereto, and such Liens shall attach solely to the particular item of property so acquired, improved or added and any additions or accessions thereto, or replacements thereof, and (iii) the aggregate amount of Debt secured by Liens permitted by this clause (3) shall not at any time exceed $40,000,000; (4) Liens to secure Refinancing of any Debt secured by Liens described in clauses (l)-(3) above and (5) below; provided that (i) Refinancing does not increase the principal amount of Debt being so Refinanced and (ii) the Lien of the Refinancing Debt does not extend to any asset not securing the Debt being Refinanced or improvements or additions thereto, or replacements thereof; (5) Liens securing Acquired Debt; provided that (i) any such Lien secured the Acquired Debt at the time of the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and such Lien and Acquired Debt were not incurred by the Company or any of its Subsidiaries or by the Person being acquired or from whom the assets were acquired in connection with, or in anticipation of, the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and (ii) any such Lien does not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Debt prior to the time such Debt became Acquired Debt of the Company or of one of its Subsidiaries; (6) Liens on Receivables securing Debt permitted by Section 4.09(b)(8); (7) Liens securing intercompany Debt permitted by Section 4.09(b)(2); (8) Liens securing the Credit Agreement, the New Credit Agreement and the Other Indebtedness (including Liens to be granted in connection with any Refinancing of the Credit Agreement, the New Credit Agreement and the Other Indebtedness); (9) Liens permitted under the Credit Agreement or the New Credit Agreement as each such agreement is in effect on the effective date of the New Credit Agreement; and (10) Beginning on the first anniversary of the effective date of the New Credit Agreement, Liens on assets of the Company and its Subsidiaries in addition to those referred to in clauses (1)-(9); provided that such Liens only secure Debt of the Company and its Subsidiaries in an aggregate amount not to exceed at any one time outstanding $30,000,000.or any Refinancing of either of them." 7 8 SECTION 1.06. (a) Section 4.13(6) of the Indenture is hereby amended and restated in its entirety to read as follows: "the Credit Agreement, the Receivables Financing Agreement, other Debt existing on the Issue Date or the New Credit Agreement; and" (b) Section 4.13(7) of the Indenture is hereby amended and restated in its entirety to read as follows: "any Refinancing of the Credit Agreement, the Receivables Financing Agreement, any such other Debt existing on the Issue Date or the New Credit Agreement; provided that the terms and conditions of any such Refinancing agreements relating to the terms described under clauses (a)-(d) above are no less favorable to the Company than those contained in the agreements governing the Debt being Refinanced." SECTION 1.07. A new Section 6.13 is hereby added to the Indenture to read as follows: "Notification to Collateral Agent. If an Event of Default occurs and is continuing, the Trustee shall notify the Collateral Agent (as defined in the Collateral Agent Agreement) of such default pursuant to the terms of the Collateral Agent Agreement and take any action as may be required thereby." SECTION 1.08. Section 9.01 of the Indenture is hereby amended by adding a new paragraph (7) to read as follows: "(7) to secure the Securities as contemplated by the first paragraph of Section 4.11 hereof." ARTICLE II GUARANTEES SECTION 2.01. Guarantee. Subject to Section 2.07, each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to each Holder (a "Guaranty"), the following obligations: (a) the full and punctual payment of principal, premium, if any, and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under the Indenture 8 9 and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture (including, without limitation, the compensation and other payment obligations to the Trustee thereunder) and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under the terms hereof notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, the Company, any Subsidiary thereof or any other Person, and, subject to Section 2.05, a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, the Company any Subsidiary thereof or any other Person and whether or not any other Guarantor, the Company or any Subsidiary thereof be joined in any such action or actions. Any payment by the Company or any Subsidiary thereof or other circumstance which operates to toll any statute of limitations as to the Company or any such Subsidiary shall operate to toll the statute of limitations as to each Guarantor. SECTION 2.02. Unconditional Obligations. This Guaranty shall not be discharged except by complete performance of the Guaranteed Obligations as contemplated in the Indenture and the Securities. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any agreement referred to in clause (a) of this paragraph; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by or for the benefit of any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations or any other Person; or (f) except as provided in Section 2.08 of this Second Supplemental Indenture, any change in the ownership of such Guarantor. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or any right to require a proceeding or the taking of other action by the Trustee or any Holder against, and any other notice to, any other Guarantor or the Company. 9 10 SECTION 2.03. Continuing Guaranty. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action to any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Company or any Subsidiary thereof or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 2.04. Subrogation; Acceleration. Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Guaranteed Obligations until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations may be accelerated as provided in Article VI of the Indenture for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes hereof. SECTION 2.05. Enforcement. The Holders agree that this Guaranty may be enforced only by the action of the Trustee in accordance with the terms of the Indenture and that no other Holders shall have any right individually to seek to enforce this Guaranty. The Holders further agree that this Guaranty may not be enforced against any director, officer, employee, or stockholder of any Guarantor (except to the extent such stockholder is also a Guarantor hereunder). SECTION 2.06. Covenants. Each Guarantor agrees that its Guaranteed Obligations hereunder are senior Indebtedness of such Guarantor and such Guaranteed Obligations shall not be subordinate to any existing or future obligations of such Guarantor. Each Guarantor further covenants and agrees that on and after the date hereof such Guarantor will comply (as a Recourse Subsidiary of the Company), and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in the Indenture, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in 10 11 violation of any provision, covenant or agreement contained in the Indenture, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries. Each Guarantor hereby jointly and severally agrees to pay all reasonable out-of-pocket costs and expenses of each Holder in connection with the enforcement of this Guaranty and of the Trustee in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by each Holder). SECTION 2.07. Limitation on Liability. Each Guarantor hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act or any similar Federal or state law. Accordingly, each Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance SECTION 2.08. Miscellaneous. (a) This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns. (b) Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and with the written consent of the holders of a majority in aggregate principal amount of the Securities then outstanding. (c) All notices, requests, demands or other communications pursuant hereto shall be made in accordance with Section 10.02 of the Indenture. (d) In the event that all of the capital stock of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of the Indenture and the proceeds of such sale, disposition or liquidation are applied, to the extent applicable, in accordance with the provisions of the Indenture, such Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to the Company or another Subsidiary thereof) be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor terminate, and have no further force or effect. At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release. 11 12 ARTICLE III MISCELLANEOUS SECTION 3.01. Effectiveness. This Second Supplemental Indenture shall become effective immediately upon its execution and delivery by the Company, the Guarantors and the Trustee, but Articles I and II shall not become operative unless and until the Requisite Consents (as defined in the Consent Solicitation Statement) are received and the New Credit Agreement and the Credit Agreement become effective. In the event of any termination of the Consent Solicitation set forth in the Consent Solicitation Statement or in the event that Requisite Consents are not received, Articles I and II of this Second Supplemental Indenture shall be null and void and of no force or effect. SECTION 3.02. Confirmation. This Second Supplemental Indenture and the Indenture shall henceforth be read together. Except as expressly set forth herein, the Indenture shall remain unchanged and is in all respects confirmed and preserved. SECTION 3.03. Counterparts. This Second Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. SECTION 3.04. Governing Law. This Second Supplemental Indenture shall be governed by the laws of the State of New York without regard to the principles of conflicts of laws. The Trustee, the Company, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or this Second Supplemental Indenture. 12 13 IN WITNESS WHEREOF, the parties hereto caused this Second Supplemental Indenture to be signed and acknowledged by their respective officers thereunto duly authorized as of the day and year first-above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss Title: Senior Vice President BUILDING MATERIALS MANUFACTURING CORPORATION By:/s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss Title: Senior Vice President BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss Title: Senior Vice President THE BANK OF NEW YORK, as Trustee By: /s/ Signature Illegible ----------------------------------------- Name: Title: 13 14 BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP., as Additional Guarantors By: /s/ Susan B. Yoss -------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer 14 EX-4.12 5 y46546ex4-12.txt SECOND SUPPLEMENTAL INDENTURE 1 Exhibit 4.12 ------------ SECOND SUPPLEMENTAL INDENTURE dated as of December 4, 2000 to INDENTURE dated as of December 3, 1998 among BUILDING MATERIALS CORPORATION OF AMERICA, as Issuer, BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, as Original Guarantors, THE ADDITIONAL GUARANTORS SIGNATORY HERETO and THE BANK OF NEW YORK, as Trustee 2 This SECOND SUPPLEMENTAL INDENTURE to the Indenture (as defined below) (the "Second Supplemental Indenture") dated as of December 4, 2000, is made among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, each a Delaware corporation wholly-owned by the Company (the "Original Guarantors"), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"), and the ADDITIONAL GUARANTORS signatory hereto (the "Additional Guarantors," and together with the Original Guarantors, the "Guarantors") and amends the Indenture, dated as of December 3, 1998, between the Company and the Trustee, as amended by the First Supplemental Indenture, dated January 1, 1999, among the Company, the Original Guarantors and the Trustee (as further amended from time to time, the "Indenture"). R E C I T A L S: ---------------- A. Pursuant to the Indenture, the Company issued $155 million in aggregate principal amount at maturity of its 8% Senior Notes due 2008 (the "Securities"). B. The Company, the Guarantors and the Trustee desire by this Second Supplemental Indenture to amend certain provisions of the Indenture. C. Consent to the amendments set forth in Article I herein have been solicited from the holders of record as of November 27, 2000, of the Securities pursuant to a Consent Solicitation Statement dated the 6th day of December 2000, as supplemented by the Supplement to Consent Solicitation Statement dated the 20th day of December 2000 (the "Consent Solicitation Statement"). The effectiveness of this Second Supplemental Indenture is conditioned upon the receipt of the Requisite Consents (as defined in the Consent Solicitation Statement). D. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. NOW, THEREFORE, it is hereby agreed as follows: ARTICLE I AMENDMENTS SECTION 1.01. Certain Defined Terms. The following provisions set forth in the definitions in Section 1.01 of the Indenture are hereby amended as follows: 2 3 (a) The definition of "Credit Agreement" is hereby amended and restated in its entirety to read as follows: "Credit Agreement" means the amended and restated Credit Agreement, dated as of December 4, 2000, among the Company, the lenders party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time." (b) The following defined terms are added to Section 1.01 in the appropriate alphabetical order: "Collateral Agent Agreement" means the collateral agent agreement, dated as of December 4, 2000, among the Company, the Subsidiary Guarantors identified therein, The Chase Manhattan Bank, Fleet National Bank, The Bank of New York, as Collateral Agent, The Bank of New York, as Indenture Trustee, and The Bank of New York, as Administrative Agent under the Credit Agreement and the New Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Consent Solicitation Statement" means that certain consent solicitation statement of the Company and Building Materials Manufacturing Corporation dated December 6, 2000, as supplemented on December 20, 2000." "DIP Facility" has the meaning ascribed to such term in the New Credit Agreement. "New Credit Agreement" means the secured credit agreement, dated as of December 4, 2000, among the Company, the Lenders party thereto, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time. "Other Indebtedness" means the obligations under that certain promissory note issued by the Company to The Chase Manhattan Bank dated as of the effective date of the New Credit Agreement which was issued to replace the obligations of the 3 4 Company under that certain platinum bullion lease effective December 1, 2000 (and any subsequent confirmations of such lease entered into prior to the effective date of the New Credit Agreement) and approximately $3.5 million of obligations under a standby letter of credit, dated as of June 4, 1999, issued by Fleet National Bank in connection with the Company's Shafter, California facility, as each may be amended, supplemented, refinanced (including by the DIP Facility) or otherwise modified from time to time and any hedging obligations entered into with counterparties that are the lenders or affiliates of the lenders under the New Credit Agreement and the Credit Agreement. SECTION 1.02. Section 4.01 of the Indenture is hereby amended and restated in its entirety to read as follows: "The Company shall pay, or cause to be paid, the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities; provided, however, that Holders that consented to the Proposed Amendments (as defined in the Consent Solicitation Statement) will receive quarterly interest payments on March 1, June 1, September 1, December 1 of each year, commencing June 1, 2001. The record dates for such interest payments shall be the preceding February 15, May 15, August 15 and November 15. Principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay all principal and interest payable in cash in each case as then due. The Company shall pay interest on overdue principal, as the case may be, at the rate specified therefor in the Securities." SECTION 1.03. Section 4.09(b) of the Indenture is hereby amended and restated in its entirety to read as follows: "(b) Notwithstanding the foregoing, there may be issued the following Debt: (1) The Securities; (2) (i) Debt of the Company Issued to and held by a Wholly-Owned Recourse Subsidiary of the Company and (ii) Debt of a Recourse Subsidiary of the Company Issued to and held by the Company or a Wholly-Owned Recourse Subsidiary of the Company; provided that any subsequent transfer of such Debt (other than to the Company or to a Wholly-Owned Recourse Subsidiary of the Company) shall be deemed, in each case, to constitute the Issuance of such Debt by the Company or such Subsidiary; 4 5 (3) Debt the proceeds of which are used to acquire assets of the Company and its Subsidiaries; provided that, after giving effect to the Issuance of any such Debt that otherwise complies with this clause (3), the aggregate amount of all Debt then outstanding at any time under this clause (3), including all Refinancings thereof then outstanding, shall not at any time exceed $80,000,000; (4) Acquired Debt; (5) (x) Debt outstanding on the Issue Date (including the Deferred Coupon Notes, the 2005 Notes, the 2006 Notes and the 2007 Notes) and (y) Debt Issued to Refinance any Debt permitted by clause (a), this clause (5) or by clauses (1), (3), (7), (9) and (10) of this Section 4.09(b); provided that, in the case of a Refinancing, (i) the amount of the Debt so Issued shall not exceed the principal amount or the accreted value (in the case of Debt Issued at a discount) of the Debt so Refinanced plus, in each case, the reasonable costs incurred by the issuer in connection with such Refinancing, (ii) the Average Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not bear interest in cash prior to a specified date, the Refinancing Debt shall not bear interest in cash prior to such specified date, (v) if the Debt being Refinanced is Debt permitted by clause (3), such Refinancing Debt is not secured by any assets not securing the Debt so Refinanced or improvements or additions thereto, or replacements thereof, and (vi) the obligors with respect to the Refinancing Debt shall not include any Persons who were not obligors (including predecessors thereof) with respect to the Debt being Refinanced; (6) Non-Recourse Debt of a Non-Recourse Subsidiary of the Company and Guarantees of Non-Recourse Debt of Non-Recourse Subsidiaries which Guarantees are recourse only to the stock of the Non-Recourse Subsidiaries; (7) Debt under the Credit Agreement in an aggregate principal amount not to exceed $110,000,000; (8) Debt secured by Receivables, including to Refinance the Receivables Financing Agreement, provided that the amount of such Debt does not exceed 85% of the face amount of the Receivables; (9) Debt represented by the Other Indebtedness or any Refinancing thereof; (10) Debt represented by the New Credit Agreement in an aggregate principal amount not to exceed $100,000,000; 5 6 (11) Debt permitted to be incurred under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (12) Beginning on the first anniversary of the effective date of the New Credit Agreement, Debt (other than Debt identified in clauses (1) through (11) above) in an aggregate principal amount outstanding at any one time not to exceed $30,000,000." SECTION 1.04. (a) Sections 4.10(a) and (b) of the Indenture are hereby amended by adding the clause "Subject to Section 4.10(c) below," to the beginning of each such section. (b) Section 4.10 of the Indenture is hereby further amended by adding a new clause (c) to read as follows: "Notwithstanding the foregoing, until the date that is the third anniversary following the effective date of the New Credit Agreement, the Company will be permitted to make a Restricted Payment to the extent, and only to the extent, that such payment is permitted by the terms of the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement. Following the date that is the third anniversary of the effective date of the New Credit Agreement, the Company will only be permitted to make Restricted Payments pursuant to paragraph 4.10(a) above in an aggregate principal amount not to exceed $15,000,000 in any fiscal year." SECTION 1.05. Section 4.11 of the Indenture is hereby amended and restated in its entirety to read as follows: "Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur or suffer to exist any Liens upon their respective property or assets whether owned on the Issue Date or acquired after such date, or on any income or profits therefrom, unless the Securities are equally and ratably secured by such Lien; provided that if the Debt secured by such Lien is subordinate or junior in right of payment to the Securities then the Lien securing such Debt shall be subordinate or junior in priority to the Lien securing the Securities at least to the same extent as such Debt is subordinate or junior to the Securities. The foregoing restrictions shall not apply to: (1) Liens existing on the Issue Date; (2) Permitted Liens; (3) Purchase money Liens on assets of the Company and its Subsidiaries or improvements or additions thereto existing or created within 180 days after the time of acquisition of or improvements or 6 7 additions to such assets, or replacements thereof; provided that (i) such acquisition, improvement or addition is otherwise permitted by this Indenture, (ii) the principal amount of Debt (including Debt in respect of Capitalized Lease Obligations) secured by each such Lien on each asset shall not exceed the cost (including all such Debt secured thereby, whether or not assumed) of the item subject thereto, and such Liens shall attach solely to the particular item of property so acquired, improved or added and any additions or accessions thereto, or replacements thereof, and (iii) the aggregate amount of Debt secured by Liens permitted by this clause (3) shall not at any time exceed $40,000,000; (4) Liens to secure Refinancing of any Debt secured by Liens described in clauses (l)-(3) above and (5) below; provided that (i) Refinancing does not increase the principal amount of Debt being so Refinanced and (ii) the Lien of the Refinancing Debt does not extend to any asset not securing the Debt being Refinanced or improvements or additions thereto, or replacements thereof; (5) Liens securing Acquired Debt; provided that (i) any such Lien secured the Acquired Debt at the time of the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and such Lien and Acquired Debt were not incurred by the Company or any of its Subsidiaries or by the Person being acquired or from whom the assets were acquired in connection with, or in anticipation of, the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and (ii) any such Lien does not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Debt prior to the time such Debt became Acquired Debt of the Company or of one of its Subsidiaries; (6) Liens on Receivables securing Debt permitted by Section 4.09(b)(8); (7) Liens securing intercompany Debt permitted by Section 4.09(b)(2); (8) Liens securing the Credit Agreement, the New Credit Agreement and the Other Indebtedness (including Liens to be granted in connection with any Refinancing of the Credit Agreement, the New Credit Agreement and the Other Indebtedness); (9) Liens permitted under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and (10) Beginning on the first anniversary of the effective date of the New Credit Agreement, Liens on assets of the Company and its Subsidiaries in addition to those referred to in clauses (1)-(9); 7 8 provided that such Liens only secure Debt of the Company and its Subsidiaries in an aggregate amount not to exceed at any one time outstanding $30,000,000." SECTION 1.06. (a) Section 4.13(6) of the Indenture is hereby amended and restated in its entirety to read as follows: "the Credit Agreement, the Receivables Financing Agreement, other Debt existing on the Issue Date or the New Credit Agreement; and" (b) Section 4.13(7) of the Indenture is hereby amended and restated in its entirety to read as follows: "any Refinancing of the Credit Agreement, the Receivables Financing Agreement, any such other Debt existing on the Issue Date or the New Credit Agreement; provided that the terms and conditions of any such Refinancing agreements relating to the terms described under clauses (a)-(d) above are no less favorable to the Company than those contained in the agreements governing the Debt being Refinanced." SECTION 1.07. A new Section 6.13 is hereby added to the Indenture to read as follows: "Notification to Collateral Agent. If an Event of Default occurs and is continuing, the Trustee shall notify the Collateral Agent (as defined in the Collateral Agent Agreement) of such default pursuant to the terms of the Collateral Agent Agreement and take any action as may be required thereby." SECTION 1.08. Section 9.01 of the Indenture is hereby amended by adding a new paragraph (7) to read as follows: "(7) to secure the Securities as contemplated by the first paragraph of Section 4.11 hereof." ARTICLE II GUARANTEES SECTION 2.01. Guarantee. Subject to Section 2.07, each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to each Holder (a "Guaranty"), the following obligations: (a) the full and punctual payment of principal, premium, if any, and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under the Indenture 8 9 and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture (including, without limitation, the compensation and other payment obligations to the Trustee thereunder) and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under the terms hereof notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, the Company, any Subsidiary thereof or any other Person, and, subject to Section 2.05, a separate action or actions may be brought and prosecuted against each Additional Guarantor whether or not action is brought against any other Guarantor, the Company any Subsidiary thereof or any other Person and whether or not any other Guarantor, the Company or any Subsidiary thereof be joined in any such action or actions. Any payment by the Company or any Subsidiary thereof or other circumstance which operates to toll any statute of limitations as to the Company or any such Subsidiary shall operate to toll the statute of limitations as to each Guarantor. SECTION 2.02. Unconditional Obligations. This Guaranty shall not be discharged except by complete performance of the Guaranteed Obligations as contemplated in the Indenture and the Securities. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any agreement referred to in clause (a) of this paragraph; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by or for the benefit of any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations or any other Person; or (f) except as provided in Section 2.08 of this Second Supplemental Indenture, any change in the ownership of such Guarantor. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or any right to require a proceeding or the taking of other action by the Trustee or any Holder against, and any other notice to, any other Guarantor or the Company. SECTION 2.03. Continuing Guaranty. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance 9 10 hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action to any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Company or any Subsidiary thereof or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 2.04. Subrogation; Acceleration. Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Guaranteed Obligations until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations may be accelerated as provided in Article VI of the Indenture for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes hereof. SECTION 2.05. Enforcement. The Holders agree that this Guaranty may be enforced only by the action of the Trustee in accordance with the terms of the Indenture and that no other Holders shall have any right individually to seek to enforce this Guaranty. The Holders further agree that this Guaranty may not be enforced against any director, officer, employee, or stockholder of any Guarantor (except to the extent such stockholder is also a Guarantor hereunder). SECTION 2.06. Covenants. Each Guarantor agrees that its Guaranteed Obligations hereunder are senior Indebtedness of such Guarantor and such Guaranteed Obligations shall not be subordinate to any existing or future obligations of such Guarantor. Each Guarantor further covenants and agrees that on and after the date hereof such Guarantor will comply (as a Recourse Subsidiary of the Company), and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in the Indenture, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in the Indenture, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries. 10 11 Each Guarantor hereby jointly and severally agrees to pay all reasonable out-of-pocket costs and expenses of each Holder in connection with the enforcement of this Guaranty and of the Trustee in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by each Holder). SECTION 2.07. Limitation on Liability. Each Guarantor hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act or any similar Federal or state law. Accordingly, each Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance SECTION 2.08. Miscellaneous. (a) This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns. (b) Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and with the written consent of the holders of a majority in aggregate principal amount of the Securities then outstanding. (c) All notices, requests, demands or other communications pursuant hereto shall be made in accordance with Section 10.02 of the Indenture. (d) In the event that all of the capital stock of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of the Indenture and the proceeds of such sale, disposition or liquidation are applied, to the extent applicable, in accordance with the provisions of the Indenture, such Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to the Company or another Subsidiary thereof) be released from this Guaranty automatically and without further action and this Guaranty shall, as to each such Guarantor terminate, and have no further force or effect. At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release. ARTICLE III MISCELLANEOUS 11 12 SECTION 3.01. Effectiveness. This Second Supplemental Indenture shall become effective immediately upon its execution and delivery by the Issuer, the Guarantors and the Trustee, but Articles I and II shall not become operative unless and until the Requisite Consents (as defined in the Consent Solicitation Statement) are received and the New Credit Agreement and the Credit Agreement become effective. In the event of any termination of the Consent Solicitation set forth in the Consent Solicitation Statement or in the event that Requisite Consents are not received, Articles I and II of this Second Supplemental Indenture shall be null and void and of no force or effect. SECTION 3.02. Confirmation. This Second Supplemental Indenture and the Indenture shall henceforth be read together. Except as expressly set forth herein, the Indenture shall remain unchanged and is in all respects confirmed and preserved. SECTION 3.03. Counterparts. This Second Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. SECTION 3.04. Governing Law. This Second Supplemental Indenture shall be governed by the laws of the State of New York without regard to the principles of conflicts of laws. The Trustee, the Issuer, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or this Second Supplemental Indenture. 12 13 IN WITNESS WHEREOF, the parties hereto caused this Second Supplemental Indenture to be signed and acknowledged by their respective officers thereunto duly authorized as of the day and year first-above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss --------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS MANUFACTURING CORPORATION By: /s/ Susan B. Yoss --------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss --------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Signature Illegible --------------------------------------------------- Name: Title: 13 14 BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP., as Additional Guarantors By: /s/ Susan B. Yoss ------------------------------------------------ Name: Susan B. Yoss Title: Senior Vice President and Treasurer 14 EX-4.13 6 y46546ex4-13.txt INDENTURE 1 Exhibit 4.13 ------------ - -------------------------------------------------------------------------------- BUILDING MATERIALS CORPORATION OF AMERICA 10.50% Senior Notes due 2002 and Series B 10.50% Senior Notes due 2002 --------------------------------------- INDENTURE Dated as of July 5, 2000 --------------------------------------- THE BANK OF NEW YORK --------------------------------------- Trustee - -------------------------------------------------------------------------------- 2 CROSS-REFERENCE TABLE
Trust Indenture Act Section Indenture Section - ----------- ----------------- 310(a)(1)........................................................................................... 7.10 (a)(2)........................................................................................ 7.10 (a)(3)........................................................................................ N.A. (a)(4)........................................................................................ N.A. (a)(5)........................................................................................ 7.08 (b)........................................................................................... 7.08; 7.10; 11.02 (c)........................................................................................... N.A. 311(a).............................................................................................. 7.11 (b)........................................................................................... 7.11 (c)........................................................................................... N.A. 312(a).............................................................................................. 2.05 (b)........................................................................................... 11.03 (c)........................................................................................... 11.03 313(a).............................................................................................. 7.06 (b)(1)........................................................................................ N.A. (b)(2)........................................................................................ 7.06 (c)........................................................................................... 7.06; 11.02 (d)........................................................................................... 7.06 314(a).............................................................................................. 4.05; 4.06; 11.02 (b)........................................................................................... N.A. (c)(l)........................................................................................ 11.04 (c)(2)........................................................................................ 11.04 (c)(3)........................................................................................ N.A. (d)........................................................................................... N.A. (e)........................................................................................... 11.05 (f)........................................................................................... N.A. 315(a).............................................................................................. 7.12(b) (b)........................................................................................... 7.05; 11.02 (c)........................................................................................... 7.12(a) (d)........................................................................................... 7.12(c) (e)........................................................................................... 6.11 316(a)(last sentence)............................................................................... 2.09 (a)(1)(A)..................................................................................... 6.05 (a)(1)(B)..................................................................................... 6.04 (a)(2)........................................................................................ N.A. (b)........................................................................................... 6.07 (c)........................................................................................... 9.04 317(a)(1)........................................................................................... 6.08 (a)(2)........................................................................................ 6.09 (b)........................................................................................... 2.04 318(a).............................................................................................. 11.01
- ------------------------------- N.A. means "not applicable". *This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture. 3 TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE....................................................1 SECTION 1.01. DEFINITIONS................................................................................1 ----------- SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.........................................18 ------------------------------------------------- SECTION 1.03. RULES OF CONSTRUCTION.....................................................................18 --------------------- ARTICLE II. THE SECURITIES..............................................................................19 SECTION 2.01. FORM AND DATING...........................................................................19 --------------- SECTION 2.02. EXECUTION AND AUTHENTICATION; AGGREGATE PRINCIPAL AMOUNT..................................19 -------------------------------------------------------- SECTION 2.03. REGISTRAR AND PAYING AGENT................................................................20 -------------------------- SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.......................................................20 ----------------------------------- SECTION 2.05. SECURITYHOLDER LISTS......................................................................21 -------------------- SECTION 2.06. TRANSFER AND EXCHANGE.....................................................................21 --------------------- SECTION 2.07. REPLACEMENT SECURITIES....................................................................23 ---------------------- SECTION 2.08. OUTSTANDING SECURITIES....................................................................23 ---------------------- SECTION 2.09. TREASURY SECURITIES.......................................................................23 ------------------- SECTION 2.10. TEMPORARY SECURITIES......................................................................23 -------------------- SECTION 2.11. CANCELLATION..............................................................................24 ------------ SECTION 2.12. DEFAULTED INTEREST........................................................................24 ------------------ SECTION 2.13. CUSIP NUMBER..............................................................................24 ------------ SECTION 2.14. DEPOSIT OF MONEYS.........................................................................24 ----------------- ARTICLE III. REDEMPTION.................................................................................25 SECTION 3.01. NOTICES TO TRUSTEE........................................................................25 ------------------ SECTION 3.02. [RESERVED]................................................................................25 SECTION 3.03. NOTICE OF REDEMPTION......................................................................25 -------------------- SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION............................................................25 ------------------------------ SECTION 3.05. DEPOSIT OF REDEMPTION PRICE...............................................................26 --------------------------- SECTION 3.06. SECURITIES REDEEMED IN PART...............................................................26 --------------------------- ARTICLE IV. COVENANTS...................................................................................26 SECTION 4.01. PAYMENT OF SECURITIES.....................................................................26 --------------------- SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY...........................................................26 ------------------------------- SECTION 4.03. CORPORATE EXISTENCE.......................................................................27 ------------------- SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS.........................................................27 --------------------------------- SECTION 4.05. COMPLIANCE CERTIFICATES...................................................................27 ----------------------- SECTION 4.06. SECURITIES AND EXCHANGE COMMISSION REPORTS................................................28 ------------------------------------------ SECTION 4.07. WAIVER OF STAY, EXTENSION OR USURY LAWS...................................................28 --------------------------------------- SECTION 4.08. MAINTENANCE OF PROPERTIES.................................................................29 ------------------------- SECTION 4.09. LIMITATION ON DEBT AND PREFERRED STOCK OF THE COMPANY AND ITS SUBSIDIARIES................29 -------------------------------------------------------------------------- SECTION 4.10. LIMITATION ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS..............................31 ------------------------------------------------------------ SECTION 4.11. LIMITATION ON LIENS.......................................................................33 ------------------- SECTION 4.12. LIMITATION ON TRANSACTIONS WITH AFFILIATES................................................34 ------------------------------------------ SECTION 4.13. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES..............36 ---------------------------------------------------------------------------- SECTION 4.14. CHANGE OF CONTROL.........................................................................36 ----------------- SECTION 4.15. LIMITATION ON ASSET SALES.................................................................38 ------------------------- SECTION 4.16. RESTRICTION ON TRANSFER OF CERTAIN ASSETS TO SUBSIDIARIES.................................40 --------------------------------------------------------- SECTION 4.17. INVESTMENT COMPANY ACT....................................................................40 ---------------------- SECTION 4.18. CONSENTS, ETC.............................................................................40 -------------
i 4
Page ---- ARTICLE V. SUCCESSOR CORPORATION........................................................................41 SECTION 5.01. WHEN THE COMPANY MAY MERGE, ETC...........................................................41 ------------------------------- SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.........................................................41 --------------------------------- ARTICLE VI. DEFAULTS AND REMEDIES.......................................................................42 SECTION 6.01. EVENTS OF DEFAULT.........................................................................42 ----------------- SECTION 6.02. ACCELERATION..............................................................................43 ------------ SECTION 6.03. OTHER REMEDIES............................................................................43 -------------- SECTION 6.04. WAIVER OF PAST DEFAULTS...................................................................44 ----------------------- SECTION 6.05. CONTROL BY MAJORITY.......................................................................44 ------------------- SECTION 6.06. LIMITATION ON REMEDIES....................................................................44 ---------------------- SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT......................................................45 ------------------------------------ SECTION 6.08. COLLECTION SUIT BY TRUSTEE................................................................45 -------------------------- SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM..........................................................45 -------------------------------- SECTION 6.10. PRIORITIES................................................................................45 ---------- SECTION 6.11. UNDERTAKING FOR COSTS.....................................................................46 --------------------- SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES........................................................46 ---------------------------------- ARTICLE VII. TRUSTEE....................................................................................46 SECTION 7.01. RIGHTS OF TRUSTEE.........................................................................46 ----------------- SECTION 7.02. INDIVIDUAL RIGHTS OF TRUSTEE..............................................................47 ---------------------------- SECTION 7.03. MONEY HELD IN TRUST.......................................................................47 ------------------- SECTION 7.04. TRUSTEE'S DISCLAIMER......................................................................47 -------------------- SECTION 7.05. NOTICE OF DEFAULTS........................................................................47 ------------------ SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.............................................................47 ----------------------------- SECTION 7.07. COMPENSATION AND INDEMNITY................................................................47 -------------------------- SECTION 7.08. REPLACEMENT OF TRUSTEE....................................................................48 ---------------------- SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC..........................................................49 -------------------------------- SECTION 7.10. ELIGIBILITY: DISQUALIFICATION.............................................................49 ----------------------------- SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.....................................50 ----------------------------------------------------- SECTION 7.12. DUTIES OF TRUSTEE.........................................................................50 ----------------- SECTION 7.13. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY...................................51 ------------------------------------------------------- ARTICLE VIII. DISCHARGE OF INDENTURE; DEFEASANCE........................................................51 SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES DEFEASANCE...........................................51 ----------------------------------------------- SECTION 8.02. CONDITIONS TO DEFEASANCE..................................................................52 ------------------------ SECTION 8.03. APPLICATION OF TRUST MONEY................................................................53 -------------------------- SECTION 8.04. REPAYMENT TO COMPANY......................................................................53 -------------------- SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS......................................................53 ------------------------------------ SECTION 8.06. REINSTATEMENT.............................................................................53 ------------- ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS.........................................................54 SECTION 9.01. WITHOUT CONSENT OF HOLDERS................................................................54 -------------------------- SECTION 9.02. WITH CONSENT OF HOLDERS...................................................................54 ----------------------- SECTION 9.03. REVOCATION AND EFFECT OF CONSENTS.........................................................56 --------------------------------- SECTION 9.04. RECORD DATE...............................................................................56 ----------- SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES.....................................................56 ------------------------------------- SECTION 9.06. TRUSTEE MAY SIGN AMENDMENTS, ETC..........................................................56 -------------------------------- SECTION 9.07. COMPLIANCE WITH TIA.......................................................................57 -------------------
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Page ---- ARTICLE X SUBSIDIARY GUARANTEES.........................................................................57 SECTION 10.01. GUARANTEE................................................................................57 --------- SECTION 10.02. UNCONDITIONAL OBLIGATIONS................................................................58 ------------------------- SECTION 10.03. CONTINUING GUARANTEE.....................................................................58 -------------------- SECTION 10.04. SUBROGATION; ACCELERATION................................................................58 ------------------------- SECTION 10.05. ENFORCEMENT..............................................................................59 ----------- SECTION 10.06. COVENANTS................................................................................59 --------- SECTION 10.07. LIMITATION LIABILITY.....................................................................59 -------------------- SECTION 10.08. WHEN THE GUARANTORS MAY MERGE, ETC.......................................................60 ---------------------------------- SECTION 10.09. MISCELLANEOUS............................................................................61 ------------- SECTION 10.10. EXECUTION AND DELIVERY OF NOTATION OF SUBSIDIARY GUARANTEE...............................61 ----------------------------------------------------------- ARTICLE XI. MISCELLANEOUS...............................................................................61 SECTION 11.01. TRUST INDENTURE ACT OF 1939..............................................................61 --------------------------- SECTION 11.02. NOTICES..................................................................................61 ------- SECTION 11.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS..............................................62 ------------------------------------------- SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.......................................62 -------------------------------------------------- SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION............................................62 --------------------------------------------- SECTION 11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR................................................63 ----------------------------------------- SECTION 11.07. GOVERNING LAW............................................................................63 ------------- SECTION 11.08. NO INTERPRETATION OF OTHER AGREEMENTS....................................................63 ------------------------------------- SECTION 11.09. NO RECOURSE AGAINST OTHERS...............................................................63 -------------------------- SECTION 11.10. LEGAL HOLIDAYS...........................................................................63 -------------- SECTION 11.11. SUCCESSORS...............................................................................63 ---------- SECTION 11.12. DUPLICATE ORIGINALS......................................................................64 ------------------- SECTION 11.13. SEPARABILITY.............................................................................64 ------------ SECTION 11.14. TABLE OF CONTENTS, HEADINGS, ETC.........................................................64 -------------------------------- SECTION 11.15. BENEFITS OF INDENTURE....................................................................64 ---------------------
iii 6 INDENTURE, dated as of July 5, 2000, among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation, BUILDING MATERIALS MANUFACTURING CORPORATION, a Delaware corporation ("Manufacturing Co."), BUILDING MATERIALS INVESTMENT CORPORATION, a Delaware corporation ("Investment Co." and together with Manufacturing Co., the "Guarantors"), and THE BANK OF NEW YORK, a New York banking corporation (the "Trustee"), having its Corporate Trust Office at 101 Barclay Street, New York, New York 10286. The parties agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Company's 10.50% Senior Notes due 2002 (the "Initial Securities"), the Company's Series B 10.50% Senior Notes due 2002 (the "Exchange Securities") and the Holders of the Additional Securities, if any: ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. ----------- "Accredited Investor" has the meaning set forth in Rule 501(a)(l), (2), (3) or (7) under the Securities Act. "Acquired Debt", with respect to any Person, means (i) Debt (including any then unutilized commitment under any revolving working capital facility) of an entity, which entity is acquired by such Person or any of its Subsidiaries after the Issue Date; provided that such Debt (including any such facility) is outstanding at the time of the acquisition of such entity, is not created in contemplation of such acquisition and is not, directly or indirectly, recourse (including by way of set-off) to such Person or its Subsidiaries or any of their respective assets other than to the entity and its Subsidiaries so acquired and the assets of the entity and its Subsidiaries so acquired, (ii) Debt of such Person that is not, directly or indirectly, recourse (including by way of set-off) to such Person and its Subsidiaries or any of their respective assets other than to specified assets acquired by such Person or its Subsidiaries after the Issue Date, which Debt is outstanding at the time of the acquisition of such assets and is not created in contemplation of such acquisition, or (iii) Refinancings of Debt described in clause (i) or (ii), provided that the recourse with respect to such Refinancing Debt is limited to the same extent as the Debt so Refinanced. "Additional Securities" means up to $115,000,000 in aggregate principal amount of notes (other than the Initial Securities, the Exchange Securities or the Private Exchange Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms 7 "controlling" and "controlled" have meanings correlative to the foregoing. For the avoidance of doubt, ISP and its Affiliates (so long as they are under common control with the Company) shall be deemed to be Affiliates of the Company. "Agent" means any Registrar, Paying Agent or co-Registrar of the Securities. "Applicable Premium" means, with respect to any Security, the greater of (x) 1.0% of the principal amount of such Security and (y) the excess, if any, of (a) the present value of the remaining interest payments, principal and future optional redemption premium (if applicable) of such security, discounted on a semi-annual bond equivalent basis from the maturity date of the Security to the applicable date of purchase at a per annum interest rate equal to the Treasury Yield for such redemption date plus 100 basis points, over (b) the sum of the principal amount of such Security plus accrued and unpaid interest to the purchase date. "Asset Sale" means, with respect to any Person, the sale, lease, assignment or other disposition (including, without limitation, dispositions pursuant to any consolidation, merger or sale and leaseback transaction) by such Person or any of its Subsidiaries in any single transaction or series of related transactions which consists of the disposition of (i) any Capital Stock of any Subsidiary or (ii) all or substantially all of the properties and assets of any division or line of business of such Person or any Subsidiary of such Person (other than of a Non-Recourse Subsidiary) to any other Person which is not the Company or a Subsidiary of the Company. For the purposes of this definition, the term "Asset Sale" shall not include (A) any sale, lease, assignment or other disposition of properties or assets that is governed by the provisions of Article V or (B) any sale, lease, assignment or other disposition by a Person that has outstanding senior debt securities all of which (I) are rated BBB- or higher by S&P and have not been placed on credit watch by S&P for a possible downgrade or (II) are rated Baa3 or higher by Moody's and have not been placed on credit watch by Moody's for a possible downgrade. "Average Life" means, with respect to any Debt, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from the date of the transaction or event giving rise to the need to calculate the Average Life of such Debt to the date, or dates, of each successive scheduled principal payment of such Debt multiplied by (b) the amount of each such principal payment by (ii) the sum of all such principal payments. "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state or foreign law for the relief of debtors. "Board of Directors" of any Person means the Board of Directors or similar governing body of such Person, or any duly authorized committee of such Board of Directors or similar governing body. "Board Resolution" means, with respect to the Board of Directors of any Person, a copy of a resolution certified by the Secretary or Assistant Secretary of such Person to have been duly adopted by such Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. 2 8 "Book-Entry Security" means a Security represented by a Global Security and registered in the name of the nominee of the Depository. "Business Day" means a day that is not a Legal Holiday. "Capitalized Lease Obligation" means any rental obligation that, in accordance with GAAP, is required to be classified and accounted for as a capitalized lease and the amount of Debt represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the stated maturity thereof shall be the date of the last payment of rent or any other amount due in respect of such obligation. "Capital Stock" of any Person means any and all shares, interests (including partnership interests), warrants, rights, options or other interests, participations or other equivalents of or interests in (however designated) equity of such Person, including common or preferred stock, whether now outstanding or issued after the Issue Date, but excluding any debt securities convertible into or exchangeable for such equity. "Cash Equivalents" means (i) marketable direct obligations Issued by, or unconditionally Guaranteed by, the United States Government or Issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof, (ii) marketable direct obligations Issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's, (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's, (iv) certificates of deposit or bankers' acceptances maturing within one year from the date of acquisition thereof Issued by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital surplus of not less than $500,000,000, (v) Eurodollar time deposits maturing within one year from the date of acquisition thereof and issued or accepted by any commercial bank having at the date of acquisition thereof combined capital and surplus of not less than $500,000,000, (vi) repurchase obligations with a term of not more than thirty days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above and (vii) investments in money market funds having assets in excess of $500,000,000 and which invest substantially all their assets in securities of the types described in clauses (i) through (vi) above. "Cedel" means Cedel Bank, S.A. "Change of Control" means the occurrence of any of the following events: (i) prior to the time that at least 15% of the then outstanding Voting Stock of Parent, the Company, or any Subsidiary of Parent of which the Company is also a Subsidiary is publicly traded on a national securities exchange or in the NASDAQ (national market 3 9 system), the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of majority voting power of the Voting Stock of the Company, whether as a result of issuance of securities of the Company or any of its Affiliates, any merger, consolidation, liquidation or dissolution of the Company or any of its Affiliates, any direct or indirect transfer of securities by any Permitted Holder or by Parent or any of its Subsidiaries or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of a corporation (the "specified corporation") held by any other corporation (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, a majority of the Voting Stock of the parent corporation); (ii) 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 (as defined in clause (i) above, except that a Person shall be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the Voting Stock of Parent or the Company; provided that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the Voting Stock of Parent or the Company 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 Directors of Parent or the Company; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Company including predecessors, was approved by a vote of a majority of the directors of 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 Company then in office. "Change of Control Payment Date" has the meaning set forth in Section 4.14. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commencement Date" means April 3, 1994. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the TIA, then the body performing such duties at such time. 4 10 "Common Stock" of any Person means any and all shares, interests, participations, or other equivalents (however designated) of such Person's common stock whether now outstanding or issued after the Issue Date. "Company" means Building Materials Corporation of America, a Delaware corporation, and its successors. "Consolidated EBITDA Coverage Ratio" with respect to any Person for any period means the ratio of (i) the aggregate amount of EBITDA of such Person for such period to (ii) Consolidated Interest Expense of such Person for such period; provided that (A) if such Person or any Subsidiary of such Person has Issued any Debt or Capital Stock since the beginning of such period that remains outstanding on the date such calculation is made or if the transaction giving rise to the need to calculate the Consolidated EBITDA Coverage Ratio is an Issuance of Debt or Capital Stock, or both, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect, on a pro forma basis, to the issuance of such Debt or Capital Stock as if such Debt or Capital Stock had been Issued on the first day of such period and the discharge of any other Debt or Capital Stock Refinanced or otherwise discharged with the proceeds of such new Debt or Capital Stock as if such discharge had occurred on the first day of such period, (B) if since the beginning of such period such Person or any Subsidiary of such Person shall have made any asset sales out of the ordinary course of business, EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such asset sale for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Debt or Capital Stock of such Person or any Subsidiary of such Person Refinanced or otherwise discharged with respect to such Person and its continuing Subsidiaries (including as a result of the assumption of such Debt or Capital Stock by the purchaser of such assets, provided that such Person or any of its Subsidiaries is no longer liable therefor) in connection with such asset sales for such period (or if the Capital Stock of any Subsidiary of such Person is sold, the Consolidated Interest Expense for such period directly attributable to the Debt of such Subsidiary to the extent such Person and its continuing Subsidiaries are no longer liable for such Debt after such sale) and (C) if since the beginning of the period such Person or any Subsidiary of such Person (by merger or otherwise) shall have made an Investment in any Subsidiary of such Person (or any Person which becomes a Subsidiary of such Person) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto, as if such Investment or acquisition occurred on the first day of such period. For purposes of this definition, pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Person with respect to which the calculation is being made. If any Debt or Capital Stock bears a floating rate of interest and is being given pro forma effect, the interest on such Debt and the dividends on such Capital Stock shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period. 5 11 "Consolidated Interest Expense" means, with respect to any Person, for any period, the sum of (a) the interest expense of such Person and its consolidated Subsidiaries (other than interest expense related to Non-Recourse Debt) for such period as determined in accordance with GAAP consistently applied, plus the amount of all dividends paid or accrued on any series of Preferred Stock (other than non-Redeemable Stock) of such Person and its Subsidiaries (other than Non-Recourse Subsidiaries). "Consolidated Net Income (Loss)" means, with respect to any Person, for any period, the consolidated net income (or loss) of such Person and its consolidated Subsidiaries for such period as determined in accordance with GAAP, adjusted to the extent included in calculating such net income (or loss), by excluding (i) all extraordinary gains or losses in such period; (ii) net income (or loss) of any other Person attributable to any period prior to the date of combination of such other Person with such Person or any of its Subsidiaries on a "pooling of interests" basis; (iii) net gains or losses in respect of dispositions of assets by such Person or any of its Subsidiaries (including pursuant to a sale-and-leaseback arrangement) other than in the ordinary course of business; (iv) the net income (loss) of any Subsidiary of such Person to the extent that the declaration of dividends or distributions by that Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulations applicable to that Subsidiary or its shareholders; (v) the net income (or net loss) of any other Person that is not a Subsidiary of the first Person with respect to which Consolidated Net Income is being calculated (the "first Person") and in which any other Person (other than such first Person and/or any of its Subsidiaries) has an equity interest or of a Non-Recourse Subsidiary of such first Person, except to the extent of the amount of dividends or other distributions actually paid or made to such first Person or any of its Subsidiaries by such other Person during such period (subject, in the case of a dividend or distribution received by a Subsidiary of such first Person, to the limitations contained in clause (iv) above); (vi) any interest income resulting from loans or investments in Affiliates, other than cash interest income actually received; (vii) any reserve established at the time the Company's Affiliates first acquired USI; and (viii) the cumulative effect of a change in accounting principles. In determining Consolidated Net Income (Loss), gains or losses resulting from the early retirement, extinguishment or refinancing of indebtedness for money borrowed, including any fees and expenses associated therewith, shall be deducted or added back, respectively. "Consolidated Net Worth" of any Person means, at any date, all amounts that would, in conformity with GAAP, be included under shareholders' equity on a consolidated balance sheet of such Person as at such date less (to the extent otherwise included therein) any amounts attributable to Redeemable Stock. "Corporate Trust Office" means the corporate trust office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which on the date hereof is located at 101 Barclay Street, Floor 21 West, New York, New York 10286, except that, with respect to presentation of Securities for payment or registration of transfer and exchange and the location of the Securities register, such term means the 6 12 office or agency of the Trustee at which at any particular time its corporate agency business shall be conducted, which is, on the date hereof, located at 101 Barclay Street, Corporate Trust Services Window, New York, New York 10286. "Credit Agreement" means the credit agreement, dated as of August 18, 1999, among the Company, the Lenders party thereto, Fleet National Bank, as documentation agent, Bear Stearns Corporate Lending Inc., as syndication agent, and The Bank of New York, as administrative agent, as amended by amendment no. 1, dated as of March 31, 2000, and as the same may be further amended, supplemented or otherwise modified from time to time. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "Debt" of any Person means, without duplication, (i) the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable (other than those payable to government agencies to defer the payment of workers' compensation liabilities, taxes, assessments or other obligations, and provided in the ordinary course of business of such Person); (ii) all Capitalized Lease Obligations of such Person; (iii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the ordinary course of business); (iv) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers' acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (i) through (iii) above) entered into in the ordinary course of business of such Person to the extent 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); (v) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Preferred Stock (but excluding any accrued dividends); (vi) all obligations of the type referred to in clauses (i) through (v) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including guarantees of such obligations and dividends; and (vii) all obligations of the type referred to in clauses (i) through (vi) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured. For purposes of Section 4.15, Debt of the Company or any of its Subsidiaries shall include the provision for existing or future asbestos-related bodily injury claims, as set forth in the then most recent consolidated financial statement of the Company. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. 7 13 "Depository" means, with respect to the Securities issued in the form of one or more Book-Entry Securities, The Depository Trust Company or another person designated as Depository by the Company, which must be a clearing agency registered under the Exchange Act. "EBITDA" with respect to any Person for any period means the Consolidated Net Income of such Person for such period, adjusted to the extent deducted in calculating such Consolidated Net Income by adding back (without duplication): (i) income tax expense of such Person and its Subsidiaries accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary items or other items excluded from the definition of Consolidated Net Income), (ii) Consolidated Interest Expense of such Person for such period, (iii) depreciation expense of such Person for such period, (iv) amortization expense of such Person for such period, and (v) minority interest in any non Wholly-Owned Recourse Subsidiary that is otherwise consolidated in the financial statements of such Person, but only so long as such Subsidiary is consolidated with such Person for such period for U.S. federal income tax purposes. "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "Events of Default" has the meaning set forth in Section 6.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Offer" means the registration by the Company under the Securities Act pursuant to a registration statement of the offer by the Company to each Holder of the Initial Securities to exchange all the Initial Securities held by such Holder for the Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Initial Securities held by such Holder, all in accordance with the terms and conditions of the Registration Rights Agreement. "Exchange Securities" has the meaning assigned to that term in the preambles to this Indenture. "GAF" means GAF Corporation, a Delaware corporation, and its successors. "Generally Accepted Accounting Principles" or "GAAP" means generally acceptable accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board as of the date of the Indenture. "GFC" means GAF Fiberglass Corporation, a Delaware corporation, and its successors. "G-I Holdings" means G-I Holdings Inc., a Delaware corporation, and its successors. 8 14 "Glass Fiber Contract" means the supply agreement effective as of January 1, 1997 between GFC and the Company. "Global Security" means a Security evidencing all or a part of the Securities to be issued as Book-Entry Securities, including a Regulation S Global Security, issued to the Depository in accordance with Section 2.02 and bearing the legend prescribed in Exhibit C. "Granules Contracts" means (i) the supply agreement, dated as of January 1, 1995, between ISP Technologies, Inc. and the Company, as amended through the Issue Date and (ii) the letter dated November 9, 1995 from ISP Mineral Products Inc. to USI. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation, contingent or otherwise, of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation of such other Person (whether arising by virtue of participation arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring the obligee of such Debt or other obligation in any other manner of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided 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. "Guaranteed Obligations" has the meaning set forth in Section 10.01. "Guarantors" has the meaning assigned to such term in the preambles to this Indenture. "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Incur" means incur, create, assume, Guarantee or otherwise become liable; and the terms "incurred" and "incurrence" having meanings correlative to the foregoing. "Indenture" means this Indenture, as amended or supplemented from time to time. "Initial Purchaser" means BNY Capital Markets, Inc. "Initial Securities" has the meaning assigned to that term in the preambles to this Indenture. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Investment" means any direct or indirect advance, loan (other than advances or loans to customers in the ordinary course of business, which are recorded, in accordance with GAAP, at the time made as accounts 9 15 receivable on the balance sheet of the Person making such advance or loan) or other extension of credit or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities Issued by, any other Person. "Investment Co." has the meaning assigned to such term in the preambles to this Indenture. "ISP" means International Specialty Products Inc., a Delaware corporation, and its successors. "Issue" means issue, assume, Guarantee, incur or otherwise become liable for; provided that any Debt or Capital Stock of a Person existing at the time such Person becomes a Subsidiary of another Person (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Issued by such Subsidiary at the time it becomes a Subsidiary of such other Person. "Issue Date" means July 5, 2000. "Legal Holiday" has the meaning set forth in Section 11.10. "Lien" means any lien, mortgage, charge, pledge, security interest, or other encumbrance of any kind (including any conditional sale or other title retention agreement and any lease in the nature thereof). "Management Agreement" means the Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF Corporation, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, International Specialty Products Inc., GAF Building Materials Corporation, GAF Broadcasting Company, Inc., the Company and ISP Opco Holdings Inc., as amended through the Issue Date. "Manufacturing Co." has the meaning assigned to such term in the preambles to this Indenture. "Margin Stock" shall have the meaning provided in Regulation U. "Material Assets" means assets, singly or in the aggregate, the book or fair market value of which equals 5% or more of the consolidated tangible assets of the Company, as set forth on its most recently publicly available balance sheet. "Moody's" means Moody's Investors Service, Inc. or its successors. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents received by the Company or any of its Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to 10 16 such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes paid or payable ((1) including, without limitation, income taxes reasonably estimated to be actually payable as a result of any disposition of property within two years of the date of disposition, including under any tax sharing arrangements, and (2) after taking into account any reduction in tax liability due to available tax credits or deductions applicable to the transaction), (c) a reasonable reserve for the after-tax cost of any indemnification obligations (fixed and/or contingent) attributable to seller's indemnities to the purchaser undertaken by the Company or any of its Subsidiaries in connection with such Asset Sale and (d) repayment of Debt that is required to be repaid in connection with such Asset Sale, under the agreements governing such Debt or Asset Sale. "Net Proceeds Offer" shall have the meaning provided in Section 4.15. "Non-Recourse Debt" of any Person means Debt or the portion of Debt (i) as to which neither Parent nor any of its Subsidiaries (other than a Non-Recourse Subsidiary) (A) provides credit support (including any undertaking, agreement or instrument which would constitute Debt), (B) is directly or indirectly liable or (C) constitutes the lender and (ii) no default with respect to which (including any rights which the holders thereof may have to take enforcement action against the assets of a Non-Recourse Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Debt of such Person or its Subsidiaries (other than Non-Recourse Subsidiaries) to declare a default on such other Debt or cause the payment thereof to be accelerated or payable prior to its Stated Maturity. "Non-Recourse Subsidiary" of any Person means a Subsidiary (A) which has been designated as such by such Person, (B) which has not acquired any assets directly or indirectly from Parent or any of its Subsidiaries other than at fair market value, including by the receipt of Capital Stock of such Non-Recourse Subsidiary, provided that, if any such acquisition or series of related acquisitions involves assets having a value in excess of $2,000,000, such acquisition or series of related acquisitions shall be approved by a majority of the members of the Board of Directors of the Company in a Board Resolution which shall set forth that such acquisitions are being, or have been, made at fair market value, and (C) which has no Debt other than Non-Recourse Debt. "Obligations" means (a) the full and punctual payment of the principal and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under this Indenture and the Securities and (b) the full and punctual performance of all other obligations of the Company under this Indenture and the Securities. "Offering" means the Company's offering of the Initial Securities. "Offering Memorandum" means the Offering Memorandum dated June 29, 2000, pursuant to which the Initial Securities were offered. 11 17 "Officer" of any corporation means the Chairman of the Board, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Secretary, the Controller or the Assistant Secretary of such corporation. "Officers' Certificate" of any corporation means a certificate signed by two Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of such corporation and delivered to the Trustee and which complies with Section 11.05. "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee and which complies with Section 11.05. Such legal counsel may be an employee of or counsel to the Company or its Affiliates. "Parent" means GAF so long as it owns, and any other Person which acquires or owns, directly or indirectly, 80% or more of the Voting Stock of the Company. "Participant" means with respect to the Depositary, Euroclear or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Cedel). "Paying Agent" has the meaning set forth in Section 2.03, except that, for the purposes of Article VIII and Sections 4.14 and 4.15, the Paying Agent shall not be the Company or a Subsidiary of the Company or an Affiliate of any thereof. "Permitted Holders" means (i) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the Voting Stock is owned by Samuel J. Heyman, his heirs, administrators or executors and (ii) any Person controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. "Permitted Lien" means: (1) Liens for taxes, assessments and governmental charges to the extent not required to be paid under this Indenture; (2) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by an appropriate process of law, and for which a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made; (3) pledges or deposits in the ordinary course of business to secure lease obligations or non-delinquent obligations under workers' compensation, unemployment insurance or similar legislation; (4) Liens to secure the performance of public statutory obligations that are not delinquent, appeal bonds, performance bonds or other obligations of a like nature (other than for borrowed money); 12 18 (5) easements, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business of the Company and its Subsidiaries, taken as a whole; (6) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of nondelinquent customs duties in connection with the importation of goods; (7) judgment and attachment Liens not giving rise to a Default or Event of Default; (8) leases or subleases granted to others not interfering in any material respect with the business of the Company and its Subsidiaries, taken as a whole; (9) Liens encumbering deposits made in the ordinary course of business to secure non-delinquent obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Subsidiaries for which a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made; (10) any interest or title of a lessor in the property subject to any lease, whether characterized as capitalized or operating other than any such interest or title resulting from or arising out of default by the Company or any of its Subsidiaries of its obligations under any such lease which is material; (11) Liens arising from filing UCC financing statements for precautionary purposes in connection with true leases or conditional sales of personal property that are otherwise permitted under this Indenture and under which the Company or any of its Subsidiaries is lessee; (12) broker's Liens securing the payment of commissions and management fees in the ordinary course of business; (13) Liens on cash and Cash Equivalents posted as margin pursuant to the requirements of any bona fide hedge agreement relating to interest rates, foreign exchange or commodities listed on public exchanges, but only to the extent such Liens are required from customers generally (regardless of creditworthiness) in accordance with customary market practice; (14) Liens on cash collateralizing reimbursement obligations in respect of letters of credit issued for the account of the Company or any of its Subsidiaries in the ordinary course of business (other than letters of credit issued as credit support for any Debt); (15) Liens arising in respect of accounts receivable arising as a result of non-recourse sales thereof; and 13 19 (16) Liens on stock or assets of any Non-Recourse Subsidiary securing Debt owing by such Non-Recourse Subsidiary. "Person" means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind. "Preferred Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. Preferred Stock of any Person shall include Redeemable Stock of such Person. "Principal" of a debt security, including the Securities, means the principal of such security plus, when appropriate, the premium, if any, on such security. "Private Exchange Notes" has the meaning assigned to such term in the Registration Rights Agreement. "Proceeds Purchase Date" shall have the meaning provided in Section 4.15. "Qualified Institutional Buyer" or "QIB" shall have the meaning specified in Rule 144A under the Securities Act. "Receivables" means accounts receivables, and related documentation, contract rights, related proceeds and general intangibles. "Receivables Financing Agreement" means the Pooling and Servicing Agreement, dated as of November 1, 1996, among the Company, BMCA Receivables Corporation and The Bank of New York, as Trustee, and related agreements, as amended or supplemented. "Recourse Subsidiaries" of any Person means all Subsidiaries of such Person other than Non-Recourse Subsidiaries of such Person. "Redeemable Stock" means, with respect to any Person, Capital Stock of such Person that by its terms or otherwise (x) is required, directly or indirectly, to be redeemed on or prior to the ninetieth day after the Stated Maturity of the Securities, (y) is redeemable or puttable, directly or indirectly, at the option of the holder thereof at any time on or prior to the ninetieth day after the Stated Maturity of the Securities, or (z) is exchangeable or convertible into another security (other than a security that is not itself Redeemable Stock). "Refinance" means, in respect of any Debt, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue Debt in exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall have correlative meanings. "Registrar" has the meaning set forth in Section 2.03. 14 20 "Registration Rights Agreement" means the registration rights agreement dated July 5, 2000, among the Company, the Guarantors and the Initial Purchaser. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Security" means a global security substantially in the form of Exhibit A hereto bearing the legend prescribed in Exhibit C and deposited with or on behalf of the Depository and registered in the name of the Depository or its nominee and issued in a denomination equal to the outstanding principal amount of the Securities initially resold by the Initial Purchaser in reliance on Rule 903 of Regulation S. "Restricted Investment" means, with respect to the Company or any of its Subsidiaries, an Investment by such Person in an Affiliate of the Company; provided that the following shall not be Restricted Investments: (i) Investments in the Company or any of its Recourse Subsidiaries; (ii) Investments in Unrestricted Affiliates; and (iii) Investments in Affiliates that become, as a result of such Investment, Recourse Subsidiaries. "Restricted Payment" means (i) the declaration or making of any dividend or of any other payment or distribution (other than dividends, payments or distributions payable solely in shares of the Company's Capital Stock other than Redeemable Stock) on or with respect to the Company's Capital Stock (other than Redeemable Stock) and (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of the Company's Capital Stock (other than Redeemable Stock). "Restricted Period" means the 40-day restricted period referred to in Regulation S. "Restricted Security" has the meaning set forth in Rule 144(a)(3) under the Securities Act. "Revolving Credit Subsidiary Guarantee" has the meaning set forth in Section 10.01. "S&P" means Standard & Poor's Rating Services or its successors. "Securities" means the Initial Securities, the Exchange Securities, the Private Exchange Notes and the Additional Securities treated as a single class of securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission thereunder. "Shelf Registration Statement" means the shelf registration statement, which the Company will use its best efforts to cause to become effective with respect to the resale of the Initial Securities in the event that the Exchange Offer is not completed, pursuant to the terms of the Registration Rights Agreement. "Significant Subsidiary" means (i) any Subsidiary (other than a Non-Recourse Subsidiary) of the Company which at the time of determination either (A) had assets which, as of the date of the Company's most 15 21 recent quarterly consolidated balance sheet, constituted at least 5% of the Company's total assets on a consolidated basis as of such date, in each case determined in accordance with GAAP, or (B) had revenues for the 12-month period ending on the date of the Company's most recent quarterly consolidated statement of income which constituted at least 5% of the Company's total revenues on a consolidated basis for such period, or (ii) any Subsidiary of the Company (other than a Non-Recourse Subsidiary) which, if merged with all Defaulting Subsidiaries (as defined below) of the Company, would at the time of determination either (A) have had assets which, as of the date of the Company's most recent quarterly consolidated balance sheet, would have constituted at least 10% of the Company's total assets on a consolidated basis as of such date or (B) have had revenues for the 12-month period ending on the date of the Company's most recent quarterly consolidated statement of income which would have constituted at least 10% of the Company's total revenues on a consolidated basis for such period (each such determination being made in accordance with GAAP). "Defaulting Subsidiary" means any Subsidiary of the Company (other than a Non-Recourse Subsidiary) with respect to which an event described under clause (6), (7) or (8) of Section 6.01 has occurred and is continuing. "Stated Maturity" when used with respect to any Security or any installment of interest thereon, means the dates specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable, and when used with respect to any other Debt, means the date specified in the instrument governing such Debt as the fixed date on which the principal of such Debt or any installment of interest is due and payable. "Subsidiary" means, with respect to any Person, (i) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof has at least majority ownership interest and the power to direct the policies, management and affairs thereof. For purposes of this definition, any director's qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary. "Subsidiary Guarantee" has the meaning set forth in Section 10.01. "Tax Sharing Agreement" means the tax sharing agreement, dated as of January 31, 1994, among the Company, G-I Holdings and GAF. "TIA" means, except as otherwise provided in Section 9.07, the Trust Indenture Act of 1939, as amended, as in effect on the date hereof. "Treasury Yield" 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 applicable redemption date (or, if such Statistical Release is no longer 16 22 published, any publicly available source of similar data) most nearly equal to the then remaining Average Life of the Securities; provided that, if the Average Life of the Securities is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Yield 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 the average life of the Securities is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Trustee" means the party named as such in this Indenture until a successor replaces such party in accordance with the provisions of this Indenture, and thereafter means such successor. "Trust Officer" means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "2005 Notes" means the Company's Series B 7 3/4% Senior Notes due 2005. "2006 Notes" means the Company's Series B 8 5/8% Senior Notes due 2006. "2007 Notes" means the Company's 8% Senior Notes due 2007 and the Company's Series B 8% Senior Notes due 2007. "2008 Notes" means the Company's Series B 8% Senior Notes due 2008. "Unrestricted Affiliate" means a Person (other than a Subsidiary of the Company except a Non-Recourse Subsidiary) controlled by, or under common control with, the Company in which no Affiliate of the Company (other than (i) the Company or a Wholly-Owned Recourse Subsidiary, (ii) any director or officer of the Company or any of its Subsidiaries whose primary employment is by the Company or any of its Subsidiaries other than a Non-Recourse Subsidiary, except for Permitted Holders or members of their immediate family, and (iii) another Unrestricted Affiliate) has an Investment. "U.S. Government Obligations" means money or direct non-callable obligations of the United States of America for the payment of which the full faith and credit of the United States is pledged. "U.S. Person" means a U.S. Person as defined in Rule 902 under the Securities Act. "USI" means U.S. Intec, Inc., a Texas corporation, and its successors. 17 23 "Voting Stock" means, with respect to any Person, Capital Stock of any class or kind normally entitled to vote in the election of the board of directors or other governing body of such Person. "Wholly-Owned Recourse Subsidiary" means a Subsidiary of a Person (other than a Non-Recourse Subsidiary) all the Capital Stock of which (other than directors qualifying shares) is owned by such Person or another Wholly-Owned Recourse Subsidiary of such Person. "Wholly-Owned Subsidiary" means a Subsidiary all the Capital Stock of which (other than directors' qualifying shares) is owned by the applicable corporation or another Wholly-Owned Subsidiary of the applicable corporation. Section 1.02. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Securities; "indenture security holder" means Holder or a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company and any other obligor on the Securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them therein. Section 1.03 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) "or" is not exclusive; (3) words in the singular include the plural, and words in the plural include the singular; (4) provisions apply to successive events and transactions; (5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other Subdivision; and (6) all calculations made for the purpose of determining compliance with the terms of the covenants set forth in Article IV and other provisions of this Indenture shall 18 24 utilize GAAP in effect at the time of preparation of, and in conformity with those used to prepare, the historical consolidated financial statements of the Company at and for the fiscal year ended December 31, 1999. ARTICLE II. THE SECURITIES Section 2.01. Form and Dating. The Initial Securities and the Additional Securities, and the Trustee's certificate of authentication thereon, shall be substantially in the form of Exhibit A hereto. The Exchange Securities and the Private Exchange Notes and the Trustee's certificate of authentication thereon shall be substantially in the form of Exhibit B. The Securities may have notations, legends or endorsements required by law, stock exchange rule or agreements to which the Company is subject, if any, or usage. The Company shall approve the form of the Securities and any notation, legend or endorsement on them, and such approval shall be evidenced by the execution of such Securities by two Officers of the Company. Each Security shall be dated the date of its authentication. The terms and provisions contained in the form of the Securities, annexed hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a part of this Indenture. Section 2.02. Execution and Authentication; Aggregate Principal Amount. Two Officers shall sign the Securities for the Company by facsimile or manual signature. The Company's seal may be reproduced or imprinted on the Securities, by facsimile or otherwise. If a Person whose signature is on a Security as an Officer no longer holds that office or position at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery (i) Initial Securities for original issue in an aggregate principal amount of $35,000,000, (ii) Exchange Securities or Private Exchange Notes from time to time for issue only in exchange for a like principal amount of Initial Securities in accordance with the Registration Rights Agreement, and (iii) Additional Securities for original issue in an aggregate principal amount not exceeding $115,000,000, in each case upon a written order of the Company signed by an Officer of the Company to a Trust Officer. The order shall specify the amount of Securities to be authenticated, the date on which the Securities are to be authenticated and whether the Securities are to be Initial Securities, Exchange Securities, Private Exchange Notes or Additional Securities. 19 25 The aggregate principal amount of Securities outstanding at any time may not exceed $150,000,000, except as provided in Section 2.07. The Company may issue Additional Securities from time to time after the offering of the Initial Securities. Any offering of Additional Securities is subject to Section 4.09. The Securities shall be issuable only in registered form and only in denominations of $1,000 and any integral multiple thereof. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate the Securities, which authenticating agent shall be compensated by the Company. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so, except with regard to the original issuance of the Securities and pursuant to Section 2.06. Except as provided in the preceding sentence, each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Agent. If the Securities are to be issued in the form of one or more Global Securities, then the Company shall execute and the Trustee shall authenticate and deliver one or more Global Securities that (i) shall represent and shall be in minimum denominations of $1,000 or in the approximate equivalent amount, (ii) shall be registered in the name of the Depository for such Global Security or Securities or the nominee of such Depository, (iii) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions and (iv) shall bear the legend set forth in Exhibit C. Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional Paying Agents. The term "Paying Agent" includes any additional Paying Agent. The Company shall enter into an appropriate written agency agreement with any Agent not a party to this Indenture. Each such agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall give prompt written notice to the Trustee of the name and address of any such Agent and any change in the address of such Agent. The Company may change an Agent without prior notice to the Holders. In the event that there is a change in the address of an Agent or if the Company changes an Agent, the Company shall promptly notify the Holders in writing. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities. Section 2.04. Paying Agent To Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of Securityholders all money held by the Paying Agent for the payment of principal 20 26 of or interest on the Securities, and such Paying Agent shall notify the Trustee of any default by the Company in making any such payment. If the Company or any of its Subsidiaries acts as Paying Agent, it shall segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee. Section 2.05. Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders, and the Company shall otherwise comply with TIA ss. 312(a). The Trustee shall be entitled to rely upon a certificate of the Registrar, the Company or such other Paying Agent, as the case may be, as to the names and addresses of the Securityholders and the principal amounts and serial numbers of the Securities. Section 2.06. Transfer and Exchange. The Securities shall be issued in registered form and shall be transferable only upon the surrender of such Securities for registration or transfer. When Securities are presented to the Registrar or a co-Registrar with a request to register the transfer or to exchange them for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met; provided that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument or transfer in a form satisfactory to the Company and the Registrar duly executed by the Holder thereof or his attorney duly authorized in writing; and provided further that prior to the expiration of the Restricted Period, transfers of book-entry interests in the Regulation S Global Security may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than the Initial Purchaser). To permit registrations of transfer and exchanges, the Company shall execute the Securities, and the Trustee shall authenticate the Securities at the Registrar's request. No service charge to the Securityholder shall be made for any registration of transfer or exchange, but the Company or the Trustee may require from the transferring or exchanging Securityholder payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchanges pursuant to Sections 2.10, 4.14, 4.15 or 9.05). The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Security (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Securities and ending at the close of business on the day of such mailing and (ii) selected for redemption in whole or in part pursuant to Article III, except the unredeemed portion of any Security being redeemed in part. 21 27 If a Security is a Restricted Security in certificated form, then as provided in this Indenture and subject to the limitations herein set forth, the Holder, provided it is a Qualified Institutional Buyer, an Accredited Investor or a Holder pursuant to Regulation S, may exchange such Security for a Book-Entry Security by instructing the Trustee to arrange for such Security to be represented by a beneficial interest in a Global Security in accordance with the customary procedures of the Depository. In accordance with the provisions of this Indenture and subject to certain limitations herein set forth, an owner of a beneficial interest in a Global Security which has not been exchanged for an Exchange Security may request a Security in certificated form, in exchange in whole or in part, as the case may be, for such beneficial owner's interest in the Global Security. Upon any exchange provided for in the preceding paragraph, the Company shall execute and the Trustee shall authenticate and deliver to the person specified by the Depository a new Security or Securities registered in such names and in such authorized denominations as the Depository, pursuant to the instructions of the beneficial owner of the Securities requesting the exchange, shall instruct the Trustee. Thereupon, the beneficial ownership of such Global Security shown on the records maintained by the Depository or its nominee shall be reduced by the amounts so exchanged and an appropriate endorsement shall be made by or on behalf of the Trustee on the Global Security. Any such exchange shall be effected through the Depository in accordance with the procedures of the Depository therefor. Notwithstanding the foregoing, no Global Security shall be registered for transfer or exchange, or authenticated and delivered, whether pursuant to this Section, Section 2.07, 2.10 or 3.06 or otherwise, in the name of a person other than the Depository for such Global Security or its nominee until (i) the Company notifies the Trustee that the Depository is unwilling or unable to continue as Depository for such Global Security or if at any time the Depository ceases to be a clearing agency registered under the Exchange Act, and a successor depository is not appointed by the Company within 90 days, (ii) the Company executes and delivers to the Trustee a Company order that all such Global Securities shall be exchangeable or (iii) there shall have occurred and be continuing an Event of Default. Upon the occurrence in respect of any Global Security representing the Securities of any one or more of the conditions specified in clause (i), (ii) or (iii) of the preceding sentence, such Global Security may be registered for transfer or exchange for Securities registered in the names of, authenticated and delivered to, such persons as the Trustee or the Depository, as the case may be, shall direct. Except as provided above, any Security authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any Global Security, whether pursuant to this Section, Section 2.07, 2.10 or 3.06 or otherwise, shall also be a Global Security and bear the legend specified in Exhibit C. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be applicable to transfers of book-entry interests in the Regulation 22 28 S Global Securities that are held by Participants through Euroclear or Cedel Bank. The Company shall not have any liability to any Person relating to (i) the performance by the Depositary, Euroclear, Cedel or any of their respective direct or indirect Participants under the rules and procedures governing, the Depository, Euroclear or Cedel including with respect to transferring book-entry interests in the Securities, or (ii) maintaining, supervising or reviewing any records of such entities relating to the Securities. Section 2.07. Replacement Securities. If a mutilated Security is surrendered to the Trustee or if the Holder of a Security claims that such Security has been lost, destroyed or wrongfully taken, the Company shall issue a replacement Security, and the Trustee shall authenticate such replacement Security if the Trustee's requirements are met. If required by the Trustee or the Company, an indemnity bond must be provided by the Securityholder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced. The Company or the Trustee may charge such Holder for its expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. Section 2.08. Outstanding Securities. Securities outstanding at any time are all Securities that have been authenticated by the Trustee, except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. A Security does not cease to be outstanding because the Company or one of its Affiliates holds the Security. If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds (or, if the Company or a Subsidiary is the Paying Agent, segregates and holds in trust), in accordance with this Indenture, on the maturity or redemption date, money sufficient to pay Securities payable on that date, then on and after that date such Securities shall be deemed to be no longer outstanding and interest on them shall cease to accrue. Section 2.09. Treasury Securities. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or any of its Affiliates shall be disregarded, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Section 2.10. Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare, and the Trustee shall authenticate upon written order of the Company signed by an Officer thereof, temporary Securities. Temporary Securities shall be substantially in 23 29 the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare, and the Trustee shall authenticate, definitive Securities in exchange for temporary Securities. Until such exchange, such temporary Securities shall be entitled to the same rights, benefits and privileges as the definitive Securities. Section 2.11. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation. The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. Section 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest, plus, to the extent permitted by law, any interest payable on the defaulted interest, to the Persons who are Securityholders on a subsequent special record date. Such special record date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before the special record date, the Company shall mail or cause to be mailed to each Securityholder and the Trustee a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. Section 2.13. CUSIP Number. The Company in issuing the Securities may use one or more "CUSIP" numbers. If so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Securityholders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in a CUSIP number. Section 2.14. Deposit of Moneys. On or before 11:00 A.M., New York City time, on each payment date, the Company shall deposit with the Trustee or Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such payment date. The principal amount and interest due on Book-Entry Securities shall be payable to the Depository or its nominee, as the case may be, as the sole registered owner and the sole holder of the Book-Entry Securities represented thereby. The principal amount and interest on Securities in certificated form shall be payable at the office of the Paying Agent; provided however that the Company, at its option, may pay interest by check by mailing such check to the Holder's registered address. 24 30 ARTICLE III. REDEMPTION Section 3.01. Notices to Trustee. If the Company elects to redeem Securities pursuant to paragraph 5(a) of the Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Securities to be redeemed. The Company shall give the notice to the Trustee provided for in this Section at least 45 days before the redemption date, unless the Trustee consents in writing to a shorter notice period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of Counsel to the effect that such redemption will comply with the conditions contained in this Indenture and will set forth the redemption price. Section 3.02 [Reserved] Section 3.03 Notice of Redemption. At such time as is provided by paragraph 5(a) of the Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (A) the redemption date; (B) the redemption price; (C) the name and address of the Paying Agent; (D) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (E) that, unless the Company defaults in making such redemption payment, interest on Securities called for redemption ceases to accrue on and after such redemption date; and (F) the CUSIP number, if any, and that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by clauses (A), (B) and (C) at least 45 days before the redemption date. Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, subject to the Company's compliance with Section 25 31 3.05 herein, such Securities shall be paid at the redemption price stated in the notice, plus accrued and unpaid interest, if any, to the redemption date. Section 3.05. Deposit of Redemption Price. On or prior to the redemption date, the Company shall deposit with the Paying Agent in immediately available funds (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued and unpaid interest, if any, on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancellation. Section 3.06. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE IV. COVENANTS Section 4.01. Payment of Securities. The Company shall pay, or cause to be paid, the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities. Principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay all principal and interest payable in cash in each case as then due. The Company shall pay interest on overdue principal, as the case may be, at the rate specified therefor in the Securities. Section 4.02. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee as set forth in Section 11.02. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any matter relieve the Company of its obligation to maintain an office or agency pursuant to this Section 4.02. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. 26 32 The Company hereby initially designates the office of the Trustee or its agent located in the Borough of Manhattan, The City of New York, as such office of the Company in accordance with Section 2.03. Section 4.03. Corporate Existence. The Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its (i) corporate existence and the corporate existence of each of its Subsidiaries (other than Non-Recourse Subsidiaries) in accordance with their respective organizational documents and (ii) the material rights (charter and statutory), licenses and franchises of the Company and each of its Subsidiaries; provided that (i) neither the Company nor any of its Subsidiaries shall be required to preserve any such right or franchise, or corporate existence, if the Board of Directors of the Company or such Subsidiary shall determine that the loss thereof is not, and will not be, adverse in any material respect to the Company or the Holders and (ii) nothing in this Section 4.03 shall prevent the Company from taking any action that complies with the provisions of Section 5.01. Section 4.04. Payment of Taxes and Other Claims. The Company shall, and shall cause each of its Subsidiaries (other than Non-Recourse Subsidiaries) to, pay or discharge or cause to be paid or discharged, before any penalty accrues from the failure to so pay or discharge, (1) all material taxes, assessments and governmental charges levied or imposed upon it or any of such Subsidiaries or upon the income, profits or property of it or any of such Subsidiaries, and (2) all material, lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon its property or the property of any Subsidiary; provided that there shall not be required to be paid or discharged any such tax, assessment, charge or claim if the amount, applicability or validity thereof is being contested in good faith by appropriate proceedings and adequate provision therefor has been made. Section 4.05. Compliance Certificates. (a) The Company shall deliver to the Trustee within 60 days after the end of each of the Company's fiscal quarters (120 days after the end of the Company's last fiscal quarter of its fiscal year) an Officers' Certificate, stating whether or not the signers, after due inquiry, know of any Default or Event of Default which occurred during such fiscal quarter. An Officers' Certificate delivered within 120 days after the end of the Company's fiscal year shall also contain a certification from the principal executive officer, principal financial officer or principal accounting officer of the Company as to such officer's knowledge of the Company's compliance with all conditions and covenants under this Indenture. For purposes of this Section 4.05(a), such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. If the officer does know of such a Default or Event of Default, the certificate shall describe any such Default or Event of Default, and its status. The first certificate to be delivered pursuant to this Section 4.05(a) shall be for the first fiscal quarter beginning after the execution of this Indenture. (b) The Company shall deliver to the Trustee, as soon as possible and in any event within 10 days after the Company becomes aware of the occurrence of each Default or Event of Default which is continuing, an Officers' Certificate setting forth the details of such Default or Event of Default, and the action which the Company has taken and proposes to take with respect 27 33 thereto. Following receipt of such Officers' Certificate, the Trustee shall send the notice called for by Section 7.05, except as provided therein. Section 4.06. Securities and Exchange Commission Reports. (a) The Company shall file with the Trustee and provide Holders of record, within 15 days after it files them with the Commission, copies of its annual report and the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) which the Company is required to file with the Commission pursuant to Sections 13 or 15(d) of the Exchange Act, without exhibits in the case of each Holder, unless the Company is requested in writing by such Holder. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will continue to file with the Commission and provide the Trustee and Holders with such annual reports and information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) which are specified in Sections 13 and 15(d) of the Exchange Act, without exhibits in the case of Holders, unless the Company is requested in writing by the Holders. The Company also will comply with the other provisions of TIA Section 314(a). (b) So long as any of the Securities remain outstanding, the Company shall cause each annual, quarterly and other financial report mailed or otherwise furnished by it generally to public securityholders to be filed with the Trustee and mailed to the Holders of record at their addresses appearing in the register of Securities maintained by the Registrar, in each case at the time of such mailing or furnishing to stockholders. The Company shall provide to any Holder or any beneficial owner of Notes any information reasonably requested by such holder or such beneficial owner concerning the Company and its Subsidiaries (including financial statements) necessary in order to permit such holder or such beneficial owner to sell or transfer Notes in compliance with Rule 144A under the Securities Act or any similar rule or regulation adopted by the Commission. (c) Delivery of such reports to the Trustee is for informational purposes only and the Trustee's receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely conclusively and exclusively on Officers' Certificates). Section 4.07. Waiver of Stay, Extension or Usury Laws. The Company and the Guarantors each covenants (to the full extent permitted by applicable law) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, and will actively resist any attempts to claim the benefit of any stay or extension law or any usury law or other law which would prohibit or forgive the Company or any Guarantor from paying all or any portion of the principal of or interest on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the full extent permitted by applicable law) the Company and the Guarantors each hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any 28 34 power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 4.08 Maintenance of Properties. Subject to this Article IV, the Company shall cause all material properties owned by or leased to it or any of its Subsidiaries (other than Non-Recourse Subsidiaries) and used or useful in the conduct of its business or the business of such Subsidiaries to be maintained and kept in normal condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company or such Subsidiary may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided that nothing in this Section 4.08 shall prevent the Company or any of its Subsidiaries from discontinuing the use, operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is not, in the judgment of the Board of Directors of the Company or such Subsidiary, adverse in any material respect, to the Company or the Holders. Section 4.09. Limitation on Debt and Preferred Stock of the Company and its Subsidiaries. (a) The Company shall not, and shall not permit any of its Subsidiaries to, Issue, directly or indirectly, any Debt unless, at the time of such Issuance and after giving effect thereto, (i) no Default or Event of Default shall have occurred and be continuing and (ii) the Consolidated EBITDA Coverage Ratio of the Company for the period of its most recently completed four consecutive fiscal quarters ending at least 45 days prior to the date such Debt is Issued is at least 2.00 to 1.00. (b) Notwithstanding the foregoing, there may be issued the following Debt: (1) The Securities (other than the Additional Securities) and the guarantee thereof by the Guarantors; (2) Debt of the Company Issued to and held by a Wholly-Owned Recourse Subsidiary of the Company and (ii) Debt of a Recourse Subsidiary of the Company Issued to and held by the Company or a Wholly-Owned Recourse Subsidiary of the Company; provided that any subsequent transfer of such Debt (other than to the Company or to a Wholly-Owned Recourse Subsidiary of the Company) shall be deemed, in each case, to constitute the Issuance of such Debt by the Company or such Subsidiary; (3) Debt the proceeds of which are used to acquire assets of the Company and its Subsidiaries; provided that, after giving effect to the Issuance of any such Debt that otherwise complies with this clause (3), the aggregate amount of all Debt then outstanding at any time under this clause (3), including all Refinancings thereof then outstanding, shall not at any time exceed $80,000,000; (4) Acquired Debt; (5) (x) Debt outstanding on the Issue Date (including the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes) and (y) Debt Issued to Refinance any Debt permitted 29 35 by clause (a), this clause (5) or by clauses (1) and (3) of this Section 4.09(b); provided that, in the case of a Refinancing, (i) the amount of the Debt so Issued shall not exceed the principal amount or the accreted value (in the case of Debt Issued at a discount) of the Debt so Refinanced plus, in each case, the reasonable costs incurred by the issuer in connection with such Refinancing, (ii) the Average Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not bear interest in cash prior to a specified date, the Refinancing Debt shall not bear interest in cash prior to such specified date, (v) if the Debt being Refinanced is Debt permitted by clause (3), such Refinancing Debt is not secured by any assets not securing the Debt so Refinanced or improvements or additions thereto, or replacements thereof, and (vi) the obligors with respect to the Refinancing Debt shall not include any Persons who were not obligors (including predecessors thereof) with respect to the Debt being Refinanced; (6) Non-Recourse Debt of a Non-Recourse Subsidiary of the Company and Guarantees of Non-Recourse Debt of Non-Recourse Subsidiaries which Guarantees are recourse only to the stock of the Non-Recourse Subsidiaries; (7) Debt under the Credit Agreement or any Refinancing thereof; provided that the aggregate outstanding amount thereunder does not at any time exceed $150,000,000; (8) Debt secured by Receivables, including to Refinance the Receivables Financing Agreement, provided that the amount of such Debt does not exceed 85% of the face amount of the Receivables; and (9) Debt (other than Debt identified in clauses (1) through (8) above) in an aggregate principal amount outstanding at any one time not to exceed $100,000,000. (c) The Company shall not, and shall not permit any of its Subsidiaries to, Issue any Preferred Stock; provided that there may be issued the following Preferred Stock: (1) Preferred Stock of the Company or any Subsidiary of the Company issued to and held by the Company or a Wholly-Owned Recourse Subsidiary of the Company; provided that any subsequent transfer of such Preferred Stock (other than to the Company or to a Wholly-Owned Recourse Subsidiary of the Company) or such Wholly-Owned Recourse Subsidiary of the Company ceasing to be a Wholly-Owned Recourse Subsidiary of the Company shall be deemed, in each case, to constitute the Issuance of such Preferred Stock by the Company or such Subsidiary; (2) Preferred Stock (other than Preferred Stock described in clause (1) but including the Preferred Stock referred to in the proviso to clause (1) above); provided that the liquidation value of any Preferred Stock issued pursuant to this clause (2) shall constitute Debt for purposes of this Section 4.09 and dividends on such Preferred Stock shall be included in determining Consolidated 30 36 Interest Expense of the Company for purposes of calculating the Consolidated EBITDA Coverage Ratio of the Company under paragraph (a) of this Section 4.09; and (3) Preferred Stock (other than Redeemable Stock) of the Company. (d) To the extent the Company or any of its Subsidiaries Guarantees any Debt of the Company or any other Subsidiary, such Guarantee and such Debt will be deemed to be the same Debt and only the amount of the Debt will be deemed to be outstanding. If the Company or any of its Subsidiaries Guarantees any Debt of a Person that, subsequent to the Issuance of such Guarantee, becomes a Subsidiary of the Company, such Guarantee and the Debt so Guaranteed shall be deemed to be the same Debt, which shall be deemed to have been Issued when the Guarantee was Issued and shall be deemed to be permitted to the extent the Guarantee was permitted when Issued. Section 4.10. Limitation on Restricted Payments and Restricted Investments. (a) So long as no Default or an Event of Default shall have occurred and be continuing, the Company may make, and may permit any of its Subsidiaries to make, directly or indirectly, a Restricted Payment or Restricted Investment so long as, at the time of such Restricted Payment or Restricted Investment and immediately after giving effect thereto, the aggregate amount of Restricted Payments made since the Issue Date and the aggregate amount of Restricted Investments made since the Issue Date and then outstanding (the amount expended for such purposes, if other than in cash, shall be the fair market value of such property as determined by the Board of Directors of the Company in good faith as of the date of payment or investment) shall not exceed the sum of: (i) 75% of the cumulative Consolidated Net Income (or minus 100% of the cumulative Consolidated Net Loss) of the Company accrued during the period beginning on the Commencement Date and ending on the last day of the fiscal quarter for which financial information has been made publicly available by the Company but ending no more than 135 days prior to the date of such Restricted Payment or Restricted Investment (treating such period as a single accounting period); (ii) 100% of the net cash proceeds, including the fair market value of property other than cash as determined by the Board of Directors of the Company in good faith, as evidenced by a Board Resolution, received by the Company from any Person (other than a Subsidiary of the Company) from the Issuance and sale subsequent to the Commencement Date of Capital Stock of the Company (other than Redeemable Stock) or as a capital contribution; provided that, if the value of the non-cash contribution is in excess of $10,000,000 the Company shall have received the written opinion of a nationally recognized investment banking firm that the terms thereof, from a financial point of view, are fair to the shareholders of the Company or such Subsidiary, in their capacity as such (the determination as to the value of any non-cash consideration referred to in this clause (ii) to be made by such investment banking firm), and such opinion shall have been delivered to the Trustee; 31 37 (iii) 100% of the net cash proceeds received by the Company from the exercise of options or warrants on Capital Stock of the Company (other than Redeemable Stock) since the Commencement Date; (iv) 100% of the net cash proceeds received by the Company from the conversion into Capital Stock (other than Redeemable Stock) of convertible Debt or convertible Preferred Stock issued and sold (other than to a Subsidiary of the Company) since the Commencement Date; and (v) $60,000,000. The designation by the Company or any of its Subsidiaries of a Subsidiary as a Non-Recourse Subsidiary shall be deemed to be the making of a Restricted Investment by the Company in an amount equal to the outstanding Investments made by the Company and its Subsidiaries in such Person being designated a Non-Recourse Subsidiary at the time of such designation. (b) Section 4.10(a) shall not prevent the following, as long as no Default or Event of Default shall have occurred and be continuing (or would result therefrom other than pursuant to Section 4.10(a)): (1) the making of any Restricted Payment or Restricted Investment within 60 days after (x) the date of declaration thereof or (y) the making of a binding commitment in respect thereof; provided that at such date of declaration or commitment such Restricted Payment or Restricted Investment complied with Section 4.10(a); (2) any Restricted Payment or Restricted Investment made out of the net cash proceeds received by the Company from the substantially concurrent sale of its Common Stock (other than to a Subsidiary of the Company); provided that such net cash proceeds so utilized shall not be included in paragraph (a) in determining the amount of Restricted Payments or Restricted Investments the Company could make under Section 4.10(a); (3) cumulative Investments in Non-Recourse Subsidiaries not in excess of $50,000,000 in the aggregate determined as of the date of Investment (the amount so expended, if other than cash, to be determined by the Company's Board of Directors, as evidenced by a Board Resolution); and (4) repurchases of Capital Stock of the Company, in each case from employees of the Company or any of its Subsidiaries (other than any Permitted Holder); provided, however, that the aggregate amount of Restricted Payments made under this clause shall not exceed $1,500,000 in any fiscal year. Restricted Payments or Restricted Investments made pursuant to clauses (2), (3) or (4) shall not be deducted in determining the amount of Restricted Payments or Restricted Investments made or then outstanding under Section 4.10(a). 32 38 Section 4.11. Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur or suffer to exist any Liens upon their respective property or assets whether owned on the Issue Date or acquired after such date, or on any income or profits therefrom, other than the following: (1) Liens existing on the Issue Date; (2) Permitted Liens; (3) Purchase money Liens on assets of the Company and its Subsidiaries or improvements or additions thereto existing or created within 180 days after the time of acquisition of or improvements or additions to such assets, or replacements thereof; provided that (i) such acquisition, improvement or addition is otherwise permitted by this Indenture, (ii) the principal amount of Debt (including Debt in respect of Capitalized Lease Obligations) secured by each such Lien on each asset shall not exceed the cost (including all such Debt secured thereby, whether or not assumed) of the item subject thereto, and such Liens shall attach solely to the particular item of property so acquired, improved or added and any additions or accessions thereto, or replacements thereof, and (iii) the aggregate amount of Debt secured by Liens permitted by this clause (3) shall not at any time exceed $40,000,000; (4) Liens to secure Refinancing of any Debt secured by Liens described in clauses (l)-(3) above and (5) below; provided that (i) Refinancing does not increase the principal amount of Debt being so Refinanced and (ii) the Lien of the Refinancing Debt does not extend to any asset not securing the Debt being Refinanced or improvements or additions thereto, or replacements thereof; (5) Liens securing Acquired Debt; provided that (i) any such Lien secured the Acquired Debt at the time of the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and such Lien and Acquired Debt were not incurred by the Company or any of its Subsidiaries or by the Person being acquired or from whom the assets were acquired in connection with, or in anticipation of, the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and (ii) any such Lien does not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Debt prior to the time such Debt became Acquired Debt of the Company or of one of its Subsidiaries; (6) Liens on Receivables securing Debt permitted by Section 4.09(b)(8); (7) Liens securing intercompany Debt permitted by Section 4.09(b)(2); and (8) Liens on assets of the Company and its Subsidiaries in addition to those referred to in clauses (1)-(7), provided that such Liens only secure Debt of the Company and its 33 39 Subsidiaries in an aggregate amount not to exceed at any one time outstanding $60,000,000. Section 4.12. Limitation on Transactions with Affiliates. (a) The Company shall not enter, and shall not permit any of its Subsidiaries to enter, directly or indirectly, into any transaction or series of related transactions with any Affiliate of the Company (other than (x) the making of a Restricted Payment or Restricted Investment otherwise permitted by Section 4.10 or those transactions specifically permitted by Section 4.10(b), (y) transactions between or among Non-Recourse Subsidiaries of the Company or (z) transactions between or among the Company and its Subsidiaries (other than Non-Recourse Subsidiaries)) including, without limitation, any loan, advance or investment or any purchase, sale, lease or exchange of property or the rendering of any service, unless the terms of such transaction or series of transactions are set forth in writing and at least as favorable as those available in a comparable transaction in arms-length dealings from an unrelated Person; provided that (i) if any such transaction or series of related transactions (other than any purchase or sale of inventory in the ordinary course of business, but including entering into any long-term arrangement involving the purchase of granules or glass fiber from, or the provision of management services of the type currently provided under the Management Agreement by, an Affiliate of the Company, including ISP or a Subsidiary thereof) involves aggregate payments or other consideration in excess of $10,000,000, such transaction or series of related transactions shall be approved (and the value of any non-cash consideration shall be determined) by a majority of those members of the Board of Directors of the Company or such Subsidiary, as the case may be, having no personal stake in such business, transaction or transactions; and (ii) in the event that such transaction or series of related transactions (other than any purchase or sale of inventory in the ordinary course of business or other than purchases of granules or glass fiber from an Affiliate of the Company, including ISP or a Subsidiary thereof) involves aggregate payments or other consideration in excess of $35,000,000 (with the value of any non-cash consideration being determined by a majority of those members of the Board of Directors of the Company or such Subsidiary, as the case may be, having no personal stake in such business, transaction or transactions), the Company or such Subsidiary, as the case may be, shall have also received a written opinion from a nationally recognized investment banking firm that such transaction or series of related transactions is fair to the shareholders, in their capacity as such, of the Company or such Subsidiary from a financial point of view and such opinion has been delivered to the Trustee; provided further, in the event that each member of the Board of Directors of the Company or the Subsidiary, as the case may be, proposing to engage in a transaction or series of related transactions described in the preceding proviso has a personal stake in such business, transaction or transactions, the Company or such Subsidiary may enter into such transaction or series of transactions if the Company or such Subsidiary, as the case may be, shall have received the written opinion of a nationally recognized investment banking firm that the terms thereof, from a financial point of view, are fair to the shareholders of the Company or such Subsidiary, in their capacity as such (the determination as to the value of any non-cash consideration referred to in the preceding proviso to be made by such investment banking firm), and such opinion shall have been delivered to the Trustee. (b) Section 4.12(a) shall not prevent the following: 34 40 (1) the purchase of granules from an Affiliate of the Company, including ISP or a Subsidiary of ISP, provided that (a) subject to Section 4.12(c), the price and other terms shall not be less favorable to the Company than those set forth in the Granules Contracts or (b) a nationally recognized investment banking firm or accounting firm has delivered a written opinion to the Company to the effect that either the terms thereof are fair to the Company from a financial point of view or are on terms at least as favorable to the Company as those available in comparable transactions in arms-length dealings from an unrelated third party; (2) the continuance of the Management Agreement (including with an Affiliate of the Company other than ISP) (a) in accordance with its terms or on terms no less favorable to the Company than those contained in the Management Agreement or (b) on other terms provided that the Company shall have received the written opinion of a nationally recognized investment banking firm or accounting firm that either the terms thereof, from a financial point of view, are fair to the Company or are on terms at least as favorable to the Company as those available in comparable transactions in arms-length dealings from an unrelated Person; (3) any transaction between the Company or a Subsidiary thereof and its own employee stock ownership or benefit plan; (4) any transaction with an officer or director of the Company or any Subsidiary of the Company entered into in the ordinary course of business (including compensation or employee benefit arrangements with any such officer or director); (5) any business or transactions with an Unrestricted Affiliate; (6) borrowings by the Company or its Subsidiaries from Affiliates of the Company; provided that such loans are unsecured, are prepayable at any time without penalty, contain no restrictive covenants and the effective cost of borrowings thereunder do not exceed the interest rate then in effect from time to time under the Credit Agreement or any Refinancings thereof (or, if such agreement is not outstanding, under the unsecured bank debt of the Company); (7) payments made pursuant to the Tax Sharing Agreement; or (8) purchases made pursuant to the Glass Fiber Contract; provided that the terms of such contract are set forth in writing and are at least as favorable to the Company as those available in a comparable transaction in arms-length dealings with an unrelated Person. (c) The Company shall not, and shall not permit any of its Subsidiaries to, amend, modify or waive any provision of the Tax Sharing Agreement, the Granules Contracts or the Glass Fiber Contract in any manner which is significantly adverse to the Company or the holders of the Notes (it being understood that an extension or modification of any of the Granules Contracts (or any similar granules purchase contract) or the Glass Fiber 35 41 Contract on terms at least as favorable to the Company as those available at the time of the extension or modification (or any such new agreement) in a comparable transaction in arms-length dealings with an unrelated Person shall not be deemed significantly adverse to the Company or the Holders). Section 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Subsidiaries (other than Non-Recourse Subsidiaries) to, directly or indirectly, create or otherwise cause to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make any other distributions on its Capital Stock or pay any Debt owed to the Company or any of its Subsidiaries, (b) make loans or advances to the Company or any of its Subsidiaries, (c) transfer any of its properties or assets to the Company or (d) incur or suffer to exist Liens in favor of the Holders, except for such encumbrances or restrictions existing under or by reason of any of the following: (1) applicable law; (2) this Indenture and the indentures governing the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes; (3) customary provisions restricting subletting or assignment of any lease or license or other commercial agreement; (4) any instrument governing Acquired Debt of any Person, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than such Person and its Subsidiaries, or the property or assets of such Person and its Subsidiaries, so acquired; (5) the Liens specifically permitted by Section 4.11; provided that such Liens and the terms governing such Liens do not, directly or indirectly, restrict the Company or its Subsidiaries from granting other Liens, except as to the assets subject to such Liens; (6) the Credit Agreement, the Receivables Financing Agreement or other Debt existing on the Issue Date; and (7) any Refinancing of the Credit Agreement, the Receivables Financing Agreement or any such other Debt existing on the Issue Date; provided that the terms and conditions of any such Refinancing agreements relating to the terms described under clauses (a)-(d) above are no less favorable to the Company than those contained in the agreements governing the Debt being Refinanced. Section 4.14. Change of Control. (a) In the event of any Change of Control, each Holder shall have the right, at such Holder's option, to require the Company to purchase all or any portion (in integral multiples of $1,000) of such Holder's Securities on the date (the "Change of Control Payment Date") which is 25 Business Days after the date the Change of Control Notice (as 36 42 defined below) is mailed or is required to be mailed (or such later date as is required by applicable law) at 101% of the principal amount thereof, plus accrued interest to the Change of Control Payment Date (the "Put Amount"). (b) The Company or, at the request of the Company, the Trustee shall send, by first-class mail, postage prepaid, to all Holders, within ten Business Days after the occurrence of each Change of Control, a notice of the occurrence of such Change of Control (the "Change of Control Notice"), specifying a date by which a Holder must notify the Company of such Holder's intention to exercise the repurchase right and describing the procedure that such Holder must follow to exercise such right. The Company is required to deliver a copy of such notice to the Trustee and to cause a copy of such notice to be published in a daily newspaper of national circulation. Each Change of Control Notice shall state: (1) that a Change of Control has occurred, that each Holder has the right to require the Company to repurchase all or any part of such Holder's Security at a purchase price in cash equal to their Put Amount, that the change of control offer is being made pursuant to this Section 4.14 and that all Securities tendered will be accepted for payment; (2) the purchase price and the Change of Control Payment Date; (3) that any Security not tendered will continue to accrue interest; (4) that, unless the Company defaults in making payment therefor, any Security accepted for payment pursuant to the change of control offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have a Security purchased pursuant to a change of control offer will be required to surrender the Security, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day prior to the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than five Business Days prior to the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Securities the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Security purchased; (7) that Holders whose Securities are purchased only in part will be issued new Securities in a principal amount equal to the unpurchased portion of the Securities surrendered; (8) the circumstances and relevant facts regarding such Change of Control, including but not 37 43 limited to the identity of the purchaser and pro forma financial information; and (9) that the Company has the right, pursuant to the provision described in paragraph 5(a) of the Securities, to purchase any securities not tendered as provided therein. No failure of the Company to give the foregoing notice shall limit any Holder's right to exercise a repurchase right. The Company shall comply with all applicable Federal and state securities laws in connection with each Change of Control Notice. On or before the Change of Control Payment Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the change of control offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Securities so tendered and (iii) deliver to the Trustee Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail to such Holders new Securities equal in principal amount to any unpurchased portion of the Securities surrendered. Any Securities not so purchased shall be promptly mailed by the Company to the Holder thereof. For purposes of this Section 4.14, the Trustee shall act as the Paying Agent. Section 4.15. Limitation on Asset Sales. (a) The Company shall not, and shall not permit any of its Subsidiaries, directly or indirectly, to, consummate an Asset Sale unless: (1) the Company or such Subsidiary, as the case may be, receives consideration (including non-cash consideration, whose fair market value shall be determined in good faith by the Board of Directors of the Company or such Subsidiary, as evidenced by a Board Resolution) at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of (as determined in good faith by its Board of Directors, as evidenced by a Board Resolution); (2) at least 75% of the consideration received by the Company or such Subsidiary, as the case may be, shall be cash or Cash Equivalents; provided that this clause (2) shall not prohibit any Asset Sale for which the Company or such Subsidiary, as the case may be, receives 100% of the consideration, directly or through the acquisition of Capital Stock of a Person, in operating assets; and (3) in the case of an Asset Sale by the Company or any of its Subsidiaries, the Company shall commit to apply the Net Cash Proceeds of such Asset Sale within 300 days of the consummation of such Asset Sale, and shall apply such Net Cash Proceeds within 360 days of receipt thereof (i) to invest in the businesses that the Company and its Recourse Subsidiaries are engaged in at the time of such Asset Sale or any like or related business, (ii) to pay or satisfy any Debt of the Company or any of its Subsidiaries (other than Debt which is subordinated by its terms to the Securities) or Preferred Stock of a Subsidiary, including the Debt referred to in the last sentence of the definition thereof or make provision for the payment thereof, through an escrow or other fund, and/or (iii) to 38 44 offer to purchase the Securities in a tender offer (a "Net Proceeds Offer") at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of purchase; provided, however, that the Company shall, to the extent required under the indentures governing the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes, first offer to purchase any outstanding 2006 Notes in a tender offer at a redemption price equal to 100% of the accreted value thereof to the date of redemption, and then offer to purchase any outstanding 2007 Notes, in a tender offer at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of purchase, and then offer to purchase any outstanding 2005 Notes, in a tender offer at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of repurchase, and then offer to purchase any outstanding 2008 Notes, in a tender offer at a redemption price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of purchase, provided, further, however, that the Company may defer making a Net Proceeds Offer until the aggregate Net Cash Proceeds from Asset Sales to be applied pursuant to this clause (3)(iii) equal or exceed $25,000,000; provided that (i) the Company and its Subsidiaries may retain up to $7,000,000 of Net Cash Proceeds from Asset Sales in any twelve-month period (without complying with clause (3)), and (ii) any Asset Sale that would result in a Change of Control shall not be governed by this Section 4.15 but shall be governed by the provisions described under Section 4.14 and paragraph 5(a) of the Securities. (b) Notice of a Net Proceeds Offer shall be mailed or caused to be mailed, by first class mail, by the Company, within 300 days after the relevant Asset Sale to all Holders at their last registered addresses as of a date within 15 days prior to the mailing of such notice, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Net Proceeds Offer and shall state the following terms: (1) that the Net Proceeds Offer is being made pursuant to this Section 4.15 and that all Securities tendered will be accepted for payment; provided that, if the aggregate principal amount of Securities tendered in a Net Proceeds Offer exceeds the aggregate amount available for the Net Proceeds Offer, the Company shall select the Securities to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company, so that only Securities in denominations of $1,000 or multiples thereof shall be purchased); (2) the purchase price and the purchase date (which shall be determined in accordance with Section 4.15(a)) (the "Proceeds Purchase Date); (3) that any Security not tendered will continue to accrue interest; (4) that, unless there is a default in making payment therefor, any Security accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Proceeds Purchase Date; 39 45 (5) that Holders electing to have a Security purchased pursuant to a Net Proceeds Offer will be required to surrender the Security, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Security completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day prior to the Proceeds Purchase Date; (6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than two Business Days prior to the Proceeds Purchase Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Securities the Holder delivered for purchase and a statement that such Holder is withdrawing his or her election to have such Securities purchased; and (7) that Holders whose Securities are purchased only in part will be issued new Securities in a principal amount equal to the unpurchased portion of the Securities surrendered. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Securities pursuant to a Net Proceeds Offer. On or before the Proceeds Purchase Date, the Company or such Subsidiary of the Company, as the case may be, shall (i) accept for payment Securities or portions thereof tendered pursuant to the Net Proceeds Offer which are to be purchased in accordance with item (b)(l) above, (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Securities to be purchased and (iii) deliver to the Trustee Securities so accepted together with an Officers' Certificate stating the Securities or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Securities so accepted payment in an amount equal to the purchase price. For purposes of this Section 4.15, the Trustee shall act as the Paying Agent. Section 4.16. Restriction on Transfer of Certain Assets to Subsidiaries. If the Company transfers or causes to be transferred, in one or a series of related transactions, Material Assets to any one or more Non-Recourse Subsidiaries of the Company, the Company shall cause such transferee Subsidiary to (i) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such transferee Subsidiary shall unconditionally Guarantee, on a senior basis, all of the Company's obligations under the Securities and (ii) deliver to the Trustee an Opinion of Counsel that such supplemental indenture has been duly executed and delivered by such transferee Subsidiary. Section 4.17. Investment Company Act. The Company shall not take any action that would require it or any of its Subsidiaries to register as an investment company under the Investment Company Act of 1940. Section 4.18. Consents, etc. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any fee, interest or other amount to any Holders in connection 40 46 with any consent, waiver or amendment to this Indenture or the Securities, unless such fee, interest or other amount is offered or agreed to be paid to all Holders who are given the same opportunity to so consent, waive or agree to amend and who, in fact, so consent, waive or agree to amend. ARTICLE V. SUCCESSOR CORPORATION Section 5.01. When the Company May Merge, etc. The Company shall not consolidate with or merge with or into or sell, assign, transfer or lease all or substantially all of its properties and assets (either in one transaction or in a series of related transactions) to any Person, unless: (1) the Company shall be the continuing Person, or the resulting, surviving or transferee Person (if other than the Company) shall be a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Securities and this Indenture, and this Indenture shall remain in full force and effect; (2) immediately before and immediately after giving effect to such transaction (and treating any Debt which becomes an obligation of the resulting, surviving or transferee Person or any of its Subsidiaries as a result of such transaction as having been issued by such Person or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (3) immediately before and after giving effect to such transaction, the resulting, surviving or transferee Person could incur at least $1.00 of additional Debt under Section 4.09(a); and (4) immediately after giving effect to such transaction, the resulting, surviving or transferee Person shall have a Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of the Company immediately prior to such transaction. In connection with any consolidation, merger, sale, assignment, transfer or lease contemplated by this Section 5.01, the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer or lease and the supplemental indenture in respect thereto comply with this Article V and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger or any sale, assignment, transfer or lease of all or substantially all of the assets of the Company in accordance with Section 5.01, 41 47 the successor corporation formed by such consolidation or into which the Company is merged or to which such sale, assignment, transfer or lease is made, shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, with the same effect as if such successor corporation had been named as the Company herein, and, except in the case of a lease, the Company will be discharged from all obligations and covenants under this Indenture and the Securities. ARTICLE VI. DEFAULTS AND REMEDIES Section 6.02. Events of Default. An "Event of Default" occurs if: (1) the Company defaults in the payment of interest on any Security when the same becomes due and payable and the default continues for a period of 30 days; (2) (i) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at maturity or otherwise or (ii) the Company fails to redeem or repurchase Securities when required pursuant to this Indenture or the Securities; (3) the Company fails to comply with the provisions of Article V; (4) the Company fails to comply for 30 days after notice with any of its obligations under Sections 4.03, 4.06 and 4.09 through 4.14, inclusive; (5) the Company fails to comply for 60 days after notice with its other agreements contained in this Indenture or the Securities (other than those referred to in clauses (1)-(4) above); (6) principal of or interest on Debt of the Company or any of its Significant Subsidiaries is not paid within any applicable grace period or is accelerated by the holders thereof because of a default and the total amount that is unpaid or accelerated exceeds $15,000,000 or its foreign currency equivalent and such default continues for five days after notice; (7) the Company or any of its Significant Subsidiaries (A) admits in writing its inability to pay its debts generally as they become due, (B) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (C) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (D) consents to the appointment of a Custodian of it or for substantially all of its property, (E) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (F) makes a general assignment for the benefit of its creditors, or (G) takes any corporate action to authorize or effect any of the foregoing; 42 48 (8) any judgment or order for the payment of money in excess of $15,000,000 in the aggregate is rendered against the Company or any of its Significant Subsidiaries and (i) there is a period of 60 days following the entry of such judgment or order during which such judgment or order is not discharged, waived or the execution thereof stayed and such default continues for 10 days after the notice specified below or (ii) foreclosure proceedings therefor have begun and have not been stayed within five days of the commencement of such foreclosure proceeding; or (9) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee. A Default under clauses (4), (5), (6), (8) or (9) is not an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Securities notify the Company in writing of the Default, and the Company does not cure the Default within the time specified in such clause after receipt of such notice. Such notice shall be given by the Trustee if so requested in writing by the Holders of at least 25% in aggregate principal amount of the outstanding Securities. When a Default under clause (4), (5), (6), (8) or (9) is cured or remedied within the specified period, it ceases to exist. Section 6.02. Acceleration. If an Event of Default (other than an Event of Default with respect to the Company specified in Section 6.01(7)) occurs and is continuing, the Trustee, by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the outstanding Securities, by written notice to the Company and the Trustee, may declare all unpaid principal of and accrued interest on the Securities then outstanding to be due and payable (the "Default Amount"). Upon a declaration of acceleration, such amount shall be due and payable immediately. If an Event of Default with respect to the Company specified in Section 6.01(7) occurs, the Default Amount shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. The Holders of a majority in aggregate principal amount of the Securities then outstanding, by written notice to the Trustee and the Company, may rescind an acceleration with respect to the Securities and its consequences if (i) all existing Defaults and Events of Default, other than the non-payment of the principal of the Securities which has become due solely by such declaration of acceleration, have been cured or waived, (ii) to the extent the payment of such interest is lawful, interest on overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid and (iii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. Section 6.03. Other Remedies. Notwithstanding any other provision of this Indenture, if an Event of Default occurs and is continuing and the Holders are entitled to payment as a result of acceleration, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the 43 49 payment of principal of and/or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 6.04. Waiver of Past Defaults. Subject only to the provisions of Sections 6.07 and 9.02, the Holders of a majority in aggregate principal amount of the outstanding Securities by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a Default or Event of Default in payment of principal or interest on any Security as specified in clauses (1) and (2) of Section 6.01. When a Default or Event of Default is waived, it is cured and ceases to exist. Section 6.05. Control by Majority. The Holders of a majority in aggregate principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of another Securityholder as such, or that may subject the Trustee to personal liability. The Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 6.06. Limitation on Remedies. Except as provided in Section 6.07, a Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) Holders of at least 25% in aggregate principal amount of the outstanding Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer and provide to the Trustee reasonable indemnity or security satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with such request within 60 days after receipt of the request and the offer of security or indemnity; and (5) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Securities do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request. 44 50 A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over such other Securityholder. Section 6.07. Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal amount of and interest on the Security, on or after the respective due dates expressed in the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Securities for the whole amount of the principal amount, together with, to the extent that payment of such interest is lawful, interest on overdue principal, at the rate per annum specified in the Securities, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Securityholders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Securities), its creditors or its property. The Trustee shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceedings is hereby authorized by each Securityholder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due to the Trustee for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article VI, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.07; Second: to Securityholders for amounts due and unpaid on the Securities ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for the principal amount and interest, respectively; and Third: to the Company. 45 51 The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by any Holder or a group of Holders of more than 10% in principal amount of the outstanding Securities. Section 6.12. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. ARTICLE VII. TRUSTEE Section 7.01. Rights of Trustee. Subject to TIAss. 315(a) through (d): (A) The Trustee may conclusively rely on any document whether in its original or facsimile form believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (B) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate and/or an Opinion of Counsel, which shall conform to Section 11.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate and/or Opinion of Counsel. (C) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (D) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided that the Trustee's conduct does not constitute negligence. (E) The Trustee may consult with counsel of its own choosing and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection in respect of any action taken, 46 52 omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (F) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. Section 7.02. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. Any Agent or Affiliate (including without limitation the Initial Purchaser) may do the same with like rights. However, the Trustee is subject to TIA ss.ss. 310(b) and 311. Section 7.03. Money Held in Trust. The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.04. Trustee's Disclaimer. The Trustee makes no representation as to the legality or validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is actually known to a Trust Officer of the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of the principal of or interest on any Security, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders. Section 7.06. Reports by Trustee to Holders. Within 60 days after each May 15 beginning with the May 15 following the Issue Date, the Trustee shall mail to each Securityholder a report dated as of May 15 as to the matters set forth in TIA ss. 313(a) if required by TIA ss. 313(a). The Trustee also shall comply with TIA ss.ss. 313(b) and 313(c). A copy of each such report at the time of its mailing to Securityholders shall be filed with the Commission and each stock exchange, if any, on which the Securities are listed. The Company shall promptly notify the Trustee in writing if the Securities become listed on any national securities exchange or of any delisting thereof. Section 7.07. Compensation and Indemnity. The Company agrees that it shall pay to the Trustee from time to time such compensation as the Company and the Trustee shall agree in writing for its services. The 47 53 Trustee's compensation shall not be limited by any law on compensation relating to the trustee of an express trust. The Company agrees that it shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. Such expenses shall also include any taxes or other reasonable costs incurred by the trust created under Section 8.01. The Company shall indemnify each of the Trustee and any predecessor Trustee for, and hold it harmless against, any and all loss, damage, claim or liability or expense, including taxes (other than taxes based on the income of the Trustee) incurred by it in connection with the administration of this trust and its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder unless the Company is actually prejudiced thereby. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not reimburse the Trustee for any expense or indemnify the Trustee against any loss or liability incurred by the Trustee through negligence or bad faith. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee except money or property held in trust to pay principal or interest on particular Securities. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(7), the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The Company's obligations under this Section 7.07 and any Lien arising hereunder shall survive the resignation or removal of any Trustee, the discharge of the Company's obligations pursuant to Article VIII and/or the termination of this Indenture. Section 7.08. Replacement of Trustee. A resignation or removal of the Trustee and the appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign by so notifying the Company in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in aggregate principal amount of the outstanding Securities may remove the Trustee by so notifying a Trust Officer of the Trustee in writing and may appoint a successor Trustee with the Company's consent. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; 48 54 (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. The Trustee shall be entitled to payment of its fees and reimbursement of its expenses while acting as Trustee, and to the extent such amounts remain unpaid, the Trustee that has resigned or has been removed shall retain the Lien afforded by Section 7.07. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount at maturity of the outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately thereafter, subject to the Lien provided in Section 7.07, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, the resignation or removal of the retiring Trustee shall become effective and the successor Trustee shall have all the rights, powers and duties of the retiring Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in aggregate principal amount of the outstanding Securities may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. If any Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Any successor Trustee shall comply with TIA ss. 310(a)(5). Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act shall be the successor Trustee, if such corporation or association complies with Section 7.10. Section 7.10. Eligibility: Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(l). The Trustee shall have (or, in the case of a corporation included in a bank holding company system, the related bank holding company subsidiary shall have) a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee also shall comply with TIA ss. 310(b). 49 55 Section 7.11. Preferential Collection of Claims Against the Company. The Trustee is subject to TIA ss. 311(a), excluding from the operation of TIA ss. 311(a) any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. Section 7.12. Duties of Trustee. (A) If a Default or an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (B) Except during the continuance of a Default or an Event of Default: (1) the Trustee need perform only those duties as are specifically set forth in this Indenture and no others and no implied covenants or obligation shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and which conform to the requirements of this Indenture; however, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (C) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this paragraph does not limit the effect of paragraph (B) of this Section 7.12; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (D) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (E) Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.12(A), (B), (C) and (D). 50 56 Section 7.13. Trustee's Application for Instructions from the Company. Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted. ARTICLE VIII. DISCHARGE OF INDENTURE; DEFEASANCE Section 8.01. Discharge of Liability on Securities Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable, and the Company irrevocably deposits with the Trustee money sufficient to pay at maturity all outstanding Securities, including interest thereon, if any, (other than Securities replaced pursuant to Section 2.07) and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Sections 8.01(c) and 8.06, 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 as to the satisfaction of all conditions to such satisfaction and discharge of this Indenture and at the cost and expense of the Company. (b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company may at any time terminate (i) all its obligations and all obligations of the Guarantors under the Securities and this Indenture ("legal defeasance"), or (ii) its obligations under Sections 4.03, 4.04, 4.06, 4.08 through 4.17, inclusive, and the operation of Section 6.01(3), 6.01(4), 6.01(5), 6.01(6), 6.01(7) (with respect only to Significant Subsidiaries) and 6.01(8) and the limitations contained in Section 5.01(3) and (4) ("covenant defeasance"). 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 Securities may not be accelerated because of an Event of Default with respect thereto. 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 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and 8.06 and each Guarantor's guarantee of such obligations under its 51 57 Subsidiary Guarantee shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive. Section 8.02. 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 on the Securities and interest, if any, 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, if any, when due on all the Securities to maturity or redemption, as the case may be; (3) no Default has occurred and is continuing on the date of such deposit and after giving effect thereto; (4) the deposit does not constitute a default under any other agreement binding on the Company; (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) the Company delivers to the Trustee an Opinion of Counsel stating that the Securityholders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred, and, in the case of legal defeasance only, such Opinion of Counsel shall be based on a ruling received from or published by the Internal Revenue Service or a change, since the date of this Indenture, in the applicable federal income tax law, and (7) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article VIII have been complied with. Notwithstanding the foregoing provisions of this Section, the conditions set forth in the foregoing paragraphs (2), (3), (4), (5), (6) and (7) need not be satisfied so long as, at the time the Company makes the deposit described in paragraph (1), (i) no Default under Section 6.01(1), 6.01(2), 6.01(7) or 6.01(8) has occurred and is continuing on the date of such deposit and after giving effect thereto and (ii) either (x) a notice of redemption has 52 58 been mailed pursuant to Section 3.03 providing for redemption of all the Securities 30 days after such mailing and the provisions of Section 3.01 with respect to such redemption shall have been complied with or (y) the Stated Maturity of all of the Securities will occur within 30 days. If the conditions of the preceding sentence are satisfied the Company shall be deemed to have exercised its covenant defeasance option. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article III and paragraph 5(a) of the Securities (including by utilizing amounts under deposit). Section 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the 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, if any, on the Securities. Section 8.04. 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 written request any money held by them for the payment of principal and interest, if any, that remains unclaimed for two years, and, thereafter, Securityholders entitled to the money must look to the Company for payment as general creditors. Section 8.05. Indemnity for Government Obligations. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charges imposed on or assessed against U.S. Government Obligations deposited with the Trustee hereunder or the principal and interest received on such U.S. Government Obligations. Section 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided that, if the Company has made any payment of interest, if any, on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. 53 59 ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.01. Without Consent of Holders. The Company, when authorized by a resolution of its Board of Directors, and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Article V; (3) to provide for uncertificated Securities in addition to certificated Securities; (4) to comply with any requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (5) to make any change that would provide any additional benefit or rights to the Securityholders or that does not adversely affect the rights of any Securityholder; (6) to provide for issuance of the Exchange Securities or Private Exchange Notes, if applicable, which will have terms substantially identical in all material respects to the Initial Securities (except that, with respect to the Exchange Securities, the transfer restrictions contained in the Initial Securities will be modified or eliminated, as appropriate), and which will be treated together with any outstanding Initial Securities, as a single issue of securities; (7) to release any Guarantor from its obligations hereunder in accordance with the terms of this Indenture; or (8) to provide for issuance of the Additional Securities and to reflect any registration rights agreement executed in connection with such Additional Securities, including any exchange securities and private exchange notes referred to therein, which exchange securities and private exchange notes shall have substantially the identical terms and be in substantially the identical form as the Exchange Securities and Private Exchange Notes, respectively. Notwithstanding the above, the Trustee and the Company may not make any change that adversely affects the rights of any Securityholders hereunder. Section 9.02. With Consent of Holders. Subject to Section 6.07, the Company, when authorized by resolution of its Board of Directors, and the Trustee may amend this Indenture or the Securities with the written consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding, and the Holders of a majority in aggregate principal amount of 54 60 the Securities then outstanding by written notice to the Trustee may waive future compliance by the Company with any provision of this Indenture or the Securities. Notwithstanding the provisions of this Section 9.02, without the consent of each Securityholder affected, an amendment or waiver, including a waiver pursuant to Section 6.04, may not: (A) change the stated maturity of the principal of, or any installment of interest on, any Security or reduce the principal amount thereof, the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the stated maturity thereof; (B) reduce the percentage in principal amount of the outstanding Securities, the consent of the Holders of which is required for any supplemental indenture or the consent of the Holders of which is required for any waiver of compliance with provisions of this Indenture or Defaults hereunder and their consequences provided for in this Indenture; (C) modify any of the provisions relating to supplemental indentures requiring the consent of Holders or relating to the waiver of past defaults or relating to the waiver of covenants, except to increase any such percentage of outstanding Securities required for such actions or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of each Securityholder affected thereby; (D) waive a default in the payment of the principal of or interest on any Security or modify or waive the Company's obligation to repurchase Securities under Section 4.14 or 4.15; (E) except as otherwise permitted by the covenants contained in Article V, consent to the assignment or transfer by the Company of any of its rights and obligations under this Indenture; (F) make any change in this Section 9.02 or Section 6.04 or 6.07; (G) change the time at which any Security must be redeemed or repaid in accordance with the terms of this Indenture and the Securities; or (H) release any Guarantor from its Subsidiary Guarantee other than in accordance with the terms of this Indenture. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. Any amendment, waiver or consent shall be deemed effective upon receipt by the Trustee of the necessary consents and shall not require execution of any supplemental indenture to be effective. 55 61 After an amendment or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders of each Security affected thereby, with a copy to the Trustee, a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, waiver or consent. Except as otherwise provided in this Section 9.02, the Holders of a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provisions of this Indenture or the Securities. Section 9.03. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by such Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of a Security. Such revocation shall be effective only if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder; provided that if such amendment, supplement or waiver makes a change described in any of clauses (A) through (G) of Section 9.02, such amendment, supplement or waiver shall bind each Holder of a Security who has consented to it; and provided, further, that if notice of such amendment, supplement or waiver is reflected on a Security that evidences the same debt as the consenting Holder's Security, such amendment, supplement or waiver shall bind every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 9.04. Record Date. The Company shall be permitted to set a record date for purposes of determining the identity of Securityholders entitled to vote or consent on any matter arising under this Indenture. In the Company's sole discretion, the record date shall be either (i) the record date as determined pursuant to ss. 316(c) of the TIA or (ii) such other record date as the Company shall select. Section 9.05. Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may (and, at the request of the Company, shall) require the Holder of the Security to deliver it to the Trustee. The Trustee may (and, at the request of the Company, shall) place an appropriate notation on the Security about the changed terms and return it to the Holder and the Trustee may (and, at the request of the Company, shall) place an appropriate notation on any Security thereafter authenticated. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Section 9.06. Trustee May Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the 56 62 rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment, supplement or waiver, the Trustee shall be entitled to receive and, subject to TIA ss. 315(a) through (d), shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive evidence that such amendment, supplement or waiver is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it will be valid and binding upon the Company in accordance with its terms. Section 9.07. Compliance with TIA. Every amendment or supplement to this Indenture or Securities shall comply with the TIA as then in effect. ARTICLE X SUBSIDIARY GUARANTEES Section 10.01. Guarantee. Subject to Section 10.07, each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to each Holder and, with respect only to clause (b) below, to the Trustee (a "Subsidiary Guarantee"), the following obligations: (a) the full and punctual payment of principal, premium, if any, and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all, other monetary obligations of the Company under this Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under this Indenture (including, without limitation, the compensation and other payment obligations to the Trustee hereunder) and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under the terms hereof notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor agrees that its Subsidiary Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, the Company, any Subsidiary thereof or any other Person, and, subject to Section 10.05, a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, the Company, any Subsidiary thereof or any other Person and whether or not any other Guarantor, the Company or any Subsidiary thereof be joined in any such action or actions. Any payment by the Company or any Subsidiary thereof or other circumstance which operates to toll any statute of limitations as to the Company or any such Subsidiary shall operate to toll the statute of limitations as to each Guarantor. Notwithstanding anything to the contrary contained herein, at law or otherwise, the obligations of each Guarantor hereunder, and the rights of the Trustee and each Holder hereunder, shall be construed as equal and pari 57 63 passu to the obligations of each such Guarantor under that certain Subsidiary Guaranty, dated as of August 18, 1999, among the guarantors party thereto and The Bank of New York, as Administrative Agent (as amended, supplemented or otherwise modified from time to time, the "Revolving Credit Subsidiary Guaranty") and the rights of The Bank of New York, as Administrative Agent, and the Lenders under the Revolving Credit Subsidiary Guaranty. Section 10.02. Unconditional Obligations. The obligations of each Guarantor hereunder shall not be discharged except by complete performance of the Guaranteed Obligations as contemplated in this Indenture and the Securities. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any agreement referred to in clause (a) of this paragraph; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations or any other Person; or (f) except as provided in Section 10.08, any change in the ownership of such Guarantor. Each Guarantor hereby waives notice of acceptance of its Subsidiary Guarantee herein and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or any right to require a proceeding or the taking of other action by the Trustee or any Holder against, and any other notice to, any other Guarantor or the Company. Section 10.03. Continuing Guarantee. Each Guarantor's Subsidiary Guarantee herein is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action to any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Company or any Subsidiary thereof or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. Section 10.04. Subrogation; Acceleration. Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Guaranteed Obligations until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed 58 64 Obligations may be accelerated as provided in Article VI for the purposes of such Guarantor's Subsidiary Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes hereof. Section 10.05. Enforcement. The Holders agree that each Guarantor's obligations hereunder may be enforced only by the action of the Trustee in accordance with the terms of this Indenture and that no other Holder shall have any right individually to seek to enforce the obligations of the Guarantors hereunder. The Holders further agree that each Guarantor's obligations hereunder may not be enforced against any director, officer, employee, or stockholder of any Guarantor (except to the extent such stockholder is also a Guarantor hereunder). Section 10.06. Covenants. Each Guarantor agrees that its Guaranteed Obligations hereunder are senior Indebtedness of such Guarantor and such Guaranteed Obligations shall not be subordinate to any existing or future obligations of such Guarantor. Each Guarantor further covenants and agrees that on and after the date hereof such Guarantor will comply (as a Recourse Subsidiary of the Company), and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in this Indenture, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in violation of any provision, covenant or agreement contained in this Indenture, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries. Each Guarantor hereby jointly and severally agrees to pay all reasonable out-of-pocket costs and expenses of the Trustee in connection with the enforcement of its obligations hereunder and in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by the Trustee). Section 10.07. Limitation Liability. Each Guarantor hereby confirms that it is its intention that its Subsidiary Guarantee herein not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act or any similar Federal, state or foreign law for the relief of debtors. Accordingly, each Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance. 59 65 Section 10.08. When the Guarantors May Merge, etc. No Guarantor shall consolidate with or merge with or into or sell, assign, transfer or lease all or substantially all of its properties and assets (either in one transaction or in a series of related transactions) to any Person, unless: (1) such Guarantor shall be the continuing Person, or the resulting, surviving or transferee Person (if other than such Guarantor) shall be a corporation organized and existing under the laws of the United States and or any State thereof or the District of Columbia, shall (subject to the last paragraph of this Section 10.08) be a Subsidiary of the Company and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of such Guarantor under its Subsidiary Guarantee and this Indenture, and this Indenture shall remain in full force and effect; (2) immediately after giving effect to such transaction (and treating any Debt which becomes an obligation of the resulting, surviving or transferee Person or any of its Subsidiaries as a result of such transaction as having been issued by such Person or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; (3) immediately before and after giving effect to such transaction, the resulting, surviving or transferee Person could incur at least $1.00 of additional Debt under Section 4.09(a); and (4) immediately after giving effect to such transaction, the resulting, surviving or transferee Person shall have a Consolidated Net Worth in an amount which is not less than the Consolidated Net Worth of such Guarantor immediately prior to such transaction. In connection with any consolidation, merger, sale, assignment, transfer or lease contemplated by this Section 10.08, the Guarantor shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer or lease and the supplemental indenture in respect thereto comply with this Section 10.08 and that all conditions precedent herein provided for relating to such transaction have been complied with. In the event that all of the capital stock of one or more Guarantors is sold or otherwise disposed of or liquidated in compliance with the requirements of this Indenture and the proceeds of such sale, disposition or liquidation are applied, to the extent applicable, in accordance with the provisions of this Indenture, such Guarantor shall upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to the Company or another Subsidiary thereof) be released from its obligations hereunder automatically and without further action and the Subsidiary Guarantee herein shall, as to each such Guarantor or Guarantors, terminate, and have no further force or effect. At the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release. 60 66 Section 10.09. Miscellaneous. (a) Neither the obligations of any Guarantor hereunder nor any provision of its Subsidiary Guarantee herein may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and, subject to Section 9.02(H), with the written consent of the Holders of a majority in aggregate principal amount of the outstanding Securities. (b) All notices, requests, demands or other communications pursuant to this Article X shall be made in accordance with Section 11.02 of this Indenture. Section 10.10. Execution and Delivery of Notation of Subsidiary Guarantee. To evidence its Subsidiary Guarantee set forth in Section 10.01, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee substantially in the form included in Exhibit E shall be endorsed by an Officer of such Guarantor on each Security authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of such Guarantor by an Officer of such Guarantor. Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Subsidiary Guarantee. If an Officer whose signature is on this Indenture or on a notation of such Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Security on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors. ARTICLE XI. MISCELLANEOUS Section 11.01. Trust Indenture Act of 1939. This Indenture is subject to the provisions of the TIA that are required to be a part of this Indenture, and shall, to the extent applicable, be governed by such provisions. Section 11.02. Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by first class mail, postage prepaid, addressed as follows: If to the Company or any Guarantor, to: Building Materials Corporation of America 1361 Alps Road Wayne, New Jersey 07470 Attention: General Counsel 61 67 If to the Trustee, to: The Bank of New York 101 Barclay Street, 21 West New York, New York 10286 Attention: Corporate Trust Trustee Administration The parties hereto by notice to the other parties may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed, postage prepaid, to a Securityholder shall be mailed by first class mail to him at his address as it appears on the Securities register maintained by the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Copies of any such communication or notice to a Holder shall also be mailed to the Trustee. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. Except for a notice to the Trustee or the Company, which is deemed given only when received, if a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. Section 11.03. Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA ss. 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other person shall have the protection of TIA ss. 312(c). Section 11.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 11.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than pursuant to Section 4.05(b)) shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; 62 68 (2) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinions contained in such certificate or opinion are based; (3) a brief statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with; provided that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. Section 11.06. Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules for action by or at a meeting of Securityholders. The Paying Agent or Registrar may make reasonable rules for its functions. Section 11.07. Governing Law. The laws of the State of New York shall govern this Indenture and the Securities without regard to principles of conflicts of law. The Trustee, the Company, the Guarantors and the Securityholders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Indenture or the Securities. Section 11.08. No Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. No such indenture, loan or debt agreement may be used to interpret this Indenture. Section 11.09. No Recourse Against Others. No director, officer, employee, stockholder or Affiliate, as such, of the Company shall have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. Section 11.10. Legal Holidays. A "Legal Holiday" is a Saturday, Sunday or a day on which banking institutions in New York, New York are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday and interest shall not accrue for the intervening period. Section 11.11. Successors. All agreements of the Company and the Guarantors in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. 63 69 Section 11.12. Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all such executed copies together represent the same agreement. Section 11.13. Separability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and a Holder shall have no claim therefor against any party hereto. Section 11.14. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. Section 11.15. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. 64 70 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS MANUFACTURING CORPORATION By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer THE BANK OF NEW YORK, as Trustee By: /s/ Marie E. Trimboli -------------------------------------------- Name: Marie E. Trimboli Title: Assistant Treasurer 65 71 EXHIBIT A [FORM OF FACE OF INITIAL SECURITY/ADDITIONAL SECURITY] THE SECURITY (OR ITS PREDECESSORS) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY OR ANY INTEREST OR PARTICIPATION HEREIN MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY ONLY (1) TO THE COMPANY OR A SUBSIDIARY THEREOF, (2) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A 'QUALIFIED INSTITUTIONAL BUYER' AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL 'ACCREDITED INVESTOR' (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT OR (6) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (AND IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (4), (5) OR (6), BASED ON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), SUBJECT IN EACH OF THE FOREGOING CASES TO APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THAT IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT: FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $971.61, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $28.39, THE ISSUE DATE IS JULY 5, 2000 AND THE YIELD TO MATURITY IS 12.00% PER ANNUM. A-1 72 No. $_______________ CUSIP No. _______ BUILDING MATERIALS CORPORATION OF AMERICA 10.50% SENIOR NOTES DUE 2002 BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), promises to pay to , or registered assigns, the principal sum of Dollars on October 1, 2002. Interest Payment Dates: April 1 and October 1, commencing October 1, 2000. Record Dates: March 15 and September 15. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. A-2 73 IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers. BUILDING MATERIALS CORPORATION OF AMERICA By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: Dated: July 5, 2000 Trustee's Certificate of Authentication This is one of the 10.50% Senior Notes due 2002 described in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee By: ----------------------------------- Authorized Signatory A-3 74 [FORM OF REVERSE SIDE INITIAL SECURITY/ADDITIONAL SECURITY] BUILDING MATERIALS CORPORATION OF AMERICA 10.50% Senior Notes due 2002 1. Interest. BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), promises to pay cash interest on the principal amount of this Security at a rate of 10.50% per annum, payable on April 1 and October 1 of each year (the "Interest Payment Date"), commencing October 1, 2000. The Company shall pay interest on overdue principal at the rate of 10.50% per annum. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company shall pay interest on the Securities (except defaulted interest) to the persons who are the registered Holders at the close of business on March 15 or September 15 (the "Record Date") immediately preceding the Interest Payment Date even if the Securities are canceled on registration of transfer or registration of exchange after such Record Date. The Holder must surrender this Security to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company, however, may pay principal and interest by a check payable in such money. The Company may mail an interest check to the Holder's registered address. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") or its agent will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without prior notice to any Holder. The Company or any of its Subsidiaries or Affiliates may act in any such capacity, except in certain circumstances. 4. Indenture. The Company issued the Securities under an Indenture dated as of July 5, 2000 (the "Indenture") among the Company, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors (the "Guarantors"), and the Trustee. Capitalized terms used in this Security and not defined in this Security shall have the meaning set forth in 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 as in effect on the date of the Indenture. The Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and said Act for a statement of such terms. The obligations of the Company under the Indenture and the Securities are guaranteed by the Guarantors. The Securities are senior unsecured obligations of the Company limited to $150,000,000 aggregate principal amount. This Security is one of the [Initial Securities] [Additional Securities] referred to in the Indenture. The Securities include the Initial Securities, any Additional Securities, any Exchange Securities, as defined below, issued in exchange for A-4 75 the Initial Securities and the Additional Securities, if any, pursuant to the Indenture, and the Private Exchange Notes. The Initial Securities, the Exchange Securities, the Private Exchange Notes and the Additional Securities are treated as a single class of securities under the Indenture. 5. Redemption. (a) Optional Redemption. In the event a Change of Control occurs, the Company shall have the option to redeem all, but not less than all, of the Securities, at a redemption price equal to the sum of (x) 100% of the principal amount thereof plus accrued and unpaid interest thereon to the redemption date and (y) the Applicable Premium with respect to each $1,000 principal amount of Securities so redeemed. Notice of any redemption to be made pursuant to this paragraph must be given no later than 10 days after the Change of Control Payment Date, and redemption must be made within 30 days of the date of such notice. (b) Mandatory Redemption. The Securities will not have the benefit of any sinking fund. 6. Put Provisions. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities (in integral multiples of $1,000) of such Holder at a repurchase price equal to 101% of the principal amount thereof, plus accrued interest to the date of repurchase as provided in, and subject to the terms of, the Indenture. 7. Notice of Redemption. Notice of redemptions pursuant to paragraph 5 will be mailed at such time as is provided by paragraph 5(a) to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the redemption price and accrued interest on all Securities to be redeemed on the redemption date is deposited with the Paying Agent on the redemption date, on and after such date interest will cease to accrue on such Securities. 8. Proceeds on Disposition of Assets. As described in Section 4.15 of the Indenture, the Company is required under certain circumstances to apply the Net Cash Proceeds (or a portion thereof) from Asset Sales to offer to purchase Securities at a price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of purchase. 9. Denominations, Transfer, Exchange. The Securities are in registered form in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer or exchange of Securities as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, provide certain certifications and legal opinions as described herein and to pay any taxes and fees required by law or permitted by the Indenture. 10. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Security is registered with the Registrar as the owner for all purposes. A-5 76 11. Unclaimed Money. If money for the payment of interest or principal remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its written request. After such time, Holders entitled to the money must look to the Company for payment unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. 12. Discharge Prior to Maturity. Subject to certain conditions described in Article VIII of the Indenture, if the Company deposits with the Trustee money or U.S. Government Obligations sufficient to pay the principal of and interest on the Securities to maturity, the Company will be discharged (to the extent provided in the Indenture) from the Indenture and the Securities. 13. Amendments, Supplements and Waivers. Subject to certain exceptions requiring the consent of each Holder affected as described in Article IX of the Indenture, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Securities, and any existing Default may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Securities. Without notice to or the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency, provide for the assumption of the obligations of the Company to Holders or make any change that does not adversely affect the rights of any Holder. 14. Restrictive Covenants. The Indenture imposes certain limitations on, among other things, the ability of the Company to merge or consolidate with any other Person or sell, lease or otherwise transfer all or substantially all of its properties or assets, the ability of the Company or certain of its Subsidiaries to make Restricted Payments and Restricted Investments and the ability of the Company and certain of its Subsidiaries to incur Debt, create Liens or engage in transactions with Affiliates or issue Preferred Stock, all subject to certain limitations and qualifications described in the Indenture. 15. Successor Corporation. When a successor Person or other entity assumes all the obligations of its predecessor under the Securities and the Indenture, the predecessor Person will be released from those obligations. 16. Defaults and Remedies. The Securities have the Events of Default as set forth in Section 6.01 of the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Securities may declare all the Securities to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization relating to the Company, all outstanding Securities shall become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power. The Company must furnish quarterly compliance certificates to the Trustee. A-6 77 17. Trustee Dealings with the Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or any of its Affiliates, and may otherwise deal with the Company or any of its Affiliates, as if it were not the Trustee. 18. No Recourse Against Others. A director, officer, employee, stockholder or Affiliate, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or any authenticating agent. 20. 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 right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 21. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 22. Registration Rights. Pursuant to the Registration Rights Agreement among the Company, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and the Initial Purchaser of the Initial Securities, the Company has certain obligations regarding an Exchange Offer pursuant to which the Holder of this Security shall have the right to exchange this Security for the Company's Series B 10.50% Senior Notes Due 2002 (the "Exchange Securities"), which have been registered under the Securities Act, in like principal amount and having identical terms as the Initial Securities. The Holders of the Initial Securities shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. Within five days after the occurrence of an event so resulting in such additional interest payments, the Company shall provide the Trustee with an Officers' Certificate describing such event and providing the Trustee with all necessary details relating to the payment of such interest, including, without limitation, the interest rate, the effective date of such interest rate and the method of calculating interest.* - ------------------ * To be added if the Security is an Initial Security. To be modified if the Security is an Additional Security to reflect any registration rights agreement executed in connection with such Additional Security, including any exchange securities and private exchange notes referred to therein, which exchange securities and private exchange notes shall have substantially the identical terms and be in substantially the identical form as the Exchange Securities and Private Exchange Notes, respectively. A-7 78 The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Building Materials Corporation of America 1361 Alps Road Wayne, New Jersey 07470 Attention: Secretary A-8 79 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to - -------------------------------------------------------------------------------- (insert assignee's social security or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint_______________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: Your signature: ---------------------- ------------------------- (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred: A-9 80 CHECK ONE BOX BELOW (1) [ ] to the Company or a subsidiary thereof; or (2) [ ] inside the United States to a qualified institutional buyer in compliance with Rule 144A under the Securities Act of 1933, as amended; or (3) [ ] to an institutional "accredited investor" (as defined in Rule 50l(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended) that, prior to such transfer, furnishes to the Trustee a signed letter containing certain representations and agreements relating to the restrictions on transfer of the note evidenced thereby (the form of which letter can be obtained from the Trustee); or (4) [ ] outside the United States to a non-U.S. Person in compliance with Rule 904 of Regulation S under the Securities Act of 1933, as amended; or (5) [ ] pursuant to the exemption from registration under the Securities Act of 1933, as amended, (if available); or (6) [ ] pursuant to a registration statement which has been declared effective under the Securities Act of 1933, as amended. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided that if box (3), (4) or (5) is checked, the holder must, prior to such transfer, furnish to the Trustee such certifications, legal opinions, or other information as the Company may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. Signature Guarantee: Signature Signature - -------------------------------------------------------------------------------- A-10 81 OPTIONS OF HOLDER TO ELECT PURCHASE If you want to elect to have all of this Security purchased by the Company pursuant to Section 4.14 or 4.15 of the Indenture, check the box: [ ] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.14 or 4.15 of the Indenture, state the Principal Amount: $ Date: Your Signature: ----------------------- -------------------------- (Sign exactly as your name appears on the other side of the Security) Signature Guarantee: ---------------------------------------------- (Signature must be guaranteed) A-11 82 EXHIBIT B [FORM OF FACE OF EXCHANGE NOTE OR PRIVATE EXCHANGE NOTE* ] No. $_______________ CUSIP No. _______ BUILDING MATERIALS CORPORATION OF AMERICA SERIES B 10.50% SENIOR NOTES DUE 2002 BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), promises to pay to , or registered assigns, the principal sum of Dollars on October 1, 2002. Interest Payment Dates: April 1 and October 1, commencing October 1, 2000. Record Dates: March 15 and September 15. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. - --------------- * If the certificate is a Private Exchange Note issued pursuant to the Registration Rights Agreement in a Private Exchange (as defined therein), add the restricted securities legend from Exhibit A to this Indenture and replace the Assignment Form included in this Exhibit B with the Assignment Form included in Exhibit A. B-1 83 IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers. BUILDING MATERIALS CORPORATION OF AMERICA By: Name: Title: By: Name: Title: Dated: _______________, 200_ Trustee's Certificate of Authentication This is one of the Series B 10.50% Senior Notes due 2002 [Private Exchange 10.50% Senior Notes due 2002] described in the within-mentioned Indenture. THE BANK OF NEW YORK, as Trustee By: Authorized Signatory B-2 84 [FORM OF REVERSE SIDE EXCHANGE SECURITY AND PRIVATE EXCHANGE NOTE] BUILDING MATERIALS CORPORATION OF AMERICA Series B 10.50% Senior Notes due 2002 Private Exchange 10.50% Senior Notes due 2002 1. Interest. BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), promises to pay cash interest on the principal amount of this Security at a rate of 10.50% per annum, payable on April 1 and October 1 of each year (the "Interest Payment Date"), commencing October 1, 2000. The Company shall pay interest on overdue principal at the rate of 10.50% per annum. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company shall pay interest on the Securities (except defaulted interest) to the persons who are the registered Holders at the close of business on March 15 or September 15 (the "Record Date") immediately preceding the Interest Payment Date even if the Securities are canceled on registration of transfer or registration of exchange after such Record Date. The Holder must surrender this Security to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company, however, may pay principal and interest by a check payable in such money. The Company may mail an interest check to the Holder's registered address. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 3. Paying Agent and Registrar. Initially, The Bank of New York (the "Trustee") or its agent will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without prior notice to any Holder. The Company or any of its Subsidiaries or Affiliates may act in any such capacity, except in certain circumstances. 4. Indenture. The Company issued the Securities under an Indenture dated as of July 5, 2000 (the "Indenture") among the Company, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors (the "Guarantors"), and the Trustee. Capitalized terms used in this Security and not defined in this Security shall have the meaning set forth in 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 as in effect on the date of the Indenture. The Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and said Act for a statement of such terms. The obligations of the Company under the Indenture and the Securities are guaranteed by the Guarantors. The Securities are senior unsecured obligations of the Company limited to $150,000,000 aggregate principal amount. This Security is one of the [Exchange Securities] [Private Exchange Notes] referred to in the Indenture. The Securities include the Initial Securities, any Additional B-3 85 Securities, any Exchange Securities issued in exchange for the Initial Securities and the Additional Securities, if any, pursuant to the Indenture and the Private Exchange Notes. The Initial Securities, the Exchange Securities, the Private Exchange Notes and the Additional Securities are treated as a single class of securities under the Indenture. 5. Redemption. (a) Optional Redemption. In the event a Change of Control occurs, the Company shall have the option to redeem all, but not less than all, of the Securities, at a redemption price equal to the sum of (x) 100% of the principal amount thereof plus accrued and unpaid interest thereon to the redemption date and (y) the Applicable Premium with respect to each $1,000 principal amount of Securities so redeemed. Notice of any redemption to be made pursuant to this paragraph must be given no later than 10 days after the Change of Control Payment Date, and redemption must be made within 30 days of the date of such notice. (b) Mandatory Redemption. The Securities will not have the benefit of any sinking fund. 6. Put Provisions. Upon a Change of Control, any Holder of Securities will have the right to cause the Company to repurchase all or any part of the Securities (in integral multiples of $1,000) of such Holder at a repurchase price equal to 101% of the principal amount thereof, plus accrued interest to the date of repurchase as provided in, and subject to the terms of, the Indenture. 7. Notice of Redemption. Notice of redemptions pursuant to paragraph 5 will be mailed at such time as is provided by paragraph 5(a) to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the redemption price and accrued interest on all Securities to be redeemed on the redemption date is deposited with the Paying Agent on the redemption date, on and after such date interest will cease to accrue on such Securities. 8. Proceeds on Disposition of Assets. As described in Section 4.15 of the Indenture, the Company is required under certain circumstances to apply the Net Cash Proceeds (or a portion thereof) from Asset Sales to offer to purchase Securities at a price equal to 100% of the principal amount thereof plus accrued interest thereon to the date of purchase. 9. Denominations, Transfer, Exchange. The Securities are in registered form in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer or exchange of Securities as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, provide certain certifications and legal opinions as described herein and to pay any taxes and fees required by law or permitted by the Indenture. 10. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name the Security is registered with the Registrar as the owner for all purposes. B-4 86 11. Unclaimed Money. If money for the payment of interest or principal remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its written request. After such time, Holders entitled to the money must look to the Company for payment unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. 12. Discharge Prior to Maturity. Subject to certain conditions described in Article VIII of the Indenture, if the Company deposits with the Trustee money or U.S. Government Obligations sufficient to pay the principal of and interest on the Securities to maturity, the Company will be discharged (to the extent provided in the Indenture) from the Indenture and the Securities. 13. Amendments, Supplements and Waivers. Subject to certain exceptions requiring the consent of each Holder affected as described in Article IX of the Indenture, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Securities, and any existing Default may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Securities. Without notice to or the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency, provide for the assumption of the obligations of the Company to Holders or make any change that does not adversely affect the rights of any Holder. 14. Restrictive Covenants. The Indenture imposes certain limitations on, among other things, the ability of the Company to merge or consolidate with any other Person or sell, lease or otherwise transfer all or substantially all of its properties or assets, the ability of the Company or certain of its Subsidiaries to make Restricted Payments and Restricted Investments and the ability of the Company and certain of its Subsidiaries to incur Debt, create Liens or engage in transactions with Affiliates or issue Preferred Stock, all subject to certain limitations and qualifications described in the Indenture. 15. Successor Corporation. When a successor Person or other entity assumes all the obligations of its predecessor under the Securities and the Indenture, the predecessor Person will be released from those obligations. 16. Defaults and Remedies. The Securities have the Events of Default as set forth in Section 6.01 of the Indenture. Subject to certain limitations in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Securities may declare all the Securities to be due and payable immediately, except that in the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization relating to the Company, all outstanding Securities shall become due and payable immediately without further action or notice. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Securities may direct the Trustee in its exercise of any trust or power. The Company must furnish quarterly compliance certificates to the Trustee. B-5 87 17. Trustee Dealings with the Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or any of its Affiliates, and may otherwise deal with the Company or any of its Affiliates, as if it were not the Trustee. 18. No Recourse Against Others. A director, officer, employee, stockholder or Affiliate, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 19. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or any authenticating agent. 20. 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 right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 21. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Securityholders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: Building Materials Corporation of America 1361 Alps Road Wayne, New Jersey 07470 Attention: Secretary B-6 88 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (we) assign and transfer this Security to - -------------------------------------------------------------------------------- (insert assignee's social security or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ______________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. Date: Your signature: --------------------------- ------------------------- (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: B-7 89 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have all of this Security purchased by the Company pursuant to Section 4.14 or 4.15 of the Indenture, check the box: [ ] If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.14 or 4.15 of the Indenture, state the Principal Amount: $ Date: Your signature: --------------------------- ------------------------- (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: (Signature must be guaranteed) B-8 90 EXHIBIT C [FORM OF LEGEND FOR BOOK-ENTRY SECURITIES] Any Global Security authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Security) in substantially the following form: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. C-1 91 EXHIBIT D FORM OF LETTER TO BE DELIVERED BY ACCREDITED INVESTORS The undersigned is delivering this letter in connection with an offering of 10.50% Senior Notes Due 2002 (the "Notes") of Building Materials Corporation of America (the "Company"), all as described in the Offering Memorandum (the "Offering Memorandum") relating to the offering. The undersigned hereby confirms that: (i) the undersigned is an "accredited investor" within the meaning of Rule 50l(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the "Securities Act"), or an entity in which all of the equity owners are accredited investors within the meaning of Rule 501(a)(1), (2) or (3) under the Securities Act (an "Institutional Accredited Investor"); (ii) (A) any purchase of Notes by the undersigned will be for the undersigned's own account or for the account of one or more other Institutional Accredited Investors or as fiduciary for the account of one or more trusts, each of which is an "Accredited investor" within the meaning of Rule 501(a)(7) under the Securities Act and for each of which we exercise sole investment discretion or (B) we are a "bank," within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and loan association or other institution described in Section 3(a)(5)(A) of the Securities Act that is acquiring Notes as fiduciary for the account of one or more institutions for which we exercise sole investment discretion; (iii) in the event that the undersigned purchases any notes, it will acquire Notes having a minimum principal amount of not less than $250,000 for the undersigned's own account or for any separate account for which the undersigned is acting; (iv) the undersigned has such knowledge and experience in financial and business matters that the undersigned is capable of evaluating the merits and risks of purchasing Notes; (v) the undersigned is not acquiring Notes with a view to distribution thereof or with any present intention of offering or selling Notes, except as permitted below; provided that the disposition of the undersigned's property and property of any accounts for which the undersigned is acting as fiduciary shall remain at all times within the undersigned's control; and (vi) the undersigned has received a copy of the Offering Memorandum and acknowledges that the undersigned has had access to such financial and other information, and has been afforded the opportunity to ask such questions of representatives of the Company and receive answers thereto, as the undersigned deems necessary in connection with the undersigned's decision to purchase Notes. D-1 92 The undersigned understands that the Notes were offered in a transaction not involving any public offering within the United States within the meaning of the Securities Act and that the Notes have not been registered under the Securities Act or any applicable state securities laws, and the undersigned agrees, on the undersigned's own behalf and on behalf of each account for which the undersigned acquires any Notes, that if in the future the undersigned decides to resell or otherwise transfer any Notes (A) such resale or transfer will be only (1) to the Company or a subsidiary thereof, (2) pursuant to a registration statement which has been declared effective under the Securities Act, (3) to a person it reasonably believes is a 'Qualified Institutional Buyer' as defined in Rule 144A under the Securities Act ("Rule 144A") in a transaction meeting the requirements of Rule 144A, (4) pursuant to offers and sales to Non-U.S. Persons that occur outside the United States in a transaction meeting the requirements of Rule 904 under the Securities Act, (5) to an institutional 'Accredited Investor' (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in a transaction meeting the requirements of Rule 144A under the Securities Act or (6) pursuant to any other available exemption from the registration requirements under the Securities Act (and in the case of a transfer pursuant to clause (4), (5) or (6), based on an opinion of counsel if the Company so requests), subject in each of the foregoing cases to applicable securities laws of any state of the United States or any other applicable jurisdiction and (B) that it will, and each subsequent holder is required to, notify any purchaser from it of any Notes of the resale restrictions set forth in (A) above. The undersigned agrees that any such transfer of Notes referred to in this paragraph shall be in accordance with applicable securities laws of any State of the United States or any other applicable jurisdiction and in accordance with the legends set forth on the Notes. The undersigned understands that the register and transfer agent for the Notes will not be required to accept for registration or transfer any Notes, except upon presentation of evidence satisfactory the Company that the foregoing restrictions on transfer have been complied with. The undersigned further understands that any Notes will be in the form of definitive physical certificates and that such certificates will bear a legend (unless the sale of the Notes has been registered under the Securities Act) reflecting the substance of this paragraph. The undersigned acknowledges that the Company, others and you will rely upon the undersigned's confirmations, acknowledgments and agreements set forth herein, and the undersigned agrees to notify you promptly in writing if any of the undersigned's representations or warranties herein ceases to be accurate and complete. D-2 93 THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. ------------------------------------- (Name of Purchaser) By: -------------------------------- Name: Title: Address: D-3 94 EXHIBIT E FORM OF NOTATION OF SUBSIDIARY GUARANTEE For value received, Building Materials Manufacturing Corporation ("Manufacturing Corp.") and Building Materials Investment Corporation ("Investment Corp.", and together with Manufacturing Corp., the "Guarantors") have, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, dated as of July 5, 2000 (the "Indenture") among Building Materials Corporation of America (the "Company"), the Guarantors and The Bank of New York, as trustee (the "Trustee"), (a) the full and punctual payment of the principal of, premium, if any, and interest on the Securities (as defined in the Indenture) when due, whether at maturity, by acceleration, redemption or otherwise, and all other monetary obligations of the Company under the Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture (including, without limitation, the compensation and other payment obligations to the Trustee) and the Securities. The obligations of each Guarantor to the Holders of Securities and to the Trustee pursuant to its Subsidiary Guarantee and the Indenture are expressly set forth in Article X of the Indenture and reference is hereby made to the Indenture for the precise terms of the Subsidiary Guarantee. Each Holder of a Security, by accepting the same, agrees to and shall be bound by such provisions. BUILDING MATERIALS MANUFACTURING CORPORATION By: ------------------------------------------- Name: Title: BUILDING MATERIALS INVESTMENT CORPORATION By: ------------------------------------------- Name: Title: E-1 EX-4.14 7 y46546ex4-14.txt FIRST SUPPLEMENTAL INDENTURE 1 Exhibit 4.14 ------------ FIRST SUPPLEMENTAL INDENTURE dated as of December 4, 2000 to INDENTURE dated as of July 5, 2000 among BUILDING MATERIALS CORPORATION OF AMERICA, as Issuer, BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION as Original Guarantors, THE ADDITIONAL GUARANTORS SIGNATORY HERETO and THE BANK OF NEW YORK, as Trustee 2 This FIRST SUPPLEMENTAL INDENTURE to the Indenture (as defined below) (the "First Supplemental Indenture") dated as of December 4, 2000, is made among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Company"), BUILDING MATERIALS MANUFACTURING CORPORATION and BUILDING MATERIALS INVESTMENT CORPORATION, each a Delaware corporation wholly-owned by the Company (the "Original Guarantors"), THE BANK OF NEW YORK, a New York banking corporation, as trustee (the "Trustee"), and the ADDITIONAL GUARANTORS listed on the signature pages hereto (the "Additional Guarantors," and together with the Original Guarantors, the "Guarantors") and amends the Indenture, dated as of July 5, 2000, among the Company, the Original Guarantors and the Trustee (as amended from time to time, the "Indenture"). R E C I T A L S: ---------------- A. Pursuant to the Indenture, the Company issued $35 million in aggregate principal amount at maturity of its 10 1/2% Senior Notes due 2002 (the "Securities"). B. The Company, the Guarantors and the Trustee desire by this First Supplemental Indenture to amend certain provisions of the Indenture. C. Consent to the amendments set forth in Article I herein have been solicited from the holders of record as of November 27, 2000, of the Securities pursuant to a Consent Solicitation Statement dated the 6th day of December 2000, as supplemented by the Supplement to Consent Solicitation Statement dated the 20th day of December 2000 (the "Consent Solicitation Statement"). The effectiveness of this First Supplemental Indenture is conditioned upon the receipt of the Requisite Consents (as defined in the Consent Solicitation Statement). D. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. NOW, THEREFORE, it is hereby agreed as follows: ARTICLE I AMENDMENTS SECTION 1.01. Certain Defined Terms. The following provisions set forth in the definitions in Section 1.01 of the Indenture are hereby amended as follows: (a) The definition of "Credit Agreement" is hereby amended and restated in its entirety to read as follows: 2 3 "Credit Agreement" means the amended and restated Credit Agreement, dated as of December 4, 2000, among the Company, the lenders party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time." (b) The following defined terms are added to Section 1.01 in the appropriate alphabetical order: "Collateral Agent Agreement" means the collateral agent agreement, dated as of December 4, 2000, among the Company, the Subsidiary Guarantors identified therein, The Chase Manhattan Bank, Fleet National Bank, The Bank of New York, as Collateral Agent, The Bank of New York, as Indenture Trustee, and The Bank of New York, as Administrative Agent under the Credit Agreement and the New Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Consent Solicitation Statement" means that certain consent solicitation statement of the Company and Building Materials Manufacturing Corporation dated December 6, 2000, as supplemented on December 20, 2000." "DIP Facility" shall have the meaning ascribed to such term in the New Credit Agreement. "New Credit Agreement" means the secured credit agreement, dated as of December 4, 2000, among the Company, the Lenders party thereto, and The Bank of New York, as Swing Line Lender and as Administrative Agent, as the same may be amended, supplemented, Refinanced (including by the DIP Facility) or otherwise modified from time to time. "Other Indebtedness" means the obligations under that certain promissory note issued by the Company to The Chase Manhattan Bank dated as of the effective date of the New Credit Agreement which was issued to replace the obligations of the Company under that certain platinum bullion lease effective December 1, 2000 (and any subsequent confirmations of such lease entered into prior to the effective date of the New 3 4 Credit Agreement) and approximately $3.5 million of obligations under a standby letter of credit, dated as of June 4, 1999, issued by Fleet National Bank in connection with the Company's Shafter, California facility, as each may be amended, supplemented, refinanced (including by the DIP Facility) or otherwise modified from time to time and any hedging obligations entered into with counterparties that are the lenders or affiliates of the lenders under the New Credit Agreement and the Credit Agreement. SECTION 1.02. Section 4.01 of the Indenture is hereby amended and restated in its entirety to read as follows: "The Company shall pay, or cause to be paid, the principal of and interest on the Securities on the dates and in the manner provided herein and in the Securities; provided, however, that Holders that consented to the Proposed Amendments (as defined in the Consent Solicitation Statement) will receive quarterly interest payments on January 1, April 1, July 1 and October 1 of each year, commencing April 1, 2001. The record dates for such interest payments shall be the preceding December 15, March 15, June 15 and September 15. Principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money designated for and sufficient to pay all principal and interest payable in cash in each case as then due. The Company shall pay interest on overdue principal, as the case may be, at the rate specified therefor in the Securities." SECTION 1.03. Section 4.09(b) of the Indenture is hereby amended and restated in its entirety to read as follows: "(b) Notwithstanding the foregoing, there may be issued the following Debt: (1) The Securities (other than the Additional Securities) and the guarantee thereof by the Guarantors; (2) Debt of the Company Issued to and held by a Wholly-Owned Recourse Subsidiary of the Company and (ii) Debt of a Recourse Subsidiary of the Company Issued to and held by the Company or a Wholly-Owned Recourse Subsidiary of the Company; provided that any subsequent transfer of such Debt (other than to the Company or to a Wholly-Owned Recourse Subsidiary of the Company) shall be deemed, in each case, to constitute the Issuance of such Debt by the Company or such Subsidiary; (3) Debt the proceeds of which are used to acquire assets of the Company and its Subsidiaries; provided that, after giving effect to the Issuance of any such Debt that otherwise complies with this clause (3), the aggregate amount of all Debt then outstanding at any time under this clause (3), including all Refinancings thereof then outstanding, shall not at any time exceed $80,000,000; 4 5 (4) Acquired Debt; (5) (x) Debt outstanding on the Issue Date (including the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes) and (y) Debt Issued to Refinance any Debt permitted by clause (a), this clause (5) or by clauses (1), (3), (7), (9) and (10) of this Section 4.09(b); provided that, in the case of a Refinancing, (i) the amount of the Debt so Issued shall not exceed the principal amount or the accreted value (in the case of Debt Issued at a discount) of the Debt so Refinanced plus, in each case, the reasonable costs incurred by the issuer in connection with such Refinancing, (ii) the Average Life and Stated Maturity of the Debt so Issued shall equal or exceed that of the Debt so Refinanced, (iii) the Debt so Issued shall not rank senior in right of payment to the Debt being Refinanced, (iv) if the Debt being Refinanced does not bear interest in cash prior to a specified date, the Refinancing Debt shall not bear interest in cash prior to such specified date, (v) if the Debt being Refinanced is Debt permitted by clause (3), such Refinancing Debt is not secured by any assets not securing the Debt so Refinanced or improvements or additions thereto, or replacements thereof, and (vi) the obligors with respect to the Refinancing Debt shall not include any Persons who were not obligors (including predecessors thereof) with respect to the Debt being Refinanced; (6) Non-Recourse Debt of a Non-Recourse Subsidiary of the Company and Guarantees of Non-Recourse Debt of Non-Recourse Subsidiaries which Guarantees are recourse only to the stock of the Non-Recourse Subsidiaries; (7) Debt under the Credit Agreement in an aggregate principal amount not to exceed $110,000,000; (8) Debt secured by Receivables, including to Refinance the Receivables Financing Agreement, provided that the amount of such Debt does not exceed 85% of the face amount of the Receivables; (9) Debt represented by the Other Indebtedness or any Refinancing thereof; (10) Debt represented by the New Credit Agreement in an aggregate principal amount not to exceed $100,000,000; (11) Debt permitted to be incurred under the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement; and 5 6 (12) Beginning on the first anniversary of the effective date of the New Credit Agreement, Debt (other than Debt identified in clauses (1) through (11) above) in an aggregate principal amount outstanding at any one time not to exceed $30,000,000." SECTION 1.04. (a) Sections 4.10(a) and (b) of the Indenture are hereby amended by adding the clause "Subject to Section 4.10(c) below," to the beginning of each such section. (b) Section 4.10 of the Indenture is further amended by adding a new clause (c) to read as follows: "Notwithstanding the foregoing, until the date that is the third anniversary following the effective date of the New Credit Agreement, the Company will be permitted to make a Restricted Payment to the extent, and only to the extent, that such payment is permitted by the terms of the Credit Agreement or the New Credit Agreement as each such agreement was in effect on the effective date of the New Credit Agreement. Following the date that is the third anniversary of the effective date of the New Credit Agreement, the Company will only be permitted to make Restricted Payments pursuant to paragraph 4.10(a) above in an aggregate principal amount not to exceed $15,000,000 in any fiscal year." SECTION 1.05. Section 4.11 of the Indenture is hereby amended and restated in its entirety to read as follows: "Limitation on Liens. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, incur or suffer to exist any Liens upon their respective property or assets whether owned on the Issue Date or acquired after such date, or on any income or profits therefrom, unless the Securities are equally and ratably secured by such Lien; provided that if the Debt secured by such Lien is subordinate or junior in right of payment to the Securities then the Lien securing such Debt shall be subordinate or junior in priority to the Lien securing the Securities at least to the same extent as such Debt is subordinate or junior to the Securities. The foregoing restrictions shall not apply to: (1) Liens existing on the Issue Date; (2) Permitted Liens; (3) Purchase money Liens on assets of the Company and its Subsidiaries or improvements or additions thereto existing or created within 180 days after the time of acquisition of or improvements or 6 7 additions to such assets, or replacements thereof; provided that (i) such acquisition, improvement or addition is otherwise permitted by this Indenture, (ii) the principal amount of Debt (including Debt in respect of Capitalized Lease Obligations) secured by each such Lien on each asset shall not exceed the cost (including all such Debt secured thereby, whether or not assumed) of the item subject thereto, and such Liens shall attach solely to the particular item of property so acquired, improved or added and any additions or accessions thereto, or replacements thereof, and (iii) the aggregate amount of Debt secured by Liens permitted by this clause (3) shall not at any time exceed $40,000,000; (4) Liens to secure Refinancing of any Debt secured by Liens described in clauses (l)-(3) above and (5) below; provided that (i) Refinancing does not increase the principal amount of Debt being so Refinanced and (ii) the Lien of the Refinancing Debt does not extend to any asset not securing the Debt being Refinanced or improvements or additions thereto, or replacements thereof; (5) Liens securing Acquired Debt; provided that (i) any such Lien secured the Acquired Debt at the time of the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and such Lien and Acquired Debt were not incurred by the Company or any of its Subsidiaries or by the Person being acquired or from whom the assets were acquired in connection with, or in anticipation of, the incurrence of such Acquired Debt by the Company or by one of its Subsidiaries and (ii) any such Lien does not extend to or cover any property or assets of the Company or of any of its Subsidiaries other than the property or assets that secured the Acquired Debt prior to the time such Debt became Acquired Debt of the Company or of one of its Subsidiaries; (6) Liens on Receivables securing Debt permitted by Section 4.09(b)(8); (7) Liens securing intercompany Debt permitted by Section 4.09(b)(2); (8) Liens securing the Credit Agreement, the New Credit Agreement and the Other Indebtedness (including Liens to be granted in connection with any Refinancing of the Credit Agreement, the New Credit Agreement and the Other Indebtedness); and (9) Liens permitted under the Credit Agreement or the New Credit Agreement as each such agreement is in effect on the effective date of the New Credit Agreement; and (10) Beginning on the first anniversary of the effective date of the New Credit Agreement, Liens on assets of the Company and its Subsidiaries in addition to those referred to in clauses (1)-(9), provided that such Liens only secure Debt of the Company and its 7 8 Subsidiaries in an aggregate amount not to exceed at any one time outstanding $30,000,000." SECTION 1.06. (a) Section 4.13(6) of the Indenture is hereby amended and restated in its entirety to read as follows: "the Credit Agreement, the Receivables Financing Agreement, other Debt existing on the Issue Date or the New Credit Agreement; and" (b) Section 4.13(7) of the Indenture is hereby amended and restated in its entirety to read as follows: "any Refinancing of the Credit Agreement, the Receivables Financing Agreement, any such other Debt existing on the Issue Date or the New Credit Agreement; provided that the terms and conditions of any such Refinancing agreements relating to the terms described under clauses (a)-(d) above are no less favorable to the Company than those contained in the agreements governing the Debt being Refinanced." SECTION 1.07. A new Section 6.13 is hereby added to the Indenture to read as follows: "Notification to Collateral Agent. If an Event of Default occurs and is continuing, the Trustee shall notify the Collateral Agent (as defined in the Collateral Agent Agreement) of such default pursuant to the terms of the Collateral Agent Agreement and take any action as may be required thereby." SECTION 1.08. Section 9.01 of the Indenture is hereby amended by adding a new paragraph (9) to read as follows: "(9) to secure the Securities as contemplated by the first paragraph of Section 4.11 hereof." ARTICLE II GUARANTEES SECTION 2.01. Guarantee. Subject to Section 2.07, each Guarantor, jointly and severally, hereby unconditionally and irrevocably guarantees to each Holder and, with respect only to clause (b) below, the Trustee (a "Guaranty"), the following obligations: (a) the full and punctual payment of principal, premium, if any, and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other 8 9 monetary obligations of the Company under the Indenture and the Securities and (b) the full and punctual performance within applicable grace periods of all other obligations of the Company under the Indenture (including, without limitation, the compensation and other payment obligations to the Trustee thereunder) and the Securities (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor and that such Guarantor will remain bound under the terms hereof notwithstanding any extension or renewal of any Guaranteed Obligation. Each Guarantor agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, the Company, any Subsidiary thereof or any other Person, and, subject to Section 2.05, a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, the Company any Subsidiary thereof or any other Person and whether or not any other Guarantor, the Company or any Subsidiary thereof be joined in any such action or actions. Any payment by the Company or any Subsidiary thereof or other circumstance which operates to toll any statute of limitations as to the Company or any such Subsidiary shall operate to toll the statute of limitations as to each Guarantor. SECTION 2.02. Unconditional Obligations. This Guaranty shall not be discharged except by complete performance of the Guaranteed Obligations as contemplated in the Indenture and the Securities. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any agreement referred to in clause (a) of this paragraph; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by or for the benefit of any Holder or the Trustee for the Guaranteed Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other Guarantor of the Guaranteed Obligations or any other Person; or (f) except as provided in Section 2.08 of this First Supplemental Indenture, any change in the ownership of such Guarantor. Each Guarantor hereby waives notice of acceptance of this Guaranty and notice of any liability to which it may apply, and waives promptness, diligence, presentment, demand of payment, protest, notice of dishonor or any right to require a proceeding or the taking of other action by the Trustee or any Holder against, and any other notice to, any other Guarantor or the Company. 9 10 SECTION 2.03. Continuing Guaranty. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. No failure or delay on the part of any Holder in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein expressly specified are cumulative and not exclusive of any rights or remedies which any Holder would otherwise have. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Holder to any other or further action to any circumstances without notice or demand. It is not necessary for any Holder to inquire into the capacity or powers of the Company or any Subsidiary thereof or the officers, directors, partners or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 2.04. Subrogation; Acceleration. Each Guarantor agrees that it shall not be entitled to any right of subrogation in respect of any Guaranteed Obligations until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations may be accelerated as provided in Article VI of the Indenture for the purposes of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI of the Indenture, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes hereof. SECTION 2.05. Enforcement. The Holders agree that this Guaranty may be enforced only by the action of the Trustee in accordance with the terms of the Indenture and that no other Holders shall have any right individually to seek to enforce this Guaranty. The Holders further agree that this Guaranty may not be enforced against any director, officer, employee, or stockholder of any Guarantor (except to the extent such stockholder is also a Guarantor hereunder). SECTION 2.06. Covenants. Each Guarantor agrees that its Guaranteed Obligations hereunder are senior Indebtedness of such Guarantor and such Guaranteed Obligations shall not be subordinate to any existing or future obligations of such Guarantor. Each Guarantor further covenants and agrees that on and after the date hereof such Guarantor will comply (as a Recourse Subsidiary of the Company), and will cause each of its Subsidiaries to comply, with all of the applicable provisions, covenants and agreements contained in the Indenture, and will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that it is not in 10 11 violation of any provision, covenant or agreement contained in the Indenture, and so that no Default or Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries. Each Guarantor hereby jointly and severally agrees to pay all reasonable out-of-pocket costs and expenses of the Trustee in connection with the enforcement of this Guaranty and in connection with any amendment, waiver or consent relating hereto (including in each case, without limitation, the reasonable fees and disbursements of counsel employed by the Trustee). SECTION 2.07. Limitation on Liability. Each Guarantor hereby confirms that it is its intention that this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act or any similar Federal or state law. Accordingly, each Guarantor hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws, and after giving effect to any rights to contribution pursuant to any agreement providing for an equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent transfer or conveyance SECTION 2.08. Miscellaneous. (a) This Guaranty shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the Holders and their successors and assigns. (b) Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except with the written consent of each Guarantor directly affected thereby and with the written consent of the holders of a majority in aggregate principal amount of the Securities then outstanding. (c) All notices, requests, demands or other communications pursuant hereto shall be made in accordance with Section 11.02 of the Indenture. ARTICLE III MISCELLANEOUS SECTION 3.01. Effectiveness. This First Supplemental Indenture shall become effective immediately upon its execution and delivery by the Company, the Guarantors and the Trustee, but Articles I and II shall not become operative unless and until the Requisite Consents (as defined in the Consent Solicitation Statement) are received and the New Credit Agreement and the Credit Agreement become effective. In the event of any termination of the Consent Solicitation set forth in the Consent Solicitation Statement or in the event that Requisite Consents are not received, Articles I and II of this First Supplemental Indenture shall be null and void and of no force or effect. 11 12 SECTION 3.02. Confirmation. This First Supplemental Indenture and the Indenture shall henceforth be read together. Except as expressly set forth herein, the Indenture shall remain unchanged and is in all respects confirmed and preserved. SECTION 3.03. Counterparts. This First Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. SECTION 3.04. Governing Law. This First Supplemental Indenture shall be governed by the laws of the State of New York without regard to the principles of conflicts of laws. The Trustee, the Company, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to the Indenture or this First Supplemental Indenture. 12 13 IN WITNESS WHEREOF, the parties hereto caused this First Supplemental Indenture to be signed and acknowledged by their respective officers thereunto duly authorized as of the day and year first-above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ------------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President BUILDING MATERIALS MANUFACTURING CORPORATION By: /s/ Susan B. Yoss ------------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss ------------------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President THE BANK OF NEW YORK, as Trustee By: /s/ Signature Illegible ------------------------------------------------------- Name: Title: 13 14 BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP., as Additional Guarantors By: /s/ Susan B. Yoss ------------------------------------------------ Name: Susan B. Yoss Title: Senior Vice President 14 EX-4.15 8 y46546ex4-15.txt REGISTRATION RIGHTS AGREEMENT 1 Exhibit 4.15 ------------ BUILDING MATERIALS CORPORATION OF AMERICA $35,000,000 10.50% Senior Notes Due 2002 REGISTRATION RIGHTS AGREEMENT July 5, 2000 BNY Capital Markets, Inc. One Wall Street New York, New York 10286 Ladies and Gentlemen: Building Materials Corporation of America, a Delaware corporation (the "Company"), proposes to issue and sell to you (the "Initial Purchaser"), upon the terms set forth in a purchase agreement dated June 28, 2000 (the "Purchase Agreement"), $35,000,000 aggregate principal amount of its 10.50% Senior Notes due 2002 (the "Notes"). The Subsidiaries of the Company listed on the signature pages hereto (the "Guarantors", and, together with the Company, the "Issuers") will jointly and severally guarantee the Notes (the "Guarantees" and the Notes, as so guaranteed, the "Securities"). The Securities will be issued pursuant to an indenture (the "Indenture") among the Company, the Guarantors and The Bank of New York, as trustee (the "Trustee") dated July 5, 2000, substantially in the form previously furnished to the Initial Purchaser. As an inducement to the Initial Purchaser, the Issuers agree with the Initial Purchaser, for the benefit of the holders of the Securities (including, without limitation, the Initial Purchaser, herein referred to as the "Holders"), as follows: 1. Registered Exchange Offer. The Company shall prepare and, by the earlier of 90 days after the date of original issuance of the Securities (the "Issue Date") and the date of filing of a registration statement in respect of an initial public offering of common stock of the Company (other than a registration statement on Form S-8), file with the Securities and Exchange Commission (the "Commission") a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of the Securities to issue and deliver to such Holders, in exchange for the Securities, a like principal amount of debt securities of the Company guaranteed by the Guarantors identical in all material respects to the Securities (the "Exchange Notes"), except for the transfer restrictions relating to the Securities. The Issuers shall use their best efforts to cause such Exchange Offer Registration Statement to become effective under the Securities Act within 180 days of the Issue Date. Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Issuers shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of 2 the Securities electing to exchange the Securities for Exchange Notes and (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Notes in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Notes) to trade such Exchange Notes from and after their receipt without any limitations or restrictions under the Securities Act and the securities laws of the several states of the United States. In connection with such Registered Exchange Offer, the Issuers shall take such further action, including, without limitation, appropriate filings under state securities laws, as may be necessary to realize the foregoing objective subject to the proviso of Section 3(h). The Issuers shall include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution", reasonably acceptable to the Initial Purchaser, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Notes received by such broker-dealer in the Registered Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchaser, represent the prevailing views of the staff of the Commission. Such "Plan of Distribution" section shall also allow the use of the prospectus by all persons subject to the prospectus delivery requirements of the Securities Act, including Participating Broker-Dealers, and include a statement describing the means by which Participating Broker-Dealers may resell the Exchange Notes. The Issuers shall use their best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Notes; provided that such period shall not exceed 180 days (or such longer period if extended pursuant to Section 3(j) below). If, upon consummation of the Exchange Offer, the Initial Purchaser holds Securities acquired by it as part of its initial distribution, the Company upon the request of the Initial Purchaser shall simultaneously with the delivery of the Exchange Notes pursuant to the Registered Exchange Offer issue and deliver to the Initial Purchaser, in exchange (the "Private Exchange") for the Securities held by the Initial Purchaser, a like principal amount of debt securities of the Company guaranteed by the Guarantors identical in all material respects to the Securities (the "Private Exchange Notes"). The Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes. In connection with the Registered Exchange Offer, the Issuers shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; 2 3 (b) keep the Registered Exchange Offer open for not less than 20 business days after the date notice thereof is mailed to the Holders (or longer if required by applicable law); (c) utilize the services of a depository for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all respects with all applicable laws. As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Issuers shall: (i) accept for exchange all the Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; (ii) deliver to the Trustee for cancellation all the Securities so accepted for exchange; and (iii) cause the Trustee to authenticate and deliver promptly to each Holder of the Securities, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal amount to the Securities of such Holder so accepted for exchange. The Exchange Notes and the Private Exchange Notes may be issued under (i) the Indenture or (ii) an indenture substantially similar to the Indenture, which in either event will provide that the Exchange Notes will not be subject to the transfer restrictions set forth in the Indenture and that the Exchange Notes, the Private Exchange Notes and the Securities will vote and consent together on all matters as one class and that none of the Exchange Notes, the Private Exchange Notes or the Securities will have the right to vote or consent as a separate class on any matter. 2. Shelf Registration. If, (i) because of any change in law or in currently prevailing interpretations of the staff of the Commission, the Issuers are not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) for any reason the Registered Exchange Offer is not completed within 210 days of the Issue Date (the "Initial Completion Deadline"), which date shall be extended for an additional 30 days upon delivery prior to the Initial Completion Deadline of a certificate of the Company to the effect that the Registered Exchange Offer is scheduled to be completed within 30 days of the Initial Completion Deadline (the "Extended Completion Deadline"), (iii) the Initial Purchaser so requests with respect to the Securities or the Private Exchange Notes held by it following consummation of the Registered Exchange Offer or (iv) any Holder is not eligible to participate in the Registered 3 4 Exchange Offer or, in the case of any Holder that participates in the Registered Exchange Offer or the Private Exchange, such Holder does not receive freely tradable Exchange Notes on the date of the exchange, the Issuers shall, at their cost, take the following actions: (a) as promptly as reasonably practicable file with the Commission and thereafter shall use their best efforts to cause to be declared effective a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, a "Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Securities or, if applicable, the Private Exchange Notes by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereafter, the "Shelf Registration"). (b) use their best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the Securities or, if applicable, the Private Exchange Notes for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the Issue Date or such shorter period that will terminate when all the Securities or, if applicable, the Private Exchange Notes covered by the Shelf Registration Statement have been sold pursuant thereto; provided, that the Issuers shall be deemed not to have used their best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of the Securities or, if applicable, the Private Exchange Notes covered thereby not being able to offer and sell the Securities or, if applicable, the Private Exchange Notes during that period, unless such action is required by applicable law. (c) Notwithstanding any other provisions of this Agreement to the contrary, the Issuers shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply: (a) The Company shall furnish to the Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and shall obtain the consent of the Initial Purchaser to any such filing, which shall not be unreasonably withheld. (b) The Company shall give written notice to the Initial Purchaser, the Holders of the Securities and any Participating Broker-Dealer 4 5 from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer: (i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information, provided that the request and the contents of the request need only be disclosed to the Initial Purchaser and one counsel appointed by and on behalf of the Holders of the Securities as described in Section 4; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by any Issuer or its legal counsel of any notification with respect to the suspension of the qualification of the Securities or, if applicable, the Private Exchange Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the Issuers to make changes in the Registration Statement or the prospectus in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made). (c) The Issuers shall use their best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of the Registration Statement at the earliest possible time. (d) The Company shall furnish to each Holder of the Securities or, if applicable, the Private Exchange Notes included within the coverage of the Shelf Registration, without charge, at least one copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those, if any, incorporated by reference). (e) The Company shall deliver to the Initial Purchaser and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Initial Purchaser or any such Holder requests, all exhibits (including those incorporated by reference). (f) The Company shall deliver to each Holder of the Securities or, if applicable, the Private Exchange Notes included within the coverage of the Shelf Registration, without charge, as many copies of the 5 6 prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Issuers consent, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities or, if applicable, the Private Exchange Notes in connection with the offering and sale of the Securities or, if applicable, the Private Exchange Notes covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall deliver to the Initial Purchaser, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Issuers consent, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by the Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Notes covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement. (h) Prior to any public offering of the Securities or, if applicable, the Private Exchange Notes, pursuant to the Shelf Registration, the Company shall register or qualify or cooperate with the Holders of the Securities or, if applicable, the Private Exchange Notes, included therein and their respective counsel in connection with the registration or qualification of the Securities or, if applicable, the Private Exchange Notes, for offer and sale under the securities or blue sky laws of such jurisdictions as any Holder of the Securities or the Private Exchange Notes reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by the Shelf Registration; provided that the Issuers shall not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. (i) The Issuers shall cooperate with the Holders of the Securities or, if applicable, the Private Exchange Notes to facilitate the timely preparation and delivery of certificates representing the Securities or, if applicable, the Private Exchange Notes to be sold in the Shelf Registration free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities or, if applicable, the Private Exchange Notes pursuant to the Shelf Registration. (j) Upon the occurrence of any event contemplated by Section 3(b)(v) above, the Issuers shall promptly prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter 6 7 delivered to Holders of the Securities, the Exchange Notes or, if applicable, the Private Exchange Notes, as the case may be, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchaser, the Holders of the Securities and any known Participating Broker-Dealer in accordance with Section 3(b)(v) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchaser, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j). (k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Securities or Exchange Notes, as the case may be, and provide the applicable trustee with certificates for the Securities or Exchange Notes, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Issuers will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its securities holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Shelf Registration, which statement shall cover such 12-month period. (m) The Issuers shall cause the Indenture (or an indenture substantially identical to the Indenture in the case of a Registered Exchange Offer) to be qualified under the Trust Indenture Act of 1939, as amended. (n) The Company may require each Holder of the Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement. (o) The Issuers shall enter into such customary agreements (including if requested an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration. (p) In the case of any Shelf Registration, the Issuers shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the 7 8 Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Issuers and (ii) cause the Issuers' officers, directors and employees to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement; provided that -------- the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchaser by the Initial Purchaser and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4. (q) In the case of the Registered Exchange Offer, the Issuers shall (i) make reasonably available for inspection by the Initial Purchaser, any known Participating Broker-Dealer and any attorney, accountant or other agent retained by the Initial Purchaser or such Participating Broker-Dealer all relevant financial and other records, pertinent corporate documents and properties of the Issuers and (ii) cause the Issuers' officers, directors and employees to supply all relevant information reasonably requested by the Initial Purchaser, such Participating Broker-Dealer or any such attorney, accountant or agent in connection with the Exchange Offer Registration Statement; provided that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchaser by the Initial Purchaser and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4. (r) In the case of any Shelf Registration, the Issuers, if requested by any Holder of the Securities or, if applicable, the Private Exchange Notes, shall cause their counsel to deliver an opinion relating to the Securities or, if applicable, the Private Exchange Notes in customary form, cause its officers to execute and deliver all customary documents and certificates requested by any underwriters of the Securities or, if applicable, the Private Exchange Notes and cause its independent public accountants to provide to the selling Holders of the Securities or, if applicable, the Private Exchange Notes and any underwriter therefor a comfort letter in customary form. (s) In the case of the Registered Exchange Offer, if requested by the Initial Purchaser or any known Participating Broker-Dealer, the Issuers shall cause their outside counsel to deliver to the Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Section 5(c)(A) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and shall cause its independent public accountants to deliver to the Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Section 5(f) of the Purchase Agreement, with appropriate date changes. 4. Registration Expenses. The Issuers shall bear all expenses incurred in connection with the performance of their obligations under Sections 1 through 3 hereof (including the reasonable fees and expenses of Bryan 8 9 Cave LLP, counsel to the Initial Purchaser, incurred in connection with the Registered Exchange Offer) and, in the event of a Shelf Registration, shall bear or reimburse the Holders of the Securities or, if applicable, the Private Exchange Notes for the reasonable fees and disbursements of one firm of counsel designated by the Holders of a majority in principal amount of the Securities and, if applicable, the Private Exchange Notes to act as counsel for the Holders of the Securities, and, if applicable, the Private Exchange Notes in connection therewith, which counsel shall be reasonably satisfactory to the Company. 5. Indemnification. (a) The Issuers agree to indemnify and hold harmless each Holder of the Securities or, if applicable, the Private Exchange Notes and each person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each director, officer, employee or agent of such Holder and each director, officer, employee or agent of each such controlling person (each Holder, such controlling persons and each such director, officer, employee and agent are referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities or, if applicable, the Private Exchange Notes), to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in 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, in light of the circumstances under which they were made, not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending or preparing to defend against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action in respect thereof; provided, however, that the Issuers shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information furnished to any Issuer by or on behalf of such Holder specifically for inclusion therein; provided, further , that (A) the Issuers shall not be obligated to indemnify or hold harmless any Indemnified Party in respect of any loss, claim, damage, liability or action to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in a preliminary Registration Statement or preliminary prospectus if the applicable Holder or Initial Purchaser failed to deliver a copy of a final prospectus or an amended or supplemented Registration Statement or prospectus that was made available by the Issuers to such Indemnified Party prior to the applicable sale to the person or persons asserting the claim which is the basis of indemnification and such final prospectus or amended or supplemented Registration Statement or prospectus cured such defect and (B) this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Issuers will not settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not such Indemnified Party or any person who controls such Indemnified Party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is a party to such claim, action, suit or proceeding) without the prior written consent of such Indemnified Party, which consent shall not be unreasonably withheld, unless such settlement, compromise or consent includes an unconditional release of such 9 10 Indemnified Party and each such controlling person from all liability arising out of such claim, action, suit or proceeding. No Indemnified Party will settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought without the prior written consent of the Issuers (which consent will not be unreasonably withheld). The Issuers shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution (as described in such Registration Statement), their officers and directors and each person who controls such persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders. (b) The Issuers agrees to indemnify and hold harmless the Initial Purchaser, any Participating Broker-Dealer and each person, if any, who controls the Initial Purchaser or a Participating Broker-Dealer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each director, officer, employee or agent of the Initial Purchaser or a Participating Broker-Dealer and each director, officer, employee or agent of each such controlling person (the Initial Purchaser, any Participating Broker-Dealer, such controlling persons and each such director, officer, employee and agent of the Initial Purchaser, such Participating Broker-Dealer or such controlling person are referred to collectively as the "Exchange Offer Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of Exchange Notes), to which each Exchange Offer Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Exchange Offer Registration Statement or prospectus contained therein or in 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, in light of the circumstances under which they were made, not misleading, and shall reimburse, as incurred, the Exchange Offer Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending or preparing to defend against or appearing as a third-party witness in connection with any such loss, claim, damage, liability or action in respect thereof; provided, however, that the Issuers shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any Exchange Offer Registration Statement or prospectus contained therein or in any amendment or supplement thereto in reliance upon and in conformity with written information furnished to any Issuer by or on behalf of the Initial Purchaser or 10 11 Participating Broker-Dealer specifically for inclusion therein; provided, further, that (A) the Issuers shall not be obligated to indemnify or hold harmless any Exchange Offer Indemnified Party in respect of any loss, claim, damage, liability or action to the extent that any such loss, claim, damages, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in a preliminary Registration Statement or preliminary prospectus if the applicable Initial Purchaser or Participating Broker-Dealer failed to deliver a copy of a final prospectus or an amended or supplemented Registration Statement or prospectus that was made available by the Issuers to such Exchange Offer Indemnified Party prior to the applicable sale to the person or persons asserting the claim which is the basis of indemnification and such final prospectus or amended or supplemented Registration Statement or prospectus cured such defect and (B) this indemnity agreement will be in addition to any liability which the Issuers may otherwise have to such Exchange Offer Indemnified Party. The Issuers will not settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not such Exchange Offer Indemnified Party or any person who controls such Exchange Offer Indemnified Party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is a party to such claim, action, suit or proceeding) without the prior written consent of such Exchange Offer Indemnified Party, which consent shall not be unreasonably withheld, unless such settlement, compromise or consent includes an unconditional release of such Exchange Offer Indemnified Party and each such controlling person from all liability arising out of such claim, action, suit or proceeding. No Exchange Offer Indemnified Party will settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought without the prior written consent of the Issuers (which consent will not be unreasonably withheld). (c) Each Holder of the Securities or, if applicable, the Private Exchange Notes, severally and not jointly, will indemnify and hold harmless the Issuers, each director, officer, employee or agent of the Issuers and each person, if any, who controls any Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each director, officer, employee or agent of such controlling person from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which any Issuer or any such director, officer, employee, agent or controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to any Issuer by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, such indemnified persons for any legal or other expenses reasonably incurred by any Issuer or any such director, officer, employee, agent or controlling person in connection with the investigating or defending or preparing to defend against or appearing as a third-party witness in connection 11 12 with any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to any Issuer or any such directors, officers, employees, agents or controlling persons. (d) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party (i) will not relieve it from any liability under paragraph (a), (b) or (c) 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 or 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), (b) or (c) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be one or more legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnifying party shall not have the right to direct the defense of such action on behalf of such indemnified party or parties and such indemnified party or parties shall have the right to select separate counsel to defend such action on behalf of such indemnified party or parties. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by such indemnified party of counsel appointed to defend such action, which approval shall not be unreasonably withheld, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the next preceding sentence (it being understood, however, that in connection with such action the indemnifying party shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in any one action or separate but substantially similar actions in the same jurisdiction arising out of the same general allegations or circumstances) or (ii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. (e) In circumstances in which the indemnity agreement provided for in the preceding paragraphs of this Section 5 is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) (other than by reason of exceptions provided in such Section 5), each indemnifying party, in order to provide for just and equitable contribution, 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 (i) the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on 12 13 the other from the offering of the Securities or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof). The relative fault of the parties 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 Issuers on the one hand or such Holder or such other indemnified person, as the case may be, on the other, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances. The Issuers and each indemnified party agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the first sentence of this paragraph (e). Notwithstanding any other provision of this Section 5(e), the Holders of the Securities or, if applicable, the Private Exchange Notes shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities or, if applicable, the Private Exchange Notes pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay in respect of the same or a similar claim, and no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (e), each director, officer, employee and agent of any indemnified party and each person, if any, who controls such indemnified party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such indemnified party and each director and officer of any Issuer, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Issuer. (f) The agreements contained in this Section 5 shall survive the sale of the Securities, the Exchange Notes or, if applicable, the Private Exchange Notes pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 6. Additional Interest Under Certain Circumstances. (a) Additional interest at a rate of 0.5% per annum of the principal amount of the Notes (the "Additional Interest") shall be assessed as follows: (i) if the Exchange Offer Registration Statement is not filed with the Commission by the earlier of (x) 90 days after the Issue Date and (y) the date of filing of a registration statement in respect of an initial public offering of common stock of the Company (other than a registration statement on Form S-8), then, commencing from and including the earlier of such dates, Additional Interest shall be assessed on the Notes; 13 14 (ii) if the Registered Exchange Offer is not completed and a Shelf Registration is not declared effective by the Commission by the Initial Completion Deadline, then, commencing on the Initial Completion Deadline, Additional Interest shall be assessed on the Notes; and (iii) if (A) the Issuers have not exchanged Exchange Notes for all the Securities validly tendered in accordance with the terms of the Registered Exchange Offer on or prior to 30 business days after the date on which the Exchange Offer Registration Statement was declared effective, or (B) if applicable, the Shelf Registration Statement has been declared effective and it ceases to be effective prior to two years (or such later date if such two-year period is extended pursuant to Section 3(j) above or such shorter period as is provided in Section 2(b)) from the Issue Date, then, Additional Interest shall be assessed on the Notes, commencing on (x) the 31st business day after such effective date in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective in the case of (B) above; provided, however, that (l) upon the filing of the Exchange Offer Registration Statement or the Initial Completion Deadline in the case of (i) above, (2) upon completion of the Registered Exchange Offer or the effectiveness of the Shelf Registration Statement in the case of (ii) above, or (3) upon the exchange of Exchange Notes for all the Securities validly tendered in accordance with the terms of the Registered Exchange Offer, or upon the effectiveness of the Shelf Registration Statement which has ceased to remain effective prior to two years (or such later date if extended pursuant to Section 3(j) above or such shorter period as is provided in Section 2(b)) from the date of original issuance of the Securities in the case of (iii) above, Additional Interest on the Notes as a result of such clause (i), (ii) or (iii) shall immediately cease to accrue. (b) Any amount of Additional Interest due pursuant to clauses (i), (ii) or (iii) of Section 6(a) above will be payable in cash semiannually in arrears on each Interest Payment Date (as defined in the Notes), commencing with the first such Interest Payment Date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the Additional Interest by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period, determined on the basis of a 360-day year comprised of twelve 30-day months, and the denominator of which is 360. (c) If the Issuers effect the Registered Exchange Offer, the Issuers will be entitled to close the Registered Exchange Offer provided that the Issuers have accepted all the Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer. 7. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Issuers 14 15 and the written consent of Holders of a majority in aggregate principal amount of the Securities, determined in accordance with the terms of the Indenture. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, telex, telecopy, or air courier which guarantees overnight delivery: (1) if to a Holder of the Securities, in accordance with Section 10.02 of the Indenture, with a copy to the Initial Purchaser as follows: c/o BNY Capital Markets, Inc. One Wall Street New York, New York 10286 Attention: John M. Roy with a copy to: Bryan Cave LLP 245 Park Avenue New York, New York 10167 Attention: J. Christopher Eagan, Esq. (2) if to the Initial Purchaser, at the addresses specified in Section 7(b)(1); (3) if to any Issuer, at its address as follows: Building Materials Corporation of America 1361 Alps Road Wayne, New Jersey 07470 Attention: General Counsel All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged by recipient's telecopy operator, if telecopied; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery. All such notices and communications to the Holders shall be deemed to have been duly given if given as provided in Section 10.02 of the Indenture. (c) Successors and Assigns. This Agreement shall be binding upon the Issuers and their successors and assigns. (d) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 15 16 (e) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws. (g) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 16 17 REGISTRATION RIGHTS AGREEMENT If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Initial Purchaser and the Issuers in accordance with its terms. Very truly yours, BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ------------------------------------------ Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS MANUFACTURING CORPORATION By: /s/ Susan B. Yoss ------------------------------------------ Name: Susan B. Yoss Title: Senior Vice President and Treasurer BUILDING MATERIALS INVESTMENT CORPORATION By: /s/ Susan B. Yoss ------------------------------------------ Name: Susan B. Yoss Title: Senior Vice President and Treasurer Confirmed and accepted as of the date first above written: BNY CAPITAL MARKETS, INC. By: /s/ Bennett Leichman ---------------------------------- Name: Bennett Leichman Title: Vice President 17 EX-4.16 9 y46546ex4-16.txt FIRST AMENDMENT TO THE REGISTRATION RIGHTS AGMT 1 Exhibit 4.16 ------------ FIRST AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT This FIRST AMENDMENT TO THE REGISTRATION RIGHTS AGREEMENT, dated as of December 4, 2000 (the "First Amendment"), is made among Building Materials Corporation of America (the "Company"), Building Materials Manufacturing Corporation and Building Materials Investment Corporation (the "Guarantors" and, together with the Company, the "Issuers") and BNY Capital Markets, Inc. (the "Initial Purchaser"). Capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement (as defined below). RECITALS: -------- WHEREAS, on July 5, 2000, the Company issued and sold to the Initial Purchaser $35,000,000 aggregate principal amount of its 10.50% Senior Notes due 2002, as amended and replaced by its 10.50% Senior Notes due 2003 with a maturity date of September 18, 2003 (the "Notes") and the Initial Purchaser is the beneficial and record owner of the Notes as of the date hereof; WHEREAS, the Issuers and the Initial Purchaser entered into a Registration Rights Agreement, dated July 5, 2000 (the "Registration Rights Agreement") in connection with the issuance and sale of the Notes; WHEREAS, the Issuers and the Initial Purchaser desire by this First Amendment to amend certain provisions of the Registration Rights Agreement. NOW, THEREFORE, it is hereby agreed as follows: Section 1. Additional Agreements (a) The Initial Purchaser hereby waives and forever foregoes any right to receive Additional Interest as provided in Section 6 under the Registration Rights Agreement as a result of the failure of the Company to have filed the Exchange Offer Registration Statement prior to or after the date hereof, except to the extent that Additional Interest would be assessed under the circumstances described in the amended provisions of Section 6 thereof as set forth below. (b) The Initial Purchaser hereby agrees to permit the filing of a Shelf Registration Statement on the terms described in the Registration Rights Agreement in lieu of a Registered Exchange Offer if the Company determines that a Registered Exchange Offer might not be available under existing interpretation of the Commission. Section 2. Amendments to the Registration Rights Agreement (a) The definition of Initial Completion Deadline set forth in the Registration Rights Agreement is hereby redefined as 210 days from the Effective Date (as defined below). 2 (b) Section 6(a) of the Registration Rights Agreement is hereby replaced in its entirety with the following: "6. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES. (a) Additional interest at a rate of 0.5% per annum of the principal amount of the Notes (the "Additional Interest") shall be assessed as follows: (i) if the Exchange Offer Registration Statement or the Shelf Registration Statement is not filed with the Commission by the earlier of (x) 90 days after the effectiveness of the Supplemental Indenture dated as of December 4, 2000 among the Issuers, the Additional Guarantors and the Trustee (the "Supplemental Indenture") and (y) the date of filing of a registration statement in respect of an initial public offering of common stock of the Company (other than a registration statement on Form S-8), then, commencing from and including the earlier of such dates, Additional Interest shall be assessed on the Notes; (ii) if the Registered Exchange Offer is not completed or a Shelf Registration is not declared effective by the Commission by the Initial Completion Deadline, then, commencing on the Initial Completion Deadline, Additional Interest shall be assessed on the Notes; and (iii) if (A) the Issuers have not exchanged Exchange Notes for all the Securities validly tendered in accordance with the terms of the Registered Exchange Offer on or prior to 30 business days after the date on which the Exchange Offer Registration Statement was declared effective, or (B) if applicable, the Shelf Registration Statement has been declared effective and it ceases to be effective prior to two years (or such later date if such two-year period is extended pursuant to Section 3(j) above or such shorter period as is provided in Section 2(b)) from the effectiveness of the Supplemental Indenture, then, Additional Interest shall be assessed on the Notes, commencing on (x) the 31st business day after such effective date in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective in the case of (B) above; provided, however, that (l) upon the filing of the Exchange Offer Registration Statement or the Shelf Registration Statement or the Initial Completion Deadline in the case of (i) above, (2) upon completion of the Registered Exchange Offer or the effectiveness of the Shelf Registration Statement in the case of (ii) above, or (3) upon the exchange of Exchange Notes for all the Securities validly tendered in accordance with the terms of the Registered Exchange Offer, or upon the effectiveness of the Shelf Registration Statement which has ceased to remain effective prior to two years (or such later date if such 2 3 two-year period is extended pursuant to Section 3(j) above or such shorter period as is provided in Section 2(b)) from the effectiveness of the Supplemental Indenture in the case of (iii) above, Additional Interest on the Notes as a result of such clause (i), (ii) or (iii) shall immediately cease to accrue." Section 3. Miscellaneous (a) This First Amendment shall become effective upon its execution and delivery by the Issuers and the Initial Purchaser, but only if the First Supplemental Indenture dated as of December 4, 2000 among the Issuers, the Additional Guarantors and Trustee (as defined therein) becomes effective in accordance with its terms. The date of the effectiveness of the First Supplemental Indenture is referred to herein as the "Effective Date." (b) Except as expressly amended hereby, the Registration Rights Agreement shall remain in full force and effect. (c) This First Amendment may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (d) This First Amendment shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws. 3 4 IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first written above. BNY CAPITAL MARKETS, INC. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Bennett Leichman By:/s/ Susan B. Yoss ------------------------------ --------------------------------- Name: Bennett Leichman Name: Susan B. Yoss ---------------------------- ------------------------------- Title: Senior Vice President Title: Senior Vice President --------------------------- ------------------------------- BUILDING MATERIALS BUILDING MATERIALS MANUFACTURING CORPORATION INVESTMENT CORPORATION By:/s/ Susan B. Yoss By:/s/ Susan B. Yoss ---------------------------- --------------------------------- Name: Susan B. Yoss Name: Susan B. Yoss -------------------------- -------------------------------- Title: Senior Vice President Title: Senior Vice President ------------------------ ------------------------------ 4 EX-10.8 10 y46546ex10-8.txt BMCA 2001 LONG TERM INCENTIVE PLAN 1 EXHIBIT 10.8 BUILDING MATERIALS CORPORATION OF AMERICA 2001 LONG-TERM INCENTIVE PLAN INTRODUCTION Building Materials Corporation of America, a Delaware corporation (hereinafter referred to as the "Corporation"), hereby establishes an incentive compensation plan to be known as the "BUILDING MATERIALS CORPORATION OF AMERICA 2001 LONG-TERM INCENTIVE PLAN" (hereafter referred to as the "Plan"). The Plan, by permitting the grant of Incentive Units (as hereafter defined) to eligible employees of the Corporation and the Subsidiaries (as hereafter defined), provides for a long-term incentive system that supports the Corporation's business strategy and emphasizes pay-for-performance by tying reward opportunities to corporate goals. The Plan shall become effective on December 31, 2000 (the "Effective Date"), pursuant to the approval by the Board (as hereafter defined) by action taken by the Board at a meeting duly called and held on March 1, 2001. This Plan shall terminate five (5) years after the Effective Date (unless sooner terminated by the Board). I. DEFINITIONS For purposes of this Plan, the following terms shall be defined as follows unless the context clearly indicates otherwise: (a) "Board of Directors" or "Board" shall mean the Board of Directors of the Corporation. All determinations by the Board shall be made in good faith in its sole discretion and shall be binding and conclusive. (b) "Book Value" shall mean, as of any Valuation Date, the sum of (i) $268,542,680, (ii) the cumulative consolidated net income or loss of the Corporation for the period January 1, 2001 through the date of determination and (iii) $2,480,625 multiplied by the number of full fiscal quarters of the Corporation that have ended after December 31, 2000 but on or before the date of determination (such product representing a 15% per annum credit on the aggregate dividends or distributions made by the Corporation to its stockholders during the period of October 1, 1997 through December 31, 2000), and excluding, to the extent occurring after December 31, 2000, the impact of (A) nonrecurring operating losses, nonrecurring operating gains and extraordinary items, each as determined in accordance with generally accepted accounting principles, (B) any charge incurred after December 31, 2000 relating to asbestos-related liabilities, (C) net after-tax gains or losses in respect of dispositions of assets by the Corporation other than in the ordinary course of business, (D) any charges relating to amortization of goodwill and other intangibles arising from the management buy-out of GAF Corporation in March 1989, and (E) such other items as the Board of Directors may determine to be extraordinary or unusual and the impact of which should not be included in consolidated 1 2 net income or loss, as the case may be, for the purposes of computing Book Value. There shall be deducted from Book Value an amount equal to a 15% per annum charge on the aggregate capital contributions made to the Corporation by its stockholders during the period commencing January 1, 2001 and ending with the date of determination (the "Period"), amounts actually received by the Corporation during the Period for shares of its capital stock and, to the extent not actually charged against the net income of the Corporation, on the outstanding principal amount of loans and other advances made to the Corporation by affiliates (excluding Subsidiaries of the Corporation) during the Period. There shall be added to Book Value a 15% per annum credit on the aggregate dividends or distributions (including redemption of shares of its capital stock) made by the Corporation to its stockholders during the Period and, to the extent interest is not actually imputed to the Corporation in respect of such amounts, on the outstanding principal amount of loans and other advances made by the Corporation to affiliates (excluding Subsidiaries of the Corporation) during the Period. Any adjustments to Book Value (including the 15% charge and credit referred to in the preceding two sentences) shall take into account the tax effect, if any, associated therewith. If the Corporation's common stock is converted into or exchanged for other securities or property pursuant to a recapitalization, stock split, combination, reorganization, merger, exchange or similar transaction, or if a sale of all or substantially all of, the common stock of the Corporation shall occur or be pending, Book Value, the Incentive Units and the terms hereof shall be modified by the Board of Directors in such manner as is reasonable under the circumstances. All determinations by the Board of Directors hereunder shall be made in good faith and shall be binding and conclusive. (c) "Change in Control of the Corporation" shall mean the occurrence of either of the following events: (i) prior to the time that at least 15% of the then outstanding voting stock of the Corporation or any parent of the Corporation is publicly traded, the Heyman Group ceases to be the "beneficial owner," directly or indirectly, of majority voting power of the voting stock of the Corporation; or (ii) at any other time, any person or entity, other than the Heyman Group, is or becomes the beneficial owner, directly or indirectly, of more than 35% of the voting stock of the Corporation or any parent of the Corporation and the Heyman Group beneficially owns, directly or indirectly, in the aggregate a lesser percentage of the voting stock of the Corporation or such parent, as the case may be, than such other person or entity. The "Heyman Group" shall mean (i) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the voting stock is owned by Samuel J. Heyman, his heirs, administrators or executors and (ii) any entity controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. "Beneficial ownership" shall be determined in accordance with Rule 13d under the Securities Exchange Act of 1934, as amended. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended. (e) "Corporation" shall have the meaning set forth in the Introduction. (f) "Committee" shall have the meaning set forth in Section II(a) hereof. 2 3 (g) "Effective Date" shall have the meaning set forth in the Introduction. (h) "Employee" shall mean a common-law employee at a salary grade of 12 or above of the Corporation or of any Subsidiary. (i) "Exercise Date" shall have the meaning set forth in Section IV(e) hereof. (j) "Final Value" shall have the meaning set forth in Section IV(f) hereof. (k) "Good Cause" shall, with respect to any Employee, mean (i) the Employee's willful or gross misconduct or willful or gross negligence in the performance of his duties for the Corporation or for any Subsidiary, (ii) the Employee's intentional or habitual neglect of his duties for the Corporation or for any Subsidiary, (iii) the Employee's theft or misappropriation of funds of the Corporation or of any Subsidiary, fraud, criminal misconduct, breach of fiduciary duty or dishonesty in the performance of his duties on behalf of the Corporation or any Subsidiary or commission of a felony, or crime of moral turpitude or any other conduct reflecting adversely upon the Corporation or any Subsidiary or (iv) the Employee's violation of any covenant not to compete or not to disclose confidential information with respect to the Corporation or any Subsidiary. (l) "Good Reason" shall, with respect to any Employee, mean a change or changes in the terms of such Employee's employment that are materially adverse to such Employee, including changes relating to salary and bonus, level of responsibility or location of employment. (m) "Incentive Unit" shall mean a bookkeeping item equal in value, as of any Valuation Date, to (i) the Corporation's Book Value determined as of such Valuation Date divided by (ii) 1,000,010. The value of each Incentive Unit as of a Valuation Date and the determination of accumulated comprehensive income and losses as of a Valuation Date shall each be determined by the Board and may be adjusted by the Board if the number of outstanding shares of the Corporation's common stock increases or decreases at any time after the Effective Date. (n) "Initial Value" shall have the meaning set forth in Section IV(a) hereof. (o) "Options" shall mean stock options granted to any Employee under the Corporation's Series A Cumulative Redeemable Preferred Stock option program established in 1996. (p) "Plan" shall have the meaning set forth in the Introduction. (q) "Retirement" shall mean an Employee's termination of employment after (i) he attains age fifty-five (55) and (ii) the sum of his age and the number of his years of service with the Corporation and/or any Subsidiary equals sixty (60) or more. 3 4 (r) "Subsidiary" shall mean a corporation or other entity of which more than fifty percent (50%) of the aggregate of its outstanding voting securities are owned directly or indirectly by the Corporation. (s) "Valuation Date" shall mean the last day of business of each fiscal quarter of the Corporation. II. ADMINISTRATION (a) Administration; Term of Office; Appointment of Chairperson. The Plan shall be administered by a committee (the "Committee") appointed by the Board from among Employees. The Committee shall be comprised, unless otherwise determined by the Board, of the individuals serving as the Corporation's Chief Executive Officer, Chief Financial Officer and Vice President-Human Resources. Each member of the Committee shall hold office until the date that he or she resigns from the Committee or is removed from membership on the Committee by action of the Board. In the event an individual for any reason ceases to be a member of the Committee, the Board shall appoint another qualified individual to serve on the Committee. The members of the Committee shall choose from among themselves one such member to serve as chairperson of the Committee. (b) Quorum and Manner of Acting. Except as hereinafter provided, a majority of the members of the entire Committee shall constitute a quorum for the transaction of business and the vote of a majority of the Committee members present at the time of the vote shall be the act of the Committee. In the absence of a quorum at any meeting of the Committee, a majority of the Committee members present thereat may adjourn such meeting to another time and place. Notice of the time and place of any such adjourned meeting shall be given to the Committee members who were not present at the time of the adjournment and, unless such time and place were announced at the meeting at which the adjournment was taken, to the other Committee members. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. In the event any Committee member is disqualified from acting on a specific matter pursuant to Section II(f) hereof, such individual shall not be taken into account in determining whether a quorum of the Committee exists for taking action with respect to such matter. The Committee members shall act only as a Committee and the individual Committee members shall have no power as such. All decisions of the Committee shall be made in good faith in its sole discretion and shall be binding and conclusive. (c) Action Without a Meeting. Any action required or permitted to be taken by the Committee at a meeting may be taken without a meeting if all members of the Committee consent in writing to the adoption of a resolution authorizing such action. The resolution and written consents thereto by the members of the Committee shall be filed with the minutes of the proceedings of the Committee. 4 5 (d) Telephonic Participation. Any one or more members of the Committee may participate in a meeting of the Committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at the meeting. (e) Compensation. Members of the Committee shall not be compensated for service as a Committee member. (f) Disqualification. Each member of the Committee shall be disqualified from acting as such with respect to all matters that concern such person individually. (g) Responsibilities of the Committee. Except to the extent specifically reserved herein for the Board, the Committee shall have all powers, responsibilities and duties for controlling and administering the Plan, including, but not limited to, the following: (i) to establish and enforce certain rules, regulations, and procedures as it deems necessary or proper for the efficient administration of the Plan; (ii) to interpret the Plan, with its interpretations made in good faith to be final and conclusive, and to decide all questions concerning the Plan; (iii) to determine the ongoing eligibility of any individual to participate in the Plan, and to require any person to furnish any information as it may request to properly administer the Plan as a condition to that person receiving any benefit under the Plan; (iv) to compute the amount of benefits that are payable to any Employee or beneficiary in accordance with the provisions of the Plan, and to determine the person or persons to whom those benefits will be paid; and (v) to authorize the payment of benefits from the Plan. III. ELIGIBILITY TO PARTICIPATE Each individual who is an Employee of the Corporation, or of any Subsidiary, shall be initially eligible to participate in the Plan. Notwithstanding the above, the identity of the Employees who will be entitled to receive grants of Incentive Units under this Plan or exchange Options for Incentive Units shall be determined by the Board. No individual shall automatically be entitled to receive a grant of Incentive Units or exchange Options for Incentive Units solely because he is classified as an Employee. IV. INCENTIVE UNITS (a) Grant of Incentive Units. The Committee may, in its sole discretion, grant Incentive Units to any one or more Employees. The number of Incentive Units granted to each Employee shall be determined by the Committee. Incentive Units may only be 5 6 granted on a Valuation Date. Unless otherwise determined by the Committee, in its sole discretion, subject to adjustment as provided in Section IV(c) below and except for Incentive Units granted in exchange for Options described in Section IV(b) below, the "Initial Value" of any Incentive Unit granted under the Plan shall be equal to the value of such Incentive Unit determined (under Section I(m) hereof) as of the Valuation Date on which such Incentive Unit is granted. Subject to adjustment as provided in Section IV(c) below, the aggregate maximum number of Incentive Units that may be granted under this Plan is 1,000,000. (b) Exchange of Options for Incentive Units. The Committee may permit any one or more Employees to exchange Options for Incentive Units on a Valuation Date. The number of Incentive Units to be received by each Employee in exchange for Options, and the number of Options that can be exchanged for Incentive Units, shall be determined by the Committee in its sole discretion. In the case of Incentive Units granted in exchange for Options, the "Initial Value" of any such Incentive Unit shall be the amount shown on Schedule 1 hereto opposite the date on which the Option exchanged therefor was originally granted (e.g., January 1, 1996 or such other applicable later date) in lieu of the Initial Value on the Valuation Date coinciding with the date of grant of the Incentive Unit. (c) Recapitalization, Etc. In the event there is any change in the outstanding common stock of the Corporation by reason of any reorganization, recapitalization, stock split, stock dividend, combination of shares, increase or decrease in the number of outstanding shares or otherwise (including that a sale of all or substantially all of the assets of its common stock shall occur or be pending), there shall be substituted for, added to or subtracted from each Incentive Unit then outstanding under the Plan the number of additional or partial Incentive Units that the Board determines accurately reflects the effect of such reorganization, recapitalization, stock split, stock dividend, share combination or other such event. Likewise, the Initial Value of each Incentive Unit shall also be adjusted by the Board if it determines that such adjustment is appropriate. (d) Vesting in Incentive Units. The Incentive Units granted to an Employee or received by an Employee in exchange for Options shall vest as determined by the Committee, in its sole discretion. In the absence of any action by the Committee to select a different vesting schedule, Incentive Units shall vest cumulatively, in twenty percent (20%) increments, on each anniversary of the date such Incentive Units were granted to the Employee or received in exchange for Options and such vesting shall end upon the termination of an Employee's employment with the Corporation or any Subsidiary for any reason whatsoever; provided, however, that solely with respect to Incentive Units granted in exchange for Options as provided in Section IV(b) above, such Incentive Units shall proportionally retain the vested status and the vesting schedule of the Options exchanged therefor. Notwithstanding the foregoing, (i) if, after a Change in Control of the Corporation, an Employee's employment with the Corporation or any Subsidiary is terminated by the Corporation (or its applicable Subsidiary) for any reason other than Good Cause, is terminated as a result of death or permanent disability or is terminated by the Employee for Good Reason, such Incentive Units will become fully and immediately 6 7 vested and payable in cash (pursuant to the terms of Section IV(f) hereof) and (ii) such Incentive Units, to the extent not then exercised, shall become immediately forfeited and totally unexercisable upon the termination of an Employee's employment with the Corporation or any Subsidiary for Good Cause (without regard to whether a Change in Control of the Corporation has occurred). (e) Exercise of Incentive Units. Subject to the following, an Employee may exercise his vested Incentive Units at such times as are determined by the Committee in its sole discretion (an "Exercise Date"). Notwithstanding the preceding sentence, and subject to both the immediate payment and the forfeiture rules set forth in Section IV(d) hereof, no Incentive Unit may be exercised after the earlier of (i) the sixth (6th) anniversary of the date the Incentive Unit is granted or (ii) the later of (A) one year after the Employee's termination of employment with the Corporation or any Subsidiary due to his (1) death, (2) permanent disability or (3) Retirement or (B) ninety (90) days after the Employee's termination of employment for any other reason. Any and all of an Employee's Incentive Units that are not timely exercised shall become null and void and totally unexercisable. Except in the case of a termination of employment following a Change of Control of the Corporation, an Employee shall exercise his vested Incentive Units by completing a Notice of Exercise Form in the form of Exhibit A hereto, and delivering such form to the Corporation in accordance with the notice provisions set forth herein. (f) Value of Incentive Unit Upon Exercise. Upon the exercise of an Incentive Unit, the Employee shall receive from the Corporation in cash the excess, if any, of the "Final Value" of such Incentive Unit (which Final Value shall equal the value of the Incentive Unit determined under Section I(m) hereof as of the Valuation Date on or, in the event of an exercise between Valuation Dates, immediately preceding the Exercise Date) over the Initial Value of such Incentive Unit. Such cash payment shall be made by the Corporation within 60 days of its receipt of a properly completed Notice of Exercise Form as described in Section IV(e) above. V. MISCELLANEOUS PROVISIONS (a) Assignment or Transfer. No right to any accrued but unpaid Incentive Unit shall be sold, assigned, redeemed, pledged, transferred or otherwise encumbered by an Employee except by will or the laws of descent and distribution. (b) Withholding Taxes. The Corporation or the appropriate Subsidiary shall have the right to deduct from all cash payments hereunder any federal, state, local or foreign income and employment taxes required by law to be withheld with respect to such payments. (c) Costs and Expenses. The costs and expenses of administering the Plan shall be borne by the Corporation and shall not be charged against any particular award nor to any Employee receiving an Incentive Unit but shall be included in the Corporation's computation of consolidated net income or loss. 7 8 (d) Funding of Plan. The Plan shall be unfunded. The Corporation shall not be required to segregate any of its assets to assure the payment of any Incentive Unit under the Plan. Neither the Employees nor any other persons shall have any interest in any fund or in any specific asset or assets of the Corporation or any other entity by reason of any accrued but unpaid Incentive Unit. The interests of each Employee hereunder are unsecured and shall be subject to the general creditors of the Corporation and the applicable Subsidiaries. (e) Other Incentive Plans. The adoption of the Plan does not preclude the adoption by appropriate means of any other incentive plan for Employees of the Corporation or any Subsidiary. (f) Plurals and Gender. Where appearing in this Plan, masculine gender shall include the feminine and neuter genders, and the singular shall include the plural, and vice versa, unless the context clearly indicates a different meaning. (g) Headings. The headings and sub-headings in this Plan are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof. (h) Severability. In case any provision of this Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein. (i) Limitations on Liability. Neither the Corporation nor any Subsidiary shall be responsible in any way for any action or omission of the Board, the Committee, or any other fiduciaries in the performance of their duties and obligations as set forth in this Plan. Furthermore, neither the Corporation nor any Subsidiary shall be responsible for any act or omission of any of their agents, or with respect to reliance upon advice of their counsel, provided that the Corporation and/or the appropriate Subsidiary relied in good faith upon the action of such agent or the advice of such counsel. Neither the Corporation, any Subsidiary, the Board, the Committee, nor any agents, employees, officers, directors or stockholders of any of them, nor any other person, shall have any liability or responsibility with respect to this Plan, except as expressly provided herein. (j) Incapacity. If the Committee shall receive evidence satisfactory to it that a person entitled to receive payment of, or exercise, any Incentive Unit is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such Incentive Unit and to give a valid release thereof, and that another person or an institution is then maintaining or has custody of such person and that no guardian, committee or other representative of the estate of such person shall have been duly appointed, the Committee may make payment of such Incentive Unit otherwise payable to such person to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the 8 9 minor or a trust company), and the release by such other person or institution shall be a valid and complete discharge for the payment or exercise of such Incentive Unit. (k) Cooperation of Parties. All parties to this Plan and any person claiming any interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary or desirable for carrying out this Plan or any of its provisions. (l) Governing Law. All questions pertaining to the validity, construction and administration of the Plan shall be determined in accordance with the laws of the State of New Jersey, without giving effect to conflict of law principles. (m) Nonguarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employment between the Corporation or any Subsidiary and any Employee, as a right of any Employee to be continued in the employment of the Corporation or any Subsidiary, or as a limitation on the right of the Corporation or any Subsidiary to discharge any of its Employees, at any time, with or without cause. (n) Notices. Each notice relating to this Plan shall be in writing and delivered in person, by recognized overnight courier or by certified mail to the proper address. Except as otherwise provided in any Incentive Unit award agreement with respect to the exercise thereunder, all notices to the Corporation or the Committee shall be addressed to it at l361 Alps Road, Wayne, New Jersey 07470, Attn: Vice President-Human Resources. All notices to Employees, former Employees, beneficiaries or other persons acting for or on behalf of such persons shall be addressed to such person at the last address for such person maintained in the Corporation's records. VI. AMENDMENT OR TERMINATION OF PLAN The Board may amend the Plan from time to time or suspend or terminate the Plan at any time. In the event the Plan is terminated for any reason, the vesting, exercise, and expiration provisions, as described in this Plan, for all Incentive Units granted up to and including the date of the termination of the Plan, will remain in effect. 9 EX-10.10 11 y46546ex10-10.txt AMENDMENT TO TAX SHARING AGREEMENT 1 EXHIBIT 10.10 AMENDMENT TO TAX SHARING AGREEMENT AMENDMENT TO TAX SHARING AGREEMENT (the "Amendment"), entered into as of the 19th day of March, 2001, by and between G-I Holdings Inc. (formerly GAF Building Materials Corporation), a Delaware corporation ("G-I Holdings") and Building Materials Corporation of America ("BMC"). WHEREAS, G-I is the successor by merger to GAF Corporation and G-I Holdings Inc., both of which corporations were parties to the Tax Sharing Agreement entered into as of the 31st day of January, 1994, by and among GAF Corporation, G-I Holdings Inc. and BMC (the "Agreement"); WHEREAS, G-I has become the successor common parent of the affiliated group of corporations referred to in the Agreement; WHEREAS, the total estimated payments made by BMC to G-I with respect of taxable year 2000 were in excess of the liability of BMC to G-I pursuant to paragraph 2(b) of the Agreement for such taxable year (the "Excess Payments"); WHEREAS, on January 5, 2001, G-I filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey in Newark, New Jersey, and BMC is not included in the bankruptcy filing; WHEREAS, G-I and BMC wish to amend the Agreement to provide for the offsetting of such Excess Payments against any future obligation of BMC to make payments to G-I pursuant to the Agreement up to the total amount of the Excess Payments in consideration of G-I agreeing to continue filing consolidated federal income tax returns that include the BMC Group (as that term is defined in the Agreement); NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants contained herein, it is hereby agreed as follows: 1. G-I and BMC reaffirm their rights and obligations under the Agreement and agree that the Agreement shall remain in effect subject to the modifications made by this Amendment. 2. BMC shall be permitted to offset the Excess Payments against any future obligation of BMC to make payments to G-I under the Agreement up to the total amount of the Excess Payments. 2 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. G-I HOLDINGS INC. By: /s/ Richard A. Weinberg ------------------------------------------------- Richard A. Weinberg Chief Executive Officer, President, General Counsel and Secretary BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ John F. Rebele ------------------------------------------------- John F. Rebele Vice President and Chief Financial Officer EX-10.12 12 y46546ex10-12.txt CREDIT AGREEMENT 1 Exhibit 10.12 ------------- CREDIT AGREEMENT BY AND AMONG BUILDING MATERIALS CORPORATION OF AMERICA, THE LENDERS PARTY HERETO, AND THE BANK OF NEW YORK, AS SWING LINE LENDER AND AS ADMINISTRATIVE AGENT WITH BNY CAPITAL MARKETS, INC., AS LEAD ARRANGER AND BOOKRUNNER ---------------- $100,000,000 ---------------- DATED AS OF DECEMBER 4, 2000 2 CREDIT AGREEMENT, dated as of December 4, 2000, by and among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Borrower"), the lenders party hereto (together with their respective assigns, the "Lenders", each a "Lender") and THE BANK OF NEW YORK, as agent for the Lenders (in such capacity, the "Administrative Agent") and as swing line lender (in such capacity, the "Swing Line Lender"). 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1.1. Definitions As used in this Agreement, terms defined in the preamble have the meanings therein indicated, and the following terms have the following meanings: "ABR Advances": the Swing Line Loans and the Revolving Credit Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Alternate Base Rate. "Accountants": Arthur Andersen LLP (or any successor thereto), or such other firm of certified public accountants of recognized national standing selected by the Borrower and reasonably satisfactory to the Administrative Agent. "Accumulated Funding Deficiency": as defined in Section 302 of ERISA. "Acquisition": with respect to the Borrower or any Subsidiary of the Borrower, the purchase or other acquisition by such Person, by any means whatsoever (including through a merger, dividend or otherwise and whether in a single transaction or in a series of related transactions), of (i) any Capital Stock of any other Person (other than a then existing Subsidiary of the Borrower) if, immediately thereafter, such other Person would be either a Subsidiary of such Person or otherwise under the control of such Person, or (ii) any business, going concern or division or segment of any other Person (other than the Borrower or any other Subsidiary of the Borrower), or all or substantially all of the assets of any of the foregoing. "Advance": with respect to a Loan, an ABR Advance or a Eurodollar Advance, as the case may be. "Affected Advance": as defined in Section 3.9. "Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (i) to vote 10% or more of the securities or other interests having ordinary voting power for the election of directors or other managing Persons thereof or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. 3 "Affiliated Fund": with respect to any Person, any mutual fund that is advised or managed by (a) such Person, (b) a Fund Affiliate of such Person or (c) an entity or Fund Affiliate of an entity that administers or manages such Person. For purposes of this definition, "Fund Affiliate" means, with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person, each officer, director, general partner or joint-venturer, Affiliated Fund, adviser or manager of such Person, and each Person who is the beneficial owner of 5% or more of any class of Voting Shares of such Person. For the purposes of this definition, "control " means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Affiliated Fund Distressed Debt Group": each mutual fund and each Affiliated Fund of such mutual fund, in each case whose primary stated purpose is the purchase of distressed debt. "Aggregate Credit Exposure": at any time, the sum at such time of (i) the outstanding principal balance of the Revolving Credit Loans of all Lenders, plus (ii) the outstanding principal balance of the Swing Line Loans plus (iii) an amount equal to the Letter of Credit Exposure of all Lenders. "Aggregate Revolving Credit Commitment Amount": at any time, the sum at such time of the Revolving Credit Commitment Amounts of all Lenders. "Aggregate Voting Exposure": the sum of (i) the Aggregate Revolving Credit Commitment Amount, (ii) the outstanding principal amount of the Chase Platinum Substitute Note and (iii) the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC. "Agreement": this Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Alternate Base Rate": on any date, a rate of interest per annum equal to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date. "Alternate DIP Facility": as defined in Section 11.22. "Annual Asbestos Basket": as defined in Section 8.15. "Appeal Security": cash, letters of credit or any other security deposited by the Borrower or any of its Subsidiaries on or after the Closing Date to secure any appeal bond or similar instrument in connection with any asbestos litigation. - 2 - 4 "Appeal Security Drawn Amount": an amount equal to the aggregate amount of all Appeal Security deposited on or after the Closing Date that has been drawn by the holder of the applicable appeal bond or similar instrument. "Appeal Security Undrawn Amount": an amount equal to (i) the aggregate original amount of all Appeal Security deposited on or after the Closing Date plus (ii) the amount of each increase to the face amount of any letter of credit constituting Appeal Security minus (iii) the sum of, without duplication (A) the amount of each reduction to the face amount of any such letter of credit not resulting from any drawing thereunder, (B) the undrawn face amount of any such letter of credit that has been terminated, and (C) the undrawn face amount of any such Appeal Security that has been returned to the Borrower or any of its Subsidiaries. "Applicable Margin": a rate per annum equal to (i) with respect to ABR Advances, 0.00%, and (ii) with respect to Eurodollar Advances, 2.64%. "Approved Bank": any bank whose (or whose parent company's) unsecured non-credit supported short-term commercial paper rating from (i) Standard & Poor's is at least A-1 or the equivalent thereof or (ii) Moody's is at least P-1 or the equivalent thereof. "Assignment": as defined in Section 11.7(c). "Assignment and Acceptance Agreement": an assignment and acceptance agreement executed by an assignor and an assignee, substantially in the form of Exhibit H. "Authorized Signatory": as to (i) any Person which is a corporation, the chairman of the board, the president, any vice president, the chief financial officer or any other officer (acceptable to the Administrative Agent) thereof and (ii) any Person which is not a corporation, the general partner or other managing Person (acceptable to the Administrative Agent) thereof. "BNY": The Bank of New York. "BNY Capital Markets": BNY Capital Markets, Inc. "BNY Rate": a rate of interest per annum equal to the rate of interest publicly announced in New York City by BNY from time to time as its prime commercial lending rate, such rate to be adjusted automatically (without notice) on the effective date of any change in such publicly announced rate. "Borrower Intercompany Investments": demand loans which are (i) made by the Borrower to or in any Guarantor or (ii) made by any Guarantor to or in the Borrower or to or in any other Guarantor and, in each case, evidenced by a Demand Note. "Borrowing Date": any Business Day on which (i) the Lenders make Revolving Credit Loans, (ii) the Swing Line Lender makes a Swing Line Loan or (iii) the Issuing Bank issues a Letter of Credit. - 3 - 5 "Borrowing Request": a request for Revolving Credit Loans or a Swing Line Loan in the form of Exhibit C-1, which shall contain, among other things, a certification as to the satisfaction of Section 6.3. "Business Day": (i) for all purposes other than as set forth in clause (ii) below, any day other than a Saturday, a Sunday or a day on which commercial banks located in New York City are authorized or required by law or other governmental action to close, and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Advances, any day which is a Business Day described in clause (i) above and which is also a day on which eurodollar funding between banks may be carried on in London, England. "Capital Expenditures": of any Person means expenditures (whether paid in cash or other consideration or accrued as a liability) for fixed or capital assets (excluding any capitalized interest and any such asset acquired in connection with normal replacement and maintenance programs to the extent properly charged to current operations and excluding any replacement assets to the extent acquired with the proceeds of insurance) made by such Person, all as determined in accordance with GAAP. "Capital Lease": a lease the obligations in respect of which are required to be capitalized by the lessee thereunder for financial reporting purposes in accordance with GAAP. "Capital Stock": as to any Person, all shares, interests, partnership interests, limited liability company interests, participations, rights in or other equivalents (however designated) of such Person's equity (however designated) and any rights, warrants or options exchangeable for or convertible into such shares, interests, participations, rights or other equity. "Cash Collateral Account": an account maintained by the Collateral Agent pursuant to the Security Agreement and entitled the "Building Materials Corporation of America Cash Collateral Account", provided that the name of such account shall be changed following the change of name of the Borrower. "Cash Equivalents": shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in full support thereof) having maturities of not more than six months from the date of acquisition, (ii) Dollar denominated domestic and Eurodollar time deposits, certificates of deposit and bankers acceptances of (x) any Lender or (y) any Approved Bank, in any such case with maturities of not more than six months from the date of acquisition, and (iii) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company with an unsecured non-credit supported short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's or at least P-1 or the equivalent by Moody's, or guaranteed by any industrial or financial company with a long term unsecured non-credit supported senior debt rating of at least A or A-2, or the equivalent, by Standard & Poor's - 4 - 6 or Moody's, as the case may be, and in each case maturing within six months after the date of acquisition, provided that such securities, time deposits, certificates of deposit, bankers acceptances and commercial paper have been issued in the United States, have been deposited in the Cash Collateral Account and in respect of which the Collateral Agent has a first priority perfected security interest therein. "Cash Management System": as defined in Section 3.4(d)(iii) of the Security Agreement. "Change of Control" means the occurrence of any of the following events: (i) prior to the time that at least 15% of the then outstanding Voting Shares of the Borrower or any Parent is publicly traded on a national securities exchange or in the NASDAQ (national market system), the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of majority voting power of the Voting Shares of the Borrower, whether as a result of issuance of securities of the Borrower or any of its Affiliates, any merger, consolidation, liquidation or dissolution of the Borrower or any of its Affiliates, any direct or indirect transfer of securities by any Permitted Holder or by any Parent or any of its Subsidiaries or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Shares of a corporation (the "specified corporation") held by any other corporation (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, a majority of the Voting Shares of the parent corporation); (ii) 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 (as defined in clause (i) above, except that a Person shall be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the Voting Shares of the Borrower or any Parent; provided that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the Voting Shares of the Borrower or such Parent than such other Person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election of a majority of the Managing Person of the Borrower or such Parent; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Managing Person of the Borrower or G-I Holdings Inc. (together with any new members whose election by the Managing Person of the Borrower or G-I Holdings Inc., or whose nominations for election by the shareholders of the Borrower or G-I Holdings Inc., was approved by a vote of a majority of the members of such Managing Person then still in office who were either members 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 members of such Managing Person then in office. "Chase Platinum Agreement": the agreement, from time to time in effect, between The Chase Manhattan Bank and the Borrower providing for the leasing to the Borrower of 11,329 ounces of platinum. - 5 - 7 "Chase Platinum Exposure": with respect to any Voting Lender, the amount of the outstanding principal amount of the Chase Platinum Substitute Note held by such Voting Lender. "Chase Platinum Obligations": the obligations of the Borrower under the Chase Platinum Substitute Note. "Chase Platinum Substitute Note": the note, dated as of the Effective Date, made by the Borrower to The Chase Manhattan Bank evidencing (i) the delivery of 11,329 ounces of platinum to The Chase Manhattan Bank in satisfaction of the Chase Platinum Agreement and (ii) the loan made by The Chase Manhattan Bank to the Borrower in an amount equal to the Borrower's cost of purchase of such platinum as described in such note, in form and substance acceptable to the Administrative Agent. "Closing Date": December 4, 2000. "Code": the Internal Revenue Code of 1986, as the same may be amended from time to time, or any successor thereto, and the rules and regulations issued thereunder, as from time to time in effect. "Collateral": means any and all "Collateral" as defined in any applicable Security Document. "Collateral Agent": means BNY, as Collateral Agent under the Collateral Agent Agreement. "Collateral Agent Agreement": means the Collateral Agent Agreement, substantially in the form of Exhibit G, among the (i) Administrative Agent, (ii) the Administrative Agent under, and as defined in, the Existing Credit Agreement, (iii) the Collateral Agent, (iv) each trustee under each Senior Note Indenture, (v) The Chase Manhattan Bank, in connection with the Chase Platinum Substitute Note, and (vi) Fleet National Bank, in connection with the Fleet LC Agreement. "Commitment": a Revolving Credit Commitment, the Letter of Credit Commitment or the Swing Line Commitment, as the case may be. "Commitment Fee": as defined in Section 3.2(a). "Commitment Percentage": with respect to any Lender as of any date, the percentage as of such date equal to such Lender's Revolving Credit Commitment Amount divided by the Aggregate Revolving Credit Commitment Amount (or, if no Commitments then exist, the percentage equal to such Lender's Revolving Credit Commitment Amount on the last day upon which Revolving Credit Commitments did exist divided by the Aggregate Revolving Credit Commitment Amount as in effect on such day). "Compensatory Interest Payment": as defined in Section 3.1(c). - 6 - 8 "Compliance Certificate": a certificate substantially in the form of Exhibit E. "Consolidated": the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "Consolidated EBITDA": for any period, net income of the Borrower and its Subsidiaries determined on a Consolidated basis in accordance with GAAP for such period plus, to the extent not excluded (as set forth below) from net income, the sum of, without duplication, (i) Consolidated Interest Expense, (ii) provision for income taxes of the Borrower and its Subsidiaries, and (iii) depreciation, amortization and other non-cash charges of the Borrower and its Subsidiaries. For purposes of this definition the following shall be excluded for purposes of calculating net income: (a) extraordinary gains and losses, (b) non-recurring non-cash charges relating to the closing of the facilities described in Section 8.4(i) and non-recurring severance costs related thereto for the fiscal quarter ended December 31, 2000 in an aggregate amount not exceeding $2,300,000, (c) realized losses from the sale at any time on or after October 2, 2000 of Marketable Securities, such Marketable Securities itemized in the Consolidated Balance Sheet of the Borrower for the fiscal quarter ended October 1, 2000 under the line items entitled "Investments in Available For Sale Securities" and "Investments in Trading Securities", (d) the one time charge related to an increase in the warranty reserve for the fiscal quarter ended December 31, 2000 in an amount not exceeding $15,000,000, (e) the non-recurring charge in an aggregate amount not exceeding $3,000,000 relating to the modification of the Borrower's employee stock purchase program in existence on the Closing Date and (f) non-cash charges relating to stock options or related plans given to employees of the Borrower and its Subsidiaries. "Consolidated Interest Expense": for any period, cash interest expense of the Borrower and its Subsidiaries determined on a Consolidated basis in accordance with GAAP. "Contingent Obligation": as to any Person (a "secondary obligor"), any obligation of such secondary obligor (i) guaranteeing or in effect guaranteeing any return on any investment made by another Person, or (ii) guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or other obligation (a "primary obligation") of any other Person (a "primary obligor") in any manner, whether directly or indirectly, including any obligation of such secondary obligor, whether contingent, (a) to purchase any primary obligation or any Property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of a primary obligor, (c) to purchase Property, securities or services primarily for the purpose of assuring the beneficiary of any primary obligation of the ability of a primary obligor to make payment of a primary obligation, (d) otherwise to assure or hold harmless the beneficiary of a primary obligation against loss in respect thereof, and (e) in respect of the liabilities of any partnership in which a secondary obligor is a general partner, except to the extent that such liabilities of such partnership are nonrecourse to such secondary obligor and its separate Property, provided, however, that the term "Contingent Obligation" shall not include the indorsement of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation of a - 7 - 9 Person shall be deemed to be an amount equal to the stated or determinable amount of a primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. "Control Person": as defined in Section 3.6. "Conversion Date": the date on which: (i) a Eurodollar Advance is converted to an ABR Advance, (ii) an ABR Advance is converted to a Eurodollar Advance or (iii) a Eurodollar Advance is converted to a new Eurodollar Advance. "Credit Exposure": with respect to any Lender as of any date, the sum as of such date of (i) the outstanding principal balance of such Lender's Revolving Credit Loans, (ii) such Lender's Swing Line Exposure, and (iii) such Lender's Letter of Credit Exposure. "Credit Party": the Borrower and each Guarantor. "Debt Obligations": as defined in Section 9.1(f). "Default": any event or condition which constitutes an Event of Default or which, with the giving of notice, the lapse of time, or any other condition, would, unless cured or waived, become an Event of Default. "Demand Note": a demand promissory note, in the form of Exhibit L, endorsed in blank and pledged to the Collateral Agent pursuant to the Security Documents. "Depositary Control Agreement": an agreement among a Credit Party, a Qualified Depositary Institution and the Collateral Agent substantially in the form of Exhibit M. "DIP Facility": as defined in Section 11.22. "Disbursement Account No. 1": as defined in the Security Agreement. "Disbursement Account No. 2": as defined in the Security Agreement. "Disbursement Account No. 1 Cash": cash on deposit in Disbursement Account No. 1. "Disbursement Account No. 2 Cash": cash on deposit in Disbursement Account No. 2. "Disposition": with respect to any Person, any sale, assignment, transfer or other disposition by such Person, by any means, of (i) the Capital Stock of any other Person, (ii) any business, going concern or division or segment thereof, or (iii) any other Property of such Person. - 8 - 10 "Dollars" and "$": lawful currency of the United States. "Effective Date": the date on which all of the conditions set forth in Section 5 have been satisfied. "Employee Benefit Plan": an employee benefit plan within the meaning of Section 3(3) of ERISA maintained, sponsored or contributed to by the Borrower, any of its Subsidiaries or any ERISA Affiliate. "Environmental Laws": means all applicable laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, or binding agreements issued, promulgated or entered into by any Governmental Authority, relating to the environment, preservation or reclamation of natural resources, or the management or release of any Hazardous Material. "Environmental Liability": means, as to any Person, any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of such Person directly or indirectly resulting from or based upon (i) violation of any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) exposure to any Hazardous Materials, (iv) the release or threatened release of any Hazardous Materials into the environment or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations issued thereunder, as from time to time in effect. "ERISA Affiliate": when used with respect to an Employee Benefit Plan, ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans, any Person which is a member of any group of organizations within the meaning of Sections 414(b) or (c) of the Code (or, solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, Sections 414(m) or (o) of the Code) of which the Borrower or any of its Subsidiaries is a member. "Eurodollar Advances": collectively, the Revolving Credit Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Eurodollar Rate. "Eurodollar Rate": with respect to each Eurodollar Advance, a rate of interest per annum, as determined by the Administrative Agent, obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%): (a) the rate, as reported by BNY to the Administrative Agent, quoted by BNY to leading banks in the interbank eurodollar market as the rate at which BNY is offering Dollar deposits in an amount equal approximately to the Eurodollar Advance of BNY to which such Interest Period - 9 - 11 shall apply for a period equal to such Interest Period, as quoted at approximately 11:00 a.m. two Business Days prior to the first day of such Interest Period, by (b) a number equal to 1.00 minus the aggregate of the then stated maximum rates during such Interest Period of all reserve requirements (including marginal, emergency, supplemental and special reserves), expressed as a decimal, established by the Board of Governors of the Federal Reserve System and any other banking authority to which BNY and other major United States money center banks are subject, in respect of eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board of Governors of the Federal Reserve System), without benefit of credit for proration, exceptions or offsets which may be available from time to time to any Lender. "Event of Default": as defined in Section 9.1. "Exchange Act": the Securities Exchange Act of 1934, as amended. "Excluded Taxes": collectively, in the case of any Indemnified Tax Person, (i) Taxes imposed on the net income of such Indemnified Tax Person by the jurisdiction in which such Indemnified Tax Person has its situs of organization or in which such Indemnified Tax Person's lending office is located or is engaged in business, (ii) Taxes imposed on the net income of such Indemnified Tax Person (other than those Taxes described in clause (i)), except to the extent that such Taxes would not have been incurred but for the situs of organization, any place of business or the activities of the Borrower or any of its Subsidiaries in the jurisdiction imposing the Tax, (iii) Taxes (other than withholding Taxes) imposed on or measured by the gross income, gross receipts or capital of such Indemnified Tax Person, except to the extent that such Taxes would not have been incurred but for the situs of organization, any place of business or the activities of the Borrower or any of its Subsidiaries in the jurisdiction imposing the Tax, (iv) any withholding Taxes imposed with respect to a payment to a person who has become a Lender as a result of an Assignment to the extent such withholding arises as a result of Section 881(c)(3)(A) of the Code, (v) any Tax imposed on a transfer of a Note, and (vi) any Tax imposed as a result of the willful misconduct of such Indemnified Tax Person. "Existing Credit Agreement": the Amended and Restated Credit Agreement, dated as of December 4, 2000, by and among the Borrower, the lenders party thereto, Fleet National Bank, as documentation agent, Bear Stearns Corporate Lending Inc., as syndication agent, and BNY, as swing line lender and as administrative agent. "Federal Funds Rate": for any day, a rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if - 10 - 12 such rate is not so published for any day, the Federal Funds Rate for such day shall be the average of the quotations for such day on such transactions received by BNY as determined by BNY and reported to the Administrative Agent. "Fees": as defined in Section 2.12. "Financial Officer": as to any Person, the chief financial officer of such Person or such other officer as shall be satisfactory to the Administrative Agent. "Financial Statements": as defined in Section 4.13. "Fleet LC": the letter of credit in the amount of $3,551,781 issued by Fleet National Bank with respect to the Shafter, California IDB facility. "Fleet LC Agreement": collectively, (i) the Amended and Restated Reimbursement Agreement, dated as of December 4, 2000, between Fleet National Bank and Building Materials Manufacturing Corporation providing for the issuance of the Fleet LC, and (ii) the Parent Guarantee, dated as of December 4, 2000, pursuant to which the Borrower unconditionally guarantees to Fleet National Bank the obligations of Building Materials Manufacturing Corporation under the Amended and Restated Reimbursement Agreement described in clause (i) of this definition. "Fleet LC Exposure": with respect to any Voting Lender, the amount of the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC held by such Voting Lender. "Fronting Fees": as defined in Section 3.2(c). "Funded Current Liability Percentage": as defined in Section 401(a)(29) of the Code. "GAAP": generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statement by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination, consistently applied. "Governmental Authority": any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator. "Guarantor": at any time, any Subsidiary of the Borrower that is a party to the Subsidiary Guaranty. - 11 - 13 "Guaranty Documents": means the Subsidiary Guaranty and each other guaranty agreement, instrument or other document executed or delivered pursuant to Section 7.11 or 7.12 to guarantee any of the Obligations. "Hazardous Materials": means all substances or wastes regulated or characterized as explosive, radioactive, toxic, hazardous, contaminant or pollutant under Environmental Laws, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas and infectious or medical wastes. "Hedge Agreement": any swap agreement, cap agreement, collar agreement, futures contract, forward contract or similar agreement or arrangement entered into to protect against or mitigate the effect of fluctuations in interest rates, foreign exchange rates or prices of commodities used in the business of the Borrower and its Subsidiaries. "Highest Lawful Rate": as to any Lender or the Issuing Bank, the maximum rate of interest, if any, that at any time or from time to time may be contracted for, taken, charged or received by such Lender on the Note held by it or by the Issuing Bank pursuant to the Reimbursement Agreements, as the case may be, or which may be owing to such Lender or the Issuing Bank pursuant to the Loan Documents under the laws applicable to such Lender or the Issuing Bank and this transaction. "Included Taxes": all Taxes other than Excluded Taxes. "Indebtedness": as to any Person, at a particular time, all items which constitute, without duplication, (i) indebtedness for borrowed money, (ii) indebtedness in respect of the deferred purchase price of Property (other than trade payables incurred in the ordinary course of business), (iii) indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv) obligations with respect to any conditional sale or title retention agreement, (v) indebtedness arising under acceptance facilities and the amount available to be drawn under all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder to the extent such Person shall not have reimbursed the issuer in respect of the issuer's payment thereof, (vi) all liabilities secured by any Lien on any Property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (other than carriers', warehousemen's, mechanics', repairmen's or other like non-consensual statutory Liens arising in the ordinary course of business), (vii) obligations under Capital Leases, (viii) all obligations of such Person in respect of Capital Stock subject to mandatory redemption or redemption at the option of the holder thereof, in whole or in part, and (ix) all Contingent Obligations of such Person in respect of any of the foregoing. "Indemnified Liabilities": as defined in Section 11.5. "Indemnified Person": as defined in Section 11.8. "Indemnified Tax Person": the Administrative Agent, the Swing Line Lender, the Issuing Bank or any Lender. - 12 - 14 "Interest Coverage Ratio": at any date of determination, the ratio of Consolidated EBITDA to Consolidated Interest Expense, in each case for the four fiscal quarter period ending on such date or, if such date is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarter period. "Interest Payment Date": (i) as to any ABR Advance, the last day of each calendar month and each day that such ABR Advance is repaid or converted, (ii) as to any Swing Line Loan, the last day of each calendar month and the date on which the outstanding principal balance of such Swing Line Loan shall become due and payable in accordance with Section 2.3, (iii) as to any Eurodollar Advance, (x) the last day of each calendar month and (y) the last day of the Interest Period with respect to such Eurodollar Advance, and (iv) as to all Advances, the Maturity Date, provided that, for purposes of clauses (i), (ii) and (iii)(x) of this definition, if any such Interest Payment Date would otherwise end on a day that is not a Business Day, such Interest Payment Date shall be extended to the next succeeding Business Day. "Interest Period": (a) subject to the provisions of Section 3.4, with respect to any Eurodollar Advance requested by the Borrower, the period commencing on, as the case may be, the Borrowing Date or Conversion Date with respect to such Eurodollar Advance and ending one, two, three or six months thereafter, as selected by the Borrower in its irrevocable Borrowing Request or its irrevocable Notice of Conversion, provided, however, that (i) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day and (ii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (b) subject to the provisions of Section 3.4, with respect to any Swing Line Loan requested by the Borrower, the period commencing on the Borrowing Date with respect to such Swing Line Loan and ending on or between one and five Business Days thereafter, as selected by the Borrower in its irrevocable Borrowing Request, provided, however, that (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, and (ii) the Borrower shall select Interest Periods so as not to have more than three different Interest Periods outstanding at any one time for all Swing Line Loans. "Invested Cash": means cash and Cash Equivalents (excluding System Cash, Disbursement Account No. 1 Cash and Disbursement Account No. 2 Cash). "Investments": as defined in Section 8.5. - 13 - 15 "Issuing Bank": BNY. "Lead Arranger": BNY Capital Markets. "Letter of Credit": as defined in Section 2.9(a). "Letter of Credit Commissions": as defined in Section 3.2(b). "Letter of Credit Commitment": the commitment of the Issuing Bank to issue Letters of Credit having an aggregate outstanding face amount up to $25,000,000, and the commitment of the Lenders to participate in the Letter of Credit Exposure as set forth in Section 2.10. "Letter of Credit Exposure": as of any date and in respect of any Lender, an amount equal to (i) the sum as of such date, without duplication, of (x) the aggregate undrawn face amount of all outstanding Letters of Credit, (y) the aggregate amount of unpaid drafts drawn on all Letters of Credit, and (z) the aggregate unpaid Reimbursement Obligations (after giving effect to any Revolving Credit Loans made on such date to pay any such Reimbursement Obligations), multiplied by (ii) such Lender's Commitment Percentage. "Letter of Credit Participation": with respect to each Lender, its obligations to the Issuing Bank hereunder. "Letter of Credit Request": a request in the form of Exhibit C-2, which shall contain, among other things, a certification as to the satisfaction of Section 6.3. "Lien": any mortgage, pledge, hypothecation, assignment, deposit or preferential arrangement, encumbrance, lien (statutory or other), or other security agreement or security interest of any kind or nature whatsoever, including any conditional sale or other title retention agreement (other than an operating lease) and any capital or financing lease having substantially the same economic effect as any of the foregoing. "Loan": a Revolving Credit Loan or a Swing Line Loan, as the case may be. "Loan Documents": collectively, this Agreement, the Notes, the Reimbursement Agreements, the Guaranty Documents, the Security Documents and all other agreements, instruments and documents executed or delivered in connection herewith, in each case as amended, supplemented or otherwise modified from time to time. "Loans": the Revolving Credit Loans and/or the Swing Line Loans, as the case may be. "Management Agreement": the Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF Corporation, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, International Specialty Products Inc., GAF Building Materials Corporation, GAF Broadcasting - 14 - 16 Company, Inc., the Borrower and ISP Opco Holdings Inc., and as the same may be further amended, supplemented or otherwise modified from time to time in accordance with Section 8.10. "Managing Person": with respect to any Person that is (i) a corporation, its board of directors, (ii) a limited liability company, its board of control, managing member or members, (iii) a limited partnership, its general partner, (iv) a general partnership or a limited liability partnership, its managing partner or executive committee or (v) any other Person, the managing body thereof or other Person analogous to the foregoing. "Mandatory Borrowing": as defined in Section 2.3(c). "Margin Stock": any "margin stock", as defined in Regulation U of the Board of Governors of the Federal Reserve System, as amended, supplemented or otherwise modified from time to time. "Marketable Securities": liquid marketable securities (other than Cash Equivalents) owned by the Borrower and its Subsidiaries (free and clear of any restriction) which are traded on a major United States exchange (which shall include, without limitation, the NASDAQ (national market system)). "Material Adverse Change": a material adverse change in (i) the financial condition, operations, business, prospects or Property of (A) the Borrower or (B) the Borrower and its Subsidiaries taken as a whole (which in the case of clauses (A) and (B) shall exclude the status of asbestos related claims (other than asbestos related claims made by any Governmental Authority under any Environmental Laws) against the Borrower or any of its Subsidiaries), (ii) the ability of the Borrower or any of its Subsidiaries to perform any of its obligations under the Loan Documents to which it is a party or (iii) the ability of the Administrative Agent and the Lenders to enforce any of the Loan Documents. "Material Adverse Effect": a material adverse effect on (i) the financial condition, operations, business, prospects or Property of (A) the Borrower or (B) the Borrower and its Subsidiaries taken as a whole (which in the case of clauses (A) and (B) shall exclude the status of asbestos related claims (other than asbestos related claims made by any Governmental Authority under any Environmental Laws) against the Borrower or any of its Subsidiaries), (ii) the ability of the Borrower or any of its Subsidiaries to perform any of its obligations under the Loan Documents to which it is a party or (iii) the ability of the Administrative Agent and the Lenders to enforce any of the Loan Documents. "Material Agreements": collectively, the Senior Note Indentures, the Tax Sharing Agreement, the Management Agreement and the Receivables Purchase Documents. "Maturity Date": August 18, 2003, or such earlier date on which the Revolving Credit Notes shall become due and payable, whether by acceleration or otherwise. - 15 - 17 "Moody's": Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency or, if neither Moody's Investors Service, Inc. nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Required Lenders. "Mortgage": means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Administrative Agent. "Mortgaged Property": means, initially, each parcel of real property and the improvements thereto owned by the Borrower or any Guarantor and identified on Schedule 1.1(m), and includes each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 7.11 or 7.12. "Multiemployer Plan": a Pension Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Note": a Revolving Credit Note or the Swing Line Note, as the case may be. "Notes": the Revolving Credit Notes and/or the Swing Line Note, as the case may be. "Notice of Conversion": a notice substantially in the form of Exhibit D. "Obligations": as defined in the Security Agreement. "Organizational Documents": as to any Person which is (i) a corporation, the certificate or articles of incorporation and by-laws of such Person, (ii) a limited liability company, the limited liability company agreement or similar agreement of such Person, (iii) a partnership, the partnership agreement or similar agreement of such Person, or (iv) any other form of entity or organization, the organizational documents analogous to the foregoing. "Outstanding Percentage": as of any date and with respect to each Lender, the Issuing Bank and the Swing Line Lender, as the case may be, a fraction the numerator of which is the Outstandings of such Lender, the Issuing Bank or the Swing Line Lender, as applicable, on such date, and the denominator of which is the aggregate Outstandings of all Lenders, the Issuing Bank and the Swing Line Lender on such date. "Outstandings": as of any date, an amount equal to (a) with respect to the Issuing Bank, (i) the aggregate sum of all drafts honored under all Letters of Credit after the Effective Date minus (ii) all payments made after the Effective Date to the Issuing Bank by the Borrower and the Lenders in reimbursement thereof or participation therein, as the case may be, (b) with respect to the Swing Line Lender, (i) the outstanding principal balance on such date of all Swing Line Loans minus (ii) the aggregate sum of all payments by any Lender in participation of such Swing Line Loans, and (c) with respect to each - 16 - 18 Lender, the outstanding principal balance on such date of all the Revolving Credit Loans of such Lender plus (i) the aggregate sum of all payments by such Lender in participation of the Reimbursement Obligations and the Swing Line Loans minus (ii) all reimbursements received by such Lender in respect thereof. "Parent Letter of Credit Amount": as defined in the Existing Credit Agreement. "Parents": collectively, (i) G-I Holdings Inc. and any Subsidiary of G-I Holdings Inc. (and their respective successors), in each case so long as such corporation owns directly or indirectly a majority of the Voting Shares of the Borrower, and (ii) solely for purpose of the definition of "Change of Control", any other Person that may own directly or indirectly a majority of the Voting Shares of the Borrower. "Payroll Accounts": deposit accounts maintained in the ordinary course of business by the Borrower or any of its Subsidiaries for the purpose of paying payroll and related benefit costs and remitting withholding and other payroll taxes and costs. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to the functions thereof. "Pension Plan": at any date of determination, any Employee Benefit Plan (including a Multiemployer Plan), the funding requirements of which (under Section 302 of ERISA or Section 412 of the Code) are, or at any time within the six years immediately preceding such date, were in whole or in part, the responsibility of the Borrower, any of its Subsidiaries or any ERISA Affiliate. "Permitted Holders": collectively, (i) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the Voting Shares is owned by Samuel J. Heyman, his heirs, administrators or executors and (ii) any Person controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. "Permitted Lien": a Lien permitted to exist under Section 8.2. "Person": any individual, firm, partnership, limited liability company, joint venture, corporation, association, business enterprise, joint stock company, unincorporated association, trust, Governmental Authority or any other entity, whether acting in an individual, fiduciary, or other capacity, and for the purpose of the definition of "ERISA Affiliate", a trade or business. "Petty Cash Accounts": deposit accounts maintained in the ordinary course of business by the Borrower or any of its Subsidiaries for the purpose of reimbursing employees for ordinary course expenditures or for other incidental expenses, such deposit accounts for the Borrower and its Subsidiaries not to exceed $100,000 in the aggregate. - 17 - 19 "Prohibited Transaction": a transaction which is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA. "Property": all types of real, personal, tangible, intangible or mixed property. "Proposed Lender": as defined in Section 3.12. "Qualified Depositary Institution": any commercial bank organized under the laws of the United States of America or any State thereof that (i) is listed on Schedule 1.1(q) or (ii) either (x) has capital and surplus in excess of $50,000,000 or (y) is satisfactory to the Administrative Agent and, in either case, whose deposits are federally insured. "Receivables Purchase Documents": collectively, (i) the Pooling and Services Agreement, dated as of November 1, 1996, among the Borrower, BMCA Receivables Corporation and BNY, as trustee, as supplemented by the Series 1996-1 Supplement, dated as of November 1, 1996, and the Receivables Purchase Agreement, dated as of November 1, 1996, among the Borrower and BMCA Receivables Corporation, and (ii) any amendment, modification, waiver, extension or replacement of such documents on terms and conditions that could not reasonably be expected to (x) denigrate the value of the security interest of the Collateral Agent in the Capital Stock of the Receivables Subsidiary or in any other Collateral, including any accounts receivable of the Borrower or any of its Subsidiaries (other than the Receivables Subsidiary) not subject to the documents described in clause (i) of this definition, or (y) restrict the rights of the Collateral Agent to foreclose or otherwise pursue its remedies under the Security Agreement with respect to such Capital Stock or such other Collateral, in either case in comparison to such value or rights in existence immediately prior to such amendment, modification, waiver, extension or replacement under such documents (it being understood that advance rates, eligibility requirements, concentration limits and a maturity date (provided such maturity date is later than September 30, 2001) more favorable to the Receivables Subsidiary shall not be deemed to denigrate such value or restrict such rights), provided that the aggregate amount of indebtedness to be incurred under such documents shall not exceed $115,000,000. "Receivables Subsidiary": BMCA Receivables Corporation, a special-purpose Delaware corporation, or any other special-purpose Subsidiary of the Borrower hereafter created or acquired that deals exclusively with the purchase and sale of the receivables of the Borrower and its Subsidiaries as permitted by Section 8.5(i). "Regulatory Change": the occurrence of any of the following after the Effective Date: (i) the adoption of any treaty, constitution, law, rule or regulation, (ii) the issuance or promulgation of any directive, guideline or request from any Governmental Authority (whether or not having the force of law), or (iii) any change in the interpretation of any existing treaty, constitution, law, rule, regulation, directive, guideline or request by any Governmental Authority. "Reimbursement Agreement": as defined in Section 2.9(b). - 18 - 20 "Reimbursement Obligation": the obligation of the Borrower to reimburse the Issuing Bank for amounts drawn under a Letter of Credit. "Reportable Event": with respect to any Pension Plan, (i) any event set forth in Sections 4043(c) (other than a Reportable Event as to which the 30 day notice requirement is waived by the PBGC under applicable regulations), 4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an event requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to provide security to a Pension Plan under Section 401(a)(29) of the Code, or (iii) any failure to make any payment required by Section 412(m) of the Code. "Required Lenders": at any time (i) prior to the Revolving Credit Commitment Termination Date, Voting Lenders having Voting Exposures greater than or equal to 51% of the Aggregate Voting Exposure and (ii) on or after the Revolving Credit Commitment Termination Date, Voting Lenders having aggregate (x) Credit Exposures, (y) Chase Platinum Exposures and (z) Fleet LC Exposures greater than or equal to 51% of the Aggregate Voting Exposure (or, if there is no Credit Exposure, Chase Platinum Exposure or Fleet LC Exposure, Voting Lenders having Voting Exposures greater than or equal to 51% of the Aggregate Voting Exposure immediately prior to there being no Voting Exposure). "Responsible Officer": with respect to any Person, the Chairman of the Board, the President, the Chief Financial Officer, the Chief Executive Officer or the Treasurer of such Person. "Restricted Payment": as to any Person (i) any dividend or other distribution, direct or indirect, on account of any shares of Capital Stock or other equity interest in such Person now or hereafter outstanding (other than a dividend payable solely in shares of such Capital Stock to the holders of such shares), (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition, direct or indirect, of any shares of any class of Capital Stock or other equity interest in such Person now or hereafter outstanding, and (iii) any other loan or payment made by the Borrower or any of its Subsidiaries to any Parent or on behalf of any Parent (other than any payment made pursuant to the terms of the Tax Sharing Agreement). "Revolving Credit Commitment": in respect of any Lender, such Lender's undertaking during the Revolving Credit Commitment Period to make Revolving Credit Loans, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not exceeding the Revolving Credit Commitment Amount of such Lender. "Revolving Credit Commitment Amount": as of any date and with respect to any Lender, (i) the amount set forth adjacent to its name under the heading "Revolving Credit Commitment Amount" in Exhibit A on such date, (ii) in the event that such Lender is not listed in Exhibit A, the "Revolving Credit Commitment Amount" which such Lender shall have assumed from another Lender in accordance with Section 3.12 or 11.7 on or prior to such date, or (iii) the amount set forth in any Revolving Credit Commitment Supplement executed by such - 19 - 21 Lender, in each case as the same may be adjusted from time to time pursuant to Sections 2.6, 3.12 and 11.7. "Revolving Credit Commitment Period": the period from the Effective Date until the Revolving Credit Commitment Termination Date. "Revolving Credit Commitment Termination Date": the earlier of the Business Day immediately preceding the Maturity Date or such other date upon which the Revolving Credit Commitments shall have been terminated in accordance herewith. "Revolving Credit Loan" and "Revolving Credit Loans": as defined in Section 2.1. "Revolving Credit Note" and "Revolving Credit Notes": as defined in Section 2.2. "Sale-Leaseback Transaction": as defined in Section 8.13. "SEC": the Securities and Exchange Commission or any Governmental Authority succeeding to the functions thereof. "Secured Parties": as defined in the Security Agreement. "Security Agreement": means the Security Agreement, substantially in the form of Exhibit J, among the Borrower, the Subsidiary Guarantors and the Collateral Agent, for the benefit of the Secured Parties. "Security Documents": means the Security Agreement, the Collateral Agent Agreement, the Mortgages, the Depositary Control Agreements and each other security agreement, instrument or other document executed or delivered pursuant to Sections 7.11 or 7.12 or pursuant to the Security Agreement to secure any of the Obligations. "Senior Note Indentures": collectively, (i) the Indenture, dated as of December 9, 1996, between the Borrower and BNY, as trustee, pursuant to which 8-5/8% Senior Notes due 2006 were issued, (ii) the Indenture, dated as of October 20, 1997, between the Borrower and BNY, as trustee, pursuant to which 8% Senior Notes due 2007 were issued, (iii) the Indenture, dated as of July 17, 1998, between the Borrower and The Bank of New York, as trustee, pursuant to which 7.75% Senior Notes due 2005 were issued, (iv) the Indenture, dated as of December 3, 1998, between the Borrower and The Bank of New York, as trustee, pursuant to which 8.00% Senior Notes due 2008 were issued, and (v) the Indenture, dated as of July 5, 2000, between the Borrower and The Bank of New York, as trustee, pursuant to which 10.50% Senior Notes due 2002 were issued, as each Indenture described in clauses (i) - (iv) above has been supplemented by a First Supplemental Indenture, dated as of January 1, 1999, and by a Second Supplemental Indenture, dated the date of the Senior Note Consent Solicitations, pursuant to the terms of the Senior Note Consent Solicitation applicable to such Indenture, and as the Indenture described in clause (v) above has been supplemented by a First Supplemental Indenture, dated the date of the Senior - 20 - 22 Note Consent Solicitations, pursuant to the terms of the Senior Note Consent Solicitation applicable to such Indenture, and as each of the same may be further amended, supplemented or otherwise modified from time to time in accordance with Section 8.10. "Senior Note Indenture Consent Solicitations": means the consent solicitations distributed with respect to each Senior Note Indenture and substantially in the form of Exhibit K. "Solvent": with respect to any Person on a particular date, the condition that on such date, (i) the fair value of the Property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute an unreasonably small amount of capital. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability after taking into account probable payments by co-obligors. "Special Counsel": Bryan Cave LLP, special counsel to the Administrative Agent. "Standard & Poor's": Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency or, if neither such division nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Required Lenders. "Standby Letters of Credit": as defined in Section 2.9(a). "Subsidiary": as to any Person, any corporation, association, partnership, limited liability company, joint venture or other business entity of which such Person or any Subsidiary of such Person, directly or indirectly, either (i) in respect of a corporation, owns or controls more than 50% of the outstanding Capital Stock having ordinary voting power to elect a majority of the Managing Person thereof, irrespective of whether a class or classes shall or might have voting power by reason of the happening of any contingency, or (ii) in respect of an association, partnership, limited liability company, joint venture or other business entity, is entitled to share in more than 50% of the profits and losses, however determined. "Subsidiary Guaranty": the Subsidiary Guaranty, by and among the Subsidiaries party thereto and the Administrative Agent, substantially in the form of Exhibit I, as amended, supplemented or otherwise modified from time to time. - 21 - 23 "Swing Line Commitment": the undertaking of the Swing Line Lender during the Swing Line Commitment Period to make Swing Line Loans, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not in excess of the Swing Line Commitment Amount, and the commitment of the Lenders to participate therein as set forth in Section 2.3, as the same may be reduced pursuant to Section 2.6. "Swing Line Commitment Amount": $5,000,000. "Swing Line Commitment Period": the period from the Effective Date to, but excluding, the Swing Line Termination Date. "Swing Line Exposure": at any time, in respect of any Lender, an amount equal to the aggregate outstanding principal amount of the Swing Line Loans at such time multiplied by such Lender's Commitment Percentage at such time. "Swing Line Loan" and "Swing Line Loans": as defined in Section 2.3(a). "Swing Line Note": as defined in Section 2.4. "Swing Line Participation Amount": as defined in Section 2.3(d). "Swing Line Termination Date": the date which is fifteen days prior to the Maturity Date, or if earlier, the Revolving Credit Commitment Termination Date. "System Cash": means any cash of the Borrower and its Subsidiaries (other than the Receivables Subsidiary, provided that any cash of the Receivables Subsidiary that is distributed or otherwise paid to the Borrower or any of its other Subsidiaries shall constitute System Cash upon receipt by the Borrower or any such other Subsidiary) not deposited in the Cash Collateral Account, excluding (i) any cash deposited in Payroll Accounts in amounts not exceeding the amounts calculated by the Borrower to be reasonably sufficient to fund the next payroll and related benefit costs and remit withholding and other payroll taxes and related costs of the Borrower and its Subsidiaries, (ii) any cash deposited in Petty Cash Accounts, (iii) any cash deposited in Disbursement Account No. 1 in amounts calculated by the Borrower to be reasonably sufficient to cover checks drawn on and presented for payment against Disbursement Account No. 1 and transfers of funds (including ACH and wire transfers) out of Disbursement Account No. 1, in either case for the payment when due of costs, expenditures and obligations of the Borrower and its Subsidiaries permitted by this Agreement, and (iv) any cash deposited in Disbursement Account No. 2 for the payment when due of costs, expenditures and obligations of the Borrower and its Subsidiaries permitted by this Agreement, provided that cash in Disbursement Account No. 2 shall not exceed $1,000,000 at any time. "Tax": any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by a Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or assessed. - 22 - 24 "Tax Sharing Agreement": the Tax Sharing Agreement, dated as of January 31, 1994, among GAF Corporation, G-I Holdings Inc. and the Borrower, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.10. "Termination Event": with respect to any Pension Plan, (i) a Reportable Event, (ii) the termination of a Pension Plan, or the filing of a notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan amendment as a termination, in each case under Section 4041(c) of ERISA, (iii) the institution of proceedings to terminate a Pension Plan under Section 4042 of ERISA, or (iv) the appointment of a trustee to administer any Pension Plan under Section 4042 of ERISA. "Trade Letters of Credit": as defined in Section 2.9(a). "Trademark License Agreement": the Trademark License Agreement, dated as of April 12, 1989, by and between GAF Chemicals Corporation and GAF Building Materials Corporation. "Unfunded Pension Liabilities": with respect to any Pension Plan, at any date of determination, the amount determined by taking the accumulated benefit obligation, as disclosed in accordance with Statement of Accounting Standards No. 87, "Employers' Accounting for Pensions", over the fair market value of Pension Plan assets. "United States": the United States of America (including the States thereof and the District of Columbia). "Unqualified Amount": as defined in Section 3.1(c). "Unrecognized Retiree Welfare Liability": with respect to any Employee Benefit Plan that provides postretirement benefits other than pension benefits, the amount of the transition obligation, as determined in accordance with Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as of the most recent valuation date, that has not been recognized as an expense in an income statement of the Borrower and its Subsidiaries, provided that prior to the date such Statement is applicable to the Borrower, such amount shall be based on an estimate made in good faith of such transition obligation. "Upstream Transfers": as defined in Section 8.12. "U.S. Person": a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under any laws of the United States, or any estate or trust that is subject to United States federal income taxation regardless of the source of its income. - 23 - 25 "Voting Exposure": with respect to any Voting Lender, the sum of (i) the Revolving Credit Commitment Amount of such Voting Lender, (ii) the outstanding principal amount of the Chase Platinum Substitute Note held by such Voting Lender and (iii) the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC held by such Voting Lender. "Voting Lenders": the Lenders, The Chase Manhattan Bank under the Chase Platinum Substitute Note (and each other holder thereof), and Fleet National Bank under the Fleet LC Agreement (and each other holder thereof). "Voting Shares": with respect to any Person, all outstanding shares of any class or classes (however designated) of Capital Stock of such Person entitled to vote generally in the election of members of the Managing Person thereof. 1.2. Principles of Construction (a) All terms defined in a Loan Document shall have the meanings given such terms therein when used in the other Loan Documents or any certificate, opinion or other document made or delivered pursuant thereto, to the extent not otherwise provided therein. (b) As used in the Loan Documents and in any certificate, opinion or other document made or delivered pursuant thereto, accounting terms not defined in Section 1.1, and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to reflect such change in GAAP (subject to the approval of the Required Lenders), provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement (or as the Administrative Agent may reasonably request) setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. (c) The words "hereof", "herein", "hereto" and "hereunder" and similar words when used in a Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof, and Section, schedule and exhibit references contained therein shall refer to Sections thereof or schedules or exhibits thereto unless otherwise expressly provided therein. (d) The phrase "may not" is prohibitive and not permissive. (e) Unless the context otherwise requires, words in the singular number include the plural, and words in the plural include the singular. - 24 - 26 (f) Unless specifically provided in a Loan Document to the contrary, any reference to a time shall refer to such time in New York. (g) Unless specifically provided in a Loan Document to the contrary, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". (h) References in any Loan Document to a fiscal period shall refer to that fiscal period of the Borrower. (i) The words "include" and "including", when used in each Loan Document, shall mean that the same shall be included "without limitation", unless otherwise expressly provided therein. (j) Any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein). 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT 2.1. Revolving Credit Loans Subject to the terms and conditions hereof, each Lender severally (and not jointly) agrees to make revolving credit loans (each a "Revolving Credit Loan" and, as the context may require, collectively with all other Revolving Credit Loans of such Lender and with the Revolving Credit Loans of all other Lenders, the "Revolving Credit Loans") in Dollars to the Borrower from time to time during the Revolving Credit Commitment Period, provided that immediately after giving effect thereto (i) such Lender's Credit Exposure shall not exceed such Lender's Revolving Credit Commitment Amount, and (ii) the Aggregate Credit Exposure shall not exceed the Aggregate Revolving Credit Commitment Amount. During the Revolving Credit Commitment Period, the Borrower may borrow, prepay in whole or in part and reborrow under the Revolving Credit Commitments, all in accordance with the terms and conditions of this Agreement. Subject to the provisions of Sections 2.5 and 3.3, at the option of the Borrower, Revolving Credit Loans may be made as one or more (i) ABR Advances, (ii) Eurodollar Advances or (iii) any combination thereof. 2.2. Revolving Credit Notes The Revolving Credit Loans made by each Lender shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit B-1 (each, as indorsed or modified from time to time, a "Revolving Credit Note" and, collectively with the Revolving Credit Notes of all other Lenders, the "Revolving Credit Notes"), payable to the order of such Lender and dated the Effective Date. The outstanding principal balance of the Revolving Credit Loans shall be due and payable on the Revolving Credit Commitment Termination Date. - 25 - 27 2.3. Swing Line Loans (a) Subject to the terms and conditions of this Agreement, the Swing Line Lender agrees to make swing line loans (each a "Swing Line Loan" and, collectively, the "Swing Line Loans") in Dollars to the Borrower from time to time during the Swing Line Commitment Period, provided that immediately after giving effect thereto, (i) the aggregate unpaid balance of the Swing Line Loans shall not exceed the Swing Line Commitment Amount, and (ii) the Aggregate Credit Exposure of all Lenders shall not exceed the Aggregate Revolving Credit Commitment Amount. During the Swing Line Commitment Period, the Borrower may borrow, prepay in whole or in part and reborrow under the Swing Line Commitment, all in accordance with the terms and conditions of this Agreement. (b) The Swing Line Lender shall not be obligated to make any Swing Line Loan at a time when any Lender shall be in default of its obligations under this Agreement unless the Swing Line Lender has entered into arrangements satisfactory to it and the Borrower to eliminate the Swing Line Lender's risk with respect to such defaulting Lender's participation in such Swing Line Loan. The Swing Line Lender will not make a Swing Line Loan if the Administrative Agent or any Lender, by notice to the Swing Line Lender and the Borrower no later than one Business Day prior to the Borrowing Date with respect to such Swing Line Loan, shall have determined that the conditions set forth in Section 6 have not been satisfied and such conditions remain unsatisfied as of the requested time of the making such Loan. Each Swing Line Loan shall be due and payable on the earliest to occur of the last day of the Interest Period applicable thereto, fifteen days prior to the Maturity Date, the date on which the Swing Line Commitment shall have been voluntarily terminated by the Borrower in accordance with Section 2.6, and the date on which the Swing Line Loans shall become due and payable pursuant to the provisions hereof, whether by acceleration or otherwise. (c) On any Business Day on which a Swing Line Loan shall remain unpaid, the Swing Line Lender may, in its sole discretion, give notice to the Lenders and the Borrower that such outstanding Swing Line Loan shall be funded with a borrowing of Revolving Credit Loans (provided that such notice shall be deemed to have been automatically given upon the occurrence of a Default or an Event of Default under Sections 9.1(g) or (h)), in which case a borrowing of Revolving Credit Loans made as ABR Advances (each such borrowing, a "Mandatory Borrowing"), shall be made by all Lenders pro rata based on each such Lender's Commitment Percentage on (i) such Business Day if such notice was given prior to 11:00 a.m. or (ii) the immediately succeeding Business Day if such notice was given after 11:00 a.m. The proceeds of each Mandatory Borrowing shall be remitted directly to the Swing Line Lender to repay such outstanding Swing Line Loan. Each Lender irrevocably agrees to make a Revolving Credit Loan pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified in writing by the Swing Line Lender notwithstanding: (i) the amount of such Mandatory Borrowing may not comply with the minimum amount for Loans otherwise required hereunder, (ii) whether any condition specified in Section 6 is then unsatisfied, (iii) whether a Default or an Event of Default then exists, (iv) the Borrowing Date of such Mandatory Borrowing, (v) the aggregate principal amount of all Loans then - 26 - 28 outstanding, (vi) the Aggregate Credit Exposure at such time and (vii) the Aggregate Revolving Credit Commitment Amount at such time. (d) Upon each receipt by a Lender of notice of an Event of Default from the Administrative Agent pursuant to Section 10.5, such Lender shall purchase unconditionally, irrevocably, and severally (and not jointly) from the Swing Line Lender a participation in the outstanding Swing Line Loans (including accrued interest thereon) in an amount equal to the product of its Commitment Percentage and the outstanding amount of the Swing Line Loans plus all accrued and unpaid interest thereon (the "Swing Line Participation Amount"). Each Lender shall also be liable for an amount equal to the product of its Commitment Percentage and any amounts paid by the Borrower pursuant to this Section 2.3 that are subsequently rescinded or avoided, or must otherwise be restored or returned. Such liabilities shall be absolute and unconditional and without regard to the occurrence of any Default or Event of Default or the compliance by the Borrower with any of its obligations under the Loan Documents. (e) In furtherance of subsection (d) above, upon each receipt by a Lender of notice of an Event of Default from the Administrative Agent pursuant to Section 10.5, such Lender shall promptly make available to the Administrative Agent for the account of the Swing Line Lender its Swing Line Participation Amount at the office of the Administrative Agent specified in Section 11.2, in lawful money of the United States and in immediately available funds. The Administrative Agent shall deliver the payments made by each Lender pursuant to the immediately preceding sentence to the Swing Line Lender promptly upon receipt thereof in like funds as received. Each Lender shall indemnify and hold harmless the Administrative Agent and the Swing Line Lender from and against any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, costs and expenses resulting from any failure on the part of such Lender to pay, or from any delay in paying the Administrative Agent any amount such Lender is required to pay in accordance with this Section 2.3 (except in respect of losses, liabilities or other obligations suffered by the Administrative Agent or the Swing Line Lender, as the case may be, resulting from the gross negligence or willful misconduct of the Administrative Agent or the Swing Line Lender, as the case may be), and such Lender shall be required to pay interest to the Administrative Agent for the account of the Swing Line Lender from the date such amount was due until paid in full, on the unpaid portion thereof, at a rate of interest per annum equal to (i) from the date such amount was due until the third day therefrom, the Federal Funds Rate, and (ii) thereafter, the Federal Funds Rate plus 2%, payable upon demand by the Swing Line Lender. The Administrative Agent shall distribute such interest payments to the Swing Line Lender upon receipt thereof in like funds as received. (f) Whenever the Administrative Agent is reimbursed by the Borrower, for the account of the Swing Line Lender, for any payment in connection with Swing Line Loans and such payment relates to an amount previously paid by a Lender pursuant to this Section, the Administrative Agent will promptly pay over such payment to such Lender. - 27 - 29 2.4. Swing Line Note The Swing Line Loans made by the Swing Line Lender shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit B-2 (as indorsed or modified from time to time, including all replacements thereof and substitutions therefor, the "Swing Line Note"), payable to the order of the Swing Line Lender, dated the Effective Date and in the stated principal amount equal to the Swing Line Commitment Amount. 2.5. Procedure for Borrowing (a) Revolving Credit Loans. The Borrower may borrow under the Revolving Credit Commitments on any Business Day during the Revolving Credit Commitment Period, provided that the Borrower shall notify the Administrative Agent by the delivery of a Borrowing Request, which shall be sent by facsimile and shall be irrevocable (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Borrowing Request manually signed by the Borrower), no later than: 1:00 p.m. three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Advances, and 11:00 a.m. on the requested Borrowing Date, in the case of ABR Advances, specifying (A) the aggregate principal amount to be borrowed under the Revolving Credit Commitments, (B) the requested Borrowing Date, (C) whether such borrowing is to consist of one or more Eurodollar Advances, ABR Advances, or a combination thereof and (D) if the borrowing is to consist of one or more Eurodollar Advances, the length of the Interest Period for each such Eurodollar Advance. Each (i) Eurodollar Advance to be made on a Borrowing Date, when aggregated with all amounts to be converted to a Eurodollar Advance on such date and having the same Interest Period as such first Eurodollar Advance, shall equal no less than $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof and (ii) each ABR Advance made on each Borrowing Date shall equal no less than $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof or, if less, the unused portion of the Aggregate Revolving Credit Commitment Amount. (b) Swing Line Loans. The Borrower may borrow under the Swing Line Commitment on any Business Day during the Swing Line Commitment Period, provided that the Borrower shall notify the Administrative Agent and the Swing Line Lender (by telephone or facsimile confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent and the Swing Line Lender of a Borrowing Request manually signed by the Borrower) no later than: 1:00 p.m. on the requested Borrowing Date, specifying (i) the aggregate principal amount to be borrowed under the Swing Line Commitment, (ii) the requested Borrowing Date, and (iii) the amount and the length of the Interest Period for each Swing Line Loan, provided, however, that no Interest Period selected in respect of any Swing Line Loan shall end after fifteen days prior to the Maturity Date. The Swing Line Lender will then, subject to its determination that the terms and conditions of this Agreement have been satisfied, make the requested amount available promptly on that same day, to the Administrative Agent who, thereupon, will promptly make such amount available to the Borrower at the office of the Administrative Agent specified in Section 11.2 by crediting the account of the Borrower on the books of such office of the Administrative Agent. Each borrowing of Swing Line Loans shall be in an - 28 - 30 aggregate principal amount equal to $500,000 or such amount plus a whole multiple of $100,000 in excess thereof or, if less, the unused portion of the Swing Line Commitment Amount. (c) Funding of Revolving Credit Loans. Upon receipt of each Borrowing Request requesting Revolving Credit Loans, the Administrative Agent shall promptly notify each Lender thereof. Subject to its receipt of the notice referred to in the preceding sentence, each Lender will make the amount of its Commitment Percentage of the requested Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent set forth in Section 11.2 not later than 12:00 noon on the relevant Borrowing Date requested by the Borrower, in funds immediately available to the Administrative Agent at such office. The amounts so made available to the Administrative Agent on such Borrowing Date will then, subject to the satisfaction of the terms and conditions of this Agreement, be made available on such date to the Borrower by the Administrative Agent at the office of the Administrative Agent specified in Section 11.2 by crediting the account of the Borrower on the books of such office with the aggregate of said amounts received by the Administrative Agent. (d) Failure to Fund. Unless the Administrative Agent shall have received prior notice from a Lender (by telephone or otherwise, such notice to be promptly confirmed by facsimile or other writing) that such Lender will not make available to the Administrative Agent such Lender's Commitment Percentage of the Revolving Credit Loans requested by the Borrower, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the Borrowing Date in accordance with this Section, provided that such Lender received notice of the requested Revolving Credit Loans from the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on the Borrowing Date a corresponding amount. If and to the extent such Lender shall not have so made its Commitment Percentage of such Revolving Credit Loans available to the Administrative Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount (to the extent not previously paid by the other), together with interest thereon for each day from the date such amount is made available to the Borrower to the date such amount is paid to the Administrative Agent, at a rate per annum equal to, in the case of the Borrower, the applicable interest rate set forth in Section 3.1 for ABR Advances, and, in the case of such Lender, at a rate of interest per annum equal to the Federal Funds Rate for the first three days after the due date of such payment until the date such payment is received by the Administrative Agent and the Federal Funds Rate plus 2% thereafter. Such payment by the Borrower, however, shall be (i) without prejudice to its rights against such Lender and (ii) in place of, and not in addition to, the interest payable pursuant to the terms of Section 3.1(a). If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender's Revolving Credit Loan as part of the Revolving Credit Loans for purposes of this Agreement, which Loan shall be deemed to have been made by such Lender on the Borrowing Date applicable to such Revolving Credit Loans. - 29 - 31 (e) Netting. If a Lender makes a new Loan on a Borrowing Date on which the Borrower is to repay an existing Loan from such Lender, such Lender shall apply the proceeds of such new Loan to make such repayment, and only the excess of the proceeds of such new Loan over the outstanding principal balance of the existing Loan being repaid need be made available to the Administrative Agent. 2.6. Termination or Reduction of Commitments (a) Voluntary Termination or Reduction. (i) The Borrower shall have the right, upon at least three Business Days' prior written notice to the Administrative Agent, (A) at any time when the Aggregate Credit Exposure shall be zero, to terminate the Revolving Credit Commitments of all of the Lenders, and (B) at any time and from time to time when the Aggregate Revolving Credit Commitment Amount shall exceed the Aggregate Credit Exposure, to reduce permanently the Aggregate Revolving Credit Commitment Amount by a sum not greater than the amount of such excess, provided, however, that each such partial reduction shall be in the amount of $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. (ii) The Borrower shall have the right, upon at least one Business Day's prior written notice to the Administrative Agent and the Swing Line Lender to reduce permanently the Swing Line Commitment Amount in whole at any time, or in part from time to time, to an amount not less than the aggregate principal balance of the Swing Line Loans then outstanding (after giving effect to any contemporaneous prepayment thereof), provided, however, that each partial reduction of the Swing Line Commitment Amount shall be in an amount equal to $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. (b) Termination of the Revolving Credit Commitments. Upon any termination of the Revolving Credit Commitments of all of the Lenders, the Borrower shall prepay the outstanding principal balance of the Loans and deposit an amount equal to the Letter of Credit Exposure of all Lenders at such time in a cash collateral account with and under the exclusive dominion and control of the Administrative Agent. (c) Reductions in General. Each reduction of the Aggregate Revolving Credit Commitment Amount shall be made by reducing each Lender's Revolving Credit Commitment Amount by an amount equal to such Lender's Commitment Percentage of such reduction. Simultaneously with each reduction of the Aggregate Revolving Credit Commitment Amount under this Section, the Borrower shall pay the Commitment Fee accrued on the amount by which the Aggregate Revolving Credit Commitment Amount is being reduced. 2.7. Prepayments (a) Voluntary Prepayments. The Borrower may, at its option, prepay the Revolving Credit Loans without premium or penalty (but subject to Section 3.5), in full at any time or in part from time to time by notifying the Administrative Agent in writing no later than 12:00 noon on the proposed - 30 - 32 prepayment date, in the case of Revolving Credit Loans consisting of ABR Advances, and at least two Business Days prior to the proposed prepayment date, in the case of Revolving Credit Loans consisting of Eurodollar Advances, specifying whether the Revolving Credit Loans to be prepaid consist of ABR Advances, Eurodollar Advances, or a combination thereof, the amount to be prepaid and the date of prepayment. Each such notice shall be irrevocable and the amount specified in each such notice shall be due and payable on the date specified, together with accrued interest to the date of such payment on the amount prepaid. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender thereof. Each partial prepayment of the Revolving Credit Loans pursuant to this subsection shall be in an aggregate principal amount of $500,000 or such amount plus a whole multiple of $100,000 in excess thereof, or, if less, the outstanding principal balance of the Revolving Credit Loans. After giving effect to any partial prepayment with respect to Eurodollar Advances which were made (whether as the result of a borrowing or a conversion) on the same date and which had the same Interest Period, the outstanding principal balance of such Eurodollar Advances shall exceed (subject to Section 3.3) $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. Swing Line Loans may not be prepaid. (b) Mandatory Prepayments. At any time when the Invested Cash and Marketable Securities of the Borrower and its Subsidiaries (other than any Receivables Subsidiary) on a Consolidated basis in accordance with GAAP exceed (i) for the period beginning on the Effective Date and ending 91 days thereafter, $25,000,000, and (ii) for the period beginning 92 days after the Effective Date and thereafter, $50,000,000, the Borrower shall immediately repay any outstanding Loans in an amount equal to such excess. (c) In General. Simultaneously with each prepayment of a Loan, the Borrower shall prepay all accrued interest on the amount prepaid through the date of prepayment. Unless otherwise specified by the Borrower, each prepayment of Revolving Credit Loans shall first be applied to ABR Advances. With respect to prepayments made with respect to Section 2.7(b), such prepayment shall be applied first to prepay outstanding Swing Line Loans in full and then to prepay outstanding Revolving Credit Loans. If any prepayment is made in respect of any Eurodollar Advance, in whole or in part, prior to the last day of the applicable Interest Period, the Borrower agrees to indemnify the Lenders in accordance with Section 3.5. 2.8. Use of Proceeds The Borrower agrees that the proceeds of the Loans shall be used solely for working capital purposes and for permitted capital expenditures not inconsistent with the provisions hereof. Notwithstanding anything to the contrary contained in any Loan Document, the Borrower agrees that no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, to purchase or carry any Margin Stock or any Investments described in Section 8.5(g) or 8.5(h) for a purpose which violates any law, including the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System, as amended. - 31 - 33 2.9. Letter of Credit Sub-Facility (a) Subject to the terms and conditions of this Agreement, the Issuing Bank shall, in reliance on the agreement of the other Lenders set forth in Section 2.10, issue standby letters of credit (the "Standby Letters of Credit") or commercial (trade) letters of credit (the "Trade Letters of Credit", and together with the Standby Letters of Credit, the "Letters of Credit", each, individually, a "Letter of Credit") denominated in Dollars during the Revolving Credit Commitment Period for the account of the Borrower and for the benefit of the Borrower or any of its Subsidiaries, provided that immediately after the issuance of each Letter of Credit (i) the Letter of Credit Exposure of all Lenders (whether or not the conditions for drawing under any Letter of Credit have or may be satisfied) shall not exceed $25,000,000 and (ii) the Aggregate Credit Exposure shall not exceed the Aggregate Revolving Credit Commitment Amount. Each Letter of Credit shall have an expiration date which shall be not later than the earlier of (i) twelve months after the date of issuance thereof, and (ii) fifteen days prior to the Maturity Date. No Letter of Credit shall be issued if the Administrative Agent or any Lender, by notice to the Issuing Bank and the Borrower no later than one Business Day prior to the Borrowing Date with respect to the issuance of such Letter of Credit, shall have determined that the conditions set forth in Section 6 have not been satisfied and such conditions remain unsatisfied as of the requested time of the issuance of Letter of Credit. (b) Each Letter of Credit shall be issued for the account of the Borrower for the benefit of the Borrower or any of its Subsidiaries in favor of a beneficiary who has requested the issuance of such Letter of Credit as a condition to a transaction entered into in the ordinary course of business. The Borrower shall give the Administrative Agent a Letter of Credit Request for the issuance of each Letter of Credit by no later than 11:00 a.m., three Business Days prior to the requested date of issuance. Each Letter of Credit Request shall be accompanied by the Issuing Bank's standard letter of credit application, standard reimbursement agreement (each a "Reimbursement Agreement") and such other documentation as the Issuing Bank may reasonably require, executed by the Borrower. Upon receipt of such Letter of Credit Request from the Borrower, the Administrative Agent shall promptly notify the Issuing Bank and each other Lender thereof. Each Letter of Credit shall be in form and substance reasonably satisfactory to the Issuing Bank, with such provisions with respect to the conditions under which a drawing may be made thereunder and the documentation required in respect of such drawing as the Issuing Bank shall reasonably require. The Issuing Bank shall, on the proposed date of issuance and subject to the terms and conditions of the Reimbursement Agreement and to the other terms and conditions of this Agreement, issue the requested Letter of Credit. (c) Upon each payment by the Issuing Bank of a draft drawn under a Letter of Credit, the Borrower shall immediately pay to the Administrative Agent, for the account of the Issuing Bank, an amount equal to such payment in immediately available funds. (d) Notwithstanding anything to the contrary contained herein or in any Reimbursement Agreement, to the extent that the terms of this Agreement shall be inconsistent with the terms of such Reimbursement Agreement, the terms of this Agreement shall govern. - 32 - 34 2.10. Letter of Credit Participation and Funding Commitments (a) Each Lender hereby unconditionally, irrevocably and severally (and not jointly) for itself only and without any notice to or the taking of any action by such Lender, takes an undivided participating interest in the obligations of the Issuing Bank under and in connection with each Letter of Credit in an amount equal to such Lender's Commitment Percentage of the amount of such Letter of Credit. Each Lender shall be liable to the Issuing Bank for its Commitment Percentage of (i) the unreimbursed amount of any draft drawn and honored under each of the Letters of Credit, and (ii) any amounts paid by the Borrower pursuant to Sections 2.9(c) or 2.11 that are subsequently rescinded or avoided, or must otherwise be restored or returned. Such liabilities shall be unconditional and without regard to the occurrence of any Default or the compliance by the Borrower with the Loan Documents. (b) The Issuing Bank will promptly notify the Administrative Agent, and the Administrative Agent will promptly notify each Lender (which notice shall be promptly confirmed in writing) of the date and the amount of any draft presented under each of the Letters of Credit with respect to which full reimbursement is not made as provided in Section 2.9(c), and forthwith upon receipt of each such notice, such Lender (other than the Issuing Bank in its capacity as a Lender) shall make available to the Administrative Agent for the account of the Issuing Bank its Commitment Percentage of the amount of such unreimbursed draft at the office of the Administrative Agent specified in Section 11.2, in immediately available funds before 4:00 p.m., on the day such notice was given by the Administrative Agent, if the relevant notice was given by the Administrative Agent at or prior to 1:00 p.m., on such day, and before 12:00 noon, on the next Business Day, if the relevant notice was given by the Administrative Agent after 1:00 p.m., on such day. The Administrative Agent shall distribute the payments made pursuant to the immediately preceding sentence to the Issuing Bank promptly upon receipt thereof in like funds as received. Each Lender shall indemnify and hold harmless the Administrative Agent and the Issuing Bank from and against any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) resulting from any failure on the part of such Lender to perform its obligations under this Section 2.10 (except in respect of losses, liabilities or other obligations suffered by the Issuing Bank to the extent resulting from the gross negligence or willful misconduct of the Issuing Bank). If a Lender does not make any payment required under this Section 2.10 when due, such Lender shall be required to pay interest to the Administrative Agent for the account of the Issuing Bank (upon demand therefor) the amount of such payment at a rate of interest per annum equal to the Federal Funds Rate for the first three days after the due date of such payment and the Federal Funds Rate plus 2% thereafter until the date such payment is received by the Administrative Agent. The Administrative Agent shall distribute such interest payments to the Issuing Bank upon receipt thereof in like funds as received. (c) Whenever the Issuing Bank is reimbursed by the Borrower or the Administrative Agent is reimbursed by the Borrower, for the account of the Issuing Bank, for any payment under a Letter of Credit and such payment relates - 33 - 35 to an amount previously paid by a Lender pursuant to this Section 2.10, the Administrative Agent (or the Issuing Bank, to the extent that it has received the same) will pay over such payment to such Lender (i) before 4:00 p.m. on the day such payment from the Borrower is received, if such payment is received at or prior to 1:00 p.m. on such day, or (ii) before 12:00 noon on the next succeeding Business Day, if such payment from the Borrower is received after 1:00 p.m. on such day. 2.11. Absolute Obligation With Respect to Letter of Credit Payments The Borrower's obligation to reimburse the Administrative Agent for the account of the Issuing Bank in respect of each payment under or in respect of the Letters of Credit shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the beneficiary of such Letter of Credit, the Administrative Agent, the Issuing Bank, as issuer of such Letter of Credit, any Lender or any other Person, including, without limitation, any defense based on the failure of any drawing to conform to the terms of such Letter of Credit, any drawing document proving to be forged, fraudulent or invalid, or the legality, validity, regularity or enforceability of such Letter of Credit; provided, that, with respect to any Letter of Credit, the foregoing shall not relieve the Issuing Bank of any liability it may have to the Borrower for any actual damages sustained by the Borrower arising from a wrongful payment under such Letter of Credit made as a result of the Issuing Bank's gross negligence or willful misconduct. 2.12. Payments (a) Except as otherwise expressly provided herein, each payment, including each prepayment, of principal and interest on the Loans, of the Commitment Fee, the Letter of Credit Commissions, the Fronting Fees and of all of the other fees to be paid by the Borrower to the Administrative Agent and the Lenders in connection with the Loan Documents (the Commitment Fee, the Letter of Credit Commissions and the Fronting Fees, together with all of such other fees, being sometimes hereinafter collectively referred to as the "Fees") shall be made prior to 1:00 p.m., on the date such payment is due to the Administrative Agent for the account of the applicable Lenders at the Administrative Agent's office specified in Section 11.2, in each case in lawful money of the United States, in immediately available funds and without set-off or counterclaim. The failure of the Borrower to make any such payment by such time shall not constitute a Default, provided that such payment is made on such due date, but any such payment made after 1:00 p.m., on such due date shall be deemed to have been made on the next Business Day for the purpose of calculating interest. Promptly upon receipt thereof by the Administrative Agent, each payment of principal and interest on the Loans shall be remitted by the Administrative Agent in like funds as received to the Swing Line Lender, the Issuing Bank and each Lender (i) first, pro rata according to its Outstanding Percentage of the amount of interest which is then due and payable under the Loan Documents, and (ii) second, pro rata according to its Outstanding Percentage of the amount of principal which is then due and payable under the Loan Documents. Promptly upon receipt thereof by the Administrative Agent, each payment of the Commitment Fee shall be remitted by the Administrative Agent in like funds as received to each Lender pro rata according to such Lender's Revolving Credit Commitment Amount or, if the Revolving Credit Commitments shall - 34 - 36 have terminated or been terminated, according to the outstanding principal balance of such Lender's Revolving Credit Loans. (b) If any payment hereunder, under the Notes or under any Reimbursement Agreement shall be due and payable on a day which is not a Business Day, the due date thereof (except as otherwise provided in the definition of Interest Period) shall be extended to the next Business Day and (except with respect to payments in respect of the Fees) interest shall be payable at the applicable rate specified herein during such extension, provided, however that if such next Business Day is after the Maturity Date, any such payment shall be due on the immediately preceding Business Day. 3. INTEREST, FEES, YIELD PROTECTIONS, ETC. 3.1. Interest Rate and Payment Dates (a) Prior to Default. Except as otherwise provided in Section 3.1(b) and 3.1(c), the Loans shall bear interest on the outstanding principal balance thereof at the applicable interest rate or rates per annum set forth below: ADVANCES RATE - -------- ---- Each ABR Advance Alternate Base Rate plus the Applicable Margin. Each Eurodollar Advance Eurodollar Rate for the applicable Interest Period plus the Applicable Margin. Each Swing Line Loan Alternate Base Rate plus the Applicable Margin. (b) Default Rate. Upon the occurrence and during the continuance of an Event of Default, the unpaid principal balance of the Loans and any overdue interest or other amount payable under the Loan Documents shall bear interest, payable on demand, at a rate per annum (whether before or after the entry of a judgment thereon) equal to the Alternate Base Rate plus the Applicable Margin plus 2%. (c) Highest Lawful Rate. At no time shall the interest rate payable on the Loans of any Lender, together with the Fees and all other amounts payable under the Loan Documents to such Lender, to the extent the same are construed to constitute interest, exceed the Highest Lawful Rate applicable to such Lender. If with respect to any Lender for any period during the term of this Agreement, any amount paid to such Lender under the Loan Documents, to the extent the same shall (but for the provisions of this Section) constitute or be deemed to constitute interest, would exceed the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period (such amount being hereinafter referred to as an "Unqualified Amount"), - 35 - 37 then (i) such Unqualified Amount shall be applied or shall be deemed to have been applied as a prepayment of the Loans of such Lender, and (ii) if in any subsequent period during the term of this Agreement, all amounts payable under the Loan Documents to such Lender in respect of such period which constitute or shall be deemed to constitute interest shall be less than the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period, then the Borrower shall pay to such Lender in respect of such period an amount (each a "Compensatory Interest Payment") equal to the lesser of (x) a sum which, when added to all such amounts, would equal the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period, and (y) an amount equal to the Unqualified Amount less all other Compensatory Interest Payments made in respect thereof. (d) In General. Interest on ABR Advances, Eurodollar Advances and Swing Line Loans shall be calculated on the basis of a 360-day year, in each case, for the actual number of days elapsed. Except as otherwise expressly provided herein, interest shall be payable in arrears on each Interest Payment Date and upon each payment (including prepayment) of the Loans. Any change in the interest rate on the Loans resulting from a change in the Alternate Base Rate or reserve requirements shall become effective as of the opening of business on the day on which such change shall become effective. The Administrative Agent shall, as soon as practicable, notify the Borrower and the Lenders of the effective date and the amount of each such change in the BNY Rate. Each determination of the Alternate Base Rate or a Eurodollar Rate by the Administrative Agent pursuant to this Agreement shall be conclusive and binding on all parties hereto absent manifest error. The Borrower acknowledges that to the extent interest payable on ABR Advances is based on the BNY Rate, such rate is only one of the bases for computing interest on loans made by the Lenders, and by basing interest payable on ABR Advances on the BNY Rate, the Lenders have not committed to charge, and the Borrower has not in any way bargained for, interest based on a lower or the lowest rate at which any Lender may now or in the future make loans to other borrowers. 3.2. Fees (a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, a fee (the "Commitment Fee"), during the Revolving Credit Commitment Period, at a rate per annum equal to 0.50% of the excess of the average daily Aggregate Revolving Credit Commitment Amount over the sum of the aggregate outstanding principal balance of the Revolving Credit Loans on such day and the Letter of Credit Exposure of all of the Lenders. The Commitment Fee shall be payable quarterly in arrears on the last day of each March, June, September and December of each year, commencing on the first such day following the Effective Date and ending on the Revolving Credit Commitment Termination Date. The Commitment Fee shall be calculated on the basis of a 360-day year for the actual number of days elapsed. (b) Letter of Credit Commissions. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, commissions (the "Letter of Credit - 36 - 38 Commissions") with respect to the Letters of Credit for the period from and including the date of issuance of each thereof to the expiration date thereof, at a rate per annum equal to 2.64% (or, upon the occurrence and during the continuance of an Event of Default, 4.64%), on the average daily maximum amount available under any contingency to be drawn under such Letter of Credit. The Letter of Credit Commissions shall be (i) calculated on the basis of a 360-day year for the actual number of days elapsed and (ii) payable quarterly in arrears on the last day of each March, June, September and December of each year and on the Revolving Credit Commitment Termination Date. (c) Letter of Credit Fronting Fees. The Borrower agrees to pay to Administrative Agent, for the account of the Issuing Bank, a fee (the "Fronting Fees") with respect to the Letters of Credit for the period from and including the date of issuance of each thereof to the expiration date thereof, at a rate per annum equal to 0.250% on the average daily maximum amount available under any contingency to be drawn under such Letters of Credit. The Fronting Fees shall be (i) calculated on the basis of a 360-day year for the actual number of days elapsed and (ii) payable quarterly in arrears on the last day of each March, June, September and December of each year and on the Revolving Credit Commitment Termination Date. In addition to the Fronting Fees, the Borrower agrees to pay to the Issuing Bank, for its own account, its standard fees and charges customarily charged to customers similar to the Borrower with respect to any of the Letters of Credit. (d) Administrative Agent's Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, such other fees as have been agreed to in writing by the Borrower and the Administrative Agent. 3.3. Conversions (a) The Borrower may elect from time to time to convert one or more Eurodollar Advances to ABR Advances by giving the Administrative Agent at least one Business Day's prior irrevocable notice of such election, specifying the amount to be converted, provided, that any such conversion of Eurodollar Advances shall only be made on the last day of the Interest Period applicable thereto. In addition, the Borrower may elect from time to time to convert (i) ABR Advances to Eurodollar Advances and (ii) Eurodollar Advances to new Eurodollar Advances by selecting a new Interest Period therefor, in each case by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election, in the case of a conversion to Eurodollar Advances, specifying the amount to be so converted and the initial Interest Period relating thereto, provided that any such conversion of ABR Advances to Eurodollar Advances shall only be made on a Business Day and any such conversion of Eurodollar Advances to new Eurodollar Advances shall only be made on the last day of the Interest Period applicable to the Eurodollar Advances which are to be converted to such new Eurodollar Advances. Each such notice shall be irrevocable and shall be given by the delivery by facsimile of a Notice of Conversion (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Notice of Conversion manually signed by the Borrower). The Administrative Agent shall promptly provide the Lenders with notice of each such election. Advances may be converted pursuant to this Section - 37 - 39 in whole or in part, provided that the amount to be converted to each Eurodollar Advance, when aggregated with any Eurodollar Advance to be made on such date in accordance with Section 2.5 and having the same Interest Period as such first Eurodollar Advance, shall equal no less than $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. (b) Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of a Default or an Event of Default, the Borrower shall have no right to elect to convert any existing ABR Advance to a new Eurodollar Advance or to convert any existing Eurodollar Advance to a new Eurodollar Advance. In such event, all ABR Advances shall be automatically continued as ABR Advances and all Eurodollar Advances shall be automatically converted to ABR Advances on the last day of the Interest Period applicable to such Eurodollar Advance. (c) Each conversion shall be effected by each Lender by applying the proceeds of its new ABR Advance or Eurodollar Advance, as the case may be, to its Advances (or portion thereof) being converted (it being understood that any such conversion shall not constitute a borrowing for purposes of Sections 4, 5 or 6). 3.4. Concerning Interest Periods Notwithstanding any other provision of any Loan Document: (a) If the Borrower shall have failed to elect a Eurodollar Advance under Section 2.5 or 3.3, as the case may be, in connection with any borrowing of new Revolving Credit Loans or expiration of an Interest Period with respect to any existing Eurodollar Advance, the amount of the Revolving Credit Loans subject to such borrowing or such existing Eurodollar Advance shall thereafter be an ABR Advance until such time, if any, as the Borrower shall elect to convert such ABR Advances to a Eurodollar Advance pursuant to Section 3.3. (b) No Interest Period selected in respect of the borrowing of, or the conversion to, any Eurodollar Advance shall end after the Maturity Date, and no Interest Period selected in respect of the borrowing of any Swing Line Loan shall end after fifteen days prior to the Maturity Date. (c) The Borrower shall not be permitted to have more than five Eurodollar Advances outstanding at any one time, it being agreed that each borrowing of a Eurodollar Advance pursuant to a single Borrowing Request shall constitute the making of one Eurodollar Advance for the purpose of calculating such limitation. 3.5. Indemnification for Loss Notwithstanding anything contained herein to the contrary, if the Borrower shall fail for any reason to borrow a Revolving Credit Loan in respect of which it shall have requested a Eurodollar Advance or convert an Advance to a Eurodollar Advance after it shall have notified the Administrative - 38 - 40 Agent of its intent to do so, or if a Eurodollar Advance shall terminate for any reason prior to the last day of the Interest Period applicable thereto, or if the Borrower shall for any reason prepay or repay all or any part of the principal amount of a Eurodollar Advance prior to the last day of the Interest Period applicable thereto, the Borrower shall indemnify each Lender against, and pay on demand directly to such Lender the amount (calculated by such Lender using any method chosen by such Lender which is customarily used by such Lender for such purpose) equal to any loss or out-of-pocket expense suffered by such Lender as a result of such failure to borrow or convert, or such termination, repayment or prepayment, including any loss, cost or expense suffered by such Lender in liquidating or employing deposits acquired to fund or maintain the funding of such Eurodollar Advance, or redeploying funds prepaid or repaid, in amounts which correspond to such Eurodollar Advance and any internal processing charge customarily charged by such Lender in connection therewith. 3.6. Capital Adequacy If the amount of capital required or expected to be maintained by any Lender, the Swing Line Lender or the Issuing Bank or any Person directly or indirectly owning or controlling such Lender, the Swing Line Lender or the Issuing Bank (each a "Control Person"), shall be affected by the occurrence of a Regulatory Change and such Lender, the Swing Line Lender or the Issuing Bank shall have determined that such Regulatory Change shall have had or will thereafter have the effect of reducing the rate of return on such Lender's, the Issuing Bank's, the Swing Line Lender's or such Control Person's capital in respect of the Loans, Letters of Credit, Revolving Credit Commitment, Swing Line Commitment, Letter of Credit Commitment or Letter of Credit or Swing Line Loan participations made or maintained by such Lender, the Swing Line Lender or the Issuing Bank, or of the Reimbursement Obligations owed to the Issuing Bank, in any case to a level below that which such Lender, the Issuing Bank, the Swing Line Lender or such Control Person could have achieved or would thereafter be able to achieve but for such Regulatory Change (after taking into account such Lender's, the Issuing Bank's, the Swing Line Lender's or such Control Person's policies regarding capital adequacy) by an amount deemed by such Lender, the Swing Line Lender or the Issuing Bank to be material, then, within ten days after demand by such Lender or the Issuing Bank, the Borrower shall pay to such Lender, the Issuing Bank, the Swing Line Lender or such Control Person such additional amount or amounts as shall be sufficient to compensate such Lender, the Issuing Bank, the Swing Line Lender or such Control Person for such reduction, provided that if such Lender, the Issuing Bank, the Swing Line Lender or such Control Person fails to notify the Borrower of any such event requiring additional compensation within 45 days after such Lender, the Issuing Bank, the Swing Line Lender or such Control Person has obtained knowledge of such event, such Lender, the Issuing Bank, the Swing Line Lender or such Control Person, as the case may be, shall only be entitled to compensation under this Section 3.6 for costs incurred from and after the date 45 days prior to the date that such Lender, the Issuing Bank, the Swing Line Lender or such Control Person, as the case may be, does give such notice. - 39 - 41 3.7. Reimbursement for Increased Costs If any Lender, the Administrative Agent, the Swing Line Lender or the Issuing Bank shall determine that a Regulatory Change: (a) does or shall subject it to any Tax of any kind whatsoever with respect to any Eurodollar Advances or Swing Line Loans or its obligations under this Agreement to make Eurodollar Advances or Swing Line Loans, or change the basis of taxation of payments to it of principal, interest or any other amount payable hereunder in respect of its Eurodollar Advances or Swing Line Loans, or impose on the Administrative Agent, the Issuing Bank, the Swing Line Lender or such Lender any other condition regarding the Letters of Credit including any Tax required to be withheld from any amounts payable under the Loan Documents (except for imposition of, or change in the rate of, any Excluded Tax applicable to such Lender); or (b) does or shall impose, modify or make applicable any reserve, special deposit, compulsory loan, assessment, increased cost or similar requirement against assets held by, or deposits of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender in respect of its Eurodollar Advances which is not otherwise included in the determination of a Eurodollar Rate or against any Letters of Credit issued by the Issuing Bank or participated in by any Lender; and the result of any of the foregoing is to increase the cost to such Lender of making, renewing, converting or maintaining its Eurodollar Advances, or its commitment to make such Eurodollar Advances or Swing Line Loans, as the case may be, or to reduce any amount receivable hereunder in respect of its Eurodollar Advances, or to increase the cost to the Issuing Bank of issuing or maintaining the Letters of Credit or the cost to any Lender of participating therein or the cost to the Administrative Agent, the Swing Line Lender or the Issuing Bank of performing its respective functions hereunder with respect to the Letters of Credit, then, in any such case, the Borrower shall pay such Lender, the Administrative Agent, the Swing Line Lender or the Issuing Bank, as the case may be, within ten days after demand therefor, such additional amounts as is sufficient to compensate such Lender, the Issuing Bank, the Swing Line Lender or the Administrative Agent, as the case may be, for such additional cost or reduction in such amount receivable which such Lender, the Issuing Bank, the Swing Line Lender or the Administrative Agent, as the case may be, deems to be material as determined by such Lender, the Issuing Bank, the Swing Line Lender or the Administrative Agent, as the case may be; provided, however, that nothing in this Section shall require the Borrower to indemnify the Lenders, the Administrative Agent, the Swing Line Lender or the Issuing Bank, as the case may be, with respect to any withholding Tax for which the Borrower has no obligation under Section 3.10. No failure by any Lender or the Administrative Agent, the Swing Line Lender, or the Issuing Bank to demand, and no delay in demanding, compensation for any increased cost shall constitute a waiver of its right to demand such compensation at any time, provided that if the Administrative Agent, the Issuing Bank, the Swing Line Lender or such Lender fails to notify the Borrower of any such increased cost within 45 days after the Administrative Agent, the Issuing Bank, the Swing Line Lender or such Lender has obtained knowledge of such increased cost, the Administrative Agent, the Issuing Bank, the Swing Line Lender or such Lender, as the case may be, shall only be entitled to payment under this Section 3.7 for such increased cost incurred from and after the date 45 days prior to the date that the Administrative Agent, the - 40 - 42 Issuing Bank, the Swing Line Lender or such Lender, as the case may be, does give such notice. A statement setting forth the calculations of any additional amounts payable pursuant to this Section submitted by a Lender, the Administrative Agent, the Swing Line Lender or the Issuing Bank, as the case may be, to the Borrower shall be conclusive absent manifest error. 3.8. Illegality of Funding Notwithstanding any other provision hereof, if any Lender shall reasonably determine that any Regulatory Change shall make it unlawful for such Lender to make or maintain any Eurodollar Advance as contemplated by this Agreement, such Lender shall promptly notify the Borrower and the Administrative Agent thereof, and (i) the commitment of such Lender to make such Eurodollar Advances or convert ABR Advances to Eurodollar Advances shall forthwith be suspended, (ii) such Lender shall fund its portion of each requested Eurodollar Advance as an ABR Advance and (iii) such Lender's Revolving Credit Loans then outstanding as such Eurodollar Advances, if any, shall be converted automatically to an ABR Advance on the last day of the then current Interest Period applicable thereto or at such earlier time as may be required by law. If the commitment of any Lender with respect to Eurodollar Advances is suspended pursuant to this Section and such Lender shall have obtained actual knowledge that it is once again legal for such Lender to make or maintain Eurodollar Advances, such Lender shall promptly notify the Administrative Agent and the Borrower thereof and, upon receipt of such notice by each of the Administrative Agent and the Borrower, such Lender's commitment to make or maintain Eurodollar Advances shall be reinstated. 3.9. Substituted Interest Rate In the event that (i) the Administrative Agent shall have determined (which determination shall be conclusive and binding) that by reason of circumstances affecting the interbank eurodollar market either adequate or reasonable means do not exist for ascertaining the Eurodollar Rate, or (ii) Required Lenders shall have notified the Administrative Agent that they have determined (which determination shall be made on a reasonable basis and in good faith and shall be conclusive and binding) that the applicable Eurodollar Rate will not adequately and fairly reflect the cost to such Lenders of maintaining or funding loans bearing interest based on such Eurodollar Rate, with respect to any portion of the Revolving Credit Loans that the Borrower has requested be made as Eurodollar Advances or Eurodollar Advances that will result from the requested conversion of any portion of the Advances into or of Eurodollar Advances (each, an "Affected Advance"), the Administrative Agent shall promptly notify the Borrower and the Lenders (by telephone or otherwise, to be promptly confirmed in writing) of such determination, on or, to the extent practicable, prior to the requested Borrowing Date or Conversion Date for such Affected Advances. If the Administrative Agent shall give such notice, (a) any Affected Advances shall be made as ABR Advances, (b) the Advances (or any portion thereof) that were to have been converted to Affected Advances shall be converted to ABR Advances and (c) any outstanding Affected Advances shall be - 41 - 43 converted, on the last day of the then current Interest Period with respect thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as the case may be, of this Section has been withdrawn by the Administrative Agent (by notice to the Borrower promptly upon either (x) the Administrative Agent having determined that such circumstances affecting the interbank eurodollar market no longer exist and that adequate and reasonable means do exist for determining the Eurodollar Rate, or (y) the Administrative Agent having been notified by such Required Lenders that circumstances no longer render the Advances (or any portion thereof) Affected Advances, no further Eurodollar Advances shall be required to be made by the Lenders, nor shall the Borrower have the right to convert all or any portion of the Revolving Credit Loans to or as Eurodollar Advances. 3.10. Taxes; Net Payments (a) All payments made by the Borrower under the Loan Documents shall be made free and clear of, and without reduction for or on account of, any Included Taxes required by law to be withheld from any amounts payable under the Loan Documents. In the event that the Borrower is prohibited by law from making payments under the Loan Documents free of deductions or withholdings in respect of Included Taxes, then the Borrower shall pay such additional amounts to the Administrative Agent, for the benefit of the Indemnified Tax Persons, as may be necessary in order that the actual amounts received by each Indemnified Tax Person in respect of interest and any other amount payable under the Loan Documents after deduction or withholding (and after payment of any additional taxes or other charges due as a consequence of the payment of such additional amounts) shall equal the amount that would have been received if such deduction or withholding were not required. In the event that any such deduction or withholding with respect to Included Taxes can be reduced or nullified as a result of the application of any relevant double taxation convention, the relevant Indemnified Tax Person will cooperate with the Borrower (at the sole expense of the Borrower) in making application to the relevant taxing authorities to seek to obtain such reduction or nullification, so long as it would not be disadvantageous to such Indemnified Tax Person, provided, however, that no Indemnified Tax Person shall have any obligation to engage in litigation with respect thereto. If the Borrower shall make any payments under this Section 3.10 or shall make any deductions or withholdings from amounts paid in accordance with this Section 3.10, the Borrower shall, as promptly as practicable thereafter, forward to the Administrative Agent original or certified copies of official receipts or other evidence acceptable to the Administrative Agent establishing such payment and the Administrative Agent in turn shall distribute copies of such receipts to each Indemnified Tax Person. If payments under the Loan Documents to any Indemnified Tax Person are or become subject to any withholding, such Indemnified Tax Person shall (unless otherwise required by a Governmental Authority or as a result of any treaty, convention, law, rule, regulation, order or similar directive applicable to such Indemnified Tax Person) use its best efforts to designate a different office or branch to which payments are to be made under the Loan Documents from that initially selected thereby, if such designation would avoid or mitigate such withholding and would not be disadvantageous to such Indemnified Tax Person. In the event that any Indemnified Tax Person shall have determined that it received a refund or credit for Included Taxes paid by the Borrower under this Section 3.10, such Indemnified Tax Person shall promptly notify the Administrative Agent and the - 42 - 44 Borrower of such fact and shall remit to the Borrower the amount of such refund or credit applicable to the payments made by the Borrower in respect of such Indemnified Tax Person under this Section 3.10. (b) Each Indemnified Tax Person shall deliver to the Borrower such certificates, documents, or other evidence as the Borrower may reasonably require from time to time as are necessary to establish that such Indemnified Tax Person is not subject to withholding under Section 1441, 1442 or 3406 of the Code or as may be necessary to establish, under any law imposing upon the Borrower, hereafter, an obligation to withhold any portion of the payments made by the Borrower under the Loan Documents, that payments to the Administrative Agent on behalf of such Indemnified Tax Person are not subject to withholding. Notwithstanding any provision herein to the contrary, the Borrower shall not have any obligation to pay to the Administrative Agent for the benefit of any Indemnified Tax Person any amount which the Borrower is required to withhold (and shall have no obligation to otherwise indemnify any Lender with respect to such amount) to the extent that the Borrower's obligation to withhold is due to the failure of such Indemnified Tax Person to file any required statement, certificate or other document with respect to exemption which such Borrower requested of it. (c) Each Indemnified Tax Person not incorporated under the laws of the United States or any State thereof shall deliver to the Borrower such certificates, documents, or other evidence as the Borrower may reasonably require from time to time as are necessary to establish that such Indemnified Tax Person is not subject to withholding under Section 1441, 1442 or 3406 of the Code or as may be necessary to establish, under any law imposing upon the Borrower, hereafter, an obligation to withhold any portion of the payments made by the Borrower under the Loan Documents, that payments to the Administrative Agent on behalf of such Indemnified Tax Person are not subject to withholding. Notwithstanding any provision herein to the contrary, the Borrower shall not have any obligation to pay to the Administrative Agent for the benefit of any Indemnified Tax Person any amount which the Borrower is liable to withhold due to the failure of such Indemnified Tax Person to file any statement of exemption required by the Code. 3.11. Option to Fund Each Lender has indicated that, if the Borrower requests a Eurodollar Advance such Lender may wish to purchase one or more deposits in order to fund or maintain its funding of its Commitment Percentage of such Eurodollar Advance during the Interest Period with respect thereto; it being understood that the provisions of this Agreement relating to such funding are included only for the purpose of determining the rate of interest to be paid in respect of such Eurodollar Advance and any amounts owing under Sections 3.5 and 3.7. Each Lender shall be entitled to fund and maintain its funding of all or any part of each Eurodollar Advance in any manner it sees fit, but all such determinations hereunder shall be made as if each Lender had actually funded and maintained its Commitment Percentage of each Eurodollar Advance during the applicable Interest Period through the purchase of deposits in an amount equal to its Commitment Percentage of such Eurodollar Advance having a maturity corresponding to such Interest Period. Any Lender may fund its Commitment - 43 - 45 Percentage of each Eurodollar Advance from or for the account of any branch or office of such Lender as such Lender may choose from time to time. 3.12. Replacement of Lenders Notwithstanding the foregoing, if (i) any Lender shall request compensation or additional amounts pursuant to Section 3.6, 3.7 or 3.10 and such amounts are in excess of those being generally charged by the other Lenders, (ii) any Lender shall give any notice to the Borrower or the Administrative Agent pursuant to Section 3.8, (iii) a receiver or custodian shall have been appointed for any Lender and such Lender shall be in default of its obligations under this Agreement, or (iv) a Lender fails or refuses to agree to a request by the Borrower or to amend or waive, or grant any consent under, any provision of any Loan Document under circumstances when such amendment, waiver or consent requires the approval of all the Lenders to be effective and has been approved by the Administrative Agent, the Borrower may require that such Lender transfer all of its right, title and interest under this Agreement and such Lender's Notes to any lender identified by the Borrower (a "Proposed Lender") if such Proposed Lender agrees to assume all of the obligations of such Lender for consideration equal to the outstanding principal amount of such Lender's Loans and all unreimbursed sums paid by such Lender under Section 2.10(b), together with all accrued and unpaid interest thereon to the date of such transfer and all other accrued and unpaid amounts payable under the Loan Documents to such Lender on or prior to the date of such transfer (including any accrued and unpaid fees hereunder and any amounts which would be payable under Section 3.5 as if all of such Lender's Loans were being prepaid in full on such date). Subject to the execution and delivery of new Notes and an Assignment and Acceptance Agreement and the satisfaction of the requirements contained in Section 11.7, such Proposed Lender shall be a "Lender" for all purposes hereunder. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements of the Borrower contained in Sections 3.5, 3.6, 11.5, 11.8 and 11.9 (without duplication of any payments made to such Lender by the Borrower or the Proposed Lender) shall survive for the benefit of any Lender replaced under this Section with respect to the time prior to such replacement. 4. REPRESENTATIONS AND WARRANTIES In order to induce the Administrative Agent and the Lenders to enter into this Agreement, the Lenders to make the Revolving Credit Loans, the Issuing Bank to issue the Letters of Credit and the Lenders to participate therein, and the Swing Line Lender to make the Swing Line Loans and the Lenders to participate therein, the Borrower makes the following representations and warranties to the Administrative Agent, the Issuing Bank, the Swing Line Lender and each Lender: - 44 - 46 4.1. Subsidiaries; Capitalization As of the Effective Date, the Borrower has only the Subsidiaries set forth on, and the authorized, issued and outstanding Capital Stock of the Borrower and each such Subsidiary is as set forth on, Schedule 4.1. As of the Effective Date, except as set forth on Schedule 4.1, the shares of, or partnership or other interests in, each Subsidiary of the Borrower are owned beneficially and of record by the Borrower or another Subsidiary of the Borrower, are free and clear of all Liens and are duly authorized, validly issued, fully paid and nonassessable. As of the Effective Date, except as set forth on Schedule 4.1, (i) neither the Borrower nor any of its Subsidiaries has issued any securities convertible into, or options or warrants for, any common or preferred equity securities thereof, (ii) there are no agreements, voting trusts or understandings binding upon the Borrower or any of its Subsidiaries with respect to the voting securities of the Borrower or any of its Subsidiaries or affecting in any manner the sale, pledge, assignment or other disposition thereof, including any right of first refusal, option, redemption, call or other right with respect thereto, whether similar or dissimilar to any of the foregoing, and (iii) all of the outstanding Capital Stock of each Subsidiary of the Borrower is owned by the Borrower or another Subsidiary of the Borrower. 4.2. Existence and Power Each of the Borrower and each of its Subsidiaries is duly organized or formed and validly existing in good standing under the laws of the jurisdiction of its incorporation or formation, has all requisite power and authority to own its Property and to carry on its business as now conducted, and is in good standing and authorized to do business in each jurisdiction in which the nature of the business conducted therein or the Property owned by it therein makes such qualification necessary, except where such failure to qualify could not reasonably be expected to have a Material Adverse Effect. 4.3. Authority and Execution Each of the Borrower and each of its Subsidiaries has full legal power and authority to enter into, execute, deliver and perform the terms of the Loan Documents to which it is a party all of which have been duly authorized by all proper and necessary corporate, partnership or other applicable action and are in full compliance with its Organizational Documents, except where the failure to be in such full compliance could not reasonably be expected to have a Material Adverse Effect. The Borrower and each of its Subsidiaries has duly executed and delivered the Loan Documents to which it is a party. 4.4. Binding Agreement The Loan Documents (other than the Notes) constitute, and the Notes, when issued and delivered pursuant hereto for value received, will constitute, the valid and legally binding obligations of each Credit Party, in each case, to the extent it is a party thereto, enforceable in accordance with their respective terms, except as such enforceability may be limited by - 45 - 47 applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally. 4.5. Litigation Except as set forth on Schedule 4.5, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority (whether purportedly on behalf of the Borrower, any of its Subsidiaries or any other Credit Party) pending or, to the knowledge of the Borrower, threatened against the Borrower, any of its Subsidiaries or any other Credit Party or maintained by the Borrower, any of its Subsidiaries or any other Credit Party or which may affect the Property of the Borrower, any of its Subsidiaries or any other Credit Party or any of their respective Properties or rights, which (i) could reasonably be expected to have a Material Adverse Effect or (ii) (x) on the Closing Date, call into question the validity or enforceablility of, or otherwise seek to invalidate, or might, individually or in the aggregate, materially and adversely affect, any Loan Document or any of the transactions contemplated thereby, or (y) on any other date on which the representations and warranties under this Agreement are made or deemed to be made, have resulted in any judgment or decree that affects the validity or enforceability of, or invalidates, or might, individually or in the aggregate, materially and adversely affect, any Loan Document or any of the transactions contemplated thereby. 4.6. Required Consents Except for information filings required to be made in the ordinary course of business which are not a condition to the performance by the Borrower or any of its Subsidiaries under the Loan Documents to which it is a party, and except for the consents required to be obtained pursuant to Section 5.11 (which consents have been obtained on the Effective Date), no consent, authorization or approval of, filing with, notice to, or exemption by, stockholders or holders of any other equity interest, any Governmental Authority or any other Person is required to authorize, or is required in connection with the execution, delivery or performance by the Credit Parties of the Loan Documents to which the Borrower or any of its Subsidiaries is a party or is required as a condition to the validity or enforceability of the Loan Documents against the Credit Parties to which any of the same is a party. The Borrower, prior to each borrowing by it hereunder, has obtained all necessary approvals and consents of, and has filed or caused to be filed all reports, applications, documents, instruments and information required to be filed pursuant to all applicable laws, rules, regulations and requests of, all Governmental Authorities in connection with such borrowing. 4.7. Absence of Defaults; No Conflicting Agreements (a) Neither the Borrower, any of its Subsidiaries nor any other Credit Party is in default under any mortgage, indenture, contract or agreement to which it is a party or by which it or any of its Property is bound, the effect of which default could reasonably be expected to have a Material Adverse Effect. The execution, delivery or carrying out of the terms of the Loan Documents will not constitute a default under, or result in the creation or - 46 - 48 imposition of, or obligation to create, any Lien (other than the Lien created by the Security Documents) upon any Property of the Borrower or any of its Subsidiaries or result in a breach of or require the mandatory repayment of or other acceleration of payment under or pursuant to the terms of any such mortgage, indenture, contract or agreement, the effect of which could reasonably be expected to have a Material Adverse Effect. (b) Neither the Borrower, any of its Subsidiaries nor any other Credit Party is in default with respect to any judgment, order, writ, injunction, decree or decision of any Governmental Authority which default could reasonably be expected to have a Material Adverse Effect. 4.8. Compliance with Applicable Laws The Borrower and each of its Subsidiaries is complying in all respects with all laws, regulations, rules and orders of all Governmental Authorities which are applicable to the Borrower or such Subsidiary, a violation of which could reasonably be expected to have a Material Adverse Effect. 4.9. Taxes Each of the Borrower and each of its Subsidiaries has filed or caused to be filed all tax returns required to be filed and has paid, or has made adequate provision for the payment of, all taxes shown to be due and payable on said returns or in any assessments made against it (other than those being contested in accordance with Section 7.4) which would be material to the Borrower or to the Borrower and its Subsidiaries taken as a whole, and no tax Liens have been filed with respect thereto (other than a Lien described in Section 8.2(i)). The charges, accruals and reserves on the books of the Borrower and each of its Subsidiaries with respect to all taxes are, to the best knowledge of the Borrower, adequate for the payment of such taxes, and the Borrower knows of no unpaid assessment which is due and payable against the Borrower or any of its Subsidiaries or any claims being asserted which could reasonably be expected to have a Material Adverse Effect, except such thereof as are being contested in accordance with Section 7.4, and for which adequate reserves have been set aside in accordance with GAAP. 4.10. Governmental Regulations Neither the Borrower, any of its Subsidiaries nor any Person controlled by, controlling, or under common control with, the Borrower or any of its Subsidiaries, is (i) subject to regulation under the Public Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as amended, or is subject to any statute or regulation which prohibits or restricts the incurrence of Indebtedness (other than provisions of laws generally), including statutes or regulations relative to common or contract carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services or (ii) is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. - 47 - 49 4.11. Federal Reserve Regulations; Use of Loan Proceeds Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. The Borrower will use the proceeds of all Loans and Letters of Credit in compliance with the provisions of Section 2.8. 4.12. Plans Each Employee Benefit Plan is in compliance with ERISA, the Code and all other applicable state and federal law, in all material respects. The Borrower and all ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards under ERISA and the Code with respect to each Employee Benefit Plan. No event or condition has occurred and is continuing as to which the Borrower would be under an obligation to provide notice under Section 7.2(d), (e), (f) or (g). 4.13. Financial Statements The Borrower has heretofore delivered to the Administrative Agent and the Lenders copies of the (i) audited Consolidated Balance Sheet of the Borrower as of December 31, 1999, and the related Consolidated Statement of Operations, Stockholder's Equity and Cash Flow for the fiscal year then ended and (ii) the unaudited Consolidated Balance Sheets of the Borrower as of April 2, 2000, July 2, 2000 and October 1, 2000 and the related Consolidated Statement of Operations, Stockholder's Equity and Cash Flow for the respective fiscal quarters then ended (with the related notes and schedules, the "Financial Statements"). The Financial Statements fairly present the Consolidated financial condition and results of the operations of the Borrower and its Subsidiaries as of the dates and for the periods indicated therein (subject, in the case of such unaudited statements, to normal year-end adjustments) and have been prepared in conformity with GAAP. Except as set forth in the Financial Statements and as set forth on Schedule 4.13, since December 31, 1999, the Borrower and each of its Subsidiaries has conducted its business only in the ordinary course and there has been no Material Adverse Change. 4.14. Property (a) Each of the Borrower and the Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Schedule 4.14 sets forth the address of each real property that is owned or leased by the Borrower or any of the Subsidiaries as of the Effective Date. - 48 - 50 4.15. Authorizations (a) The Borrower possesses or has the right to use all franchises, licenses and other rights set forth in the Trademark License Agreement, and with respect to which it is in compliance, with no known conflict with the valid rights of others. No event has occurred which permits or, to the best knowledge of the Borrower, after notice or the lapse of time or both, or any other condition, could reasonably be expected to permit, the revocation or termination of the Trademark License Agreement. (b) Each of the Borrower and each of its Subsidiaries possesses or has the right to use all other franchises, licenses and other rights as are material and necessary for the conduct of its business, and with respect to which it is in compliance, with no known conflict with the valid rights of others which could reasonably be expected to have a Material Adverse Effect. No event has occurred which permits or, to the best knowledge of the Borrower, after notice or the lapse of time or both, or any other condition, could reasonably be expected to permit, the revocation or termination of any such other franchise, license or other right which revocation or termination could reasonably be expected to have a Material Adverse Effect. 4.16. Environmental Matters (a) Except as set forth on Schedule 4.16 and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries (i) have failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) have become subject to any Environmental Liability, (iii) have received notice of any claim with respect to any Environmental Liability or (iv) know of any basis that could reasonably be expected to result in the Borrower or any of its Subsidiaries incurring any Environmental Liability. (b) Since the date of this Agreement, there has been no change in the status of the matters set forth on Schedule 4.16, that, individually or in the aggregate, has resulted in, or could reasonably be expected to have, a Material Adverse Effect. (c) Since the dates of its formation or organization, neither the Borrower nor any of its Subsidiaries has used asbestos or any asbestos product in the manufacture of any of its products or otherwise in its business or, to the best knowledge of the Borrower, has sold any asbestos or asbestos related product. 4.17. Solvency Each of the Borrower and its Subsidiaries is Solvent. - 49 - 51 4.18. Absence of Certain Restrictions No indenture, certificate of designation for preferred stock, agreement or instrument to which the Borrower or any of its Subsidiaries is a party (other than this Agreement and the Existing Credit Agreement), prohibits or limits in any way, directly or indirectly the ability of any Subsidiary (other than any Receivables Subsidiary) of the Borrower to make Restricted Payments or repay any Indebtedness to the Borrower or to another Subsidiary of the Borrower. 4.19. No Misrepresentation No representation or warranty contained in any Loan Document and no certificate or report from time to time furnished by the Borrower or any of its Subsidiaries in connection with the transactions contemplated thereby, contains or will contain a misstatement of material fact or omits or will omit to state a material fact required to be stated in order to make the statements therein contained not misleading in the light of the circumstances under which made. 5. CONDITIONS TO EFFECTIVENESS Except as provided in Section 11.24, the effectiveness of this Agreement shall be subject to the fulfillment of the following conditions precedent: 5.1. Evidence of Action The Administrative Agent shall have received a certificate, dated the Effective Date, of the Secretary or Assistant Secretary or other analogous counterpart of each Credit Party (i) attaching a true and complete copy of the resolutions of its Managing Person and of all documents evidencing all necessary corporate, partnership or similar action (in form and substance satisfactory to the Administrative Agent) taken by it to authorize the Loan Documents to which it is a party and the transactions contemplated thereby, (ii) attaching a true and complete copy of its Organizational Documents, (iii) setting forth the incumbency of its officer or officers or other analogous counterpart who may sign the Loan Documents, including therein a signature specimen of such officer or officers and (iv) attaching a certificate of good standing of the Secretary of State of the jurisdiction of its formation and of each other jurisdiction in which it is qualified to do business, except, in the case of such other jurisdiction, when the failure to be in good standing in such jurisdiction would not have a Material Adverse Effect. 5.2. This Agreement The Administrative Agent shall have received counterparts of this Agreement signed by each of the parties hereto. - 50 - 52 5.3. Notes The Administrative Agent shall have received the Revolving Credit Notes and the Swing Line Note, duly executed by an Authorized Signatory of the Borrower. 5.4. Subsidiary Guaranty The Administrative Agent shall have received the Subsidiary Guaranty, duly executed by an Authorized Signatory of each Subsidiary of the Borrower (other than any Receivables Subsidiary). 5.5. Security Agreement The Administrative Agent shall have received counterparts of the Security Agreement signed on behalf of the Borrower, each Guarantor and the Collateral Agent, together with the following: (a) a copy of each stock certificate (the original of which shall have been delivered to the Collateral Agent) representing shares of capital stock owned by or on behalf of any Credit Party constituting Collateral as of the Effective Date; (b) a copy of each promissory note or other instrument (the original of which shall have been delivered to the Collateral Agent), endorsed in blank, evidencing all loans, advances and other debt owed or owing to any Credit Party constituting Collateral as of the Effective Date (including, without limitation, a Demand Note made by each Guarantor to the Borrower); (c) a copy of each stock power or instrument of transfer (the original of which shall have been delivered to the Collateral Agent), endorsed in blank, with respect to each such stock certificate, promissory note and other instrument; (d) a copy of each instrument and other document (the original of which shall have been delivered to the Collateral Agent), including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreement; (e) a copy of the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Credit Parties in the jurisdictions contemplated by the Security Agreement and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 8.2 or have been released; - 51 - 53 (f) a copy of the fully executed Depositary Control Agreement of each Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains any bank account, other than a Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains only one or more Payroll Accounts and/or Petty Cash Accounts (the original of which shall have been delivered to the Collateral Agent); (g) a copy of the fully executed control agreement of Bear, Stearns & Co. Inc. required to be delivered pursuant to the Security Agreement with respect to the Marketable Securities (the original of which shall have been delivered to the Collateral Agent); and (h) a copy of the fully executed Depositary Control Agreement of The Bank of New York with respect to Disbursement Account No. 1 and Disbursement Account No. 2 (the original of which shall have been delivered to the Collateral Agent). 5.6. Collateral Agent Agreement The Administrative Agent shall have received counterparts of the Collateral Agent Agreement signed by each of the parties thereto. 5.7. Insurance The Administrative Agent shall have received the items required to be delivered on the Effective Date under Section 7.5, in each case satisfactory to the Administrative Agent. 5.8. Deposits of Cash, Cash Equivalents and Marketable Securities The Borrower and its Subsidiaries (other than any Receivables Subsidiary) shall have deposited (i) all of their Invested Cash in the Cash Collateral Account, and (ii) all of their Marketable Securities with Bear, Stearns & Co. Inc. 5.9. Absence of Litigation There shall be no injunction, writ, preliminary restraining order or other order of any nature issued by any Governmental Authority in any respect affecting the transactions provided for in the Loan Documents, and the Administrative Agent shall have received a certificate, in all respects satisfactory to the Administrative Agent, of an executive officer of the Borrower to the foregoing effects to the best of his or her knowledge. 5.10. Approvals and Consents All approvals and consents of all Persons required to be obtained by the Borrower or any of its Subsidiaries in connection with the consummation of the transactions contemplated by the Loan Documents shall have been obtained and shall be in full force and effect, and all notices required of the Borrower or any of its Subsidiaries shall have been given and all required - 52 - 54 waiting periods shall have expired, and the Administrative Agent shall have received a certificate, in all respects satisfactory to the Administrative Agent, of an Authorized Signatory of the Borrower to the foregoing effects to the best of his or her knowledge. 5.11. Senior Note Indenture Consent Solicitations The Borrower shall have received the consent of the requisite noteholders under each Senior Note Indenture to the amendment and modification of such Senior Note Indenture pursuant to the terms of the applicable Senior Note Indenture Consent Solicitations. 5.12. Amendment to Existing Credit Agreement The Existing Credit Agreement shall have become effective and the Administrative Agent shall have received a duly executed copy thereof. 5.13. Policano & Manzo Report The Lenders shall have received a copy of the report, dated November 10, 2000, from Policano & Manzo with respect to the Borrower and its Subsidiaries. 5.14. Opinion of Counsel to the Borrower and its Subsidiaries The Administrative Agent shall have received an opinion of (i) Richard A. Weinberg, General Counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit F-1, and (ii) Weil, Gotshal & Manges LLP, special counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit F-2, each addressed to the Administrative Agent, the Swing Line Lender, the Issuing Bank, the Lenders and the Collateral Agent and dated the Effective Date. It is understood that such opinions are being delivered to the Administrative Agent, the Swing Line Lender, the Issuing Bank, the Lenders and the Collateral Agent upon the direction of the Borrower and its Subsidiaries and that the Administrative Agent, the Swing Line Lender, the Issuing Bank, the Lenders and the Collateral Agent may and will rely on such opinions. 5.15. Material Agreements The Administrative Agent shall have received a fully executed copy of each of the Material Agreements, together with a fully executed copy of the Trademark License Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, in each case certified to be a true and complete copy thereof by the Secretary or Assistant Secretary of the Borrower. 5.16. Asbestos Report The Borrower shall have delivered to the Administrative Agent and the Lenders a report detailing asbestos claims, asbestos settlements, asbestos judgments and asbestos legal fees, in each case for the period beginning November 1, 2000 and ending November 25, 2000. - 53 - 55 5.17. Chase Platinum Substitute Note The Chase Platinum Substitute Note shall have been executed, and the Chase Platinum Agreement shall have been terminated. 5.18. Fees (a) The Administrative Agent shall have received for the account of each Lender a fee in an amount equal to 1.00% of the Commitment of such Lender. (b) All other fees payable to the Administrative Agent, the Issuing Bank and the Lenders on or prior to the Effective Date shall have been paid. All fees payable hereunder and for which invoices have been received of Bryan Cave LLP, Wachtell, Lipton, Rosen & Katz and Policano & Manzo shall have been paid. 5.19. Effective Date Cutoff This Agreement shall have become effective on or prior to January 16, 2001. 5.20. Other Documents The Administrative Agent shall have received such other documents, each in form and substance reasonably satisfactory to the Administrative Agent, as the Administrative Agent shall reasonably require. 6. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT The obligation of each Lender to make a Revolving Credit Loan, the Swing Line Lender to make a Swing Line Loan or the Issuing Bank to issue any Letter of Credit (and each Lender to participate therein) on a Borrowing Date is subject to the satisfaction of the following conditions precedent as of the date of such Revolving Credit Loan or Swing Line Loan or the issuance of such Letter of Credit, as the case may be: 6.1. Compliance On each Borrowing Date and after giving effect to the Loans to be made and the Letters of Credit to be issued thereon (i) there shall exist no Default or Event of Default, (ii) the representations and warranties contained in the Loan Documents shall be true and correct with the same effect as though such representations and warranties had been made on such Borrowing Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date, and (iii) each Credit Party shall be in compliance with all of the terms, covenants and conditions of the Loan Documents to which it is a party. Each borrowing by the Borrower and each request by the Borrower for the issuance of a Letter of Credit shall constitute - 54 - 56 a representation and warranty by the Borrower as of such Borrowing Date that each of the foregoing matters is true and correct in all respects. 6.2. Borrowing Request; Letter of Credit Request With respect to the Loans to be made, and the Letters of Credit to be issued, on each Borrowing Date, the Administrative Agent shall have received, (i) in the case of Loans, a Borrowing Request and (ii) in the case of Letters of Credit, a Letter of Credit Request together with the Issuing Bank's standard letter of credit application, Reimbursement Agreement and such other documentation as the Issuing Bank may reasonably require, in each case duly executed by an Authorized Signatory of the Borrower. 6.3. Minimum Cash Amount On each Borrowing Date and with respect to the making of Loans and the issuance of Letters of Credit, the Invested Cash plus the Marketable Securities of the Borrower and its Subsidiaries (other than any Receivables Subsidiary) on a Consolidated basis in accordance with GAAP shall be less than (i) for the period beginning on the Effective Date and ending 91 days thereafter, $25,000,000, and (ii) for the period beginning 92 days after the Effective Date and thereafter, $50,000,000. 6.4. Loan Closings All documents required by the provisions of the Loan Documents to be executed or delivered to the Administrative Agent or any Lender on or before the applicable Borrowing Date shall have been so executed and delivered on or before such Borrowing Date. 7. AFFIRMATIVE COVENANTS The Borrower agrees that, so long as this Agreement is in effect, any Loan or Reimbursement Obligation (contingent or otherwise) in respect of any Letter of Credit remains outstanding and unpaid, or any other amount is owing under any Loan Document to any Lender, the Issuing Bank or the Administrative Agent, the Borrower shall: 7.1. Financial Statements and Information Maintain, and cause each of its Subsidiaries to maintain, a standard system of accounting in accordance with GAAP, and furnish or cause to be furnished to the Administrative Agent and each Lender: (a) As soon as available, but in any event within 95 days after the end of each fiscal year, a copy of the Consolidated Balance Sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, together with the related Consolidated Statement of Operations, Stockholders' Equity and Cash Flow as of and through the end of such fiscal year, setting forth in each case in comparative form the figures for the preceding fiscal year. The - 55 - 57 Consolidated Balance Sheet and Consolidated Statement of Operations, Stockholders' Equity and Cash Flow shall be audited and certified without qualification by the Accountants, which certification shall (i) state that the examination by such Accountants in connection with such Consolidated financial statements has been made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances, and (ii) include the opinion of such Accountants that such Consolidated financial statements have been prepared in accordance with GAAP in a manner consistent with prior fiscal periods, except as otherwise specified in such opinion. Notwithstanding any of the foregoing, the Borrower may satisfy its obligation to furnish its Consolidated Balance Sheet and Consolidated Statement of Operations, Stockholders' Equity and Cash Flow by furnishing copies of the Borrower's annual report on Form 10-K in respect of such fiscal year, together with the financial statements required to be attached thereto or incorporated by reference therein, provided the Borrower is required to file such annual report on Form 10-K with the SEC and such filing is actually made. (b) As soon as available, but in any event within 50 days after the end of each of the first three fiscal quarters of each fiscal year, a copy of the Consolidated Balance Sheet of the Borrower and its Subsidiaries as at the end of each such quarterly period, together with the related Consolidated Statement of Operations and Cash Flows for such period and for the elapsed portion of the fiscal year through such date, setting forth in each case in comparative form the figures for the corresponding periods of the preceding fiscal year, certified by a Financial Officer of the Borrower as presenting fairly the Consolidated financial condition and the Consolidated results of operations of the Borrower and its Subsidiaries in accordance with GAAP. Notwithstanding any of the foregoing, the Borrower may satisfy its obligation to furnish its quarterly Consolidated Balance Sheet and Consolidated Statement of Operations and Cash Flow by furnishing copies of the Borrower's quarterly report on Form 10-Q in respect of such fiscal quarter, together with the financial statements required to be attached thereto or incorporated by reference therein, provided the Borrower is required to file such quarterly report on Form 10-Q with the SEC and such filing is actually made. (c) Within 50 days after the end of each of the first three fiscal quarters (95 days after the end of the last fiscal quarter), a Compliance Certificate, certified by a Financial Officer of the Borrower. (d) Within 30 days after the end of each fiscal month, a copy of the Consolidated Balance Sheet of the Borrower and its Subsidiaries as at the end of each such fiscal month, together with the related Consolidated Statement of Operations and Cash Flows (including, without limitation, line items for Capital Expenditures and payments made to any Parent or any Affiliate of the Borrower) for such period and for the elapsed portion of the fiscal year through such date, setting forth in each case in comparative form the figures for the corresponding periods of the preceding fiscal year, certified by a Financial Officer of the Borrower as presenting fairly the Consolidated financial condition and the Consolidated results of operations of the Borrower and its Subsidiaries in accordance with GAAP. - 56 - 58 (e) Within 30 days after the end of each fiscal month, a report detailing asbestos claims, asbestos settlements, asbestos judgments and asbestos legal fees, in each case for such fiscal month period. (f) Such other information as the Administrative Agent or any Lender may reasonably request from time to time. 7.2. Certificates; Other Information Furnish to the Administrative Agent and each Lender: (a) Prompt written notice if: (i) any Indebtedness of the Borrower or any of its Subsidiaries in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries is declared or shall become due and payable prior to its stated maturity, or is called and not paid when due, (ii) a default shall have occurred under, or the holder or obligee of, any note (other than the Notes), certificate, security or other evidence of Indebtedness, with respect to any other Indebtedness of the Borrower or any of its Subsidiaries has the right to declare Indebtedness in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries due and payable prior to its stated maturity, or (iii) there shall occur and be continuing a Default or an Event of Default; (b) Prompt written notice of: (i) any citation, summons, subpoena, order to show cause or other document naming the Borrower or any of its Subsidiaries a party to any proceeding before any Governmental Authority which could reasonably be expected to have a Material Adverse Effect or which calls into question the validity or enforceability of any of the Loan Documents, and include with such notice a copy of such citation, summons, subpoena, order to show cause or other document, (ii) any lapse or other termination of any license, permit, franchise or other authorization issued to the Borrower or any of its Subsidiaries by any Person or Governmental Authority, which lapse or termination could reasonably be expected to have a Material Adverse Effect, and (iii) any refusal by any Person or Governmental Authority to renew or extend any such material license, permit, franchise or other authorization, which lapse, termination, refusal or dispute could reasonably be expected to have a Material Adverse Effect; (c) Promptly upon becoming available, copies of all (i) registration statements (other than with respect to employee benefit plans), regular, periodic or special reports, schedules and other material which the Borrower or any of its Subsidiaries may now or hereafter be required to file with or deliver to any securities exchange or the SEC, and (ii) financial statements, proxy statements, notices and reports as the Borrower or any of its Subsidiaries shall generally send to analysts or all public holders of its Capital Stock in their capacity as such holders (in each case to the extent not theretofore delivered to the Lenders pursuant to this Agreement); (d) Prompt written notice in the event that the Borrower, any of its Subsidiaries or any ERISA Affiliate knows, or has reason to - 57 - 59 know, that (i) any Termination Event with respect to a Pension Plan has occurred or will occur, (ii) any condition exists with respect to a Pension Plan which presents a material risk of termination of the Pension Plan under Section 4041(c) or 4042 of ERISA, imposition of a material excise tax, requirement to provide security to the Pension Plan or other material liability on the Borrower, any of its Subsidiaries or any ERISA Affiliate, (iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate has filed under Section 4041(a)(2) of ERISA a notice of termination of, or intent to terminate, a Pension Plan, (iv) the Borrower, any of its Subsidiaries or any ERISA Affiliate has applied for a waiver of the minimum funding standard under Section 412 of the Code with respect to a Pension Plan, (v) the aggregate amount of the Unfunded Pension Liabilities under all Pension Plans is in excess of $5,000,000, (vi) the aggregate amount of Unrecognized Retiree Welfare Liability under all applicable Employee Benefit Plans is in excess of $1,000,000, (vii) the Borrower, any of its Subsidiaries or any ERISA Affiliate has engaged in a Prohibited Transaction with respect to an Employee Benefit Plan, (viii) the imposition of any material tax against the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 4980B(a) of the Code or (ix) the assessment of a material civil penalty against the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 502(c) of ERISA, together with a certificate of a Financial Officer of the Borrower setting forth the details of such event and the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto, together with a copy of all notices and filings with respect thereto. (e) Prompt written notice in the event that the Borrower, any of its Subsidiaries or any ERISA Affiliate shall receive a demand letter from the PBGC notifying the Borrower, such Subsidiary or such ERISA Affiliate of any final decision finding liability and the date by which such liability must be paid, together with a copy of such letter and a certificate of a Financial Officer of the Borrower setting forth the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (f) Promptly upon the same becoming available, and in any event by the date such amendment is adopted, a copy of any Pension Plan amendment that the Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt which would require the posting of security under Section 401(a)(29) of the Code, together with a certificate of a Financial Officer of the Borrower setting forth the reasons for the adoption of such amendment and the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (g) As soon as possible and in any event by the tenth day after any required installment or other payment under Section 412 of the Code owed to a Pension Plan shall have become due and owing by the Borrower, any of its Subsidiaries or any ERISA Affiliate and remain unpaid, a copy of the notice of failure to make required contributions provided to the PBGC by the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 412(n) of the Code, together with a certificate of a Financial Officer setting forth the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. - 58 - 60 (h) Prompt written notice upon any development in asbestos litigation that could reasonably be expected to have a Material Adverse Effect. (i) Such other information as the Administrative Agent or any Lender shall reasonably request from time to time. 7.3. Legal Existence Except as may otherwise be permitted by Sections 8.3 and 8.4, maintain, and cause each of its Subsidiaries to maintain, its corporate, partnership or analogous existence, as the case may be, in good standing in the jurisdiction of its incorporation or formation and in each other jurisdiction in which the failure so to do could reasonably be expected to have a Material Adverse Effect, provided, however, that any Guarantor may be dissolved, provided that (i) no Event of Default shall then exist and be continuing, (ii) all of the Property of such Guarantor shall be transferred to the Borrower or any other Guarantor, (iii) no such dissolution shall adversely affect the Collateral (including the nature, status, quality or value thereof) or the interest of the Collateral Agent therein, and (iv) no Guarantor that creates accounts receivable may dissolve into any other Guarantor or the Borrower unless the accounts receivable of such Guarantor (or attributable to the line of business engaged in by such Guarantor) shall, after giving effect to such dissolution, constitute Collateral under the Security Agreement and shall be expressly excluded for all purposes from being sold to the Receivables Subsidiary pursuant to the Receivables Purchase Documents or otherwise being subject to any restriction contained in the Receivables Purchase Documents. 7.4. Taxes Pay and discharge when due, and cause each of its Subsidiaries so to do, any Tax upon or with respect to the Borrower or such Subsidiary and any Tax upon the income, profits and Property of the Borrower and its Subsidiaries, which if unpaid, could reasonably be expected to have a Material Adverse Effect or become a Lien on Property of the Borrower or such Subsidiary (other than a Lien described in Section 8.2(i)), unless and to the extent only that any such Tax shall be contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Subsidiary and provided that such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor. 7.5. Insurance and Condemnation. (a) Liability Insurance. Maintain, and cause each Subsidiary to maintain, insurance with financially sound insurance carriers on such of its Property, against at least such risks, and in at least such amounts, as are customarily insured against by similar businesses, in each case naming the Administrative Agent and the Collateral Agent as an additional insured under such policies. (b) Property Insurance. Maintain such property and other insurance as is customarily maintained by companies engaged in similar businesses. All such property insurance shall name the Collateral Agent, under a - 59 - 61 standard loss payable clause, as a loss payee, as its interest may appear, in respect of each claim resulting in a payment under any such insurance policy exceeding $500,000 and shall contain such endorsements as the Collateral Agent shall require. If the Borrower or any of its Subsidiaries shall receive the proceeds of any insurance, the Borrower shall cause such proceeds to be deposited in a deposit account with a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement. (c) Condemnation Awards. If the Borrower or any of its Subsidiaries shall receive the proceeds of any condemnation or similar awards, the Borrower shall cause such proceeds to be deposited in a deposit account with a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement. (d) Insurance Policies. The Borrower shall deliver to the Administrative Agent on the Effective Date and on each anniversary thereof a detailed list of all insurance of the Borrower and its Subsidiaries then in effect, stating the names of the carriers thereof, the policy numbers, the insureds thereunder, the amounts of insurance, dates of expiration thereof, and the Property and risks covered thereby, together with a certificate of an Authorized Signatory certifying that in the opinion of such officer such insurance complies with the obligations of the Borrower under this Section 7.5, and is in full force and effect. Promptly upon request therefor, the Borrower shall deliver or cause to be delivered to the Administrative Agent originals or duplicate originals of all such policies of insurance. 7.6. Performance of Obligations Pay and discharge when due, and cause each of its Subsidiaries so to do, all lawful Indebtedness, obligations and claims for labor, materials and supplies or otherwise which, if unpaid, could (i) reasonably be expected to have a Material Adverse Effect, or (ii) become a Lien upon Property of the Borrower or any of its Subsidiaries other than a Permitted Lien, unless and to the extent only that the validity of such Indebtedness, obligation or claim shall be contested in good faith and by appropriate proceedings diligently conducted, and provided that such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor. 7.7. Observance of Legal Requirements Observe and comply in all respects, and cause each of its Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules, regulations, certifications, franchises, permits, licenses, directions and requirements of all Governmental Authorities, which now or at any time hereafter may be applicable to it, a violation of which could reasonably be expected to have a Material Adverse Effect, except such thereof as shall be contested in good faith and by appropriate proceedings diligently conducted by it, provided that such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor. - 60 - 62 7.8. Inspection of Property; Books and Records; Discussions (a) At all reasonable times, upon reasonable prior notice, permit representatives of the Administrative Agent and each Lender to visit the offices of the Borrower and each of its Subsidiaries, to examine the books and records thereof and Accountants' reports relating thereto, and to make copies or extracts therefrom, to discuss the affairs of the Borrower and each such Subsidiary with the respective officers thereof, and to examine and inspect the Property of the Borrower and each such Subsidiary and to meet and discuss the affairs of the Borrower and each such Subsidiary with the Accountants. (b) Upon the occurrence and during the continuance of any Default, Event of Default or Material Adverse Change, at the request of the Required Lenders and at the expense of the Borrower, permit financial consultants or other representatives of the Administrative Agent or any Lender to visit the offices of the Borrower and each of its Subsidiaries, to examine the books and records thereof and Accountants' reports relating thereto and to make copies or extracts therefrom, to discuss the affairs of the Borrower and each such Subsidiary with the respective officers thereof, to examine and inspect the Property of the Borrower and each such Subsidiary, to meet and discuss the affairs of the Borrower and each such Subsidiary with the Accountants, and to prepare reports relating thereto. 7.9. Authorizations Maintain, and cause each of its Subsidiaries to maintain, in full force and effect, all licenses, franchises, permits, licenses, authorizations and other rights as are necessary for the conduct of its business, except to the extent the failure to so maintain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 7.10. Financial Covenants (a) Interest Coverage Ratio. Maintain as of the end of any fiscal quarter during each period set forth below, an Interest Coverage Ratio of not less than the applicable ratio set forth below: Period Ratio ------ ----- Effective Date through the fiscal quarter ending on or about June 30, 2002 1.35:1.00 the fiscal quarter beginning on or about July 1, 2002 and thereafter 1.50:1.00. - 61 - 63 (b) Minimum Consolidated EBITDA. Maintain as of the end of any fiscal quarter Consolidated EBITDA for the immediately preceding four fiscal quarters of not less than $80,000,000. 7.11. Additional Subsidiaries If any Subsidiary is formed or acquired after the Effective Date, the Borrower will notify the Administrative Agent and the Lenders in writing thereof within three Business Days prior to the date on which such Subsidiary is to be formed or acquired and (i) the Borrower will cause such Subsidiary (other than the Receivables Subsidiary) to (a) execute and deliver each applicable Guaranty Document (or otherwise become a party thereto in the manner provided therein) and become a party to each applicable Security Document in the manner provided therein, in each case within five Business Days after the date on which such Subsidiary is formed or acquired and (ii) promptly take such actions to create and perfect Liens on such Subsidiary's assets to secure the Obligations as the Administrative Agent or the Required Lenders shall reasonably request, (b) if any equity securities issued by any such Subsidiary are owned or held by or on behalf of the Borrower or any Guarantor or any loans, advances or other debt is owed or owing by any such Subsidiary to the Borrower or any Guarantor, the Borrower will cause such equity securities and promissory notes and other instruments evidencing such loans, advances and other debt to be pledged pursuant to the Security Documents within five Business Days after the date on which such Subsidiary is formed or acquired, and (c) deliver (i) a certificate, dated the date such Subsidiary shall have become a party to the Subsidiary Guaranty, executed by such Subsidiary and substantially in the form of, and with substantially the same attachments as, the certificate which would have been required under Section 5.1 if such Subsidiary had become a party to the Subsidiary Guaranty on or before the Effective Date, and (ii) an opinion of counsel to such Subsidiary, covering the same matters with respect to such Subsidiary as were covered by the opinions delivered pursuant to Section 5.14, in form and substance satisfactory to the Administrative Agent, and (iii) such other documents as the Administrative Agent shall request. 7.12. Further Assurances; Certain Real Estate Matters (a) Within 45 days of the Closing Date, the Borrower will deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent (i) counterparts of a Mortgage with respect to each Mortgaged Property listed on Part A of Schedule 1.1(m), signed on behalf of the record owner of such Mortgaged Property, (ii) a current title search report in standard form issued by a nationally recognized title insurance company with respect to each such Mortgaged Property, and (iii) such UCC-1 financing statements and other documents, instruments or agreements that the Administrative Agent reasonably requests with respect to each such Mortgaged Property for purposes of creating and perfecting a valid mortgage lien on each such such Mortgaged Property, provided that the Borrower will use its best efforts to satisfy this Section 7.12(a) within 30 days of the Closing Date. (b) Within 60 days of the Closing Date, the Borrower will deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent (i) a policy or policies of title insurance issued by a - 62 - 64 nationally recognized title insurance company, insuring the Lien of each Mortgage on each Mortgaged Property listed on Part A of Schedule 1.1(m) as a valid first Lien on such Mortgaged Property described therein, free of any other Liens except as permitted by Section 8.2, in form and substance reasonably acceptable to the Administrative Agent, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request, (ii) such existing surveys of such Mortgaged Property as the Borrower or its Subsidiaries may have, (iii) a copy of any existing phase I environmental report issued for each such Mortgaged Property as the Borrower or its Subsidiaries may have, (iv) such customary opinions of local counsel to the Borrower with respect to such Mortgages as the Administrative Agent shall reasonably require and (v) such other customary documentation with respect to such Mortgages and such Mortgaged Property, including copies of all appraisals issued with respect thereto, as the Administrative Agent may reasonably request. (c) The Borrower will use its commercially reasonable best efforts to deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible (i) counterparts of a Mortgage with respect to each Mortgaged Property listed on Part B of Schedule 1.1(m), signed on behalf of the record owner of such Mortgaged Property, (ii) a current title search report in standard form issued by a nationally recognized title insurance company with respect to each such Mortgaged Property, (iii) such UCC-1 financing statements and other documents, instruments or agreements that the Administrative Agent reasonably requests with respect to each such Mortgaged Property for purposes of creating and perfecting a valid mortgage lien on each such such Mortgaged Property, (iv) a policy or policies of title insurance issued by a nationally recognized title insurance company, insuring the Lien of each Mortgage on each such Mortgaged Property as a valid first Lien on such Mortgaged Property described therein, free of any other Liens except as permitted by Section 8.2, in form and substance reasonably acceptable to the Administrative Agent, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request, (v) such existing surveys of such Mortgaged Property as the Borrower or its Subsidiaries may have, (vi) a copy of any existing phase I environmental report issued for each such Mortgaged Property as the Borrower or its Subsidiaries may have, (vii) such customary opinions of local counsel to the Borrower with respect to such Mortgages as the Administrative Agent shall reasonably require and (viii) such other customary documentation with respect to such Mortgages and such Mortgaged Property, including copies of all appraisals issued with respect thereto, as the Administrative Agent may reasonably request. (d) With respect to each Mortgaged Property listed on Part B of Schedule 1.1(m), the Borrower will use its commercially reasonable best efforts to deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible a collateral assignment (satisfactory in form and substance to the Administrative Agent) of all of its rights or options to acquire the underlying real estate and improvements constituting a part of such Mortgaged Property. (e) With respect to leased real property the landlord of which is an Affiliate of the Borrower, the Borrower will deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as - 63 - 65 possible a landlord lien waiver with respect to each such leased real property, such landlord lien waiver to be in customary form and reasonably satisfactory to the Administrative Agent. (f) With respect to leased real property the landlord of which is not an Affiliate of the Borrower, the Borrower will use its commercially reasonable best efforts to deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible a landlord lien waiver with respect to each such leased real property, such landlord lien waiver to be in customary form and reasonably satisfactory to the Administrative Agent. (g) The Borrower will, and will cause each Guarantor to, execute any and all further documents, financing statements, agreements (including guarantee agreements and security agreements) and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Mortgages and other documents), that may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect (including as a result of any change in applicable law) the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Borrower and the Guarantors. The Borrower also agrees to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents. (h) If any assets (including any real property or improvements thereto or any interest therein that exceed $1,000,000 in value) are acquired by the Borrower or any Guarantor after the Effective Date (other than Payroll Accounts, Petty Cash Accounts and assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), the Borrower will notify the Administrative Agent and the Lenders thereof, and, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Guarantors to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraphs (a), (b), (c), (d), (e) and (f) of this Section and shall deliver all documents, certificates and instruments required to be delivered pursuant to Section 5.5 as if such assets existed on the Effective Date, all at the expense of the Borrower and the Guarantors. 7.13. Environmental Compliance The Borrower will, and will cause each Subsidiary to, use and operate all of its facilities and property in compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all applicable Environmental Laws, except where noncompliance with any of the foregoing could not reasonably be expected to have a Material Adverse Effect. - 64 - 66 7.14. Invested Cash, Marketable Securities and System Cash (a) The Borrower will, and will cause each Subsidiary (other than any Receivable Subsidiary) to (i) deposit and maintain on deposit all of its Invested Cash in the Cash Collateral Account, (ii) deposit and, subject to Section 7.14(b), maintain on deposit all of its Marketable Securities with Bear, Stearns & Co. Inc., (iii) cause all of its System Cash to be deposited in Qualified Depositary Institutions and, prior to any such deposit, cause each such Qualified Depositary Institution to execute and deliver to the Collateral Agent a Depositary Control Agreement and (iv) comply with the Cash Management System. (b) The Borrower will, and will cause each Subsidiary to, liquidate all of its Marketable Securities by no later than December 31, 2000 and deposit the net proceeds in the Cash Collateral Account pursuant to Section 7.14(a). (c) The Borrower will cause the Receivables Subsidiary to promptly transfer to the Borrower, for deposit in a Qualified Depositary Institution that has executed and delivered to the Collateral Agent a Depositary Control Agreement, cash held by the Receivables Subsidiary in excess of the cash required to be held by the Receivables Subsidiary pursuant to the Receivables Purchase Documents. 8. NEGATIVE COVENANTS The Borrower agrees that, so long as this Agreement is in effect, any Loan or Reimbursement Obligation (contingent or otherwise) in respect of any Letter of Credit remains outstanding and unpaid, or any other amount is owing under any Loan Document to any Lender, the Issuing Bank or the Administrative Agent, the Borrower shall not, directly or indirectly: 8.1. Indebtedness Create, incur, assume or suffer to exist any liability for Indebtedness, or permit any of its Subsidiaries so to do, except (i) Indebtedness under the Loan Documents, (ii) Indebtedness of the Borrower or any of its Subsidiaries existing on the Effective Date as set forth on Schedule 8.1, (iii) Borrower Intercompany Investments, (iv) the Chase Platinum Substitute Note, and (v) Indebtedness with respect to Capital Leases and purchase money Indebtedness of the Borrower or any of its Subsidiaries (including any extension, replacement or refinance of such Capital Lease or purchase money Indebtedness), provided that any such extension, replacement or refinance (x) does not result in an increase in the outstanding principal amount of such Capital Lease or purchase money Indebtedness from that in effect on the Effective Date, and (y) does not result in the annual lease payments/debt service payable under such Capital Lease or purchase money Indebtedness (as so extended, replaced or refinanced) exceeding the annual lease payments/debt service (without giving effect to any balloon or similar payments) payable under such Capital Lease or purchase money Indebtedness immediately prior to such extension, replacement or refinance. - 65 - 67 8.2. Liens Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, or permit any of its Subsidiaries so to do, except (i) Liens for any Tax or governmental charge in the ordinary course of business which are not delinquent or which are being contested in accordance with Section 7.4 or 7.6, provided that enforcement of such Liens is stayed pending such contest, (ii) Liens in connection with workers' compensation, unemployment insurance or other social security obligations (but not ERISA), (iii) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety, performance and appeal bonds, contractual or warranty requirements and other obligations of like nature arising in the ordinary course of business, (iv) zoning ordinances, easements, rights of way, minor defects, irregularities, and other similar restrictions affecting real Property which do not materially adversely affect the value of such real Property or the financial condition of the Borrower or of the Borrower and its Subsidiaries taken as a whole or materially impair its use for the operation of the business of the Borrower or any such Subsidiary, (v) Liens arising by operation of law such as mechanics', materialmen's, carriers', warehousemen's liens incurred in the ordinary course of business which are not delinquent or which are being contested in accordance with Section 7.6, provided that enforcement of such Liens is stayed pending such contest, (vi) Liens arising out of judgments or decrees which are being contested in accordance with Section 7.6, provided that enforcement of such Liens is stayed pending such contest, (vii) Liens in favor of the Administrative Agent, the Issuing Bank and the Lenders under the Loan Documents and Liens in favor of the Collateral Agent under the Security Documents, (viii) broker's Liens securing the payment of commissions and management fees in the ordinary course of business, (ix) Liens on Property (including replacements of such Property or additions or accessions thereto pursuant to applicable law) existing on the Effective Date as set forth on Schedule 8.2, (x) Liens under Capital Leases or purchase money Indebtedness permitted by Section 8.1(v), provided that such Liens attach only to the Property so acquired pursuant to such Capital Leases or purchase money Indebtedness (including replacements thereof or additions or accessions thereto pursuant to applicable law), and (xi) Liens arising solely from the filing of UCC financing statements for precautionary purposes in connection with true operating leases or conditional sales of property that are otherwise permitted under the Agreement and under which the Borrower or any of its Subsidiaries is lessee or on accounts receivable and related intangible rights in connection with non-recourse sales of accounts receivable of the Borrower to a Receivables Subsidiary pursuant to and in accordance with the Receivables Purchase Documents. 8.3. Merger, Consolidations and Acquisitions Consolidate with, merge into or with any Person, make any Acquisition or enter into any binding agreement to do any of the foregoing which is not contingent on obtaining the consent of the Required Lenders, or permit any of its Subsidiaries so to do, except: (a) any wholly-owned Guarantor may merge with any other wholly-owned Guarantor or with the Borrower, provided that (i) no such merger - 66 - 68 shall adversely affect the Collateral (including the nature, status, quality or value thereof) or the interest of the Collateral Agent therein, (ii) the Borrower shall be the survivor in any merger involving the Borrower and (iii) no Guarantor that creates accounts receivable may merge with any other Guarantor or with the Borrower unless the accounts receivable of such Guarantor (or attributable to the line of business engaged in by such Guarantor) shall, after giving effect to such merger, constitute Collateral under the Security Agreement and shall be expressly excluded for all purposes from being sold to the Receivables Subsidiary pursuant to the Receivables Purchase Documents or otherwise being subject to any restriction contained in the Receivables Purchase Documents; (b) Investments permitted by Section 8.5; and (c) Dispositions permitted by Section 8.4. 8.4. Dispositions Make any Disposition, or permit any of its Subsidiaries so to do, except: (a) Dispositions of inventory or other assets (including, without limitation, Marketable Securities, Cash Equivalents and Hedge Agreements) in the ordinary course of business or the disposition of platinum in connection with the satisfaction of the Chase Platinum Agreement; (b) Dispositions of shares of stock, notes or other securities or other equity interests owned by the Borrower or any of its Subsidiaries, other than any such equity interests of (i) any Subsidiaries of the Borrower, or (ii) other Persons, unless such equity interests are held solely as an investment and without a view to participating in the management of such other Person; (c) Dispositions by means of a lease or sublease of Property of the Borrower or any of its Subsidiaries, so long as the Borrower or such Subsidiary continues to reflect ownership of such Property in its financial statements in accordance with GAAP; (d) Dispositions of Property (other than accounts receivable) by the Borrower or any of its Subsidiaries to the Borrower or any Guarantor; (e) Dispositions of Property pursuant to a condemnation proceeding; (f) sales or transfers of accounts receivable (and related intangible rights) to any Receivables Subsidiary pursuant to and in accordance with the Receivables Purchase Documents; (g) the destruction of Property as a result of casualty; (h) Dispositions of Property which, in the reasonable opinion of the Borrower or such Subsidiary, is obsolete or no longer useful in the conduct of its business; - 67 - 69 (i) the Disposition of the Ontario, Port Arthur, Corvallis, Monroe, Houston and Leatherback facilities of the Borrower, provided that at least 50% of the consideration received for each such Disposition shall be cash and no Default or Event of Default shall exist immediately before or after giving effect thereto; (j) any Disposition the fair market value of which is less than $5,000,000 and, when aggregated with all other Dispositions made pursuant to this Section 8.4(j) within the same fiscal year, is less than $15,000,000; and (k) Dispositions in the ordinary course of business by means of a license or a sublicense, to the extent the proceeds thereof (excluding reimbursements, indemnities and the like) are included in the income before taxes and extraordinary items of the Borrower or such Subsidiary; provided that in connection with any Disposition pursuant to subsection (a) or (b) above of Investments in Marketable Securities and Investments in other securities or to fund managers permitted pursuant to subsections (g) or (h) of Section 8.5, and in connection with Dispositions pursuant to subsections (i) or (j) above, upon receipt of any net proceeds by the Borrower or any of its Subsidiaries as a result thereof, the Borrower shall immediately cause such net proceeds to be deposited with a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement. 8.5. Investments, Loans, Etc. At any time, directly or indirectly, purchase or otherwise hold, own, acquire or invest in the Capital Stock of, evidence of indebtedness or other obligation or security issued by, any other Person, or make any loan or advance to, or enter into any arrangement for the purpose of providing funds or credit to, or become a partner or joint venturer in any partnership or joint venture, or enter into any Hedge Agreement, or make any other investment (whether in cash or other Property) in any other Person, or make any commitment or otherwise to agree to do any of the foregoing (all of which are sometimes referred to herein as "Investments"), or permit any of its Subsidiaries so to do, except: (a) Investments in Cash Equivalents on deposit in the Cash Collateral Account; (b) Investments existing on the Effective Date as set forth on Schedule 8.5; (c) (i) Investments of System Cash in the form of deposits in normal business banking accounts in a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement, (ii) Investments in the form of deposits in Payroll Accounts with Qualified Depositary Institutions, (iii) Investments in the form of deposits in Petty Cash Accounts with Qualified Depositary Institutions, (iv) Investments in the form of - 68 - 70 deposits in Disbursement Account No. 1, and (v) Investments in the form of deposits in Disbursement Account No. 2; (d) Investments in Hedge Agreements, provided that such Investments are used for hedging purposes and in the ordinary course of business; (e) Borrower Intercompany Investments; (f) (i) loans or advances to employees of the Borrower or any of its Subsidiaries (other than any Permitted Holder) for travel and relocation expenses incurred in the ordinary course of business, and (ii) other loans or advances to employees of the Borrower or any of its Subsidiaries (other than any Permitted Holder) in an aggregate outstanding amount not to exceed $1,000,000; (g) Until December 31, 2000, Investments in Marketable Securities existing on the Effective Date as set forth on Schedule 8.5(g), including Marketable Securities received as a dividend or distribution in respect of any such Marketable Securities existing on the Effective Date, provided that such Investments are subject to a first priority perfected security interest in favor of the Collateral Agent pursuant to the Security Agreement; (h) Until December 31, 2000, Investments in other securities or to fund managers existing on the Effective Date as set forth on Schedule 8.5(h), including any Investments in other securities or to fund managers received as a dividend or distribution in respect of any such Investments in other securities or to fund managers existing on the Effective Date, provided that such Investments are subject to a first priority perfected security interest in favor of the Collateral Agent pursuant to the Security Agreement. (i) Investments by any Receivables Subsidiary to the extent required pursuant to and in accordance with the Receivables Purchase Documents; (j) Investments in any "strategic alliance" joint marketing arrangement, provided that such Investments do not exceed $750,000 in the aggregate for any fiscal year; (k) Loans made to employees of the Borrower and its Subsidiaries in an aggregate principal amount not to exceed $6,000,000 in order for such employees to purchase equity securities of the Borrower pursuant to an employee stock purchase or similar program; (l) any loan made by the Borrower or any of its Subsidiaries to any Parent, provided that such loan shall be permitted under Section 8.6; and (m) loans or advances to suppliers of the Borrower or any of its Subsidiaries relating to the operations or business thereof in an aggregate outstanding amount not to exceed $250,000 for any single supplier and $1,000,000 for all suppliers. - 69 - 71 8.6. Restricted Payments Declare or pay any Restricted Payments payable in cash or otherwise or apply any of its Property thereto or set apart any sum therefor, or permit any of its Subsidiaries so to do, except that: (i) a wholly-owned Subsidiary of the Borrower may declare and pay Restricted Payments to the Borrower or to any Guarantor, and (ii) the Borrower may make demand loans (which loans shall be evidenced by a Demand Note) to any Parent, provided that (a) the aggregate amount of all such loans shall not exceed (1) for the period from the Closing Date until the first anniversary thereof, the unused portion of the Annual Asbestos Basket for such period minus the Parent Letter of Credit Amount minus the Appeal Security Undrawn Amount, (2) for the period from the first anniversary of the Closing Date until the second anniversary of the Closing Date, $20,000,000 (not exceeding $10,000,000 per fiscal quarter of such year) plus the unused portion of the Annual Asbestos Basket for the period from the Closing Date until the second anniversary of the Closing Date minus the Parent Letter of Credit Amount minus the Appeal Security Undrawn Amount, and (3) for the period from the second anniversary of the Closing Date until the third anniversary of the Closing Date, $5,000,000 plus the unused portion of the Annual Asbestos Basket for the period from the Closing Date until the third anniversary of the Closing Date plus the unused portion of such $20,000,000 for the period from the first anniversary of the Closing Date until the second anniversary of the Closing Date minus the Parent Letter of Credit Amount minus the Appeal Security Undrawn Amount, and (b) immediately before and after giving effect thereto no Default or Event of Default shall exist. 8.7. Business and Name Changes Materially change the nature of the business of the Borrower and its Subsidiaries taken as a whole as conducted on the Effective Date. 8.8. ERISA Permit or cause any Pension Plan to have a Funded Current Liability Percentage of less than 60%, or increase benefits, or permit any of its Subsidiaries so to do, under any Employee Benefit Plan or establish or contribute to any new Employee Benefit Plan except to the extent that the same could not reasonably be expected to result in a Material Adverse Effect. 8.9. Prepayments of Indebtedness Prepay or obligate itself to prepay, in whole or in part, Indebtedness under any Senior Note Indenture, the Fleet LC Agreement or the Chase Platinum Substitute Note or permit any of its Subsidiaries so to do. 8.10. Amendments, Etc. of Certain Agreements Enter into or agree to any amendment, modification or waiver of any term or condition of its Organizational Documents or any of the Material Agreements in any way that could reasonably be expected to have a Material Adverse Effect, or permit any of its Subsidiaries so to do, or, with respect to the Receivables Purchase Documents, that could reasonably be respected to (x) - 70 - 72 denigrate the value of the security interest of the Collateral Agent in the Capital Stock of the Receivables Subsidiary or in any other Collateral, including any accounts receivable of the Borrower or any of its Subsidiaries (other than the Receivables Subsidiary) not subject to the documents described in clause (i) of the definition of Receivables Purchase Documents, or (y) restrict the rights of the Collateral Agent to foreclose or otherwise pursue its remedies under the Security Agreement with respect to such Capital Stock or such other Collateral, in either case in comparison to such value or rights in existence under the Receivables Purchase Documents immediately prior to such amendment, modification or waiver (it being understood that advance rates, eligibility requirements, concentration limits and a maturity date (provided such maturity date is later than September 30, 2001) more favorable to the Receivables Subsidiary shall not be deemed to denigrate such value or restrict such rights. 8.11. Transactions with Affiliates Except with respect to any Restricted Payment permitted by Section 8.6, become a party to any transaction with an Affiliate, or permit any of its Subsidiaries so to do, unless the terms and conditions relating thereto are as favorable to the Borrower or such Subsidiary as those which would be obtainable at the time in a comparable arms-length transaction with a Person other than an Affiliate. 8.12. Limitation on Upstream Transfers Permit or cause any of its Subsidiaries (other than any Receivables Subsidiary) to enter into or agree, or otherwise be or become subject, to any agreement, contract or other arrangement (other than this Agreement and the Existing Credit Agreement) with any Person pursuant to the terms of which (i) such Subsidiary is or would be prohibited from making any advances to the Borrower or declaring or paying any cash dividends on any class of its Capital Stock owned directly or indirectly by the Borrower or any of the other Subsidiaries or from making any other distribution on account of any class of any such Capital Stock (herein referred to as "Upstream Transfers"), or (ii) the declaration or payment of Upstream Transfers on an annual or cumulative basis is or would be otherwise limited or restricted. 8.13. Capital Leases and Sale-Leaseback Transactions Enter into any arrangement with any Person, or permit any of its Subsidiaries so to do, (i) constituting a Capital Lease or (ii) providing for the leasing (pursuant to a Capital Lease) by the Borrower or such Subsidiary of Property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such Property or rental obligations of the Borrower or such Subsidiary (a "Sale-Leaseback Transaction"), except Capital Leases and Sale-Leaseback Transactions of the Borrower or any of its Subsidiaries existing on the Effective Date as set forth on Schedule 8.13 and Capital Leases permitted under Section 8.1(iv). - 71 - 73 8.14. Capital Expenditures Permit Capital Expenditures of the Borrower and the Subsidiaries to exceed (i) for the fiscal quarter ending on or about December 31, 2000, $15,800,000, (ii) from January 1, 2001 through and including December 31, 2001, $40,000,000, (iii) from January 1, 2002 through and including December 31, 2002, $30,000,000 plus the sum of 75% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2001 over $100,000,000 up to $120,000,000 and 100% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2001 over $120,000,000, and (iv) from January 1, 2003 through and including the Maturity Date, $30,000,000 plus the sum of 75% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2002 over $100,000,000 up to $120,000,000 and 100% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2002 over $120,000,000. In calculating Capital Expenditures for any period set forth above, (i) there should be deducted from Capital Expenditures for such period the amount of any reimbursement due the Borrower or any of its Subsidiaries, but not paid during such period, from lessors under leases, which amount, had it been paid during such period, would have reduced the amount of Capital Expenditures for such period, (ii) there shall be added to Capital Expenditures for such period the amount of any reimbursement paid to the Borrower or any of its Subsidiaries during such period from lessors under leases to the extent such reimbursement had been deducted from Capital Expenditures for a prior period pursuant to clause (i) above, and (iii) there shall be excluded from Capital Expenditures the cost of the Borrower's purchase of platinum in connection with the Chase Platinum Substitute Note. 8.15. Asbestos Costs Permit all costs (including, without limitation, payments, settlements, judgments, the Appeal Security Drawn Amount and legal costs) of the Borrower and its Subsidiaries in connection with asbestos claims to exceed $2,000,000 per fiscal quarter (for any four fiscal quarter period, the "Annual Asbestos Basket"), provided that the Appeal Security Drawn Amount may exceed $2,000,000 per fiscal quarter but shall not exceed $8,000,000 for any four fiscal quarter period and shall be deemed usage of the Annual Asbestos Basket. 8.16. Tax Sharing Payments. Permit any payments made by the Borrower or any of its Subsidiaries under the Tax Sharing Agreement (a) to be on terms other than the terms contained in the Tax Sharing Agreement, and (b) to exceed (i) for the period from the Closing Date through the last day of the fiscal year ending on or about December 31, 2000, $0, (ii) for the fiscal year ending on or about December 31, 2001, $0, and (iii) for the fiscal year ending on or about December 31, 2002 and for each fiscal year thereafter, $5,000,000 for such fiscal year if Consolidated EBITDA for the immediately preceding fiscal year is between $100,000,000 and $120,000,000 and $10,000,000 for such fiscal year if Consolidated EBITDA for the immediately preceding fiscal year is greater than $120,000,000. - 72 - 74 9. DEFAULT 9.1. Events of Default The following shall each constitute an "Event of Default" hereunder: (a) The failure of the Borrower to make any payment of principal on any Note, or any reimbursement payment hereunder or under any Reimbursement Agreement, when due and payable; or (b) The failure of the Borrower to make any payment of interest, Fees, expenses or other amounts payable under any Loan Document or otherwise to the Administrative Agent with respect to the loan facilities established hereunder within three Business Days of the date when due and payable; or (c) The failure of the Borrower to observe or perform any covenant or agreement contained in Sections 2.8, 7.3, 7.10, 7.11, 7.14 or Section 8; or (d) The failure of any Credit Party to observe or perform any other term, covenant, or agreement contained in any Loan Document and such failure shall have continued unremedied for a period of 30 days after a Responsible Officer of such Credit Party shall have obtained knowledge thereof; or (e) Any representation or warranty made by any Credit Party (or by an officer thereof on its behalf) in any Loan Document or in any certificate, report, opinion (other than an opinion of counsel) or other document delivered or to be delivered pursuant thereto, shall prove to have been incorrect or misleading (whether because of misstatement or omission) in any material respect when made; or (f) (i) Liabilities and/or other obligations of the Borrower (other than its obligations hereunder) or any of its Subsidiaries, whether as principal, guarantor, surety or other obligor, for the payment of any Indebtedness or operating leases ("Debt Obligations") in an aggregate amount in excess of $5,000,000 (A) shall become or shall be declared to be due and payable prior to the expressed maturity thereof, or (B) shall not be paid when due or within any grace period for the payment thereof, or (ii) as a consequence of the occurrence or continuation of any event or condition, the Borrower or any of its Subsidiaries has become obligated to purchase or repay any Debt Obligations in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries before the regularly scheduled maturity date thereof, or (iii) any holder or holders (or any trustee or agent on its or their behalf) of any Debt Obligations in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries shall have the right to declare such liabilities or obligations due and payable prior to the expressed maturity thereof; or (g) The Borrower or any of its Subsidiaries shall (i) suspend or discontinue its business (except as permitted pursuant to Section 7.3), (ii) make an assignment for the benefit of creditors, (iii) generally not - 73 - 75 be paying its debts as such debts become due, (iv) admit in writing its inability to pay its debts as they become due, (v) file a voluntary petition in bankruptcy, (vi) become insolvent (however such insolvency shall be evidenced), (vii) file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment of debt, liquidation or dissolution or similar relief under any present or future statute, law or regulation of any jurisdiction, (viii) petition or apply to any tribunal for any receiver, custodian or any trustee for any substantial part of its Property, (ix) be the subject of any such proceeding filed against it which remains undismissed for a period of 60 days, (x) file any answer admitting or not contesting the material allegations of any such petition filed against it or any order, judgment or decree approving such petition in any such proceeding, (xi) seek, approve, consent to, or acquiesce in any such proceeding, or in the appointment of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal agent for it, or any substantial part of its Property, or an order is entered appointing any such trustee, receiver, custodian, liquidator or fiscal agent and such order remains in effect for 60 days, or (xii) take any formal action for the purpose of effecting any of the foregoing or looking to the liquidation or dissolution (except as permitted pursuant to Section 7.3) of the Borrower or such Subsidiary; or (h) An order for relief is entered under the bankruptcy or insolvency laws of any jurisdiction or any other decree or order is entered by a court having jurisdiction (i) adjudging the Borrower or any of its Subsidiaries bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization, liquidation, arrangement, adjustment or composition of or in respect of the Borrower or any of its Subsidiaries under the bankruptcy or insolvency laws of any jurisdiction, (iii) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Borrower or any of its Subsidiaries, or of any substantial part of the Property of any thereof, or (iv) ordering the winding up or liquidation of the affairs of the Borrower or any of its Subsidiaries, and any such decree or order continues unstayed and in effect for a period of 60 days; or (i) Judgments or decrees against the Borrower or any of its Subsidiaries aggregating in excess of $5,000,000 for the Borrower and its Subsidiaries shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of 30 days; or (j) Any Loan Document shall cease, for any reason, to be in full force and effect, or any Credit Party shall so assert in writing or shall disavow any of its obligations under any Loan Document; or (k) The occurrence of a Change of Control; or (l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Credit Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents or (ii) as a result of the Collateral Agent's failure to maintain possession of any stock certificates, promissory notes or other - 74 - 76 instruments delivered to it under any Security Document or any foreclosure, distraint, sale or similar proceedings have been commenced with respect to any Collateral; or (m) any Termination Event shall occur; (ii) any Accumulated Funding Deficiency, whether waived, shall exist with respect to any Pension Plan; (iii) any Person shall engage in any Prohibited Transaction involving any Employee Benefit Plan; (iv) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall fail to pay when due an amount which is payable by it to the PBGC or to a Pension Plan under Title IV of ERISA; (v) the imposition of any tax under Section 4980B(a) of the Code; (vi) the assessment of a civil penalty with respect to any Employee Benefit Plan under Section 502(c) of ERISA; or (vii) any other event or condition shall occur or exist with respect to an Employee Benefit Plan which, in the case of clauses (i) through (vii), individually or in the aggregate, would be reasonably likely to constitute a Material Adverse Effect; or (n) the declaration or payment of any Restricted Payment described in clauses (i) and (ii) of the definition of Restricted Payment by, or loan to any shareholder of, G-I Holdings Inc., other than pursuant to a court order expressly permitting such declaration or payment. 9.2. Contract Remedies (a) Upon the occurrence of an Event of Default or at any time thereafter during the continuance thereof, (i) if it is an Event of Default specified in Sections 9.1(g) or 9.1(h), all Revolving Credit Commitments, the Swing Line Commitment and the Letter of Credit Commitment shall immediately and automatically terminate and the Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations owing or contingently owing in respect of all outstanding Letters of Credit and all other amounts owing under the Loan Documents shall immediately become due and payable, and the Borrower shall forthwith deposit an amount equal to the Letter of Credit Exposure of all Lenders in a cash collateral account with and under the exclusive dominion and control of the Collateral Agent, and (ii) if it is any other Event of Default, upon the direction of the Required Lenders the Administrative Agent shall (A) by notice to the Borrower, declare all Revolving Credit Commitments, the Swing Line Commitment, and the Letter of Credit Commitment to be terminated forthwith, whereupon such Revolving Credit Commitments, the Swing Line Commitment and the Letter of Credit Commitment shall immediately terminate, and/or (B) by notice to the Borrower, declare the Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations owing or contingently owing in respect of all outstanding Letters of Credit and all other amounts owing under the Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable, and the Borrower shall forthwith deposit an amount equal to the Letter of Credit Exposure of all Lenders in a cash collateral account with and under the exclusive dominion and control of the Collateral Agent. Except as otherwise provided in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. The Borrower hereby further expressly waives and covenants not to assert any appraisement, valuation, stay, extension, redemption or similar laws, now or at any time - 75 - 77 hereafter in force which might delay, prevent or otherwise impede the performance or enforcement of any Loan Document. (b) In the event that the Revolving Credit Commitments of all the Lenders, the Swing Line Commitment of the Swing Line Lender and the Letter of Credit Commitment shall have been terminated or the Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations owing or contingently owing in respect of all outstanding Letters of Credit and all other amounts owing under the Loan Documents shall have been declared due and payable pursuant to the provisions of this Section, any funds received by the Administrative Agent, Swing Line Lender, the Issuing Bank and the Lenders from or on behalf of the Borrower shall, subject to the Collateral Agent Agreement, be remitted to and applied by the Administrative Agent in the following manner and order: (i) first, to the payment of interest on, and then the principal portion of, any Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed, (ii) second, to reimburse the Administrative Agent, the Swing Line Lender, the Issuing Bank and the Lenders for any expenses due from the Borrower pursuant to the provisions of Section 11.5 and the Reimbursement Agreements, (iii) third, to the payment of the Reimbursement Obligations and the outstanding principal amount of the Swing Line Loans (together with all interest thereon), (iv) fourth, to the payment of the Fees, (v) fifth, to the payment of any other fees, expenses or amounts (other than the principal of and interest on the Loans) payable by the Borrower to the Administrative Agent, the Issuing Bank, the Swing Line Lender or any of the Lenders under the Loan Documents, (vi) sixth, to the payment, pro rata according to the Outstanding Percentage of each Lender, of interest due on the Loans (other than the Swing Line Loans), (vii) seventh, to the payment, pro rata according to the Outstanding Percentage of each Lender, of principal on the Loans (other than the Swing Line Loans), and (viii) eighth, any remaining funds shall be paid to whomsoever shall be entitled thereto or as a court of competent jurisdiction shall direct. 10. THE ADMINISTRATIVE AGENT 10.1. Appointment The Issuing Bank and each Lender hereby irrevocably designates and appoints BNY as the Administrative Agent of the Issuing Bank and such Lender under the Loan Documents and the Issuing Bank and each Lender hereby irrevocably authorizes the Administrative Agent to take such action on its behalf under the provisions of the Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Loan Documents, together with such other powers as are reasonably incidental thereto. The duties of the Administrative Agent shall be mechanical and administrative in nature, and, notwithstanding any provision to the contrary elsewhere in any Loan Document, the Administrative Agent shall not have any duties or responsibilities other than those expressly set forth therein, or any fiduciary relationship with, or fiduciary duty to, the Issuing Bank or any Lender, and no implied covenants, functions, responsibilities, duties, - 76 - 78 obligations or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent. 10.2. Delegation of Duties The Administrative Agent may execute any of its duties under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to rely upon, and shall be fully protected in, and shall not be under any liability for, relying upon, the advice of counsel concerning all matters pertaining to such duties. 10.3. Exculpatory Provisions Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan Documents (except the Administrative Agent for its own gross negligence or willful misconduct), or (ii) responsible in any manner to the Issuing Bank or any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any other Credit Party or any officer thereof contained in the Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness, perfection, enforceability or sufficiency of any of the Loan Documents or for any failure of the Borrower or any other Credit Party or any other Person to perform its obligations thereunder. The Administrative Agent shall not be under any obligation to the Issuing Bank or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Loan Documents, or to inspect the Property, books or records of the Borrower or any other Credit Party. The Issuing Bank and the Lenders acknowledge that the Administrative Agent shall not be under any duty to take any discretionary action permitted under the Loan Documents unless the Administrative Agent shall be instructed in writing to do so by the Issuing Bank and Required Lenders and such instructions shall be binding on the Issuing Bank and all Lenders and all holders of the Notes; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or is contrary to law or any provision of the Loan Documents. The Administrative Agent shall not be under any liability or responsibility whatsoever, as Administrative Agent, to the Borrower or any other Credit Party or any other Person as a consequence of any failure or delay in performance, or any breach, by the Issuing Bank or any Lender of any of its obligations under any of the Loan Documents. 10.4. Reliance by Administrative Agent The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by a - 77 - 79 proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower or any other Credit Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may treat the Issuing Bank or each Lender, as the case may be, or the Person designated in the last notice filed with it under this Section, as the holder of all of the interests of the Issuing Bank or such Lender, as the case may be, in its Loans, Notes, Letters of Credit and Reimbursement Obligations, as applicable, until written notice of transfer, signed by the Issuing Bank or such Lender (or the Person designated in the last notice filed with the Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Administrative Agent, shall have been filed with the Administrative Agent. The Administrative Agent shall not be under any duty to examine or pass upon the validity, effectiveness, enforceability or genuineness of the Loan Documents or any instrument, document or communication furnished pursuant thereto or in connection therewith, and the Administrative Agent shall be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. The Administrative Agent shall be fully justified in failing or refusing to take any action under the Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request or direction of the Required Lenders, and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon the Issuing Bank, all the Lenders and all future holders of the Notes and the Reimbursement Obligations. 10.5. Notice of Default The Administrative Agent shall be deemed not to have knowledge or notice of the occurrence of any Default unless the Administrative Agent has received written notice thereof from the Issuing Bank, a Lender, or the Borrower. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall promptly give notice thereof to the Issuing Bank, the Lenders and the Borrower. 10.6. Non-Reliance on Administrative Agent and Other Lenders The Issuing Bank and each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter, including any review of the affairs of the Borrower or any other Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. The Issuing Bank and each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, the Issuing Bank or any Lender, and based on such documents and information as it has deemed appropriate made its own evaluation of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Borrower or any other Credit Party and the value and Lien status of any collateral security and made its own decision to enter into this Agreement. The Issuing Bank and each Lender also represents that it will, independently and without reliance upon the - 78 - 80 Administrative Agent, the Issuing Bank or any Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, evaluations and decisions in taking or not taking action under any Loan Document, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Borrower or any other Credit Party and the value and Lien status of any collateral security. Except for notices, reports and other documents expressly required to be furnished to the Issuing Bank and/or the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide the Issuing Bank or any Lender with any credit or other information concerning the business, operations, Property, financial and other condition or creditworthiness of the Borrower or any other Credit Party which at any time may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.7. Indemnification Each Lender agrees to indemnify and hold harmless the Administrative Agent in its capacity as such (to the extent not promptly reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), pro rata according to its Credit Exposure (or at any time when the Aggregate Credit Exposure is zero, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever including, without limitation, any amounts paid to the Lenders (through the Administrative Agent) by the Borrower pursuant to the terms of the Loan Documents, that are subsequently rescinded or avoided, or must otherwise be restored or returned which may at any time (including, without limitation, at any time following the payment of the Loans, the Notes and the Reimbursement Obligations) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other documents contemplated by or referred to therein or the transactions contemplated thereby or any action taken or omitted to be taken by the Administrative Agent under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting solely from the finally adjudicated gross negligence or willful misconduct of the Administrative Agent. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its pro rata share of any costs and expenses (including, without limitation, reasonable fees and expenses of counsel) payable by the Borrower under Section 11.5, to the extent that the Administrative Agent has not been paid such fees or has not been reimbursed for such costs and expenses by the Borrower. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its pro rata share of any amount required to be paid by the Lenders to the Administrative Agent as provided in this Section shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its pro rata share of such amount, but no Lender shall be responsible for the failure of other Lender to reimburse the Administrative Agent for such other Lender's pro rata share of such amount. The agreements in this Section shall survive the termination of the Revolving Credit Commitments of all of the Lenders, the Swing Line Commitment of - 79 - 81 the Swing Line Lender, the Letter of Credit Commitment, and the payment of all amounts payable under the Loan Documents. 10.8. Administrative Agent in Its Individual Capacity BNY and its affiliates may make secured or unsecured loans to, accept deposits from, issue letters of credit for the account of, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower or any other Credit Party as though BNY were not Administrative Agent hereunder and BNY Capital Markets did not arrange the transactions contemplated hereby. With respect to the Revolving Credit Commitment and Swing Line Commitment made or renewed by BNY and the Notes issued to, and the Reimbursement Obligations owing to, BNY, BNY shall have the same rights and powers under the Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall in each case include BNY. 10.9. Successor Administrative Agent If at any time the Administrative Agent deems it advisable, in its sole discretion, it may submit to the Issuing Bank and each of the Lenders a written notice of its resignation as Administrative Agent under the Loan Documents, such resignation to be effective upon the earlier of (i) the written acceptance of the duties of the Administrative Agent under the Loan Documents by a successor Administrative Agent and (ii) on the 30th day after the date of such notice. Upon any such resignation, the Required Lenders shall have the right to appoint from among the Lenders a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and accepted such appointment in writing within 30 days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Issuing Bank and the Lenders, appoint a successor Administrative Agent, which successor Administrative Agent shall be a commercial bank organized under the laws of the United States or any State thereof and having a combined capital, surplus, and undivided profits of at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent's rights, powers, privileges and duties as Administrative Agent under the Loan Documents shall be terminated. The Borrower, the other Credit Parties, the Issuing Bank and the Lenders shall execute such documents as shall be necessary to effect such appointment. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of the Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it, and any amounts owing to it, while it was Administrative Agent under the Loan Documents. If at any time there shall not be a duly appointed and acting Administrative Agent, the Borrower agrees to make each payment due under the Loan Documents directly to the Issuing Bank and the Lenders entitled thereto during such time. - 80 - 82 10.10. Lead Arranger The Lead Arranger shall have no duties or obligations under the Loan Documents in its capacity as Lead Arranger. The Lead Arranger shall be entitled to the same protections, indemnities and rights as the Administrative Agent. 10.11. Appointment of Collateral Agent Each Lender and the Issuing Bank hereby authorizes the Administrative Agent to enter into the Collateral Agent Agreement on behalf of and for the benefit of such Lender or Issuing Bank and agrees to be bound by the terms of the Collateral Agent Agreement. Each Lender and the Issuing Bank hereby authorizes the Collateral Agent to enter into the Security Documents and to take all action contemplated by the Security Documents. Each Lender and the Issuing Bank agrees that it shall have no right individually to seek or to enforce or to realize upon the security granted by any Security Document, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Parties upon the terms of the Security Documents. 11. OTHER PROVISIONS 11.1. Amendments and Waivers Notwithstanding anything to the contrary contained in any Loan Document, with the written consent of the Required Lenders, the Administrative Agent and the appropriate Credit Parties may, from time to time, enter into written amendments, supplements or modifications thereof and, with the consent of the Required Lenders, the Administrative Agent on behalf of the Swing Line Lender, the Issuing Bank and the Lenders, may execute and deliver to any such Credit Parties a written instrument waiving or consenting to the departure from, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of the Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such amendment, supplement, modification, waiver or consent shall: (a) without the consent of all of the Lenders (i) increase the Revolving Credit Commitment Amount of any Lender or the Aggregate Revolving Credit Commitment Amount, (ii) extend the Revolving Credit Commitment Period, (iii) reduce the amount, or extend the time of payment, of the Revolving Credit Commitment Fee or the Letter of Credit Commissions, (iv) reduce the rate, or extend the time of payment of, interest on any Loan or any Note, (v) reduce the amount, or extend the time of payment of any installment or other payment of principal on any Loan or any Note, (vi) decrease or forgive the principal amount of any Loan or any Note, (vii) consent to any assignment or delegation by the Borrower of any of its rights or obligations under any Loan Document, (viii) except as provided in Section 11.1(e), release all or any part of the Collateral or the obligations of any Guarantor under the Subsidiary Guaranty, (ix) change the provisions of Section 3.5, 3.6, 3.7, 3.9, 3.10, 9.1(a), this Section 11.1 or Section 11.7(a), (x) change the definition of "Required Lenders", (xi) change - 81 - 83 the several nature of the Lenders' obligations, or (xii) change any provision governing the sharing of payments and liabilities among the Lenders; (b) without the written consent of the Issuing Bank, change the Letter of Credit Commitment, change the amount or the time of payment of the Letter of Credit Commissions or the Fronting Fees or change any other term or provision of this Agreement which relates to the Letter of Credit Commitment or the Letters of Credit or any other rights or obligations of the Issuing Bank under any Loan Document; (c) without the written consent of the Administrative Agent, amend, modify or waive any provision of Section 10 or otherwise change any of the rights or obligations of the Administrative Agent hereunder or under the Loan Documents; (d) without the written consent of the Swing Line Lender, change the Swing Line Commitment or change any other term or provision that relates to the Swing Line Commitment or the Swing Line Loans or any other rights or obligations of the Swing Line Lender under any Loan Document; and (e) notwithstanding anything to the contrary contained in this Section 11.1, each of the Lenders (i) hereby authorizes the Administrative Agent, to the extent that the Administrative Agent is acting as the Required Lender Representative under and as such term is defined in the Security Agreement, to instruct the Collateral Agent pursuant to Section 7.1(b) of the Collateral Agent Agreement to release any Collateral (but not the proceeds thereof) in connection with a disposition of such Collateral as permitted by Section 8.4 and (ii) hereby authorizes the Administrative Agent to release all or any of the obligations of any Guarantor under the Subsidiary Guaranty in connection with a Disposition of such Guarantor as permitted by Section 8.4 or a dissolution of such Guarantor as permitted by Section 7.3. Any such amendment, supplement, modification, waiver or consent shall apply equally to the Administrative Agent, the Swing Line Lender, the Issuing Bank and each of the Lenders and shall be binding upon the parties to the applicable Loan Document, the Lenders, the Issuing Bank, the Administrative Agent, the Swing Line Lender and all future holders of the Notes and the Reimbursement Obligations. In the case of any waiver, the parties to the applicable Loan Document, the Issuing Bank, the Lenders, the Swing Line Lender and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Notes and other Loan Documents to the extent provided for in such waiver, and any Default or Event of Default waived shall not extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 11.2. Notices All notices, requests and demands to or upon the respective parties to the Loan Documents to be effective shall be in writing and, unless otherwise expressly provided therein, shall be deemed to have been duly given or - 82 - 84 made when delivered by hand, one Business Day after having been sent by overnight courier service, three Business Days after having been deposited in the mail, first-class postage prepaid, or, in the case of notice by facsimile, when sent, addressed as follows in the case of the Borrower, the Administrative Agent or the Swing Line Lender, and as set forth in Schedule 11.2 in the case of each Lender and the Issuing Bank, or addressed to such other addresses as to which the Administrative Agent may be hereafter notified by the respective parties thereto or any future holders of the Notes: The Borrower: Building Materials Corporation of America 1361 Alps Road Wayne, New Jersey 07470 Attention: Treasurer Telephone: (973) 628-3000 Facsimile: (973) 628-3326 The Administrative Agent or the Swing Line Lender: The Bank of New York One Wall Street Agency Function Administration 18th Floor New York, New York 10286 Attention: Sandra Morgan Telephone: (212) 635-4692 Facsimile: (212) 635-6365 with a copy to: The Bank of New York One Wall Street New York, New York 10286 Attention: David Judge, Senior Vice President Telephone: (212) 635-6861 Facsimile: (212) 635-7498, except that any notice, request or demand by the Borrower to or upon the Administrative Agent, the Swing Line Lender, the Issuing Bank or the Lenders pursuant to Sections 2.5, 2.9 or 3.3 shall not be effective until received. Any party to a Loan Document may rely on signatures of the parties thereto which are transmitted by facsimile or other electronic means as fully as if originally signed. - 83 - 85 11.3. No Waiver; Cumulative Remedies No failure to exercise and no delay in exercising, on the part of the Administrative Agent, the Issuing Bank, the Swing Line Lender or any Lender, any right, remedy, power or privilege under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges under the Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.4. Survival of Representations and Warranties and Certain Obligations (a) All representations and warranties made under the Loan Documents and in any document, certificate or statement delivered pursuant thereto or in connection therewith shall survive the execution and delivery of the Loan Documents. (b) The obligations of the Borrower under Sections 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 11.5 and 11.8 shall survive the termination of the Revolving Credit Commitments of all of the Lenders, the Swing Line Commitment, the Letter of Credit Commitment and the payment of the Loans, the Reimbursement Obligations and all other amounts payable under the Loan Documents. 11.5. Expenses The Borrower agrees, promptly upon presentation of a statement or invoice therefor, and whether any Loan is made or any Letter of Credit is issued (i) to pay or reimburse the Administrative Agent and BNY Capital Markets for all their respective out-of-pocket costs and expenses reasonably incurred in connection with the development, preparation, execution and syndication of, the Loan Documents and any amendment, supplement or modification thereto (whether or not executed or effective), any documents prepared in connection therewith and the consummation of the transactions contemplated thereby, including the fees and disbursements of Special Counsel, Wachtell, Lipton, Rosen & Katz and Policano & Manzo, (ii) to pay or reimburse the Issuing Bank, the Administrative Agent, the Swing Line Lender and the Lenders for all of its costs and expenses, including reasonable fees and disbursements of counsel, incurred in connection with (A) any Default or Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether consummated or not) of the obligations of any Credit Party under any of the Loan Documents and (B) the enforcement of this Section and (iii) to pay, indemnify, and hold the Issuing Bank, the Lenders, the Swing Line Lender and the Administrative Agent harmless from and against, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, the Loan Documents and any such other - 84 - 86 documents, and (iv) to pay, indemnify and hold the Issuing Bank, the Lenders, the Swing Line Lender and the Administrative Agent and each of its officers, directors and employees harmless from and against any and all other liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable counsel fees and disbursements) with respect to the enforcement and performance of the Loan Documents, the use of the proceeds of the Loans and the Letters of Credit and the enforcement and performance of the provisions of any subordination agreement involving the Administrative Agent and the Lenders (all the foregoing, collectively, the "Indemnified Liabilities") and, if and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower agrees to make the maximum payment not prohibited under applicable law; provided, however, that the Borrower shall have no obligation to pay Indemnified Liabilities to the Administrative Agent, the Swing Line Lender, the Issuing Bank or any Lender arising from the finally adjudicated gross negligence or willful misconduct of the Administrative Agent, the Swing Line Lender, the Issuing Bank or such Lender. The agreements in this Section shall survive the termination of the Commitments and the payment of all amounts payable under the Loan Documents. The Borrower agrees to pay on the date of this Agreement all fees for which invoices have been received of Bryan Cave LLP, Wachtell, Lipton, Rosen & Katz and Policano & Manzo in connection with the development, preparation, negotiation and execution of the Loan Documents and the transactions contemplated thereby. 11.6. Lending Offices Each Lender agrees that, upon the occurrence of any event giving rise to any increased cost or indemnity under Sections 3.6, 3.7 and 3.10 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans and Reimbursement Obligations affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Sections 3.5, 3.6, 3.7 and 3.10. 11.7. Successors and Assigns (a) This Agreement, the Notes and the other Loan Documents to which the Borrower is a party shall be binding upon and inure to the benefit of the Borrower, the Issuing Bank, the Swing Line Lender, the Administrative Agent, the Lenders, all future holders of the Notes and Reimbursement Obligations and their respective successors and assigns. Neither the Borrower nor any other Credit Party shall delegate any obligation or duty under any Loan Document without the prior written consent of the Issuing Bank, the Swing Line Lender, the Administrative Agent and each Lender. - 85 - 87 (b) Subject to Section 11.7(e), each Lender, the Swing Line Lender and the Issuing Bank may at any time assign all or any portion of its rights under any Loan Document to any Federal Reserve Bank. (c) In addition to its rights under Section 11.7(b), each Lender shall have the right to sell, assign, transfer or negotiate (each an "Assignment") all or any portion of all of its Loans, its Commitments and its Notes and its interest in the Loan Documents to any subsidiary or Affiliate of such Lender, to any other Lender or, with the prior written consent of the Issuing Bank, the Administrative Agent and the Swing Line Lender (which consents shall not be unreasonably withheld), to any bank, savings and loan institution, insurance company, thrift institution, pension fund, mutual fund (provided that no Affiliated Fund Distressed Debt Group shall own more than 30% of the aggregate Loans and Commitments) or, subject to the consent of the Borrower (such consent not to be unreasonably withheld or delayed), other financial institution, provided that (i) each such Assignment shall be of a constant, and not a varying, percentage of all of the assignor Lender's rights and obligations under the Loan Documents, (ii) the Revolving Credit Commitment Amount of the Commitments assigned shall be not less than $5,000,000 or the full Revolving Credit Commitment Amount of such assignor Lender's Commitments, and (iii) the assignor Lender and such assignee shall deliver to the Administrative Agent three copies of an Assignment and Acceptance Agreement executed by each of them, along with an assignment fee in the sum of $3,500 for the account of the Administrative Agent. Upon receipt of such number of executed copies of each such Assignment and Acceptance Agreement together with the assignment fee therefor and the Borrower's consent to such Assignment, if required, the Administrative Agent shall record the same and execute not less than two copies of such Assignment and Acceptance Agreement in the appropriate place, deliver one such copy to the assignor and one such copy to the assignee, and deliver one photocopy thereof, as executed, to the Borrower. From and after the Assignment Effective Date specified in, and as defined in, such Assignment and Acceptance Agreement, the assignee thereunder shall be a party hereto and shall for all purposes of this Agreement and the other Loan Documents be deemed a "Lender" and, to the extent provided in such Assignment and Acceptance Agreement, the assignor Lender thereunder shall be released from its obligations under this Agreement and the other Loan Documents. The Borrower agrees that, if requested, in connection with each such Assignment, it shall at its own cost and expense execute and deliver (1) to the Administrative Agent or such assignee a Revolving Credit Note in a maximum principal amount equal to the Revolving Credit Commitment Amount of the Commitments assumed by such assignee, and (2) to the Administrative Agent or such assignor Lender, in the event that such assignor Lender shall not have assigned all of its Commitments, a Revolving Credit Note in a maximum principal amount equal to the Commitment Amount of the Commitment retained by such assignor, in each case either in escrow pending the delivery of, or against receipt of, such assignor Lender's existing Revolving Credit Note. The Administrative Agent shall be entitled to rely upon the representations and warranties made by the assignee under each Assignment and Acceptance Agreement. (d) In addition to the participations provided for in Section 11.11(b), each Lender may grant participations in all or any part of its Loans, - 86 - 88 its Notes and its Commitments to one or more banks, insurance companies, pension funds, mutual funds or other financial institutions, provided that (i) such Lender's obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties to this Agreement and the other Loan Documents for the performance of such obligations, (iii) the Borrower, the Swing Line Lender, the Issuing Bank, the Administrative Agent 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 the other Loan Documents, (iv) the granting of such participation does not require that any additional loss, cost or expense be borne by the Borrower at any time, and (v) the voting rights of any holder of any participation shall be limited to decisions that in accordance with Section 11.1 require the consent of all of the Lenders. The Borrower acknowledges and agrees that any such participant shall for purposes of Section 3.5, 3.6, 3.10 and 11.5 be deemed to be a "Lender", provided that in no event shall the Borrower be liable for any amounts under said Sections in excess of the amounts for which it would be liable but for such participation. (e) No Lender shall, as between and among the Borrower, the Administrative Agent, the Swing Line Lender, the Issuing Bank and such Lender, be relieved of any of its obligations under the Loan Documents as a result of any assignment of or granting of participations in, all or any part of its Loans, its Commitments and its Notes, except that a Lender shall be relieved of its obligations to the extent of any such assignment of all or any part of its Loans, its Commitments or its Notes pursuant to Section 11.7(c). 11.8. Indemnity The Borrower agrees to defend, protect, indemnify, and hold harmless the Administrative Agent, BNY Capital Markets, the Issuing Bank, the Swing Line Lender and each and all of the Lenders, each of their respective Affiliates and each of the respective officers, directors, employees and agents of each of the foregoing (each an "Indemnified Person" and, collectively, the "Indemnified Persons") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel to such Indemnified Persons in connection with any investigative, administrative or judicial proceeding, whether direct, indirect or consequential and whether based on any federal or state laws or other statutory regulations, including securities and commercial laws and regulations, under common law or at equitable cause, or on contract or otherwise, including any liabilities and costs under environmental laws, Federal, state or local health or safety laws, regulations, or common law principles, arising from or in connection with the past, present or future operations of the Borrower, any other Credit Party, or their respective predecessors in interest, or the past, present or future environmental condition of the Property of the Borrower or any of its Subsidiaries, the presence of asbestos-containing materials at any such Property, or the release or threatened release of any hazardous substance into the environment from any such Property) in any manner relating to or arising out of the Loan Documents or the transactions contemplated thereby, any commitment letter or fee letter executed between or among (x) the Borrower or any of its Subsidiaries, and (y) the Swing Line Lender, the Issuing Bank and/or the Administrative Agent, the - 87 - 89 capitalization of the Borrower or any of its Subsidiaries, the Commitments, the Letter of Credit Commitment, the making of, issuance of, management of and participation in the Loans or the Letters of Credit, or the use or intended use of the Letters of Credit and the proceeds of the Loans hereunder, provided that the Borrower shall have no obligation under this Section to an Indemnified Person with respect to any of the foregoing to the extent found in a final judgment of a court having jurisdiction to have resulted primarily out of the gross negligence or willful misconduct of such Indemnified Person. The indemnity set forth herein shall be in addition to any other obligations or liabilities of the Borrower to each Indemnified Person under the Loan Documents or at common law or otherwise, and shall survive any termination of the Loan Documents, the expiration of the Revolving Credit Commitments, the Letter of Credit Commitment, the Swing Line Commitment and the payment of all Indebtedness of the Credit Parties under the Loan Documents. 11.9. Limitation of Liability No claim may be made by the Borrower, any of its Subsidiaries, any other Credit Party, any Lender, the Issuing Bank or other Person against the Administrative Agent, any Lender, the Issuing Bank or the Swing Line Lender or any directors, officers, employees, or agents of any of them, for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by any Loan Document, or any act, omission or event occurring in connection therewith, and each of the Borrower, its Subsidiaries, such other Credit Party, any such Lender, the Issuing Bank or other Person hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 11.10. Counterparts Each Loan Document (other than the Notes) may be executed by one or more of the parties thereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same document. It shall not be necessary in making proof of any Loan Document to produce or account for more than one counterpart signed by the party to be charged. A counterpart of any Loan Document or to any document evidencing, and of any amendment, modification, consent or waiver to or of any Loan Document transmitted by facsimile shall be deemed to be an originally executed counterpart. A set of the copies of the Loan Documents signed by all the parties thereto shall be deposited with each of the Borrower and the Administrative Agent. Any party to a Loan Document may rely upon the signatures of any other party thereto which are transmitted by facsimile or other electronic means to the same extent as if originally signed. 11.11. Adjustments; Set-off (a) In addition to any rights and remedies of each Lender provided by law, upon the occurrence of an Event of Default and acceleration of the Notes, or at any time upon the occurrence and during the continuance of an - 88 - 90 Event of Default under Sections 9.1(a) or 9.1(b), each Lender, the Swing Line Lender and the Issuing Bank shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, to set-off and apply against any indebtedness or other liability, whether matured or unmatured, of the Borrower to such Lender, the Swing Line Lender or the Issuing Bank arising under the Loan Documents, any amount owing from such Lender, the Swing Line Lender or the Issuing Bank to the Borrower. To the extent permitted by applicable law, the aforesaid right of set-off may be exercised by such Lender, the Swing Line Lender or the Issuing Bank against the Borrower or against any trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor of the Borrower, or against anyone else claiming through or against the Borrower or such trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receivers, or execution, judgment or attachment creditors, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender, the Swing Line Lender or the Issuing Bank prior to the making, filing or issuance of, service upon such Lender, the Swing Line Lender or the Issuing Bank of, or notice to such Lender, the Swing Line Lender or the Issuing Bank of, any petition, assignment for the benefit of creditors, appointment or application for the appointment of a receiver, or issuance of execution, subpoena, order or warrant. Each Lender, the Swing Line Lender and the Issuing Bank agrees promptly to notify the Borrower and the Administrative Agent after each such set-off and application made by such Lender, the Swing Line Lender or the Issuing Bank, as the case may be, provided that the failure to give such notice shall not affect the validity of such set-off and application. (b) If any Lender, the Swing Line Lender or the Issuing Bank shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of its Loans, its Notes or Reimbursement Obligations in excess of its Outstanding Percentage of payments then due and payable on account of the Loans, the Notes or Reimbursement Obligations received by all the Lenders, the Swing Line Lender and the Issuing Bank, such Lender, the Swing Line Lender or the Issuing Bank, as the case may be, shall forthwith purchase, without recourse, for cash, from the other Lenders, the Swing Line Lender and the Issuing Bank such participations in their Loans, Notes and Reimbursement Obligations as shall be necessary to cause such purchaser to share such excess payment with each of them according to their Outstanding Percentages, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchaser, such purchase shall be rescinded and the related seller shall repay to such purchaser the purchase price to the extent of such recovery, together with an amount equal to such seller's pro rata share (according to the proportion of (i) the amount of all other related required repayments to (ii) the total amount so recovered from the purchaser) of any interest or other amount paid or payable by the purchaser in respect of the total amount so recovered. 11.12. Construction Each party to a Loan Document represents that it has been represented by counsel in connection with the Loan Documents and the - 89 - 91 transactions contemplated thereby and that the principle that agreements are to be construed against the party drafting the same shall be inapplicable. 11.13. Governing Law The Loan Documents and the rights and obligations of the parties thereunder shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New York, without regard to principles of conflict of laws, but including Section 5-1401 of the General Obligations Law. 11.14. Headings Descriptive Section headings have been inserted in the Loan Documents for convenience only and shall not be construed to be a part thereof. 11.15. Severability Every provision of the Loan Documents is intended to be severable, and if any term or provision thereof shall be invalid, illegal or unenforceable for any reason, the validity, legality and enforceability of the remaining provisions thereof shall not be affected or impaired thereby, and any invalidity, illegality or unenforceability in any jurisdiction shall not affect the validity, legality or enforceability of any such term or provision in any other jurisdiction. 11.16. Integration All exhibits to a Loan Document shall be deemed to be a part thereof. Except for agreements between the Administrative Agent, the Swing Line Lender and/or the Issuing Bank and the Borrower with respect to certain fees, the Loan Documents embody the entire agreement and understanding among the Borrower, the Administrative Agent, the Swing Line Lender, the Issuing Bank and the Lenders with respect to the subject matter thereof and supersede all prior agreements and understandings among them with respect to the subject matter thereof. 11.17. Consent to Jurisdiction Each party to a Loan Document hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in the City of New York over any suit, action or proceeding arising out of or relating to the Loan Documents. Each party to a Loan Document hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each Credit Party hereby agrees that a final judgment in any such suit, action or proceeding brought in such a court, after all appropriate appeals, shall be conclusive and binding upon it. - 90 - 92 11.18. Service of Process Each party to a Loan Document hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by first class mail, return receipt requested or by overnight courier service, to the address of such party set forth in Section 11.2 of the applicable Loan Document executed by such party. Each party to a Loan Document hereby agrees that any such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action, or proceeding, and (ii) shall to the fullest extent enforceable by law, be taken and held to be valid personal service upon and personal delivery to it. 11.19. No Limitation on Service or Suit Nothing in the Loan Documents or any modification, waiver, consent or amendment thereto shall affect the right of the Borrower, the Administrative Agent, the Swing Line Lender, the Issuing Bank or any Lender to serve process in any manner permitted by law or limit the right of the Administrative Agent, the Swing Line Lender, the Issuing Bank or any Lender to bring proceedings against any Credit Party in the courts of any jurisdiction or jurisdictions in which such Credit Party may be served. 11.20. WAIVER OF TRIAL BY JURY EACH OF THE ADMINISTRATIVE AGENT, THE SWING LINE LENDER, THE ISSUING BANK, THE LENDERS, AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE SWING LINE LENDER, THE ISSUING BANK, THE ADMINISTRATIVE AGENT, OR THE LENDERS, OR COUNSEL TO THE SWING LINE LENDER, THE ISSUING BANK, THE ADMINISTRATIVE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SWING LINE LENDER, THE ISSUING BANK, THE ADMINISTRATIVE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE BORROWER ACKNOWLEDGES THAT THE SWING LINE LENDER, THE ISSUING BANK, THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION. 11.21. Treatment of Confidential Information Each Lender, the Issuing Bank, the Swing Line Lender and the Administrative Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of the same nature, all non-public - 91 - 93 information supplied by the Borrower or any of its Subsidiaries pursuant to this Agreement which (a) is identified by such Person as being confidential at the time the same is delivered to such Lender, the Issuing Bank, the Swing Line Lender or the Administrative Agent, or (b) constitutes any financial statement, financial projection or forecast, budget, compliance certificate, audit report, management letter or accountants' certification delivered hereunder, provided, however, that nothing herein shall limit the disclosure of any such information (i) to the extent required by law, rule, regulation or judicial process, provided that, unless prohibited by applicable law or court order, each Lender, the Issuing Bank, the Swing Line Lender and the Administrative Agent, prior to the disclosure thereof, shall endeavor to notify the Borrower of any request for disclosure of any such confidential information by any governmental agency or representative thereof (other than in connection with an examination of the financial condition of the Issuing Bank, such Lender, the Swing Line Lender or the Administrative Agent by such governmental agency) or pursuant to legal process, (ii) on a confidential basis, to counsel to any Lender, the Issuing Bank, the Swing Line Lender or the Administrative Agent, (iii) to bank examiners, auditors or accountants, and any analogous counterpart thereof, (iv) to the Administrative Agent, the Lenders, the Swing Line Lender or the Issuing Bank, (v) in connection with any litigation or proceeding to which any one or more of the Lenders, the Issuing Bank, the Swing Line Lender or the Administrative Agent is a party, (vi) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) agrees to keep such information confidential on substantially the same basis as set forth in this Section, or (vii) to affiliates of the Administrative Agent, the Swing Line Lender, each Lender and the Issuing Bank, so long as such affiliate agrees to keep such information confidential on substantially the same basis as set forth in this Section. 11.22. Conversion of DIP In the event that the Borrower shall become the subject of any bankruptcy proceedings under Chapter 11 of Title 11 of the United States Code, the Lenders and the Issuing Bank, together with the Lenders and the Issuing Banks under and as defined in the Existing Credit Agreement, The Chase Manhattan Bank under the Chase Platinum Substitute Note and Fleet National Bank under the Fleet LC Agreement, in each case severally and not jointly and based on their respective interests at the time in this Agreement, the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, and the Borrower agree, subject to receipt of all appropriate bankruptcy court approvals, to refinance and consolidate in full the indebtedness evidenced by (i) this Agreement, the Notes and the Letters of Credit, (ii) the Existing Credit Agreement and the Notes and Letters of Credit under and as defined in the Existing Credit Agreement, (iii) the Chase Platinum Substitute Note and (iv) the Fleet LC Agreement with a new debtor-in-possession credit facility (the "DIP Facility"), on terms and conditions (including a first priority perfected security interest on all of the Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) and an administrative claim against all estates, and the Borrower agrees to use its best efforts to provide a super priority administrative claim against such estates) substantially identical to this Agreement, the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement in an aggregate amount (not exceeding $210,000,000 plus the principal amount of the Chase Platinum - 92 - 94 Substitute Note and the principal amount of the Fleet LC) equal to the Aggregate Revolving Credit Commitment Amount under this Agreement at the time plus $110,000,000 plus the principal amount of the Chase Platinum Substitute Note and the principal amount of the Fleet LC, which DIP Facility will (i) refinance in full all Loans and Letters of Credit under this Agreement, all Loans and Letters of Credit under and as defined in the Existing Credit Agreement, and all obligations under the Chase Platinum Substitute Note and the Fleet LC Agreement, whereupon this Agreement, the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement will terminate, (ii) mature on August 18, 2004, (iii) allow for the cash payment of interest on the Senior Note Indentures, except that no interest may be paid on the Senior Note Indentures at any time during the continuance of a Default or Event of Default under the DIP Facility or if the Borrower shall not at the time have a Fixed Charge Coverage Ratio (as defined below) of greater than 1.50:1.00 (such Fixed Charge Ratio to be included in the DIP Facility), (iv) provide that Section 8.15 would no longer be applicable, provided that any asbestos costs and expenses of the Borrower and its Subsidiaries that are allocable to any Parent would reduce by an equal amount the amount available for loans made to any Parent under Section 8.6(ii), and (v) if the DIP Facility is not consummated pursuant to a final court order (which order is in effect and not stayed and not under appeal, provided that an order that may be, but has not been, appealed shall be considered final) within 45 days of the Borrower becoming the subject of any such bankruptcy proceedings, an Event of Default (or similar event) shall have been deemed to occur under this Agreement, the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, upon which, in addition to all other rights and remedies available at such time, the default rate of interest and the default rate on letter of credit commissions under each such agreement, if not otherwise in effect, shall become applicable, commencing on the 46th day after the Borrower shall have become the subject of any such bankruptcy proceedings. For purposes hereof, "Fixed Charge Coverage Ratio" shall mean the ratio of (x) Consolidated EBITDA to (y) the sum, without duplication, of all cash payments made in respect of Indebtedness (including all principal, interest, commitment fees, letter of credit fees, and similar fees), capital expenditures, Restricted Payments, loans and other advances and payments (including payments made under the Tax Sharing Agreement) to any Parent or Affiliate, and all restructuring, administration and other expenses and charges (to the extent such expenses and charges are not included (but are not expressly excluded) in the determination of Consolidated EBITDA), in each case determined on a Consolidated basis in accordance with GAAP for the four fiscal quarter period ending on the date of calculation or, if the date of calculation is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarters. Prior to bankruptcy court approval of the DIP Facility, if no Event of Default shall exist and be continuing (including, without limitation, an Event of Default caused by the provisions of clause (v) in the preceding paragraph), the Borrower shall be entitled to use cash collateral for all purposes permitted under this Agreement as long as the Lenders are granted adequate protection in the form of a first priority perfected replacement lien on all postpetition accounts receivable and inventory and a super priority administrative claim against all estates, provided, however, if the bankruptcy court does not grant such adequate protection on the first day the order for - 93 - 95 relief is in effect, the Borrower may use cash collateral for three Business Days for ordinary course purposes. The Lenders agree that any interim or final order approving the DIP Facility may not constitute a determination as to any third parties (specifically excluding the Borrower) regarding whether the Lenders are entitled to receive postpetition interest, fees or administrative status on refinanced prepetition indebtedness (except as otherwise provided in such interim or final order and approved by the bankruptcy court). If (i) a Title 11 case in respect of the Borrower is commenced less than 91 days after the Liens under the Security Documents have been perfected with respect to the obligations outstanding under the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, (ii) no Loans or Letters of Credit have been made or issued under this Agreement, and (iii) the final order approving the DIP Facility does not provide that such obligations shall be refinanced with proceeds from the DIP Facility, then, in addition to all other rights and remedies available at such time, the commitment amount of the DIP Facility shall be reduced to reflect that such obligations shall not be so refinanced. If the Borrower is in compliance with all conditions precedent under Section 6 of this Agreement, the Lenders shall not assert any defense that may otherwise be available under Bankruptcy Code section 365(c) with respect to Lenders' obligations herein concerning the DIP Facility. Notwithstanding the foregoing, if the Lenders do not furnish the DIP Facility, or the bankruptcy court does not approve it, the Borrower does not waive any rights it has under Title 11 of the United States Code or otherwise. Notwithstanding the foregoing, if the Borrower does not accept the DIP Facility, or the bankruptcy court does not approve it, the Lenders do not waive any rights they have under Title 11 of the United States Code or otherwise. If and when the DIP Facility is approved by the bankruptcy court, the Borrower may use its funds for all valid corporate purposes, including, without limitation, professional fees, as long as there is no default under the DIP Facility (including any default of any covenant limiting such use). The DIP Facility shall include a carveout of $7,500,000 for professional services. If (i) either (a) this Agreement shall not have become effective in accordance with Section 5 due solely to an order of a court of competent jurisdiction enjoining the Borrower or any of its Subsidiaries from satisfying any of the conditions to effectiveness set forth in Section 5 and no Default or Event of Default shall otherwise exist or (b) this Agreement shall have become so effective, the Borrower or any of its Subsidiaries shall not be permitted to perform its obligations under this Agreement that relate to the granting or delivery of Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) within the applicable time periods prescribed thereby due solely to an order of a court of competent jurisdiction issued within nine months of the Effective Date enjoining the Borrower or any of its Subsidiaries from performing any of such obligations within such applicable prescribed time periods (and the Lenders shall not have agreed to waive such - 94 - 96 failure to perform), the DIP Facility shall not have become effective and no other Default or Event of Default shall exist and (ii) the Borrower shall not be able to obtain an alternate debtor-in-possession credit facility on reasonable terms in an amount not exceeding $100,000,000 (an "Alternate DIP Facility") without priming the liens on the Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) securing this Agreement, the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, then (x) an Alternate DIP Facility shall be permitted to prime such liens on the Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) and (y) such Alternate DIP Facility may, if such Alternate DIP Facility so requires, restrict the payment of interest on the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, provided that (A) this Agreement shall be immediately terminated and all principal, interest, letter of credit obligations and other obligations hereunder shall have been paid in full in cash and (B) the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement shall continue to be secured by a perfected security interest in all Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) subject only to the prior lien of such Alternate DIP Facility. 11.23. Consolidation and Restatement In the event that the Borrower shall not have become the subject of any bankruptcy proceedings for a period of at least 91 days after the Effective Date, the Borrower and the Lenders hereby agree that this Agreement shall be consolidated with the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement in one consolidated and restated credit agreement on terms and conditions substantially identical (mutatis mutandis) to this Agreement, the Existing Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, which consolidated and restated credit agreement shall become effective upon the execution and delivery thereof by the Administrative Agent, the Administrative Agent (under and as defined in the Existing Credit Agreement), The Chase Manhattan Bank, under the Chase Platinum Substitute Note, Fleet National Bank, under the Fleet LC Agreement, and the Borrower. 11.24. Effectiveness; Marketable Securities (a) Notwithstanding anything to the contrary contained in this Agreement, (i) Sections 8.3, 8.4 (without giving effect to the proviso at the end thereof), 8.6, 8.16, 10.7, 11.5, 11.8, 11.9, 11.10, 11.12, 11.13, 11.14, 11.15, 11.16, 11.17, 11.18, 11.19, 11.20, 11.21, the last paragraph of Section 11.22 (other than clause (i)(b) contained therein) and this Section 11.24 shall become effective upon the Closing Date, and (ii) on January 17, 2001, unless the Effective Date shall have occurred prior to such date, (A) Sections 8.3, 8.4, 8.6, 8.16, the last paragraph of Section 11.22 (other than clause (i)(b) contained therein) and Section 11.24(b) shall terminate, and (B) Sections 10.7, 11.5, 11.8, 11.9, 11.10, 11.12, 11.13, 11.14, 11.15, 11.16, 11.17, 11.18, 11.19, 11.20, 11.21 and 11.24(a) shall survive and continue to be in full force and effect. - 95 - 97 (b) Notwithstanding anything to the contrary contained in this Agreement, during the period beginning on the Closing Date and ending on the Effective Date, the Borrower shall, and shall cause each Subsidiary to, maintain on deposit all of its Marketable Securities and any Proceeds (as defined in the Security Agreement) therefrom with Bear, Stearns & Co. Inc. in the account such Marketable Securities are being held as of the Closing Date, provided that cash Proceeds from such Marketable Securities may be transferred to accounts at one or more of the Lenders. - 96 - 98 BUILDING MATERIALS CORPORATION OF AMERICA CREDIT AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss Title: Senior Vice President and Treasurer ------------------------------------------- THE BANK OF NEW YORK, as Swing Line Lender, as the Issuing Bank, as Administrative Agent and as a Lender By: /s/ David C. Judge -------------------------------------------- Name: David C. Judge Title: Senior Vice President ------------------------------------------- FLEET NATIONAL BANK By: /s/ Peggy Peckham -------------------------------------------- Name: Peggy Peckham Title: Senior Vice President ------------------------------------------- THE CHASE MANHATTAN BANK By: /s/ Patrick A. Danielo -------------------------------------------- Name: Patrick A. Danielo Title: Vice President ------------------------------------------- THE BANK OF NOVA SCOTIA By: /s/ Daniel A. Costigan -------------------------------------------- Name: Daniel A. Costigan Title: Director ------------------------------------------- 99 BEAR STEARNS CORPORATE LENDING INC. By: /s/ Keith Barnish -------------------------------------------- Name: Keith Barnish Title: Senior Managing Director ------------------------------------------- - 2 - 100 TABLE OF CONTENTS -----------------
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION..................................................1 1.1. Definitions......................................................................1 1.2. Principles of Construction.......................................................2 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT.............................................2 2.1. Revolving Credit Loans...........................................................2 2.2. Revolving Credit Notes...........................................................2 2.3. Swing Line Loans.................................................................2 2.4. Swing Line Note..................................................................2 2.5. Procedure for Borrowing..........................................................2 2.6. Termination or Reduction of Commitments..........................................2 2.7. Prepayments......................................................................2 2.8. Use of Proceeds..................................................................2 2.9. Letter of Credit Sub-Facility....................................................2 2.10. Letter of Credit Participation and Funding Commitments..........................2 2.11. Absolute Obligation With Respect to Letter of Credit Payments...................2 2.12. Payments........................................................................2 3. INTEREST, FEES, YIELD PROTECTIONS, ETC......................................................2 3.1. Interest Rate and Payment Dates..................................................2 3.2. Fees.............................................................................2 3.3. Conversions......................................................................2 3.4. Concerning Interest Periods......................................................2 3.5. Indemnification for Loss.........................................................2 3.6. Capital Adequacy.................................................................2 3.7. Reimbursement for Increased Costs................................................2 3.8. Illegality of Funding............................................................2 3.9. Substituted Interest Rate........................................................2 3.10. Taxes; Net Payments.............................................................2 3.11. Option to Fund..................................................................2 3.12. Replacement of Lenders..........................................................2 4. REPRESENTATIONS AND WARRANTIES..............................................................2 4.1. Subsidiaries; Capitalization.....................................................2 4.2. Existence and Power..............................................................2 4.3. Authority and Execution..........................................................2 4.4. Binding Agreement................................................................2 4.5. Litigation.......................................................................2
101
4.6. Required Consents................................................................2 4.7. Absence of Defaults; No Conflicting Agreements...................................2 4.8. Compliance with Applicable Laws..................................................2 4.9. Taxes............................................................................2 4.10. Governmental Regulations........................................................2 4.11. Federal Reserve Regulations; Use of Loan Proceeds...............................2 4.12. Plans...........................................................................2 4.13. Financial Statements............................................................2 4.14. Property........................................................................2 4.15. Authorizations..................................................................2 4.16. Environmental Matters...........................................................2 4.17. Solvency........................................................................2 4.18. Absence of Certain Restrictions.................................................2 4.19. No Misrepresentation............................................................2 5. CONDITIONS TO EFFECTIVENESS.................................................................2 5.1. Evidence of Action...............................................................2 5.2. This Agreement...................................................................2 5.3. Notes............................................................................2 5.4. Subsidiary Guaranty..............................................................2 5.5. Security Agreement...............................................................2 5.6. Collateral Agent Agreement.......................................................2 5.7. Insurance........................................................................2 5.8. Deposits of Cash, Cash Equivalents and Marketable Securities.....................2 5.9. Absence of Litigation............................................................2 5.10. Approvals and Consents..........................................................2 5.11. Senior Note Indenture Consent Solicitations.....................................2 5.12. Amendment to Existing Credit Agreement..........................................2 5.13. Policano & Manzo Report.........................................................2 5.14. Opinion of Counsel to the Borrower and its Subsidiaries.........................2 5.15. Material Agreements.............................................................2 5.16. Asbestos Report.................................................................2 5.17. Chase Platinum Substitute Note..................................................2 5.18. Fees............................................................................2 5.19. Effective Date Cutoff...........................................................2 5.20. Other Documents.................................................................2 6. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT.....................................2 6.1. Compliance.......................................................................2 6.2. Borrowing Request; Letter of Credit Request......................................2 6.3. Minimum Cash Amount..............................................................2 6.4. Loan Closings....................................................................2
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7. AFFIRMATIVE COVENANTS.......................................................................2 7.1. Financial Statements and Information.............................................2 7.2. Certificates; Other Information..................................................2 7.3. Legal Existence..................................................................2 7.4. Taxes............................................................................2 7.5. Insurance and Condemnation.......................................................2 7.6. Performance of Obligations.......................................................2 7.7. Observance of Legal Requirements.................................................2 7.8. Inspection of Property; Books and Records; Discussions...........................2 7.9. Authorizations...................................................................2 7.10. Financial Covenants.............................................................2 7.11. Additional Subsidiaries.........................................................2 7.12. Further Assurances; Certain Real Estate Matters.................................2 7.13. Environmental Compliance........................................................2 7.14. Invested Cash, Marketable Securities and System Cash............................2 8. NEGATIVE COVENANTS..........................................................................2 8.1. Indebtedness.....................................................................2 8.2. Liens............................................................................2 8.3. Merger, Consolidations and Acquisitions..........................................2 8.4. Dispositions.....................................................................2 8.5. Investments, Loans, Etc..........................................................2 8.6. Restricted Payments..............................................................2 8.7. Business and Name Changes........................................................2 8.8. ERISA............................................................................2 8.9. Prepayments of Indebtedness......................................................2 8.10. Amendments, Etc. of Certain Agreements..........................................2 8.11. Transactions with Affiliates....................................................2 8.12. Limitation on Upstream Transfers................................................2 8.13. Capital Leases and Sale-Leaseback Transactions..................................2 8.14. Capital Expenditures............................................................2 8.15. Asbestos Costs..................................................................2 8.16. Tax Sharing Payments............................................................2 9. DEFAULT.....................................................................................2 9.1. Events of Default................................................................2 9.2. Contract Remedies................................................................2 10. THE ADMINISTRATIVE AGENT...................................................................2 10.1. Appointment.....................................................................2 10.2. Delegation of Duties............................................................2
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10.3. Exculpatory Provisions..........................................................2 10.4. Reliance by Administrative Agent................................................2 10.5. Notice of Default...............................................................2 10.6. Non-Reliance on Administrative Agent and Other Lenders..........................2 10.7. Indemnification.................................................................2 10.8. Administrative Agent in Its Individual Capacity.................................2 10.9. Successor Administrative Agent..................................................2 10.10. Lead Arranger..................................................................2 10.11. Appointment of Collateral Agent................................................2 11. OTHER PROVISIONS...........................................................................2 11.1. Amendments and Waivers..........................................................2 11.2. Notices.........................................................................2 11.3. No Waiver; Cumulative Remedies..................................................2 11.4. Survival of Representations and Warranties and Certain Obligations..............2 11.5. Expenses........................................................................2 11.6. Lending Offices.................................................................2 11.7. Successors and Assigns..........................................................2 11.8. Indemnity.......................................................................2 11.9. Limitation of Liability.........................................................2 11.10. Counterparts...................................................................2 11.11. Adjustments; Set-off...........................................................2 11.12. Construction...................................................................2 11.13. Governing Law..................................................................2 11.14. Headings Descriptive...........................................................2 11.15. Severability...................................................................2 11.16. Integration....................................................................2 11.17. Consent to Jurisdiction........................................................2 11.18. Service of Process.............................................................2 11.19. No Limitation on Service or Suit...............................................2 11.20. WAIVER OF TRIAL BY JURY........................................................2 11.21. Treatment of Confidential Information..........................................2 11.22. Conversion of DIP..............................................................2 11.23. Consolidation and Restatement..................................................2 11.24. Effectiveness; Marketable Securities...........................................2
EXHIBITS - -------- Exhibit A List of Revolving Credit Commitment Amounts Exhibit B-1 Form of Revolving Credit Note Exhibit B-2 Form of Swing Line Note Exhibit C-1 Form of Borrowing Request - iv - 104 Exhibit C-2 Form of Letters of Credit Request Exhibit D Form of Notice of Conversion Exhibit E Form of Compliance Certificate Exhibit F-1 Form of Opinion of General Counsel to the Borrower and its Subsidiaries Exhibit F-2 Form of Opinion of Special Counsel to the Borrower and its Subsidiaries Exhibit G Form of Collateral Agent Agreement Exhibit H Form of Assignment and Acceptance Agreement Exhibit I Form of Subsidiary Guaranty Exhibit J Form of Security Agreement Exhibit K Form of Senior Note Indenture Consent Solicitation Exhibit L Form of Demand Note Exhibit M Form of Depositary Control Agreement - v - 105 SCHEDULES - --------- Schedule 1.1(m) List of Mortgaged Properties Schedule 1.1(q) List of Qualified Depositary Institutions Schedule 4.1 List of Subsidiaries; Capitalization Schedule 4.5 List of Litigation Schedule 4.13 Disclosure of Ordinary Course of Business Schedule 4.14 List of Real Properties Schedule 4.16 List of Environmental Matters Schedule 8.1 List of Existing Indebtedness Schedule 8.2 List of Existing Liens Schedule 8.5 List of Investments Schedule 8.5(g) List of Marketable Securities Schedule 8.5(h) List of Security Investments Schedule 8.13 List of Existing Capital Leases and Sale Leaseback Transactions Schedule 11.2 List of Addresses for Notices - vi - EX-10.13 13 y46546ex10-13.txt AMENDMENT NO. 1 TO CREDIT AGREEMENT 1 Exhibit 10.13 ------------- AMENDMENT NO. 1 TO CREDIT AGREEMENT ---------------- AMENDMENT NO. 1, dated as of December 22, 2000 (this "Amendment"), to the Credit Agreement, dated as of December 4, 2000 (the "Credit Agreement"), by and among Building Materials Corporation of America (the "Borrower"), the Lenders party thereto and The Bank of New York, as administrative agent (in such capacity, the "Administrative Agent") and as swing line lender (in such capacity, the "Swing Line Lender"). RECITALS -------- I. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. II. The Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement upon the terms and conditions contained in this Amendment, and the Administrative Agent and the Required Lenders are willing so to do. Accordingly, in consideration of the Recitals and the covenants and conditions hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 1.1 is amended by amending and restating the definition of "Applicable Margin" in its entirety to read as follows: "Applicable Margin": a rate per annum equal to (i) with respect to ABR Advances, 0.00%, and (ii) with respect to Eurodollar Advances, 2.64%; provided that if at any time during the pendency of a BMCA Bankruptcy (as defined in the Collateral Agent Agreement), (A) the Senior Note Lien Avoidance (as defined in the Collateral Agent Agreement) has occurred, (B) the 1999 Liens (as defined in the Collateral Agent Agreement) remain in full force and effect, and (C) the DIP Facility shall have come into effect, then, for the period from and after such time as such Senior Note Lien Avoidance shall have occurred, the Applicable Margin under the DIP Facility shall be increased by 1%. 2. Section 1.1 is amended by amending and restating the definition of "Depositary Control Agreement" in its entirety to read as follows: "Depositary Control Agreement": an agreement among a Credit Party, a Qualified Depositary Institution and the Collateral Agent substantially in the form of Exhibit M, with such changes thereto as shall be agreed upon by such Credit Party, Qualified Depositary Institution and the Collateral Agent. 2 3. Section 5.5(f) is amended and restated in its entirety to read as follows: (f) a copy of the fully executed Depositary Control Agreement of each Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains any bank account (other than a Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains only one or more Payroll Accounts and/or Petty Cash Accounts), to the extent the Borrower shall have received such Depositary Control Agreements from each such Qualified Depositary Institution (the original of which shall have been delivered to the Collateral Agent); 4. Section 7.14(a) is amended and restated in its entirety to read as follows: (a) The Borrower will, and will cause each Subsidiary (other than any Receivable Subsidiary) to (i) deposit and maintain on deposit all of its Invested Cash in the Cash Collateral Account, (ii) deposit and, subject to Section 7.14(b), maintain on deposit all of its Marketable Securities with Bear, Stearns & Co. Inc., (iii) cause all of its System Cash to be deposited in Qualified Depositary Institutions and, subject to Section 7.15, prior to any such deposit, cause each such Qualified Depositary Institution to execute and deliver to the Collateral Agent a Depositary Control Agreement and (iv) subject to Section 7.15, comply with the Cash Management System. 5. Article 7 is amended by adding a new Section 7.15 to read as follows: Deliver to the Administrative Agent within 30 days of the Effective Date a copy of the fully executed Depositary Control Agreement of each Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains any bank account (other than a Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains only one or more Payroll Accounts and/or Petty Cash Accounts), to the extent any such Depositary Control Agreement shall not have been delivered to the Collateral Agent on or before the Effective Date (the original of which shall have been delivered to the Collateral Agent). Prior to such delivery the Borrower (i) will cause each such Qualified Depositary Institution to wire all collected and available funds each Business Day to the Cash Collateral Account, and (ii) will not draw upon, withdraw, seek to withdraw or transfer any funds therefrom (other than to the Cash Collateral Account). 6. The Credit Agreement is amended by replacing Exhibit G, Exhibit J and Exhibit K thereto with Exhibit G, Exhibit J and Exhibit K attached hereto, respectively. 7. Paragraphs 1 through 6 shall not be effective until the satisfaction of all of the following conditions precedent (the "Amendment Effective Date"): (a) The Administrative Agent shall have received this Amendment, duly executed by a duly authorized officer or officers of the Borrower, the Guarantors, the Administrative Agent and the Required Lenders. 2 3 (b) The Amendment Effective Date shall occur on or prior to the Effective Date. 8. On the date hereof, each Credit Party hereby (a) reaffirms and admits the validity and enforceability of each Loan Document (as amended by this Amendment) to which it is a party and all of its obligations thereunder, (b) agrees and admits that it has no defenses to or offsets against any such obligation, and (c) represents and warrants that no Default or Event of Default under any Loan Document (as amended by this Amendment) has occurred and is continuing, and that each of the representations and warranties made by it in the Loan Documents (as amended by this Amendment) to which it is a party is true and correct in all material respects with the same effect as though each such representation and warranty had been made on the date hereof, except to the extent such representation and warranty specifically relates to an earlier date, in which case such representation and warranty shall have been true and correct on and as of such earlier date. 9. In all other respects, the Loan Documents shall remain in full force and effect, and no consent or amendment in respect of any term or condition of any Loan Document contained herein shall be deemed to be a consent or amendment in respect of any other term or condition contained in any Loan Document. 10. This Amendment may be executed in any number of counterparts all of which, taken together, shall constitute one agreement. In making proof of this Amendment, it shall only be necessary to produce the counterpart executed and delivered by the party to be charged. All future references to the Credit Agreement shall mean and refer to the Credit Agreement as amended hereby. 11. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, BUT INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW. [signature pages follow] 3 4 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA AS EVIDENCE of the agreement by the parties hereto to the terms and conditions herein contained, each such party has caused this Amendment No. 1 to be executed on its behalf. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss --------------------------------------- Title: Senior Vice President and Treasurer -------------------------------------- 5 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NEW YORK, as Swing Line Lender, as an Issuing Bank, as Administrative Agent and as a Lender By: /s/ G. P. Malaungg ----------------------------------- Name: George P. Malaungg ---------------------------------- Title: Senior Vice President --------------------------------- 6 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA FLEET NATIONAL BANK By: /s/ Peggy Peckham ----------------------------------- Name: Peggy Peckham ---------------------------------- Title: Senior Vice President --------------------------------- 7 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA BEAR STEARNS CORPORATE LENDING INC. By: /s/ Victor F. Bulzaccehellci ----------------------------------- Name: Victor F. Bulzaccehellci ---------------------------------- Title: Managing Director --------------------------------- 8 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA THE CHASE MANHATTAN BANK By: /s/ Peter Delousas ----------------------------------- Name: Peter Delousas ---------------------------------- Title: Managing Director --------------------------------- 9 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NOVA SCOTIA By: /s/ Daniel A. Costigan ----------------------------------- Name: Daniel A. Costigan ---------------------------------- Title: Director --------------------------------- 10 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA AGREED AND CONSENTED TO: BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP. By: /s/ Susan B. Yoss ---------------------------------------- Name: Susan B. Yoss -------------------------------------- Title: Senior Vice President ------------------------------------- EX-10.14 14 y46546ex10-14.txt AMENDMENT NO. 2 TO CREDIT AGREEMENT 1 EXHIBIT 10.14 AMENDMENT NO. 2 TO CREDIT AGREEMENT AMENDMENT NO. 2, dated as of March 8, 2001 (this "Amendment"), to the Credit Agreement, dated as of December 4, 2000, among Building Materials Corporation of America (the "Borrower"), the lenders from time to time party thereto, and The Bank of New York, as Swing Line Lender and as Administrative Agent (in such capacity, the "Administrative Agent") (as amended to the date hereof, the "Credit Agreement"). RECITALS I. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. II. The Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement upon the terms and conditions contained in this Amendment, and the Administrative Agent and the Required Lenders are willing so to do. Accordingly, in consideration of the Recitals and the covenants and conditions hereinafter set forth, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 2.7(b) of the Credit Agreement is amended and restated in its entirety to read as follows: (b) Mandatory Prepayments. At any time when the Invested Cash plus the sum of (i) the book value (as determined in accordance with GAAP and reflected in the most recent Consolidated balance sheet delivered to the Administrative Agent and the Lenders pursuant to Section 7.1(d)) of the City of Michigan City, Indiana Economic Development Taxable Revenue Bonds Series 1999 held by the Borrower and its Subsidiaries and (ii) the Marketable Securities of the Borrower and its Subsidiaries (other than any Receivables Subsidiary) on a Consolidated basis in accordance with GAAP exceed (i) for the period beginning on the Effective Date and ending 91 days thereafter, $25,000,000, and (ii) for the period beginning 92 days after the Effective Date and thereafter, $50,000,000, the Borrower shall immediately repay any outstanding Loans in an amount equal to such excess. 2. Section 6.3 of the Credit Agreement is amended and restated in its entirety to read as follows: 6.3. Minimum Cash Amount 2 On each Borrowing Date and with respect to the making of Loans and the issuance of Letters of Credit, the Invested Cash plus the sum of (i) the book value (as determined in accordance with GAAP and reflected in the most recent Consolidated balance sheet delivered to the Administrative Agent and the Lenders pursuant to Section 7.1(d)) of the City of Michigan City, Indiana Economic Development Taxable Revenue Bonds Series 1999 held by the Borrower and its Subsidiaries and (ii) the Marketable Securities of the Borrower and its Subsidiaries (other than any Receivables Subsidiary) on a Consolidated basis in accordance with GAAP shall be less than (i) for the period beginning on the Effective Date and ending 91 days thereafter, $25,000,000, and (ii) for the period beginning 92 days after the Effective Date and thereafter, $50,000,000. 3. Effective as of December 4, 2000, Schedule 8.5 to the Credit Agreement is amended and restated in its entirety in the form of Schedule 8.5 attached hereto. 4. Section 3 of each of Exhibit C-1 and C-2 is amended and restated in its entirety to read as follows: 3. The Borrower hereby certifies that on the date hereof and on the Borrowing Date set forth above, (a) the Invested Cash plus the sum of (i) the book value (as determined in accordance with GAAP and reflected in the most recent Consolidated balance sheet delivered to the Administrative Agent and the Lenders pursuant to Section 7.1(d)) of the City of Michigan City, Indiana Economic Development Taxable Revenue Bonds Series 1999 held by the Borrower and its Subsidiaries and (ii) the Marketable Securities of the Borrower and its Subsidiaries (other than any Receivables Subsidiary) on a Consolidated basis in accordance with GAAP is less than (i) for the period beginning on the Effective Date and ending 91 days thereafter, $25,000,000, and (ii) for the period beginning 92 days after the Effective Date and thereafter, $50,000,000. 5. Paragraphs 1-4 shall not be effective until the Administrative Agent shall have received this Amendment, duly executed by a duly authorized officer or officers of the Borrower, the Guarantors, the Administrative Agent and the Required Lenders. 6. On the date hereof, each Credit Party hereby (a) reaffirms and admits the validity and enforceability of each Loan Document (as amended by this Amendment) to which it is a party and all of its obligations thereunder, (b) agrees and admits that it has no defenses to or offsets against any such obligation, and (c) represents and warrants that no Default or Event of Default under any Loan Document (as amended by this Amendment) has occurred and is continuing, and that each of the representations and warranties made by it in the Loan Documents (as amended by this Amendment) to which it is a party is true and correct in all material respects with the same effect as though each such representation and warranty had been made on the date hereof, except to the extent such representation and warranty specifically relates to an earlier date, in which case such representation and warranty shall have been true and correct on and as of such earlier date. 2 3 7. In all other respects, the Loan Documents shall remain in full force and effect, and no consent or amendment in respect of any term or condition of any Loan Document contained herein shall be deemed to be a consent or amendment in respect of any other term or condition contained in any Loan Document. 8. This Amendment may be executed in any number of counterparts all of which, taken together, shall constitute one agreement. In making proof of this Amendment, it shall only be necessary to produce the counterpart executed and delivered by the party to be charged. All future references to the Credit Agreement shall mean and refer to the Credit Agreement as amended hereby. 9. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, BUT INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW. [signature pages follow] 3 4 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA AS EVIDENCE of the agreement by the parties hereto to the terms and conditions herein contained, each such party has caused this Amendment No. 2 to be executed on its behalf. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss --------------------------------------- Title: Senior Vice President and Treasurer -------------------------------------- 5 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NEW YORK, as Swing Line Lender, as Issuing Bank, as Administrative Agent and as a Lender By: /s/ David C. Judge ----------------------------------- Name: David C. Judge ---------------------------------- Title: Senior Vice President --------------------------------- 6 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA FLEET NATIONAL BANK By: /s/ Peggy Peckham ----------------------------------- Name: Peggy Peckham ---------------------------------- Title: Senior Vice President --------------------------------- 7 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA BEAR STEARNS CORPORATE LENDING INC. By: /s/ Victor F. Bulzaccehellci ----------------------------------- Name: Victor F. Bulzaccehellci ---------------------------------- Title: Managing Director --------------------------------- 8 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA THE CHASE MANHATTAN BANK By: /s/ Peter A. Dedousis ----------------------------------- Name: Peter A. Dedousis ---------------------------------- Title: Managing Director --------------------------------- 9 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NOVA SCOTIA By: /s/ Daniel A. Costigan ----------------------------------- Name: Daniel A. Costigan ---------------------------------- Title: Director --------------------------------- 10 AMENDMENT NO. 2 TO CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA AGREED AND CONSENTED TO: BMCA INSULATION PRODUCTS INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAFTECH CORPORATION LL BUILDING PRODUCTS INC. WIND GAP REAL PROPERTY ACQUISITION CORP. By: /s/ Susan B. Yoss ---------------------------------------- Name: Susan B. Yoss -------------------------------------- Title: Senior Vice President and Treasurer ------------------------------------- EX-10.15 15 y46546ex10-15.txt AMENDMENT AND RESTATED CREDIT AGREEMENT 1 Exhibit 10.15 ------------- AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG BUILDING MATERIALS CORPORATION OF AMERICA, THE LENDERS PARTY HERETO, FLEET NATIONAL BANK, AS DOCUMENTATION AGENT, BEAR STEARNS CORPORATE LENDING INC., AS SYNDICATION AGENT, AND THE BANK OF NEW YORK, AS SWING LINE LENDER AND AS ADMINISTRATIVE AGENT WITH BNY CAPITAL MARKETS, INC., AS LEAD ARRANGER AND BOOKRUNNER ---------------- 110,000,000 ---------------- DATED AS OF DECEMBER 4, 2000 31688.0003 2 TABLE OF CONTENTS ----------------- 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.....................................................................1 1.1. Definitions.........................................................................................1 1.2. Principles of Construction..........................................................................2 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT................................................................2 2.1. Revolving Credit Loans..............................................................................2 2.2. Revolving Credit Notes..............................................................................2 2.3. Swing Line Loans....................................................................................2 2.4. Swing Line Note.....................................................................................2 2.5. Procedure for Borrowing.............................................................................2 2.6. Termination or Reduction of Commitments.............................................................2 2.7. Prepayments.........................................................................................2 2.8. Use of Proceeds.....................................................................................2 2.9. Letter of Credit Sub-Facility.......................................................................2 2.10. Letter of Credit Participation and Funding Commitments.............................................2 2.11. Absolute Obligation With Respect to Letter of Credit Payments......................................2 2.12. Payments...........................................................................................2 3. INTEREST, FEES, YIELD PROTECTIONS, ETC.........................................................................2 3.1. Interest Rate and Payment Dates.....................................................................2 3.2. Fees................................................................................................2 3.3. Conversions.........................................................................................2 3.4. Concerning Interest Periods.........................................................................2 3.5. Indemnification for Loss............................................................................2 3.6. Capital Adequacy....................................................................................2 3.7. Reimbursement for Increased Costs...................................................................2 3.8. Illegality of Funding...............................................................................2 3.9. Substituted Interest Rate...........................................................................2 3.10. Taxes; Net Payments................................................................................2 3.11. Option to Fund.....................................................................................2 3.12. Replacement of Lenders.............................................................................2 4. REPRESENTATIONS AND WARRANTIES.................................................................................2 4.1. Subsidiaries; Capitalization........................................................................2 4.2. Existence and Power.................................................................................2 4.3. Authority and Execution.............................................................................2 4.4. Binding Agreement...................................................................................2 4.5. Litigation..........................................................................................2
3 4.6. Required Consents...................................................................................2 4.7. Absence of Defaults; No Conflicting Agreements......................................................2 4.8. Compliance with Applicable Laws.....................................................................2 4.9. Taxes...............................................................................................2 4.10. Governmental Regulations...........................................................................2 4.11. Federal Reserve Regulations; Use of Loan Proceeds..................................................2 4.12. Plans..............................................................................................2 4.13. Financial Statements...............................................................................2 4.14. Property...........................................................................................2 4.15. Authorizations.....................................................................................2 4.16. Environmental Matters..............................................................................2 4.17. Solvency...........................................................................................2 4.18. Absence of Certain Restrictions....................................................................2 4.19. No Misrepresentation...............................................................................2 5. CONDITIONS TO EFFECTIVENESS....................................................................................2 5.1. Evidence of Action..................................................................................2 5.2. This Agreement......................................................................................2 5.3. Notes...............................................................................................2 5.4. Subsidiary Guaranty.................................................................................2 5.5. Security Agreement..................................................................................2 5.6. Collateral Agent Agreement..........................................................................2 5.7. Insurance The Administrative Agent shall have received the items required to be delivered on the Effective Date under Section 7.5, in each case satisfactory to the Administrative Agent...........................................................................................2 5.8. Deposits of Cash, Cash Equivalents and Marketable Securities........................................2 5.9. Absence of Litigation...............................................................................2 5.10. Approvals and Consents.............................................................................2 5.11. Senior Note Indenture Consent Solicitations........................................................2 5.12. 2000 Credit Agreement..............................................................................2 5.13. Policano & Manzo Report............................................................................2 5.14. Opinion of Counsel to the Borrower and its Subsidiaries............................................2 5.15. Material Agreements................................................................................2 5.16. Asbestos Report....................................................................................2 5.17. Chase Platinum Substitute Note.....................................................................2 5.18. Fees...............................................................................................2 5.19. Effective Date Cutoff..............................................................................2 5.20. Certain Accrued Payments...........................................................................2 5.21. Other Documents....................................................................................2 6. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT........................................................2 6.1. Compliance..........................................................................................2
-ii- 4 6.2. Borrowing Request; Letter of Credit Request.........................................................2 6.3. Loan Closings.......................................................................................2 7. AFFIRMATIVE COVENANTS..........................................................................................2 7.1. Financial Statements and Information................................................................2 7.2. Certificates; Other Information.....................................................................2 7.3. Legal Existence.....................................................................................2 7.4. Taxes...............................................................................................2 7.5. Insurance and Condemnation..........................................................................2 7.6. Performance of Obligations..........................................................................2 7.7. Observance of Legal Requirements....................................................................2 7.8. Inspection of Property; Books and Records; Discussions..............................................2 7.9. Authorizations......................................................................................2 7.10. Financial Covenants................................................................................2 7.11. Additional Subsidiaries............................................................................2 7.12. Further Assurances; Certain Real Estate Matters....................................................2 7.13. Environmental Compliance...........................................................................2 7.14. Invested Cash, Marketable Securities and System Cash...............................................2 8. NEGATIVE COVENANTS.............................................................................................2 8.1. Indebtedness........................................................................................2 8.2. Liens...............................................................................................2 8.3. Merger, Consolidations and Acquisitions.............................................................2 8.4. Dispositions........................................................................................2 8.5. Investments, Loans, Etc.............................................................................2 8.6. Restricted Payments.................................................................................2 8.7. Business and Name Changes...........................................................................2 8.8. ERISA...............................................................................................2 8.9. Prepayments of Indebtedness.........................................................................2 8.10. Amendments, Etc. of Certain Agreements.............................................................2 8.11. Transactions with Affiliates.......................................................................2 8.12. Limitation on Upstream Transfers...................................................................2 8.13. Capital Leases and Sale-Leaseback Transactions.....................................................2 8.14. Capital Expenditures...............................................................................2 8.15. Asbestos Costs.....................................................................................2 8.16. Tax Sharing Payments...............................................................................2 9. DEFAULT........................................................................................................2 9.1. Events of Default...................................................................................2 9.2. Contract Remedies...................................................................................2
-iii- 5 10. THE ADMINISTRATIVE AGENT......................................................................................2 10.1. Appointment........................................................................................2 10.2. Delegation of Duties...............................................................................2 10.3. Exculpatory Provisions.............................................................................2 10.4. Reliance by Administrative Agent...................................................................2 10.5. Notice of Default..................................................................................2 10.6. Non-Reliance on Administrative Agent and Other Lenders.............................................2 10.7. Indemnification....................................................................................2 10.8. Administrative Agent in Its Individual Capacity....................................................2 10.9. Successor Administrative Agent.....................................................................2 10.10. Documentation Agent, Syndication Agent and Lead Arranger..........................................2 10.11. Appointment of Collateral Agent...................................................................2 11. OTHER PROVISIONS..............................................................................................2 11.1. Amendments and Waivers.............................................................................2 11.2. Notices............................................................................................2 11.3. No Waiver; Cumulative Remedies.....................................................................2 11.4. Survival of Representations and Warranties and Certain Obligations.................................2 11.5. Expenses...........................................................................................2 11.6. Lending Offices....................................................................................2 11.7. Successors and Assigns.............................................................................2 11.8. Indemnity..........................................................................................2 11.9. Limitation of Liability............................................................................2 11.10. Counterparts......................................................................................2 11.11. Adjustments; Set-off..............................................................................2 11.12. Construction......................................................................................2 11.13. Governing Law.....................................................................................2 11.14. Headings Descriptive..............................................................................2 11.15. Severability......................................................................................2 11.16. Integration.......................................................................................2 11.17. Consent to Jurisdiction...........................................................................2 11.18. Service of Process................................................................................2 11.19. No Limitation on Service or Suit..................................................................2 11.20. WAIVER OF TRIAL BY JURY...........................................................................2 11.21. Treatment of Confidential Information.............................................................2 11.22. Conversion of DIP.................................................................................2 11.23. Consolidation and Restatement.....................................................................2 11.24. Effectiveness; Marketable Securities..............................................................2 11.25. Existing Credit Agreement Financial Covenants.....................................................2
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Exhibit A List of Revolving Credit Commitment Amounts Exhibit B-1 Form of Revolving Credit Note Exhibit B-2 Form of Swing Line Note Exhibit C-1 Form of Borrowing Request Exhibit C-2 Form of Letters of Credit Request Exhibit D Form of Notice of Conversion Exhibit E Form of Compliance Certificate Exhibit F-1 Form of Opinion of General Counsel to the Borrower and its Subsidiaries Exhibit F-2 Form of Opinion of Special Counsel to the Borrower and its Subsidiaries Exhibit G Form of Collateral Agent Agreement Exhibit H Form of Assignment and Acceptance Agreement Exhibit I Form of Subsidiary Guaranty Exhibit J Form of Security Agreement Exhibit K Form of Senior Note Indenture Consent Solicitation Exhibit L Form of Demand Note Exhibit M Form of Depositary Control Agreement
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SCHEDULES Schedule 1.1(m) List of Mortgaged Properties Schedule 1.1(q) List of Qualified Depositary Institutions Schedule 4.1 List of Subsidiaries; Capitalization Schedule 4.5 List of Litigation Schedule 4.13 Disclosure of Ordinary Course of Business Schedule 4.14 List of Real Properties Schedule 4.16 List of Environmental Matters Schedule 8.1 List of Existing Indebtedness Schedule 8.2 List of Existing Liens Schedule 8.5 List of Investments Schedule 8.5(g) List of Marketable Securities Schedule 8.5(h) List of Security Investments Schedule 8.13 List of Existing Capital Leases and Sale Leaseback Transactions Schedule 11.2 List of Addresses for Notices
-vi- 8 AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 4, 2000, by and among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation (the "Borrower"), the lenders party hereto (together with their respective assigns, the "Lenders", each a "Lender"), FLEET NATIONAL BANK, as documentation agent (in such capacity, the "Documentation Agent"), BEAR STEARNS CORPORATE LENDING INC., as syndication agent (in such capacity, the "Syndication Agent"), and THE BANK OF NEW YORK, as agent for the Lenders (in such capacity, the "Administrative Agent") and as swing line lender (in such capacity, the "Swing Line Lender"). This Agreement amends and restates in its entirety the Credit Agreement, dated as of August 18, 1999, by and among the Borrower, the lenders party thereto, Fleet National Bank, as documentation agent, Bear Stearns Corporate Lending Inc., as syndication agent, and The Bank of New York, as administrative agent, as amended by Amendment No. 1, dated as of March 31, 2000 (as amended, the "Existing Credit Agreement"). 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1.1. Definitions As used in this Agreement, terms defined in the preamble have the meanings therein indicated, and the following terms have the following meanings: "ABR Advances": the Swing Line Loans and the Revolving Credit Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Alternate Base Rate. "Accountants": Arthur Andersen LLP (or any successor thereto), or such other firm of certified public accountants of recognized national standing selected by the Borrower and reasonably satisfactory to the Administrative Agent. "Accumulated Funding Deficiency": as defined in Section 302 of ERISA. "Acquisition": with respect to the Borrower or any Subsidiary of the Borrower, the purchase or other acquisition by such Person, by any means whatsoever (including through a merger, dividend or otherwise and whether in a single transaction or in a series of related transactions), of (i) any Capital Stock of any other Person (other than a then existing Subsidiary of the Borrower) if, immediately thereafter, such other Person would be either a Subsidiary of such Person or otherwise under the control of such Person, or (ii) any business, going concern or division or segment of any other Person (other than the Borrower or any other Subsidiary of the Borrower), or all or substantially all of the assets of any of the foregoing. "Advance": with respect to a Loan, an ABR Advance or a Eurodollar Advance, as the case may be. "Affected Advance": as defined in Section 3.9. 9 "Affiliate": as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (i) to vote 10% or more of the securities or other interests having ordinary voting power for the election of directors or other managing Persons thereof or (ii) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. "Affiliated Fund": with respect to any Person, any mutual fund that is advised or managed by (a) such Person, (b) a Fund Affiliate of such Person or (c) an entity or Fund Affiliate of an entity that administers or manages such Person. For purposes of this definition, "Fund Affiliate" means, with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person, each officer, director, general partner or joint-venturer, Affiliated Fund, adviser or manager of such Person, and each Person who is the beneficial owner of 5% or more of any class of Voting Shares of such Person. For the purposes of this definition, "control " means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Affiliated Fund Distressed Debt Group": each mutual fund and each Affiliated Fund of such mutual fund, in each case whose primary stated purpose is the purchase of distressed debt. "Aggregate Credit Exposure": at any time, the sum at such time of (i) the outstanding principal balance of the Revolving Credit Loans of all Lenders, plus (ii) the outstanding principal balance of the Swing Line Loans plus (iii) an amount equal to the Letter of Credit Exposure of all Lenders. "Aggregate Revolving Credit Commitment Amount": at any time, the sum at such time of the Revolving Credit Commitment Amounts of all Lenders. "Aggregate Voting Exposure": the sum of (i) the Aggregate Revolving Credit Commitment Amount, (ii) the outstanding principal amount of the Chase Platinum Substitute Note and (iii) the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC. "Agreement": this Amended and Restated Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Alternate Base Rate": on any date, a rate of interest per annum equal to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date. "Alternate DIP Facility": as defined in Section 11.22. 2 10 "Annual Asbestos Basket": as defined in Section 8.15. "Appeal Security": cash, letters of credit or any other security deposited by the Borrower or any of its Subsidiaries on or after the Closing Date to secure any appeal bond or similar instrument in connection with any asbestos litigation. "Appeal Security Drawn Amount": an amount equal to the aggregate amount of all Appeal Security deposited on or after the Closing Date that has been drawn by the holder of the applicable appeal bond or similar instrument. "Appeal Security Undrawn Amount": an amount equal to (i) the aggregate original amount of all Appeal Security deposited on or after the Closing Date plus (ii) the amount of each increase to the face amount of any letter of credit constituting Appeal Security minus (iii) the sum of, without duplication (A) the amount of each reduction to the face amount of any such letter of credit not resulting from any drawing thereunder, (B) the undrawn face amount of any such letter of credit that has been terminated, and (C) the undrawn face amount of any such Appeal Security that has been returned to the Borrower or any of its Subsidiaries. "Applicable Margin": a rate per annum equal to (i) with respect to ABR Advances, 0.00%, and (ii) with respect to Eurodollar Advances, 2.64%. "Approved Bank": any bank whose (or whose parent company's) unsecured non-credit supported short-term commercial paper rating from (i) Standard & Poor's is at least A-1 or the equivalent thereof or (ii) Moody's is at least P-1 or the equivalent thereof. "Assignment": as defined in Section 11.7(c). "Assignment and Acceptance Agreement": an assignment and acceptance agreement executed by an assignor and an assignee, substantially in the form of Exhibit H. "Authorized Signatory": as to (i) any Person which is a corporation, the chairman of the board, the president, any vice president, the chief financial officer or any other officer (acceptable to the Administrative Agent) thereof and (ii) any Person which is not a corporation, the general partner or other managing Person (acceptable to the Administrative Agent) thereof. "BNY": The Bank of New York. "BNY Capital Markets": BNY Capital Markets, Inc. "BNY Rate": a rate of interest per annum equal to the rate of interest publicly announced in New York City by BNY from time to time as its prime commercial lending rate, such rate to be adjusted automatically (without notice) on the effective date of any change in such publicly announced rate. 3 11 "Borrower Intercompany Investments": demand loans which are (i) made by the Borrower to or in any Guarantor or (ii) made by any Guarantor to or in the Borrower or to or in any other Guarantor and, in each case, evidenced by a Demand Note. "Borrowing Date": any Business Day on which (i) the Lenders make Revolving Credit Loans, (ii) the Swing Line Lender makes a Swing Line Loan or (iii) the Issuing Bank issues a Letter of Credit. "Borrowing Request": a request for Revolving Credit Loans or a Swing Line Loan in the form of Exhibit C-1. "Business Day": (i) for all purposes other than as set forth in clause (ii) below, any day other than a Saturday, a Sunday or a day on which commercial banks located in New York City are authorized or required by law or other governmental action to close, and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Advances, any day which is a Business Day described in clause (i) above and which is also a day on which eurodollar funding between banks may be carried on in London, England. "Capital Expenditures": of any Person means expenditures (whether paid in cash or other consideration or accrued as a liability) for fixed or capital assets (excluding any capitalized interest and any such asset acquired in connection with normal replacement and maintenance programs to the extent properly charged to current operations and excluding any replacement assets to the extent acquired with the proceeds of insurance) made by such Person, all as determined in accordance with GAAP. "Capital Lease": a lease the obligations in respect of which are required to be capitalized by the lessee thereunder for financial reporting purposes in accordance with GAAP. "Capital Stock": as to any Person, all shares, interests, partnership interests, limited liability company interests, participations, rights in or other equivalents (however designated) of such Person's equity (however designated) and any rights, warrants or options exchangeable for or convertible into such shares, interests, participations, rights or other equity. "Cash Collateral Account": an account maintained by the Collateral Agent pursuant to the Security Agreement and entitled the "Building Materials Corporation of America Cash Collateral Account", provided that the name of such account shall be changed following the change of name of the Borrower. "Cash Equivalents": shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in full support thereof) having maturities of not 4 12 more than six months from the date of acquisition, (ii) Dollar denominated domestic and Eurodollar time deposits, certificates of deposit and bankers acceptances of (x) any Lender or (y) any Approved Bank, in any such case with maturities of not more than six months from the date of acquisition, and (iii) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company with an unsecured non-credit supported short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's or at least P-1 or the equivalent by Moody's, or guaranteed by any industrial or financial company with a long term unsecured non-credit supported senior debt rating of at least A or A-2, or the equivalent, by Standard & Poor's or Moody's, as the case may be, and in each case maturing within six months after the date of acquisition, provided that such securities, time deposits, certificates of deposit, bankers acceptances and commercial paper have been issued in the United States, have been deposited in the Cash Collateral Account and in respect of which the Collateral Agent has a first priority perfected security interest therein. "Cash Management System": as defined in Section 3.4(d)(iii) of the Security Agreement. "Change of Control" means the occurrence of any of the following events: (i) prior to the time that at least 15% of the then outstanding Voting Shares of the Borrower or any Parent is publicly traded on a national securities exchange or in the NASDAQ (national market system), the Permitted Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of majority voting power of the Voting Shares of the Borrower, whether as a result of issuance of securities of the Borrower or any of its Affiliates, any merger, consolidation, liquidation or dissolution of the Borrower or any of its Affiliates, any direct or indirect transfer of securities by any Permitted Holder or by any Parent or any of its Subsidiaries or otherwise (for purposes of this clause (i) and clause (ii) below, the Permitted Holders shall be deemed to beneficially own any Voting Shares of a corporation (the "specified corporation") held by any other corporation (the "parent corporation") so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, a majority of the Voting Shares of the parent corporation); (ii) 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 (as defined in clause (i) above, except that a Person shall be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the Voting Shares of the Borrower or any Parent; provided that the Permitted Holders beneficially own (as defined in clause (i) above), directly or indirectly, in the aggregate a lesser percentage of the Voting Shares of the Borrower or such Parent than such other Person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election of a majority of the Managing Person of the Borrower or such Parent; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Managing Person of the Borrower or G-I Holdings Inc. (together with any new members whose election by the Managing Person of the Borrower or G-I Holdings Inc., or whose nominations for election by the shareholders of the Borrower or G-I Holdings Inc., was approved by a vote of a majority of the members of such Managing Person then still in office who were either members at the beginning of such period or whose election or nomination for election was previously so approved) cease for any 5 13 reason to constitute a majority of the members of such Managing Person then in office. "Chase Platinum Agreement": the agreement, from time to time in effect, between The Chase Manhattan Bank and the Borrower providing for the leasing to the Borrower of 11,329 ounces of platinum. "Chase Platinum Exposure": with respect to any Voting Lender, the amount of the outstanding principal amount of the Chase Platinum Substitute Note held by such Voting Lender. "Chase Platinum Substitute Note": the note, dated as of the Effective Date, made by the Borrower to The Chase Manhattan Bank evidencing (i) the delivery of 11,329 ounces of platinum to The Chase Manhattan Bank in satisfaction of the Chase Platinum Agreement and (ii) the loan made by The Chase Manhattan Bank to the Borrower in an amount equal to the Borrower's cost of purchase of such platinum as described in such note, in form and substance acceptable to the Administrative Agent. "Closing Date": December 4, 2000. "Code": the Internal Revenue Code of 1986, as the same may be amended from time to time, or any successor thereto, and the rules and regulations issued thereunder, as from time to time in effect. "Collateral": means any and all "Collateral" as defined in any applicable Security Document. "Collateral Agent": means BNY, as Collateral Agent under the Collateral Agent Agreement. "Collateral Agent Agreement": means the Collateral Agent Agreement, substantially in the form of Exhibit G, among the (i) Administrative Agent, (ii) the Administrative Agent under, and as defined in, the Existing Credit Agreement, (iii) the Collateral Agent, (iv) each trustee under each Senior Note Indenture, (v) The Chase Manhattan Bank, in connection with the Chase Platinum Substitute Note, and (vi) Fleet National Bank, in connection with the Fleet LC Agreement. "Commitment": a Revolving Credit Commitment, the Letter of Credit Commitment or the Swing Line Commitment, as the case may be. "Commitment Fee": as defined in Section 3.2(a). "Commitment Percentage": with respect to any Lender as of any date, the percentage as of such date equal to such Lender's Revolving Credit Commitment Amount divided by the Aggregate Revolving Credit Commitment Amount (or, if no Commitments then exist, the percentage equal to such Lender's Revolving Credit 6 14 Commitment Amount on the last day upon which Revolving Credit Commitments did exist divided by the Aggregate Revolving Credit Commitment Amount as in effect on such day). "Compensatory Interest Payment": as defined in Section 3.1(c). "Compliance Certificate": a certificate substantially in the form of Exhibit E. "Consolidated": the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP. "Consolidated EBITDA": for any period, net income of the Borrower and its Subsidiaries determined on a Consolidated basis in accordance with GAAP for such period plus, to the extent not excluded (as set forth below) from net income, the sum of, without duplication, (i) Consolidated Interest Expense, (ii) provision for income taxes of the Borrower and its Subsidiaries, and (iii) depreciation, amortization and other non-cash charges of the Borrower and its Subsidiaries. For purposes of this definition the following shall be excluded for purposes of calculating net income: (a) extraordinary gains and losses, (b) non-recurring non-cash charges relating to the closing of the facilities described in Section 8.4(i) and non-recurring severance costs related thereto for the fiscal quarter ended December 31, 2000 in an aggregate amount not exceeding $2,300,000, (c) realized losses from the sale at any time on or after October 2, 2000 of Marketable Securities, such Marketable Securities itemized in the Consolidated Balance Sheet of the Borrower for the fiscal quarter ended October 1, 2000 under the line items entitled "Investments in Available For Sale Securities" and "Investments in Trading Securities", (d) the one time charge related to an increase in the warranty reserve for the fiscal quarter ended December 31, 2000 in an amount not exceeding $15,000,000, (e) the non-recurring charge in an aggregate amount not exceeding $3,000,000 relating to the modification of the Borrower's employee stock purchase program in existence on the Closing Date and (f) non-cash charges relating to stock options or related plans given to employees of the Borrower and its Subsidiaries. "Consolidated Interest Expense": for any period, cash interest expense of the Borrower and its Subsidiaries determined on a Consolidated basis in accordance with GAAP. "Contingent Obligation": as to any Person (a "secondary obligor"), any obligation of such secondary obligor (i) guaranteeing or in effect guaranteeing any return on any investment made by another Person, or (ii) guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or other obligation (a "primary obligation") of any other Person (a "primary obligor") in any manner, whether directly or indirectly, including any obligation of such secondary obligor, whether contingent, (a) to purchase any primary obligation or any Property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of a primary obligor, (c) to purchase Property, securities or services primarily for the purpose of assuring the beneficiary of any primary obligation of the ability of a primary obligor to make payment of a primary obligation, (d) otherwise to assure or hold harmless 7 15 the beneficiary of a primary obligation against loss in respect thereof, and (e) in respect of the liabilities of any partnership in which a secondary obligor is a general partner, except to the extent that such liabilities of such partnership are nonrecourse to such secondary obligor and its separate Property, provided, however, that the term "Contingent Obligation" shall not include the indorsement of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation of a Person shall be deemed to be an amount equal to the stated or determinable amount of a primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. "Control Person": as defined in Section 3.6. "Conversion Date": the date on which: (i) a Eurodollar Advance is converted to an ABR Advance, (ii) an ABR Advance is converted to a Eurodollar Advance or (iii) a Eurodollar Advance is converted to a new Eurodollar Advance. "Credit Exposure": with respect to any Lender as of any date, the sum as of such date of (i) the outstanding principal balance of such Lender's Revolving Credit Loans, (ii) such Lender's Swing Line Exposure, and (iii) such Lender's Letter of Credit Exposure. "Credit Party": the Borrower and each Guarantor. "Debt Obligations": as defined in Section 9.1(f). "Default": any event or condition which constitutes an Event of Default or which, with the giving of notice, the lapse of time, or any other condition, would, unless cured or waived, become an Event of Default. "Demand Note": a demand promissory note, in the form of Exhibit L, endorsed in blank and pledged to the Collateral Agent pursuant to the Security Documents. "Depositary Control Agreement": an agreement among a Credit Party, a Qualified Depositary Institution and the Collateral Agent substantially in the form of Exhibit M. "DIP Facility": as defined in Section 11.22. "Disbursement Account No. 1": as defined in the Security Agreement. "Disbursement Account No. 2": as defined in the Security Agreement. "Disbursement Account No. 1 Cash": cash on deposit in Disbursement Account No. 1. 8 16 "Disbursement Account No. 2 Cash": cash on deposit in Disbursement Account No. 2. "Disposition": with respect to any Person, any sale, assignment, transfer or other disposition by such Person, by any means, of (i) the Capital Stock of any other Person, (ii) any business, going concern or division or segment thereof, or (iii) any other Property of such Person. "Dollars" and "$": lawful currency of the United States. "Effective Date": the date on which all of the conditions set forth in Section 5 have been satisfied. "Employee Benefit Plan": an employee benefit plan within the meaning of Section 3(3) of ERISA maintained, sponsored or contributed to by the Borrower, any of its Subsidiaries or any ERISA Affiliate. "Environmental Laws": means all applicable laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, or binding agreements issued, promulgated or entered into by any Governmental Authority, relating to the environment, preservation or reclamation of natural resources, or the management or release of any Hazardous Material. "Environmental Liability": means, as to any Person, any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of such Person directly or indirectly resulting from or based upon (i) violation of any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) exposure to any Hazardous Materials, (iv) the release or threatened release of any Hazardous Materials into the environment or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "ERISA": the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations issued thereunder, as from time to time in effect. "ERISA Affiliate": when used with respect to an Employee Benefit Plan, ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans, any Person which is a member of any group of organizations within the meaning of Sections 414(b) or (c) of the Code (or, solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, Sections 414(m) or (o) of the Code) of which the Borrower or any of its Subsidiaries is a member. "Eurodollar Advances": collectively, the Revolving Credit Loans (or any portions thereof), at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Eurodollar Rate. 9 17 "Eurodollar Rate": with respect to each Eurodollar Advance, a rate of interest per annum, as determined by the Administrative Agent, obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%): (a) the rate, as reported by BNY to the Administrative Agent, quoted by BNY to leading banks in the interbank eurodollar market as the rate at which BNY is offering Dollar deposits in an amount equal approximately to the Eurodollar Advance of BNY to which such Interest Period shall apply for a period equal to such Interest Period, as quoted at approximately 11:00 a.m. two Business Days prior to the first day of such Interest Period, by (b) a number equal to 1.00 minus the aggregate of the then stated maximum rates during such Interest Period of all reserve requirements (including marginal, emergency, supplemental and special reserves), expressed as a decimal, established by the Board of Governors of the Federal Reserve System and any other banking authority to which BNY and other major United States money center banks are subject, in respect of eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board of Governors of the Federal Reserve System), without benefit of credit for proration, exceptions or offsets which may be available from time to time to any Lender. "Event of Default": as defined in Section 9.1. "Exchange Act": the Securities Exchange Act of 1934, as amended. "Excluded Taxes": collectively, in the case of any Indemnified Tax Person, (i) Taxes imposed on the net income of such Indemnified Tax Person by the jurisdiction in which such Indemnified Tax Person has its situs of organization or in which such Indemnified Tax Person's lending office is located or is engaged in business, (ii) Taxes imposed on the net income of such Indemnified Tax Person (other than those Taxes described in clause (i)), except to the extent that such Taxes would not have been incurred but for the situs of organization, any place of business or the activities of the Borrower or any of its Subsidiaries in the jurisdiction imposing the Tax, (iii) Taxes (other than withholding Taxes) imposed on or measured by the gross income, gross receipts or capital of such Indemnified Tax Person, except to the extent that such Taxes would not have been incurred but for the situs of organization, any place of business or the activities of the Borrower or any of its Subsidiaries in the jurisdiction imposing the Tax, (iv) any withholding Taxes imposed with respect to a payment to a person who has become a Lender as a result of an Assignment to the extent such withholding arises as a result of Section 881(c)(3)(A) of the Code, (v) any Tax imposed on a transfer of a Note, and (vi) any Tax imposed as a result of the willful misconduct of such Indemnified Tax Person. "Existing Credit Agreement": as defined in the preamble. "Federal Funds Rate": for any day, a rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such 10 18 day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average of the quotations for such day on such transactions received by BNY as determined by BNY and reported to the Administrative Agent. "Fees": as defined in Section 2.12. "Financial Officer": as to any Person, the chief financial officer of such Person or such other officer as shall be satisfactory to the Administrative Agent. "Financial Statements": as defined in Section 4.13. "Fleet LC": the letter of credit in the amount of $3,551,781 issued by Fleet National Bank with respect to the Shafter, California IDB facility. "Fleet LC Agreement": collectively, (i) the Amended and Restated Reimbursement Agreement, dated as of December 4, 2000, between Fleet National Bank and Building Materials Manufacturing Corporation providing for the issuance of the Fleet LC, and (ii) the Parent Guarantee, dated as of December 4, 2000, pursuant to which the Borrower unconditionally guarantees to Fleet National Bank the obligations of Building Materials Manufacturing Corporation under the Amended and Restated Reimbursement Agreement described in clause (i) of this definition. "Fleet LC Exposure": with respect to any Voting Lender, the amount of the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC held by such Voting Lender. "Fronting Fees": as defined in Section 3.2(c). "Funded Current Liability Percentage": as defined in Section 401(a)(29) of the Code. "GAAP": generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statement by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination, consistently applied. "Governmental Authority": any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator. 11 19 "Guarantor": at any time, any Subsidiary of the Borrower that is a party to the Subsidiary Guaranty. "Guaranty Documents": means the Subsidiary Guaranty and each other guaranty agreement, instrument or other document executed or delivered pursuant to Section 7.11 or 7.12 to guarantee any of the Obligations. "Hazardous Materials": means all substances or wastes regulated or characterized as explosive, radioactive, toxic, hazardous, contaminant or pollutant under Environmental Laws, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas and infectious or medical wastes. "Hedge Agreement": any swap agreement, cap agreement, collar agreement, futures contract, forward contract or similar agreement or arrangement entered into to protect against or mitigate the effect of fluctuations in interest rates, foreign exchange rates or prices of commodities used in the business of the Borrower and its Subsidiaries. "Highest Lawful Rate": as to any Lender or any Issuing Bank, the maximum rate of interest, if any, that at any time or from time to time may be contracted for, taken, charged or received by such Lender on the Note held by it or by such Issuing Bank pursuant to the Reimbursement Agreements, as the case may be, or which may be owing to such Lender or such Issuing Bank pursuant to the Loan Documents under the laws applicable to such Lender or such Issuing Bank and this transaction. "Included Taxes": all Taxes other than Excluded Taxes. "Indebtedness": as to any Person, at a particular time, all items which constitute, without duplication, (i) indebtedness for borrowed money, (ii) indebtedness in respect of the deferred purchase price of Property (other than trade payables incurred in the ordinary course of business), (iii) indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv) obligations with respect to any conditional sale or title retention agreement, (v) indebtedness arising under acceptance facilities and the amount available to be drawn under all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder to the extent such Person shall not have reimbursed the issuer in respect of the issuer's payment thereof, (vi) all liabilities secured by any Lien on any Property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (other than carriers', warehousemen's, mechanics', repairmen's or other like non-consensual statutory Liens arising in the ordinary course of business), (vii) obligations under Capital Leases, (viii) all obligations of such Person in respect of Capital Stock subject to mandatory redemption or redemption at the option of the holder thereof, in whole or in part, and (ix) all Contingent Obligations of such Person in respect of any of the foregoing. "Indemnified Liabilities": as defined in Section 11.5. "Indemnified Person": as defined in Section 11.8. 12 20 "Indemnified Tax Person": the Administrative Agent, the Swing Line Lender, any Issuing Bank or any Lender. "Interest Coverage Ratio": at any date of determination, the ratio of Consolidated EBITDA to Consolidated Interest Expense, in each case for the four fiscal quarter period ending on such date or, if such date is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarter period. "Interest Payment Date": (i) as to any ABR Advance, the last day of each calendar month and each day that such ABR Advance is repaid or converted, (ii) as to any Swing Line Loan, the last day of each calendar month and the date on which the outstanding principal balance of such Swing Line Loan shall become due and payable in accordance with Section 2.3, (iii) as to any Eurodollar Advance, (x) the last day of each calendar month and (y) the last day of the Interest Period with respect to such Eurodollar Advance, and (iv) as to all Advances, the Maturity Date, provided that, for purposes of clauses (i), (ii) and (iii)(x) of this definition, if any such Interest Payment Date would otherwise end on a day that is not a Business Day, such Interest Payment Date shall be extended to the next succeeding Business Day. "Interest Period": (a) subject to the provisions of Section 3.4, with respect to any Eurodollar Advance requested by the Borrower, the period commencing on, as the case may be, the Borrowing Date or Conversion Date with respect to such Eurodollar Advance and ending one, two, three or six months thereafter, as selected by the Borrower in its irrevocable Borrowing Request or its irrevocable Notice of Conversion, provided, however, that (i) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day and (ii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (b) subject to the provisions of Section 3.4, with respect to any Swing Line Loan requested by the Borrower, the period commencing on the Borrowing Date with respect to such Swing Line Loan and ending on or between one and five Business Days thereafter, as selected by the Borrower in its irrevocable Borrowing Request, provided, however, that (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, and (ii) the Borrower shall select Interest Periods so as not to have more than three different Interest Periods outstanding at any one time for all Swing Line Loans. "Invested Cash": means cash and Cash Equivalents (excluding System Cash, Disbursement Account No. 1 Cash and Disbursement Account No. 2 Cash). 13 21 "Investments": as defined in Section 8.5. "Issuing Banks": BNY and The Chase Manhattan Bank, each an "Issuing Bank". "Lead Arranger": BNY Capital Markets. "Letter of Credit": as defined in Section 2.9(a). The term "Letter of Credit" shall include all Letters of Credit outstanding on the Effective Date under the Existing Credit Agreement. "Letter of Credit Commissions": as defined in Section 3.2(b). "Letter of Credit Commitment": the commitment of the Issuing Banks to issue Letters of Credit having an aggregate outstanding face amount up to the Aggregate Revolving Credit Commitment Amount, and the commitment of the Lenders to participate in the Letter of Credit Exposure as set forth in Section 2.10. "Letter of Credit Exposure": as of any date and in respect of any Lender, an amount equal to (i) the sum as of such date, without duplication, of (x) the aggregate undrawn face amount of all outstanding Letters of Credit, (y) the aggregate amount of unpaid drafts drawn on all Letters of Credit, and (z) the aggregate unpaid Reimbursement Obligations (after giving effect to any Revolving Credit Loans made on such date to pay any such Reimbursement Obligations), multiplied by (ii) such Lender's Commitment Percentage. "Letter of Credit Participation": with respect to each Lender, its obligations to each Issuing Bank hereunder. "Letter of Credit Request": a request in the form of Exhibit C-2. "Lien": any mortgage, pledge, hypothecation, assignment, deposit or preferential arrangement, encumbrance, lien (statutory or other), or other security agreement or security interest of any kind or nature whatsoever, including any conditional sale or other title retention agreement (other than an operating lease) and any capital or financing lease having substantially the same economic effect as any of the foregoing. "Loan": a Revolving Credit Loan or a Swing Line Loan, as the case may be. "Loan Documents": collectively, this Agreement, the Notes, the Reimbursement Agreements, the Guaranty Documents, the Security Documents and all other agreements, instruments and documents executed or delivered in connection herewith, in each case as amended, supplemented or otherwise modified from time to time. "Loans": the Revolving Credit Loans and/or the Swing Line Loans, as the case may be. 14 22 "Management Agreement": the Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF Corporation, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, International Specialty Products Inc., GAF Building Materials Corporation, GAF Broadcasting Company, Inc., the Borrower and ISP Opco Holdings Inc., and as the same may be further amended, supplemented or otherwise modified from time to time in accordance with Section 8.10. "Managing Person": with respect to any Person that is (i) a corporation, its board of directors, (ii) a limited liability company, its board of control, managing member or members, (iii) a limited partnership, its general partner, (iv) a general partnership or a limited liability partnership, its managing partner or executive committee or (v) any other Person, the managing body thereof or other Person analogous to the foregoing. "Mandatory Borrowing": as defined in Section 2.3(c). "Margin Stock": any "margin stock", as defined in Regulation U of the Board of Governors of the Federal Reserve System, as amended, supplemented or otherwise modified from time to time. "Marketable Securities": liquid marketable securities (other than Cash Equivalents) owned by the Borrower and its Subsidiaries (free and clear of any restriction) which are traded on a major United States exchange (which shall include, without limitation, the NASDAQ (national market system)). "Material Adverse Change": a material adverse change in (i) the financial condition, operations, business, prospects or Property of (A) the Borrower or (B) the Borrower and its Subsidiaries taken as a whole (which in the case of clauses (A) and (B) shall exclude the status of asbestos related claims (other than asbestos related claims made by any Governmental Authority under any Environmental Laws) against the Borrower or any of its Subsidiaries), (ii) the ability of the Borrower or any of its Subsidiaries to perform any of its obligations under the Loan Documents to which it is a party or (iii) the ability of the Administrative Agent and the Lenders to enforce any of the Loan Documents. "Material Adverse Effect": a material adverse effect on (i) the financial condition, operations, business, prospects or Property of (A) the Borrower or (B) the Borrower and its Subsidiaries taken as a whole (which in the case of clauses (A) and (B) shall exclude the status of asbestos related claims (other than asbestos related claims made by any Governmental Authority under any Environmental Laws) against the Borrower or any of its Subsidiaries), (ii) the ability of the Borrower or any of its Subsidiaries to perform any of its obligations under the Loan Documents to which it is a party or (iii) the ability of the Administrative Agent and the Lenders to enforce any of the Loan Documents. "Material Agreements": collectively, the Senior Note Indentures, the Tax Sharing Agreement, the Management Agreement and the Receivables Purchase Documents. 15 23 "Maturity Date": August 18, 2003, or such earlier date on which the Revolving Credit Notes shall become due and payable, whether by acceleration or otherwise. "Moody's": Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency or, if neither Moody's Investors Service, Inc. nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Required Lenders. "Mortgage": means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Administrative Agent. "Mortgaged Property": means, initially, each parcel of real property and the improvements thereto owned by the Borrower or any Guarantor and identified on Schedule 1.1(m), and includes each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 7.11 or 7.12. "Multiemployer Plan": a Pension Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Note": a Revolving Credit Note or the Swing Line Note, as the case may be. "Notes": the Revolving Credit Notes and/or the Swing Line Note, as the case may be. "Notice of Conversion": a notice substantially in the form of Exhibit D. "Obligations": as defined in the Security Agreement. "Organizational Documents": as to any Person which is (i) a corporation, the certificate or articles of incorporation and by-laws of such Person, (ii) a limited liability company, the limited liability company agreement or similar agreement of such Person, (iii) a partnership, the partnership agreement or similar agreement of such Person, or (iv) any other form of entity or organization, the organizational documents analogous to the foregoing. "Original Effective Date": August 18, 1999. "Outstanding Percentage": as of any date and with respect to each Lender, each Issuing Bank and the Swing Line Lender, as the case may be, a fraction the numerator of which is the Outstandings of such Lender, such Issuing Bank or the Swing Line Lender, as applicable, on such date, and the denominator of which is the aggregate Outstandings of all Lenders, the Issuing Banks and the Swing Line Lender on such date. 16 24 "Outstandings": as of any date, an amount equal to (a) with respect to any Issuing Bank, (i) the aggregate sum of all drafts honored under all Letters of Credit of such Issuing Bank after the Original Effective Date minus (ii) all payments made after the Original Effective Date to such Issuing Bank by the Borrower and the Lenders in reimbursement thereof or participation therein, as the case may be, (b) with respect to the Swing Line Lender, (i) the outstanding principal balance on such date of all Swing Line Loans minus (ii) the aggregate sum of all payments by any Lender in participation of such Swing Line Loans, and (c) with respect to each Lender, the outstanding principal balance on such date of all the Revolving Credit Loans of such Lender plus (i) the aggregate sum of all payments by such Lender in participation of the Reimbursement Obligations and the Swing Line Loans minus (ii) all reimbursements received by such Lender in respect thereof. "Parent Letter of Credit": as defined in Section 2.9(a). "Parent Letter of Credit Amount": an amount equal to (i) the aggregate original face amount of all Parent Letters of Credit issued on or after the Closing Date plus (ii) the amount of each increase to the face amount of any such Parent Letter of Credit minus (iii) the sum of, without duplication (A) the amount of each reduction to the face amount of any such Parent Letter of Credit not resulting from any drawing thereunder and (B) the undrawn face amount of any such Parent Letter of Credit that has been terminated. "Parents": collectively, (i) G-I Holdings Inc. and any Subsidiary of G-I Holdings Inc. (and their respective successors), in each case so long as such corporation owns directly or indirectly a majority of the Voting Shares of the Borrower, and (ii) solely for purpose of the definition of "Change of Control", any other Person that may own directly or indirectly a majority of the Voting Shares of the Borrower. "Payroll Accounts": deposit accounts maintained in the ordinary course of business by the Borrower or any of its Subsidiaries for the purpose of paying payroll and related benefit costs and remitting withholding and other payroll taxes and costs. "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to the functions thereof. "Pension Plan": at any date of determination, any Employee Benefit Plan (including a Multiemployer Plan), the funding requirements of which (under Section 302 of ERISA or Section 412 of the Code) are, or at any time within the six years immediately preceding such date, were in whole or in part, the responsibility of the Borrower, any of its Subsidiaries or any ERISA Affiliate. "Permitted Holders": collectively, (i) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the Voting Shares is owned by Samuel J. Heyman, his heirs, administrators or executors and (ii) 17 25 any Person controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. "Permitted Lien": a Lien permitted to exist under Section 8.2. "Person": any individual, firm, partnership, limited liability company, joint venture, corporation, association, business enterprise, joint stock company, unincorporated association, trust, Governmental Authority or any other entity, whether acting in an individual, fiduciary, or other capacity, and for the purpose of the definition of "ERISA Affiliate", a trade or business. "Petty Cash Accounts": deposit accounts maintained in the ordinary course of business by the Borrower or any of its Subsidiaries for the purpose of reimbursing employees for ordinary course expenditures or for other incidental expenses, such deposit accounts for the Borrower and its Subsidiaries not to exceed $100,000 in the aggregate. "Prohibited Transaction": a transaction which is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA. "Property": all types of real, personal, tangible, intangible or mixed property. "Proposed Lender": as defined in Section 3.12. "Qualified Depositary Institution": any commercial bank organized under the laws of the United States of America or any State thereof that (i) is listed on Schedule 1.1(q) or (ii) either (x) has capital and surplus in excess of $50,000,000 or (y) is satisfactory to the Administrative Agent and, in either case, whose deposits are federally insured. "Receivables Purchase Documents": collectively, (i) the Pooling and Services Agreement, dated as of November 1, 1996, among the Borrower, BMCA Receivables Corporation and BNY, as trustee, as supplemented by the Series 1996-1 Supplement, dated as of November 1, 1996, and the Receivables Purchase Agreement, dated as of November 1, 1996, among the Borrower and BMCA Receivables Corporation, and (ii) any amendment, modification, waiver, extension or replacement of such documents on terms and conditions that could not reasonably be expected to (x) denigrate the value of the security interest of the Collateral Agent in the Capital Stock of the Receivables Subsidiary or in any other Collateral, including any accounts receivable of the Borrower or any of its Subsidiaries (other than the Receivables Subsidiary) not subject to the documents described in clause (i) of this definition, or (y) restrict the rights of the Collateral Agent to foreclose or otherwise pursue its remedies under the Security Agreement with respect to such Capital Stock or such other Collateral, in either case in comparison to such value or rights in existence immediately prior to such amendment, modification, waiver, extension or replacement under such documents (it being understood that advance rates, eligibility requirements, concentration limits and a maturity date (provided such maturity date is later than September 30, 2001) more favorable to the Receivables Subsidiary shall not be deemed to denigrate such value or restrict such rights), 18 26 provided that the aggregate amount of indebtedness to be incurred under such documents shall not exceed $115,000,000. "Receivables Subsidiary": BMCA Receivables Corporation, a special-purpose Delaware corporation, or any other special-purpose Subsidiary of the Borrower hereafter created or acquired that deals exclusively with the purchase and sale of the receivables of the Borrower and its Subsidiaries as permitted by Section 8.5(i). "Regulatory Change": the occurrence of any of the following after the Effective Date: (i) the adoption of any treaty, constitution, law, rule or regulation, (ii) the issuance or promulgation of any directive, guideline or request from any Governmental Authority (whether or not having the force of law), or (iii) any change in the interpretation of any existing treaty, constitution, law, rule, regulation, directive, guideline or request by any Governmental Authority. "Reimbursement Agreement": as defined in Section 2.9(b). "Reimbursement Obligation": the obligation of the Borrower to reimburse an Issuing Bank for amounts drawn under a Letter of Credit of such Issuing Bank. "Reportable Event": with respect to any Pension Plan, (i) any event set forth in Sections 4043(c) (other than a Reportable Event as to which the 30 day notice requirement is waived by the PBGC under applicable regulations), 4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an event requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to provide security to a Pension Plan under Section 401(a)(29) of the Code, or (iii) any failure to make any payment required by Section 412(m) of the Code. "Required Lenders": at any time (i) prior to the Revolving Credit Commitment Termination Date, Voting Lenders having Voting Exposures greater than or equal to 51% of the Aggregate Voting Exposure and (ii) on or after the Revolving Credit Commitment Termination Date, Voting Lenders having aggregate (x) Credit Exposures, (y) Chase Platinum Exposures and (z) Fleet LC Exposures greater than or equal to 51% of the Aggregate Voting Exposure (or, if there is no Credit Exposure, Chase Platinum Exposure or Fleet LC Exposure, Voting Lenders having Voting Exposures greater than or equal to 51% of the Aggregate Voting Exposure immediately prior to there being no Voting Exposure). "Responsible Officer": with respect to any Person, the Chairman of the Board, the President, the Chief Financial Officer, the Chief Executive Officer or the Treasurer of such Person. "Restricted Payment": as to any Person (i) any dividend or other distribution, direct or indirect, on account of any shares of Capital Stock or other equity interest in such Person now or hereafter outstanding (other than a dividend payable solely in shares of such Capital Stock to the holders of such shares), (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition, direct or indirect, of any shares of any class of Capital Stock or other equity interest in such Person now or hereafter outstanding, and (iii) any other loan or payment made by the Borrower or any of 19 27 its Subsidiaries to any Parent or on behalf of any Parent (other than any payment made pursuant to the terms of the Tax Sharing Agreement). "Revolving Credit Commitment": in respect of any Lender, such Lender's undertaking during the Revolving Credit Commitment Period to make Revolving Credit Loans, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not exceeding the Revolving Credit Commitment Amount of such Lender. "Revolving Credit Commitment Amount": as of any date and with respect to any Lender, (i) the amount set forth adjacent to its name under the heading "Revolving Credit Commitment Amount" in Exhibit A on such date, (ii) in the event that such Lender is not listed in Exhibit A, the "Revolving Credit Commitment Amount" which such Lender shall have assumed from another Lender in accordance with Section 3.12 or 11.7 on or prior to such date, or (iii) the amount set forth in any Revolving Credit Commitment Supplement executed by such Lender, in each case as the same may be adjusted from time to time pursuant to Sections 2.6, 3.12 and 11.7. "Revolving Credit Commitment Period": the period from the Effective Date until the Revolving Credit Commitment Termination Date. "Revolving Credit Commitment Termination Date": the earlier of the Business Day immediately preceding the Maturity Date or such other date upon which the Revolving Credit Commitments shall have been terminated in accordance herewith. "Revolving Credit Loan" and "Revolving Credit Loans": as defined in Section 2.1. The terms "Revolving Credit Loan" and "Revolving Credit Loans" shall include all Revolving Credit Loans outstanding on the Effective Date under the Existing Credit Agreement. "Revolving Credit Note" and "Revolving Credit Notes": as defined in Section 2.2. "Sale-Leaseback Transaction": as defined in Section 8.13. "SEC": the Securities and Exchange Commission or any Governmental Authority succeeding to the functions thereof. "Secured Parties": as defined in the Security Agreement. "Security Agreement": means the Security Agreement, substantially in the form of Exhibit J, among the Borrower, the Subsidiary Guarantors and the Collateral Agent, for the benefit of the Secured Parties. "Security Documents": means the Security Agreement, the Collateral Agent Agreement, the Mortgages, the Depositary Control Agreements and each other security agreement, instrument or other document executed or delivered pursuant to Sections 7.11 or 7.12 or pursuant to the Security Agreement to secure any of the Obligations. 20 28 "Senior Note Indentures": collectively, (i) the Indenture, dated as of December 9, 1996, between the Borrower and BNY, as trustee, pursuant to which 8-5/8% Senior Notes due 2006 were issued, (ii) the Indenture, dated as of October 20, 1997, between the Borrower and BNY, as trustee, pursuant to which 8% Senior Notes due 2007 were issued, (iii) the Indenture, dated as of July 17, 1998, between the Borrower and The Bank of New York, as trustee, pursuant to which 7.75% Senior Notes due 2005 were issued, (iv) the Indenture, dated as of December 3, 1998, between the Borrower and The Bank of New York, as trustee, pursuant to which 8.00% Senior Notes due 2008 were issued, and (v) the Indenture, dated as of July 5, 2000, between the Borrower and The Bank of New York, as trustee, pursuant to which 10.50% Senior Notes due 2002 were issued, as each Indenture described in clauses (i) - (iv) above has been supplemented by a First Supplemental Indenture, dated as of January 1, 1999, and by a Second Supplemental Indenture, dated the date of the Senior Note Consent Solicitations, pursuant to the terms of the Senior Note Consent Solicitation applicable to such Indenture, and as the Indenture described in clause (v) above has been supplemented by a First Supplemental Indenture, dated the date of the Senior Note Consent Solicitations, pursuant to the terms of the Senior Note Consent Solicitation applicable to such Indenture, and as each of the same may be further amended, supplemented or otherwise modified from time to time in accordance with Section 8.10. "Senior Note Indenture Consent Solicitations": means the consent solicitations distributed with respect to each Senior Note Indenture and substantially in the form of Exhibit K. "Solvent": with respect to any Person on a particular date, the condition that on such date, (i) the fair value of the Property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute an unreasonably small amount of capital. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability after taking into account probable payments by co-obligors. "Special Counsel": Bryan Cave LLP, special counsel to the Administrative Agent. "Standard & Poor's": Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency or, if neither such division nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Required Lenders. "Standby Letters of Credit": as defined in Section 2.9(a). 21 29 "Subsidiary": as to any Person, any corporation, association, partnership, limited liability company, joint venture or other business entity of which such Person or any Subsidiary of such Person, directly or indirectly, either (i) in respect of a corporation, owns or controls more than 50% of the outstanding Capital Stock having ordinary voting power to elect a majority of the Managing Person thereof, irrespective of whether a class or classes shall or might have voting power by reason of the happening of any contingency, or (ii) in respect of an association, partnership, limited liability company, joint venture or other business entity, is entitled to share in more than 50% of the profits and losses, however determined. "Subsidiary Guaranty": the Subsidiary Guaranty, by and among the Subsidiaries party thereto and the Administrative Agent, substantially in the form of Exhibit I, as amended, supplemented or otherwise modified from time to time. "Swing Line Commitment": the undertaking of the Swing Line Lender during the Swing Line Commitment Period to make Swing Line Loans, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not in excess of the Swing Line Commitment Amount, and the commitment of the Lenders to participate therein as set forth in Section 2.3, as the same may be reduced pursuant to Section 2.6. "Swing Line Commitment Amount": $5,000,000. "Swing Line Commitment Period": the period from the Effective Date to, but excluding, the Swing Line Termination Date. "Swing Line Exposure": at any time, in respect of any Lender, an amount equal to the aggregate outstanding principal amount of the Swing Line Loans at such time multiplied by such Lender's Commitment Percentage at such time. "Swing Line Loan" and "Swing Line Loans": as defined in Section 2.3(a). The terms "Swing Line Loan" and "Swing Line Loans" shall include all Swing Line Loans outstanding on the Effective Date under the Existing Credit Agreement. "Swing Line Note": as defined in Section 2.4. "Swing Line Participation Amount": as defined in Section 2.3(d). "Swing Line Termination Date": the date which is fifteen days prior to the Maturity Date, or if earlier, the Revolving Credit Commitment Termination Date. "System Cash": means any cash of the Borrower and its Subsidiaries (other than the Receivables Subsidiary, provided that any cash of the Receivables Subsidiary that is distributed or otherwise paid to the Borrower or any of its other Subsidiaries shall constitute System Cash upon receipt by the Borrower or any such other Subsidiary) not deposited in the Cash Collateral Account, excluding (i) any cash deposited in Payroll Accounts in amounts not exceeding the amounts calculated by the Borrower to be reasonably sufficient to 22 30 fund the next payroll and related benefit costs and remit withholding and other payroll taxes and related costs of the Borrower and its Subsidiaries, (ii) any cash deposited in Petty Cash Accounts, (iii) any cash deposited in Disbursement Account No. 1 in amounts calculated by the Borrower to be reasonably sufficient to cover checks drawn on and presented for payment against Disbursement Account No. 1 and transfers of funds (including ACH and wire transfers) out of Disbursement Account No. 1, in either case for the payment when due of costs, expenditures and obligations of the Borrower and its Subsidiaries permitted by this Agreement, and (iv) any cash deposited in Disbursement Account No. 2 for the payment when due of costs, expenditures and obligations of the Borrower and its Subsidiaries permitted by this Agreement, provided that cash in Disbursement Account No. 2 shall not exceed $1,000,000 at any time. "Tax": any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by a Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or assessed. "Tax Sharing Agreement": the Tax Sharing Agreement, dated as of January 31, 1994, among GAF Corporation, G-I Holdings Inc. and the Borrower, as the same may be amended, supplemented or otherwise modified from time to time in accordance with Section 8.10. "Termination Event": with respect to any Pension Plan, (i) a Reportable Event, (ii) the termination of a Pension Plan, or the filing of a notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan amendment as a termination, in each case under Section 4041(c) of ERISA, (iii) the institution of proceedings to terminate a Pension Plan under Section 4042 of ERISA, or (iv) the appointment of a trustee to administer any Pension Plan under Section 4042 of ERISA. "Trade Letters of Credit": as defined in Section 2.9(a). "Trademark License Agreement": the Trademark License Agreement, dated as of April 12, 1989, by and between GAF Chemicals Corporation and GAF Building Materials Corporation. "2000 Credit Agreement": the Credit Agreement, dated as of December 4, 2000, by and among the Borrower, the lenders party thereto and BNY, as swing line lender and as administrative agent. "Unfunded Pension Liabilities": with respect to any Pension Plan, at any date of determination, the amount determined by taking the accumulated benefit obligation, as disclosed in accordance with Statement of Accounting Standards No. 87, "Employers' Accounting for Pensions", over the fair market value of Pension Plan assets. "United States": the United States of America (including the States thereof and the District of Columbia). 23 31 "Unqualified Amount": as defined in Section 3.1(c). "Unrecognized Retiree Welfare Liability": with respect to any Employee Benefit Plan that provides postretirement benefits other than pension benefits, the amount of the transition obligation, as determined in accordance with Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as of the most recent valuation date, that has not been recognized as an expense in an income statement of the Borrower and its Subsidiaries, provided that prior to the date such Statement is applicable to the Borrower, such amount shall be based on an estimate made in good faith of such transition obligation. "Upstream Transfers": as defined in Section 8.12. "U.S. Person": a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under any laws of the United States, or any estate or trust that is subject to United States federal income taxation regardless of the source of its income. "Voting Exposure": with respect to any Voting Lender, the sum of (i) the Revolving Credit Commitment Amount of such Voting Lender, (ii) the outstanding principal amount of the Chase Platinum Substitute Note held by such Voting Lender and (iii) the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC held by such Voting Lender. "Voting Lenders": the Lenders, The Chase Manhattan Bank under the Chase Platinum Substitute Note (and each other holder thereof), and Fleet National Bank under the Fleet LC Agreement (and each other holder thereof). "Voting Shares": with respect to any Person, all outstanding shares of any class or classes (however designated) of Capital Stock of such Person entitled to vote generally in the election of members of the Managing Person thereof. 1.2. Principles of Construction (a) All terms defined in a Loan Document shall have the meanings given such terms therein when used in the other Loan Documents or any certificate, opinion or other document made or delivered pursuant thereto, to the extent not otherwise provided therein. (b) As used in the Loan Documents and in any certificate, opinion or other document made or delivered pursuant thereto, accounting terms not defined in Section 1.1, and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to reflect such change in GAAP (subject to the approval of the Required Lenders), provided that, until so amended, (i) such ratio or 24 32 requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement (or as the Administrative Agent may reasonably request) setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. (c) The words "hereof", "herein", "hereto" and "hereunder" and similar words when used in a Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof, and Section, schedule and exhibit references contained therein shall refer to Sections thereof or schedules or exhibits thereto unless otherwise expressly provided therein. (d) The phrase "may not" is prohibitive and not permissive. (e) Unless the context otherwise requires, words in the singular number include the plural, and words in the plural include the singular. (f) Unless specifically provided in a Loan Document to the contrary, any reference to a time shall refer to such time in New York. (g) Unless specifically provided in a Loan Document to the contrary, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". (h) References in any Loan Document to a fiscal period shall refer to that fiscal period of the Borrower. (i) The words "include" and "including", when used in each Loan Document, shall mean that the same shall be included "without limitation", unless otherwise expressly provided therein. (j) Any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein). 2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT 2.1. Revolving Credit Loans Subject to the terms and conditions hereof, each Lender severally (and not jointly) agrees to make revolving credit loans (each a "Revolving Credit Loan" and, as the context may require, collectively with all other Revolving Credit Loans of such Lender and with the Revolving Credit Loans of all other Lenders, the "Revolving Credit Loans") in Dollars to the Borrower from time to 25 33 time during the Revolving Credit Commitment Period, provided that immediately after giving effect thereto (i) such Lender's Credit Exposure shall not exceed such Lender's Revolving Credit Commitment Amount, and (ii) the Aggregate Credit Exposure shall not exceed the Aggregate Revolving Credit Commitment Amount. During the Revolving Credit Commitment Period, the Borrower may borrow, prepay in whole or in part and reborrow under the Revolving Credit Commitments, all in accordance with the terms and conditions of this Agreement. Subject to the provisions of Sections 2.5 and 3.3, at the option of the Borrower, Revolving Credit Loans may be made as one or more (i) ABR Advances, (ii) Eurodollar Advances or (iii) any combination thereof. 2.2. Revolving Credit Notes The Revolving Credit Loans made by each Lender shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit B-1 (each, as indorsed or modified from time to time, a "Revolving Credit Note" and, collectively with the Revolving Credit Notes of all other Lenders, the "Revolving Credit Notes"), payable to the order of such Lender and dated the Effective Date. The outstanding principal balance of the Revolving Credit Loans shall be due and payable on the Revolving Credit Commitment Termination Date. 2.3. Swing Line Loans (a) Subject to the terms and conditions of this Agreement, the Swing Line Lender agrees to make swing line loans (each a "Swing Line Loan" and, collectively, the "Swing Line Loans") in Dollars to the Borrower from time to time during the Swing Line Commitment Period, provided that immediately after giving effect thereto, (i) the aggregate unpaid balance of the Swing Line Loans shall not exceed the Swing Line Commitment Amount, and (ii) the Aggregate Credit Exposure of all Lenders shall not exceed the Aggregate Revolving Credit Commitment Amount. During the Swing Line Commitment Period, the Borrower may borrow, prepay in whole or in part and reborrow under the Swing Line Commitment, all in accordance with the terms and conditions of this Agreement. (b) The Swing Line Lender shall not be obligated to make any Swing Line Loan at a time when any Lender shall be in default of its obligations under this Agreement unless the Swing Line Lender has entered into arrangements satisfactory to it and the Borrower to eliminate the Swing Line Lender's risk with respect to such defaulting Lender's participation in such Swing Line Loan. The Swing Line Lender will not make a Swing Line Loan if the Administrative Agent or any Lender, by notice to the Swing Line Lender and the Borrower no later than one Business Day prior to the Borrowing Date with respect to such Swing Line Loan, shall have determined that the conditions set forth in Section 6 have not been satisfied and such conditions remain unsatisfied as of the requested time of the making such Loan. Each Swing Line Loan shall be due and payable on the earliest to occur of the last day of the Interest Period applicable thereto, fifteen days prior to the Maturity Date, the date on which the Swing Line Commitment shall have been voluntarily terminated by the Borrower in accordance with Section 2.6, and the date on which the Swing Line Loans shall 26 34 become due and payable pursuant to the provisions hereof, whether by acceleration or otherwise. (c) On any Business Day on which a Swing Line Loan shall remain unpaid, the Swing Line Lender may, in its sole discretion, give notice to the Lenders and the Borrower that such outstanding Swing Line Loan shall be funded with a borrowing of Revolving Credit Loans (provided that such notice shall be deemed to have been automatically given upon the occurrence of a Default or an Event of Default under Sections 9.1(g) or (h)), in which case a borrowing of Revolving Credit Loans made as ABR Advances (each such borrowing, a "Mandatory Borrowing"), shall be made by all Lenders pro rata based on each such Lender's Commitment Percentage on (i) such Business Day if such notice was given prior to 11:00 a.m. or (ii) the immediately succeeding Business Day if such notice was given after 11:00 a.m. The proceeds of each Mandatory Borrowing shall be remitted directly to the Swing Line Lender to repay such outstanding Swing Line Loan. Each Lender irrevocably agrees to make a Revolving Credit Loan pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified in writing by the Swing Line Lender notwithstanding: (i) the amount of such Mandatory Borrowing may not comply with the minimum amount for Loans otherwise required hereunder, (ii) whether any condition specified in Section 6 is then unsatisfied, (iii) whether a Default or an Event of Default then exists, (iv) the Borrowing Date of such Mandatory Borrowing, (v) the aggregate principal amount of all Loans then outstanding, (vi) the Aggregate Credit Exposure at such time and (vii) the Aggregate Revolving Credit Commitment Amount at such time. (d) Upon each receipt by a Lender of notice of an Event of Default from the Administrative Agent pursuant to Section 10.5, such Lender shall purchase unconditionally, irrevocably, and severally (and not jointly) from the Swing Line Lender a participation in the outstanding Swing Line Loans (including accrued interest thereon) in an amount equal to the product of its Commitment Percentage and the outstanding amount of the Swing Line Loans plus all accrued and unpaid interest thereon (the "Swing Line Participation Amount"). Each Lender shall also be liable for an amount equal to the product of its Commitment Percentage and any amounts paid by the Borrower pursuant to this Section 2.3 that are subsequently rescinded or avoided, or must otherwise be restored or returned. Such liabilities shall be absolute and unconditional and without regard to the occurrence of any Default or Event of Default or the compliance by the Borrower with any of its obligations under the Loan Documents. (e) In furtherance of subsection (d) above, upon each receipt by a Lender of notice of an Event of Default from the Administrative Agent pursuant to Section 10.5, such Lender shall promptly make available to the Administrative Agent for the account of the Swing Line Lender its Swing Line Participation Amount at the office of the Administrative Agent specified in Section 11.2, in lawful money of the United States and in immediately available funds. The Administrative Agent shall deliver the payments made by each Lender pursuant to the immediately preceding sentence to the Swing Line Lender promptly upon receipt thereof in like funds as received. Each Lender shall indemnify and hold harmless the Administrative Agent and the Swing Line Lender from and against any and all losses, liabilities (including liabilities for penalties), actions, 27 35 suits, judgments, demands, costs and expenses resulting from any failure on the part of such Lender to pay, or from any delay in paying the Administrative Agent any amount such Lender is required to pay in accordance with this Section 2.3 (except in respect of losses, liabilities or other obligations suffered by the Administrative Agent or the Swing Line Lender, as the case may be, resulting from the gross negligence or willful misconduct of the Administrative Agent or the Swing Line Lender, as the case may be), and such Lender shall be required to pay interest to the Administrative Agent for the account of the Swing Line Lender from the date such amount was due until paid in full, on the unpaid portion thereof, at a rate of interest per annum equal to (i) from the date such amount was due until the third day therefrom, the Federal Funds Rate, and (ii) thereafter, the Federal Funds Rate plus 2%, payable upon demand by the Swing Line Lender. The Administrative Agent shall distribute such interest payments to the Swing Line Lender upon receipt thereof in like funds as received. (f) Whenever the Administrative Agent is reimbursed by the Borrower, for the account of the Swing Line Lender, for any payment in connection with Swing Line Loans and such payment relates to an amount previously paid by a Lender pursuant to this Section, the Administrative Agent will promptly pay over such payment to such Lender. 2.4. Swing Line Note The Swing Line Loans made by the Swing Line Lender shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit B-2 (as indorsed or modified from time to time, including all replacements thereof and substitutions therefor, the "Swing Line Note"), payable to the order of the Swing Line Lender, dated the Effective Date and in the stated principal amount equal to the Swing Line Commitment Amount. 2.5. Procedure for Borrowing (a) Revolving Credit Loans. The Borrower may borrow under the Revolving Credit Commitments on any Business Day during the Revolving Credit Commitment Period, provided that the Borrower shall notify the Administrative Agent by the delivery of a Borrowing Request, which shall be sent by facsimile and shall be irrevocable (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Borrowing Request manually signed by the Borrower), no later than: 1:00 p.m. three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Advances, and 11:00 a.m. on the requested Borrowing Date, in the case of ABR Advances, specifying (A) the aggregate principal amount to be borrowed under the Revolving Credit Commitments, (B) the requested Borrowing Date, (C) whether such borrowing is to consist of one or more Eurodollar Advances, ABR Advances, or a combination thereof and (D) if the borrowing is to consist of one or more Eurodollar Advances, the length of the Interest Period for each such Eurodollar Advance. Each (i) Eurodollar Advance to be made on a Borrowing Date, when aggregated with all amounts to be converted to a Eurodollar Advance on such date and having the same Interest Period as such first Eurodollar Advance, shall equal no less than $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof and (ii) each ABR Advance made on each Borrowing Date shall equal no less than 28 36 $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof or, if less, the unused portion of the Aggregate Revolving Credit Commitment Amount. (b) Swing Line Loans. The Borrower may borrow under the Swing Line Commitment on any Business Day during the Swing Line Commitment Period, provided that the Borrower shall notify the Administrative Agent and the Swing Line Lender (by telephone or facsimile confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent and the Swing Line Lender of a Borrowing Request manually signed by the Borrower) no later than: 1:00 p.m. on the requested Borrowing Date, specifying (i) the aggregate principal amount to be borrowed under the Swing Line Commitment, (ii) the requested Borrowing Date, and (iii) the amount and the length of the Interest Period for each Swing Line Loan, provided, however, that no Interest Period selected in respect of any Swing Line Loan shall end after fifteen days prior to the Maturity Date. The Swing Line Lender will then, subject to its determination that the terms and conditions of this Agreement have been satisfied, make the requested amount available promptly on that same day, to the Administrative Agent who, thereupon, will promptly make such amount available to the Borrower at the office of the Administrative Agent specified in Section 11.2 by crediting the account of the Borrower on the books of such office of the Administrative Agent. Each borrowing of Swing Line Loans shall be in an aggregate principal amount equal to $500,000 or such amount plus a whole multiple of $100,000 in excess thereof or, if less, the unused portion of the Swing Line Commitment Amount. (c) Funding of Revolving Credit Loans. Upon receipt of each Borrowing Request requesting Revolving Credit Loans, the Administrative Agent shall promptly notify each Lender thereof. Subject to its receipt of the notice referred to in the preceding sentence, each Lender will make the amount of its Commitment Percentage of the requested Revolving Credit Loans available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent set forth in Section 11.2 not later than 12:00 noon on the relevant Borrowing Date requested by the Borrower, in funds immediately available to the Administrative Agent at such office. The amounts so made available to the Administrative Agent on such Borrowing Date will then, subject to the satisfaction of the terms and conditions of this Agreement, be made available on such date to the Borrower by the Administrative Agent at the office of the Administrative Agent specified in Section 11.2 by crediting the account of the Borrower on the books of such office with the aggregate of said amounts received by the Administrative Agent. (d) Failure to Fund. Unless the Administrative Agent shall have received prior notice from a Lender (by telephone or otherwise, such notice to be promptly confirmed by facsimile or other writing) that such Lender will not make available to the Administrative Agent such Lender's Commitment Percentage of the Revolving Credit Loans requested by the Borrower, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the Borrowing Date in accordance with this Section, provided that such Lender received notice of the requested Revolving Credit Loans from the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on the Borrowing 29 37 Date a corresponding amount. If and to the extent such Lender shall not have so made its Commitment Percentage of such Revolving Credit Loans available to the Administrative Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount (to the extent not previously paid by the other), together with interest thereon for each day from the date such amount is made available to the Borrower to the date such amount is paid to the Administrative Agent, at a rate per annum equal to, in the case of the Borrower, the applicable interest rate set forth in Section 3.1 for ABR Advances, and, in the case of such Lender, at a rate of interest per annum equal to the Federal Funds Rate for the first three days after the due date of such payment until the date such payment is received by the Administrative Agent and the Federal Funds Rate plus 2% thereafter. Such payment by the Borrower, however, shall be (i) without prejudice to its rights against such Lender and (ii) in place of, and not in addition to, the interest payable pursuant to the terms of Section 3.1(a). If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender's Revolving Credit Loan as part of the Revolving Credit Loans for purposes of this Agreement, which Loan shall be deemed to have been made by such Lender on the Borrowing Date applicable to such Revolving Credit Loans. (e) Netting. If a Lender makes a new Loan on a Borrowing Date on which the Borrower is to repay an existing Loan from such Lender, such Lender shall apply the proceeds of such new Loan to make such repayment, and only the excess of the proceeds of such new Loan over the outstanding principal balance of the existing Loan being repaid need be made available to the Administrative Agent. 2.6. Termination or Reduction of Commitments (a) Voluntary Termination or Reduction. (i) The Borrower shall have the right, upon at least three Business Days' prior written notice to the Administrative Agent, (A) at any time when the Aggregate Credit Exposure shall be zero, to terminate the Revolving Credit Commitments of all of the Lenders, and (B) at any time and from time to time when the Aggregate Revolving Credit Commitment Amount shall exceed the Aggregate Credit Exposure, to reduce permanently the Aggregate Revolving Credit Commitment Amount by a sum not greater than the amount of such excess, provided, however, that each such partial reduction shall be in the amount of $5,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. (ii) The Borrower shall have the right, upon at least one Business Day's prior written notice to the Administrative Agent and the Swing Line Lender to reduce permanently the Swing Line Commitment Amount in whole at any time, or in part from time to time, to an amount not less than the aggregate principal balance of the Swing Line Loans then outstanding (after giving effect to any contemporaneous prepayment thereof), provided, however, that each partial reduction of the Swing Line Commitment Amount shall be in an amount equal to $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. 30 38 (b) Termination of the Revolving Credit Commitments. Upon any termination of the Revolving Credit Commitments of all of the Lenders, the Borrower shall prepay the outstanding principal balance of the Loans and deposit an amount equal to the Letter of Credit Exposure of all Lenders at such time in a cash collateral account with and under the exclusive dominion and control of the Administrative Agent. (c) Reductions in General. Each reduction of the Aggregate Revolving Credit Commitment Amount shall be made by reducing each Lender's Revolving Credit Commitment Amount by an amount equal to such Lender's Commitment Percentage of such reduction. Simultaneously with each reduction of the Aggregate Revolving Credit Commitment Amount under this Section, the Borrower shall pay the Commitment Fee accrued on the amount by which the Aggregate Revolving Credit Commitment Amount is being reduced. 2.7. Prepayments (a) Voluntary Prepayments. The Borrower may, at its option, prepay the Revolving Credit Loans without premium or penalty (but subject to Section 3.5), in full at any time or in part from time to time by notifying the Administrative Agent in writing no later than 12:00 noon on the proposed prepayment date, in the case of Revolving Credit Loans consisting of ABR Advances, and at least two Business Days prior to the proposed prepayment date, in the case of Revolving Credit Loans consisting of Eurodollar Advances, specifying whether the Revolving Credit Loans to be prepaid consist of ABR Advances, Eurodollar Advances, or a combination thereof, the amount to be prepaid and the date of prepayment. Each such notice shall be irrevocable and the amount specified in each such notice shall be due and payable on the date specified, together with accrued interest to the date of such payment on the amount prepaid. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender thereof. Each partial prepayment of the Revolving Credit Loans pursuant to this subsection shall be in an aggregate principal amount of $500,000 or such amount plus a whole multiple of $100,000 in excess thereof, or, if less, the outstanding principal balance of the Revolving Credit Loans. After giving effect to any partial prepayment with respect to Eurodollar Advances which were made (whether as the result of a borrowing or a conversion) on the same date and which had the same Interest Period, the outstanding principal balance of such Eurodollar Advances shall exceed (subject to Section 3.3) $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. Swing Line Loans may not be prepaid. (b) In General. Simultaneously with each prepayment of a Loan, the Borrower shall prepay all accrued interest on the amount prepaid through the date of prepayment. Unless otherwise specified by the Borrower, each prepayment of Revolving Credit Loans shall first be applied to ABR Advances. With respect to prepayments made with respect to Section 2.7(b), such prepayment shall be applied first to prepay outstanding Swing Line Loans in full and then to prepay outstanding Revolving Credit Loans. If any prepayment is made in respect of any Eurodollar Advance, in whole or in part, prior to the last day of the applicable Interest Period, the Borrower agrees to indemnify the Lenders in accordance with Section 3.5. 31 39 2.8. Use of Proceeds The Borrower agrees that the proceeds of the Loans shall be used solely for working capital purposes and for permitted capital expenditures not inconsistent with the provisions hereof. Notwithstanding anything to the contrary contained in any Loan Document, the Borrower agrees that no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, to purchase or carry any Margin Stock or any Investments described in Section 8.5(g) or 8.5(h) for a purpose which violates any law, including the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System, as amended. 2.9. Letter of Credit Sub-Facility (a) Subject to the terms and conditions of this Agreement, each Issuing Bank shall, in reliance on the agreement of the other Lenders set forth in Section 2.10, issue standby letters of credit (the "Standby Letters of Credit") or commercial (trade) letters of credit (the "Trade Letters of Credit", and together with the Standby Letters of Credit, the "Letters of Credit", each, individually, a "Letter of Credit") denominated in Dollars during the Revolving Credit Commitment Period for the account of the Borrower and for the benefit of the Borrower, any of its Subsidiaries or any Parent, provided that immediately after the issuance of each Letter of Credit (i) the Letter of Credit Exposure of all Lenders shall not exceed the Aggregate Revolving Credit Commitment Amount, (ii) the Letter of Credit Exposure of all Lenders attributable to all Letters of Credit issued for the benefit of any Parent (each, a "Parent Letter of Credit") shall not exceed $20,000,000, and (iii) the Aggregate Credit Exposure shall not exceed the Aggregate Revolving Credit Commitment Amount, and provided further that with respect to the issuance of any Parent Letter of Credit, the Borrower would be permitted to make a demand loan to a Parent pursuant to the terms of Section 8.6(ii) in an amount equal to the face amount of such Parent Letter of Credit. Each Letter of Credit shall have an expiration date which shall be not later than the earlier of (i) twelve months after the date of issuance thereof, and (ii) fifteen days prior to the Maturity Date. No Letter of Credit shall be issued if the Administrative Agent or any Lender, by notice to the applicable Issuing Bank and the Borrower no later than one Business Day prior to the Borrowing Date with respect to the issuance of such Letter of Credit, shall have determined that the conditions set forth in Section 6 have not been satisfied and such conditions remain unsatisfied as of the requested time of the issuance of Letter of Credit. (b) Each Letter of Credit shall be issued for the account of the Borrower for the benefit of the Borrower, any of its Subsidiaries or any Parent in favor of a beneficiary who has requested the issuance of such Letter of Credit as a condition to a transaction entered into in the ordinary course of business. The Borrower shall give the Administrative Agent a Letter of Credit Request for the issuance of each Letter of Credit by no later than 11:00 a.m., three Business Days prior to the requested date of issuance. Each Letter of Credit Request shall be accompanied by the applicable Issuing Bank's standard letter of credit application, standard reimbursement agreement (each a "Reimbursement Agreement") and such other documentation as such Issuing Bank may reasonably require, executed by the Borrower. Upon receipt of such Letter of Credit Request from the Borrower, the Administrative Agent shall promptly notify 32 40 the applicable Issuing Bank and each other Lender thereof. Each Letter of Credit shall be in form and substance reasonably satisfactory to the applicable Issuing Bank, with such provisions with respect to the conditions under which a drawing may be made thereunder and the documentation required in respect of such drawing as such Issuing Bank shall reasonably require. The applicable Issuing Bank shall, on the proposed date of issuance and subject to the terms and conditions of the Reimbursement Agreement and to the other terms and conditions of this Agreement, issue the requested Letter of Credit. On or before the issuance of each Parent Letter of Credit, such Parent shall have executed and delivered to the Borrower a Demand Note, in an amount equal to the face amount of such Parent Letter of Credit, evidencing the obligations of such Parent to reimburse the Borrower for any drawings under such Parent Letter of Credit, which Demand Note shall have been pledged to the Collateral Agent pursuant to the Security Documents. (c) Upon each payment by an Issuing Bank of a draft drawn under a Letter of Credit, the Borrower shall immediately pay to the Administrative Agent, for the account of such Issuing Bank, an amount equal to such payment in immediately available funds. (d) Notwithstanding anything to the contrary contained herein or in any Reimbursement Agreement, to the extent that the terms of this Agreement shall be inconsistent with the terms of such Reimbursement Agreement, the terms of this Agreement shall govern. 2.10. Letter of Credit Participation and Funding Commitments (a) Each Lender hereby unconditionally, irrevocably and severally (and not jointly) for itself only and without any notice to or the taking of any action by such Lender, takes an undivided participating interest in the obligations of each Issuing Bank under and in connection with each Letter of Credit in an amount equal to such Lender's Commitment Percentage of the amount of such Letter of Credit. Each Lender shall be liable to each Issuing Bank for its Commitment Percentage of (i) the unreimbursed amount of any draft drawn and honored under each of its Letters of Credit, and (ii) any amounts paid by the Borrower pursuant to Sections 2.9(c) or 2.11 that are subsequently rescinded or avoided, or must otherwise be restored or returned. Such liabilities shall be unconditional and without regard to the occurrence of any Default or the compliance by the Borrower with the Loan Documents. (b) Each Issuing Bank will promptly notify the Administrative Agent, and the Administrative Agent will promptly notify each Lender (which notice shall be promptly confirmed in writing) of the date and the amount of any draft presented under each of its Letters of Credit with respect to which full reimbursement is not made as provided in Section 2.9(c), and forthwith upon receipt of each such notice, such Lender (other than the applicable Issuing Bank in its capacity as a Lender) shall make available to the Administrative Agent for the account of the applicable Issuing Bank its Commitment Percentage of the amount of such unreimbursed draft at the office of the Administrative Agent specified in Section 11.2, in immediately available funds before 4:00 p.m., on the day such notice was given by the Administrative Agent, if the relevant notice was given by the Administrative Agent at or prior to 1:00 p.m., on such 33 41 day, and before 12:00 noon, on the next Business Day, if the relevant notice was given by the Administrative Agent after 1:00 p.m., on such day. The Administrative Agent shall distribute the payments made pursuant to the immediately preceding sentence to the applicable Issuing Bank promptly upon receipt thereof in like funds as received. Each Lender shall indemnify and hold harmless the Administrative Agent and each Issuing Bank from and against any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) resulting from any failure on the part of such Lender to perform its obligations under this Section 2.10 (except in respect of losses, liabilities or other obligations suffered by such Issuing Bank to the extent resulting from the gross negligence or willful misconduct of such Issuing Bank). If a Lender does not make any payment required under this Section 2.10 when due, such Lender shall be required to pay interest to the Administrative Agent for the account of the applicable Issuing Bank (upon demand therefor) the amount of such payment at a rate of interest per annum equal to the Federal Funds Rate for the first three days after the due date of such payment and the Federal Funds Rate plus 2% thereafter until the date such payment is received by the Administrative Agent. The Administrative Agent shall distribute such interest payments to the applicable Issuing Bank upon receipt thereof in like funds as received. (c) Whenever an Issuing Bank is reimbursed by the Borrower or the Administrative Agent is reimbursed by the Borrower, for the account of such Issuing Bank, for any payment under a Letter of Credit issued by it and such payment relates to an amount previously paid by a Lender pursuant to this Section 2.10, the Administrative Agent (or such Issuing Bank, to the extent that it has received the same) will pay over such payment to such Lender (i) before 4:00 p.m. on the day such payment from the Borrower is received, if such payment is received at or prior to 1:00 p.m. on such day, or (ii) before 12:00 noon on the next succeeding Business Day, if such payment from the Borrower is received after 1:00 p.m. on such day. 2.11. Absolute Obligation With Respect to Letter of Credit Payments The Borrower's obligation to reimburse the Administrative Agent for the account of any Issuing Bank in respect of each payment under or in respect of such Issuing Bank's Letters of Credit shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the beneficiary of such Letter of Credit, the Administrative Agent, such Issuing Bank, as issuer of such Letter of Credit, any Lender or any other Person, including, without limitation, any defense based on the failure of any drawing to conform to the terms of such Letter of Credit, any drawing document proving to be forged, fraudulent or invalid, or the legality, validity, regularity or enforceability of such Letter of Credit; provided, that, with respect to any Letter of Credit, the foregoing shall not relieve the applicable Issuing Bank of any liability it may have to the Borrower for any actual damages sustained by the Borrower arising from a wrongful payment under such Letter of Credit made as a result of such Issuing Bank's gross negligence or willful misconduct. 34 42 2.12. Payments (a) Except as otherwise expressly provided herein, each payment, including each prepayment, of principal and interest on the Loans, of the Commitment Fee, the Letter of Credit Commissions, the Fronting Fees and of all of the other fees to be paid by the Borrower to the Administrative Agent and the Lenders in connection with the Loan Documents (the Commitment Fee, the Letter of Credit Commissions and the Fronting Fees, together with all of such other fees, being sometimes hereinafter collectively referred to as the "Fees") shall be made prior to 1:00 p.m., on the date such payment is due to the Administrative Agent for the account of the applicable Lenders at the Administrative Agent's office specified in Section 11.2, in each case in lawful money of the United States, in immediately available funds and without set-off or counterclaim. The failure of the Borrower to make any such payment by such time shall not constitute a Default, provided that such payment is made on such due date, but any such payment made after 1:00 p.m., on such due date shall be deemed to have been made on the next Business Day for the purpose of calculating interest. Promptly upon receipt thereof by the Administrative Agent, each payment of principal and interest on the Loans shall be remitted by the Administrative Agent in like funds as received to the Swing Line Lender, each Issuing Bank and each Lender (i) first, pro rata according to its Outstanding Percentage of the amount of interest which is then due and payable under the Loan Documents, and (ii) second, pro rata according to its Outstanding Percentage of the amount of principal which is then due and payable under the Loan Documents. Promptly upon receipt thereof by the Administrative Agent, each payment of the Commitment Fee shall be remitted by the Administrative Agent in like funds as received to each Lender pro rata according to such Lender's Revolving Credit Commitment Amount or, if the Revolving Credit Commitments shall have terminated or been terminated, according to the outstanding principal balance of such Lender's Revolving Credit Loans. (b) If any payment hereunder, under the Notes or under any Reimbursement Agreement shall be due and payable on a day which is not a Business Day, the due date thereof (except as otherwise provided in the definition of Interest Period) shall be extended to the next Business Day and (except with respect to payments in respect of the Fees) interest shall be payable at the applicable rate specified herein during such extension, provided, however that if such next Business Day is after the Maturity Date, any such payment shall be due on the immediately preceding Business Day. 3. INTEREST, FEES, YIELD PROTECTIONS, ETC. 3.1. Interest Rate and Payment Dates (a) Prior to Default. Except as otherwise provided in Section 3.1(b) and 3.1(c), the Loans shall bear interest on the outstanding principal balance thereof at the applicable interest rate or rates per annum set forth below: 35 43 ADVANCES RATE - -------- ---- Each ABR Advance Alternate Base Rate plus the Applicable Margin. Each Eurodollar Advance Eurodollar Rate for the applicable Interest Period plus the Applicable Margin. Each Swing Line Loan Alternate Base Rate plus the Applicable Margin. (b) Default Rate. Upon the occurrence and during the continuance of an Event of Default, the unpaid principal balance of the Loans and any overdue interest or other amount payable under the Loan Documents shall bear interest, payable on demand, at a rate per annum (whether before or after the entry of a judgment thereon) equal to the Alternate Base Rate plus the Applicable Margin plus 2%. (c) Highest Lawful Rate. At no time shall the interest rate payable on the Loans of any Lender, together with the Fees and all other amounts payable under the Loan Documents to such Lender, to the extent the same are construed to constitute interest, exceed the Highest Lawful Rate applicable to such Lender. If with respect to any Lender for any period during the term of this Agreement, any amount paid to such Lender under the Loan Documents, to the extent the same shall (but for the provisions of this Section) constitute or be deemed to constitute interest, would exceed the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period (such amount being hereinafter referred to as an "Unqualified Amount"), then (i) such Unqualified Amount shall be applied or shall be deemed to have been applied as a prepayment of the Loans of such Lender, and (ii) if in any subsequent period during the term of this Agreement, all amounts payable under the Loan Documents to such Lender in respect of such period which constitute or shall be deemed to constitute interest shall be less than the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period, then the Borrower shall pay to such Lender in respect of such period an amount (each a "Compensatory Interest Payment") equal to the lesser of (x) a sum which, when added to all such amounts, would equal the maximum amount of interest permitted by the Highest Lawful Rate applicable to such Lender during such period, and (y) an amount equal to the Unqualified Amount less all other Compensatory Interest Payments made in respect thereof. (d) In General. Interest on ABR Advances, Eurodollar Advances and Swing Line Loans shall be calculated on the basis of a 360-day year, in each case, for the actual number of days elapsed. Except as otherwise expressly provided herein, interest shall be payable in arrears on each Interest Payment Date and upon each payment (including prepayment) of the Loans. Any change in the interest rate on the Loans resulting from a change in the Alternate Base Rate or reserve requirements shall become effective as of the opening of business on the 36 44 day on which such change shall become effective. The Administrative Agent shall, as soon as practicable, notify the Borrower and the Lenders of the effective date and the amount of each such change in the BNY Rate. Each determination of the Alternate Base Rate or a Eurodollar Rate by the Administrative Agent pursuant to this Agreement shall be conclusive and binding on all parties hereto absent manifest error. The Borrower acknowledges that to the extent interest payable on ABR Advances is based on the BNY Rate, such rate is only one of the bases for computing interest on loans made by the Lenders, and by basing interest payable on ABR Advances on the BNY Rate, the Lenders have not committed to charge, and the Borrower has not in any way bargained for, interest based on a lower or the lowest rate at which any Lender may now or in the future make loans to other borrowers. 3.2. Fees (a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, a fee (the "Commitment Fee"), during the Revolving Credit Commitment Period, at a rate per annum equal to 0.50% of the excess of the average daily Aggregate Revolving Credit Commitment Amount over the sum of the aggregate outstanding principal balance of the Revolving Credit Loans on such day and the Letter of Credit Exposure of all of the Lenders. The Commitment Fee shall be payable quarterly in arrears on the last day of each March, June, September and December of each year, commencing on the first such day following the Effective Date and ending on the Revolving Credit Commitment Termination Date. The Commitment Fee shall be calculated on the basis of a 360-day year for the actual number of days elapsed. (b) Letter of Credit Commissions. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, commissions (the "Letter of Credit Commissions") with respect to the Letters of Credit for the period from and including the date of issuance of each thereof to the expiration date thereof, at a rate per annum equal to 2.64% (or, upon the occurrence and during the continuance of an Event of Default, 4.64%), on the average daily maximum amount available under any contingency to be drawn under such Letter of Credit. The Letter of Credit Commissions shall be (i) calculated on the basis of a 360-day year for the actual number of days elapsed and (ii) payable quarterly in arrears on the last day of each March, June, September and December of each year and on the Revolving Credit Commitment Termination Date. (c) Letter of Credit Fronting Fees. The Borrower agrees to pay to Administrative Agent, for the account of each Issuing Bank, a fee (the "Fronting Fees") with respect to the Letters of Credit issued by such Issuing Bank for the period from and including the date of issuance of each thereof to the expiration date thereof, at a rate per annum equal to 0.250% on the average daily maximum amount available under any contingency to be drawn under such Letters of Credit. The Fronting Fees shall be (i) calculated on the basis of a 360-day year for the actual number of days elapsed and (ii) payable quarterly in arrears on the last day of each March, June, September and December of each year and on the Revolving Credit Commitment Termination Date. In addition to the Fronting Fees, the Borrower agrees to pay to each Issuing Bank, for its own account, its 37 45 standard fees and charges customarily charged to customers similar to the Borrower with respect to any of the Letters of Credit issued by such Issuing Bank. (d) Administrative Agent's Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, such other fees as have been agreed to in writing by the Borrower and the Administrative Agent. 3.3. Conversions (a) The Borrower may elect from time to time to convert one or more Eurodollar Advances to ABR Advances by giving the Administrative Agent at least one Business Day's prior irrevocable notice of such election, specifying the amount to be converted, provided, that any such conversion of Eurodollar Advances shall only be made on the last day of the Interest Period applicable thereto. In addition, the Borrower may elect from time to time to convert (i) ABR Advances to Eurodollar Advances and (ii) Eurodollar Advances to new Eurodollar Advances by selecting a new Interest Period therefor, in each case by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election, in the case of a conversion to Eurodollar Advances, specifying the amount to be so converted and the initial Interest Period relating thereto, provided that any such conversion of ABR Advances to Eurodollar Advances shall only be made on a Business Day and any such conversion of Eurodollar Advances to new Eurodollar Advances shall only be made on the last day of the Interest Period applicable to the Eurodollar Advances which are to be converted to such new Eurodollar Advances. Each such notice shall be irrevocable and shall be given by the delivery by facsimile of a Notice of Conversion (confirmed promptly, and in any event within five Business Days, by the delivery to the Administrative Agent of a Notice of Conversion manually signed by the Borrower). The Administrative Agent shall promptly provide the Lenders with notice of each such election. Advances may be converted pursuant to this Section in whole or in part, provided that the amount to be converted to each Eurodollar Advance, when aggregated with any Eurodollar Advance to be made on such date in accordance with Section 2.5 and having the same Interest Period as such first Eurodollar Advance, shall equal no less than $1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof. (b) Notwithstanding anything in this Agreement to the contrary, upon the occurrence and during the continuance of a Default or an Event of Default, the Borrower shall have no right to elect to convert any existing ABR Advance to a new Eurodollar Advance or to convert any existing Eurodollar Advance to a new Eurodollar Advance. In such event, all ABR Advances shall be automatically continued as ABR Advances and all Eurodollar Advances shall be automatically converted to ABR Advances on the last day of the Interest Period applicable to such Eurodollar Advance. (c) Each conversion shall be effected by each Lender by applying the proceeds of its new ABR Advance or Eurodollar Advance, as the case may be, to its Advances (or portion thereof) being converted (it being understood that any 38 46 such conversion shall not constitute a borrowing for purposes of Sections 4, 5 or 6). 3.4. Concerning Interest Periods Notwithstanding any other provision of any Loan Document: (a) If the Borrower shall have failed to elect a Eurodollar Advance under Section 2.5 or 3.3, as the case may be, in connection with any borrowing of new Revolving Credit Loans or expiration of an Interest Period with respect to any existing Eurodollar Advance, the amount of the Revolving Credit Loans subject to such borrowing or such existing Eurodollar Advance shall thereafter be an ABR Advance until such time, if any, as the Borrower shall elect to convert such ABR Advances to a Eurodollar Advance pursuant to Section 3.3. (b) No Interest Period selected in respect of the borrowing of, or the conversion to, any Eurodollar Advance shall end after the Maturity Date, and no Interest Period selected in respect of the borrowing of any Swing Line Loan shall end after fifteen days prior to the Maturity Date. (c) The Borrower shall not be permitted to have more than five Eurodollar Advances outstanding at any one time, it being agreed that each borrowing of a Eurodollar Advance pursuant to a single Borrowing Request shall constitute the making of one Eurodollar Advance for the purpose of calculating such limitation. 3.5. Indemnification for Loss Notwithstanding anything contained herein to the contrary, if the Borrower shall fail for any reason to borrow a Revolving Credit Loan in respect of which it shall have requested a Eurodollar Advance or convert an Advance to a Eurodollar Advance after it shall have notified the Administrative Agent of its intent to do so, or if a Eurodollar Advance shall terminate for any reason prior to the last day of the Interest Period applicable thereto, or if the Borrower shall for any reason prepay or repay all or any part of the principal amount of a Eurodollar Advance prior to the last day of the Interest Period applicable thereto, the Borrower shall indemnify each Lender against, and pay on demand directly to such Lender the amount (calculated by such Lender using any method chosen by such Lender which is customarily used by such Lender for such purpose) equal to any loss or out-of-pocket expense suffered by such Lender as a result of such failure to borrow or convert, or such termination, repayment or prepayment, including any loss, cost or expense suffered by such Lender in liquidating or employing deposits acquired to fund or maintain the funding of such Eurodollar Advance, or redeploying funds prepaid or repaid, in amounts which correspond to such Eurodollar Advance and any internal processing charge customarily charged by such Lender in connection therewith. 39 47 3.6. Capital Adequacy If the amount of capital required or expected to be maintained by any Lender, the Swing Line Lender or any Issuing Bank or any Person directly or indirectly owning or controlling such Lender, the Swing Line Lender or any Issuing Bank (each a "Control Person"), shall be affected by the occurrence of a Regulatory Change and such Lender, the Swing Line Lender or such Issuing Bank shall have determined that such Regulatory Change shall have had or will thereafter have the effect of reducing the rate of return on such Lender's, such Issuing Bank's, the Swing Line Lender's or such Control Person's capital in respect of the Loans, Letters of Credit, Revolving Credit Commitment, Swing Line Commitment, Letter of Credit Commitment or Letter of Credit or Swing Line Loan participations made or maintained by such Lender, the Swing Line Lender or such Issuing Bank, or of the Reimbursement Obligations owed to such Issuing Bank, in any case to a level below that which such Lender, such Issuing Bank, the Swing Line Lender or such Control Person could have achieved or would thereafter be able to achieve but for such Regulatory Change (after taking into account such Lender's, such Issuing Bank's, the Swing Line Lender's or such Control Person's policies regarding capital adequacy) by an amount deemed by such Lender, the Swing Line Lender or such Issuing Bank to be material, then, within ten days after demand by such Lender or such Issuing Bank, the Borrower shall pay to such Lender, such Issuing Bank, the Swing Line Lender or such Control Person such additional amount or amounts as shall be sufficient to compensate such Lender, such Issuing Bank, the Swing Line Lender or such Control Person for such reduction, provided that if such Lender, such Issuing Bank, the Swing Line Lender or such Control Person fails to notify the Borrower of any such event requiring additional compensation within 45 days after such Lender, such Issuing Bank, the Swing Line Lender or such Control Person has obtained knowledge of such event, such Lender, such Issuing Bank, the Swing Line Lender or such Control Person, as the case may be, shall only be entitled to compensation under this Section 3.6 for costs incurred from and after the date 45 days prior to the date that such Lender, such Issuing Bank, the Swing Line Lender or such Control Person, as the case may be, does give such notice. 3.7. Reimbursement for Increased Costs If any Lender, the Administrative Agent, the Swing Line Lender or any Issuing Bank shall determine that a Regulatory Change: (a) does or shall subject it to any Tax of any kind whatsoever with respect to any Eurodollar Advances or Swing Line Loans or its obligations under this Agreement to make Eurodollar Advances or Swing Line Loans, or change the basis of taxation of payments to it of principal, interest or any other amount payable hereunder in respect of its Eurodollar Advances or Swing Line Loans, or impose on the Administrative Agent, such Issuing Bank, the Swing Line Lender or such Lender any other condition regarding its Letters of Credit including any Tax required to be withheld from any amounts payable under the Loan Documents (except for imposition of, or change in the rate of, any Excluded Tax applicable to such Lender); or 40 48 (b) does or shall impose, modify or make applicable any reserve, special deposit, compulsory loan, assessment, increased cost or similar requirement against assets held by, or deposits of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender in respect of its Eurodollar Advances which is not otherwise included in the determination of a Eurodollar Rate or against any Letters of Credit issued by such Issuing Bank or participated in by any Lender; and the result of any of the foregoing is to increase the cost to such Lender of making, renewing, converting or maintaining its Eurodollar Advances, or its commitment to make such Eurodollar Advances or Swing Line Loans, as the case may be, or to reduce any amount receivable hereunder in respect of its Eurodollar Advances, or to increase the cost to such Issuing Bank of issuing or maintaining its Letters of Credit or the cost to any Lender of participating therein or the cost to the Administrative Agent, the Swing Line Lender or such Issuing Bank of performing its respective functions hereunder with respect to the Letters of Credit, then, in any such case, the Borrower shall pay such Lender, the Administrative Agent, the Swing Line Lender or such Issuing Bank, as the case may be, within ten days after demand therefor, such additional amounts as is sufficient to compensate such Lender, such Issuing Bank, the Swing Line Lender or the Administrative Agent, as the case may be, for such additional cost or reduction in such amount receivable which such Lender, such Issuing Bank, the Swing Line Lender or the Administrative Agent, as the case may be, deems to be material as determined by such Lender, such Issuing Bank, the Swing Line Lender or the Administrative Agent, as the case may be; provided, however, that nothing in this Section shall require the Borrower to indemnify the Lenders, the Administrative Agent, the Swing Line Lender or any Issuing Bank, as the case may be, with respect to any withholding Tax for which the Borrower has no obligation under Section 3.10. No failure by any Lender or the Administrative Agent, the Swing Line Lender, or any Issuing Bank to demand, and no delay in demanding, compensation for any increased cost shall constitute a waiver of its right to demand such compensation at any time, provided that if the Administrative Agent, such Issuing Bank, the Swing Line Lender or such Lender fails to notify the Borrower of any such increased cost within 45 days after the Administrative Agent, such Issuing Bank, the Swing Line Lender or such Lender has obtained knowledge of such increased cost, the Administrative Agent, such Issuing Bank, the Swing Line Lender or such Lender, as the case may be, shall only be entitled to payment under this Section 3.7 for such increased cost incurred from and after the date 45 days prior to the date that the Administrative Agent, such Issuing Bank, the Swing Line Lender or such Lender, as the case may be, does give such notice. A statement setting forth the calculations of any additional amounts payable pursuant to this Section submitted by a Lender, the Administrative Agent, the Swing Line Lender or an Issuing Bank, as the case may be, to the Borrower shall be conclusive absent manifest error. 3.8. Illegality of Funding Notwithstanding any other provision hereof, if any Lender shall reasonably determine that any Regulatory Change shall make it unlawful for such Lender to make or maintain any Eurodollar Advance as contemplated by this Agreement, such Lender shall promptly notify the Borrower and the Administrative Agent thereof, and (i) the commitment of such Lender to make such Eurodollar Advances or convert ABR Advances to Eurodollar Advances shall forthwith be 41 49 suspended, (ii) such Lender shall fund its portion of each requested Eurodollar Advance as an ABR Advance and (iii) such Lender's Revolving Credit Loans then outstanding as such Eurodollar Advances, if any, shall be converted automatically to an ABR Advance on the last day of the then current Interest Period applicable thereto or at such earlier time as may be required by law. If the commitment of any Lender with respect to Eurodollar Advances is suspended pursuant to this Section and such Lender shall have obtained actual knowledge that it is once again legal for such Lender to make or maintain Eurodollar Advances, such Lender shall promptly notify the Administrative Agent and the Borrower thereof and, upon receipt of such notice by each of the Administrative Agent and the Borrower, such Lender's commitment to make or maintain Eurodollar Advances shall be reinstated. 3.9. Substituted Interest Rate In the event that (i) the Administrative Agent shall have determined (which determination shall be conclusive and binding) that by reason of circumstances affecting the interbank eurodollar market either adequate or reasonable means do not exist for ascertaining the Eurodollar Rate, or (ii) Required Lenders shall have notified the Administrative Agent that they have determined (which determination shall be made on a reasonable basis and in good faith and shall be conclusive and binding) that the applicable Eurodollar Rate will not adequately and fairly reflect the cost to such Lenders of maintaining or funding loans bearing interest based on such Eurodollar Rate, with respect to any portion of the Revolving Credit Loans that the Borrower has requested be made as Eurodollar Advances or Eurodollar Advances that will result from the requested conversion of any portion of the Advances into or of Eurodollar Advances (each, an "Affected Advance"), the Administrative Agent shall promptly notify the Borrower and the Lenders (by telephone or otherwise, to be promptly confirmed in writing) of such determination, on or, to the extent practicable, prior to the requested Borrowing Date or Conversion Date for such Affected Advances. If the Administrative Agent shall give such notice, (a) any Affected Advances shall be made as ABR Advances, (b) the Advances (or any portion thereof) that were to have been converted to Affected Advances shall be converted to ABR Advances and (c) any outstanding Affected Advances shall be converted, on the last day of the then current Interest Period with respect thereto, to ABR Advances. Until any notice under clauses (i) or (ii), as the case may be, of this Section has been withdrawn by the Administrative Agent (by notice to the Borrower promptly upon either (x) the Administrative Agent having determined that such circumstances affecting the interbank eurodollar market no longer exist and that adequate and reasonable means do exist for determining the Eurodollar Rate, or (y) the Administrative Agent having been notified by such Required Lenders that circumstances no longer render the Advances (or any portion thereof) Affected Advances, no further Eurodollar Advances shall be required to be made by the Lenders, nor shall the Borrower have the right to convert all or any portion of the Revolving Credit Loans to or as Eurodollar Advances. 42 50 3.10. Taxes; Net Payments (a) All payments made by the Borrower under the Loan Documents shall be made free and clear of, and without reduction for or on account of, any Included Taxes required by law to be withheld from any amounts payable under the Loan Documents. In the event that the Borrower is prohibited by law from making payments under the Loan Documents free of deductions or withholdings in respect of Included Taxes, then the Borrower shall pay such additional amounts to the Administrative Agent, for the benefit of the Indemnified Tax Persons, as may be necessary in order that the actual amounts received by each Indemnified Tax Person in respect of interest and any other amount payable under the Loan Documents after deduction or withholding (and after payment of any additional taxes or other charges due as a consequence of the payment of such additional amounts) shall equal the amount that would have been received if such deduction or withholding were not required. In the event that any such deduction or withholding with respect to Included Taxes can be reduced or nullified as a result of the application of any relevant double taxation convention, the relevant Indemnified Tax Person will cooperate with the Borrower (at the sole expense of the Borrower) in making application to the relevant taxing authorities to seek to obtain such reduction or nullification, so long as it would not be disadvantageous to such Indemnified Tax Person, provided, however, that no Indemnified Tax Person shall have any obligation to engage in litigation with respect thereto. If the Borrower shall make any payments under this Section 3.10 or shall make any deductions or withholdings from amounts paid in accordance with this Section 3.10, the Borrower shall, as promptly as practicable thereafter, forward to the Administrative Agent original or certified copies of official receipts or other evidence acceptable to the Administrative Agent establishing such payment and the Administrative Agent in turn shall distribute copies of such receipts to each Indemnified Tax Person. If payments under the Loan Documents to any Indemnified Tax Person are or become subject to any withholding, such Indemnified Tax Person shall (unless otherwise required by a Governmental Authority or as a result of any treaty, convention, law, rule, regulation, order or similar directive applicable to such Indemnified Tax Person) use its best efforts to designate a different office or branch to which payments are to be made under the Loan Documents from that initially selected thereby, if such designation would avoid or mitigate such withholding and would not be disadvantageous to such Indemnified Tax Person. In the event that any Indemnified Tax Person shall have determined that it received a refund or credit for Included Taxes paid by the Borrower under this Section 3.10, such Indemnified Tax Person shall promptly notify the Administrative Agent and the Borrower of such fact and shall remit to the Borrower the amount of such refund or credit applicable to the payments made by the Borrower in respect of such Indemnified Tax Person under this Section 3.10. (b) Each Indemnified Tax Person shall deliver to the Borrower such certificates, documents, or other evidence as the Borrower may reasonably require from time to time as are necessary to establish that such Indemnified Tax Person is not subject to withholding under Section 1441, 1442 or 3406 of the Code or as may be necessary to establish, under any law imposing upon the Borrower, hereafter, an obligation to withhold any portion of the payments made by the Borrower under the Loan Documents, that payments to the Administrative Agent on behalf of such Indemnified Tax Person are not subject to withholding. 43 51 Notwithstanding any provision herein to the contrary, the Borrower shall not have any obligation to pay to the Administrative Agent for the benefit of any Indemnified Tax Person any amount which the Borrower is required to withhold (and shall have no obligation to otherwise indemnify any Lender with respect to such amount) to the extent that the Borrower's obligation to withhold is due to the failure of such Indemnified Tax Person to file any required statement, certificate or other document with respect to exemption which such Borrower requested of it. (c) Each Indemnified Tax Person not incorporated under the laws of the United States or any State thereof shall deliver to the Borrower such certificates, documents, or other evidence as the Borrower may reasonably require from time to time as are necessary to establish that such Indemnified Tax Person is not subject to withholding under Section 1441, 1442 or 3406 of the Code or as may be necessary to establish, under any law imposing upon the Borrower, hereafter, an obligation to withhold any portion of the payments made by the Borrower under the Loan Documents, that payments to the Administrative Agent on behalf of such Indemnified Tax Person are not subject to withholding. Notwithstanding any provision herein to the contrary, the Borrower shall not have any obligation to pay to the Administrative Agent for the benefit of any Indemnified Tax Person any amount which the Borrower is liable to withhold due to the failure of such Indemnified Tax Person to file any statement of exemption required by the Code. 3.11. Option to Fund Each Lender has indicated that, if the Borrower requests a Eurodollar Advance such Lender may wish to purchase one or more deposits in order to fund or maintain its funding of its Commitment Percentage of such Eurodollar Advance during the Interest Period with respect thereto; it being understood that the provisions of this Agreement relating to such funding are included only for the purpose of determining the rate of interest to be paid in respect of such Eurodollar Advance and any amounts owing under Sections 3.5 and 3.7. Each Lender shall be entitled to fund and maintain its funding of all or any part of each Eurodollar Advance in any manner it sees fit, but all such determinations hereunder shall be made as if each Lender had actually funded and maintained its Commitment Percentage of each Eurodollar Advance during the applicable Interest Period through the purchase of deposits in an amount equal to its Commitment Percentage of such Eurodollar Advance having a maturity corresponding to such Interest Period. Any Lender may fund its Commitment Percentage of each Eurodollar Advance from or for the account of any branch or office of such Lender as such Lender may choose from time to time. 3.12. Replacement of Lenders Notwithstanding the foregoing, if (i) any Lender shall request compensation or additional amounts pursuant to Section 3.6, 3.7 or 3.10 and such amounts are in excess of those being generally charged by the other Lenders, (ii) any Lender shall give any notice to the Borrower or the Administrative Agent pursuant to Section 3.8, (iii) a receiver or custodian shall have been appointed for any Lender and such Lender shall be in default of its obligations 44 52 under this Agreement, or (iv) a Lender fails or refuses to agree to a request by the Borrower or to amend or waive, or grant any consent under, any provision of any Loan Document under circumstances when such amendment, waiver or consent requires the approval of all the Lenders to be effective and has been approved by the Administrative Agent, the Borrower may require that such Lender transfer all of its right, title and interest under this Agreement and such Lender's Notes to any lender identified by the Borrower (a "Proposed Lender") if such Proposed Lender agrees to assume all of the obligations of such Lender for consideration equal to the outstanding principal amount of such Lender's Loans and all unreimbursed sums paid by such Lender under Section 2.10(b), together with all accrued and unpaid interest thereon to the date of such transfer and all other accrued and unpaid amounts payable under the Loan Documents to such Lender on or prior to the date of such transfer (including any accrued and unpaid fees hereunder and any amounts which would be payable under Section 3.5 as if all of such Lender's Loans were being prepaid in full on such date). Subject to the execution and delivery of new Notes and an Assignment and Acceptance Agreement and the satisfaction of the requirements contained in Section 11.7, such Proposed Lender shall be a "Lender" for all purposes hereunder. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements of the Borrower contained in Sections 3.5, 3.6, 11.5, 11.8 and 11.9 (without duplication of any payments made to such Lender by the Borrower or the Proposed Lender) shall survive for the benefit of any Lender replaced under this Section with respect to the time prior to such replacement. 4. REPRESENTATIONS AND WARRANTIES In order to induce the Administrative Agent and the Lenders to enter into this Agreement, the Lenders to make the Revolving Credit Loans, the Issuing Bank to issue the Letters of Credit and the Lenders to participate therein, and the Swing Line Lender to make the Swing Line Loans and the Lenders to participate therein, the Borrower makes the following representations and warranties to the Administrative Agent, the Issuing Bank, the Swing Line Lender and each Lender: 4.1. Subsidiaries; Capitalization As of the Effective Date, the Borrower has only the Subsidiaries set forth on, and the authorized, issued and outstanding Capital Stock of the Borrower and each such Subsidiary is as set forth on, Schedule 4.1. As of the Effective Date, except as set forth on Schedule 4.1, the shares of, or partnership or other interests in, each Subsidiary of the Borrower are owned beneficially and of record by the Borrower or another Subsidiary of the Borrower, are free and clear of all Liens and are duly authorized, validly issued, fully paid and nonassessable. As of the Effective Date, except as set forth on Schedule 4.1, (i) neither the Borrower nor any of its Subsidiaries has issued any securities convertible into, or options or warrants for, any common or preferred equity securities thereof, (ii) there are no agreements, voting trusts or understandings binding upon the Borrower or any of its Subsidiaries with respect to the voting securities of the Borrower or any of its Subsidiaries or affecting in any manner the sale, pledge, assignment or other disposition thereof, including any right of first refusal, option, redemption, call or other 45 53 right with respect thereto, whether similar or dissimilar to any of the foregoing, and (iii) all of the outstanding Capital Stock of each Subsidiary of the Borrower is owned by the Borrower or another Subsidiary of the Borrower. 4.2. Existence and Power Each of the Borrower and each of its Subsidiaries is duly organized or formed and validly existing in good standing under the laws of the jurisdiction of its incorporation or formation, has all requisite power and authority to own its Property and to carry on its business as now conducted, and is in good standing and authorized to do business in each jurisdiction in which the nature of the business conducted therein or the Property owned by it therein makes such qualification necessary, except where such failure to qualify could not reasonably be expected to have a Material Adverse Effect. 4.3. Authority and Execution Each of the Borrower and each of its Subsidiaries has full legal power and authority to enter into, execute, deliver and perform the terms of the Loan Documents to which it is a party all of which have been duly authorized by all proper and necessary corporate, partnership or other applicable action and are in full compliance with its Organizational Documents, except where the failure to be in such full compliance could not reasonably be expected to have a Material Adverse Effect. The Borrower and each of its Subsidiaries has duly executed and delivered the Loan Documents to which it is a party. 4.4. Binding Agreement The Loan Documents (other than the Notes) constitute, and the Notes, when issued and delivered pursuant hereto for value received, will constitute, the valid and legally binding obligations of each Credit Party, in each case, to the extent it is a party thereto, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally. 4.5. Litigation Except as set forth on Schedule 4.5, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority (whether purportedly on behalf of the Borrower, any of its Subsidiaries or any other Credit Party) pending or, to the knowledge of the Borrower, threatened against the Borrower, any of its Subsidiaries or any other Credit Party or maintained by the Borrower, any of its Subsidiaries or any other Credit Party or which may affect the Property of the Borrower, any of its Subsidiaries or any other Credit Party or any of their respective Properties or rights, which (i) could reasonably be expected to have a Material Adverse Effect or (ii) (x) on the Closing Date, call into question the validity or enforceablility of, or otherwise seek to invalidate, or might, individually or in the aggregate, materially and adversely affect, any Loan Document or any of the transactions contemplated thereby, or (y) on any other date on which the representations and 46 54 warranties under this Agreement are made or deemed to be made, have resulted in any judgment or decree that affects the validity or enforceability of, or invalidates, or might, individually or in the aggregate, materially and adversely affect, any Loan Document or any of the transactions contemplated thereby. 4.6. Required Consents Except for information filings required to be made in the ordinary course of business which are not a condition to the performance by the Borrower or any of its Subsidiaries under the Loan Documents to which it is a party, and except for the consents required to be obtained pursuant to Section 5.11 (which consents have been obtained on the Effective Date), no consent, authorization or approval of, filing with, notice to, or exemption by, stockholders or holders of any other equity interest, any Governmental Authority or any other Person is required to authorize, or is required in connection with the execution, delivery or performance by the Credit Parties of the Loan Documents to which the Borrower or any of its Subsidiaries is a party or is required as a condition to the validity or enforceability of the Loan Documents against the Credit Parties to which any of the same is a party. The Borrower, prior to each borrowing by it hereunder, has obtained all necessary approvals and consents of, and has filed or caused to be filed all reports, applications, documents, instruments and information required to be filed pursuant to all applicable laws, rules, regulations and requests of, all Governmental Authorities in connection with such borrowing. 4.7. Absence of Defaults; No Conflicting Agreements (a) Neither the Borrower, any of its Subsidiaries nor any other Credit Party is in default under any mortgage, indenture, contract or agreement to which it is a party or by which it or any of its Property is bound, the effect of which default could reasonably be expected to have a Material Adverse Effect. The execution, delivery or carrying out of the terms of the Loan Documents will not constitute a default under, or result in the creation or imposition of, or obligation to create, any Lien (other than the Lien created by the Security Documents) upon any Property of the Borrower or any of its Subsidiaries or result in a breach of or require the mandatory repayment of or other acceleration of payment under or pursuant to the terms of any such mortgage, indenture, contract or agreement, the effect of which could reasonably be expected to have a Material Adverse Effect. (b) Neither the Borrower, any of its Subsidiaries nor any other Credit Party is in default with respect to any judgment, order, writ, injunction, decree or decision of any Governmental Authority which default could reasonably be expected to have a Material Adverse Effect. 4.8. Compliance with Applicable Laws The Borrower and each of its Subsidiaries is complying in all respects with all laws, regulations, rules and orders of all Governmental Authorities 47 55 which are applicable to the Borrower or such Subsidiary, a violation of which could reasonably be expected to have a Material Adverse Effect. 4.9. Taxes Each of the Borrower and each of its Subsidiaries has filed or caused to be filed all tax returns required to be filed and has paid, or has made adequate provision for the payment of, all taxes shown to be due and payable on said returns or in any assessments made against it (other than those being contested in accordance with Section 7.4) which would be material to the Borrower or to the Borrower and its Subsidiaries taken as a whole, and no tax Liens have been filed with respect thereto (other than a Lien described in Section 8.2(i)). The charges, accruals and reserves on the books of the Borrower and each of its Subsidiaries with respect to all taxes are, to the best knowledge of the Borrower, adequate for the payment of such taxes, and the Borrower knows of no unpaid assessment which is due and payable against the Borrower or any of its Subsidiaries or any claims being asserted which could reasonably be expected to have a Material Adverse Effect, except such thereof as are being contested in accordance with Section 7.4, and for which adequate reserves have been set aside in accordance with GAAP. 4.10. Governmental Regulations Neither the Borrower, any of its Subsidiaries nor any Person controlled by, controlling, or under common control with, the Borrower or any of its Subsidiaries, is (i) subject to regulation under the Public Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as amended, or is subject to any statute or regulation which prohibits or restricts the incurrence of Indebtedness (other than provisions of laws generally), including statutes or regulations relative to common or contract carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services or (ii) is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 4.11. Federal Reserve Regulations; Use of Loan Proceeds Neither the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. The Borrower will use the proceeds of all Loans and Letters of Credit in compliance with the provisions of Section 2.8. 4.12. Plans Each Employee Benefit Plan is in compliance with ERISA, the Code and all other applicable state and federal law, in all material respects. The Borrower and all ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards under ERISA and the Code with respect to each Employee Benefit Plan. No event or condition has occurred and is continuing as to which the Borrower would be under an obligation to provide notice under Section 7.2(d), (e), (f) or (g). 48 56 4.13. Financial Statements The Borrower has heretofore delivered to the Administrative Agent and the Lenders copies of the (i) audited Consolidated Balance Sheet of the Borrower as of December 31, 1999, and the related Consolidated Statement of Operations, Stockholder's Equity and Cash Flow for the fiscal year then ended and (ii) the unaudited Consolidated Balance Sheets of the Borrower as of April 2, 2000, July 2, 2000 and October 1, 2000 and the related Consolidated Statement of Operations, Stockholder's Equity and Cash Flow for the respective fiscal quarters then ended (with the related notes and schedules, the "Financial Statements"). The Financial Statements fairly present the Consolidated financial condition and results of the operations of the Borrower and its Subsidiaries as of the dates and for the periods indicated therein (subject, in the case of such unaudited statements, to normal year-end adjustments) and have been prepared in conformity with GAAP. Except as set forth in the Financial Statements and as set forth on Schedule 4.13, since December 31, 1999, the Borrower and each of its Subsidiaries has conducted its business only in the ordinary course and there has been no Material Adverse Change. 4.14. Property (a) Each of the Borrower and the Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Schedule 4.14 sets forth the address of each real property that is owned or leased by the Borrower or any of the Subsidiaries as of the Effective Date. 4.15. Authorizations (a) The Borrower possesses or has the right to use all franchises, licenses and other rights set forth in the Trademark License Agreement, and with respect to which it is in compliance, with no known conflict with the valid rights of others. No event has occurred which permits or, to the best knowledge of the Borrower, after notice or the lapse of time or both, or any other condition, could reasonably be expected to permit, the revocation or termination of the Trademark License Agreement. (b) Each of the Borrower and each of its Subsidiaries possesses or has the right to use all other franchises, licenses and other rights as are material and necessary for the conduct of its business, and with respect to which it is in compliance, with no known conflict with the valid rights of others which could reasonably be expected to have a Material Adverse Effect. No event has occurred which permits or, to the best knowledge of the Borrower, after notice or the lapse of time or both, or any other condition, could reasonably be expected to permit, the revocation or termination of any such other franchise, license or other right which revocation or termination could reasonably be expected to have a Material Adverse Effect. 49 57 4.16. Environmental Matters (a) Except as set forth on Schedule 4.16 and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries (i) have failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) have become subject to any Environmental Liability, (iii) have received notice of any claim with respect to any Environmental Liability or (iv) know of any basis that could reasonably be expected to result in the Borrower or any of its Subsidiaries incurring any Environmental Liability. (b) Since the date of this Agreement, there has been no change in the status of the matters set forth on Schedule 4.16, that, individually or in the aggregate, has resulted in, or could reasonably be expected to have, a Material Adverse Effect. (c) Since the dates of its formation or organization, neither the Borrower nor any of its Subsidiaries has used asbestos or any asbestos product in the manufacture of any of its products or otherwise in its business or, to the best knowledge of the Borrower, has sold any asbestos or asbestos related product. 4.17. Solvency Each of the Borrower and its Subsidiaries is Solvent. 4.18. Absence of Certain Restrictions No indenture, certificate of designation for preferred stock, agreement or instrument to which the Borrower or any of its Subsidiaries is a party (other than this Agreement and the 2000 Credit Agreement), prohibits or limits in any way, directly or indirectly the ability of any Subsidiary (other than any Receivables Subsidiary) of the Borrower to make Restricted Payments or repay any Indebtedness to the Borrower or to another Subsidiary of the Borrower. 4.19. No Misrepresentation No representation or warranty contained in any Loan Document and no certificate or report from time to time furnished by the Borrower or any of its Subsidiaries in connection with the transactions contemplated thereby, contains or will contain a misstatement of material fact or omits or will omit to state a material fact required to be stated in order to make the statements therein contained not misleading in the light of the circumstances under which made. 5. CONDITIONS TO EFFECTIVENESS Except as provided in Section 11.24, the effectiveness of this Agreement shall be subject to the fulfillment of the following conditions precedent: 50 58 5.1. Evidence of Action The Administrative Agent shall have received a certificate, dated the Effective Date, of the Secretary or Assistant Secretary or other analogous counterpart of each Credit Party (i) attaching a true and complete copy of the resolutions of its Managing Person and of all documents evidencing all necessary corporate, partnership or similar action (in form and substance satisfactory to the Administrative Agent) taken by it to authorize the Loan Documents to which it is a party and the transactions contemplated thereby, (ii) attaching a true and complete copy of its Organizational Documents, (iii) setting forth the incumbency of its officer or officers or other analogous counterpart who may sign the Loan Documents, including therein a signature specimen of such officer or officers and (iv) attaching a certificate of good standing of the Secretary of State of the jurisdiction of its formation and of each other jurisdiction in which it is qualified to do business, except, in the case of such other jurisdiction, when the failure to be in good standing in such jurisdiction would not have a Material Adverse Effect. 5.2. This Agreement The Administrative Agent shall have received counterparts of this Agreement signed by each of the parties hereto. 5.3. Notes The Administrative Agent shall have received the Revolving Credit Notes and the Swing Line Note, duly executed by an Authorized Signatory of the Borrower. 5.4. Subsidiary Guaranty The Administrative Agent shall have received the Subsidiary Guaranty, duly executed by an Authorized Signatory of each Subsidiary of the Borrower (other than any Receivables Subsidiary). 5.5. Security Agreement The Administrative Agent shall have received counterparts of the Security Agreement signed on behalf of the Borrower, each Guarantor and the Collateral Agent, together with the following: (a) a copy of each stock certificate (the original of which shall have been delivered to the Collateral Agent) representing shares of capital stock owned by or on behalf of any Credit Party constituting Collateral as of the Effective Date; (b) a copy of each promissory note or other instrument (the original of which shall have been delivered to the Collateral Agent), endorsed in blank, evidencing all loans, advances and other debt owed or owing to any Credit Party 51 59 constituting Collateral as of the Effective Date (including, without limitation, a Demand Note made by each Guarantor to the Borrower); (c) a copy of each stock power or instrument of transfer (the original of which shall have been delivered to the Collateral Agent), endorsed in blank, with respect to each such stock certificate, promissory note and other instrument; (d) a copy of each instrument and other document (the original of which shall have been delivered to the Collateral Agent), including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreement; (e) a copy of the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Credit Parties in the jurisdictions contemplated by the Security Agreement and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 8.2 or have been released; (f) a copy of the fully executed Depositary Control Agreement of each Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains any bank account, other than a Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains only one or more Payroll Accounts and/or Petty Cash Accounts (the original of which shall have been delivered to the Collateral Agent); (g) a copy of the fully executed control agreement of Bear, Stearns & Co. Inc. required to be delivered pursuant to the Security Agreement with respect to the Marketable Securities (the original of which shall have been delivered to the Collateral Agent); and (h) a copy of the fully executed Depositary Control Agreement of The Bank of New York with respect to Disbursement Account No. 1 and Disbursement Account No. 2 (the original of which shall have been delivered to the Collateral Agent). 5.6. Collateral Agent Agreement The Administrative Agent shall have received counterparts of the Collateral Agent Agreement signed by each of the parties thereto. 52 60 5.7. Insurance The Administrative Agent shall have received the items required to be delivered on the Effective Date under Section 7.5, in each case satisfactory to the Administrative Agent. 5.8. Deposits of Cash, Cash Equivalents and Marketable Securities The Borrower and its Subsidiaries (other than any Receivables Subsidiary) shall have deposited (i) all of their Invested Cash in the Cash Collateral Account, and (ii) all of their Marketable Securities with Bear, Stearns & Co. Inc. 5.9. Absence of Litigation There shall be no injunction, writ, preliminary restraining order or other order of any nature issued by any Governmental Authority in any respect affecting the transactions provided for in the Loan Documents, and the Administrative Agent shall have received a certificate, in all respects satisfactory to the Administrative Agent, of an executive officer of the Borrower to the foregoing effects to the best of his or her knowledge. 5.10. Approvals and Consents All approvals and consents of all Persons required to be obtained by the Borrower or any of its Subsidiaries in connection with the consummation of the transactions contemplated by the Loan Documents shall have been obtained and shall be in full force and effect, and all notices required of the Borrower or any of its Subsidiaries shall have been given and all required waiting periods shall have expired, and the Administrative Agent shall have received a certificate, in all respects satisfactory to the Administrative Agent, of an Authorized Signatory of the Borrower to the foregoing effects to the best of his or her knowledge. 5.11. Senior Note Indenture Consent Solicitations The Borrower shall have received the consent of the requisite noteholders under each Senior Note Indenture to the amendment and modification of such Senior Note Indenture pursuant to the terms of the applicable Senior Note Indenture Consent Solicitations. 5.12. 2000 Credit Agreement The 2000 Credit Agreement shall have become effective and the Administrative Agent shall have received a duly executed copy thereof. 5.13. Policano & Manzo Report The Lenders shall have received a copy of the report, dated November 10, 2000, from Policano & Manzo with respect to the Borrower and its Subsidiaries. 53 61 5.14. Opinion of Counsel to the Borrower and its Subsidiaries The Administrative Agent shall have received an opinion of (i) Richard A. Weinberg, General Counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit F-1, and (ii) Weil, Gotshal & Manges LLP, special counsel to the Borrower and its Subsidiaries, substantially in the form of Exhibit F-2, each addressed to the Administrative Agent, the Swing Line Lender, the Issuing Banks, the Lenders and the Collateral Agent and dated the Effective Date. It is understood that such opinions are being delivered to the Administrative Agent, the Swing Line Lender, the Issuing Banks, the Lenders and the Collateral Agent upon the direction of the Borrower and its Subsidiaries and that the Administrative Agent, the Swing Line Lender, the Issuing Banks, the Lenders and the Collateral Agent may and will rely on such opinions. 5.15. Material Agreements The Administrative Agent shall have received a fully executed copy of each of the Material Agreements, together with a fully executed copy of the Trademark License Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, in each case certified to be a true and complete copy thereof by the Secretary or Assistant Secretary of the Borrower. 5.16. Asbestos Report The Borrower shall have delivered to the Administrative Agent and the Lenders a report detailing asbestos claims, asbestos settlements, asbestos judgments and asbestos legal fees, in each case for the period beginning November 1, 2000 and ending November 25, 2000. 5.17. Chase Platinum Substitute Note The Chase Platinum Substitute Note shall have been executed, and the Chase Platinum Agreement shall have been terminated. 5.18. Fees (a) In the event that any fee is payable to any noteholder under any Senior Note Indenture in connection with the Senior Note Indenture Consent Solicitation delivered to such noteholder, the Administrative Agent shall have received for the account of each Lender a fee in an amount equal to the Commitment of such Lender multiplied by the same percentage that such fee payable to such noteholder bears to the outstanding principal amount of the note held by such noteholder under such Senior Note Indenture. (b) All other fees payable to the Administrative Agent, the Issuing Banks and the Lenders on or prior to the Effective Date shall have been paid. All fees payable hereunder and for which invoices have been received of Bryan Cave LLP, Wachtell, Lipton, Rosen & Katz and Policano & Manzo shall have been paid. 54 62 5.19. Effective Date Cutoff This Agreement shall have become effective on or prior to January 16, 2001. 5.20. Certain Accrued Payments The Borrower shall have paid to the Administrative Agent for the account of the Lenders all interest on the Loans, all Commitment Fees, all Letter of Credit Commissions and all Fronting Fees under the Existing Credit Agreement accrued and unpaid to, but excluding, the Effective Date. 5.21. Other Documents The Administrative Agent shall have received such other documents, each in form and substance reasonably satisfactory to the Administrative Agent, as the Administrative Agent shall reasonably require. 6. CONDITIONS OF LENDING - ALL LOANS AND LETTERS OF CREDIT The obligation of each Lender to make a Revolving Credit Loan, the Swing Line Lender to make a Swing Line Loan or each Issuing Bank to issue any Letter of Credit (and each Lender to participate therein) on a Borrowing Date is subject to the satisfaction of the following conditions precedent as of the date of such Revolving Credit Loan or Swing Line Loan or the issuance of such Letter of Credit, as the case may be: 6.1. Compliance On each Borrowing Date and after giving effect to the Loans to be made and the Letters of Credit to be issued thereon (i) there shall exist no Default or Event of Default, (ii) the representations and warranties contained in the Loan Documents shall be true and correct with the same effect as though such representations and warranties had been made on such Borrowing Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date, and (iii) each Credit Party shall be in compliance with all of the terms, covenants and conditions of the Loan Documents to which it is a party. Each borrowing by the Borrower and each request by the Borrower for the issuance of a Letter of Credit shall constitute a representation and warranty by the Borrower as of such Borrowing Date that each of the foregoing matters is true and correct in all respects. 6.2. Borrowing Request; Letter of Credit Request With respect to the Loans to be made, and the Letters of Credit to be issued, on each Borrowing Date, the Administrative Agent shall have received, (i) in the case of Loans, a Borrowing Request and (ii) in the case of Letters of Credit, a Letter of Credit Request together with the applicable Issuing Bank's standard letter of credit application, Reimbursement Agreement and such other 55 63 documentation as such Issuing Bank may reasonably require, in each case duly executed by an Authorized Signatory of the Borrower. 6.3. Loan Closings All documents required by the provisions of the Loan Documents to be executed or delivered to the Administrative Agent or any Lender on or before the applicable Borrowing Date shall have been so executed and delivered on or before such Borrowing Date. 7. AFFIRMATIVE COVENANTS The Borrower agrees that, so long as this Agreement is in effect, any Loan or Reimbursement Obligation (contingent or otherwise) in respect of any Letter of Credit remains outstanding and unpaid, or any other amount is owing under any Loan Document to any Lender, any Issuing Bank or the Administrative Agent, the Borrower shall: 7.1. Financial Statements and Information Maintain, and cause each of its Subsidiaries to maintain, a standard system of accounting in accordance with GAAP, and furnish or cause to be furnished to the Administrative Agent and each Lender: (a) As soon as available, but in any event within 95 days after the end of each fiscal year, a copy of the Consolidated Balance Sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, together with the related Consolidated Statement of Operations, Stockholders' Equity and Cash Flow as of and through the end of such fiscal year, setting forth in each case in comparative form the figures for the preceding fiscal year. The Consolidated Balance Sheet and Consolidated Statement of Operations, Stockholders' Equity and Cash Flow shall be audited and certified without qualification by the Accountants, which certification shall (i) state that the examination by such Accountants in connection with such Consolidated financial statements has been made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances, and (ii) include the opinion of such Accountants that such Consolidated financial statements have been prepared in accordance with GAAP in a manner consistent with prior fiscal periods, except as otherwise specified in such opinion. Notwithstanding any of the foregoing, the Borrower may satisfy its obligation to furnish its Consolidated Balance Sheet and Consolidated Statement of Operations, Stockholders' Equity and Cash Flow by furnishing copies of the Borrower's annual report on Form 10-K in respect of such fiscal year, together with the financial statements required to be attached thereto or incorporated by reference therein, provided the Borrower is required to file such annual report on Form 10-K with the SEC and such filing is actually made. (b) As soon as available, but in any event within 50 days after the end of each of the first three fiscal quarters of each fiscal year, a copy of the Consolidated Balance Sheet of the Borrower and its Subsidiaries as at the end of 56 64 each such quarterly period, together with the related Consolidated Statement of Operations and Cash Flows for such period and for the elapsed portion of the fiscal year through such date, setting forth in each case in comparative form the figures for the corresponding periods of the preceding fiscal year, certified by a Financial Officer of the Borrower as presenting fairly the Consolidated financial condition and the Consolidated results of operations of the Borrower and its Subsidiaries in accordance with GAAP. Notwithstanding any of the foregoing, the Borrower may satisfy its obligation to furnish its quarterly Consolidated Balance Sheet and Consolidated Statement of Operations and Cash Flow by furnishing copies of the Borrower's quarterly report on Form 10-Q in respect of such fiscal quarter, together with the financial statements required to be attached thereto or incorporated by reference therein, provided the Borrower is required to file such quarterly report on Form 10-Q with the SEC and such filing is actually made. (c) Within 50 days after the end of each of the first three fiscal quarters (95 days after the end of the last fiscal quarter), a Compliance Certificate, certified by a Financial Officer of the Borrower. (d) Within 30 days after the end of each fiscal month, a copy of the Consolidated Balance Sheet of the Borrower and its Subsidiaries as at the end of each such fiscal month, together with the related Consolidated Statement of Operations and Cash Flows (including, without limitation, line items for Capital Expenditures and payments made to any Parent or any Affiliate of the Borrower) for such period and for the elapsed portion of the fiscal year through such date, setting forth in each case in comparative form the figures for the corresponding periods of the preceding fiscal year, certified by a Financial Officer of the Borrower as presenting fairly the Consolidated financial condition and the Consolidated results of operations of the Borrower and its Subsidiaries in accordance with GAAP. (e) Within 30 days after the end of each fiscal month, a report detailing asbestos claims, asbestos settlements, asbestos judgments and asbestos legal fees, in each case for such fiscal month period. (f) Such other information as the Administrative Agent or any Lender may reasonably request from time to time. 7.2. Certificates; Other Information Furnish to the Administrative Agent and each Lender: (a) Prompt written notice if: (i) any Indebtedness of the Borrower or any of its Subsidiaries in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries is declared or shall become due and payable prior to its stated maturity, or is called and not paid when due, (ii) a default shall have occurred under, or the holder or obligee of, any note (other than the Notes), certificate, security or other evidence of Indebtedness, with respect to any other Indebtedness of the Borrower or any of its Subsidiaries has the right to declare Indebtedness in an aggregate amount in excess of $5,000,000 for the 57 65 Borrower and its Subsidiaries due and payable prior to its stated maturity, or (iii) there shall occur and be continuing a Default or an Event of Default; (b) Prompt written notice of: (i) any citation, summons, subpoena, order to show cause or other document naming the Borrower or any of its Subsidiaries a party to any proceeding before any Governmental Authority which could reasonably be expected to have a Material Adverse Effect or which calls into question the validity or enforceability of any of the Loan Documents, and include with such notice a copy of such citation, summons, subpoena, order to show cause or other document, (ii) any lapse or other termination of any license, permit, franchise or other authorization issued to the Borrower or any of its Subsidiaries by any Person or Governmental Authority, which lapse or termination could reasonably be expected to have a Material Adverse Effect, and (iii) any refusal by any Person or Governmental Authority to renew or extend any such material license, permit, franchise or other authorization, which lapse, termination, refusal or dispute could reasonably be expected to have a Material Adverse Effect; (c) Promptly upon becoming available, copies of all (i) registration statements (other than with respect to employee benefit plans), regular, periodic or special reports, schedules and other material which the Borrower or any of its Subsidiaries may now or hereafter be required to file with or deliver to any securities exchange or the SEC, and (ii) financial statements, proxy statements, notices and reports as the Borrower or any of its Subsidiaries shall generally send to analysts or all public holders of its Capital Stock in their capacity as such holders (in each case to the extent not theretofore delivered to the Lenders pursuant to this Agreement); (d) Prompt written notice in the event that the Borrower, any of its Subsidiaries or any ERISA Affiliate knows, or has reason to know, that (i) any Termination Event with respect to a Pension Plan has occurred or will occur, (ii) any condition exists with respect to a Pension Plan which presents a material risk of termination of the Pension Plan under Section 4041(c) or 4042 of ERISA, imposition of a material excise tax, requirement to provide security to the Pension Plan or other material liability on the Borrower, any of its Subsidiaries or any ERISA Affiliate, (iii) the Borrower, any of its Subsidiaries or any ERISA Affiliate has filed under Section 4041(a)(2) of ERISA a notice of termination of, or intent to terminate, a Pension Plan, (iv) the Borrower, any of its Subsidiaries or any ERISA Affiliate has applied for a waiver of the minimum funding standard under Section 412 of the Code with respect to a Pension Plan, (v) the aggregate amount of the Unfunded Pension Liabilities under all Pension Plans is in excess of $5,000,000, (vi) the aggregate amount of Unrecognized Retiree Welfare Liability under all applicable Employee Benefit Plans is in excess of $1,000,000, (vii) the Borrower, any of its Subsidiaries or any ERISA Affiliate has engaged in a Prohibited Transaction with respect to an Employee Benefit Plan, (viii) the imposition of any material tax against the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 4980B(a) of the Code or (ix) the assessment of a material civil penalty against the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 502(c) of ERISA, together with a certificate of a Financial Officer of the Borrower setting forth the details of such event and the action which the Borrower, such 58 66 Subsidiary or such ERISA Affiliate proposes to take with respect thereto, together with a copy of all notices and filings with respect thereto. (e) Prompt written notice in the event that the Borrower, any of its Subsidiaries or any ERISA Affiliate shall receive a demand letter from the PBGC notifying the Borrower, such Subsidiary or such ERISA Affiliate of any final decision finding liability and the date by which such liability must be paid, together with a copy of such letter and a certificate of a Financial Officer of the Borrower setting forth the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (f) Promptly upon the same becoming available, and in any event by the date such amendment is adopted, a copy of any Pension Plan amendment that the Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt which would require the posting of security under Section 401(a)(29) of the Code, together with a certificate of a Financial Officer of the Borrower setting forth the reasons for the adoption of such amendment and the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (g) As soon as possible and in any event by the tenth day after any required installment or other payment under Section 412 of the Code owed to a Pension Plan shall have become due and owing by the Borrower, any of its Subsidiaries or any ERISA Affiliate and remain unpaid, a copy of the notice of failure to make required contributions provided to the PBGC by the Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 412(n) of the Code, together with a certificate of a Financial Officer setting forth the action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect thereto. (h) Prompt written notice upon any development in asbestos litigation that could reasonably be expected to have a Material Adverse Effect. (i) Such other information as the Administrative Agent or any Lender shall reasonably request from time to time. 7.3. Legal Existence Except as may otherwise be permitted by Sections 8.3 and 8.4, maintain, and cause each of its Subsidiaries to maintain, its corporate, partnership or analogous existence, as the case may be, in good standing in the jurisdiction of its incorporation or formation and in each other jurisdiction in which the failure so to do could reasonably be expected to have a Material Adverse Effect, provided, however, that any Guarantor may be dissolved, provided that (i) no Event of Default shall then exist and be continuing, (ii) all of the Property of such Guarantor shall be transferred to the Borrower or any other Guarantor, (iii) no such dissolution shall adversely affect the Collateral (including the nature, status, quality or value thereof) or the interest of the Collateral Agent therein, and (iv) no Guarantor that creates accounts receivable may 59 67 dissolve into any other Guarantor or the Borrower unless the accounts receivable of such Guarantor (or attributable to the line of business engaged in by such Guarantor) shall, after giving effect to such dissolution, constitute Collateral under the Security Agreement and shall be expressly excluded for all purposes from being sold to the Receivables Subsidiary pursuant to the Receivables Purchase Documents or otherwise being subject to any restriction contained in the Receivables Purchase Documents. 7.4. Taxes Pay and discharge when due, and cause each of its Subsidiaries so to do, any Tax upon or with respect to the Borrower or such Subsidiary and any Tax upon the income, profits and Property of the Borrower and its Subsidiaries, which if unpaid, could reasonably be expected to have a Material Adverse Effect or become a Lien on Property of the Borrower or such Subsidiary (other than a Lien described in Section 8.2(i)), unless and to the extent only that any such Tax shall be contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Subsidiary and provided that such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor. 7.5. Insurance and Condemnation. (a) Liability Insurance. Maintain, and cause each Subsidiary to maintain, insurance with financially sound insurance carriers on such of its Property, against at least such risks, and in at least such amounts, as are customarily insured against by similar businesses, in each case naming the Administrative Agent and the Collateral Agent as an additional insured under such policies. (b) Property Insurance. Maintain such property and other insurance as is customarily maintained by companies engaged in similar businesses. All such property insurance shall name the Collateral Agent, under a standard loss payable clause, as a loss payee, as its interest may appear, in respect of each claim resulting in a payment under any such insurance policy exceeding $500,000 and shall contain such endorsements as the Collateral Agent shall require. If the Borrower or any of its Subsidiaries shall receive the proceeds of any insurance, the Borrower shall cause such proceeds to be deposited in a deposit account with a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement. (c) Condemnation Awards. If the Borrower or any of its Subsidiaries shall receive the proceeds of any condemnation or similar awards, the Borrower shall cause such proceeds to be deposited in a deposit account with a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement. (d) Insurance Policies. The Borrower shall deliver to the Administrative Agent on the Effective Date and on each anniversary thereof a detailed list of all insurance of the Borrower and its Subsidiaries then in effect, stating the names of the carriers thereof, the policy numbers, the insureds thereunder, the amounts of insurance, dates of expiration thereof, and 60 68 the Property and risks covered thereby, together with a certificate of an Authorized Signatory certifying that in the opinion of such officer such insurance complies with the obligations of the Borrower under this Section 7.5, and is in full force and effect. Promptly upon request therefor, the Borrower shall deliver or cause to be delivered to the Administrative Agent originals or duplicate originals of all such policies of insurance. 7.6. Performance of Obligations Pay and discharge when due, and cause each of its Subsidiaries so to do, all lawful Indebtedness, obligations and claims for labor, materials and supplies or otherwise which, if unpaid, could (i) reasonably be expected to have a Material Adverse Effect, or (ii) become a Lien upon Property of the Borrower or any of its Subsidiaries other than a Permitted Lien, unless and to the extent only that the validity of such Indebtedness, obligation or claim shall be contested in good faith and by appropriate proceedings diligently conducted, and provided that such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor. 7.7. Observance of Legal Requirements Observe and comply in all respects, and cause each of its Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules, regulations, certifications, franchises, permits, licenses, directions and requirements of all Governmental Authorities, which now or at any time hereafter may be applicable to it, a violation of which could reasonably be expected to have a Material Adverse Effect, except such thereof as shall be contested in good faith and by appropriate proceedings diligently conducted by it, provided that such reserve or other appropriate provision as shall be required by GAAP shall have been made therefor. 7.8. Inspection of Property; Books and Records; Discussions (a) At all reasonable times, upon reasonable prior notice, permit representatives of the Administrative Agent and each Lender to visit the offices of the Borrower and each of its Subsidiaries, to examine the books and records thereof and Accountants' reports relating thereto, and to make copies or extracts therefrom, to discuss the affairs of the Borrower and each such Subsidiary with the respective officers thereof, and to examine and inspect the Property of the Borrower and each such Subsidiary and to meet and discuss the affairs of the Borrower and each such Subsidiary with the Accountants. (b) Upon the occurrence and during the continuance of any Default, Event of Default or Material Adverse Change, at the request of the Required Lenders and at the expense of the Borrower, permit financial consultants or other representatives of the Administrative Agent or any Lender to visit the offices of the Borrower and each of its Subsidiaries, to examine the books and records thereof and Accountants' reports relating thereto and to make copies or extracts therefrom, to discuss the affairs of the Borrower and each such Subsidiary with the respective officers thereof, to examine and inspect the Property of the Borrower and each such Subsidiary, to meet and discuss the 61 69 affairs of the Borrower and each such Subsidiary with the Accountants, and to prepare reports relating thereto. 7.9. Authorizations Maintain, and cause each of its Subsidiaries to maintain, in full force and effect, all licenses, franchises, permits, licenses, authorizations and other rights as are necessary for the conduct of its business, except to the extent the failure to so maintain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 7.10. Financial Covenants (a) Interest Coverage Ratio. Maintain as of the end of any fiscal quarter during each period set forth below, an Interest Coverage Ratio of not less than the applicable ratio set forth below: Period Ratio ------ ----- Effective Date through the fiscal quarter ending on or about June 30, 2002 1.35:1.00 the fiscal quarter beginning on or about July 1, 2002 and thereafter 1.50:1.00. (b) Minimum Consolidated EBITDA. Maintain as of the end of any fiscal quarter Consolidated EBITDA for the immediately preceding four fiscal quarters of not less than $80,000,000. 7.11. Additional Subsidiaries If any Subsidiary is formed or acquired after the Effective Date, the Borrower will notify the Administrative Agent and the Lenders in writing thereof within three Business Days prior to the date on which such Subsidiary is to be formed or acquired and (i) the Borrower will cause such Subsidiary (other than the Receivables Subsidiary) to (a) execute and deliver each applicable Guaranty Document (or otherwise become a party thereto in the manner provided therein) and become a party to each applicable Security Document in the manner provided therein, in each case within five Business Days after the date on which such Subsidiary is formed or acquired and (ii) promptly take such actions to create and perfect Liens on such Subsidiary's assets to secure the Obligations as the Administrative Agent or the Required Lenders shall reasonably request, (b) if any equity securities issued by any such Subsidiary are owned or held by or on behalf of the Borrower or any Guarantor or any loans, advances or other debt is owed or owing by any such Subsidiary to the Borrower or any Guarantor, the Borrower will cause such equity securities and promissory notes and other instruments evidencing such loans, advances and other debt to be pledged 62 70 pursuant to the Security Documents within five Business Days after the date on which such Subsidiary is formed or acquired, and (c) deliver (i) a certificate, dated the date such Subsidiary shall have become a party to the Subsidiary Guaranty, executed by such Subsidiary and substantially in the form of, and with substantially the same attachments as, the certificate which would have been required under Section 5.1 if such Subsidiary had become a party to the Subsidiary Guaranty on or before the Effective Date, and (ii) an opinion of counsel to such Subsidiary, covering the same matters with respect to such Subsidiary as were covered by the opinions delivered pursuant to Section 5.14, in form and substance satisfactory to the Administrative Agent, and (iii) such other documents as the Administrative Agent shall request. 7.12. Further Assurances; Certain Real Estate Matters (a) Within 45 days of the Closing Date, the Borrower will deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent (i) counterparts of a Mortgage with respect to each Mortgaged Property listed on Part A of Schedule 1.1(m), signed on behalf of the record owner of such Mortgaged Property, (ii) a current title search report in standard form issued by a nationally recognized title insurance company with respect to each such Mortgaged Property, and (iii) such UCC-1 financing statements and other documents, instruments or agreements that the Administrative Agent reasonably requests with respect to each such Mortgaged Property for purposes of creating and perfecting a valid mortgage lien on each such such Mortgaged Property, provided that the Borrower will use its best efforts to satisfy this Section 7.12(a) within 30 days of the Closing Date. (b) Within 60 days of the Closing Date, the Borrower will deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent (i) a policy or policies of title insurance issued by a nationally recognized title insurance company, insuring the Lien of each Mortgage on each Mortgaged Property listed on Part A of Schedule 1.1(m) as a valid first Lien on such Mortgaged Property described therein, free of any other Liens except as permitted by Section 8.2, in form and substance reasonably acceptable to the Administrative Agent, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request, (ii) such existing surveys of such Mortgaged Property as the Borrower or its Subsidiaries may have, (iii) a copy of any existing phase I environmental report issued for each such Mortgaged Property as the Borrower or its Subsidiaries may have, (iv) such customary opinions of local counsel to the Borrower with respect to such Mortgages as the Administrative Agent shall reasonably require and (v) such other customary documentation with respect to such Mortgages and such Mortgaged Property, including copies of all appraisals issued with respect thereto, as the Administrative Agent may reasonably request. (c) The Borrower will use its commercially reasonable best efforts to deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible (i) counterparts of a Mortgage with respect to each Mortgaged Property listed on Part B of Schedule 1.1(m), signed on behalf of the record owner of such Mortgaged Property, (ii) a current title search report in standard form issued by a nationally recognized title insurance 63 71 company with respect to each such Mortgaged Property, (iii) such UCC-1 financing statements and other documents, instruments or agreements that the Administrative Agent reasonably requests with respect to each such Mortgaged Property for purposes of creating and perfecting a valid mortgage lien on each such such Mortgaged Property, (iv) a policy or policies of title insurance issued by a nationally recognized title insurance company, insuring the Lien of each Mortgage on each such Mortgaged Property as a valid first Lien on such Mortgaged Property described therein, free of any other Liens except as permitted by Section 8.2, in form and substance reasonably acceptable to the Administrative Agent, together with such endorsements, coinsurance and reinsurance as the Administrative Agent may reasonably request, (v) such existing surveys of such Mortgaged Property as the Borrower or its Subsidiaries may have, (vi) a copy of any existing phase I environmental report issued for each such Mortgaged Property as the Borrower or its Subsidiaries may have, (vii) such customary opinions of local counsel to the Borrower with respect to such Mortgages as the Administrative Agent shall reasonably require and (viii) such other customary documentation with respect to such Mortgages and such Mortgaged Property, including copies of all appraisals issued with respect thereto, as the Administrative Agent may reasonably request. (d) With respect to each Mortgaged Property listed on Part B of Schedule 1.1(m), the Borrower will use its commercially reasonable best efforts to deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible a collateral assignment (satisfactory in form and substance to the Administrative Agent) of all of its rights or options to acquire the underlying real estate and improvements constituting a part of such Mortgaged Property. (e) With respect to leased real property the landlord of which is an Affiliate of the Borrower, the Borrower will deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible a landlord lien waiver with respect to each such leased real property, such landlord lien waiver to be in customary form and reasonably satisfactory to the Administrative Agent. (f) With respect to leased real property the landlord of which is not an Affiliate of the Borrower, the Borrower will use its commercially reasonable best efforts to deliver or, as applicable, cause each of its Subsidiaries to deliver, to the Collateral Agent as soon as possible a landlord lien waiver with respect to each such leased real property, such landlord lien waiver to be in customary form and reasonably satisfactory to the Administrative Agent. (g) The Borrower will, and will cause each Guarantor to, execute any and all further documents, financing statements, agreements (including guarantee agreements and security agreements) and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Mortgages and other documents), that may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect (including as a result of any change in applicable law) the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the 64 72 expense of the Borrower and the Guarantors. The Borrower also agrees to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents. (h) If any assets (including any real property or improvements thereto or any interest therein that exceed $1,000,000 in value) are acquired by the Borrower or any Guarantor after the Effective Date (other than Payroll Accounts, Petty Cash Accounts and assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), the Borrower will notify the Administrative Agent and the Lenders thereof, and, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Guarantors to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraphs (a), (b), (c), (d), (e) and (f) of this Section and shall deliver all documents, certificates and instruments required to be delivered pursuant to Section 5.5 as if such assets existed on the Effective Date, all at the expense of the Borrower and the Guarantors. 7.13. Environmental Compliance The Borrower will, and will cause each Subsidiary to, use and operate all of its facilities and property in compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all applicable Environmental Laws, except where noncompliance with any of the foregoing could not reasonably be expected to have a Material Adverse Effect. 7.14. Invested Cash, Marketable Securities and System Cash (a) The Borrower will, and will cause each Subsidiary (other than any Receivable Subsidiary) to (i) deposit and maintain on deposit all of its Invested Cash in the Cash Collateral Account, (ii) deposit and, subject to Section 7.14(b), maintain on deposit all of its Marketable Securities with Bear, Stearns & Co. Inc., (iii) cause all of its System Cash to be deposited in Qualified Depositary Institutions and, prior to any such deposit, cause each such Qualified Depositary Institution to execute and deliver to the Collateral Agent a Depositary Control Agreement and (iv) comply with the Cash Management System. (b) The Borrower will, and will cause each Subsidiary to, liquidate all of its Marketable Securities by no later than December 31, 2000 and deposit the net proceeds in the Cash Collateral Account pursuant to Section 7.14(a). (c) The Borrower will cause the Receivables Subsidiary to promptly transfer to the Borrower, for deposit in a Qualified Depositary Institution that has executed and delivered to the Collateral Agent a Depositary Control Agreement, cash held by the Receivables Subsidiary in excess of the cash 65 73 required to be held by the Receivables Subsidiary pursuant to the Receivables Purchase Documents. 8. NEGATIVE COVENANTS The Borrower agrees that, so long as this Agreement is in effect, any Loan or Reimbursement Obligation (contingent or otherwise) in respect of any Letter of Credit remains outstanding and unpaid, or any other amount is owing under any Loan Document to any Lender, any Issuing Bank or the Administrative Agent, the Borrower shall not, directly or indirectly: 8.1. Indebtedness Create, incur, assume or suffer to exist any liability for Indebtedness, or permit any of its Subsidiaries so to do, except (i) Indebtedness under the Loan Documents, (ii) Indebtedness of the Borrower or any of its Subsidiaries existing on the Effective Date as set forth on Schedule 8.1, (iii) Borrower Intercompany Investments, (iv) the Chase Platinum Substitute Note, and (v) Indebtedness with respect to Capital Leases and purchase money Indebtedness of the Borrower or any of its Subsidiaries (including any extension, replacement or refinance of such Capital Lease or purchase money Indebtedness), provided that any such extension, replacement or refinance (x) does not result in an increase in the outstanding principal amount of such Capital Lease or purchase money Indebtedness from that in effect on the Effective Date, and (y) does not result in the annual lease payments/debt service payable under such Capital Lease or purchase money Indebtedness (as so extended, replaced or refinanced) exceeding the annual lease payments/debt service (without giving effect to any balloon or similar payments) payable under such Capital Lease or purchase money Indebtedness immediately prior to such extension, replacement or refinance. 8.2. Liens Create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, or permit any of its Subsidiaries so to do, except (i) Liens for any Tax or governmental charge in the ordinary course of business which are not delinquent or which are being contested in accordance with Section 7.4 or 7.6, provided that enforcement of such Liens is stayed pending such contest, (ii) Liens in connection with workers' compensation, unemployment insurance or other social security obligations (but not ERISA), (iii) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety, performance and appeal bonds, contractual or warranty requirements and other obligations of like nature arising in the ordinary course of business, (iv) zoning ordinances, easements, rights of way, minor defects, irregularities, and other similar restrictions affecting real Property which do not materially adversely affect the value of such real Property or the financial condition of the Borrower or of the Borrower and its Subsidiaries taken as a whole or materially impair its use for the operation of the business of the Borrower or any such Subsidiary, (v) Liens arising by operation of law such as mechanics', materialmen's, carriers', warehousemen's liens incurred in the ordinary course of business which are not delinquent or which are being 66 74 contested in accordance with Section 7.6, provided that enforcement of such Liens is stayed pending such contest, (vi) Liens arising out of judgments or decrees which are being contested in accordance with Section 7.6, provided that enforcement of such Liens is stayed pending such contest, (vii) Liens in favor of the Administrative Agent, the Issuing Banks and the Lenders under the Loan Documents and Liens in favor of the Collateral Agent under the Security Documents, (viii) broker's Liens securing the payment of commissions and management fees in the ordinary course of business, (ix) Liens on Property (including replacements of such Property or additions or accessions thereto pursuant to applicable law) existing on the Effective Date as set forth on Schedule 8.2, (x) Liens under Capital Leases or purchase money Indebtedness permitted by Section 8.1(v), provided that such Liens attach only to the Property so acquired pursuant to such Capital Leases or purchase money Indebtedness (including replacements thereof or additions or accessions thereto pursuant to applicable law), and (xi) Liens arising solely from the filing of UCC financing statements for precautionary purposes in connection with true operating leases or conditional sales of property that are otherwise permitted under the Agreement and under which the Borrower or any of its Subsidiaries is lessee or on accounts receivable and related intangible rights in connection with non-recourse sales of accounts receivable of the Borrower to a Receivables Subsidiary pursuant to and in accordance with the Receivables Purchase Documents. 8.3. Merger, Consolidations and Acquisitions Consolidate with, merge into or with any Person, make any Acquisition or enter into any binding agreement to do any of the foregoing which is not contingent on obtaining the consent of the Required Lenders, or permit any of its Subsidiaries so to do, except: (a) any wholly-owned Guarantor may merge with any other wholly-owned Guarantor or with the Borrower, provided that (i) no such merger shall adversely affect the Collateral (including the nature, status, quality or value thereof) or the interest of the Collateral Agent therein, (ii) the Borrower shall be the survivor in any merger involving the Borrower and (iii) no Guarantor that creates accounts receivable may merge with any other Guarantor or with the Borrower unless the accounts receivable of such Guarantor (or attributable to the line of business engaged in by such Guarantor) shall, after giving effect to such merger, constitute Collateral under the Security Agreement and shall be expressly excluded for all purposes from being sold to the Receivables Subsidiary pursuant to the Receivables Purchase Documents or otherwise being subject to any restriction contained in the Receivables Purchase Documents; (b) Investments permitted by Section 8.5; and (c) Dispositions permitted by Section 8.4. 8.4. Dispositions Make any Disposition, or permit any of its Subsidiaries so to do, except: 67 75 (a) Dispositions of inventory or other assets (including, without limitation, Marketable Securities, Cash Equivalents and Hedge Agreements) in the ordinary course of business or the disposition of platinum in connection with the satisfaction of the Chase Platinum Agreement; (b) Dispositions of shares of stock, notes or other securities or other equity interests owned by the Borrower or any of its Subsidiaries, other than any such equity interests of (i) any Subsidiaries of the Borrower, or (ii) other Persons, unless such equity interests are held solely as an investment and without a view to participating in the management of such other Person; (c) Dispositions by means of a lease or sublease of Property of the Borrower or any of its Subsidiaries, so long as the Borrower or such Subsidiary continues to reflect ownership of such Property in its financial statements in accordance with GAAP; (d) Dispositions of Property (other than accounts receivable) by the Borrower or any of its Subsidiaries to the Borrower or any Guarantor; (e) Dispositions of Property pursuant to a condemnation proceeding; (f) sales or transfers of accounts receivable (and related intangible rights) to any Receivables Subsidiary pursuant to and in accordance with the Receivables Purchase Documents; (g) the destruction of Property as a result of casualty; (h) Dispositions of Property which, in the reasonable opinion of the Borrower or such Subsidiary, is obsolete or no longer useful in the conduct of its business; (i) the Disposition of the Ontario, Port Arthur, Corvallis, Monroe, Houston and Leatherback facilities of the Borrower, provided that at least 50% of the consideration received for each such Disposition shall be cash and no Default or Event of Default shall exist immediately before or after giving effect thereto; (j) any Disposition the fair market value of which is less than $5,000,000 and, when aggregated with all other Dispositions made pursuant to this Section 8.4(j) within the same fiscal year, is less than $15,000,000; and (k) Dispositions in the ordinary course of business by means of a license or a sublicense, to the extent the proceeds thereof (excluding reimbursements, indemnities and the like) are included in the income before taxes and extraordinary items of the Borrower or such Subsidiary; provided that in connection with any Disposition pursuant to subsection (a) or (b) above of Investments in Marketable Securities and Investments in other securities or to fund managers permitted pursuant to subsections (g) or (h) of 68 76 Section 8.5, and in connection with Dispositions pursuant to subsections (i) or (j) above, upon receipt of any net proceeds by the Borrower or any of its Subsidiaries as a result thereof, the Borrower shall immediately cause such net proceeds to be deposited with a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement. 8.5. Investments, Loans, Etc. At any time, directly or indirectly, purchase or otherwise hold, own, acquire or invest in the Capital Stock of, evidence of indebtedness or other obligation or security issued by, any other Person, or make any loan or advance to, or enter into any arrangement for the purpose of providing funds or credit to, or become a partner or joint venturer in any partnership or joint venture, or enter into any Hedge Agreement, or make any other investment (whether in cash or other Property) in any other Person, or make any commitment or otherwise to agree to do any of the foregoing (all of which are sometimes referred to herein as "Investments"), or permit any of its Subsidiaries so to do, except: (a) Investments in Cash Equivalents on deposit in the Cash Collateral Account; (b) Investments existing on the Effective Date as set forth on Schedule 8.5; (c) (i) Investments of System Cash in the form of deposits in normal business banking accounts in a Qualified Depositary Institution that is subject to an effective Depositary Control Agreement, (ii) Investments in the form of deposits in Payroll Accounts with Qualified Depositary Institutions, (iii) Investments in the form of deposits in Petty Cash Accounts with Qualified Depositary Institutions, (iv) Investments in the form of deposits in Disbursement Account No. 1, and (v) Investments in the form of deposits in Disbursement Account No. 2; (d) Investments in Hedge Agreements, provided that such Investments are used for hedging purposes and in the ordinary course of business; (e) Borrower Intercompany Investments; (f) (i) loans or advances to employees of the Borrower or any of its Subsidiaries (other than any Permitted Holder) for travel and relocation expenses incurred in the ordinary course of business, and (ii) other loans or advances to employees of the Borrower or any of its Subsidiaries (other than any Permitted Holder) in an aggregate outstanding amount not to exceed $1,000,000; (g) Until December 31, 2000, Investments in Marketable Securities existing on the Effective Date as set forth on Schedule 8.5(g), including Marketable Securities received as a dividend or distribution in respect of any 69 77 such Marketable Securities existing on the Effective Date, provided that such Investments are subject to a first priority perfected security interest in favor of the Collateral Agent pursuant to the Security Agreement; (h) Until December 31, 2000, Investments in other securities or to fund managers existing on the Effective Date as set forth on Schedule 8.5(h), including any Investments in other securities or to fund managers received as a dividend or distribution in respect of any such Investments in other securities or to fund managers existing on the Effective Date, provided that such Investments are subject to a first priority perfected security interest in favor of the Collateral Agent pursuant to the Security Agreement. (i) Investments by any Receivables Subsidiary to the extent required pursuant to and in accordance with the Receivables Purchase Documents; (j) Investments in any "strategic alliance" joint marketing arrangement, provided that such Investments do not exceed $750,000 in the aggregate for any fiscal year; (k) Loans made to employees of the Borrower and its Subsidiaries in an aggregate principal amount not to exceed $6,000,000 in order for such employees to purchase equity securities of the Borrower pursuant to an employee stock purchase or similar program; (l) any loan made by the Borrower or any of its Subsidiaries to any Parent, provided that such loan shall be permitted under Section 8.6; and (m) loans or advances to suppliers of the Borrower or any of its Subsidiaries relating to the operations or business thereof in an aggregate outstanding amount not to exceed $250,000 for any single supplier and $1,000,000 for all suppliers. 8.6. Restricted Payments Declare or pay any Restricted Payments payable in cash or otherwise or apply any of its Property thereto or set apart any sum therefor, or permit any of its Subsidiaries so to do, except that: (i) a wholly-owned Subsidiary of the Borrower may declare and pay Restricted Payments to the Borrower or to any Guarantor, and (ii) the Borrower may make demand loans (which loans shall be evidenced by a Demand Note) to any Parent, provided that (a) the aggregate amount of all such loans shall not exceed (1) for the period from the Closing Date until the first anniversary thereof, the unused portion of the Annual Asbestos Basket for such period minus the Parent Letter of Credit Amount minus the Appeal Security Undrawn Amount, (2) for the period from the first anniversary of the Closing Date until the second anniversary of the Closing Date, $20,000,000 (not exceeding $10,000,000 per fiscal quarter of such year) plus the unused portion of the Annual Asbestos Basket for the period from the Closing Date until the second anniversary of the Closing Date minus the Parent Letter of Credit Amount minus the Appeal Security Undrawn Amount, and (3) for the period from the second anniversary of the Closing Date until the third anniversary of the Closing Date, $5,000,000 plus the unused portion of the 70 78 Annual Asbestos Basket for the period from the Closing Date until the third anniversary of the Closing Date plus the unused portion of such $20,000,000 for the period from the first anniversary of the Closing Date until the second anniversary of the Closing Date minus the Parent Letter of Credit Amount minus the Appeal Security Undrawn Amount, and (b) immediately before and after giving effect thereto no Default or Event of Default shall exist. 8.7. Business and Name Changes Materially change the nature of the business of the Borrower and its Subsidiaries taken as a whole as conducted on the Effective Date. 8.8. ERISA Permit or cause any Pension Plan to have a Funded Current Liability Percentage of less than 60%, or increase benefits, or permit any of its Subsidiaries so to do, under any Employee Benefit Plan or establish or contribute to any new Employee Benefit Plan except to the extent that the same could not reasonably be expected to result in a Material Adverse Effect. 8.9. Prepayments of Indebtedness Prepay or obligate itself to prepay, in whole or in part, Indebtedness under any Senior Note Indenture, the Fleet LC Agreement or the Chase Platinum Substitute Note or permit any of its Subsidiaries so to do. 8.10. Amendments, Etc. of Certain Agreements Enter into or agree to any amendment, modification or waiver of any term or condition of its Organizational Documents or any of the Material Agreements in any way that could reasonably be expected to have a Material Adverse Effect, or permit any of its Subsidiaries so to do, or, with respect to the Receivables Purchase Documents, that could reasonably be respected to (x) denigrate the value of the security interest of the Collateral Agent in the Capital Stock of the Receivables Subsidiary or in any other Collateral, including any accounts receivable of the Borrower or any of its Subsidiaries (other than the Receivables Subsidiary) not subject to the documents described in clause (i) of the definition of Receivables Purchase Documents, or (y) restrict the rights of the Collateral Agent to foreclose or otherwise pursue its remedies under the Security Agreement with respect to such Capital Stock or such other Collateral, in either case in comparison to such value or rights in existence under the Receivables Purchase Documents immediately prior to such amendment, modification or waiver (it being understood that advance rates, eligibility requirements, concentration limits and a maturity date (provided such maturity date is later than September 30, 2001) more favorable to the Receivables Subsidiary shall not be deemed to denigrate such value or restrict such rights). 71 79 8.11. Transactions with Affiliates Except with respect to any Restricted Payment permitted by Section 8.6, become a party to any transaction with an Affiliate, or permit any of its Subsidiaries so to do, unless the terms and conditions relating thereto are as favorable to the Borrower or such Subsidiary as those which would be obtainable at the time in a comparable arms-length transaction with a Person other than an Affiliate. 8.12. Limitation on Upstream Transfers Permit or cause any of its Subsidiaries (other than any Receivables Subsidiary) to enter into or agree, or otherwise be or become subject, to any agreement, contract or other arrangement (other than this Agreement and the 2000 Credit Agreement) with any Person pursuant to the terms of which (i) such Subsidiary is or would be prohibited from making any advances to the Borrower or declaring or paying any cash dividends on any class of its Capital Stock owned directly or indirectly by the Borrower or any of the other Subsidiaries or from making any other distribution on account of any class of any such Capital Stock (herein referred to as "Upstream Transfers"), or (ii) the declaration or payment of Upstream Transfers on an annual or cumulative basis is or would be otherwise limited or restricted. 8.13. Capital Leases and Sale-Leaseback Transactions Enter into any arrangement with any Person, or permit any of its Subsidiaries so to do, (i) constituting a Capital Lease or (ii) providing for the leasing (pursuant to a Capital Lease) by the Borrower or such Subsidiary of Property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such Property or rental obligations of the Borrower or such Subsidiary (a "Sale-Leaseback Transaction"), except Capital Leases and Sale-Leaseback Transactions of the Borrower or any of its Subsidiaries existing on the Effective Date as set forth on Schedule 8.13 and Capital Leases permitted under Section 8.1(iv). 8.14. Capital Expenditures Permit Capital Expenditures of the Borrower and the Subsidiaries to exceed (i) for the fiscal quarter ending on or about December 31, 2000, $15,800,000, (ii) from January 1, 2001 through and including December 31, 2001, $40,000,000, (iii) from January 1, 2002 through and including December 31, 2002, $30,000,000 plus the sum of 75% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2001 over $100,000,000 up to $120,000,000 and 100% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2001 over $120,000,000, and (iv) from January 1, 2003 through and including the Maturity Date, $30,000,000 plus the sum of 75% of the excess (up to $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2002 over $100,000,000 up to $120,000,000 and 100% of the excess (up to 72 80 $15,000,000) of Consolidated EBITDA for the four fiscal quarter period ending December 31, 2002 over $120,000,000. In calculating Capital Expenditures for any period set forth above, (i) there should be deducted from Capital Expenditures for such period the amount of any reimbursement due the Borrower or any of its Subsidiaries, but not paid during such period, from lessors under leases, which amount, had it been paid during such period, would have reduced the amount of Capital Expenditures for such period, (ii) there shall be added to Capital Expenditures for such period the amount of any reimbursement paid to the Borrower or any of its Subsidiaries during such period from lessors under leases to the extent such reimbursement had been deducted from Capital Expenditures for a prior period pursuant to clause (i) above, and (iii) there shall be excluded from Capital Expenditures the cost of the Borrower's purchase of platinum in connection with the Chase Platinum Substitute Note. 8.15. Asbestos Costs Permit all costs (including, without limitation, payments, settlements, judgments, the Appeal Security Drawn Amount and legal costs) of the Borrower and its Subsidiaries in connection with asbestos claims to exceed $2,000,000 per fiscal quarter (for any four fiscal quarter period, the "Annual Asbestos Basket"), provided that the Appeal Security Drawn Amount may exceed $2,000,000 per fiscal quarter but shall not exceed $8,000,000 for any four fiscal quarter period and shall be deemed usage of the Annual Asbestos Basket. 8.16. Tax Sharing Payments. Permit any payments made by the Borrower or any of its Subsidiaries under the Tax Sharing Agreement (a) to be on terms other than the terms contained in the Tax Sharing Agreement, and (b) to exceed (i) for the period from the Closing Date through the last day of the fiscal year ending on or about December 31, 2000, $0, (ii) for the fiscal year ending on or about December 31, 2001, $0, and (iii) for the fiscal year ending on or about December 31, 2002 and for each fiscal year thereafter, $5,000,000 for such fiscal year if Consolidated EBITDA for the immediately preceding fiscal year is between $100,000,000 and $120,000,000 and $10,000,000 for such fiscal year if Consolidated EBITDA for the immediately preceding fiscal year is greater than $120,000,000. 9. DEFAULT 9.1. Events of Default The following shall each constitute an "Event of Default" hereunder: (a) The failure of the Borrower to make any payment of principal on any Note, or any reimbursement payment hereunder or under any Reimbursement Agreement, when due and payable; or (b) The failure of the Borrower to make any payment of interest, Fees, expenses or other amounts payable under any Loan Document or otherwise to the Administrative Agent with respect to the loan facilities established hereunder 73 81 within three Business Days of the date when due and payable; or (c) The failure of the Borrower to observe or perform any covenant or agreement contained in Sections 2.8, 7.3, 7.10, 7.11, 7.14 or Section 8; or (d) The failure of any Credit Party to observe or perform any other term, covenant, or agreement contained in any Loan Document and such failure shall have continued unremedied for a period of 30 days after a Responsible Officer of such Credit Party shall have obtained knowledge thereof; or (e) Any representation or warranty made by any Credit Party (or by an officer thereof on its behalf) in any Loan Document or in any certificate, report, opinion (other than an opinion of counsel) or other document delivered or to be delivered pursuant thereto, shall prove to have been incorrect or misleading (whether because of misstatement or omission) in any material respect when made; or (f) (i) Liabilities and/or other obligations of the Borrower (other than its obligations hereunder) or any of its Subsidiaries, whether as principal, guarantor, surety or other obligor, for the payment of any Indebtedness or operating leases ("Debt Obligations") in an aggregate amount in excess of $5,000,000 (A) shall become or shall be declared to be due and payable prior to the expressed maturity thereof, or (B) shall not be paid when due or within any grace period for the payment thereof, or (ii) as a consequence of the occurrence or continuation of any event or condition, the Borrower or any of its Subsidiaries has become obligated to purchase or repay any Debt Obligations in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries before the regularly scheduled maturity date thereof, or (iii) any holder or holders (or any trustee or agent on its or their behalf) of any Debt Obligations in an aggregate amount in excess of $5,000,000 for the Borrower and its Subsidiaries shall have the right to declare such liabilities or obligations due and payable prior to the expressed maturity thereof; or (g) The Borrower or any of its Subsidiaries shall (i) suspend or discontinue its business (except as permitted pursuant to Section 7.3), (ii) make an assignment for the benefit of creditors, (iii) generally not be paying its debts as such debts become due, (iv) admit in writing its inability to pay its debts as they become due, (v) file a voluntary petition in bankruptcy, (vi) become insolvent (however such insolvency shall be evidenced), (vii) file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment of debt, liquidation or dissolution or similar relief under any present or future statute, law or regulation of any jurisdiction, (viii) petition or apply to any tribunal for any receiver, custodian or any trustee for any substantial part of its Property, (ix) be the subject of any such proceeding filed against it which remains undismissed for a period of 60 days, (x) file any answer admitting or not contesting the material allegations of any such petition filed against it or any order, judgment or decree approving such petition in any such proceeding, (xi) seek, approve, consent to, or acquiesce in any such proceeding, or in the appointment of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal agent for it, or any 74 82 substantial part of its Property, or an order is entered appointing any such trustee, receiver, custodian, liquidator or fiscal agent and such order remains in effect for 60 days, or (xii) take any formal action for the purpose of effecting any of the foregoing or looking to the liquidation or dissolution (except as permitted pursuant to Section 7.3) of the Borrower or such Subsidiary; or (h) An order for relief is entered under the bankruptcy or insolvency laws of any jurisdiction or any other decree or order is entered by a court having jurisdiction (i) adjudging the Borrower or any of its Subsidiaries bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization, liquidation, arrangement, adjustment or composition of or in respect of the Borrower or any of its Subsidiaries under the bankruptcy or insolvency laws of any jurisdiction, (iii) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Borrower or any of its Subsidiaries, or of any substantial part of the Property of any thereof, or (iv) ordering the winding up or liquidation of the affairs of the Borrower or any of its Subsidiaries, and any such decree or order continues unstayed and in effect for a period of 60 days; or (i) Judgments or decrees against the Borrower or any of its Subsidiaries aggregating in excess of $5,000,000 for the Borrower and its Subsidiaries shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of 30 days; or (j) Any Loan Document shall cease, for any reason, to be in full force and effect, or any Credit Party shall so assert in writing or shall disavow any of its obligations under any Loan Document; or (k) The occurrence of a Change of Control; or (l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Credit Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents or (ii) as a result of the Collateral Agent's failure to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under any Security Document or any foreclosure, distraint, sale or similar proceedings have been commenced with respect to any Collateral; or (m) any Termination Event shall occur; (ii) any Accumulated Funding Deficiency, whether waived, shall exist with respect to any Pension Plan; (iii) any Person shall engage in any Prohibited Transaction involving any Employee Benefit Plan; (iv) the Borrower, any of its Subsidiaries or any ERISA Affiliate shall fail to pay when due an amount which is payable by it to the PBGC or to a Pension Plan under Title IV of ERISA; (v) the imposition of any tax under Section 4980B(a) of the Code; (vi) the assessment of a civil penalty with respect to any Employee Benefit Plan under Section 502(c) of ERISA; or (vii) any other event or condition shall occur or exist with respect to an Employee Benefit Plan which, in the case of clauses (i) through (vii), individually or in 75 83 the aggregate, would be reasonably likely to constitute a Material Adverse Effect; or (n) the declaration or payment of any Restricted Payment described in clauses (i) and (ii) of the definition of Restricted Payment by, or loan to any shareholder of, G-I Holdings Inc., other than pursuant to a court order expressly permitting such declaration or payment. 9.2. Contract Remedies (a) Upon the occurrence of an Event of Default or at any time thereafter during the continuance thereof, (i) if it is an Event of Default specified in Sections 9.1(g) or 9.1(h), all Revolving Credit Commitments, the Swing Line Commitment and the Letter of Credit Commitment shall immediately and automatically terminate and the Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations owing or contingently owing in respect of all outstanding Letters of Credit and all other amounts owing under the Loan Documents shall immediately become due and payable, and the Borrower shall forthwith deposit an amount equal to the Letter of Credit Exposure of all Lenders in a cash collateral account with and under the exclusive dominion and control of the Collateral Agent, and (ii) if it is any other Event of Default, upon the direction of the Required Lenders the Administrative Agent shall (A) by notice to the Borrower, declare all Revolving Credit Commitments, the Swing Line Commitment, and the Letter of Credit Commitment to be terminated forthwith, whereupon such Revolving Credit Commitments, the Swing Line Commitment and the Letter of Credit Commitment shall immediately terminate, and/or (B) by notice to the Borrower, declare the Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations owing or contingently owing in respect of all outstanding Letters of Credit and all other amounts owing under the Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable, and the Borrower shall forthwith deposit an amount equal to the Letter of Credit Exposure of all Lenders in a cash collateral account with and under the exclusive dominion and control of the Collateral Agent. Except as otherwise provided in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. The Borrower hereby further expressly waives and covenants not to assert any appraisement, valuation, stay, extension, redemption or similar laws, now or at any time hereafter in force which might delay, prevent or otherwise impede the performance or enforcement of any Loan Document. (b) In the event that the Revolving Credit Commitments of all the Lenders, the Swing Line Commitment of the Swing Line Lender and the Letter of Credit Commitment shall have been terminated or the Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations owing or contingently owing in respect of all outstanding Letters of Credit and all other amounts owing under the Loan Documents shall have been declared due and payable pursuant to the provisions of this Section, any funds received by the Administrative Agent, Swing Line Lender, the Issuing Banks and the Lenders from or on behalf of the Borrower shall, subject to the Collateral Agent Agreement, be remitted to 76 84 and applied by the Administrative Agent in the following manner and order: (i) first, to the payment of interest on, and then the principal portion of, any Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed, (ii) second, to reimburse the Administrative Agent, the Swing Line Lender, the Issuing Banks and the Lenders for any expenses due from the Borrower pursuant to the provisions of Section 11.5 and the Reimbursement Agreements, (iii) third, to the payment of the Reimbursement Obligations and the outstanding principal amount of the Swing Line Loans (together with all interest thereon), (iv) fourth, to the payment of the Fees, (v) fifth, to the payment of any other fees, expenses or amounts (other than the principal of and interest on the Loans) payable by the Borrower to the Administrative Agent, the Issuing Banks, the Swing Line Lender or any of the Lenders under the Loan Documents, (vi) sixth, to the payment, pro rata according to the Outstanding Percentage of each Lender, of interest due on the Loans (other than the Swing Line Loans), (vii) seventh, to the payment, pro rata according to the Outstanding Percentage of each Lender, of principal on the Loans (other than the Swing Line Loans), and (viii) eighth, any remaining funds shall be paid to whomsoever shall be entitled thereto or as a court of competent jurisdiction shall direct. 10. THE ADMINISTRATIVE AGENT 10.1. Appointment Each Issuing Bank and each Lender hereby irrevocably designates and appoints BNY as the Administrative Agent of such Issuing Bank and such Lender under the Loan Documents and each Issuing Bank and each Lender hereby irrevocably authorizes the Administrative Agent to take such action on its behalf under the provisions of the Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Loan Documents, together with such other powers as are reasonably incidental thereto. The duties of the Administrative Agent shall be mechanical and administrative in nature, and, notwithstanding any provision to the contrary elsewhere in any Loan Document, the Administrative Agent shall not have any duties or responsibilities other than those expressly set forth therein, or any fiduciary relationship with, or fiduciary duty to, any Issuing Bank or any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent. 10.2. Delegation of Duties The Administrative Agent may execute any of its duties under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to rely upon, and shall be fully protected in, and shall not be under any liability for, relying upon, the advice of counsel concerning all matters pertaining to such duties. 77 85 10.3. Exculpatory Provisions Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan Documents (except the Administrative Agent for its own gross negligence or willful misconduct), or (ii) responsible in any manner to any Issuing Bank or any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any other Credit Party or any officer thereof contained in the Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness, perfection, enforceability or sufficiency of any of the Loan Documents or for any failure of the Borrower or any other Credit Party or any other Person to perform its obligations thereunder. The Administrative Agent shall not be under any obligation to any Issuing Bank or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Loan Documents, or to inspect the Property, books or records of the Borrower or any other Credit Party. Each Issuing Bank and the Lenders acknowledge that the Administrative Agent shall not be under any duty to take any discretionary action permitted under the Loan Documents unless the Administrative Agent shall be instructed in writing to do so by such Issuing Bank and Required Lenders and such instructions shall be binding on such Issuing Bank and all Lenders and all holders of the Notes; provided, however, that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or is contrary to law or any provision of the Loan Documents. The Administrative Agent shall not be under any liability or responsibility whatsoever, as Administrative Agent, to the Borrower or any other Credit Party or any other Person as a consequence of any failure or delay in performance, or any breach, by any Issuing Bank or any Lender of any of its obligations under any of the Loan Documents. 10.4. Reliance by Administrative Agent The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram, telegram, facsimile, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by a proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower or any other Credit Party), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may treat each Issuing Bank or each Lender, as the case may be, or the Person designated in the last notice filed with it under this Section, as the holder of all of the interests of such Issuing Bank or such Lender, as the case may be, in its Loans, Notes, Letters of Credit and Reimbursement Obligations, as applicable, until written notice of transfer, signed by such Issuing Bank or such Lender (or the Person designated in the last notice filed with the Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the 78 86 Administrative Agent, shall have been filed with the Administrative Agent. The Administrative Agent shall not be under any duty to examine or pass upon the validity, effectiveness, enforceability or genuineness of the Loan Documents or any instrument, document or communication furnished pursuant thereto or in connection therewith, and the Administrative Agent shall be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. The Administrative Agent shall be fully justified in failing or refusing to take any action under the Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request or direction of the Required Lenders, and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon the Issuing Banks, all the Lenders and all future holders of the Notes and the Reimbursement Obligations. 10.5. Notice of Default The Administrative Agent shall be deemed not to have knowledge or notice of the occurrence of any Default unless the Administrative Agent has received written notice thereof from an Issuing Bank, a Lender, or the Borrower. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall promptly give notice thereof to the Issuing Banks, the Lenders and the Borrower. 10.6. Non-Reliance on Administrative Agent and Other Lenders Each Issuing Bank and each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter, including any review of the affairs of the Borrower or any other Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Issuing Bank and each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, any Issuing Bank or any Lender, and based on such documents and information as it has deemed appropriate made its own evaluation of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Borrower or any other Credit Party and the value and Lien status of any collateral security and made its own decision to enter into this Agreement. Each Issuing Bank and each Lender also represents that it will, independently and without reliance upon the Administrative Agent, any Issuing Bank or any Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, evaluations and decisions in taking or not taking action under any Loan Document, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Borrower or any other Credit Party and the value and Lien status of any collateral security. Except for notices, reports and other documents expressly required to be furnished to the Issuing Banks and/or the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Issuing Bank or any Lender with any credit or other information concerning the business, operations, Property, financial and other condition or 79 87 creditworthiness of the Borrower or any other Credit Party which at any time may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.7. Indemnification Each Lender agrees to indemnify and hold harmless the Administrative Agent in its capacity as such (to the extent not promptly reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), pro rata according to its Credit Exposure (or at any time when the Aggregate Credit Exposure is zero, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever including, without limitation, any amounts paid to the Lenders (through the Administrative Agent) by the Borrower pursuant to the terms of the Loan Documents, that are subsequently rescinded or avoided, or must otherwise be restored or returned which may at any time (including, without limitation, at any time following the payment of the Loans, the Notes and the Reimbursement Obligations) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other documents contemplated by or referred to therein or the transactions contemplated thereby or any action taken or omitted to be taken by the Administrative Agent under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements to the extent resulting solely from the finally adjudicated gross negligence or willful misconduct of the Administrative Agent. Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its pro rata share of any costs and expenses (including, without limitation, reasonable fees and expenses of counsel) payable by the Borrower under Section 11.5, to the extent that the Administrative Agent has not been paid such fees or has not been reimbursed for such costs and expenses by the Borrower. The failure of any Lender to reimburse the Administrative Agent promptly upon demand for its pro rata share of any amount required to be paid by the Lenders to the Administrative Agent as provided in this Section shall not relieve any other Lender of its obligation hereunder to reimburse the Administrative Agent for its pro rata share of such amount, but no Lender shall be responsible for the failure of other Lender to reimburse the Administrative Agent for such other Lender's pro rata share of such amount. The agreements in this Section shall survive the termination of the Revolving Credit Commitments of all of the Lenders, the Swing Line Commitment of the Swing Line Lender, the Letter of Credit Commitment, and the payment of all amounts payable under the Loan Documents. 10.8. Administrative Agent in Its Individual Capacity BNY and its affiliates may make secured or unsecured loans to, accept deposits from, issue letters of credit for the account of, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower or any other Credit Party as though BNY were not Administrative Agent hereunder 80 88 and BNY Capital Markets did not arrange the transactions contemplated hereby. With respect to the Revolving Credit Commitment and Swing Line Commitment made or renewed by BNY and the Notes issued to, and the Reimbursement Obligations owing to, BNY, BNY shall have the same rights and powers under the Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall in each case include BNY. 10.9. Successor Administrative Agent If at any time the Administrative Agent deems it advisable, in its sole discretion, it may submit to each Issuing Bank and each of the Lenders a written notice of its resignation as Administrative Agent under the Loan Documents, such resignation to be effective upon the earlier of (i) the written acceptance of the duties of the Administrative Agent under the Loan Documents by a successor Administrative Agent and (ii) on the 30th day after the date of such notice. Upon any such resignation, the Required Lenders shall have the right to appoint from among the Lenders a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and accepted such appointment in writing within 30 days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Issuing Banks and the Lenders, appoint a successor Administrative Agent, which successor Administrative Agent shall be a commercial bank organized under the laws of the United States or any State thereof and having a combined capital, surplus, and undivided profits of at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent's rights, powers, privileges and duties as Administrative Agent under the Loan Documents shall be terminated. The Borrower, the other Credit Parties, the Issuing Banks and the Lenders shall execute such documents as shall be necessary to effect such appointment. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of the Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it, and any amounts owing to it, while it was Administrative Agent under the Loan Documents. If at any time there shall not be a duly appointed and acting Administrative Agent, the Borrower agrees to make each payment due under the Loan Documents directly to the Issuing Banks and the Lenders entitled thereto during such time. 10.10. Documentation Agent, Syndication Agent and Lead Arranger The Documentation Agent, the Syndication Agent and the Lead Arranger shall have no duties or obligations under the Loan Documents in their respective capacities as Documentation Agent, Syndication Agent and Lead Arranger. The Documentation Agent, the Syndication Agent and the Lead Arranger shall be entitled to the same protections, indemnities and rights as the Administrative Agent. 81 89 10.11. Appointment of Collateral Agent Each Lender and each Issuing Bank hereby authorizes the Administrative Agent to enter into the Collateral Agent Agreement on behalf of and for the benefit of such Lender or such Issuing Bank and agrees to be bound by the terms of the Collateral Agent Agreement. Each Lender and each Issuing Bank hereby authorizes the Collateral Agent to enter into the Security Documents and to take all action contemplated by the Security Documents. Each Lender and each Issuing Bank agrees that it shall have no right individually to seek or to enforce or to realize upon the security granted by any Security Document, it being understood and agreed that such rights and remedies may be exercised by the Collateral Agent for the benefit of the Secured Parties upon the terms of the Security Documents. 11. OTHER PROVISIONS 11.1. Amendments and Waivers Notwithstanding anything to the contrary contained in any Loan Document, with the written consent of the Required Lenders, the Administrative Agent and the appropriate Credit Parties may, from time to time, enter into written amendments, supplements or modifications thereof and, with the consent of the Required Lenders, the Administrative Agent on behalf of the Swing Line Lender, the Issuing Banks and the Lenders, may execute and deliver to any such Credit Parties a written instrument waiving or consenting to the departure from, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of the Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such amendment, supplement, modification, waiver or consent shall: (a) without the consent of all of the Lenders (i) increase the Revolving Credit Commitment Amount of any Lender or the Aggregate Revolving Credit Commitment Amount, (ii) extend the Revolving Credit Commitment Period, (iii) reduce the amount, or extend the time of payment, of the Revolving Credit Commitment Fee or the Letter of Credit Commissions, (iv) reduce the rate, or extend the time of payment of, interest on any Loan or any Note, (v) reduce the amount, or extend the time of payment of any installment or other payment of principal on any Loan or any Note, (vi) decrease or forgive the principal amount of any Loan or any Note, (vii) consent to any assignment or delegation by the Borrower of any of its rights or obligations under any Loan Document, (viii) except as provided in Section 11.1(e), release all or any part of the Collateral or the obligations of any Guarantor under the Subsidiary Guaranty, (ix) change the provisions of Section 3.5, 3.6, 3.7, 3.9, 3.10, 9.1(a), this Section 11.1 or Section 11.7(a), (x) change the definition of "Required Lenders", (xi) change the several nature of the Lenders' obligations, or (xii) change any provision governing the sharing of payments and liabilities among the Lenders; (b) without the written consent of the Issuing Banks, change the Letter of Credit Commitment, change the amount or the time of payment of the Letter of 82 90 Credit Commissions or the Fronting Fees or change any other term or provision of this Agreement which relates to the Letter of Credit Commitment or the Letters of Credit or any other rights or obligations of the Issuing Banks under any Loan Document; (c) without the written consent of the Administrative Agent, amend, modify or waive any provision of Section 10 or otherwise change any of the rights or obligations of the Administrative Agent hereunder or under the Loan Documents; (d) without the written consent of the Swing Line Lender, change the Swing Line Commitment or change any other term or provision that relates to the Swing Line Commitment or the Swing Line Loans or any other rights or obligations of the Swing Line Lender under any Loan Document; and (e) notwithstanding anything to the contrary contained in this Section 11.1, each of the Lenders (i) hereby authorizes the Administrative Agent, to the extent that the Administrative Agent is acting as the Required Lender Representative under and as such term is defined in the Security Agreement, to instruct the Collateral Agent pursuant to Section 7.1(b) of the Collateral Agent Agreement to release any Collateral (but not the proceeds thereof) in connection with a disposition of such Collateral as permitted by Section 8.4 and (ii) hereby authorizes the Administrative Agent to release all or any of the obligations of any Guarantor under the Subsidiary Guaranty in connection with a Disposition of such Guarantor as permitted by Section 8.4 or a dissolution of such Guarantor as permitted by Section 7.3. Any such amendment, supplement, modification, waiver or consent shall apply equally to the Administrative Agent, the Swing Line Lender, the Issuing Banks and each of the Lenders and shall be binding upon the parties to the applicable Loan Document, the Lenders, the Issuing Banks, the Administrative Agent, the Swing Line Lender and all future holders of the Notes and the Reimbursement Obligations. In the case of any waiver, the parties to the applicable Loan Document, the Issuing Banks, the Lenders, the Swing Line Lender and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Notes and other Loan Documents to the extent provided for in such waiver, and any Default or Event of Default waived shall not extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 11.2. Notices All notices, requests and demands to or upon the respective parties to the Loan Documents to be effective shall be in writing and, unless otherwise expressly provided therein, shall be deemed to have been duly given or made when delivered by hand, one Business Day after having been sent by overnight courier service, three Business Days after having been deposited in the mail, first-class postage prepaid, or, in the case of notice by facsimile, when sent, addressed as follows in the case of the Borrower, the Administrative Agent or the Swing Line Lender, and as set forth in Schedule 11.2 in the case of each Lender and each Issuing Bank, or addressed to such other addresses as to which 83 91 the Administrative Agent may be hereafter notified by the respective parties thereto or any future holders of the Notes: The Borrower: Building Materials Corporation of America 1361 Alps Road Wayne, New Jersey 07470 Attention: Treasurer Telephone: (973) 628-3000 Facsimile: (973) 628-3326 The Administrative Agent or the Swing Line Lender: The Bank of New York One Wall Street Agency Function Administration 18th Floor New York, New York 10286 Attention: Sandra Morgan Telephone: (212) 635-4692 Facsimile: (212) 635-6365 with a copy to: The Bank of New York One Wall Street New York, New York 10286 Attention: David Judge, Senior Vice President Telephone: (212) 635-6861 Facsimile: (212) 635-7498, except that any notice, request or demand by the Borrower to or upon the Administrative Agent, the Swing Line Lender, the Issuing Banks or the Lenders pursuant to Sections 2.5, 2.9 or 3.3 shall not be effective until received. Any party to a Loan Document may rely on signatures of the parties thereto which are transmitted by facsimile or other electronic means as fully as if originally signed. 11.3. No Waiver; Cumulative Remedies No failure to exercise and no delay in exercising, on the part of the Administrative Agent, any Issuing Bank, the Swing Line Lender or any Lender, any right, remedy, power or privilege under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any Loan Document preclude any other or further 84 92 exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges under the Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 11.4. Survival of Representations and Warranties and Certain Obligations (a) All representations and warranties made under the Loan Documents and in any document, certificate or statement delivered pursuant thereto or in connection therewith shall survive the execution and delivery of the Loan Documents. (b) The obligations of the Borrower under Sections 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 11.5 and 11.8 shall survive the termination of the Revolving Credit Commitments of all of the Lenders, the Swing Line Commitment, the Letter of Credit Commitment and the payment of the Loans, the Reimbursement Obligations and all other amounts payable under the Loan Documents. 11.5. Expenses The Borrower agrees, promptly upon presentation of a statement or invoice therefor, and whether any Loan is made or any Letter of Credit is issued (i) to pay or reimburse the Administrative Agent and BNY Capital Markets for all their respective out-of-pocket costs and expenses reasonably incurred in connection with the development, preparation, execution and syndication of, the Loan Documents and any amendment, supplement or modification thereto (whether or not executed or effective), any documents prepared in connection therewith and the consummation of the transactions contemplated thereby, including the fees and disbursements of Special Counsel, Wachtell, Lipton, Rosen & Katz and Policano & Manzo, (ii) to pay or reimburse the Issuing Banks, the Administrative Agent, the Swing Line Lender and the Lenders for all of its costs and expenses, including reasonable fees and disbursements of counsel, incurred in connection with (A) any Default or Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether consummated or not) of the obligations of any Credit Party under any of the Loan Documents and (B) the enforcement of this Section and (iii) to pay, indemnify, and hold the Issuing Banks, the Lenders, the Swing Line Lender and the Administrative Agent harmless from and against, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, the Loan Documents and any such other documents, and (iv) to pay, indemnify and hold the Issuing Banks, the Lenders, the Swing Line Lender and the Administrative Agent and each of its officers, directors and employees harmless from and against any and all other liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including reasonable counsel fees and disbursements) with respect to the enforcement and 85 93 performance of the Loan Documents, the use of the proceeds of the Loans and the Letters of Credit and the enforcement and performance of the provisions of any subordination agreement involving the Administrative Agent and the Lenders (all the foregoing, collectively, the "Indemnified Liabilities") and, if and to the extent that the foregoing indemnity may be unenforceable for any reason, the Borrower agrees to make the maximum payment not prohibited under applicable law; provided, however, that the Borrower shall have no obligation to pay Indemnified Liabilities to the Administrative Agent, the Swing Line Lender, any Issuing Bank or any Lender arising from the finally adjudicated gross negligence or willful misconduct of the Administrative Agent, the Swing Line Lender, such Issuing Bank or such Lender. The agreements in this Section shall survive the termination of the Commitments and the payment of all amounts payable under the Loan Documents. The Borrower agrees to pay on the date of this Agreement all fees for which invoices have been received of Bryan Cave LLP, Wachtell, Lipton, Rosen & Katz and Policano & Manzo in connection with the development, preparation, negotiation and execution of the Loan Documents and the transactions contemplated thereby. 11.6. Lending Offices Each Lender agrees that, upon the occurrence of any event giving rise to any increased cost or indemnity under Sections 3.6, 3.7 and 3.10 with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans and Reimbursement Obligations affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Sections 3.5, 3.6, 3.7 and 3.10. 11.7. Successors and Assigns (a) This Agreement, the Notes and the other Loan Documents to which the Borrower is a party shall be binding upon and inure to the benefit of the Borrower, the Issuing Banks, the Swing Line Lender, the Administrative Agent, the Lenders, all future holders of the Notes and Reimbursement Obligations and their respective successors and assigns. Neither the Borrower nor any other Credit Party shall delegate any obligation or duty under any Loan Document without the prior written consent of each Issuing Bank, the Swing Line Lender, the Administrative Agent and each Lender. (b) Subject to Section 11.7(e), each Lender, the Swing Line Lender and each Issuing Bank may at any time assign all or any portion of its rights under any Loan Document to any Federal Reserve Bank. (c) In addition to its rights under Section 11.7(b), each Lender shall have the right to sell, assign, transfer or negotiate (each an "Assignment") all or any portion of all of its Loans, its Commitments and its Notes and its 86 94 interest in the Loan Documents to any subsidiary or Affiliate of such Lender, to any other Lender or, with the prior written consent of each Issuing Bank that has a Letter of Credit outstanding, the Administrative Agent and the Swing Line Lender (which consents shall not be unreasonably withheld), to any bank, savings and loan institution, insurance company, thrift institution, pension fund, mutual fund (provided that no Affiliated Fund Distressed Debt Group shall own more than 30% of the aggregate Loans and Commitments) or, subject to the consent of the Borrower (such consent not to be unreasonably withheld or delayed), other financial institution, provided that (i) each such Assignment shall be of a constant, and not a varying, percentage of all of the assignor Lender's rights and obligations under the Loan Documents, (ii) the Revolving Credit Commitment Amount of the Commitments assigned shall be not less than $5,000,000 or the full Revolving Credit Commitment Amount of such assignor Lender's Commitments, and (iii) the assignor Lender and such assignee shall deliver to the Administrative Agent three copies of an Assignment and Acceptance Agreement executed by each of them, along with an assignment fee in the sum of $3,500 for the account of the Administrative Agent. Upon receipt of such number of executed copies of each such Assignment and Acceptance Agreement together with the assignment fee therefor and the Borrower's consent to such Assignment, if required, the Administrative Agent shall record the same and execute not less than two copies of such Assignment and Acceptance Agreement in the appropriate place, deliver one such copy to the assignor and one such copy to the assignee, and deliver one photocopy thereof, as executed, to the Borrower. From and after the Assignment Effective Date specified in, and as defined in, such Assignment and Acceptance Agreement, the assignee thereunder shall be a party hereto and shall for all purposes of this Agreement and the other Loan Documents be deemed a "Lender" and, to the extent provided in such Assignment and Acceptance Agreement, the assignor Lender thereunder shall be released from its obligations under this Agreement and the other Loan Documents. The Borrower agrees that, if requested, in connection with each such Assignment, it shall at its own cost and expense execute and deliver (1) to the Administrative Agent or such assignee a Revolving Credit Note in a maximum principal amount equal to the Revolving Credit Commitment Amount of the Commitments assumed by such assignee, and (2) to the Administrative Agent or such assignor Lender, in the event that such assignor Lender shall not have assigned all of its Commitments, a Revolving Credit Note in a maximum principal amount equal to the Commitment Amount of the Commitment retained by such assignor, in each case either in escrow pending the delivery of, or against receipt of, such assignor Lender's existing Revolving Credit Note. The Administrative Agent shall be entitled to rely upon the representations and warranties made by the assignee under each Assignment and Acceptance Agreement. (d) In addition to the participations provided for in Section 11.11(b), each Lender may grant participations in all or any part of its Loans, its Notes and its Commitments to one or more banks, insurance companies, pension funds, mutual funds or other financial institutions, provided that (i) such Lender's obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties to this Agreement and the other Loan Documents for the performance of such 87 95 obligations, (iii) the Borrower, the Swing Line Lender, the Issuing Banks, the Administrative Agent 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 the other Loan Documents, (iv) the granting of such participation does not require that any additional loss, cost or expense be borne by the Borrower at any time, and (v) the voting rights of any holder of any participation shall be limited to decisions that in accordance with Section 11.1 require the consent of all of the Lenders. The Borrower acknowledges and agrees that any such participant shall for purposes of Section 3.5, 3.6, 3.10 and 11.5 be deemed to be a "Lender", provided that in no event shall the Borrower be liable for any amounts under said Sections in excess of the amounts for which it would be liable but for such participation. (e) No Lender shall, as between and among the Borrower, the Administrative Agent, the Swing Line Lender, the Issuing Banks and such Lender, be relieved of any of its obligations under the Loan Documents as a result of any assignment of or granting of participations in, all or any part of its Loans, its Commitments and its Notes, except that a Lender shall be relieved of its obligations to the extent of any such assignment of all or any part of its Loans, its Commitments or its Notes pursuant to Section 11.7(c). 11.8. Indemnity The Borrower agrees to defend, protect, indemnify, and hold harmless the Administrative Agent, BNY Capital Markets, the Issuing Banks, the Swing Line Lender and each and all of the Lenders, each of their respective Affiliates and each of the respective officers, directors, employees and agents of each of the foregoing (each an "Indemnified Person" and, collectively, the "Indemnified Persons") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel to such Indemnified Persons in connection with any investigative, administrative or judicial proceeding, whether direct, indirect or consequential and whether based on any federal or state laws or other statutory regulations, including securities and commercial laws and regulations, under common law or at equitable cause, or on contract or otherwise, including any liabilities and costs under environmental laws, Federal, state or local health or safety laws, regulations, or common law principles, arising from or in connection with the past, present or future operations of the Borrower, any other Credit Party, or their respective predecessors in interest, or the past, present or future environmental condition of the Property of the Borrower or any of its Subsidiaries, the presence of asbestos-containing materials at any such Property, or the release or threatened release of any hazardous substance into the environment from any such Property) in any manner relating to or arising out of the Loan Documents or the transactions contemplated thereby, any commitment letter or fee letter executed between or among (x) the Borrower or any of its Subsidiaries, and (y) the Swing Line Lender, an Issuing Bank and/or the Administrative Agent, the capitalization of the Borrower or any of its Subsidiaries, the Commitments, the Letter of Credit Commitment, the making of, issuance of, management of and participation in the Loans or the Letters of Credit, or the use or intended use of the Letters of Credit and the proceeds of the Loans hereunder, provided that the Borrower shall have no obligation under this Section to an Indemnified Person with respect to any of the foregoing to 88 96 the extent found in a final judgment of a court having jurisdiction to have resulted primarily out of the gross negligence or willful misconduct of such Indemnified Person. The indemnity set forth herein shall be in addition to any other obligations or liabilities of the Borrower to each Indemnified Person under the Loan Documents or at common law or otherwise, and shall survive any termination of the Loan Documents, the expiration of the Revolving Credit Commitments, the Letter of Credit Commitment, the Swing Line Commitment and the payment of all Indebtedness of the Credit Parties under the Loan Documents. 11.9. Limitation of Liability No claim may be made by the Borrower, any of its Subsidiaries, any other Credit Party, any Lender, any Issuing Bank or other Person against the Administrative Agent, any Lender, any Issuing Bank or the Swing Line Lender or any directors, officers, employees, or agents of any of them, for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by any Loan Document, or any act, omission or event occurring in connection therewith, and each of the Borrower, its Subsidiaries, such other Credit Party, any such Lender, any such Issuing Bank or other Person hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 11.10. Counterparts Each Loan Document (other than the Notes) may be executed by one or more of the parties thereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same document. It shall not be necessary in making proof of any Loan Document to produce or account for more than one counterpart signed by the party to be charged. A counterpart of any Loan Document or to any document evidencing, and of any amendment, modification, consent or waiver to or of any Loan Document transmitted by facsimile shall be deemed to be an originally executed counterpart. A set of the copies of the Loan Documents signed by all the parties thereto shall be deposited with each of the Borrower and the Administrative Agent. Any party to a Loan Document may rely upon the signatures of any other party thereto which are transmitted by facsimile or other electronic means to the same extent as if originally signed. 11.11. Adjustments; Set-off (a) In addition to any rights and remedies of each Lender provided by law, upon the occurrence of an Event of Default and acceleration of the Notes, or at any time upon the occurrence and during the continuance of an Event of Default under Sections 9.1(a) or 9.1(b), each Lender, the Swing Line Lender and each Issuing Bank shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, to set-off and apply against any indebtedness or other liability, whether matured or unmatured, of the Borrower to such Lender, the Swing Line Lender or such Issuing Bank arising under the Loan Documents, any 89 97 amount owing from such Lender, the Swing Line Lender or such Issuing Bank to the Borrower. To the extent permitted by applicable law, the aforesaid right of set-off may be exercised by such Lender, the Swing Line Lender or such Issuing Bank against the Borrower or against any trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor of the Borrower, or against anyone else claiming through or against the Borrower or such trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receivers, or execution, judgment or attachment creditors, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender, the Swing Line Lender or such Issuing Bank prior to the making, filing or issuance of, service upon such Lender, the Swing Line Lender or such Issuing Bank of, or notice to such Lender, the Swing Line Lender or such Issuing Bank of, any petition, assignment for the benefit of creditors, appointment or application for the appointment of a receiver, or issuance of execution, subpoena, order or warrant. Each Lender, the Swing Line Lender and each Issuing Bank agrees promptly to notify the Borrower and the Administrative Agent after each such set-off and application made by such Lender, the Swing Line Lender or such Issuing Bank, as the case may be, provided that the failure to give such notice shall not affect the validity of such set-off and application. (b) If any Lender, the Swing Line Lender or any Issuing Bank shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of its Loans, its Notes or Reimbursement Obligations in excess of its Outstanding Percentage of payments then due and payable on account of the Loans, the Notes or Reimbursement Obligations received by all the Lenders, the Swing Line Lender and the Issuing Banks, such Lender, the Swing Line Lender or such Issuing Bank, as the case may be, shall forthwith purchase, without recourse, for cash, from the other Lenders, the Swing Line Lender and the Issuing Banks such participations in their Loans, Notes and Reimbursement Obligations as shall be necessary to cause such purchaser to share such excess payment with each of them according to their Outstanding Percentages, provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchaser, such purchase shall be rescinded and the related seller shall repay to such purchaser the purchase price to the extent of such recovery, together with an amount equal to such seller's pro rata share (according to the proportion of (i) the amount of all other related required repayments to (ii) the total amount so recovered from the purchaser) of any interest or other amount paid or payable by the purchaser in respect of the total amount so recovered. 11.12. Construction Each party to a Loan Document represents that it has been represented by counsel in connection with the Loan Documents and the transactions contemplated thereby and that the principle that agreements are to be construed against the party drafting the same shall be inapplicable. 90 98 11.13. Governing Law The Loan Documents and the rights and obligations of the parties thereunder shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New York, without regard to principles of conflict of laws, but including Section 5-1401 of the General Obligations Law. 11.14. Headings Descriptive Section headings have been inserted in the Loan Documents for convenience only and shall not be construed to be a part thereof. 11.15. Severability Every provision of the Loan Documents is intended to be severable, and if any term or provision thereof shall be invalid, illegal or unenforceable for any reason, the validity, legality and enforceability of the remaining provisions thereof shall not be affected or impaired thereby, and any invalidity, illegality or unenforceability in any jurisdiction shall not affect the validity, legality or enforceability of any such term or provision in any other jurisdiction. 11.16. Integration All exhibits to a Loan Document shall be deemed to be a part thereof. Except for agreements between the Administrative Agent, the Swing Line Lender and/or an Issuing Bank and the Borrower with respect to certain fees, the Loan Documents embody the entire agreement and understanding among the Borrower, the Administrative Agent, the Swing Line Lender, the Issuing Banks and the Lenders with respect to the subject matter thereof and supersede all prior agreements and understandings among them with respect to the subject matter thereof. 11.17. Consent to Jurisdiction Each party to a Loan Document hereby irrevocably submits to the jurisdiction of any New York State or Federal court sitting in the City of New York over any suit, action or proceeding arising out of or relating to the Loan Documents. Each party to a Loan Document hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each Credit Party hereby agrees that a final judgment in any such suit, action or proceeding brought in such a court, after all appropriate appeals, shall be conclusive and binding upon it. 11.18. Service of Process Each party to a Loan Document hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by first class mail, return receipt requested or by overnight courier service, to 91 99 the address of such party set forth in Section 11.2 of the applicable Loan Document executed by such party. Each party to a Loan Document hereby agrees that any such service (i) shall be deemed in every respect effective service of process upon it in any such suit, action, or proceeding, and (ii) shall to the fullest extent enforceable by law, be taken and held to be valid personal service upon and personal delivery to it. 11.19. No Limitation on Service or Suit Nothing in the Loan Documents or any modification, waiver, consent or amendment thereto shall affect the right of the Borrower, the Administrative Agent, the Swing Line Lender, any Issuing Bank or any Lender to serve process in any manner permitted by law or limit the right of the Administrative Agent, the Swing Line Lender, any Issuing Bank or any Lender to bring proceedings against any Credit Party in the courts of any jurisdiction or jurisdictions in which such Credit Party may be served. 11.20. WAIVER OF TRIAL BY JURY EACH OF THE ADMINISTRATIVE AGENT, THE SWING LINE LENDER, THE ISSUING BANKS, THE LENDERS, AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE SWING LINE LENDER, THE ISSUING BANKS, THE ADMINISTRATIVE AGENT, OR THE LENDERS, OR COUNSEL TO THE SWING LINE LENDER, THE ISSUING BANKS, THE ADMINISTRATIVE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SWING LINE LENDER, THE ISSUING BANKS, THE ADMINISTRATIVE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE BORROWER ACKNOWLEDGES THAT THE SWING LINE LENDER, THE ISSUING BANKS, THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION. 11.21. Treatment of Confidential Information Each Lender, the Issuing Bank, each Swing Line Lender and the Administrative Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of the same nature, all non-public information supplied by the Borrower or any of its Subsidiaries pursuant to this Agreement which (a) is identified by such Person as being confidential at the time the same is delivered to such Lender, such Issuing Bank, the Swing Line 92 100 Lender or the Administrative Agent, or (b) constitutes any financial statement, financial projection or forecast, budget, compliance certificate, audit report, management letter or accountants' certification delivered hereunder, provided, however, that nothing herein shall limit the disclosure of any such information (i) to the extent required by law, rule, regulation or judicial process, provided that, unless prohibited by applicable law or court order, each Lender, each Issuing Bank, the Swing Line Lender and the Administrative Agent, prior to the disclosure thereof, shall endeavor to notify the Borrower of any request for disclosure of any such confidential information by any governmental agency or representative thereof (other than in connection with an examination of the financial condition of such Issuing Bank, such Lender, the Swing Line Lender or the Administrative Agent by such governmental agency) or pursuant to legal process, (ii) on a confidential basis, to counsel to any Lender, any Issuing Bank, the Swing Line Lender or the Administrative Agent, (iii) to bank examiners, auditors or accountants, and any analogous counterpart thereof, (iv) to the Administrative Agent, the Lenders, the Swing Line Lender or the Issuing Banks, (v) in connection with any litigation or proceeding to which any one or more of the Lenders, the Issuing Banks, the Swing Line Lender or the Administrative Agent is a party, (vi) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) agrees to keep such information confidential on substantially the same basis as set forth in this Section, or (vii) to affiliates of the Administrative Agent, the Swing Line Lender, each Lender and each Issuing Bank, so long as such affiliate agrees to keep such information confidential on substantially the same basis as set forth in this Section. 11.22. Conversion of DIP In the event that the Borrower shall become the subject of any bankruptcy proceedings under Chapter 11 of Title 11 of the United States Code, the Lenders and the Issuing Banks, together with the Lenders and the Issuing Banks under and as defined in the 2000 Credit Agreement, The Chase Manhattan Bank under the Chase Platinum Substitute Note and Fleet National Bank under the Fleet LC Agreement, in each case severally and not jointly and based on their respective interests at the time in this Agreement, the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, and the Borrower agree, subject to receipt of all appropriate bankruptcy court approvals, to refinance and consolidate in full the indebtedness evidenced by (i) this Agreement, the Notes and the Letters of Credit, (ii) the 2000 Credit Agreement and the Notes and Letters of Credit under and as defined in the 2000 Credit Agreement, (iii) the Chase Platinum Substitute Note and (iv) the Fleet LC Agreement with a new debtor-in-possession credit facility (the "DIP Facility"), on terms and conditions (including a first priority perfected security interest on all of the Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) and an administrative claim against all estates, and the Borrower agrees to use its best efforts to provide a super priority administrative claim against such estates) substantially identical to this Agreement, the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement in an aggregate amount (not exceeding $210,000,000 plus the principal amount of the Chase Platinum Substitute Note and the principal amount of the Fleet LC) equal to the Aggregate Revolving Credit Commitment Amount under and as defined in the 2000 Credit Agreement at the time plus $110,000,000 plus 93 101 the principal amount of the Chase Platinum Substitute Note and the principal amount of the Fleet LC, which DIP Facility will (i) refinance in full all Loans and Letters of Credit under this Agreement, all Loans and Letters of Credit under and as defined in the 2000 Credit Agreement, and all obligations under the Chase Platinum Substitute Note and the Fleet LC Agreement, whereupon this Agreement, the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement will terminate, (ii) mature on August 18, 2004, (iii) allow for the cash payment of interest on the Senior Note Indentures, except that no interest may be paid on the Senior Note Indentures at any time during the continuance of a Default or Event of Default under the DIP Facility or if the Borrower shall not at the time have a Fixed Charge Coverage Ratio (as defined below) of greater than 1.50:1.00 (such Fixed Charge Ratio to be included in the DIP Facility), (iv) provide that Section 8.15 would no longer be applicable, provided that any asbestos costs and expenses of the Borrower and its Subsidiaries that are allocable to any Parent would reduce by an equal amount the amount available for loans made to any Parent under Section 8.6(ii), and (v) if the DIP Facility is not consummated pursuant to a final court order (which order is in effect and not stayed and not under appeal, provided that an order that may be, but has not been, appealed shall be considered final) within 45 days of the Borrower becoming the subject of any such bankruptcy proceedings, an Event of Default (or similar event) shall have been deemed to occur under this Agreement, the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, upon which, in addition to all other rights and remedies available at such time, the default rate of interest and the default rate on letter of credit commissions under each such agreement, if not otherwise in effect, shall become applicable, commencing on the 46th day after the Borrower shall have become the subject of any such bankruptcy proceedings. For purposes hereof, "Fixed Charge Coverage Ratio" shall mean the ratio of (x) Consolidated EBITDA to (y) the sum, without duplication, of all cash payments made in respect of Indebtedness (including all principal, interest, commitment fees, letter of credit fees, and similar fees), capital expenditures, Restricted Payments, loans and other advances and payments (including payments made under the Tax Sharing Agreement) to any Parent or Affiliate, and all restructuring, administration and other expenses and charges (to the extent such expenses and charges are not included (but are not expressly excluded) in the determination of Consolidated EBITDA), in each case determined on a Consolidated basis in accordance with GAAP for the four fiscal quarter period ending on the date of calculation or, if the date of calculation is not the last day of a fiscal quarter, for the immediately preceding four fiscal quarters. Prior to bankruptcy court approval of the DIP Facility, if no Event of Default shall exist and be continuing (including, without limitation, an Event of Default caused by the provisions of clause (v) in the preceding paragraph), the Borrower shall be entitled to use cash collateral for all purposes permitted under this Agreement as long as the Lenders are granted adequate protection in the form of a first priority perfected replacement lien on all postpetition accounts receivable and inventory and a super priority administrative claim against all estates, provided, however, if the bankruptcy court does not grant such adequate protection on the first day the order for relief is in effect, the Borrower may use cash collateral for three Business Days for ordinary course purposes. The Lenders agree that any interim or final order approving the DIP Facility may not constitute a determination as to any third parties (specifically excluding the Borrower) regarding whether the Lenders are entitled 94 102 to receive postpetition interest, fees or administrative status on refinanced prepetition indebtedness (except as otherwise provided in such interim or final order and approved by the bankruptcy court). If (i) a Title 11 case in respect of the Borrower is commenced less than 91 days after the Liens under the Security Documents have been perfected with respect to the obligations outstanding under this Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, (ii) no Loans or Letters of Credit (in each case under and as defined in the 2000 Credit Agreement) have been made or issued under the 2000 Credit Agreement, and (iii) the final order approving the DIP Facility does not provide that such obligations shall be refinanced with proceeds from the DIP Facility, then, in addition to all other rights and remedies available at such time, the commitment amount of the DIP Facility shall be reduced to reflect that such obligations shall not be so refinanced. If the Borrower is in compliance with all conditions precedent under Section 6 of this Agreement, the Lenders shall not assert any defense that may otherwise be available under Bankruptcy Code section 365(c) with respect to Lenders' obligations herein concerning the DIP Facility. Notwithstanding the foregoing, if the Lenders do not furnish the DIP Facility, or the bankruptcy court does not approve it, the Borrower does not waive any rights it has under Title 11 of the United States Code or otherwise. Notwithstanding the foregoing, if the Borrower does not accept the DIP Facility, or the bankruptcy court does not approve it, the Lenders do not waive any rights they have under Title 11 of the United States Code or otherwise. If and when the DIP Facility is approved by the bankruptcy court, the Borrower may use its funds for all valid corporate purposes, including, without limitation, professional fees, as long as there is no default under the DIP Facility (including any default of any covenant limiting such use). The DIP Facility shall include a carveout of $7,500,000 for professional services. If (i) either (a) this Agreement shall not have become effective in accordance with Section 5 due solely to an order of a court of competent jurisdiction enjoining the Borrower or any of its Subsidiaries from satisfying any of the conditions to effectiveness set forth in Section 5 and no Default or Event of Default shall otherwise exist or (b) this Agreement shall have become so effective, the Borrower or any of its Subsidiaries shall not be permitted to perform its obligations under this Agreement that relate to the granting or delivery of Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) within the applicable time periods prescribed thereby due solely to an order of a court of competent jurisdiction issued within nine months of the Effective Date enjoining the Borrower or any of its Subsidiaries from performing any of such obligations within such applicable prescribed time periods (and the Lenders shall not have agreed to waive such failure to perform), the DIP Facility shall not have become effective and no other Default or Event of Default shall exist and (ii) the Borrower shall not be able to obtain an alternate debtor-in-possession credit facility on reasonable terms in an amount not exceeding $100,000,000 (an "Alternate DIP Facility") 95 103 without priming the liens on the Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) securing this Agreement, the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, then (x) an Alternate DIP Facility shall be permitted to prime such liens on the Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) and (y) such Alternate DIP Facility may, if such Alternate DIP Facility so requires, restrict the payment of interest on this Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, provided that (A) the 2000 Credit Agreement shall be immediately terminated and all principal, interest, letter of credit obligations and other obligations thereunder shall have been paid in full in cash and (B) this Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement shall continue to be secured by a perfected security interest in all Collateral (including a Mortgage on each Mortgaged Property listed on Part B of Schedule 1.1(m)) subject only to the prior lien of such Alternate DIP Facility. 11.23. Consolidation and Restatement In the event that the Borrower shall not have become the subject of any bankruptcy proceedings for a period of at least 91 days after the Effective Date, the Borrower and the Lenders hereby agree that this Agreement shall be consolidated with the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement in one consolidated and restated credit agreement on terms and conditions substantially identical (mutatis mutandis) to this Agreement, the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement, which consolidated and restated credit agreement shall become effective upon the execution and delivery thereof by the Administrative Agent, the Administrative Agent (under and as defined in the 2000 Credit Agreement), The Chase Manhattan Bank, under the Chase Platinum Substitute Note, Fleet National Bank, under the Fleet LC Agreement, and the Borrower. 11.24. Effectiveness; Marketable Securities (a) Notwithstanding anything to the contrary contained in this Agreement, (i) Sections 8.3, 8.4 (without giving effect to the proviso at the end thereof), 8.6, 8.16, 10.7, 11.5, 11.8, 11.9, 11.10, 11.12, 11.13, 11.14, 11.15, 11.16, 11.17, 11.18, 11.19, 11.20, 11.21, the last paragraph of Section 11.22 (other than clause (i)(b) contained therein), this Section 11.24 and Section 11.25 shall become effective upon the Closing Date, and (ii) on January 17, 2001, unless the Effective Date shall have occurred prior to such date, (A) Sections 8.3, 8.4, 8.6, 8.16, the last paragraph of Section 11.22 (other than clause (i)(b) contained therein), Section 11.24(b) and Section 11.25 shall terminate, and (B) Sections 10.7, 11.5, 11.8, 11.9, 11.10, 11.12, 11.13, 11.14, 11.15, 11.16, 11.17, 11.18, 11.19, 11.20, 11.21 and 11.24(a) shall survive and continue to be in full force and effect. (b) Notwithstanding anything to the contrary contained in this Agreement, during the period beginning on the Closing Date and ending on the Effective Date, the Borrower shall, and shall cause each Subsidiary to, maintain on deposit all of its Marketable Securities and any Proceeds (as defined in the 96 104 Security Agreement) therefrom with Bear, Stearns & Co. Inc. in the account such Marketable Securities are being held as of the Closing Date, provided that cash Proceeds from such Marketable Securities may be transferred to accounts at one or more of the Lenders. 11.25. Existing Credit Agreement Financial Covenants Notwithstanding anything to the contrary contained in this Agreement or the Existing Credit Agreement, during the period from and including the Closing Date through and including the earlier to occur of the Effective Date or January 16, 2001 (the "Covenant Replacement Period") the financial covenants contained in Section 7.10 of this Agreement shall replace the financial covenants contained in Section 7.10 of the Existing Credit Agreement, provided that the Aggregate Credit Exposure under and as defined in the Existing Credit Agreement shall not at any time during the Covenant Replacement Period exceed the Aggregate Credit Exposure under and as defined in the Existing Credit Agreement as of the Closing Date. 97 105 BUILDING MATERIALS CORPORATION OF AMERICA AMENDED AND RESTATED CREDIT AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Credit Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ---------------------------------------- Name: Susan B. Yoss --------------------------------------- Title: Senior Vice President and Treasurer --------------------------------------- THE BANK OF NEW YORK, as Swing Line Lender, as an Issuing Bank, as Administrative Agent and as a Lender By: /s/ David C. Judge ---------------------------------------- Name: David C. Judge --------------------------------------- Title: Senior Vice President --------------------------------------- FLEET NATIONAL BANK By: /s/ Peggy Peckham ---------------------------------------- Name: Peggy Peckham --------------------------------------- Title: Senior Vice President --------------------------------------- THE CHASE MANHATTAN BANK, as an Issuing Bank and as a Lender By: /s/ Peter A. Dedonsis ---------------------------------------- Name: Peter A. Dedonsis --------------------------------------- Title: Managing Director --------------------------------------- THE BANK OF NOVA SCOTIA By: /s/ Daniel A. Costigan ---------------------------------------- Name: Daniel A. Costigan --------------------------------------- Title: Director --------------------------------------- 98 106 BUILDING MATERIALS CORPORATION OF AMERICA AMENDED AND RESTATED CREDIT AGREEMENT BEAR STEARNS CORPORATE LENDING INC. By: /s/ Victor T. Bulzacchelli --------------------------------------- Name: Victor T. Bulzacchelli --------------------------------------- Title: Managing Director --------------------------------------- 99 EX-10.16 16 y46546ex10-16.txt AMENDMENT NO. 1 TO AMENDED & RESTATED CREDIT AGMT 1 Exhibit 10.16 ------------- AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT ------------------------------------- AMENDMENT NO. 1, dated as of December 22, 2000 (this "Amendment"), to the Amended and Restated Credit Agreement, dated as of December 4, 2000 (the "Credit Agreement"), by and among Building Materials Corporation of America (the "Borrower"), the Lenders party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as administrative agent (the "Administrative Agent"). RECITALS -------- I. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. II. The Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement upon the terms and conditions contained in this Amendment, and the Administrative Agent and the Required Lenders are willing so to do. Accordingly, in consideration of the Recitals and the covenants and conditions hereinafter set forth, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Section 1.1 is amended by amending and restating the definition of "Applicable Margin" in its entirety to read as follows: "Applicable Margin": a rate per annum equal to (i) with respect to ABR Advances, 0.00%, and (ii) with respect to Eurodollar Advances, 2.64%; provided that if at any time during the pendency of a BMCA Bankruptcy (as defined in the Collateral Agent Agreement), (A) the Senior Note Lien Avoidance (as defined in the Collateral Agent Agreement) has occurred, (B) the 1999 Liens (as defined in the Collateral Agent Agreement) remain in full force and effect, and (C) the DIP Facility shall have come into effect, then, for the period from and after such time as such Senior Note Lien Avoidance shall have occurred, the Applicable Margin under the DIP Facility shall be increased by 1%. 2. Section 1.1 is amended by amending and restating the definition of "Depositary Control Agreement" in its entirety to read as follows: "Depositary Control Agreement": an agreement among a Credit Party, a Qualified Depositary Institution and the Collateral Agent substantially in the form of Exhibit M, with such changes thereto as shall be agreed upon by such Credit Party, Qualified Depositary Institution and the Collateral Agent. 2 3. Section 5.5(f) is amended and restated in its entirety to read as follows: (f) a copy of the fully executed Depositary Control Agreement of each Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains any bank account (other than a Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains only one or more Payroll Accounts and/or Petty Cash Accounts), to the extent the Borrower shall have received such Depositary Control Agreements from each such Qualified Depositary Institution (the original of which shall have been delivered to the Collateral Agent); 4. Section 7.14(a) is amended and restated in its entirety to read as follows: (a) The Borrower will, and will cause each Subsidiary (other than any Receivable Subsidiary) to (i) deposit and maintain on deposit all of its Invested Cash in the Cash Collateral Account, (ii) deposit and, subject to Section 7.14(b), maintain on deposit all of its Marketable Securities with Bear, Stearns & Co. Inc., (iii) cause all of its System Cash to be deposited in Qualified Depositary Institutions and, subject to Section 7.15, prior to any such deposit, cause each such Qualified Depositary Institution to execute and deliver to the Collateral Agent a Depositary Control Agreement and (iv) subject to Section 7.15, comply with the Cash Management System. 5. Article 7 is amended by adding a new Section 7.15 to read as follows: Deliver to the Administrative Agent within 30 days of the Effective Date a copy of the fully executed Depositary Control Agreement of each Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains any bank account (other than a Qualified Depositary Institution in which the Borrower or any of its Subsidiaries maintains only one or more Payroll Accounts and/or Petty Cash Accounts), to the extent any such Depositary Control Agreement shall not have been delivered to the Collateral Agent on or before the Effective Date (the original of which shall have been delivered to the Collateral Agent). Prior to such delivery the Borrower (i) will cause each such Qualified Depositary Institution to wire all collected and available funds each Business Day to the Cash Collateral Account, and (ii) will not draw upon, withdraw, seek to withdraw or transfer any funds therefrom (other than to the Cash Collateral Account). 6. The Credit Agreement is hereby amended by replacing Exhibit G, Exhibit J and Exhibit K thereto with Exhibit G, Exhibit J and Exhibit K attached hereto, respectively. 7. Paragraphs 1 through 6 shall not be effective until the satisfaction of all of the following conditions precedent (the "Amendment Effective Date"): (a) The Administrative Agent shall have received this Amendment, duly executed by a duly authorized officer or officers of the Borrower, the Guarantors, the Administrative Agent and the Required Lenders. 2 3 (b) The Amendment Effective Date shall occur on or prior to the Effective Date. 8. On the date hereof, each Credit Party hereby (a) reaffirms and admits the validity and enforceability of each Loan Document (as amended by this Amendment) to which it is a party and all of its obligations thereunder, (b) agrees and admits that it has no defenses to or offsets against any such obligation, and (c) represents and warrants that no Default or Event of Default under any Loan Document (as amended by this Amendment) has occurred and is continuing, and that each of the representations and warranties made by it in the Loan Documents (as amended by this Amendment) to which it is a party is true and correct in all material respects with the same effect as though each such representation and warranty had been made on the date hereof, except to the extent such representation and warranty specifically relates to an earlier date, in which case such representation and warranty shall have been true and correct on and as of such earlier date. 9. In all other respects, the Loan Documents shall remain in full force and effect, and no consent or amendment in respect of any term or condition of any Loan Document contained herein shall be deemed to be a consent or amendment in respect of any other term or condition contained in any Loan Document. 10. This Amendment may be executed in any number of counterparts all of which, taken together, shall constitute one agreement. In making proof of this Amendment, it shall only be necessary to produce the counterpart executed and delivered by the party to be charged. All future references to the Credit Agreement shall mean and refer to the Credit Agreement as amended hereby. 11. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, BUT INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW. [signature pages follow] 3 4 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA AS EVIDENCE of the agreement by the parties hereto to the terms and conditions herein contained, each such party has caused this Amendment No. 1 to be executed on its behalf. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss --------------------------------------- Title: Senior Vice President and Treasurer -------------------------------------- 5 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NEW YORK, as Swing Line Lender, as an Issuing Bank, as Administrative Agent and as a Lender By: /s/ G. P. Malbright ----------------------------------- Name: George P. Malbright ---------------------------------- Title: Senior Vice President --------------------------------- 6 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA FLEET NATIONAL BANK By: /s/ Peggy Peckham ----------------------------------- Name: Peggy Peckham ---------------------------------- Title: Senior Vice President --------------------------------- 7 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA BEAR STEARNS CORPORATE LENDING INC. By: /s/ Victor F. Bulzaccehellci ----------------------------------- Name: Victor F. Bulzaccehellci ---------------------------------- Title: Managing Director --------------------------------- 8 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA THE CHASE MANHATTAN BANK By: /s/ Peter Dedousis ----------------------------------- Name: Peter Dedousis ---------------------------------- Title: Managing Director --------------------------------- 9 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NOVA SCOTIA By: /s/ Daniel A. Costigan ----------------------------------- Name: Daniel A. Costigan ---------------------------------- Title: Director --------------------------------- 10 AMENDMENT NO. 1 BUILDING MATERIALS CORPORATION OF AMERICA AGREED AND CONSENTED TO: BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE, INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP. By: /s/ Susan B. Yoss ---------------------------------------- Name: Susan B. Yoss -------------------------------------- Title: Senior Vice President and Treasurer ------------------------------------- EX-10.17 17 y46546ex10-17.txt AMENDMENT NO. 2 TO AMENDED & RESTATED CREDIT AMGT 1 EXHIBIT 10.17 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT AMENDMENT NO. 2, dated as of March 8, 2001 (this "Amendment"), to the Amended and Restated Credit Agreement, dated as of December 4, 2000, among Building Materials Corporation of America (the "Borrower"), the lenders from time to time party thereto, Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending Inc., as Syndication Agent, and The Bank of New York, as Swing Line Lender and as Administrative Agent (in such capacity, the "Administrative Agent") (as amended to the date hereof, the "Credit Agreement"). RECITALS I. Capitalized terms used herein which are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. II. The Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement upon the terms and conditions contained in this Amendment, and the Administrative Agent and the Required Lenders are willing so to do. Accordingly, in consideration of the Recitals and the covenants and conditions hereinafter set forth, and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Effective as of December 4, 2000, Schedule 8.5 to the Credit Agreement is amended and restated in its entirety in the form of Schedule 8.5 attached hereto. 2. Paragraph 1 shall not be effective until the Administrative Agent shall have received this Amendment, duly executed by a duly authorized officer or officers of the Borrower, the Guarantors, the Administrative Agent and the Required Lenders. 3. On the date hereof, each Credit Party hereby (a) reaffirms and admits the validity and enforceability of each Loan Document (as amended by this Amendment) to which it is a party and all of its obligations thereunder, (b) agrees and admits that it has no defenses to or offsets against any such obligation, and (c) represents and warrants that no Default or Event of Default under any Loan Document (as amended by this Amendment) has occurred and is continuing, and that each of the representations and warranties made by it in the Loan Documents (as amended by this Amendment) to which it is a party is true and correct in all material respects with the same effect as though each such representation and warranty had been made on the date hereof, except to the extent such representation and warranty specifically relates to an earlier date, in which case such representation and warranty shall have been true and correct on and as of such earlier date. 4. In all other respects, the Loan Documents shall remain in full force and effect, and no consent or amendment in respect of any term or condition of any Loan Document contained 2 herein shall be deemed to be a consent or amendment in respect of any other term or condition contained in any Loan Document. 5. This Amendment may be executed in any number of counterparts all of which, taken together, shall constitute one agreement. In making proof of this Amendment, it shall only be necessary to produce the counterpart executed and delivered by the party to be charged. All future references to the Credit Agreement shall mean and refer to the Credit Agreement as amended hereby. 6. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, BUT INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW. [signature pages follow] 2 3 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA AS EVIDENCE of the agreement by the parties hereto to the terms and conditions herein contained, each such party has caused this Amendment No. 2 to be executed on its behalf. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ----------------------------------------- Name: Susan B. Yoss --------------------------------------- Title: Senior Vice President and Treasurer -------------------------------------- 4 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NEW YORK, as Swing Line Lender, as an Issuing Bank, as Administrative Agent and as a Lender By: /s/ David C. Judge ----------------------------------- Name: David C. Judge ---------------------------------- Title: Senior Vice President --------------------------------- 5 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA FLEET NATIONAL BANK By: /s/ Peggy Peckham ----------------------------------- Name: Peggy Peckham ---------------------------------- Title: Senior Vice President --------------------------------- 6 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA BEAR STEARNS CORPORATE LENDING INC. By: /s/ Victor T. Bulzaccehellci ----------------------------------- Name: Victor T. Bulzaccehellci ---------------------------------- Title: Managing Director --------------------------------- 7 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA THE CHASE MANHATTAN BANK, as an Issuing Bank and as a Lender By: /s/ Peter A. Dedousis ----------------------------------- Name: Peter A. Dedousis ---------------------------------- Title: Managing Director --------------------------------- 8 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA THE BANK OF NOVA SCOTIA By: /s/ Daniel A. Costigan ----------------------------------- Name: Daniel A. Costigan ---------------------------------- Title: Director --------------------------------- 9 AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT BUILDING MATERIALS CORPORATION OF AMERICA AGREED AND CONSENTED TO: BMCA INSULATION PRODUCTS INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAFTECH CORPORATION LL BUILDING PRODUCTS INC. WIND GAP REAL PROPERTY ACQUISITION CORP. By: /s/ Susan B. Yoss ---------------------------------------- Name: Susan B. Yoss -------------------------------------- Title: Senior Vice President and Treasurer ------------------------------------- EX-10.18 18 y46546ex10-18.txt SECURITY AGREEMENT 1 Exhibit 10.18 ------------- SECURITY AGREEMENT by and among BUILDING MATERIALS CORPORATION OF AMERICA, AND EACH OF THE OTHER GRANTORS A PARTY HERETO and THE BANK OF NEW YORK, AS COLLATERAL AGENT ------------------------------ DATED AS OF DECEMBER 22, 2000 2 TABLE OF CONTENTS PAGE ---- SECTION 1. DEFINITIONS; GRANT OF SECURITY...............................................................3 1.1 General Definitions.........................................................................3 1.2 Definitions; Interpretation.................................................................21 1.3 Grant of Security...........................................................................22 1.4 Ranking of Obligations......................................................................23 1.5 Certain Limited Exclusions..................................................................24 1.6 Power of Attorney to BMCA...................................................................24 SECTION 2. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE..............................................25 2.1 Security for Obligations....................................................................25 2.2 Grantors Remain Liable......................................................................25 SECTION 3. REPRESENTATIONS AND WARRANTIES AND COVENANTS..................................................26 3.1 Generally...................................................................................26 3.2 Equipment and Inventory.....................................................................28 3.3 Receivables.................................................................................29 3.4 Investment Related Property; Cash Collateral Account........................................31 3.5 Letter of Credit Rights.....................................................................39 3.6 Intellectual Property Collateral............................................................39 SECTION 4. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS.......................42 4.1 Access; Right of Inspection.................................................................42 4.2 Further Assurances..........................................................................42 4.3 Additional Grantors.........................................................................44 SECTION 5. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT..................................................44 5.1 Power of Attorney...........................................................................44 5.2 No Duty on the Part of Collateral Agent or Secured Parties..................................46 SECTION 6. REMEDIES......................................................................................46 6.1 Generally...................................................................................46
3 PAGE ---- 6.2 Investment Related Property.................................................................48 6.3 Intellectual Property Collateral............................................................48 6.4 Cash Proceeds...............................................................................51 6.5 Application of Proceeds.....................................................................51 SECTION 7. COLLATERAL AGENT..............................................................................51 SECTION 8. CONTINUING SECURITY INTEREST..................................................................51 SECTION 9. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM...............................................51 SECTION 10. INDEMNITY AND EXPENSES......................................................................52 SECTION 11. NOTICES.....................................................................................52 SECTION 12. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS..............................................52 SECTION 13. SURVIVAL OF AGREEMENT; SEVERABILITY.........................................................53 SECTION 14. AMENDMENTS..................................................................................53 SECTION 15. GOVERNING LAW...............................................................................53 SECTION 16. COUNTERPARTS................................................................................54 SECTION 17. HEADINGS....................................................................................54 SECTION 18. JURISDICTION; CONSENT TO SERVICE OF PROCESS.................................................54 SECTION 19. WAIVER OF JURY TRIAL........................................................................55
ii 4 SECURITY AGREEMENT ------------------ SECURITY AGREEMENT (this "Agreement"), dated as of December 22, 2000, by and among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation ("BMCA" or the "Borrower"), each other Grantor (as defined Recital E), whether as an original signatory hereto or as an Additional Grantor (as defined herein) and THE BANK OF NEW YORK, as Collateral Agent (in such capacity, the "Collateral Agent") under the Collateral Agent Agreement (as defined in Recital D). RECITALS -------- (A) Reference is made to the Amended and Restated Credit Agreement, dated as of December 4, 2000 (the "1999 Credit Agreement"), among BMCA, the lenders from time to time party thereto (each, a "1999 Lender" and, collectively, the "1999 Lenders"), Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending, as Syndication Agent, and The Bank of New York, as Administrative Agent (in such capacity, the "1999 Administrative Agent") and Swing Line Lender, under which the 1999 Lenders have agreed to make or participate in the making of Revolving Credit Loans and Swing Line Loans (collectively, the "1999 Loans") to the Borrower upon the terms and subject to the conditions specified in the 1999 Credit Agreement. In addition, one or more of the 1999 Lenders under the 1999 Credit Agreement (each, a "1999 Issuing Bank" and, collectively, the "1999 Issuing Banks") has agreed to issue Letters of Credit (the "1999 Letters of Credit ") for the account of the Borrower, and the 1999 Lenders have agreed to participate therein, upon the terms and subject to the conditions specified in the 1999 Credit Agreement. Certain Subsidiaries of the Borrower (the "1999 Guarantors") have guaranteed the payment of the obligations of the Borrower under the 1999 Credit Agreement, including the 1999 Loans and the 1999 Letters of Credit, pursuant to Subsidiary Guaranties or Supplements to Subsidiary Guaranties executed and delivered in connection with the 1999 Credit Agreement or thereafter with respect thereto (the "1999 Guaranties"). (B) Reference is also made to: (i) the Indenture, dated as of December 9, 1996, between BMCA and The Bank of New York, as trustee (the "2006 Trustee"), pursuant to which 8 5/8% senior notes due 2006 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2006 Indenture"), (ii) the Indenture, dated as of October 20, 1997, between BMCA and The Bank of New York, as trustee (the "2007 Trustee"), pursuant to which 8% senior notes due 2007 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2007 Indenture"), 5 (iii) the Indenture, dated as of July 17, 1998, between BMCA and The Bank of New York, as trustee (the "2005 Trustee"), pursuant to which 7.75% senior notes due 2005 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2005 Indenture"), (iv) the Indenture, dated as of December 3, 1998, between BMCA and The Bank of New York, as trustee (the "2008 Trustee"), pursuant to which 8.00% senior notes due 2008 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2008 Indenture"), and (v) the Indenture, dated as of July 5, 2000, between BMCA and The Bank of New York, as trustee (the "2002 Trustee", and collectively with the 2006 Trustee, the 2007 Trustee, the 2005 Trustee and the 2008 Trustee, the "Senior Note Trustees"), pursuant to which the 10.50% senior notes due 2002 were issued, as supplemented by Supplement, dated as of December 4, 2000 (the "2002 Indenture", and collectively with the 2006 Indenture, the 2007 Indenture, the 2005 Indenture and the 2008 Indenture, the "Senior Note Indentures"). Payment of each Senior Note issued under each Senior Note Indenture is guaranteed by certain Subsidiaries of BMCA (each, a "Senior Note Guarantor") pursuant to Guaranties ("Senior Note Guaranties") executed in connection therewith or thereafter with respect thereto. The senior notes issued pursuant to the Indentures (the "Senior Notes") are and will be, from time to time, held by various holders (collectively, the "Noteholders"). (C) Reference is further made to the Credit Agreement, dated as of December 4, 2000 (the "2000 Credit Agreement"), among BMCA, the lenders from time to time party thereto (each, a "2000 Lender" and, collectively, the "2000 Lenders"), and The Bank of New York, as Administrative Agent (in such capacity, the "2000 Administrative Agent") and Swing Line Lender, under which the 2000 Lenders have agreed to make or participate in the making of Revolving Credit Loans and Swing Line Loans (collectively, the "2000 Loans") to the Borrower upon the terms and subject to the conditions specified in the 2000 Credit Agreement. In addition, one or more of the 2000 Lenders under the 2000 Credit Agreement (each a "2000 Issuing Bank" and, collectively, the "2000 Issuing Banks") has agreed to issue Letters of Credit (the "2000 Letters of Credit ") for the account of the Borrower, and the 2000 Lenders have agreed to participate therein, upon the terms and subject to the conditions specified in the 2000 Credit Agreement. Certain Subsidiaries of the Borrower (the "2000 Guarantors") have guaranteed the payment of the obligations of the Borrower under the 2000 Credit Agreement, including the 2000 Loans, the 2000 Letters of Credit, the Chase Platinum Obligations and the Fleet LC Obligations pursuant to Subsidiary Guaranties or Supplements to Subsidiary Guaranties executed and delivered in connection with the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement or thereafter with respect thereto (the "2000 Guaranties"). 2 6 (D) Reference is also made to the Collateral Agent Agreement, dated as of December 22, 2000 (the "Collateral Agent Agreement"), among the Grantors (as defined in Recital E), the Administrative Agents, The Chase Manhattan Bank, Fleet National Bank, the Senior Note Trustees and The Bank of New York, as collateral agent (the "Collateral Agent"). (E) In consideration for the execution and delivery of: (i) the 1999 Credit Agreement by the 1999 Administrative Agent and the 1999 Lenders, (ii) a Supplement, dated as of December 4, 2000, to each Senior Note Indenture by each Senior Note Trustee (collectively, the "Indenture Supplements") and (iii) the 2000 Credit Agreement by the 2000 Administrative Agent and the 2000 Lenders, the Chase Platinum Agreement, the Fleet LC Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower, the 1999 Guarantors, the 2000 Guarantors, the Senior Note Guarantors and each other Subsidiary of the Borrower that shall become a signatory hereto (individually, a "Grantor" and, collectively, the "Grantors") and the Collateral Agent, for itself and for the benefit of each other Secured Party, agree as follows: SECTION 1. DEFINITIONS; GRANT OF SECURITY. 1.1 General Definitions. In this Agreement, the following terms shall have the following meanings: "Account Debtor": each Person who is obligated on a Receivable or any Supporting Obligation related thereto. "Accounts": all "accounts" as defined in the UCC. "Acceleration Default": (i) with respect to the 2000 Lenders, a 2000 Credit Agreement Event of Default has occurred and, as a result thereof, there has been an acceleration of the 2000 Obligations (ii) with respect to the 1999 Lenders, a 1999 Credit Agreement Event of Default has occurred and, as a result thereof, there has been an acceleration of the 1999 Obligations, (iii) with respect to the Chase Platinum Agreement or the Fleet LC Agreement, an event has occurred under either thereof and, as a result thereof, there has been an acceleration of the Chase Platinum Obligations or the Fleet LC Obligations, as the case may be, and (iv) with respect to the Noteholders, a Senior Note Event of Default has occurred and, as a result thereof, there has been an acceleration of the majority principal amount of Senior Notes issued under any Senior Note Indenture. "Actionable Default": (i) with respect to the 2000 Lenders, a 2000 Credit Agreement Event of Default has occurred and is continuing, (ii) with respect to the 1999 Lenders, a 1999 Credit Agreement Event of Default has occurred and is continuing, or (iii) with respect to the Chase Platinum Agreement or the Fleet LC Agreement, an event has occurred and is continuing 3 7 under either thereof permitting an acceleration of the Chase Platinum Obligations or the Fleet LC Obligations, as the case may be and (iv) with respect to the Noteholders, a Senior Note Event of Default has occurred and is continuing under any of the Senior Note Indentures. "Additional Grantor": as defined in Section 4.3. "Administrative Agent": the 1999 Administrative Agent or the 2000 Administrative Agent, as the case may be. "Affiliate": with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. "Aggregate Priority Obligations Exposure": at any time, the sum at such time of: (i) with respect to the 1999 Credit Agreement, (a) prior to the "Revolving Credit Commitment Termination Date", the "Aggregate Revolving Credit Commitment Amount" and (b) on or after the "Revolving Credit Commitment Termination Date", the aggregate "Credit Exposure" of all 1999 Lenders under the 1999 Credit Agreement (as each such defined term is defined in the 1999 Credit Agreement), (ii) with respect to the 2000 Credit Agreement, (a) prior to the "Revolving Credit Commitment Termination Date", the "Aggregate Revolving Credit Commitment Amount" and (b) on or after the "Revolving Credit Commitment Termination Date", the aggregate "Credit Exposure" of all 2000 Lenders under the 2000 Credit Agreement (as each such defined term is defined in the 2000 Credit Agreement), (iii) the outstanding principal amount of the Chase Platinum Substitute Note, and (iv) the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC. "Assigned Agreements": all agreements and contracts to which a Grantor is a party as of the date hereof, or to which such Grantor becomes a party after the date hereof. "BMCA Receivables": BMCA Receivables Corporation, a special-purpose Delaware corporation, or any other special-purpose Subsidiary of the Borrower hereafter created or acquired that deals exclusively with the purchase and sale of the receivables of the Borrower and its Subsidiaries as permitted by Section 8.5(i) of the 2000 Credit Agreement. "Borrower Obligations": (i) the due and punctual payment of (a) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (b) all other monetary obligations, including amounts due in respect of Letters of Credit, 4 8 fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower to any of the Secured Parties, or that are otherwise payable to any Credit Party, under any Credit Document to which the Borrower is a party, (ii) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower under or pursuant to each Credit Document, Debt Instrument or Security Document, (iii) unless otherwise agreed upon in writing by the applicable Lender party thereto, all obligations of the Borrower, monetary or otherwise, under each Hedge Agreement entered into with a counterparty that was a Lender (or an Affiliate thereof) at the time such Hedge Agreement was entered into, (iv) the Chase Platinum Obligations and (v) the Fleet LC Obligations. "Capital Lease": a lease the obligations in respect of which are required to be capitalized by the lessee thereunder for financial reporting purposes in accordance with GAAP. "Capital Stock": as to any Person, all shares, interests, partnership interests, limited liability company interests, participations, rights in or other equivalents (however designated) of such Person's equity (however designated) and any rights, warrants or options exchangeable for or convertible into such shares, interests, participations, rights or other equity. "Cash Collateral Account": defined in Section 3.4(d)(i) which definition shall include any sub accounts created thereunder. "Cash Equivalents": as defined in the 2000 Credit Agreement. "Cash Management System": defined in Section 3.4 (d)(iii). "Cash Proceeds": defined in Section 6.4. "Chase Platinum Obligations": all existing and future obligations of the Borrower and certain Subsidiaries of the Borrower under the Chase Platinum Substitute Note and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, including (a) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the Chase Platinum Obligations, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (b) all other monetary obligations, fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred 5 9 during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower and certain Subsidiaries of the Borrower under the Chase Platinum Substitute Note and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, as the same may be refinanced by the DIP Facility. "Chase Platinum Substitute Note": the note, dated as of the Effective Date (as defined in the 2000 Credit Agreement), made by the Borrower to The Chase Manhattan Bank evidencing (i) the delivery of 11,329 ounces of platinum to The Chase Manhattan Bank in satisfaction of the Chase Platinum Agreement and (ii) the loan made by The Chase Manhattan Bank to the Borrower in an amount equal to the Borrower's cost of purchase of such platinum as described in such note, in form and substance acceptable to the Administrative Agent. "Chattel Paper": all "chattel paper" as defined in the UCC. "Collateral": defined in Section 1.3. "Collateral Agent": defined in Recital D. "Collateral Agent Agreement": defined in Recital D. "Collateral Agreement Collateral": defined in Section 4.2(a) of the Collateral Trust Agreement. "Collateral Documents": this Agreement, the Mortgages and any documents executed and delivered in connection with any thereof in order to grant to the Collateral Agent a Lien for the benefit of the Secured Parties. "Collateral Records": books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon. "Collateral Support": all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property. "Commercial Tort Claims": all "commercial tort claims", as defined in Revised Article 9. 6 10 "Commodities Accounts": (i): all "commodity accounts" as defined in Article 9 of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 3.4 under the heading "Commodities Accounts". "Contingent Obligation": as to any Person ( a "secondary obligor"), any obligation of such secondary obligor (i) guaranteeing or in effect guaranteeing any return on any investment made by another Person, or (ii) guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or other obligation (a "primary obligation") of any other Person (a "primary obligor") in any manner, whether directly or indirectly, including any obligation of such secondary obligor, whether contingent, (a) to purchase any primary obligation or any Property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of a primary obligor, (c) to purchase Property, securities or services primarily for the purpose of assuring the beneficiary of any primary obligation of the ability of a primary obligor to make payment of a primary obligation, (d) otherwise to assure or hold harmless the beneficiary of a primary obligation against loss in respect thereof, and (e) in respect of the liabilities of any partnership in which a secondary obligor is a general partner, except to the extent that such liabilities of such partnership are nonrecourse to such secondary obligor and its separate Property, provided, however, that the term "Contingent Obligation" shall not include the indorsement of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation of a Person shall be deemed to be an amount equal to the stated or determinable amount of a primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith. "Controlled Foreign Corporation": defined in Section 1.4. "Copyright Licenses": any and all agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 3.6(B). "Copyrights": all United States, state and foreign copyrights, all mask works fixed in semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now or hereafter in force throughout the world, all registrations and applications therefor including, without limitation, the applications referred to in Schedule 3.6(A), all rights corresponding thereto throughout the world, all extensions and renewals of any thereof, the right to sue for past, present and future infringements of any of the foregoing, and all proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit. 7 11 "Credit Agreement": the 1999 Credit Agreement or the 2000 Credit Agreement, as the case may be, and the Notes and Reimbursement Agreements, as such terms are defined in, and which were executed and delivered in connection with, each thereof. "Credit Document": each Credit Agreement, the Chase Platinum Substitute Note, the Fleet LC Agreement and each Senior Note Indenture and all other agreements, instruments and documents executed or delivered in connection therewith. "Credit Party": an Administrative Agent, a Senior Note Trustee, a Lender, a 1999 Issuing Bank or the 2000 Issuing Bank, as the case may be. "Debt Instrument": any promissory note or other instrument, document or agreement evidencing any Secured Debt. "Default": an Actionable Default or an Acceleration Default. "Deposit Accounts": (i) all "deposit accounts" as defined in Article 9 of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 3.4 under the heading "Deposit Accounts". "Depositary Control Agreement": an agreement among a Credit Party, a Qualified Depositary Institution and the Collateral Agent, substantially in the form of Exhibit M to the 2000 Credit Agreement with such changes as shall be agreed upon by such Qualified Depositary Institution, such Credit Party and the Collateral Agent. "DIP Facility": defined in the 1999 Credit Agreement and the 2000 Credit Agreement. "Disbursement Account": defined in Section 3.4 (d)(iv). "Disbursement Account No. 1": defined in Section 3.4 (d)(iv). "Disbursement Account No. 2": defined in Section 3.4 (d)(iv). "Documents": all "documents" as defined in the UCC. "Equipment": (i) all "equipment" as defined in the UCC, (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, fixtures and tools (in each case, regardless of whether characterized as equipment under the UCC) and (iii) all accessions or additions thereto, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefor, wherever located, now or hereafter existing, including any fixtures. 8 12 "Fleet LC": the letter of credit in the amount of $3,551,781 issued by Fleet National Bank with respect to the Shafter, California IDB facility. "Fleet LC Agreement": collectively, (i) the Amended and Restated Reimbursement Agreement, dated as of December 4, 2000, between Fleet National Bank and Building Materials Manufacturing Corporation providing for the issuance of the Fleet LC, and (ii) the Parent Guarantee, dated as of December 4, 2000, pursuant to which the Borrower unconditionally guarantees to Fleet National Bank the obligations of Building Materials Manufacturing Corporation under the Amended and Restated Reimbursement Agreement described in clause (i) of this definition. "Fleet LC Obligations": all existing and future obligations of the Borrower and certain Subsidiaries of the Borrower under the Fleet LC Agreement and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, including (a) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the Fleet LC Obligations, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (b) all other monetary obligations, fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower and certain Subsidiaries of the Borrower under the Fleet LC Agreement and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, as the same may be refinanced by the DIP Facility "GAAP": United States generally accepted accounting principles in effect at the applicable date. "General Intangibles": (i) all "general intangibles" as defined in the UCC and (ii) shall include, without limitation, all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations, all Assigned Agreements, all Intellectual Property and all Payment Intangibles (in each case, regardless of whether characterized as general intangibles under the UCC). "Goods": (i) all "goods" as defined in the UCC and (ii) shall include, without limitation, all Inventory and Equipment and any computer program embedded in the goods and any supporting information provided in connection with such program if (x) the program is associated with the goods in such a manner that is customarily considered part of the goods or (y) by becoming the owner of the goods, a Person acquires a right to use the program in 9 13 connection with the goods (in each case, regardless of whether characterized as goods under the UCC). "Grantor": defined in Recital E. "Guaranties": the 1999 Guaranties, the 2000 Guaranties or the Senior Note Guaranties, as the case may be. "Guarantor": a 1999 Guarantor, a 2000 Guarantor or a Senior Note Guarantor, as the case may be. "Guarantor Obligations": the obligations of each Guarantor under each Guaranty to which it is a party. "Hedge Agreement": any swap agreement, cap agreement, collar agreement, futures contract, forward contract or similar agreement or arrangement entered into to protect against or mitigate the effect of fluctuations in interest rates, foreign exchange rates or prices of commodities used in the business of the Borrower and its Subsidiaries. "Hedge Obligations": all obligations of the Borrower and its Subsidiaries under the Hedge Agreements entered into with a counterparty that was a Lender (or an Affiliate thereof) at the time such Hedge Agreement was entered into. "Indebtedness": as to any Person, at a particular time, all items which constitute, without duplication, (i) indebtedness for borrowed money, (ii) indebtedness in respect of the deferred purchase price of Property (other than trade payables incurred in the ordinary course of business), (iii) indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv) obligations with respect to any conditional sale or title retention agreement, (v) indebtedness arising under acceptance facilities and the amount available to be drawn under all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder to the extent such Person shall not have reimbursed the issuer in respect of the issuer's payment thereof, (vi) all liabilities secured by any Lien on any Property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (other than carriers', warehousemen's, mechanics', repairmen's or other like non-consensual statutory Liens arising in the ordinary course of business), (vii) obligations under Capital Leases, (viii) all obligations of such Person in respect of Capital Stock subject to mandatory redemption or redemption at the option of the holder thereof, in whole or in part, and (ix) all Contingent Obligations of such Person in respect of any of the foregoing. "Indemnitee": the Collateral Agent, and its officers, partners, directors, trustees, employees, agents and affiliates. 10 14 "Indenture Supplements": defined in Recital E. "Instruments": all "instruments" as defined in the UCC. "Insurance": (i) all insurance policies covering any or all of the Collateral (regardless of whether the Collateral Agent is the loss payee thereof) and (ii) any key man life insurance policies. "Intellectual Property": collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses. "Inventory": (i) all "inventory" as defined in the UCC and (ii) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in a Grantor's business; all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind; all goods which are returned to or repossessed by such Grantor, and all computer programs embedded in any goods and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC). "Investment Related Property": (i) all "investment property" (as such term is defined in the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, Pledged Debt, Securities Accounts, Commodities Accounts, Deposit Accounts and certificates of deposit. "Issuing Bank": a 1999 Issuing Bank or a 2000 Issuing Bank, as the case may be. "Junior Obligations: the Senior Note Obligations. "Lender": a 1999 Lender, a 2000 Lender, the holder of a Senior Note, The Chase Manhattan Bank with respect to the Chase Platinum Obligations (or any other holder thereof), or Fleet National Bank with respect to the Fleet LC Obligations (or any other holder thereof), as the case may be. "Letters of Credit": 1999 Letters of Credit or 2000 Letters of Credit, as the case may be. "Letter of Credit Right" shall have the meaning specified in Revised Article 9. 11 15 "Lien": any mortgage, pledge, hypothecation, assignment, deposit or preferential arrangement, encumbrance, lien (statutory or other), or other security agreement or security interest of any kind or nature whatsoever, including any conditional sale or other title retention agreement (other than an operating lease) and any capital or financing lease having substantially the same economic effect as any of the foregoing. "Loans": 1999 Loans, 2000 Loans or Senior Notes, as the case may be. "Material Adverse Change": a material adverse change in (i) the financial condition, operations, business, prospects or Property of (A) BMCA or (B) BMCA and its Subsidiaries taken as a whole (which in the case of clauses (A) and (B) shall exclude the status of asbestos related claims (other than asbestos related claims made by any Governmental Authority under any Environmental Laws) made against BMCA or any of its Subsidiaries), (ii) the ability of a Grantor to perform any of its obligations under the Security Documents to which it is a party or (iii) the ability of Collateral Agent to enforce any of the Security Documents. "Money": "money" as defined in the UCC. "1999 Administrative Agent": defined in Recital A. "1999 Credit Agreement": defined in Recital A. "1999 Credit Agreement Event of Default" shall have the meaning attributed to the term "Event of Default" set forth in the 1999 Credit Agreement. "1999 Guaranties": defined in Recital A. "1999 Guarantor": defined in Recital A. "1999 Issuing Bank": defined in Recital A. "1999 Lender": defined in Recital A. "1999 Letter of Credit": defined in Recital A. "1999 Loan": defined in Recital A. "1999 Obligations": all existing and future obligations and liabilities of the Borrower and the 1999 Guarantors to the 1999 Administrative Agent, the 1999 Lenders and the 1999 Issuing Banks under the 1999 Credit Agreement, the 1999 Guaranties and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, including (a) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, 12 16 insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the 1999 Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (b) all other monetary obligations, including amounts due in respect of 1999 Letters of Credit, fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower and the 1999 Guarantors under the 1999 Credit Agreement, the 1999 Guaranties and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, as the same may be refinanced by the DIP Facility. "Notice of Acceleration Default": a written certification to the Collateral Agent and the Borrower (i) from the 2000 Administrative Agent, certifying that an Acceleration Default has occurred with respect to the 2000 Obligations; (ii) from the 1999 Administrative Agent certifying that an Acceleration Default has occurred with respect to 1999 Obligations, (iii) from The Chase Manhattan Bank certifying that an Acceleration Default has occurred with respect to the Chase Platinum Obligations, (iv) from Fleet National Bank certifying that an Acceleration Default has occurred with respect to the Fleet LC Obligations or (v) from a Senior Note Trustee certifying that an Acceleration Default has occurred under the Senior Note Indenture in respect of which it acts as Senior Note Trustee. "Notice of Default": a notice of a Default or Event of Default (each, as defined in the 1999 Credit Agreement or the 2000 Credit Agreement). "Obligations": the Borrower Obligations, the Guarantor Obligations, all obligations due the Collateral Agent under this Agreement and all existing and future obligations and liabilities of the Borrower and the Guarantors to any and all Beneficiaries under all Credit Documents, the Debt Instruments, the Security Documents and any and all agreements, documents and instruments executed in connection therewith or which relate thereto and the Chase Platinum Obligations, the Fleet LC Obligations and the Hedge Obligations. "Patent Licenses": all agreements providing for the granting of any right in or to Patents (whether a Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 3.6(D). "Patents": all United States, state and foreign patents and applications for letters patent throughout the world, including, but not limited to each patent and patent application referred to in Schedule 3.6(C), all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations of any of the foregoing, all rights corresponding thereto 13 17 throughout the world, and all proceeds of the foregoing including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit and the right to sue for past, present and future infringements of any of the foregoing. "Payment Intangible": shall have the meaning specified in Revised Article 9. "Payroll Account": defined in Section 3.4 (d)(iv). "Permitted Lien": Liens permitted by the 1999 Credit Agreement and the 2000 Credit Agreement. "Person": any individual, firm, partnership, limited liability company, joint venture, corporation, association, business enterprise, joint stock company, unincorporated association, trust, Governmental Authority or any other entity, whether acting in an individual, fiduciary, or other capacity. "Petty Cash Accounts": deposit accounts maintained in the ordinary course of business by the Borrower or any of its Subsidiaries for the purpose of reimbursing employees for ordinary course expenditures or for other incidental expenses as permitted under the 1999 Credit Agreement and the 2000 Credit Agreement. "Pledge Supplement": any supplement to this agreement in substantially the form of Exhibit A. "Pledged Debt": all Indebtedness owed to a Grantor, including, without limitation, all Indebtedness described on Schedule 3.4 under the heading "Pledged Debt" of such Grantor, issued by the obligors named therein, the instruments evidencing such Indebtedness, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness. "Pledged Equity Interests": all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests. "Pledged LLC Interests": all interests in any limited liability company including, without limitation, all limited liability company interests listed on Schedule 3.4 under the heading "Pledged LLC Interests" and the certificates, if any, representing such limited liability company interests and any interest of a Grantor on the books and records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time 14 18 received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests. "Pledged Partnership Interests": all interests in any general partnership, limited partnership, limited liability partnership or other partnership including, without limitation, all partnership interests listed on Schedule 3.4 under the heading "Pledged Partnership Interests" and the certificates, if any, representing such partnership interests and any interest of a Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests. "Pledged Stock": all shares of capital stock owned by a Grantor, including all shares of capital stock described on Schedule 3.4 under the heading "Pledged Stock", and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares. "Pledged Trust Interests": all interests in a Delaware business trust or other trust including, without limitation, all trust interests listed on Schedule 3.4 under the heading "Pledged Trust Interests" and the certificates, if any, representing such trust interests and any interest of a Grantor on the books and records of such trust or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such trust interests. "Priority Obligations": (i) the 2000 Obligations, (ii) the 1999 Obligations, (iii) the Chase Platinum Obligations, (iv) the Fleet LC Obligations and (v) the Hedge Obligations. "Priority Obligations Exposure": with respect to any holder of Priority Obligations, at any time, the sum at such time of: (i) with respect to the 1999 Credit Agreement, (a) prior to the "Revolving Credit Commitment Termination Date", the "Revolving Credit Commitment Amount" of such holder and (b) on or after the "Revolving Credit Commitment Termination Date", the "Credit Exposure" of such holder under the 1999 Credit Agreement (as each such defined term is defined in the 1999 Credit Agreement), (ii) with respect to the 2000 Credit Agreement, (a) prior to the "Revolving Credit Commitment Termination Date", the "Revolving Credit Commitment Amount" of such holder and (b) on or 15 19 after the "Revolving Credit Commitment Termination Date", the "Credit Exposure" of such holder under the 2000 Credit Agreement (as each such defined term is defined in the 2000 Credit Agreement), (iii) such holder's percentage interest in the outstanding principal amount of the Chase Platinum Substitute Note, and (iv) such holder's percentage interest in the undrawn face amount of the Fleet LC plus the amount of any unpaid drafts drawn under the Fleet LC. "Priority Obligations Representative": (i) at any time until the 2000 Obligations have been paid in full in cash, the 2000 Administrative Agent, (ii) at any time after the 2000 Obligations have been paid in full in cash until the 1999 Obligations have been paid in full in cash, the 1999 Administrative Agent, (iii) at any time after the 1999 Obligations and the 2000 Obligations have been paid in full in cash, until the Chase Platinum Obligations and the Fleet LC Obligations have been paid in full in cash, the holders of the Chase Platinum Obligations and the Fleet LC Obligations acting together, in any case under clauses (i), (ii) or (iii) above, acting upon the instructions of the holders of the Priority Obligations having Priority Obligations Exposure greater than or equal to 51% of the Aggregate Priority Obligations Exposure. "Proceeds": (i) all "proceeds" as defined in the UCC, (ii) payments or distributions made with respect to any Investment Related Property and (iii) whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. "Property": all types of real, personal, tangible, intangible or mixed property. "Qualified Depositary Institution": any commercial bank organized under the laws of the United States of America or any State thereof that (i) is listed on Schedule 1.1(q) or (ii) either (x) has capital and surplus in excess of $50,000,000 or (y) is satisfactory to the Administrative Agent and, in either case, whose deposits are federally insured. "Receivables": subject to the exclusion set forth in Section 1.4(a), all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including, without limitation all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together with all of each Grantor's rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records. "Receivables Program": the arrangement between BMCA Receivables and BMCA evidenced by the Receivables Purchase Documents. 16 20 "Receivables Purchase Documents": collectively, (i) the Pooling and Services Agreement, dated as of November 1, 1996, among the Borrower, BMCA Receivables and BNY, as trustee, as supplemented by the Series 1996-1 Supplement, dated as of November 1, 1996, and the Receivables Purchase Agreement, dated as of November 1, 1996, among the Borrower and BMCA Receivables, and (ii) any amendment, modification, waiver, extension or replacement of such documents on terms and conditions that could not reasonably be expected to (x) denigrate the value of the security interest of the Collateral Agent in the Capital Stock of BMCA Receivables or in any other Collateral, including any accounts receivable of the Borrower or any of its Subsidiaries (other than BMCA Receivables) not subject to the documents described in clause (i) of this definition, or (y) restrict the rights of the Collateral Agent to foreclose or otherwise pursue its remedies under this Agreement with respect to such Capital Stock or such other Collateral, in either case in comparison to such value or rights in existence immediately prior to such amendment, modification, waiver, extension or replacement under such documents (it being understood that advance rates, eligibility requirements, concentration limits and a maturity date (provided such maturity date is later then December 31, 2001) more favorable to BMCA Receivables shall not be deemed to denigrate such value or restrict such rights), provided that the aggregate amount of indebtedness to be incurred under such documents shall not exceed $115,000,000. "Receivables Records": (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of a Grantor or any computer bureau or agent from time to time acting for such Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors or secured parties, and certificates, acknowledgments, or other writings, including, without limitation, lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or non-written forms of information related in any way to the foregoing or any Receivable. "Record" shall have the meaning specified in Revised Article 9. "Required Lender Representative": (i) at any time until the Priority Obligations have been paid in full in cash, the Priority Obligations Representative and (ii) at any time thereafter, the Senior Note Trustees. "Revised Article 9": the 1999 Official Text of Article 9 of the UCC with conforming amendments to Articles 1, 2, 2a, 4, 5, 6, 7 and 8. 17 21 "Secured Debt": at any time, the Obligations then outstanding. "Secured Parties": (i) the Credit Parties, (ii) unless otherwise agreed upon in writing by it, each counterparty to a Hedge Agreement entered into with a Grantor if such counterparty was a Lender (or an Affiliate thereof) at the time the Hedge Agreement was entered into, (iii) The Chase Manhattan Bank with respect to the Chase Platinum Obligations (and each other holder thereof), (iv) Fleet National Bank with respect to the Fleet LC Obligations (and each other holder thereof) and (v) the beneficiaries of each indemnification obligation undertaken by a Grantor under any Credit Document. "Securities Accounts": (i): all "securities accounts" as defined in the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 3.4 under the heading "Securities Accounts". "Securities Entitlements": all "security entitlements" as defined in the UCC. "Security Agreement Cash Collateral": the Cash Collateral Account, all cash deposited therein, all certificates and instruments, if any, from time to time representing the Cash Collateral Account; all investments from time to time made pursuant to Section 3.4, all notes, certificates of deposit and other instruments from time to time hereafter delivered to or otherwise possessed by the Collateral Agent in substitution for, or in addition to, any or all of the then existing Security Agreement Cash Collateral; all interest, dividends, cash, instruments, and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Security Agreement Cash Collateral; and to the extent not covered above, all Proceeds of and any collections, earnings and accruals with respect to any or all of the foregoing (whether the same are acquired before or after the commencement of a case under the Bankruptcy Code by or against such Grantor as a debtor). "Security Agreement Supplement": a supplement hereto in the form of Exhibit E, executed by an Additional Grantor pursuant to Section 4.3. "Security Documents": this Agreement, the Mortgages, the Guaranties, the Depositary Control Agreements and the other security agreements, instruments and documents, any additional documents executed to reflect the grant to the Collateral Agent of a lien upon or security interest in any Collateral, and any agreement or document referred to in Section 2.4, 5.7 or 9.1(b) of the Collateral Agent Agreement. "Senior Note Event of Default" shall have the meaning attributed to the term "Event of Default" in each Senior Note Indenture. "Senior Note Guaranties": defined in Recital B. 18 22 "Senior Note Guarantors": defined in Recital B. "Senior Note Indentures": defined in Recital B. "Senior Note Obligations": all existing and future obligations and liabilities of the Borrower and the Senior Note Guarantors to the holders of the Senior Notes under the Senior Note Indentures, the Senior Note Guaranties and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, including (a) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the Senior Notes, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (b) all other monetary obligations, including amounts due in respect of fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower and the Senior Note Guarantors under the Senior Note Indentures, the Senior Note Guaranties and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto. "Senior Note Trustees": defined in Recital B. "Senior Notes": the Notes issued and outstanding under the Senior Note Indentures. "Subsidiary": defined in the 2000 Credit Agreement. "Supporting Obligation": all "supporting obligations" as defined in Revised Article 9. "System Cash": any cash of the Borrower and its Subsidiaries (other than BMCA Receivables, provided that any cash of BMCA Receivables that is distributed or otherwise paid to the Borrower or any of its other Subsidiaries shall constitute System Cash upon receipt by the Borrower or any such other Subsidiary) not deposited in the Cash Collateral Account, excluding (i) any cash deposited in Payroll Accounts in amounts not exceeding the amounts calculated by the Borrower to be reasonably sufficient to fund the next payroll and related benefit costs and remit withholding and other payroll taxes and related costs of the Borrower and its Subsidiaries, (ii) any cash deposited in Petty Cash Accounts, (iii) any cash deposited in Disbursement Account No. 1 in amounts calculated by the Borrower to be reasonably sufficient to cover checks drawn on 19 23 and presented for payment against Disbursement Account No. 1 and transfers of funds (including ACH and wire transfers) out of Disbursement Account No. 1, in either case for the payment when due of costs, expenditures and obligations of the Borrower and its Subsidiaries permitted by the 2000 Credit Agreement, and (iv) any cash deposited in Disbursement Account No. 2 for the payment when due of costs, expenditures and obligations of the Borrower and its Subsidiaries permitted by the 2000 Credit Agreement, provided that cash in Disbursement Account No. 2 shall not exceed $1,000,000 at any time. "System Cash Account": a Deposit Account maintained with a Qualified Depositary Institution that has executed and delivered a Depositary Control Agreement. "Trademark Licenses": any and all agreements providing for the granting of any right in or to Trademarks (whether a Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 3.6(F). "Trademarks": all United States, state and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, internet domain names, trade styles, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, but not limited to the registrations and applications referred to in Schedule 3.6(E), all extensions or renewals of any of the foregoing, all of the goodwill of the business connected with the use of and symbolized by the foregoing, the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit. "Trade Secret Licenses": any and all payments providing for the granting of any right in or to Trade Secrets (whether a Grantor is licensee or licensor thereunder). "Trade Secrets": all trade secrets and all other confidential or proprietary information and know-how now or hereafter owned or used in, or contemplated at any time for use in, the business of a Grantor (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, the right to sue for past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit. "2000 Administrative Agent": defined in Recital C. "2000 Credit Agreement": defined in Recital C. 20 24 "2000 Credit Agreement Event of Default" shall have the meaning attributed to the term "Event of Default" set forth in the 2000 Credit Agreement. "2000 Guaranties": defined in Recital C. "2000 Guarantor": defined in Recital C. "2000 Issuing Bank": defined in Recital C. "2000 Lender": defined in Recital C. "2000 Letter of Credit": defined in Recital C. "2000 Loan": defined in Recital C. "2000 Obligations": all existing and future obligations and liabilities of the Borrower and the 2000 Guarantors to the 2000 Administrative Agent, the 2000 Lenders and the 2000 Issuing Bank under the 2000 Credit Agreement, the 2000 Guaranties and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, including (a) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) of the 2000 Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (b) all other monetary obligations, including amounts due in respect of 2000 Letters of Credit, fees, commissions, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower and the 2000 Guarantors under the 2000 Credit Agreement, the 2000 Guaranties and any and all other agreements, documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto documents and instruments heretofore, now or hereafter executed in connection therewith or which relate thereto, as the same may be refinanced on a secured basis in accordance with the provisions with respect thereto contained in the 2000 Credit Agreement. "UCC": the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction. 1.2 Definitions; Interpretation. Capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the UCC or, if not defined therein, in Revised Article 9. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may 21 25 require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (i) any definition of or reference herein to any agreement (including this Agreement), instrument or other document, and to any exhibit or schedule thereto, shall be construed as referring to such agreement, instrument or other document, and any exhibit or schedule thereto (including any Exhibit or Schedule hereto), as from time to time amended, supplemented or otherwise modified, (ii) any definition of or reference to any law shall be construed as referring to such law as from time to time amended and any successor thereto and the rules and regulations promulgated from time to time thereunder, (iii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iv) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (v) all references herein to Articles, Sections, Exhibits and Schedules, Recitals and paragraphs shall be construed to refer to Articles, Sections, and Exhibits and Schedules, Recitals and paragraphs of or to, this Agreement and (vi) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC. 1.3 Grant of Security. Each Grantor hereby grants to the Collateral Agent a security interest in, and a continuing Lien on, all personal property and fixtures of such Grantor, including, without limitation, all of such Grantor's right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (all of which being hereinafter collectively referred to as the "Collateral"): (a) Accounts; (b) Chattel Paper; (c) Documents; (d) General Intangibles; (e) Goods; (f) Instruments; 22 26 (g) Insurance; (h) Intellectual Property; (i) Investment Related Property; (j) Letter of Credit Rights; (k) Money; (l) Receivables and Receivable Records; (m) Commercial Tort Claims; (n) to the extent not otherwise included above, all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; (o) all other property in which a security interest may be granted under the UCC; and (p) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing; it being agreed that the Schedules to this Agreement are intended to describe some, but not all, of the Collateral and the fact that any item of Collateral may not be specifically described on a Schedule or in a Pledge Supplement shall not be construed as excluding such item from or otherwise limiting the scope of the security interest granted herein. To the extent the UCC is revised after the date hereof such that the definition of any of the foregoing terms included in the description of Collateral is changed, the parties hereto desire that any property which is included in such changed definitions which would not otherwise be included in the foregoing grant on the date hereof be included in such grant immediately upon the effective date of such revision. Notwithstanding the immediately preceding sentence, the foregoing grant is intended to apply immediately on the date hereof to all Collateral to the fullest extent permitted by applicable law regardless of whether any particular item of Collateral is currently subject to the UCC. 1.4 Ranking of Obligations. The security interest granted herein shall constitute (i) a first priority security interest and Lien securing the Priority Obligations and (ii) a second priority security interest and Lien securing the Junior Obligations. All Priority Obligations shall rank pari passu as to the Collateral and shall be secured equally and ratably whatever may be the date or terms of issue of the instruments evidencing such Priority Obligations. All Junior Obligations shall rank pari passu as to the Collateral and shall be 23 27 secured equally and ratably whatever may be the date or terms of issue of the instruments evidencing such Junior Obligations. 1.5 Certain Limited Exclusions. Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, (a) any of BMCA's right, title or interest in any property sold to BMCA Receivables under the Receivables Purchase Agreement, (b) any Intellectual Property, if the grant of such security interest shall constitute or result in the abandonment, invalidation or rendering unenforceable any right, title or interest of such Grantor therein; (c) in any license, contract or agreement to which such Grantor is a party or any of its rights or interests thereunder, including, without limitation, with respect to any Pledged Partnership Interests or any Pledged LLC Interests, to the extent, but only to the extent, that such a grant would, under the terms of such license, contract or agreement (including, without limitation, any partnership agreements or any limited liability company agreements), or otherwise, result in a breach or termination of the terms of, or constitute a default under or termination of any such license, contract or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-318(4) of the UCC (or any successor provision, including Section 9-406 of Revised Article 9) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity) or would otherwise constitute a violation of law, regulation or policy; provided, immediately upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect; or (d) in any of the outstanding capital stock of a "controlled foreign corporation" as defined in the Internal Revenue Code of 1986, as amended from time to time (each, a "Controlled Foreign Corporation"), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporation entitled to vote. 1.6 Power of Attorney to BMCA. Pursuant to Section 2.5 of the Collateral Agent Agreement, each Grantor (other than BMCA) has irrevocably constituted and appointed BMCA and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Grantor or in its own name, from time to time in BMCA's discretion, to take or omit taking any and all actions hereunder for the purpose of carrying out the terms of this Agreement and any of the other Security Documents, to receive and give all notices to be given by or received by such Grantor, to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes hereof and, without limiting the generality of the foregoing, has granted to BMCA the power and right on behalf of such Grantor, without assent by such Grantor, to bind such Grantor in all respects hereunder and under any of the other Security Documents, with the intent that all action taken by BMCA on 24 28 behalf of such Grantor shall be binding upon and inure to the benefit of such Grantor as effectively as if such action were taken directly by such Grantor. Each such power of attorney is a power coupled with an interest and shall be irrevocable until all of the Obligations are paid in full in cash. SECTION 2. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE. 2.1 Security for Obligations. Subject to Section 1.4, this Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all Obligations. 2.2 Grantors Remain Liable. (a) Anything contained herein to the contrary notwithstanding: (i) each Grantor shall remain liable under any partnership agreement or limited liability company agreement relating to any Pledged Partnership Interest or Pledged LLC Interest, any Assigned Agreement and/or any other contracts and agreements of such Grantor included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (ii) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral; and (iii) neither the Collateral Agent nor any Secured Party shall have any obligation or liability under any partnership agreement or limited liability company agreement relating to any Pledged Partnership Interests or Pledged LLC Interests, any Assigned Agreement or any other contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Collateral Agent or any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. (b) None of the Collateral Agent, any Secured Party or any purchaser at a foreclosure sale under this Agreement shall be obligated to assume any of any obligation or liability under any partnership agreement or limited liability company agreement relating to any Pledged Partnership Interests or Pledged LLC Interests, any Assigned Agreement or any other contracts and agreements included in the Collateral. 25 29 SECTION 3. REPRESENTATIONS AND WARRANTIES AND COVENANTS. 3.1 Generally. (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Collateral Agent and each other Secured Party, that: (i) it owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, will continue to own or have such rights in each item of the Collateral, in each case free and clear of any and all Liens, rights or claims of all other Persons other than Permitted Liens; (ii) its chief executive office or its principal place of business is, and has been for the four month period preceding the date hereof, located at the place indicated on Schedule 3.1(A), and the jurisdiction of organization of such Grantor is the jurisdiction indicated on Schedule 3.1(B); (iii) the full legal name of such Grantor is as set forth on Schedule 3.1(A) and it has not in the last five years and does not do business under any other name (including any trade-name or fictitious business name) except for those names set forth on Schedule 3.1(C); (iv) such Grantor has not within the last five years become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not heretofore been terminated; (v) all actions and consents, including all filings, notices, registrations and recordings necessary or desirable to create, perfect or ensure the first priority (subject only to Permitted Liens) of the security interests granted to the Collateral Agent hereunder or for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect of the Collateral have been made or obtained except for (x) the filing of UCC financing statements naming such Grantor as "debtor" and the Collateral Agent as "secured party" and describing the Collateral in the filing offices set forth opposite such Grantor's name on Schedule 3.1(D) hereof and (y) recordation of the security interests granted herein in Patents, Trademarks and Copyrights in the applicable registries; (vi) other than the financing statements filed in favor of the Collateral Agent as set forth on Schedule 3.1(D), no effective UCC financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office except for (x) financing statements for which proper termination statements have been delivered to the Collateral Agent for filing and (y) financing statements filed in connection with Permitted Liens; 26 30 (vii) other than the financing statements filed in favor of the Collateral Agent as provided in clause (v) above, no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for either the pledge or grant by such Grantor of the Liens purported to be created in favor of the Collateral Agent pursuant to any of the Collateral Documents or the exercise by the Collateral Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created pursuant to this Agreement); and (viii) all information supplied to the Collateral Agent by or on behalf of such Grantor is accurate and complete in all material respects with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral). (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that: (i) except for the security interests granted hereunder, it shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, except Permitted Liens, and it shall defend the Collateral against all Persons at any time claiming any interest therein; (ii) it shall not produce, use or permit any Collateral to be used in any material respect unlawfully or in violation of any provision of any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (iii) it shall not change such Grantor's name, identity, corporate structure, principal place of business, chief executive office or jurisdiction of organization unless it shall have (a) notified the Collateral Agent in writing, by executing and delivering to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, at least thirty days prior to any such change or establishment, identifying such new proposed name, identity, corporate structure, principal place of business, chief executive office, jurisdiction of organization and providing such other information in connection therewith as the Collateral Agent may reasonably request and (b) taken all actions necessary or advisable to maintain the continuous validity, perfection and the same priority of the Collateral Agent's security interest in the Collateral intended to be granted hereby; (iv) it shall pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the 27 31 Collateral, except to the extent the validity thereof is being contested in good faith and by appropriate proceedings diligently conducted; provided, such Grantor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment entered or filed against such Grantor or any of the Collateral as a result of the failure to make such payment; (v) upon such Grantor or any officer of such Grantor obtaining knowledge thereof, it shall promptly notify the Collateral Agent in writing of any event that may materially and adversely affect the value of the Collateral, the ability of the Collateral Agent to dispose of the Collateral or any portion thereof, or the rights and remedies of the Collateral Agent in relation thereto, including, without limitation, the levy of any legal process against the Collateral or any portion thereof; (vi) it shall not take or permit any action which could impair the Collateral Agent's rights in the Collateral; and (vii) it shall not sell, transfer or assign (by operation of law or otherwise) any Collateral except as permitted under the 1999 Credit Agreement and the 2000 Credit Agreement. 3.2 Equipment and Inventory. (a) Representations and Warranties. Each Grantor represents and warrants that: (i) all of the Equipment and Inventory included in the Collateral is kept only at the locations specified in Schedule 3.2; (ii) any Goods now or hereafter produced by such Grantor included in the Collateral have been and will be produced in compliance in all material respects with the requirements of the Fair Labor Standards Act, as amended; and (iii) none of the Inventory or Equipment is in the possession of an issuer of a negotiable document (as defined in Section 7-104 of the UCC) therefor or otherwise in the possession of a bailee. (b) Covenants and Agreements. Each Grantor covenants and agrees that: (i) it shall keep the Equipment and Inventory (other than Inventory in transit or being shipped to a buyer) included in the Collateral in the locations specified on Schedule 3.2 unless it shall have (a) notified the Collateral Agent in writing, by executing and delivering to the Collateral Agent a completed Pledge Supplement, substantially in the form of 28 32 Exhibit A attached hereto, together with all Supplements to Schedules thereto, at least thirty days prior to any change in locations, identifying such new locations and providing such other information in connection therewith as the Collateral Agent may reasonably request and (b) taken all actions necessary or advisable to maintain the continuous validity, perfection and the same priority of the Collateral Agent's security interest in the Collateral intended to be granted and agreed to hereby, or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder, with respect to such Equipment and Inventory; (ii) it shall keep correct and accurate records of the Inventory, itemizing and describing the kind, type and quantity of Inventory, such Grantor's cost therefor and (where applicable) the current list prices for the Inventory, in each case, in reasonable detail; (iii) if any Equipment or Inventory included in the Collateral is in possession or control of any third party, such Grantor shall join with the Collateral Agent in notifying the third party of the Collateral Agent's security interest and obtaining an acknowledgment from the third party that it is holding the Equipment and Inventory for the benefit of the Collateral Agent; and (iv) with respect to any item of Equipment which is covered by a certificate of title under a statute of any jurisdiction under the law of which indication of a security interest on such certificate is required as a condition of perfection thereof, upon the request of the Collateral Agent made during the continuation of a Default, execute and file with the registrar of motor vehicles or other appropriate authority in such jurisdiction an application or other document requesting the notation or other indication of the security interest created hereunder on such certificate of title, and upon the reasonable request of the Collateral Agent, deliver to the Collateral Agent copies of all such applications or other documents filed during each calendar quarter and copies of all such certificates of title issued during such calendar quarter indicating the security interest created hereunder in the items of Equipment covered thereby. 3.3 Receivables. (a) Representations and Warranties. Each Grantor, other than BMCA in respect of property sold to BMCA Receivables under the Receivables Program, represents and warrants that: (i) each Receivable is and will be created in compliance with all applicable laws, whether federal, state, local or foreign; (ii) no Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper which has not been delivered to, or otherwise 29 33 subjected to the control of, the Collateral Agent to the extent required by, and in accordance with Section 3.3(c). (b) Covenants and Agreements: Each Grantor, other than BMCA in respect of property sold to BMCA Receivables under the Receivables Program, hereby covenants and agrees that: (i) it shall keep and maintain at its own cost and expense satisfactory and complete records of the Receivables, including, but not limited to, the originals of all documentation with respect to all Receivables and records of all payments received and all credits granted on the Receivables, all merchandise returned and all other dealings therewith; (ii) it shall mark conspicuously, in form and manner reasonably satisfactory to the Collateral Agent, all Chattel Paper, Instruments and other evidence of Receivables (other than any delivered to the Collateral Agent as provided herein), as well as the Receivables Records with an appropriate reference to the fact that the Collateral Agent has a security interest therein; (iii) it shall perform in all material respects all of its obligations with respect to the Receivables; (iv) it shall not amend, modify, terminate or waive any provision of any Receivable other than in the ordinary course of its business. Other than in the ordinary course of business as generally conducted by it on and prior to the date hereof, and except as otherwise provided in subsection (v) below, during the continuance of a Default, such Grantor shall not (w) grant any extension or renewal of the time of payment of any Receivable, (x) compromise or settle any dispute, claim or legal proceeding with respect to any Receivable for less than the total unpaid balance thereof, (y) release, wholly or partially, any Person liable for the payment thereof, or (z) allow any credit or discount thereon; (v) except as otherwise provided in this subsection, each Grantor shall continue to collect all amounts due or to become due to such Grantor under the Receivables and any Supporting Obligation and diligently exercise each material right it may have under any Receivable, any Supporting Obligation or Collateral Support, in each case, at its own expense, and in connection with such collections and exercise, such Grantor shall take such action as such Grantor or the Collateral Agent may deem necessary or advisable. Notwithstanding the foregoing, the Collateral Agent shall have the right at any time to notify, or require any Grantor to notify, any Account Debtor of the Collateral Agent's security interest in the Receivables and any Supporting Obligation and, in addition, at any time during the continuation of a Default, the Collateral Agent may: (1) direct the Account Debtors under any Receivables to make payment of all amounts due or to become due to such Grantor thereunder 30 34 directly to the Collateral Agent; (2) notify, or require such Grantor to notify, each Person maintaining a lockbox or similar arrangement to which Account Debtors under any Receivables have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to the Collateral Agent; and (3) enforce, at the expense of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. If the Collateral Agent notifies such Grantor that it has elected to collect the Receivables in accordance with the preceding sentence, any payments of Receivables, received by such Grantor shall be forthwith (and in any event within two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent if required, in an account maintained under the sole dominion and control of the Collateral Agent, and until so turned over, all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall be received in trust for the benefit of the Collateral Agent hereunder and shall be segregated from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon; and (vi) it shall use its best efforts to keep in full force and effect any Supporting Obligation or Collateral Support relating to any Receivable. (c) Delivery and Control of Receivables. With respect to any Receivable in excess of $100,000 that is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantor shall cause each originally executed copy thereof to be delivered to the Collateral Agent (or its agent or designee) appropriately indorsed to the Collateral Agent or indorsed in blank: (i) with respect to any such Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect to any such Receivables hereafter arising, within ten days of such Grantor acquiring rights therein. With respect to any Receivable in excess of $100,000 which would constitute "electronic chattel paper" under Revised Article 9, each Grantor shall take all steps necessary to give the Collateral Agent control over such Receivables (within the meaning of Section 9-105 of Revised Article 9): (i) with respect to any such Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect to any such Receivable hereafter arising, within ten days of such Grantor acquiring rights therein. 3.4 Investment Related Property; Cash Collateral Account. (a) Representations and Warranties. Each Grantor hereby represents and warrants that: 31 35 (i) Schedule 3.4 sets forth under the headings "Pledged Stock, "Pledged LLC Interests," "Pledged Partnership Interests" and "Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests owned by any Grantor; (ii) it is the record and beneficial owner of the Pledged Equity Interests free of all Liens, rights or claims of other Persons other than Permitted Liens and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests by such Grantor; (iii) without limiting the generality of Section 3.1(a)(v), no consent of any Person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status of the security interest of the Collateral Agent in any Pledged Equity Interests or the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof; (iv) none of the Pledged LLC Interests or Pledged Partnership Interests are or represent interests in issuers that: (a) are registered as investment companies, (b) are dealt in or traded on securities exchanges or markets or (c) have opted to have their securities treated as securities under the UCC of any jurisdiction; (v) Schedule 3.4 sets forth under the heading "Pledged Debt" all of the Pledged Debt owned by any Grantor; (vi) Schedule 3.4(A) sets forth under the headings "Securities Accounts" and "Commodities Accounts," respectively, all of the Securities Accounts and Commodities Accounts in which each Grantor has an interest and each Grantor is the sole entitlement holder of each such Securities Account and Commodity Account and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Collateral Agent pursuant hereto) having "control" (as defined in Section 9-115(e) of the UCC) over, or any other interest in, any such Securities Account or Commodity Account or any securities or other property credited thereto; (vii) Schedule 3.4(A) sets forth under the heading "Deposit Accounts" all of the Deposit Accounts in which each Grantor has an interest and each Grantor is the sole account holder of each such Deposit Account and each Grantor has not consented to, and is not otherwise aware of, any Person (other than the Collateral Agent pursuant hereto) having either sole dominion and control or "control" (within the meaning of Section 9-104 of 32 36 Revised Article 9) over, or any other interest in, any such Deposit Account or any money or other property deposited therein; and (viii) each Grantor has taken all actions necessary or desirable, including those specified in Section 3.4(c), to: (a) establish the Collateral Agent's "control" (within the meaning of Section 9-115 of the UCC) over any portion of the Investment Related Property constituting Certificated Securities, Uncertificated Securities, Securities Accounts or Securities Entitlements; (b) establish the Collateral Agent's sole dominion and control over all Deposit Accounts; (c) establish the Collateral Agent's "control" (within the meaning of Section 9-104 of Revised Article 9) over all Deposit Accounts; and (d) to deliver all Instruments to the Collateral Agent. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that: (i) without the prior written consent of the Collateral Agent, it shall not vote to enable or take any other action to: (a) amend or terminate any partnership agreement, limited liability company agreement, certificate of incorporation, by-laws or other organizational documents in any way that materially changes the rights of such Grantor with respect to any Investment Related Property or adversely affects the validity, perfection or priority of the Collateral Agent's security interest, (b) permit any issuer of any Pledged Equity Interest that is a Grantor to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer, (c) other than as permitted under the 2000 Credit Agreement, permit any issuer of any Pledged Equity Interest to dispose of all or a material portion of their assets, (d) waive any default under or breach of any terms of any organizational document relating to the issuer of any Pledged Equity Interest, or (e) cause any issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the UCC) on the date hereof to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC of any jurisdiction and, in any event, shall promptly notify the Collateral Agent in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Collateral Agent's "control" thereof; (ii) in the event it acquires rights in any Investment Related Property after the date hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, reflecting such new Investment Related Property and all other Investment Related Property. Notwithstanding the foregoing, it is understood and agreed that the security interest of the Collateral Agent shall attach to all Investment Related Property immediately upon any Grantor's acquisition of rights therein and shall 33 37 not be affected by the failure of any Grantor to deliver a supplement to Schedule 3.4 as required hereby; (iii) in the event such Grantor receives any dividends, interest or distributions on any Investment Related Property, or any securities or other property upon the merger, consolidation, liquidation or dissolution of any issuer of any Investment Related Property, then (a) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (b) such Grantor shall immediately take all steps necessary or advisable to ensure the validity, perfection, priority and, if applicable, control of the Collateral Agent over such Investment Related Property, including, without limitation, prompt delivery thereof to the Collateral Agent to be held in the Cash Collateral Account, and pending any such action such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of the Collateral Agent and shall be segregated from all other property of such Grantor; (iv) it shall comply with all of its obligations under any partnership agreement or limited liability company agreement relating to Pledged Partnership Interests or Pledged LLC Interests and shall enforce all of its rights with respect to any Investment Related Property; (v) in the event that the issuer of any Pledged Equity Interest is merged or consolidated with another entity, it shall deliver or otherwise pledge and grant to the Collateral Agent a security interest in such Grantor's equity interest resulting from such merger or consolidation in accordance herewith; provided that if the surviving or resulting entity upon any such merger or consolidation is a corporation organized under the laws of a jurisdiction outside of the United States, then such Grantor shall only be required to pledge equity interests having 65% of the voting power of all classes of capital stock of such issuer entitled to vote. (c) Delivery and Control. Each Grantor agrees that with respect to any Investment Related Property in which it currently has rights it shall comply with the provisions of this Section 3.4(c) on or before the date this agreement becomes effective as set forth in Section 12 and with respect to any Investment Related Property hereafter acquired by such Grantor it shall comply with the provisions of this Section 3.4(c) immediately upon acquiring rights therein, in each case in form and substance satisfactory to the Collateral Agent. With respect to any Investment Related Property that is represented by a certificate or that is an "instrument" (other than any Investment Related Property credited to a Securities Account) it shall cause such certificate or instrument to be delivered to the Collateral Agent, indorsed in blank by an "effective indorsement" (as defined in Section 8-107 of the UCC), regardless of whether such certificate constitutes a "certificated security" for purposes of the UCC. With respect to any Investment Related Property that is an "uncertificated security" for purposes of the UCC (other than any 34 38 "uncertificated securities" credited to a Securities Account), it shall cause the issuer of such uncertificated security to either (i) register the Collateral Agent as the registered owner thereof on the books and records of the issuer or (ii) execute an agreement substantially in the form of Exhibit B, pursuant to which such issuer agrees to comply with the Collateral Agent's instructions with respect to such uncertificated security without further consent by such Grantor. With respect to any Investment Related Property consisting of Securities Accounts or Securities Entitlements, it shall cause the securities intermediary maintaining such Securities Account or Securities Entitlement to enter into an agreement substantially in the form of Exhibit C pursuant to which it shall agree to comply with the Collateral Agent's "entitlement orders" without further consent by such Grantor. With respect to any Investment Related Property that is a "Deposit Account," it shall, subject to Section 7.15 of the Credit Agreement, cause the depositary institution maintaining such account to enter into an agreement substantially in the form of Exhibit D, pursuant to which the Collateral Agent shall have both sole dominion and control over such Deposit Account (within the meaning of the common law) and "control" (as defined in Section 9-104 of Revised Article 9) over such Deposit Account. In addition to the foregoing, if any issuer of any Investment Related Property is located in a jurisdiction outside of the United States, each Grantor shall take such additional actions, including, without limitation, causing the issuer to register the pledge on its books and records or making such filings or recordings, in each case as may be necessary or advisable, under the laws of such issuer's jurisdiction to insure the validity, perfection and priority of the security interest of the Collateral Agent. At any time during the continuation of a Default, the Collateral Agent shall have the right, without notice to any Grantor, to transfer all or any portion of the Investment Related Property to its name or the name of its nominee or agent. In addition, the Collateral Agent shall have the right at any time, without notice to any Grantor, to exchange any certificates or instruments representing any Investment Related Property for certificates or instruments of smaller or larger denominations. (d) Cash Collateral Account; Cash Management System. (i) On the date hereof there shall be established and, at all times thereafter until the security interest created by this Agreement shall have terminated, there shall be maintained by the Collateral Agent an account which shall be entitled the "Building Materials Corporation of America Cash Collateral Account" (the "Cash Collateral Account"); provided that the name of such account shall be changed following any change of name of BMCA. The Collateral Agent may establish and maintain one or more sub-accounts under the Cash Collateral Account, each of which shall constitute a part of the Cash Collateral Account. All moneys which are received by the Collateral Agent with respect to the Collateral at any time before a Notice of Acceleration Default shall have been given to the Collateral Agent by the Required Lender Representative shall be deposited in the Cash Collateral Account and thereafter 35 39 shall be invested and/or disbursed by the Collateral Agent in accordance with the terms of this Agreement. The Cash Collateral Account shall be under the exclusive dominion and control of the Collateral Agent and no Grantor shall be entitled to draw thereunder. Prior to the receipt by the Collateral Agent of a Notice of Default, all cash and investments in the Cash Collateral Account shall be invested and such investments sold and the proceeds thereof disbursed as set forth in clause (ii) below. Upon receipt of a Notice of Acceleration Default, all cash and investments in the Cash Collateral Account shall be transferred by the Collateral Agent to the Collateral Account under the Collateral Agent Agreement for disposition in accordance with the provisions thereof. (ii) Prior to the transfer thereof to the Collateral Account under the Collateral Agent Agreement as provided in clause (i) above or the release thereof as provided in clause (v) below, all cash in the Cash Collateral Account shall be invested and reinvested pursuant to written requests of BMCA and at the sole risk of the Grantors in investments of the type set forth in Section 4.3 (i), (ii) and (iii) of the Collateral Agent Agreement. Any loss, expense or tax incurred in connection with any such investment shall be for the sole account of the Grantors. All property purchased with funds in the Cash Collateral Account pursuant to this Section shall constitute part of the Collateral. (iii) Each Grantor shall establish and at all times thereafter maintain, and shall cause its Subsidiaries to establish and at all times thereafter maintain, a cash management system (the "Cash Management System") as described in this Section 3.4(d). In addition, each Grantor shall establish and at all times thereafter maintain one or more Deposit Accounts with one or more Qualified Depositary Institutions. Subject to Section 7.15 of the Credit Agreement, each Grantor shall cause its System Cash and the System Cash of its Subsidiaries to be deposited only in a System Cash Account. All System Cash Accounts shall be subject to the sole dominion and control of the Collateral Agent, and no Grantor shall have access to or any right to draw upon or withdraw any funds therefrom, except as set forth in clause (v) below with respect to the Disbursement Accounts. (iv) On the date hereof, there shall be established with The Bank of New York two accounts (each, a "Disbursement Account" and, individually, "Disbursement Account No. 1" and "Disbursement Account No. 2", respectively) against which each Grantor selected by BMCA shall be entitled to draw checks and request transfers, including ACH and wire transfers, from time to time for the payment of items of Indebtedness of such Grantor to fund costs when due and payable in the ordinary course of business and for other uses permitted by the 1999 Credit Agreement and the 2000 Credit Agreement. Also on the date hereof each Grantor (i) may establish or continue the use of one or more accounts (each, a "Payroll Account") for paying payroll and related benefit costs and remitting withholding and other payroll taxes and costs and (ii) may establish one or more Petty Cash Accounts. 36 40 (v) Prior to the receipt by the Collateral Agent of a Notice of Default, the Collateral Agent shall release (A) cash to Disbursement Account No. 1 for transfer to one or more Payroll Accounts in such amounts as are requested by BMCA from time to time to cover payroll and related benefit costs and amounts required to be remitted for withholding and other payroll taxes and costs of the Grantors, (B) cash to Disbursement Account No. 1 in amounts requested by BMCA from time to time to pay checks when presented for payment against such Disbursement Account and for transfers (including ACH and wire transfers) out of such Disbursement Account, each for the payment of items of Indebtedness of Grantors to fund costs when due and payable in the ordinary course of business and other uses permitted by the 1999 Credit Agreement and the 2000 Credit Agreement, (C) cash to Disbursement Account No. 2 in amounts requested by BMCA from time to time to be used for the same purposes as permitted under subclause (B) above, except that balances in Disbursement Account No. 2 shall be swept on a daily basis only to the extent set forth below, (D) cash to Disbursement Account No. 1 for transfer to one or more Petty Cash Accounts in such amounts as are requested by BMCA from time to time to reimburse employees as permitted under the 2000 Credit Agreement and (E) cash to Disbursement Account No. 1 for transfer to BMCA Receivables in amounts requested by BMCA from time to time to the extent such cash consists of collections belonging to BMCA Receivables which are required to be paid over to BMCA Receivables pursuant to the Receivables Purchase Documents. BMCA shall be deemed to represent that there is no Default or Event of Default (each, as defined in the 1999 Credit Agreement or the 2000 Credit Agreement) in connection with each release of cash from the Cash Collateral Account contemplated by this clause (v). Requests for releases of cash contemplated by this clause (v) shall be in writing. The Collateral Agent shall be fully protected in complying with all requests for releases of cash believed by it to be genuine and made by an authorized officer of BMCA. All funds in System Cash Accounts (excluding funds credited to Payroll Accounts and funds consisting of collections belonging to BMCA Receivables) shall constitute Collateral hereunder and shall be subject to the security interest created herein in favor of the Collateral Agent for the benefit of the Secured Parties. After receipt by the Collateral Agent of a Notice of Default which has not been withdrawn, no further releases pursuant to this clause (v) shall be made, other than releases requested under subclauses (A) and (E) above. It is agreed that Disbursement Account No. 1 and Disbursement Account No. 2 are System Cash Accounts to be subject to Depositary Control Agreements, except that balances in Disbursement Account No. 2 shall be swept on a daily basis only to the extent they exceed $1,000,000. (e) Voting and Distributions. (i) So long as no Default shall be continuing: (A) except as otherwise provided in Section 3.4(b)(i) of this Agreement or elsewhere herein or in the 1999 Credit Agreement and the 2000 Credit Agreement, each Grantor shall be entitled to exercise or 37 41 refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof for any purpose not inconsistent with the terms of this Agreement, the 1999 Credit Agreement and or the 2000 Credit Agreement; provided, no Grantor shall exercise or refrain from exercising any such right if the Collateral Agent shall have notified such Grantor that, in the Collateral Agent's reasonable judgment, such action would have a material adverse effect on the value of the Investment Related Property or any part thereof; and provided further, such Grantor shall give the Collateral Agent at least five Business Days' prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right; it being understood, however, that neither the voting by such Grantor of any Pledged Stock for, nor such Grantor's consent to, the election of directors (or similar governing body) at a regularly scheduled annual or other meeting of stockholders or with respect to incidental matters at any such meeting, nor such Grantor's consent to or approval of any action otherwise permitted under this Agreement, the 1999 Credit Agreement and the 2000 Credit Agreement, shall be deemed inconsistent with the terms of this Agreement, the 1999 Credit Agreement or the 2000 Credit Agreement within the meaning of this Clause (A), and no notice of any such voting or consent need be given to the Collateral Agent; and (B) the Collateral Agent shall promptly execute and deliver (or cause to be executed and delivered) to each Grantor all proxies, and other instruments as such Grantor may from time to time reasonably request for the purpose of enabling such Grantor to exercise the voting and other consensual rights when and to the extent which it is entitled to exercise pursuant to clause (A) above; (ii) During the continuation of a Default: (A) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right to exercise such voting and other consensual rights; and (B) in order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (1) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (2) each Grantor acknowledges that the Collateral Agent may utilize the power of attorney set forth in Section 5. 38 42 3.5 Letter of Credit Rights. Each Grantor hereby represents and warrants that all material letters of credit to which such Grantor is a beneficiary are listed on Schedule 3.5 hereto. 3.6 Intellectual Property Collateral. (a) Representations and Warranties. Except as disclosed in Schedule 3.6(H), each Grantor hereby represents and warrants, that: (i) Schedule 3.6 sets forth a true and complete list of (i) all United States, state and foreign registrations of and applications for Patents, Trademarks, and Copyrights owned by each Grantor and (ii) all Patent Licenses, Trademark Licenses and Copyright Licenses material to the business of such Grantor; (ii) it is the sole and exclusive owner of the entire right, title, and interest in and to all Intellectual Property Collateral on Schedule 3.6, and owns or has the valid right to use all other Intellectual Property Collateral used in or necessary to conduct its business, free and clear of all Liens, claims, encumbrances and licenses, except for Permitted Liens and the licenses set forth on Schedule 3.6(B), (D), (F) and (G); (iii) all Intellectual Property Collateral material to the business of each Grantor is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, and each Grantor has performed all acts and has paid all renewal, maintenance, and other fees and taxes required to maintain each and every registration and application of such Intellectual Property Collateral in full force and effect; (iv) all Intellectual Property Collateral material to the business of each Grantor is valid and enforceable; no holding, decision, or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity of, such Grantor's right to register, or such Grantor's rights to own or use, any such Intellectual Property Collateral and no such action or proceeding is pending or, to the best of such Grantor's knowledge, threatened; (v) all registrations and applications for Copyrights, Patents and Trademarks are standing in the name of each Grantor, and none of the Trademarks, Patents, Copyrights or Trade Secret Collateral has been licensed by any Grantor to any affiliate or third party, except as disclosed in Schedule 3.6(B), (D), (F), or (G); (vi) each Grantor has been using appropriate statutory notice of registration in connection with its use of registered Trademarks, proper marking practices in connection with the use of Patents, and appropriate notice of copyright in connection with the publication of Copyrights material to the business of such Grantor; 39 43 (vii) the conduct of such Grantor's business does not, to such Grantor's knowledge, infringe upon any trademark, patent, copyright, trade secret or similar intellectual property right owned or controlled by a third party; no claim has been made that the use of any Intellectual Property Collateral owned or used by Grantor (or any of its respective licensees) violates the asserted rights of any third party; (viii) to such Grantor's knowledge, no third party is infringing upon any Intellectual Property Collateral owned or used by each Grantor, or any of its respective licensees; (ix) no settlement or consents, covenants not to sue, non-assertion assurances, or releases have been entered into by any Grantor or to which such Grantor is bound that adversely effect such Grantor's rights to own or use any Intellectual Property Collateral that is material to the business of such Grantor; and (x) There is no effective financing statement or other document or instrument now executed, or on file or recorded in any public office, granting a security interest in or otherwise encumbering any part of the Intellectual Property Collateral, other than in favor of the Collateral Agent. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees as follows: (i) it shall not do any act or omit to do any act whereby any of the Intellectual Property Collateral which is material to the business of Grantor may lapse, or become abandoned, dedicated to the public, or unenforceable, or which would adversely affect the validity, grant, or enforceability of the security interest granted therein; (ii) it shall, within thirty days of the creation or acquisition of any Copyrightable work which is material to the business of Grantor, apply to register the Copyright in the United States Copyright Office; (iii) it shall promptly notify the Collateral Agent if it knows or has reason to know that any item of the Intellectual Property Collateral that is material to the business of any Grantor may become (a) abandoned or dedicated to the public or placed in the public domain, (b) invalid or unenforceable, or (c) subject to any adverse determination or development (including the institution of proceedings) in any action or proceeding in the United States Patent and Trademark Office, the United States Copyright Office, and state registry, any foreign counterpart of the foregoing, or any court; 40 44 (iv) it shall take all reasonable steps in the United States Patent and Trademark Office, the United States Copyright Office, any state registry or any foreign counterpart of the foregoing, to pursue any application and maintain any registration of each Trademark, Patent, and Copyright owned by any Grantor and material to its business which is now or shall become included in the Intellectual Property Collateral (except for such works with respect to which such Grantor has determined in the exercise of its commercially reasonable judgment that it shall not seek registration) including, but not limited to, those items on Schedule 3.6(A), (C) and (E); (v) in the event that any Intellectual Property Collateral owned by or exclusively licensed to any Grantor that is material to the business of such Grantor is infringed, misappropriated, or diluted by a third party, such Grantor shall promptly take all reasonable actions to stop such infringement, misappropriation, or dilution and protect its exclusive rights in such Intellectual Property Collateral including, but not limited to, the initiation of a suit for injunctive relief and to recover damages; (vi) it shall promptly (but in no event more than thirty days after any Grantor obtains knowledge thereof) report to the Collateral Agent (i) the filing of any application to register any Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office, or any state registry or foreign counterpart of the foregoing (whether such application is filed by such Grantor or through any agent, employee, licensee, or designee thereof) and (ii) the registration of any Intellectual Property Collateral by any such office, in each case by executing and delivering to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto; (vii) it shall, promptly upon the reasonable request of the Collateral Agent, execute and deliver to the Collateral Agent any document required to acknowledge, confirm, register, record, or perfect the Collateral Agent's interest in any part of the Intellectual Property Collateral, whether now owned or hereafter acquired; (viii) except with the prior consent of the Collateral Agent or as permitted under the Credit Agreement, each Grantor shall not execute, and there will not be on file in any public office, any financing statement or other document or instruments, except financing statements or other documents or instruments filed or to be filed in favor of the Collateral Agent, and each Grantor shall not sell, assign, transfer, license, grant any option, or create or suffer to exist any Lien upon or with respect to the Intellectual Property Collateral, except (i) for the Lien created by and under this Agreement and the other Credit Documents, (ii) Permitted Liens and (iii) that a Grantor may license or sublicense its Intellectual Property in the ordinary course of its business; (ix) it shall take all steps reasonably necessary to protect the secrecy of all trade secrets relating to the products and services 41 45 sold or delivered under or in connection with the Intellectual Property Collateral, including, without limitation, entering into confidentiality agreements with employees and labeling and restricting access to secret information and documents; (x) it shall use proper statutory notice in connection with its use of any of the Intellectual Property Collateral; and (xi) it shall continue to collect, at its own expense, all amounts due or to become due to such Grantor in respect of the Intellectual Property Collateral or any portion thereof. In connection with such collections, each Grantor may take (and, at the Collateral Agent's reasonable direction, shall take) such action as such Grantor or the Collateral Agent may deem reasonably necessary or advisable to enforce collection of such amounts. Notwithstanding the foregoing, the Collateral Agent shall have the right at any time, to notify, or require any Grantor to notify, any obligors with respect to any such amounts of the existence of the security interest created hereby. SECTION 4. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS. 4.1 Access; Right of Inspection. At all reasonable times upon reasonable prior notice, the Collateral Agent shall have full and free access during normal business hours to all the books, correspondence and records of each Grantor, and the Collateral Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Grantor agrees to render to the Collateral Agent, at such Grantor's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. At all reasonable times upon reasonable prior notice, the Collateral Agent shall also have the right to enter any premises of each Grantor and inspect any property of each Grantor where any of the Intellectual Property, Inventory or Equipment of such Grantor granted pursuant to this Agreement is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. 4.2 Further Assurances. (a) Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall: 42 46 (i) execute and file such financing or continuation statements, or amendments thereto, and execute and deliver such other agreements, instruments, indorsements, powers of attorney or notices, as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (ii) take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in the Intellectual Property Collateral with any intellectual property registry in which said Intellectual Property Collateral is registered or in which an application for registration is pending including, without limitation, the United States Patent and Trademark Office, the United States Copyright Office, the various Secretaries of State, and the foreign counterparts on any of the foregoing; (iii) on the earlier of (A) the date of effectiveness of Revised Article 9 in the State of New York or (B) the date of effectiveness of Revised Article 9 in any other material jurisdiction, take such action as is reasonably requested by the Collateral Agent to maintain the validity, perfection and priority of the lien and security interest granted hereby, including, without limitation, with respect to the execution and filing of any financing statements and continuation statements as are necessary to maintain the validity, perfection and priority of such lien and security interest under Revised Article 9; (iv) at all reasonable times upon reasonable prior notice, exhibit the Collateral to and allow inspection of the Collateral by the Collateral Agent, or persons designated by the Collateral Agent; and (v) at the Collateral Agent's request, appear in and defend any action or proceeding that may affect such Grantor's title to or the Collateral Agent's security interest in all or any part of the Collateral. (b) In addition, to the extent permitted by applicable law, each Grantor hereby authorizes the Collateral Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of such Grantor. Each Grantor agrees that a photographic or other reproduction of this Agreement or of a financing statement signed by such Grantor shall be sufficient as a financing statement and may be filed as a financing statement in any and all jurisdictions. Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail. 43 47 (c) Each Grantor hereby authorizes the Collateral Agent to file a record or records (as defined in Revised Article 9), including, without limitation, financing statements, in all jurisdictions and with all filing offices as the Collateral Agent may determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the Collateral Agent herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection the security interest in the Collateral granted to the Collateral Agent herein, including, without limitation, describing such property as "all assets" or "all personal property." (d) Each Grantor hereby authorizes the Collateral Agent to modify this Agreement after obtaining such Grantor's approval of or signature to such modification by amending Schedule 3.6 to include reference to any right, title or interest in any existing Intellectual Property Collateral or any Intellectual Property Collateral acquired or developed by any Grantor after the execution hereof or to delete any reference to any right, title or interest in any Intellectual Property Collateral in which any Grantor no longer has or claims any right, title or interest. 4.3 Additional Grantors. From time to time subsequent to the date hereof, additional Persons may become parties hereto as additional Grantors (each, an "Additional Grantor"), by executing a Security Agreement Supplement. Upon delivery of any such Security Agreement Supplement to the Collateral Agent, notice of which is hereby waived by each Grantor, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of the Collateral Agent not to cause any Person to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. SECTION 5. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. 5.1 Power of Attorney. Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled with an interest) as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from time to time to take any action and to execute any instrument necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, the following: 44 48 (a) during the continuation of any Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to the Collateral Agent pursuant to the Credit Agreement; (b) during the continuation of any Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; (c) during the continuation of any Default, to receive, indorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above; (d) during the continuation of any Default, to file any claims or take any action or institute any proceedings that the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral; (e) to prepare, sign and file any UCC financing statements in the name of such Grantor as debtor; (f) to prepare, sign, and file for recordation in any intellectual property registry, appropriate evidence of the lien and security interest granted herein in the Intellectual Property Collateral in the name of Grantor as assignor; (g) to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including, without limitation, access to pay or discharge taxes or Liens (other than Liens permitted under this Agreement or the 2000 Credit Agreement and Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole discretion, any such payments made by the Collateral Agent to become obligations of such Grantor to the Collateral Agent, due and payable immediately without demand; and (h) generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and to do, at the Collateral Agent's option and such Grantor's expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to protect, preserve or realize upon the Collateral and the Collateral Agent's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 45 49 5.2 No Duty on the Part of Collateral Agent or Secured Parties. The powers conferred on the Collateral Agent hereunder are solely to protect the interests of the Secured Parties in the Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise any such powers. The Collateral Agent and the Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. SECTION 6. REMEDIES. 6.1 Generally. (a) If any Default shall be continuing, the Collateral Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of the Collateral Agent on default under the UCC (whether or not the UCC applies to the affected Collateral), and also may pursue any of the following separately, successively or simultaneously: (i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process; (iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Collateral Agent deems appropriate; (iv) without notice except as specified below, sell, assign, lease, license (on an exclusive or non-exclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Required Lender Representative may deem commercially reasonable; and (v) exercise dominion and control over, and refuse to permit further withdrawals (whether of money, securities, instruments or other property) from any Deposit Account maintained with the Collateral Agent constituting part of the Collateral. 46 50 (b) The Collateral Agent or any Secured Party may be the purchaser of any or all of the Collateral at any such sale and the Collateral Agent, as Collateral Agent for and representative of the Secured Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Obligations, each Grantor shall be liable for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Obligations becoming due and payable prior to their stated maturities. Nothing in this Section shall in any way alter the rights of the Collateral Agent hereunder. (c) The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral. The Collateral Agent may specifically disclaim any warranties of title or the like. This procedure will not be considered to adversely effect the commercial reasonableness of any sale of the Collateral. 47 51 (d) If the Collateral Agent sells any of the Collateral on credit, the Obligations will be credited only with payments actually made by the purchaser and received by the Collateral Agent and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, the Collateral Agent may resell the Collateral. (e) The Collateral Agent shall have no obligation to marshall any of the Collateral. 6.2 Investment Related Property. Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If the Collateral Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Collateral Agent all such information as the Collateral Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. 6.3 Intellectual Property Collateral. (a) Anything contained herein to the contrary notwithstanding, at any time during the continuation of a Default: (i) the Collateral Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding 48 52 in the name of any Grantor, the Collateral Agent or otherwise, in the Collateral Agent's sole discretion, to enforce any Intellectual Property Collateral, in which event such Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all documents required by the Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon demand, reimburse and indemnify the Collateral Agent as provided in Section 10 hereof in connection with the exercise of its rights under this Section, and, to the extent that the Collateral Agent shall elect not to bring suit to enforce any Intellectual Property Collateral as provided in this Section, each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Intellectual Property Collateral by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing as shall be necessary to prevent such infringement; (ii) upon written demand from the Collateral Agent, each Grantor shall grant, assign, convey or otherwise transfer to the Collateral Agent all of such Grantor's right, title and interest in and to the Intellectual Property Collateral and shall execute and deliver to the Collateral Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement; (iii) each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Obligations outstanding only to the extent that the Collateral Agent (or any Secured Party) receives cash proceeds in respect of the sale of, or other realization upon, the Intellectual Property Collateral; (iv) within five (5) Business Days after written notice from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantor's power and authority, such personnel in such Grantor's employ on the date of such Default as the Collateral Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with the Trademarks, Trademark Licenses, such persons to be available to perform their prior functions on the Collateral Agent's behalf and to be compensated by the Collateral Agent at such Grantor's expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Default; and (v) the Collateral Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of the Intellectual Property Collateral, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Collateral Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the 49 53 amount or payment thereof, in the same manner and to the same extent as such Grantor might have done; (vi) all amounts and proceeds (including checks and other instruments) received by Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 6.5; and (vii) Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. (b) If (i) a Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Default shall be continuing, (iii) an assignment or other transfer to the Collateral Agent of any rights, title and interests in and to the Intellectual Property Collateral shall have been previously made and shall have become absolute and effective, and (iv) the Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Collateral Agent shall promptly execute and deliver to such Grantor, at such Grantor's sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Collateral Agent as aforesaid, subject to any disposition thereof that may have been made by the Collateral Agent; provided, after giving effect to such reassignment, the Collateral Agent's security interest granted pursuant hereto, as well as all other rights and remedies of the Collateral Agent granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of all Liens other than Liens (if any) encumbering such rights, title and interest at the time of their assignment to the Collateral Agent and Permitted Liens. (c) Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Section 6 and at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Collateral Agent, to the extent it has the right to do so, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual Property Collateral now owned or hereafter acquired by such Grantor, and wherever the same may be located. 50 54 6.4 Cash Proceeds. In addition to the rights of the Collateral Agent specified in Section 3.3 with respect to payments of Receivables, all proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, "Cash Proceeds") shall be held by such Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required) for deposit in the Cash Collateral Account to be held and disposed of as provided in Section 3.4(c). 6.5 Application of Proceeds. All proceeds received by the Collateral Agent in respect of any sale, any collection from, or other realization upon all or any part of the Collateral shall be applied as provided in the Collateral Agent Agreement. SECTION 7. COLLATERAL AGENT. The Collateral Agent has been appointed to act as Collateral Agent hereunder pursuant to the terms of the Collateral Agent Agreement. The duties, powers, rights, limitations of liability, the standard of care, the disclaimers and indemnifications in favor of the Collateral Agent are set forth in the Collateral Agent Agreement, the provisions for which are incorporated herein as if fully set forth herein. In the event of a conflict between any of the provisions of this Agreement and any of the provisions of the Collateral Agent Agreement, the provisions of the Collateral Agent Agreement shall control. SECTION 8. CONTINUING SECURITY INTEREST. This Agreement and the security interest granted herein shall terminate at such time as the Collateral Agent releases the security interest pursuant to the provisions of Section 7.1 (a) of the Collateral Agent Agreement. In connection with any termination, partial termination, release or partial release of the security interest pursuant to this Agreement or a Credit Agreement, the Collateral Agent, at the direction of the Required Lender Representative, shall execute and deliver to the applicable Grantor at the expense of such Grantor such UCC termination or release statements and similar documents that such Grantor shall reasonably request to evidence any such termination or release. Any execution and delivery of documents pursuant to this Section shall be without recourse to the Collateral Agent. SECTION 9. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM. The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to 51 55 any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor as an additional Obligation secured by the Collateral. SECTION 10. INDEMNITY AND EXPENSES. (a) Each Grantor agrees: (i) to defend (subject to the Indemnitees' selection of counsel), indemnify, pay and hold harmless each Indemnitee, from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including without limitation enforcement of this Agreement), except to the extent such claims, losses or liabilities result from such Indemnitee's gross negligence or willful misconduct; and (ii) to pay to the Collateral Agent promptly following written demand the amount of any and all reasonable costs and reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents in accordance with the terms and conditions of the Credit Documents. (b) The obligations of each Grantor in this Section 10 shall survive the resignation or removal of the Collateral Agent and the termination of this Agreement and the discharge of such Grantor's other obligations under this Agreement, the Hedge Agreements and Credit Documents. SECTION 11. NOTICES. All communications and notices hereunder shall be in writing and given as provided in Section 9.2 of the Collateral Agent Agreement. SECTION 12. BINDING EFFECT; SEVERAL AGREEMENT; ASSIGNMENTS. 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. This Agreement shall become effective as to the Grantors at such time as 52 56 the 1999 Credit Agreement and the 2000 Credit Agreement have become effective and when a counterpart hereof executed on behalf of the Grantors shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon the Grantors and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of the Grantors, the Collateral Agent and the other Secured Parties, and their respective successors and assigns, except that of the Grantors shall not have the right to assign its rights or obligations hereunder or any interest herein or in the Collateral (and any such attempted assignment shall be void), except as expressly contemplated by this Agreement. SECTION 13. SURVIVAL OF AGREEMENT; SEVERABILITY. All covenants, agreements, representations and warranties made by the Grantors herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Collateral Agent and the other Secured Parties and shall survive the execution and delivery hereof. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). 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 14. AMENDMENTS. This Agreement may not be amended, revised, restated or supplemented without the prior written consent of BMCA, acting for itself and each other Grantor, and the Collateral Agent. SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS, BUT INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW. 53 57 SECTION 16. COUNTERPARTS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which, when taken together, shall constitute but one contract, and shall become effective as provided in Section 12. Delivery of an executed counterpart of this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement. SECTION 17. HEADINGS. Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 18. JURISDICTION; CONSENT TO SERVICE OF PROCESS. Each Grantor 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 County, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Collateral Agent or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against any Grantor or any of its property, in the courts of any jurisdiction. Each Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that 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 in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 11. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by law. 54 58 SECTION 19. 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. EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 55 59 IN EVIDENCE OF THE FOREGOING, each Grantor and the Collateral Agent have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss ---------------------------------------- Name: Susan B. Yoss -------------------------------------- Title: Senior Vice President and Treasurer ------------------------------------- BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. 56 60 U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP. By: /s/ Susan B. Yoss --------------------------------------- Name: Susan B. Yoss ------------------------------------- Title: Senior Vice President and Treasurer ------------------------------------ THE BANK OF NEW YORK, not in its individual capacity, but solely as the Collateral Agent under the Collateral Agent Agreement By: /s/ Kevin C. Cremin -------------------------------------- Name: Kevin C. Cremin ------------------------------------ Title: Vice President ----------------------------------- 57 EX-10.19 19 y46546ex10-19.txt COLLATERAL AGENT AGREEMENT 1 Exhibit 10.19 ------------- COLLATERAL AGENT AGREEMENT by and among BUILDING MATERIALS CORPORATION OF AMERICA AND EACH OTHER GRANTOR A PARTY HERETO, EACH ADMINISTRATIVE AGENT, THE CHASE MANHATTAN BANK, FLEET NATIONAL BANK AND EACH SENIOR NOTE TRUSTEE A PARTY HERETO and THE BANK OF NEW YORK, AS COLLATERAL AGENT -------------------------- Dated as of December 22, 2000 2 TABLE OF CONTENTS
PAGE ---- SECTION 1. DEFINITIONS AND OTHER MATTERS........................................................................2 Section Definitions...........................................................................................2 Section 1.2 Interpretation.....................................................................................2 SECTION 2 CERTAIN OBLIGATIONS AND DUTIES OF THE COLLATERAL AGENT AND THE GRANTORS; POWERS OF ATTORNEY............2 Section 2.1 Authorization to Execute Security Documents........................................................2 Section 2.2 Certain Representations and Warranties of the Collateral Agent.....................................2 Section 2.3 Actions: Control of the Collateral Agent...........................................................2 Section 2.4 Additional Security Documents......................................................................2 Section 2.5 Powers of Attorney to the Collateral Agent and to BMCA.............................................2 Section 2.6 Copies of Letters and Documents....................................................................2 SECTION 3 ACTIONABLE DEFAULTS; REMEDIES..........................................................................2 Section 3.1 Actionable Default.................................................................................2 Section 3.2 Remedies...........................................................................................2 Section 3.3 Right to Initiate Judicial Proceedings, etc........................................................2 Section 3.4 Appointment of a Receiver..........................................................................2 Section 3.5 Exercise of Powers.................................................................................2 Section 3.6 Remedies Not Exclusive.............................................................................2 Section 3.7 Waiver of Certain Rights...........................................................................2 Section 3.8 Limitation on Collateral Agent's Duties in Respect of Collateral...................................2 Section 3.9 Limitation by Law..................................................................................2 Section 3.10 Absolute Rights of the Beneficiaries..............................................................2 SECTION 4. COLLATERAL ACCOUNT; APPLICATION OF MONEYS.............................................................2 Section 4.1 The Collateral Account.............................................................................2 Section 4.2 Grant of Security Interest; Control of Collateral Account..........................................2 Section 4.3 Investment of Funds Deposited in Collateral Account................................................2 Section 4.4 Application of Investments.........................................................................2 SECTION 5. AGREEMENTS WITH THE COLLATERAL AGENT..................................................................2 Section 5.1 Delivery of Documents..............................................................................2 Section 5.2 Information as to Beneficiaries....................................................................2 Section 5.3 Compensation and Expenses..........................................................................2 Section 5.4 Stamp and Other Similar Taxes......................................................................2 Section 5.5 Filing Fees, Excise Taxes, etc.....................................................................2 Section 5.6 Indemnification....................................................................................2 Section 5.7 Further Assurances.................................................................................2 SECTION 6. COLLATERAL AGENT......................................................................................2 Section 6.1 Acceptance of Trust................................................................................2 Section 6.2 Exculpatory Provisions.............................................................................2 Section 6.3 Delegation of Duties..............................................................................2 Section 6.4 Reliance by Collateral Agent.......................................................................2 Section 6.5 Limitations on Duties of the Collateral Agent......................................................2 Section 6.6 Moneys Held by Collateral Agent....................................................................2 Section 6.7 Resignation and Removal of the Collateral Agent....................................................2 Section 6.8 Status of Successors to the Collateral Agent.......................................................2 Section 6.9 Merger of the Collateral Agent.....................................................................2 Section 6.10 Additional Co-Collateral Agents; Separate Collateral Agents.......................................2 SECTION 7. RELEASE OF COLLATERAL..................................................................................2 Section 7.1 Conditions to Release of Collateral................................................................2 Section 7.2 Actions Following Release of the Collateral.......................................................2 SECTION 8 AGREEMENTS AMONG BENEFICIARIES.........................................................................2 Section 8.1 Other Agreements Among Beneficiaries...............................................................2 Section 8.2 Payment of Collateral Agent's Fees.................................................................2 Section 8.3 Invalidation of Payments...........................................................................2 SECTION 9. OTHER PROVISIONS......................................................................................2
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PAGE ---- Section 9.1 Amendments, Supplements and Waivers................................................................2 Section 9.2 Notices............................................................................................2 Section 9.3 Severability.......................................................................................2 Section 9.4 Dealings with the Grantors.........................................................................2 Section 9.5 Claims Against the Collateral Agent................................................................2 Section 9.6 Binding Effect.....................................................................................2 Section 9.7 Conflict with Other Agreements.....................................................................2 Section 9.8 Governing Law......................................................................................2 Section 9.9 Counterparts.......................................................................................2 Section 9.10 Consent to Jurisdiction...........................................................................2 Section 9.11 Waiver of Jury Trial..............................................................................2
4 COLLATERAL AGENT AGREEMENT COLLATERAL AGENT AGREEMENT (this "Agreement"), dated as of December 22, 2000, by and among BUILDING MATERIALS CORPORATION OF AMERICA, a Delaware corporation ("BMCA" or the "Borrower"), each Subsidiary of BMCA a party hereto, the 1999 Administrative Agent (as defined in Recital A), each Senior Note Trustee (as defined in Recital B), the 2000 Administrative Agent (as defined in Recital C), THE CHASE MANHATTAN BANK, FLEET NATIONAL BANK and THE BANK OF NEW YORK, a New York trust company as collateral agent (in such capacity, the "Collateral Agent"). RECITALS: (A) Reference is made to the Amended and Restated Credit Agreement, dated as of December 4, 2000 (the "1999 Credit Agreement"), among BMCA, the lenders from time to time party thereto (each, a "1999 Lender" and, collectively, the "1999 Lenders"), Fleet National Bank, as Documentation Agent, Bear Stearns Corporate Lending, as Syndication Agent, and The Bank of New York, as Administrative Agent (in such capacity, the "1999 Administrative Agent") and Swing Line Lender, under which the 1999 Lenders have agreed to make or participate in the making of Revolving Credit Loans and Swing Line Loans (collectively, the "1999 Loans") to the Borrower upon the terms and subject to the conditions specified in the 1999 Credit Agreement. In addition, one or more of the 1999 Lenders under the 1999 Credit Agreement (each, a "1999 Issuing Bank" and, collectively, the "1999 Issuing Banks") have agreed to issue Letters of Credit (the "1999 Letters of Credit ") for the account of the Borrower, and the 1999 Lenders have agreed to participate therein, upon the terms and subject to the conditions specified in the 1999 Credit Agreement. Certain Subsidiaries of the Borrower (the "1999 Guarantors") have guaranteed the payment of the obligations of the Borrower under the 1999 Credit Agreement, including the 1999 Loans and the 1999 Letters of Credit, pursuant to Subsidiary Guaranties or Supplements to Subsidiary Guaranties executed and delivered in connection with the 1999 Credit Agreement or thereafter with respect thereto (the "1999 Guaranties"). (B) Reference is also made to: (i) the Indenture, dated as of December 9, 1996, between BMCA and The Bank of New York, as trustee (the "2006 Trustee"), pursuant to which 8 5/8% senior notes due 2006 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2006 Indenture"), (ii) the Indenture, dated as of October 20, 1997, between BMCA and The Bank of New York, as trustee (the "2007 Trustee"), pursuant to which 8% senior notes due 2007 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2007 Indenture"), (iii) the Indenture, dated as of July 17, 1998, between BMCA and The Bank of New York, as trustee (the "2005 Trustee"), pursuant to which 7.75% 5 senior notes due 2005 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2005 Indenture"), (iv) the Indenture, dated as of December 3, 1998, between BMCA and The Bank of New York, as trustee (the "2008 Trustee"), pursuant to which 8.00% senior notes due 2008 were issued, as supplemented by Supplements dated as of January 1, 1999 and December 4, 2000 (the "2008 Indenture"), and (v) the Indenture, dated as of July 5, 2000, between BMCA and The Bank of New York, as trustee (the "2002 Trustee", and collectively with the 2006 Trustee, the 2007 Trustee, the 2005 Trustee and the 2008 Trustee, the "Senior Note Trustees"), pursuant to which the 10.50% senior notes due 2002 were issued, as supplemented by Supplement, dated as of December 4, 2000 (the "2002 Indenture", and collectively with the 2006 Indenture, the 2007 Indenture, the 2005 Indenture and the 2008 Indenture, the "Senior Note Indentures"). Payment of each Senior Note issued under each Senior Note Indenture is guaranteed by certain Subsidiaries of BMCA (each, a "Senior Note Guarantor") pursuant to Guaranties ("Senior Note Guaranties") executed in connection therewith or thereafter with respect thereto. The senior notes issued pursuant to the Indentures (the "Senior Notes") are and will be, from time to time, held by various holders (collectively, the "Noteholders"). (C) Reference is further made to the Credit Agreement, dated as of December 4, 2000 (the "2000 Credit Agreement"), among BMCA, the lenders from time to time party thereto (each, a "2000 Lender" and, collectively, the "2000 Lenders"), and The Bank of New York, as Administrative Agent (in such capacity, the "2000 Administrative Agent") and Swing Line Lender, under which the 2000 Lenders have agreed to make or participate in the making of Revolving Credit Loans and Swing Line Loans (collectively, the "2000 Loans") to the Borrower upon the terms and subject to the conditions specified in the 2000 Credit Agreement. In addition, one or more of the 2000 Lenders under the 2000 Credit Agreement (each a "2000 Issuing Bank" and, collectively, the "2000 Issuing Banks") has agreed to issue Letters of Credit (the "2000 Letters of Credit ") for the account of the Borrower, and the 2000 Lenders have agreed to participate therein, upon the terms and subject to the conditions specified in the 2000 Credit Agreement. Certain Subsidiaries of the Borrower (the "2000 Guarantors") have guaranteed the payment of the obligations of the Borrower under the 2000 Credit Agreement, including the 2000 Loans, the 2000 Letters of Credit, the Chase Platinum Obligations and the Fleet LC Obligations pursuant to Subsidiary Guaranties or Supplements to Subsidiary Guaranties executed and delivered in connection with the 2000 Credit Agreement, the Chase Platinum Substitute Note and the Fleet LC Agreement or thereafter with respect thereto (the "2000 Guaranties"). (D) In consideration for the execution and delivery of: (i) the 1999 Credit Agreement by the 1999 Administrative Agent and the 1999 Lenders, (ii) a Supplement, dated as of December 4, 2000, to each Senior Note Indenture by each Senior Note Trustee (collectively, the "Indenture Supplements"), (iii) the 2000 Credit Agreement by the 2000 Administrative Agent and the 2000 Lenders, the Chase Platinum Agreement by The Chase Manhattan Bank and the Fleet LC Agreement by Fleet National Bank, the Borrower, the 1999 Guarantors, the 2000 Guarantors and the other Subsidiaries of the Borrower that are signatories thereto have executed and delivered the Security Agreement (as hereinafter defined) with the 2 6 Collateral Agent to secure, subject to the terms and conditions of this Agreement and the Security Documents (as hereinafter defined), the payment of the Secured Debt (as hereinafter defined). (E) The execution, delivery and effectiveness of the 1999 Credit Agreement, each of the Indenture Supplements, the 2000 Credit Agreement, the Chase Platinum Agreement and the Fleet LC Agreement are conditioned upon this Agreement having been duly executed and delivered. COLLATERAL AGENCY: To secure the payment, observance and performance of the Secured Debt and in consideration of the premises and the mutual agreements set forth herein, the Collateral Agent does hereby acknowledge and accept that it holds as Collateral Agent, to the extent actually received as Collateral Agent, pursuant to this Agreement, all of the following (and each Grantor does hereby consent thereto): (A) the Security Agreement and the Mortgages and the Liens granted to the Collateral Agent thereunder; (B) the UCC financing statements required to be delivered pursuant to the 1999 Credit Agreement and the 2000 Credit Agreement; (C) each agreement entered into and delivered, from time to time, pursuant to Sections 2.4, 5.7 or 9.1(b) and the collateral granted to the Collateral Agent thereunder; (D) the Guaranties; (E) the Collateral Agreement Collateral (as hereinafter defined); and (F) the Proceeds (as hereinafter defined) of each of the foregoing. The foregoing Security Documents and the Collateral (as hereinafter defined) and the Proceeds of any and all thereof (the right, title and interest of the Collateral Agent in the Security Documents and the Collateral and such Proceeds being hereinafter referred to as the "Secured Debt Collateral"). The Collateral Agent hereby holds the Collateral under and subject to the terms and conditions set forth herein and in the Security Documents, and for the benefit of the Beneficiaries (as hereinafter defined) and for the enforcement of the payment of all Secured Debt, and for the performance of and compliance with the covenants and conditions of this Agreement, the 1999 Credit Agreement, the Senior Note Indentures, the 2000 Credit Agreement, the Chase Platinum Agreement, the Fleet LC Agreement, each other Credit Document (as hereinafter defined) and each of the Security Documents. If the Grantors, or their successors or assigns, shall satisfy all of the conditions set forth in Section 7 with respect to all or any part of the Collateral, as the case may be, then (i) if with respect to all of the 3 7 Collateral, this Agreement, and the rights assigned in the Security Documents, shall cease, determine and be void or (ii) if with respect to part of the Collateral, this Agreement, and the rights assigned in the Security Documents, shall cease, determine and be void with respect to such part of the Collateral; otherwise they shall remain and be in full force and effect. SECTION 1. DEFINITIONS AND OTHER MATTERS. Section 1.1 Definitions. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Acceleration Default": defined in the Security Agreement. "Actionable Default": defined in the Security Agreement. "Administrative Agent": defined in the Security Agreement. "Affiliate": defined in the Security Agreement. "Approved Bank": any bank whose (or whose parent company's) unsecured non-credit supported short-term commercial paper rating from (i) Standard & Poor's is at least A-1 or the equivalent thereof or (ii) Moody's is at least P-1 or the equivalent thereof. "Bankruptcy Code": the federal Bankruptcy Code. "Beneficiary": each Lender, each 1999 Issuing Bank, the 2000 Issuing Bank, each Administrative Agent, each Noteholder, each Senior Note Trustee and each holder of the Chase Platinum Obligations and the Fleet LC Obligations. "BMCA Bankruptcy": defined in Section 4.4(b). "Borrower Obligations": defined in the Security Agreement. "Business Day": (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such State are required or authorized by law or other governmental action to close, and (ii) a day of the year on which the Collateral Agent is not required or authorized to close. "Chase Platinum Agreement": defined in the Security Agreement. "Chase Platinum Obligations": defined in the Security Agreement. "Collateral": defined in the Security Agreement. "Collateral Account": defined in Section 4.1 which definition shall include any sub-accounts created thereunder. 4 8 "Collateral Agent": The Bank of New York, a New York trust company, and its successors as provided herein. "Collateral Agent's Fees": all fees, costs and expenses of the Collateral Agent of the types described in Sections 5.3, 5.4, 5.5 and 5.6. "Collateral Agent's Liens": all liens and security interests against the Secured Debt Collateral which result from (i) claims against the Collateral Agent unrelated to the transactions contemplated by this Agreement and the Security Documents or (ii) affirmative acts by the Collateral Agent creating a lien or security interest other than as contemplated by this Agreement. "Collateral Agreement Collateral": defined in Section 4.2(a). "Credit Agreement": defined in the Security Agreement. "Credit Document": defined in the Security Agreement. "Credit Party": defined in the Security Agreement. "Debt Instrument": defined in the Security Agreement. "Deposit Account": defined in the Security Agreement. "Depositary Control Agreement": defined in the Security Agreement. "Distribution Dates": the Business Days fixed by the Collateral Agent (the first of which shall occur as soon as practicable after a Notice of Default has been given by the Required Lender Representative, but in no event more than ninety days after the giving by the Required Lender Representative of a Notice of Default which has not theretofore been withdrawn and the balance of which shall, so long as such Notice of Default shall not have been withdrawn by the Required Lender Representative, be on the corresponding date (or if not a Business Day, the next Business Day) in each calendar month thereafter) for the distribution of all moneys held by the Collateral Agent in the Collateral Account. "Fleet LC Agreement": defined in the Security Agreement. "Fleet LC Obligations": defined in the Security Agreement. "Governmental Authority": any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator. "Grantors": defined in the Security Agreement. "Guaranties": defined in the Security Agreement. 5 9 "Guarantor Obligations": defined in the Security Agreement. "Hedge Agreement": defined in the Security Agreement. "Hedge Obligations": defined in the Security Agreement. "Indenture Supplements": defined in Recital D. "Issuing Bank": defined in the Security Agreement. "Junior Obligations: defined in the Security Agreement. "Lender": defined in the Security Agreement. "Lender Representative": the 1999 Administrative Agent, the 2000 Administrative Agent, each Senior Note Trustee, The Chase Manhattan Bank with respect to the Chase Platinum Obligations or Fleet National Bank with respect to the Fleet LC Obligations, as the case may be. "Letters of Credit": defined in the Security Agreement. "Loans": defined in the Security Agreement. "Moody's": Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency or, if neither Moody's Investors Service, Inc. nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Collateral Agent. "Mortgage": defined in the 2000 Credit Agreement. "1999 Administrative Agent": defined in Recital A. "1999 Credit Agreement": defined in Recital A. "1999 Credit Agreement Event of Default" shall have the meaning attributed to the term "Event of Default" in the 1999 Credit Agreement. "1999 Distribution Amounts": with respect to each 1999 Lender, the difference (if positive) between the principal amount of the 1999 Loans on the Petition Date and the principal amount of the 1999 Loans on the Sharing Date, provided however, if a reorganization plan or other similar plan or order confirmed or otherwise approved in a BMCA Bankruptcy provides for the full payment of the principal amount of the 1999 Loans then the 1999 Distribution Amount shall be the principal amount of the1999 Loans on the Petition Date. "1999 Guaranties": defined in Recital A. "1999 Guarantor": defined in Recital A. 6 10 "1999 Issuing Bank": defined in Recital A. "1999 Lender": defined in Recital A. "1999 Letter of Credit": defined in Recital A. "1999 Liens": the first-priority liens granted by the Security Agreement in favor of the 1999 Lenders or any lien subsequently granted in a BMCA Bankruptcy. "1999 Loans": defined in Recital A. "1999 Obligations": defined in the Security Agreement. "1999 Sharing Payment": with respect to each 1999 Lender, an amount equal to its 1999 Distribution Amounts multiplied by the 1999 Sharing Percentage multiplied by one-third, but in no event shall the 1999 Sharing Payment of such 1999 Lender exceed one-third of the outstanding principal balance of the 1999 Loans of such 1999 Lender on the Petition Date. If the 1999 Loans shall have been satisfied in whole or in part with consideration other than or in addition to cash, the 1999 Sharing Payment shall be made with a ratable amount of the consideration so received. "1999 Sharing Percentage": a fraction, (x) the numerator of which is the outstanding principal amount of the Senior Notes on the Petition Date and (y) the denominator of which is the sum of (i) the outstanding principal amount of the 1999 Loans at such time and (ii) such outstanding principal amount of the Senior Notes at such time. "Noteholders": defined in Recital B. "Notice of Acceleration Default": defined in the Security Agreement. "Notice of Actionable Default": defined in the Security Agreement. "Notice of Default": a Notice of Acceleration Default or a Notice of Actionable Default, as the case may be. "Obligations": defined in the Security Agreement. "Person": defined in the Security Agreement. "Petition Date": the date on which a bankruptcy petition shall have been filed with respect to BMCA commencing a BMCA Bankruptcy. "Priority Fees and Expenses": the total fees and expenses incurred by the Priority Holders in connection with the collection or enforcement of the Priority Obligations. "Priority Holders": the holders of the Priority Obligations. 7 11 "Priority Obligations": defined in the Security Agreement. "Proceeds": defined in the Security Agreement. "Qualified Depositary Institution": defined in the Security Agreement. "Required Lender Representative": defined in the Security Agreement. "Responsible Officer": with respect to any Person, the Chairman of the Board, the President, the Chief Financial Officer, the Chief Executive Officer or the Treasurer of such Person. "Secured Debt": defined in the Security Agreement. "Secured Debt Collateral": defined on page 3 under "Collateral Agency". "Secured Parties": defined in the Security Agreement. "Security Agreement": the Security Agreement executed by and among the Grantors and the Collateral Agent, dated as of the date hereof. "Security Documents": defined in the Security Agreement. "Senior Note Distribution Amount": with respect to each Noteholder, the distribution received by such Noteholder on its Unsecured Equivalent Claim. If the distribution received by the Noteholders with respect to their claims consists in whole or in part of consideration other than or in addition to cash, the Senior Note Distribution Amount shall be made with a ratable amount of the consideration so received. "Senior Note Event of Default" defined in the Security Agreement. "Senior Note Guaranties": defined in Recital B. "Senior Note Guarantor": defined in Recital B. "Senior Note Indentures": defined in Recital B. "Senior Note Lien Avoidance": the liens granted by the Security Agreement in favor of the Noteholders are avoided or set aside pursuant to a final non-appealable order of a court of competent jurisdiction pursuant to applicable law, which order shall not have resulted from the "bad conduct" or "unclean hands" of any Senior Note Trustee or any Noteholder or as a result of any action brought by any Senior Note Trustee or any Noteholder seeking such relief. The negotiation for, and acceptance of, the liens granted by the Security Agreement shall not constitute "bad conduct" or "unclean hands" for purposes of this section. "Senior Note Obligations": defined in the Security Agreement. 8 12 "Senior Note Trustees": defined in Recital B. "Senior Notes": defined in Recital B. "Sharing Date": ninety days after Noteholders receive distributions with respect to their claims under the Senior Notes pursuant to a reorganization plan or other similar plan or order confirmed or otherwise approved in a BMCA Bankruptcy. "Standard & Poor's": Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency or, if neither such division nor any such successor shall be in the business of rating senior unsecured long-term debt, a nationally recognized rating agency in the United States selected by the Collateral Agent. "Subsidiary": defined in the 2000 Credit Agreement. "Supplements: defined in Recital D. "2000 Administrative Agent": defined in Recital C. "2000 Borrower": defined in Recital C. "2000 Credit Agreement": defined in Recital C. "2000 Credit Agreement Event of Default" shall have the meaning attributed to the term "Event of Default" in the 2000 Credit Agreement. "2000 Guaranties": defined in Recital C. "2000 Guarantor": defined in Recital C. "2000 Issuing Bank": defined in Recital C. "2000 Lender": defined in Recital C. "2000 Letter of Credit": defined in Recital C. "2000 Loan": defined in Recital C. "2000 Obligations": defined in the Security Agreement. "2002 Indenture": defined in Recital B. "2005 Indenture": defined in Recital B. "2006 Indenture": defined in Recital B. "2007 Indenture": defined in Recital B. 9 13 "2008 Indenture": defined in Recital B. "2002 Trustee": defined in Recital B. "2005 Trustee": defined in Recital B. "2006 Trustee": defined in Recital B. "2007 Trustee": defined in Recital B. "2008 Trustee": defined in Recital B. "Unsecured Equivalent Claim": for each Noteholder, a portion of the amount of its allowed unsecured claim with respect to its Senior Notes which equals the amount of the 1999 Sharing Payment received by such Noteholder. 10 14 Section 1.2 Interpretation. Capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement. The definitions of terms used herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (i) any definition of or reference herein to any agreement (including this Agreement), instrument or other document, and to any exhibit or schedule thereto, shall be construed as referring to such agreement, instrument or other document, and any exhibit or schedule thereto (including any Exhibit or Schedule hereto), as from time to time amended, supplemented or otherwise modified, (ii) any definition of or reference to any law shall be construed as referring to such law as from time to time amended and any successor thereto and the rules and regulations promulgated from time to time thereunder, (iii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iv) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (v) all references herein to Articles, Sections, Exhibits and Schedules, Recitals and paragraphs shall be construed to refer to Articles, Sections, and Exhibits and Schedules, Recitals and paragraphs of or to, this Agreement and (vi) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC. SECTION 2. CERTAIN OBLIGATIONS AND DUTIES OF THE COLLATERAL AGENT AND THE GRANTORS; POWERS OF ATTORNEY. Section 2.1 Authorization to Execute Security Documents. The Collateral Agent shall execute and deliver each of the Security Documents requiring execution and delivery by it and shall accept delivery from each Grantor of those Security Documents which do not require the Collateral Agent's execution. Section 2.2 Certain Representations and Warranties of the Collateral Agent. The Collateral Agent, in its capacity as Collateral Agent hereunder, and The Bank of New York, in its individual capacity, each represent and warrant to the Beneficiaries as follows: (a) The Bank of New York is a trust company duly incorporated, validly existing and in good standing under the laws of New York and has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and the Security Documents to which it is a party. 11 15 (b) The execution, delivery and performance by the Collateral Agent of this Agreement and the Security Documents to which it is a party have been duly authorized by all necessary corporate action on the part of The Bank of New York. (c) There are no Collateral Agent's Liens and The Bank of New York, in its individual capacity, has no liens or security interests against the Secured Debt Collateral. (d) There are no actions or proceedings pending or threatened against it before any Governmental Authority (i) which question the validity or enforceability of this Agreement or any Security Documents to which it is a party; or (ii) which relate to the banking or trust powers of The Bank of New York and which, if determined adversely to the position of The Bank of New York, would materially and adversely affect the ability of The Bank of New York or the Collateral Agent to perform their respective obligations under this Agreement or any of the Security Documents to which any one or more of them is a party. (e) This Agreement and each of the Security Documents to which the Collateral Agent is a party have been duly executed and delivered by the Collateral Agent (assuming, with respect to the Security Documents, that this Agreement has been duly authorized, executed and delivered by the other parties hereto) and are the legal, valid and binding obligations of the Collateral Agent enforceable in accordance with their terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (f) No UCC financing statements or other filings or recordations executed by or on behalf of The Bank of New York in its individual capacity have been filed by or against it with respect to any of the Collateral. Section 2.3 Actions: Control of the Collateral Agent. (a) Subject to Sections 2.3(b) and 2.3(c) and except as otherwise provided in Section 2.3(d) and in the Security Agreement, the Collateral Agent shall take such action with respect to the Collateral and the Security Documents (including, but not limited to, exercising the rights and remedies provided in Section 3) as is requested in writing by and only by the Required Lender Representative. Notwithstanding the foregoing, the Collateral Agent shall not be obligated to take any action which is in conflict with any provisions of law or of this Agreement or the Security Documents or with respect to which the Collateral Agent has not received adequate security or indemnity as provided in Section 6.4(d). Following the receipt by the Collateral Agent of a Notice of Default from the Required Lender Representative, and so long as such Notice of Default has not been withdrawn by the Required Lender Representative, the Collateral Agent shall not take any action to enforce the security interest in the Collateral or foreclose on any Lien thereon unless the Collateral Agent has received instructions to do so in the manner provided in this Section 2.3. 12 16 (b) The Collateral Agent shall not be obligated to follow any written directions received pursuant to Section 2.3(a) to the extent the Collateral Agent has received an opinion of independent counsel to the Collateral Agent to the effect that such written directions are in conflict with any provisions of law or this Agreement, provided, however, that under no circumstances shall the Collateral Agent be liable for following the written instructions of the Required Lender Representative at such times as such parties have the authority to act as herein provided. (c) Nothing in this Section 2.3 shall impair the right of the Collateral Agent to take or omit to take any action not inconsistent with any direction of the Required Lender Representative. (d) The Collateral Agent shall have no duty to inquire into, investigate or ascertain the performance by any Grantor of any of the covenants or agreements of any Grantor contained herein or in any other agreement or document, including, without limitation, any of the agreements and covenants contained in Section 3.4(d) of the Security Agreement. Section 2.4 Additional Security Documents. In the event that a Grantor acquires any interest in any Collateral which is not covered by a Security Document in a manner which will perfect the Collateral Agent's lien upon and first priority security interest in such Collateral without further act or deed of the Collateral Agent, at the time such interest in such Collateral is acquired, to the extent that such security interest may be perfected by the execution and/or filing of a Security Document, then such Grantor shall immediately prepare, execute and deliver to the Collateral Agent such Security Documents, in form and substance similar to the Security Documents heretofore executed and delivered by the Grantors, as are necessary to perfect the Collateral Agent's lien upon and security interest in such Collateral. If the signature of the Collateral Agent is required on any such Security Document, such Grantor shall present such Security Document to the Required Lender Representative and the Required Lender Representative will forward such Security Document to the Collateral Agent for signature and the Collateral Agent shall execute such Security Document and endeavor to cause such Security Document to be filed or recorded with the public filing and/or recording offices designated by the Required Lender Representative as required or advisable to perfect or protect the Collateral Agent's lien upon and security interest in such Collateral. Section 2.5 Powers of Attorney to the Collateral Agent and to BMCA. (a) Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Grantor or the name of such attorney-in-fact for the purpose of signing documents and taking other action to perfect, promote and protect the liens and security interests of the Collateral Agent in the Collateral. Such power of attorney is a power coupled with an interest, shall be irrevocable and shall not first require the Collateral Agent to have received a Notice of Default. (b) Each other Grantor hereby irrevocably constitutes and appoints BMCA and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such 13 17 Grantor or in its own name, from time to time in BMCA's discretion, to take or omit taking any and all actions hereunder for the purpose of carrying out the terms of this Agreement and any of the Security Documents, to receive and give all notices to be given by or received by such Grantor, to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes hereof and, without limiting the generality of the foregoing, hereby grants to BMCA the power and right on behalf of such Grantor, without assent by such Grantor, to bind such Grantor in all respects hereunder and under any of the Security Documents, with the intent that all action taken by BMCA on behalf of such Grantor shall be binding upon and inure to the benefit of such Grantor as effectively as if such action were taken directly by such Grantor. Each such power of attorney is a power coupled with an interest and shall be irrevocable until all of the Obligations are paid in full in cash. Section 2.6 Copies of Letters and Documents. The Collateral Agent shall promptly provide the Required Lender Representative copies of any letters or documents it receives in connection with any Deposit Account, including, but not limited to, letters and documents related to the termination or opening of any Deposit Account. In addition, the Collateral Agent shall provide to any Lender Representative, upon such Lender Representative's request, copies of any letters or documents the Collateral Agent receives from any Grantor or any other Person in connection with this Agreement, including additional Security Documents. SECTION 3. ACTIONABLE DEFAULTS; REMEDIES. Section 3.1 Actionable Default. (a) Upon actual receipt by an officer of The Bank of New York's Corporate Trust Division of a Notice of Default from the Required Lender Representative, the Collateral Agent shall, within five Business Days thereafter, send a copy thereof to each Lender Representative and shall notify each Lender Representative, in the manner provided in Section 9.2, that a Notice of Default has been received by the Collateral Agent. Upon receipt of any written directions pursuant to Section 2.3(a), the Collateral Agent shall, within five Business Days thereafter, send a copy thereof to each Lender Representative. (b) The Required Lender Representative giving a Notice of Default shall be entitled to withdraw it by delivering written notice of withdrawal to the Collateral Agent (i) before the Collateral Agent takes any action to exercise any remedy with respect to the Collateral or (ii) thereafter, if BMCA otherwise indemnifies the Collateral Agent and the Beneficiaries (in a manner satisfactory to the Collateral Agent and the Lender Representatives in their sole discretion) with respect to all costs and expenses incurred by the Collateral Agent and the Beneficiaries in connection with reversing all actions the Collateral Agent has taken to exercise any remedy or remedies with respect to the Collateral. The Collateral Agent shall immediately notify BMCA as to the receipt and contents of any such notice of withdrawal and shall promptly notify each Lender Representative, in the manner provided in Section 9.2, of the withdrawal of any Notice of Default and shall promptly send a copy of any such notice of withdrawal to each Lender Representative. 14 18 Section 3.2 Remedies. (a) Upon receipt of a Notice of Default from the Required Lender Representative, and irrespective of whether the Collateral Agent has delivered notices to the Lender Representatives pursuant to Section 3.1(a), the Collateral Agent shall exercise the rights and remedies provided in this Section 3 and the rights and remedies provided in any of the Security Documents in accordance with instructions of the Required Lender Representative. (b) Each Grantor hereby waives presentment, demand, protest or any notice (to the extent permitted by applicable law and except as otherwise expressly provided in this Agreement) of any kind in connection with this Agreement, any Collateral or any Security Document. (c) Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full power and authority in the name of such Grantor or in its own name, from time to time in the Collateral Agent's discretion, during the continuation of any Actionable Default or Acceleration Default, for the purpose of carrying out the terms of this Agreement and any of the Security Documents and hereby gives the Collateral Agent the power and right on behalf of such Grantor, without assent by such Grantor, to the extent permitted by applicable law, to do the following: (i) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due with respect to the Collateral, (ii) to receive, take, indorse, assign and deliver any and all checks, notes, drafts, acceptances, documents and other negotiable and nonnegotiable instruments, documents and chattel paper taken or received by the Collateral Agent in connection herewith and therewith, (iii) to commence, file, prosecute, defend, settle, compromise or adjust any claim, suit, action or proceeding with respect to the Collateral, and (iv) to sell, transfer, assign or otherwise deal in or with the Collateral or any part thereof pursuant to the terms and conditions hereunder and thereunder. Section 3.3 Right to Initiate Judicial Proceedings, etc. (a) Even if the Collateral Agent has not received a Notice of Default from the Required Lender Representative, the Collateral Agent shall nevertheless have the right and power to institute and maintain such suits and proceedings as it may deem appropriate to protect and enforce the rights vested in it by this Agreement and each Security Document; provided, however, that as set forth in Section 2.3(a), foreclosure of the liens and security interests in the Collateral may not be commenced prior to the Collateral Agent's receipt of a Notice of Default and instructions from the Required Lender Representative. 15 19 (b) If and only if the Collateral Agent shall have received a Notice of Default from the Required Lender Representative and during such time as such Notice of Default shall not have been withdrawn, the Collateral Agent may, either after entry or without entry, proceed by suit or suits at law or in equity to foreclose upon the Collateral and to sell all or, from time to time, any of the Secured Debt Collateral under the judgment or decree of a court of competent jurisdiction. Section 3.4 Appointment of a Receiver. If a receiver of the Secured Debt Collateral shall be required to be appointed in any judicial proceeding, The Bank of New York may be appointed as such receiver. Notwithstanding the appointment of a receiver, the Collateral Agent shall be entitled to retain possession and control of all cash held by or deposited with it or its agents pursuant to any provision of this Agreement or any Security Document. Section 3.5 Exercise of Powers. All of the powers, remedies and rights of the Collateral Agent as set forth in this Agreement may be exercised by the Collateral Agent in respect of any Security Document as though set forth at length therein and all the powers, remedies and rights of the Collateral Agent as set forth in any Security Document may be exercised from time to time as herein and therein provided. Section 3.6 Remedies Not Exclusive. (a) No remedy conferred upon or reserved to the Collateral Agent herein or in the Security Documents is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any of the Security Documents or now or hereafter existing at law or in equity or by statute. (b) No delay or omission of the Collateral Agent to exercise any right, remedy or power accruing upon any Actionable Default shall impair any such right, remedy or power or shall be construed to be a waiver of any such Actionable Default or an acquiescence therein; and every right, power and remedy given by this Agreement or any Security Document to the Collateral Agent may be exercised from time to time. (c) In case the Collateral Agent shall have proceeded to enforce any right, remedy or power under this Agreement or any Security Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Collateral Agent, then and in every such case the Grantors, the Collateral Agent and the Beneficiaries shall, subject to any effect of or determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder and under such Security Document with respect to the Secured Debt Collateral and in all other respects, and thereafter all rights, remedies and powers of the Collateral Agent shall continue as though no such proceeding had been taken. (d) All rights of action and rights to assert claims upon or under this Agreement and the Security Documents may be enforced by the Collateral Agent without the possession of any Debt Instrument or the production thereof in any trial or other proceeding relative thereto, and any such suit or proceeding 16 20 instituted by the Collateral Agent shall be brought in its name as Collateral Agent and any recovery of judgment shall be held as part of the Secured Debt Collateral. Section 3.7 Waiver of Certain Rights. Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may claim from, through or under it, including, without limitation, any and all subsequent creditors, vendees, assignees and lienors, expressly waives and releases any, every and all rights to demand or to have any marshaling of the Secured Debt Collateral upon any sale, whether made under any power of sale granted under the Security Documents, or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Agreement or the Security Documents and consents and agrees that all the Secured Debt Collateral may at any such sale be offered and sold as an entirety. In no event, however, does any Grantor waive any obligations of the Collateral Agent under applicable law to dispose of the Secured Debt Collateral in a commercially reasonable manner. Section 3.8 Limitation on Collateral Agent's Duties in Respect of Collateral. Beyond its duties set forth in this Agreement as to the custody thereof and the accounting to the Grantors and the Required Lender Representatives for moneys received by it hereunder, the Collateral Agent shall not have any duty to the Grantors or the Beneficiaries as to any Collateral in its possession or control or in the possession or control of any agent or nominee of it or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent, however, that the Collateral Agent or an agent or nominee of the Collateral Agent maintains possession or control of any of the Collateral or the Security Documents at any office of a Grantor, the Collateral Agent shall, or shall instruct such agent or nominee to, grant such Grantor the access to such Collateral or Security Documents which such Grantor requires for the conduct of its business, as permitted by the Credit Documents, so long as the Collateral Agent shall not have received a Notice of Default from the Required Lender Representative. Section 3.9 Limitation by Law. All the provisions of this Section 3 are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Agreement invalid or unenforceable in whole or in part. Section 3.10 Absolute Rights of the Beneficiaries. Notwithstanding any other provision of this Agreement or any provision of any Security Document, neither the right of each Beneficiary, which is absolute and unconditional, to receive payments of the Secured Debt held by such Beneficiary on or after the due date thereof as therein expressed, to institute suit for the enforcement of such payment on or after such due date, or to assert its position and views as a secured or unsecured creditor in, and to otherwise exercise any right (other than the right to enforce the security interest in the Collateral, which shall in all circumstances be exercisable only by the Collateral Agent and only as provided in this Agreement and the Security Documents) which such Beneficiary may have in connection with, a case under the Bankruptcy Code in which a Grantor is a debtor, nor the obligation of each Grantor, which is also absolute and unconditional, to pay the Secured Debt owing by such Grantor to each Beneficiary 17 21 at the time and place expressed therein shall be impaired or affected without the consent of such Beneficiary. SECTION 4. COLLATERAL ACCOUNT; APPLICATION OF MONEYS. Section 4.1 The Collateral Account. On the date hereof there shall be established and, at all times thereafter there shall be maintained by the Collateral Agent an account which shall be entitled the "Collateral Account" (the "Collateral Account"). The Collateral Agent may establish and maintain one or more sub-accounts under the Collateral Account, each of which shall constitute a part of the Collateral Account. All moneys which are received by the Collateral Agent with respect to the Collateral at any time after a Notice of Default shall have been given to the Collateral Agent by the Required Lender Representative and shall not have been withdrawn shall be deposited in the Collateral Account and thereafter shall be held, applied and/or disbursed by the Collateral Agent in accordance with the terms of this Agreement. Section 4.2 Grant of Security Interest; Control of Collateral Account. (a) To secure the prompt and complete payment, when due, and the observance and performance of all Secured Debt, each Grantor hereby assigns and pledges to the Collateral Agent and grants to the Collateral Agent a security interest in all of the right, title and interest of such Grantor in and to the following, whether presently existing or hereafter arising or acquired (the "Collateral Agreement Collateral"): the Collateral Account, all cash deposited therein, all certificates and instruments, if any, from time to time representing the Collateral Account; all investments from time to time made pursuant to Section 4.3, all notes, certificates of deposit and other instruments from time to time hereafter delivered to or otherwise possessed by the Collateral Agent in substitution for, or in addition to, any or all of the then existing Collateral Agreement Collateral; all interest, dividends, cash, instruments, and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Collateral Agreement Collateral; and to the extent not covered above, all Proceeds of and any collections, earnings and accruals with respect to any or all of the foregoing (whether the same are acquired before or after the commencement of a case under the Bankruptcy Code by or against such Grantor as a debtor). (b) All right, title and interest in and to the Collateral Account shall vest in the Collateral Agent, and funds on deposit in the Collateral Account and other Collateral Agreement Collateral shall constitute part of the Secured Debt Collateral. The Collateral Account shall be subject to the exclusive dominion and control of the Collateral Agent. Section 4.3 Investment of Funds Deposited in Collateral Account. The Collateral Agent shall invest and reinvest, but only in accordance with the instructions of the Required Lender Representative specifying the particular investment, moneys on deposit in the Collateral Account at any time in any of the following investments: (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in 18 22 full support thereof) having maturities of not more than six months from the date of acquisition; (ii) dollar denominated domestic and eurodollar time deposits, certificates of deposit and bankers acceptances of (x) any Lender or (y) any Approved Bank, in any such case with maturities of not more than six months from the date of acquisition; (iii) commercial paper issued by any Approved Bank or by the parent company of any Approved Bank and commercial paper issued by, or guaranteed by, any industrial or financial company which at the time of acquisition has an unsecured non-credit supported short-term commercial paper rating of at least A-1 or the equivalent by Standard & Poor's or at least P-1 or the equivalent by Moody's, or guaranteed by any industrial or financial company with a long term unsecured non-credit supported senior debt rating of at least A or A-2, or the equivalent, by Standard & Poor's or Moody's, as the case may be, and in each case maturing within six months after the date of acquisition; provided, however, that in order to provide the Collateral Agent with a perfected security interest therein, each Grantor shall take such steps as shall be required by the Required Lender Representative to perfect the security interest therein. All such investments and the interest and income received thereon and therefrom and the net proceeds realized on the sale thereof shall be held in the Collateral Account as part of the Secured Debt Collateral. Section 4.4 Application of Investments. (a) From and after the receipt by the Collateral Agent of a Notice of Default by the Required Lender Representative, and for as long as such Notice of Default shall not have been withdrawn, investments held in the Collateral Account shall be sold or otherwise liquidated from time to time and the proceeds thereof shall, to the extent available for distribution, be distributed by the Collateral Agent on the first and each succeeding Distribution Date as follows: FIRST: To the Collateral Agent in an amount equal to the Collateral Agent's Fees which are unpaid as of such Distribution Date, and to the applicable Lender Representative for the account of any Beneficiary which has theretofore advanced or paid any such Collateral Agent's Fees in an amount equal to the amount thereof so advanced or paid by such Beneficiary prior to such Distribution Date; provided, however, that nothing herein is intended to relieve any Grantor of its obligation to pay such costs, fees, expenses and liabilities from funds outside of the Collateral Account; SECOND: To the applicable Lender Representative for the account of each Priority Holder in an amount equal to the Priority Fees and Expenses due to such Priority Holder, and in case such moneys shall be insufficient to pay in full the Priority Fees and Expenses, then to the payment thereof ratably (without priority of any one over any other) to the applicable Lender Representative for the account of each such Priority Holder in proportion to the unpaid amounts thereof determined on the day before the relevant Distribution Date; 19 23 THIRD: To the applicable Lender Representative for the account of each Priority Holder in an amount equal to the unpaid interest on, and letter of credit fees in respect of, the Priority Obligations due to such Priority Holder, and in case such moneys shall be insufficient to pay in full such interest, then to the payment thereof ratably (without priority of any one over any other) to the applicable Lender Representative for the account of each such Priority Holder in proportion to the unpaid amounts thereof determined on the day before the relevant Distribution Date; FOURTH: To the applicable Lender Representative for the account of each Priority Holder in an amount equal to the unpaid principal of the Priority Obligations (but excluding therefrom any penalties, premiums, commitment fees, breakage fees or similar types of fees) due to such Priority Holder, and with respect to any outstanding Letters of Credit issued by such Priority Holder, the Collateral Agent shall withhold and retain in the Collateral Account for each such Priority Holder the undrawn face amount of such Letters of Credit and, in case such moneys shall be insufficient to pay in full such principal and to secure such Letters of Credit, then to the payment to each such Priority Holder and to secure each such Letter of Credit ratably (without priority of one over the other) in proportion to the unpaid amounts thereof and the undrawn face amounts of such Letters of Credit determined on the day before the relevant Distribution Date (provided that if any undrawn Letter of Credit is thereafter drawn, the Collateral Agent shall pay to the applicable Issuing Bank for payment to the drawee the amount drawn up to the maximum amount retained by the Collateral Agent in respect of such Letter of Credit, and provided further that if any such Letter of Credit shall expire, the Collateral Agent shall distribute the amounts retained to secure such undrawn Letter of Credit to the applicable Lender Representative for the account of each such Priority Holder pursuant to this Section 4.4); FIFTH: To the applicable Lender Representative for the account of each Priority Holder in an amount equal to the unpaid penalties, premiums, commitment fees, breakage fees or similar types of fees due to such Priority Holder and, in case such moneys shall be insufficient to pay in full such penalties, premiums, commitment fees, breakage fees or similar types of fees, then to the payment to each such Priority Holder (without priority of one over the other) in proportion to the unpaid amounts thereof determined on the day before the relevant Distribution Date; SIXTH: To the applicable Lender Representative for the account of each Priority Holder in an amount equal to all other amounts, if any, then due to such Priority Holder; SEVENTH: To the applicable Lender Representative for the account of each Beneficiary (other than the Priority Holders) in an amount equal to the collection costs, fees and expenses (but excluding therefrom any penalties, premiums, commitment fees, breakage fees or similar types of fees) due to such Beneficiary and, in case such moneys shall be insufficient to pay in full such costs, fees and expenses, then to the payment thereof ratably (without priority of any one over any other) to each such Beneficiary in proportion to the unpaid amounts thereof on the relevant Distribution Date; EIGHTH: To the applicable Lender Representative for the account of each Beneficiary (other than the Priority Holders) in an amount equal to the unpaid 20 24 interest (but excluding therefrom any penalties, premiums, commitment fees, breakage fees or similar types of fees) on the loans and extensions of credit comprising the Secured Debt (other than the Priority Obligations) due to such Beneficiary and, in case such moneys shall be insufficient to pay in full such interest, then to the payment thereof ratably (without priority of any one over any other) to each Beneficiary in proportion to the unpaid amounts thereof determined on the day before the relevant Distribution Date; NINTH: To the applicable Lender Representative for the account of each Beneficiary (other than the Priority Holders) in an amount equal to the unpaid principal of (but excluding therefrom any penalties, premiums, commitment fees, breakage fees or similar types of fees) loans and extensions of credit comprising the Secured Debt (other than the Priority Obligations) due to such Beneficiary; TENTH: To the applicable Lender Representative for the account of each Beneficiary (other than the Priority Holders) in an amount equal to the penalties, premiums, commitment fees, breakage fees or similar types of fees on all amounts due to such Beneficiary which are payable by the Borrower to such Beneficiary under the relevant Debt Instruments and, in case such moneys shall be insufficient to pay in full such penalties, premiums, commitment fees, breakage fees or similar types of fees, then to the payment thereof ratably (without priority of any one over any other) to each such Beneficiary in proportion to the unpaid amounts thereof on the relevant Distribution Date; ELEVENTH: To the applicable Lender Representative for the account of each Beneficiary (other than the Priority Holders) in an amount equal to all other amounts, if any, then due to each such Beneficiary; and TWELFTH: Any surplus then remaining shall be paid to the applicable Grantors or their successors or assigns, or as a court of competent jurisdiction may direct; provided, however, that if any Beneficiary shall have notified the Collateral Agent in writing that such Beneficiary has an outstanding claim, or has knowledge of a threatened potential claim, against a Grantor and such Beneficiary is entitled to the benefits of an indemnification, reimbursement or similar provision constituting Secured Debt in connection with such claim or potential claim, the Collateral Agent shall continue to hold in the Collateral Account, for a period of not more than two years following the date of such notice, the amount specified in such notice (which notice shall contain the Beneficiary's certification that the amount so specified is not included as part of an allowed claim in a pending bankruptcy proceeding and, if included in a pending claim, the Beneficiary's covenant to notify the Collateral Agent to reduce the amount being held by the amount of such contingent claim that becomes an allowed claim). (b) If at any time during the pendency of a bankruptcy case under Title 11 of the United States Code with respect to BMCA (the "BMCA Bankruptcy") (i) the Senior Note Lien Avoidance shall have occurred and (ii) the 1999 Liens remain in full force and effect, then on the Sharing Date, provided that the 1999 Liens have not been avoided or set aside, each 1999 Lender shall pay over to the Senior Note Trustees, for the account of the Noteholders, its 1999 21 25 Sharing Payment, and each Noteholder shall pay over to the 1999 Administrative Agent, for the account of the 1999 Lenders, its Senior Note Distribution Amount. SECTION 5. AGREEMENTS WITH THE COLLATERAL AGENT. Section 5.1 Delivery of Documents. On or promptly after the date hereof, BMCA will deliver to the Collateral Agent true and complete copies of each Credit Document, Debt Instrument and Security Document; provided, that the failure to provide the Collateral Agent with copies of such documents shall not affect the rights of the Beneficiaries or the validity of the Collateral Agent's actions taken hereunder. BMCA further agrees that, promptly upon the execution thereof, BMCA will deliver to the Collateral Agent a true and complete copy of any other Credit Documents, Debt Instruments and Security Documents entered into by any Grantor subsequent to the date hereof, and a true and complete copy of any and all amendments, modifications or supplements to any Credit Document, Debt Instrument or Security Document entered into by any Grantor subsequent to the date hereof. Section 5.2 Information as to Beneficiaries. (a) BMCA agrees to deliver to the Collateral Agent by December 1 in each year, commencing December 1, 2001, and at any other time or times upon request of the Collateral Agent, a list setting forth each Lender Representative and the information required pursuant to Section 9.2 to send notices to each such Lender Representative. (b) At any time after the Collateral Agent has received a Notice of Default from the Required Lender Representative, and so long as such Notice of Default has not been withdrawn, upon the request of the Collateral Agent, each Lender Representative agrees that it shall deliver to the Collateral Agent, within five Business Days following the receipt of such request, a schedule setting forth the aggregate principal amount of Secured Debt owing to each Beneficiary of such Lender Representative, the interest rate or rates and the letter of credit fee or fees then in effect with respect to such Secured Debt and such other information as the Collateral Agent may request to make distributions pursuant to Section 4.4, and with respect to each Priority Holder, such schedule shall also set forth the amount of Secured Debt which constitutes Priority Obligations. Upon receipt of the requested information, the Collateral Agent shall compile such information and prepare a master schedule which the Collateral Agent shall promptly send to each Lender Representative. Section 5.3 Compensation and Expenses. The Grantors jointly and severally agree to pay to the Collateral Agent as compensation for the Collateral Agent's services hereunder and under the Security Documents and for administering the Secured Debt Collateral, (a) such fees as shall be agreed to in writing from time to time between BMCA and the Collateral Agent and (b) from time to time, upon demand, all of the fees, costs and expenses of the Collateral Agent (including, without limitation, the reasonable fees and disbursements of its counsel and such special counsel as the Collateral Agent elects to retain) (x) arising in connection with the preparation, execution, delivery, modification, restatement, amendment or termination of this Agreement and each Security Document or the enforcement (whether in the context of a civil action, adversary proceeding, workout or otherwise) of any of the provisions hereof or 22 26 thereof, or (y) incurred or required or otherwise advanced in connection with the administration of the Secured Debt Collateral (including, but not limited to, reimbursements or other payments made by the Collateral Agent to a Qualified Depositary Institution or pursuant to a Depositary Control Agreement), the sale or other disposition of Collateral and the preservation, protection or defense of the Collateral Agent's rights under this Agreement and in and to the Collateral and the Secured Debt Collateral. As security for such payment, the Collateral Agent shall have a lien prior to the Secured Debt upon all Collateral and other property and funds held or collected by the Collateral Agent as part of the Secured Debt Collateral. The obligation of the Grantors to pay any and all fees, expenses, indemnities and other amounts due hereunder shall be joint and several. Section 5.4 Stamp and Other Similar Taxes. The Grantors jointly and severally agree to indemnify and hold harmless the Collateral Agent and each Beneficiary from, and shall reimburse the Collateral Agent and each Beneficiary for, any present or future claim for liability for any stamp or other similar tax and any penalties or interest with respect thereto, which may be assessed, levied or collected by any jurisdiction in connection with this Agreement, any Security Document, the Secured Debt Collateral, or the attachment or perfection of the security interest granted to the Collateral Agent in any Collateral. The obligations of the Grantors under this Section 5.4 shall survive the termination of the other provisions of this Agreement. Section 5.5 Filing Fees, Excise Taxes, etc. The Grantors jointly and severally agree to pay or to reimburse the Collateral Agent for any and all amounts in respect of all search, filing, recording and registration fees, taxes, excise taxes and other similar imposts which may be payable or determined to be payable in respect of the execution, delivery, performance and enforcement of this Agreement and each Security Document and agrees to save the Collateral Agent harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. The obligations of the Grantors under this Section 5.5 shall survive the termination of the other provisions of this Agreement. Section 5.6 Indemnification. (a) The Grantors jointly and severally agree to pay, indemnify and hold the Collateral Agent and each of its agents harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and the Security Documents, except to the extent the same constitute direct money damages arising from the gross negligence or willful misconduct of the Collateral Agent, or if the agent is seeking indemnification, from the agent's gross negligence or willful misconduct. As security for such payment, the Collateral Agent shall have a lien prior to the Secured Debt upon all Collateral and other property and funds held or collected by the Collateral Agent as part of the Secured Debt Collateral. (b) In any suit, proceeding or action brought by the Collateral Agent under or with respect to the Collateral for any sum owing thereunder, or to enforce any provisions thereof, or of any of the Security Documents or this 23 27 Agreement, the Grantors will save, indemnify and keep the Collateral Agent and the Beneficiaries harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the obligee thereunder, arising out of a breach by any Grantor of any of its obligations hereunder or thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligee or its successors from such Grantor, and all such obligations of the Grantors shall be and remain enforceable against and only against the Grantors and shall not be enforceable against the Collateral Agent or any Beneficiary. (c) The agreements and obligations of the Grantors in this Section 5.6 shall survive resignation or removal of the Collateral Agent and the termination of the other provisions of this Agreement. Section 5.7 Further Assurances. At any time and from time to time, upon the written request of the Collateral Agent, and at the expense of the Grantors, each Grantor will promptly execute and deliver any and all such further instruments and documents and take such further action necessary or desirable in obtaining the full benefits of this Agreement and the Security Documents and of the rights and powers herein and therein granted, including, without limitation, the filing of any financing or continuation statements to perfect the liens and security interests granted thereby. SECTION 6. COLLATERAL AGENT. Section 6.1 Acceptance of Duties. The Collateral Agent, for itself and its successors, accepts the duties and obligations required by this Agreement upon the terms and conditions hereof, including those contained in this Section 6. Section 6.2 Exculpatory Provisions. (a) The Collateral Agent shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties contained herein or in any Notice of Default or in any instructions purported to be from a Required Lender Representative, except for those made by the Collateral Agent. The Collateral Agent makes no representations as to the value or condition of the Secured Debt Collateral or any part thereof, or as to the title any Grantor thereto or as to the security afforded by the Security Documents or this Agreement or, except as set forth in Section 2.2, as to the validity, execution, enforceability, legality or sufficiency of this Agreement, any Credit Document, any Security Document or of the Secured Debt secured hereby and thereby, and the Collateral Agent shall incur no liability or responsibility in respect of any such matters. The Collateral Agent shall not be responsible for insuring the Secured Debt Collateral or for the payment of taxes, charges, assessments or liens upon the Secured Debt Collateral or otherwise as to the maintenance of the Secured Debt Collateral, except that (i) in the event the Collateral Agent enters into possession of a part or all of the Secured Debt Collateral, the Collateral Agent shall preserve the part in its possession, and (ii) the Collateral Agent will promptly, and at its own expense, take such action as may be necessary duly to remove and discharge (by bonding or otherwise) any Collateral Agent's Lien on any part of the Secured Debt 24 28 Collateral or any other lien on any part of the Secured Debt Collateral resulting from claims against it not related to the administration of the Secured Debt Collateral or (if so related) resulting from gross negligence or willful misconduct on its part. (b) The Collateral Agent shall not be required to ascertain or inquire as to the performance by any Grantor of any of the covenants or agreements contained herein, in any Credit Document, Security Document or in any Debt Instrument. Whenever it is necessary, or in the opinion of the Collateral Agent advisable, for the Collateral Agent to ascertain the amount of Secured Debt then held by a Beneficiary, the Collateral Agent may rely on a certificate of such Beneficiary's Lender Representative as to such amount. (c) The Bank of New York shall, in its individual capacity and at its own cost and expense, promptly take all action as may be necessary to discharge any Collateral Agent's Liens or any other lien resulting from claims against it not related to the administration of the Secured Debt Collateral or (if so related) resulting from gross negligence or willful misconduct on its part. (d) The Collateral Agent shall not be personally liable for any acts, omissions, errors of judgment or mistakes of fact or law made, taken or omitted to be made or taken by it in accordance with this Agreement or any Security Document (including, without limitation, acts, omissions, errors or mistakes with respect to the Collateral), except for those arising out of or in connection with the Collateral Agent's gross negligence or willful misconduct. In no event shall the Collateral Agent be liable for incidental, indirect, special or consequential damages, regardless of the form of action and even if the same were foreseeable. Notwithstanding anything set forth herein to the contrary, the Collateral Agent shall have a duty of reasonable care with respect to any Collateral which is delivered to the Collateral Agent or its designated representatives and is in the Collateral Agent's or its designated representatives' possession and control. (e) The Collateral Agent shall not be liable for any claims, losses, liabilities, damages, costs, expenses and judgments (including reasonable attorneys' fees and expenses) due to forces beyond the reasonable control of the Collateral Agent, including, without limitation, strikes, work stoppages, act of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services. Section 6.3 Delegation of Duties. The Collateral Agent may execute any of the powers hereof and perform any duty hereunder either directly or by or through agents, nominees or attorneys-in-fact. The Collateral Agent may act and rely, and shall be protected in acting and relying on, the opinion or advice or, or information obtained from, any counsel, accountant, appraiser or other expert or adviser, whether retained or employed by the Collateral Agent or the Required Lender Representative, in relation to any matter in connection with this Agreement, the Security Agreement or any other document, instrument or writing. The Collateral Agent shall be entitled to advice of counsel concerning all matters pertaining to such powers and duties. The Collateral Agent shall not be responsible for any acts or omissions, including any negligence or misconduct, 25 29 of any agents, designated representatives, nominees or attorneys-in-fact selected by it without gross negligence or willful misconduct. Section 6.4 Reliance by Collateral Agent. (a) Whenever in the administration of this Agreement the Collateral Agent shall deem it necessary or desirable that a matter be proved or established with respect to any Grantor in connection with the taking, suffering or omitting of any action hereunder by the Collateral Agent, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be proved or established by a certificate of a Responsible Officer of such Grantor delivered to the Collateral Agent, and such certificate shall be full warranty to the Collateral Agent for any action taken, suffered or omitted in reliance thereon without gross negligence or willful misconduct, subject, however, to the provisions of Section 6.5. (b) The Collateral Agent may consult with counsel, accountants and other experts, and any opinion of independent counsel, any such accountant, and any such other expert shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in accordance therewith. The Collateral Agent shall have the right at any time to seek instructions concerning the administration of the Secured Debt Collateral from any court of competent jurisdiction. (c) The Collateral Agent may rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of telecopies, to have been sent by the proper party or parties, including the information provided by BMCA to the Collateral Agent pursuant to Section 5.2. In the absence of its gross negligence or willful misconduct, the Collateral Agent may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Collateral Agent and conforming to the requirements of this Agreement or any Security Document. (d) If the Collateral Agent has been requested to take action pursuant to Section 2.3, the Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in the Collateral Agent by this Agreement or any Security Document unless the Collateral Agent shall have been provided adequate security and indemnity against the costs, expenses and liabilities which may be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Collateral Agent. Under no circumstances shall the Collateral Agent have any liability for investments made from moneys in the Collateral Account pursuant to instructions received under Section 4.3 and all such investments shall be at the sole risk of the Grantors. (e) The Collateral Agent shall not be required to inquire or investigate a Notice of Default or whether any instruction purported to be given by a Required Lender Representative was in fact so given, or whether any such 26 30 instruction is consistent with the Security Agreement or this Agreement, and the Collateral Agent may assume the foregoing and shall be protected in relying thereon. (f) The Collateral Agent shall have no duty as to any Collateral in its possession or control, other than those duties specifically set forth herein, or the possession or control of any agent or bailee or any income thereon or as to the preservation or rights against prior parties or any other rights pertaining thereto. The Collateral Agent shall endeavor to file such financing and continuation statements and record such documents or instruments in such places and at such times as shall be directed by the Required Lender Representative. The Collateral Agent shall not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason or the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith. (g) The Collateral Agent shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability or any liens on any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Collateral Agent, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, or for the validity of any title to the Collateral or otherwise as to the maintenance of the Collateral. The Collateral Agent shall have no duty to ascertain or inquire into the performance or observance by any other party of the terms of this Agreement, the Security Agreement or any other agreement or document. Section 6.5 Limitations on Duties of the Collateral Agent. (a) The Collateral Agent shall be obliged to perform such duties and only such duties as are specifically set forth in this Agreement or in any Security Document, and no implied covenants or obligations shall be read into this Agreement or any Security Document against the Collateral Agent. The Collateral Agent shall, upon receipt of a Notice of Default from the Required Lender Representative and during such time as such Notice of Default shall not have been withdrawn, exercise the rights and powers vested in it by this Agreement or by any Security Document, and the Collateral Agent shall not be liable with respect to any action taken or omitted by it in accordance with the direction of the Required Lender Representative pursuant to Section 2.3. (b) Except as herein otherwise expressly provided, including, without limitation, upon the written request of the Required Lender Representative pursuant to Section 2.3, the Collateral Agent shall not be under any obligation to take any action which is discretionary with the Collateral Agent under the provisions hereof or under any Security Document. The Collateral Agent shall furnish to each Lender Representative promptly upon receipt thereof, a copy of each certificate or other paper furnished to the Collateral Agent by a Grantor under or in respect of this Agreement, any Security Document or any of the Secured Debt Collateral. 27 31 Section 6.6 Moneys Held By Collateral Agent. All moneys received by the Collateral Agent under or pursuant to any provision of this Agreement or any Security Document shall be held as Collateral for the purposes for which they were paid or are held. Section 6.7 Resignation and Removal of the Collateral Agent. (a) The Collateral Agent may at any time, by giving thirty days' prior written notice to BMCA and each Lender Representative resign and be discharged of the responsibilities hereby created, such resignation to become effective upon the appointment of a successor collateral agent or collateral agents by the Required Lender Representative, and the acceptance of such appointment by such successor collateral agent or collateral agents. The Collateral Agent may be removed at any time without cause and a successor collateral agent appointed by the affirmative vote of the Required Lender Representative; provided that the Collateral Agent shall be entitled to its fees and expenses to the date of removal. If no successor collateral agent or collateral agents shall be appointed and approved within thirty days from the date of the giving of the aforesaid notice of resignation or within thirty days from the date of such removal, the Collateral Agent shall, or any Lender Representative may, apply to any court of competent jurisdiction to appoint a successor collateral agent or collateral agents (which may be an individual or individuals) to act until such time, if any, as a successor collateral agent or collateral agents shall have been appointed as above provided. Any successor collateral agent or collateral agents so appointed by such court shall immediately and without further act be superseded by any successor collateral agent or collateral agents appointed by the Required Lender Representative. (b) If at any time the Collateral Agent shall resign, be removed or otherwise become incapable of acting, or if at any time a vacancy shall occur in the office of the Collateral Agent for any other cause, a successor collateral agent or collateral agents may be appointed by the Required Lender Representative, and the powers, duties, authority and title of the predecessor collateral agent or collateral agents terminated and canceled without procuring the resignation of such predecessor collateral agent or collateral agents, and without any other formality (except as may be required by applicable law) than the appointment and designation of a successor collateral agent or collateral agents in writing, duly acknowledged, delivered to the predecessor collateral agent or collateral agents and BMCA, and filed for record in each public office, if any, in which this Agreement is required to be filed. (c) The appointment and designation referred to in Section 6.7(b) shall, after any required filing, be full evidence of the right and authority to make the same and of all the facts therein recited, and this Agreement shall vest in such successor collateral agent or collateral agents, without any further act, deed or conveyance, all of the estate and title of its predecessor or their predecessors, and upon such filing for record the successor collateral agent or collateral agents shall become fully vested with all the estates, properties, rights, powers, trusts, duties, authority and title of its predecessor or their predecessors; but such predecessor or predecessors shall, nevertheless, on the written request of any Lender Representative, BMCA, or its or their successor collateral agent or collateral agents, execute and deliver an instrument transferring to such successor or successors all the estates, properties, rights, powers, duties, authority and title of such predecessor or 28 32 predecessors hereunder and shall deliver all securities and moneys held by it or them to such successor collateral agent or collateral agents. Should any deed, conveyance or other instrument in writing from BMCA be required by any successor collateral agent or collateral agents for more fully and certainly vesting in such successor collateral agent or collateral agents the estates, properties, rights, powers, duties, authority and title vested or intended to be vested in the predecessor collateral agent or collateral agents, any and all such deeds, conveyances and other instruments in writing shall, on request of such successor collateral agent or collateral agents, be so executed, acknowledged and delivered. (d) Any required filing for record of the instrument appointing a successor collateral agent or collateral agents as hereinabove provided shall be at the expense of the Grantors. The resignation of any collateral agent or collateral agents and the instrument or instruments removing any collateral agent or collateral agents, together with all other instruments, deeds and conveyances provided for in this Section 6 shall, if required by law, be forthwith recorded, registered and filed by and at the expense of the Grantors, wherever this Agreement is recorded, registered and filed. Section 6.8 Status of Successors to the Collateral Agent. Every successor to The Bank of New York appointed pursuant to Section 6.7 and every corporation resulting from a merger or consolidation pursuant to Section 6.9 shall be a bank or trust company in good standing and having power so to act, incorporated under the laws of the United States or any State thereof or the District of Columbia, and having its principal corporate trust office within the forty-eight contiguous States, and shall also have capital, surplus and undivided profits of not less than $250,000,000 and a rating from Standard & Poor's or Moody's of A or better. Section 6.9 Merger of the Collateral Agent. Any corporation into which the Collateral Agent shall be merged, or with which it shall be consolidated, or any corporation resulting from any merger or consolidation to which the Collateral Agent shall be a party, shall be the Collateral Agent under this Agreement without the execution or filing of any paper or any further act on the part of the parties hereto. Section 6.10 Additional Co-Collateral Agents; Separate Collateral Agents. (a) If at any time or times it shall be necessary or prudent in order to conform to any law of any jurisdiction in which any of the Collateral shall be located, or the Collateral Agent shall be advised by counsel satisfactory to it that it is so necessary, or prudent in the interest of the Beneficiaries, or the Required Lender Representative shall in writing so request, or the Collateral Agent shall deem it desirable for its own protection in the performance of its duties hereunder, the Collateral Agent shall execute and deliver all instruments and agreements necessary or proper to constitute another bank or trust company, or one or more persons approved by the Collateral Agent either to act as co-collateral agent or co-collateral agents of all or any of the Collateral, jointly with the Collateral Agent originally named herein or any successor or successors, or to act as separate collateral agent or collateral agents of any such property. In the event BMCA shall not have joined in the execution of such instruments and agreements within five days after the receipt of a written request from the Collateral Agent so to do, or in case an 29 33 Actionable Default shall have occurred and be continuing, the Collateral Agent may act under the foregoing provisions of this Section 6.10 without the concurrence of BMCA, and BMCA hereby irrevocably appoints the Collateral Agent as its agent and attorney to act for it under the foregoing provisions of this Section 6.10 in either of such contingencies. (b) Every separate collateral agent and every co-collateral agent, other than any collateral agent which may be appointed as successor to The Bank of New York shall, to the extent permitted by law, be appointed and act and be such, subject to the following provisions and conditions, namely: (i) all rights, powers, duties and obligations conferred upon the Collateral Agent in respect of the custody, control and management of moneys, papers or securities shall be exercised solely by The Bank of New York or its successors as Collateral Agent hereunder; (ii) all rights, powers, duties and obligations conferred or imposed upon the Collateral Agent hereunder shall be conferred or imposed and exercised or performed by the Collateral Agent and such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents, jointly, as shall be provided in the instrument appointing such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Collateral Agent shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents; (iii) no power given hereby to, or which it is provided hereby may be exercised by, any such co-collateral agent or co-collateral agents or separate collateral agent or separate collateral agents, shall be exercised hereunder by such co-collateral agent or co-collateral agents or separate collateral agent or separate collateral agents, except jointly with, or with the consent in writing of, the Collateral Agent, anything herein contained to the contrary notwithstanding; (iv) no collateral agent hereunder shall be personally liable by reason of any act or omission of any other collateral agent hereunder; and (v) the Collateral Agent, at any time by an instrument in writing, may accept the resignation of or remove any such separate collateral agent or co-collateral agent with or without cause, and in that case may by an instrument in writing executed by the Collateral Agent appoint a successor to such separate collateral agent or co-collateral agent, as the case may be, anything herein contained to the contrary, notwithstanding. In the event that BMCA shall not have joined in the execution of any such instrument within five days after the receipt of a written request from the Collateral Agent so to do, or in case an Actionable Default shall have occurred and be continuing, the Collateral Agent shall have the power to accept the resignation of or remove any such separate collateral agent or co-collateral agent and to appoint a successor without the concurrence of BMCA; BMCA hereby irrevocably appointing the Collateral Agent its agent and 30 34 attorney to act for it in such connection in either of such contingencies. In the event that the Collateral Agent shall have appointed a separate collateral agent or separate collateral agents or co-collateral agent or co-collateral agents as above provided, it may at any time, by an instrument in writing, accept the resignation of or remove any such separate collateral agent or co-collateral agent, the successor to any such separate collateral agent or co-collateral agent to be appointed by the Collateral Agent as hereinabove provided in this Section 6.10. SECTION 7. RELEASE OF COLLATERAL. Section 7.1 Conditions to Release of Collateral. (a) Subject to this Section 7.1(a) and Section 7.2, the Collateral Agent shall release its security interest in all of the Collateral on the earliest of: (i) such date as is reasonably practicable after the date on which the Collateral Agent shall have received written notice from the Borrower to the effect that (A) all the Priority Obligations shall have been paid in full in cash and the unfunded commitments, if any, of each Beneficiary thereof shall have been terminated with one or more of the following: (x) the proceeds of unsecured indebtedness (including any Refinancing (as defined in the Senior Note Indentures) of the Priority Obligations) of the Borrower or any of its Subsidiaries permitted under the Senior Note Indentures, (y) the proceeds of secured indebtedness (including any Refinancing (as defined in the Senior Note Indentures) of the Priority Obligations) permitted under the Senior Note Indentures, provided that the Senior Note Obligations shall be secured by the same collateral as shall secure such secured indebtedness on terms and conditions, including priority, no more onerous to the Beneficiaries of the Senior Note Obligations than those contained in the Security Agreement and this Agreement or (z) cash on hand of the Borrower and its Subsidiaries that is not prohibited by the terms of the Senior Note Indentures from being applied to the repayment of the Priority Obligations, and (B) accrued and unpaid Collateral Agent's Fees shall have been paid in full; provided that the Collateral Agent shall not release its security interest in the Collateral if (I) the repayment of the Priority Obligations was not the permitted under the Senior Note Indentures, (II) an event of default under the Senior Note Indentures, the 1999 Credit Agreement or the 2000 Credit Agreement shall exist at the time of such repayment (including if BMCA is the subject of any bankruptcy proceedings) or (III) the cash for such repayment was obtained through the concurrent sale of assets of BMCA or its Subsidiaries; or (ii) the date on which (A) all the Secured Debt shall have been paid in full in cash and the unfunded commitments, if any, of each Beneficiary shall have been terminated and (B) accrued and unpaid Collateral Agent's Fees shall have been paid in full; or (iii) the date which is 3 days after the date on which (A) the Collateral Agent shall have received written instructions from all Lender Representatives instructing the Collateral Agent to release its security interest in all of the Collateral, and (B) accrued and unpaid Collateral Agent's Fees shall have been paid in full. 31 35 (b) Subject to this Section 7.1(b) and Section 7.2, the Collateral Agent shall release its security interest in specific items or portions of the Collateral on the date which is no later than 3 Business Days after the date on which (i) the Collateral Agent shall have received written instructions from the Required Lender Representative instructing the Collateral Agent to release its security interest in specific items or portions of the Collateral, and (ii) accrued and unpaid Collateral Agent's Fees shall have been paid in full. (c) Notwithstanding anything contained in this Section 7.1 to the contrary, the Required Lender Representative shall not instruct the Collateral Agent to release its security interest in specific portions of the Collateral without the consent of the Senior Note Trustees except to the extent that (i) the net cash proceeds of the Collateral so released are used to pay amounts owing under the Priority Obligations, and, to the extent provided for in this Agreement, the Senior Notes, (ii) the release of Collateral is expressly permitted or required by the terms of the 1999 Credit Agreement, the 2000 Credit Agreement or the Security Documents, as such agreements are in effect on the Effective Date (as defined in the Credit Agreement), (iii) the release is required as a matter of law or (iv) the Required Lenders (under and as defined in the 1999 Credit Agreement and the 2000 Credit Agreement) make a determination that maintaining such Collateral would be materially adverse to all of the Secured Parties. Section 7.2 Actions Following Release of the Collateral. To the extent that the Collateral Agent is required to release Collateral in accordance with Section 7.1, or the security interest in any Collateral granted pursuant to any of the Security Documents is otherwise terminated or released in accordance with the terms thereof, all right, title and interest of the Collateral Agent in, to and under such Collateral and the security interest of the Collateral Agent therein shall terminate and shall revert to the applicable Grantor or its successors and assigns, and the estate, right, title and interest of the Collateral Agent therein shall thereupon cease, terminate and become void. Following such request, instructions or other termination or release, the Collateral Agent shall, upon the written request of applicable Grantor or its successors or assigns and at the cost and expense of the Grantors, or their successors or assigns, execute such instruments and take such other actions as are necessary or desirable to terminate any such security interest and otherwise to effectuate the release of the specified portions of the Collateral from the lien of such security interest. Such termination and release shall be without prejudice to the rights of the Collateral Agent or any successor collateral agent to charge and be reimbursed for any expenditures which it may thereafter incur in connection therewith. SECTION 8. AGREEMENTS AMONG BENEFICIARIES. Section 8.1 Other Agreements Among Beneficiaries. Each Beneficiary by its acceptance of the benefits of this Agreement and any Security Documents and the Collateral shall be deemed to have: (a) agreed that should it obtain, receive or take any Collateral (by means of set-off, recoupment or otherwise), or recover any amounts under any Security Document, at any time after the Collateral Agent has received a Notice of Default from the Required Lender Representative, then the received Collateral 32 36 or the amount recovered shall be delivered to the Collateral Agent for distribution in accordance with Section 4.4; and (b) agreed that any recovery of Collateral by any Beneficiary with respect to the Obligations as a result of enforcement of any consensual or non-consensual lien or security interest on any Collateral shall be remitted to the Collateral Agent for distribution in accordance with Section 4.4. Section 8.2 Payment of Collateral Agent's Fees. In the event the Grantors do not pay the Collateral Agent's Fees, the Collateral Agent shall have the right, but not the obligation, to withdraw the Collateral Agent's Fees from the Cash Collateral Account. In addition, in the event the Grantors do not pay the Collateral Agent's Fees, each Beneficiary (other than the Collateral Agent) by its acceptance of the benefits of this Agreement and any Security Documents and the Collateral shall be deemed to have agreed that any Proceeds of Collateral to which it shall be entitled shall be available to pay the Collateral Agent's Fees ratably in accordance with the proportion of the Secured Debt held by such Beneficiary or, if there has been any recovery of the Secured Debt, in accordance with the proportion of (a) the Secured Debt recovered by such Beneficiary to (b) the aggregate amount of Secured Debt recovered by all Beneficiaries. Section 8.3 Invalidation of Payments. To the extent that any of the Beneficiaries receives payments on the Secured Debt or receive Proceeds of Collateral which are subsequently invalidated, declared to be fraudulent or preferential, or are required to be repaid to a collateral agent, receiver or any other Person under the Bankruptcy Code or under state, federal or common law, then, to the extent the payments or Proceeds are so repaid, the Secured Debt or part thereof which was intended to be satisfied shall be revived and will continue to be in full force and effect as if those payments or Proceeds had never been received by such Beneficiary. SECTION 9. OTHER PROVISIONS. Section 9.1 Amendments, Supplements and Waivers. (a) Except as set forth in Section 9.1(b), this Agreement may not be amended, revised, restated or supplemented without the prior written consent of each Lender Representative, BMCA and the Collateral Agent. (b) The Grantors, the 2000 Administrative Agent, the 1999 Administrative Agent and the Collateral Agent, at any time and from time to time, may enter into additional Security Documents or one or more agreements supplemental hereto or to any Security Document, in form satisfactory to the Collateral Agent: (i) to mortgage, pledge or grant a security interest in personal property of a type or category which is set forth in Section 1.3 of the Security Agreement or in any real property in favor of the Collateral Agent as additional security for the Secured Debt pursuant to any Security Document, or 33 37 (ii) to cure any ambiguity, to correct or supplement any provision herein or in any Security Document which may be defective or inconsistent with any other provision herein or therein or make any other amendment or modification of any Security Document. Section 9.2 Notices. All notices, requests, demands and other communications provided for or permitted hereunder shall be in writing (including telecopy), shall be sent by mail, telecopy or hand delivery and, except as otherwise provided in this Agreement, the cost thereof shall be for the sole account of the Grantors and shall be added to the Obligations, (a) If to any signatory hereto, to the address of such signatory set forth on Schedule 9.2. (b) If to any other Beneficiary, to such Beneficiary's Lender Representative set forth on Schedule 9.2. All such notices, requests, demands and communications shall, to be effective hereunder, be in writing or by a telecopy device capable of creating a written record, and shall be deemed to have been given or made when delivered by hand or five days after its deposit in the mail, first class or air postage prepaid, or in the case of notice by such a telecopy device, when properly transmitted if on the same day the sender sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid); provided, however, that any notice, request, demand or other communication to the Collateral Agent shall not be effective until received. Section 9.3 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; provided that this Agreement shall be construed so as to give effect to the intention expressed in Section 3.10. Section 9.4 Dealings with the Grantors. Upon any application or demand by BMCA to the Collateral Agent to take or permit any action under any of the provisions of this Agreement or any Security Document BMCA shall furnish to the Collateral Agent, with copies to each Lender Representative, a certificate signed by a Responsible Officer of BMCA stating that all conditions precedent, if any, provided for in this Agreement or any Security Document relating to the proposed action have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Agreement or any Security Document, relating to such particular application or demand, no additional certificate or opinion need be furnished. Section 9.5 Claims Against the Collateral Agent. Any claims or causes of action which a Beneficiary or a Grantor shall have against the Collateral Agent shall survive the termination of this Agreement and the release of the Collateral hereunder. 34 38 Section 9.6 Binding Effect. (a) This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and shall inure to the benefit of the Beneficiaries and their respective successors and assigns, and nothing herein or in any Security Document is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Agreement, any Security Document or the Secured Debt Collateral. (b) The Grantors have jointly and severally agreed in Sections 5.3, 5.4, 5.5 and 5.6 to pay on demand the Collateral Agent's Fees. In the event the Grantors fail to pay the Collateral Agent's Fees, each Beneficiary (other than the Collateral Agent) has agreed in Section 8.5 to pay the Collateral Agent's Fees, ratably in accordance with the proportion of the Secured Debt held by such Beneficiary or, if there has been any recovery of the Secured Debt, in accordance with the proportion of (i) the Secured Debt recovered by such Beneficiary to (ii) the aggregate amount of Secured Debt recovered by all Beneficiaries, all as set forth in this Agreement. Section 9.7 Conflict with Other Agreements. The parties agree that in the event of any conflict between the provisions of this Agreement and the provisions of any of the Security Documents, the provisions of this Agreement shall control. Section 9.8 Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of New York, without regard to principles of conflict of laws, but including Section 5-1401 of the General Obligations Law. Section 9.9 Counterparts. This Agreement may be executed in separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. SECTION 9.10 CONSENT TO JURISDICTION. EACH OF THE GRANTORS HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY SECURITY DOCUMENTS AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING IN THIS SECTION SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE COLLATERAL AGENT OR ANY SECURED PARTY OR ANY AFFILIATE OF THE COLLATERAL AGENT OR ANY SECURED PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH ANY COLLATERAL DOCUMENT SHALL BE BROUGHT ONLY IN A FEDERAL OR STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY. 35 39 EACH GRANTOR AGREES THAT SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING TO SUCH GRANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER. EACH GRANTOR 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. SECTION 9.11 WAIVER OF JURY TRIAL. EACH GRANTOR, LENDER REPRESENTATIVE AND BY ITS ACCEPTANCE OF THE BENEFITS THEREOF, EACH BENEFICIARY AND THE COLLATERAL AGENT HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH ANY COLLATERAL DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 36 40 IN EVIDENCE OF THE FOREGOING, the parties hereto have executed this Agreement or caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. BUILDING MATERIALS CORPORATION OF AMERICA By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss ------------------------------------------ Title: Senior Vice President and Treasurer ----------------------------------------- THE BANK OF NEW YORK, as Collateral Agent By: /s/ Kevin C. Cremin -------------------------------------------- Name: Kevin C. Cremin ------------------------------------------ Title: Vice President ----------------------------------------- The Bank of New York, not individually, but solely as 1999 Administrative Agent By: /s/ David C. Judge -------------------------------------------- Name: David C. Judge ------------------------------------------ Title: Senior Vice President ----------------------------------------- The Bank of New York, not individually, but solely as 2000 Administrative Agent By: /s/ David C. Judge -------------------------------------------- Name: David C. Judge ------------------------------------------ Title: Senior Vice President ----------------------------------------- The Bank of New York, not individually, but solely as Senior Note Trustee under the 2006 Indenture By: /s/ Signature Illegible -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- 37 41 The Bank of New York, not individually, but solely as Senior Note Trustee under the 2007 Indenture By: /s/ Signature Illegible -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- The Bank of New York, not individually, but solely as Senior Note Trustee under the 2005 Indenture By: /s/ Signature Illegible -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- The Bank of New York, not individually, but solely as Senior Note Trustee under the 2008 Indenture By: /s/ Signature Illegible -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- The Bank of New York, not individually, but solely as Senior Note Trustee under the 2002 Indenture By: /s/ Signature Illegible -------------------------------------------- Name: ------------------------------------------ Title: ----------------------------------------- 38 42 The Chase Manhattan Bank By: /s/ Patrick A. Danielo -------------------------------------------- Name: Patrick A. Danielo ------------------------------------------ Title: Vice President ----------------------------------------- Fleet National Bank By: /s/ Peggy Peckhan -------------------------------------------- Name: Peggy Peckhan ------------------------------------------ Title: Senior Vice President ----------------------------------------- 39 43 BMC WAREHOUSING INC. BMCA GOLDSBORO, INC. BMCA INSULATION PRODUCTS INC. BUILDING MATERIALS INVESTMENT CORPORATION BUILDING MATERIALS MANUFACTURING CORPORATION DUCTWORK MANUFACTURING CORPORATION EXTERIOR TECHNOLOGIES CORPORATION GAF KALAMAZOO ACQUISITION CORP. GAF LEATHERBACK CORP. GAF MATERIALS CORPORATION (CANADA) GAF PREMIUM PRODUCTS INC. GAF REAL PROPERTIES, INC. GAFTECH CORPORATION INTEC MARINE INC. LL BUILDING PRODUCTS INC. PEQUANNOCK VALLEY CLAIM SERVICE COMPANY, INC. SOUTH PONCA REALTY CORP. TOPCOAT, INC. USI MATERIALS INC. U.S. INTEC, INC. US INTEC HOLDINGS INC. WIND GAP REAL PROPERTY ACQUISITION CORP. By: /s/ Susan B. Yoss -------------------------------------------- Name: Susan B. Yoss ------------------------------------------ Title: Senior Vice President and Treasurer ----------------------------------------- 40 44 SCHEDULE 9.2 LIST OF ADDRESSES FOR NOTICES ----------------------------- BUILDING MATERIALS CORPORATION OF AMERICA: Building Materials Corporation of America: Tel.: (973) 628-3000 1361 Alps Road Fax: (973) 628-4090 Wayne, New Jersey 07470 Attention: Treasurer THE BANK OF NEW YORK, AS COLLATERAL AGENT UNDER THE COLLATERAL AGENT AGREEMENT: The Bank of New York Tel.: (212) 437-3692 100 Church Street, 14th Floor Fax: (212) 437-5612 New York, NY 10286 Attention: Kevin Cremin THE BANK OF NEW YORK, AS 1999 ADMINISTRATIVE AGENT: The Bank of New York Tel.: (212) 635-4692 One Wall Street Fax: (212) 635-6365 Agency Function Administration 18th Floor New York, NY 10286 Attention: Sandra Morgan The Bank of New York Tel.: (212) 635-6861 One Wall Street Fax: (212) 635-7498 New York, NY 10286 Attention: David C. Judge 45 THE BANK OF NEW YORK, AS 2000 ADMINISTRATIVE AGENT: The Bank of New York Tel.: (212) 635-4692 One Wall Street Fax: (212) 635-6365 Agency Function Administration 18th Floor New York, NY 10286 Attention: Sandra Morgan The Bank of New York Tel.: (212) 635-6861 One Wall Street Fax: (212) 635-7498 New York, NY 10286 Attention: David C. Judge THE BANK OF NEW YORK, AS SENIOR NOTE TRUSTEE UNDER THE 2006 INDENTURE: The Bank of New York 101 Barclay Street, 21 West New York, NY 10286 Attention: Corporate Trust Trustee Administration THE BANK OF NEW YORK, AS SENIOR NOTE TRUSTEE UNDER THE 2007 INDENTURE: The Bank of New York 101 Barclay Street, 21 West New York, NY 10286 Attention: Corporate Trust Trustee Administration THE BANK OF NEW YORK, AS SENIOR NOTE TRUSTEE UNDER THE 2005 INDENTURE: The Bank of New York 101 Barclay Street, 21 West New York, NY 10286 Attention: Corporate Trust Trustee Administration 2 46 THE BANK OF NEW YORK, AS SENIOR NOTE TRUSTEE UNDER THE 2008 INDENTURE: The Bank of New York 101 Barclay Street, 21 West New York, NY 10286 Attention: Corporate Trust Trustee Administration THE BANK OF NEW YORK, AS SENIOR NOTE TRUSTEE UNDER THE 2002 INDENTURE: The Bank of New York 101 Barclay Street, 21 West New York, NY 10286 Attention: Corporate Trust Trustee Administration THE CHASE MANHATTAN BANK: The Chase Manhattan Bank Tel.: (212) 270-4062 270 Park Avenue Fax: (212) 270-7938 New York, NY 10017 Attention: Peter Dedousis FLEET NATIONAL BANK: Fleet National Bank Tel.: (617) 434-6337 100 Federal Street Fax: (617) 434-4775 Mail Code MA DE 10010A Boston, Massachusetts 02110 Attention: Peggy Peckham 3 EX-10.20 20 y46546ex10-20.txt SEPARATION AND GENERAL RELEASE AGREEMENT 1 EXHIBIT 10.20 SEPARATION AND GENERAL RELEASE AGREEMENT This Separation and General Release Agreement (the "Agreement") is made by and between GAF Materials Corporation ("GAFMC", as more fully defined in Paragraph 17 of this Agreement), and William C. Lang ("Lang"), sometimes herein collectively referred to as "the Parties". WITNESSETH: WHEREAS, Lang has been employed on an at-will basis by GAFMC or its predecessors or subsidiaries and consistent with its March 20, 1997 letter to Lang attached hereto as Attachment B; and WHEREAS, most recently, Lang has served as Executive Vice President, Chief Administrative Officer, and Chief Financial Officer of GAFMC and was located in Wayne, New Jersey; and WHEREAS, GAFMC has decided to terminate Lang's at-will employment; and WHEREAS, Lang and GAFMC desire that Lang's termination of employment be on mutually acceptable and amicable terms; and WHEREAS, Lang has been advised of his right to consult an attorney before signing this Agreement. NOW, THEREFORE, in consideration of the covenants herein undertaken, and the releases herein contained including the general releases in Paragraph 6 of this Agreement, and for other good and valuable consideration, receipt of which is hereby acknowledged by the Parties, GAFMC and Lang agree as follows: 1. Lang's employment with GAFMC shall terminate effective the earlier of (x) the close of business May 31, 2001, or (y) the day before he commences employment with another employer (in either case referred to as the "Termination Date"). Lang agrees to execute any paperwork or procedures reasonably necessary to effectuate this termination. Effective immediately, Lang shall no longer hold any officer position of GAFMC, including Executive Vice President, Chief Administrative Officer, and Chief Financial Officer, and shall no longer serve on the Board of Directors of GAFMC. 2 (a) During the period January 22, 2001 through the Termination Date ("Transition Period"), Lang shall continue to perform his job duties with respect to specific matters and projects designated and authorized by the President and Chief Executive Officer and shall cooperate with and help GAFMC effectuate a smooth transition of his duties and projects to others as appropriate. Lang agrees that during the Transition Period, he shall at all times perform his duties and obligations conscientiously, loyally and to the best of his ability and shall at all times act in accordance with GAFMC's interests. Notwithstanding the foregoing, GAFMC recognizes and agrees that during the Transition Period, Lang may devote a substantial amount of time during working hours to his efforts to find other employment, and GAFMC shall not consider such activity to be a violation of his obligation to perform his job duties as provided by this Paragraph 1(a). Notwithstanding this Paragraph 1, GAFMC may, in its sole discretion, place Lang on paid leave of absence at any time, provided, however, that such action by GAFMC shall not relieve GAFMC of its obligations under this Agreement. 2. GAFMC agrees to provide the following pay, benefits, and other consideration to Lang: (a)For a period of nine months (9) months, beginning with GAFMC's next regular payroll period following the Termination Date and ending nine (9) months later (the "Severance Period"), GAFMC will pay Lang the total sum of $194,999.94 in eighteen (18) semi-monthly payments of $10,833.33 each, less standard withholding and payroll deductions, each of which represents an amount equal to Lang's semi-monthly base salary rate at the time of the Termination Date ("Severance Payments"). Should the Termination Date fall during the middle of a semi-monthly payroll cycle, GAFMC shall issue a check on a pro-rated basis for the period worked prior to the Termination Date, and the Severance Payments shall commence on the next regular payroll period following the Termination Date. Lang agrees that GAFMC's agreement to provide the foregoing Severance Payments fully satisfies GAFMC's understanding or agreement with Lang regarding severance pay as described in Paragraph 7 of GAFMC's March 20, 1997 letter to Lang. (b)GAFMC shall pay Lang a lump sum payment of $10,833.34 on the eighth day following Lang's execution of this Agreement, provided he does not revoke or repudiate this Agreement pursuant to Paragraph 18. The foregoing 2 3 payment represents payment for unused vacation entitlement that Lang accrued as of February 15, 2001. Calculation of this payment is based on Lang's present base salary rate and is subject to standard withholding and payroll deductions. Lang agrees that he shall not accrue or be eligible for any vacation days after February 15, 2001. (c) GAFMC agrees that notwithstanding his status during the Transition Period, GAFMC agrees that Lang may continue to use an office in Wayne, NJ and GAFMC agrees to provide him with reasonable secretarial assistance. To the extent practicable, such secretarial assistance shall be by his current secretary. Should GAFMC place Lang on paid leave absence during the Transition Period, it will provide him with office space elsewhere. (d) During the Severance Period, GAFMC shall continue to provide Lang and his dependents, if any, group medical, dental, and life insurance benefits in the same amount which is presently being provided to them by GAFMC under the same terms as applicable to active employees of GAFMC, exclusive of long-term disability insurance. Upon expiration of the Severance Period, if Lang has not obtained other group health insurance coverage, he will be eligible to elect, at his expense, continuation of his group medical and/or dental insurance coverage provided by GAFMC as provided by the Consolidated Omnibus Budget Reconciliation Act ("COBRA"). The Severance Period shall not be counted towards the applicable COBRA continuation coverage period. After the Termination Date, Lang shall no longer be eligible to participate in GAFMC's 401k plan, and his rights and obligations shall be governed solely by the applicable 401k Plan. (e) GAFMC agrees to pay the reasonable costs of job outplacement services for a six (6) month period from a professional outplacement business selected by GAFMC to assist Lang in finding new employment. Lang's receipt of such outplacement assistance shall be subject to the terms and arrangements made by GAFMC with the outplacement business. (f) GAFMC and Lang agree that any stock options currently held by Lang that have vested as of February 15, 2001 shall, in consideration for the payment set forth below, be cancelled, and Lang shall complete any paperwork and procedures necessary to effect such cancellation of vested options. Provided Lang complies with the foregoing, GAFMC shall pay Lang a lump sum 3 4 payment in the amount of $94,000.00, less standard withholding and deductions, which represents the value of all unexercised, vested stock options held by Lang. GAFMC shall make the foregoing payment to Lang on the eighth day following Lang's execution of this Agreement provided he has not revoked this Agreement pursuant to Paragraph 18 of this Agreement. Lang and GAFMC agree that other than as set forth in this Paragraph 2(f), neither GAFMC nor Lang shall have any other rights or obligations with respect to any stock options held by Lang and any stock option plan or option agreement between Lang and GAFMC shall be null and void. (g) Lang shall not be entitled to any Executive Incentive Compensation ("EIC") bonus for the year 2000 or otherwise. In lieu of any EIC bonus, GAFMC agrees to pay Lang a lump sum of $75,000.00, subject to standard withholding and deductions on the eighth day following Lang's execution of this Agreement, provided he does not revoke or repudiate this Agreement pursuant to Paragraph 18 of this Agreement. Further, GAFMC agrees to pay Lang a lump sum payment in the amount of $75,000.00 on the eighth day following the the Termination Date, provided Lang executes the General Release Agreement attached as Attachment A hereto on the Termination Date and does not revoke or repudiate the General Release Agreement within the seven-day revocation and repudiation period following his execution of the General Release Agreement. Except as stated in this Agreement, Lang shall not be entitled to receive any other bonus for any portion of the year 2000 or otherwise. (h) Upon the Termination Date, GAFMC agrees to sell Lang the company-issued personal computers currently in his possession for the sum of $1.00, provided Lang affirms that he has expunged or returned, as appropriate, all GAFMC-related documents, files, and/or information that is stored on the computer, including but not limited to, all proprietary and confidential information and trade secrets. 3. During the Transition Period and for a one-year period following the Termination Date, Lang agrees to provide written notification of each of his subsequent employers, including his title, to GAFMC c/o Vice President - Human Resources, GAF Materials Corporation, 1361 Alps Road, Wayne, New Jersey 07470. 4. Lang shall return to GAFMC all GAFMC-owned or used property in his possession on or before the Termination Date. Lang further acknowledges and 4 5 reaffirms his continuing obligations under the Confidentiality, Invention and Non-Competition Agreement that he signed as a condition of employment, a copy of which is attached hereto as Attachment C and made a part of this Agreement. 5. Lang agrees to keep this Agreement confidential and not to disclose its contents to anyone except his attorney and/or financial consultant, if any, his immediate family, and appropriate governmental agencies which require this information or except if required to respond to a valid subpoena or other legally required process. If disclosure is made to any of the foregoing, Lang shall advise each of the confidentiality requirements of this Agreement. Lang shall also keep confidential and not disclose to anyone the circumstances leading to the execution of this Agreement, subject to the exceptions specified in this Paragraph 5 and also subject to his right to discuss such circumstances (but not the contents of this Agreement) with any bona fide prospective employers of Lang. If Lang is required to respond to a valid subpoena or other lawful process which calls for: (i) the disclosure or production of this Agreement, or any contents hereof, or (ii) any information regarding the claims released herein, then he shall notify GAFMC promptly and before making any disclosure by telefaxing or mailing the subpoena or other lawful process to Patricia H. Kim, Esq., Vice President - Employment & Labor, GAF Materials Corporation, 1361 Alps Road, Wayne, New Jersey 07470, telefax no. (973) 628-4081 to enable GAFMC to contest, limit or overturn the subpoena or legal process. 6. (a) In consideration for the payments, benefits, and other consideration provided for in this Agreement, Lang, on behalf of himself, his heirs, executors, administrators, successors and assigns, hereby forever releases and discharges GAFMC, its parent companies and its and their respective successors, assigns, subsidiaries, affiliates, directors, officers, shareholders, representatives, attorneys, insurers, agents and employees (hereinafter "GAFMC Releasees") from any and all causes of action, claims, losses, damages, costs and/or expenses (including attorney's fees) and/or other liabilities (collectively, "Liabilities"), known or unknown, asserted or unasserted, which Lang has or may have, from the beginning of time to the date of the execution of this Agreement, including, but not limited to, Liabilities arising under any and all federal, state, or local laws, regulations, or ordinances prohibiting discrimination in employment on the basis of sex, sexual orientation, race, age, religion, national origin, mental or physical 5 6 disability, or any other form of unlawful discrimination, including but not limited to, Title VII of The Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Older Workers Benefit Protection Act; the Family and Medical Leave Act; the Americans with Disabilities Act; any accrued benefit under any other GAFMC employee welfare benefit plan as that term is defined by Section 3(1) of the Employment Retirement Income Security Act; any provision of the Constitution of the United States, the State of New Jersey, or any other state; any provision of any other law, common or statutory, of the United States, New Jersey, or any other state, including New Jersey's Law Against Discrimination ("LAD") and New Jersey's Conscientious Employee Protection Act ("CEPA"); any contract of employment, expressed or implied; as well as any and all claims alleging wrongful termination, or any other tortious or wrongful conduct or omission, in any way relating to or arising out of Lang's hiring by GAFMC, his employment with GAFMC or his separation of employment. Excepted from this release is any claim or right which cannot be waived by law, including claims arising after the date of this Agreement. The Parties intend Lang's release as set forth in this Paragraph 6(a) to be general and comprehensive in nature and to release all claims and potential claims by Lang to the maximum extent permitted by law. (b) In consideration of the covenants undertaken by Lang herein and for other consideration provided for in this Agreement, GAFMC, on behalf of itself, its parent companies and its and their respective successors, assigns, subsidiaries, affiliates, directors, officers, shareholders, representatives, attorneys, insurers, agents and employees, hereby forever releases and discharges Lang, his heirs, executors, administrators, successors and assigns (hereinafter "Lang Releasees") from any and all causes of action, claims, losses, damages, costs and/or expenses (including attorney's fees) and/or other liabilities (collectively, "Liabilities"), known or unknown, asserted or unasserted, which GAFMC has or may have, from the beginning of time to the date of the execution of this Agreement, including, but not limited to, Liabilities: (i) relating to or arising out of GAFMC's hiring by, employment with, or separation of employment from GAFMC; or (ii) arising out of any transactions, occurrences, acts, statements, disclosures, or omissions occurring prior to the date this Agreement is executed. The Parties intend GAFMC's release as set forth in this Paragraph 6(b) to be general and comprehensive in nature and to release all claims and potential claims by GAFMC to the maximum extent permitted by law. GAFMC agrees that it shall indemnify 6 7 Lang with respect to claims against him consistent with the applicable GAFMC corporate by-laws and indemnification insurance coverage applicable to its directors and officers in connection with any losses, claims, damages or liabilities related to, arising out of or in connection with any acts or omissions by Lang for the matters covered thereby. 7. Lang acknowledges that the only consideration for signing this Agreement and all that he is ever to receive from GAFMC Releasees are expressed in the terms stated in this Agreement and that no other promises or agreements of any kind have been made to Lang by any person or entity whatsoever to cause him to sign this Agreement, and that Lang has signed this Agreement as a free and voluntary act. Lang further acknowledges that pursuant to the terms of this Agreement, he is and will be receiving pay, benefits, and other consideration from GAFMC which are substantially above and beyond the pay, benefits, or other consideration to which he, in the absence of this Agreement, would be entitled. Lang further acknowledges that GAFMC is being induced to provide the payments, benefits, and other consideration set forth in this Agreement by Lang's promises, including the full and comprehensive release provided by him in Paragraph 6(a). 8. During the Severance Period, upon reasonable notice and without any additional consideration except for reimbursement of authorized expenses, Lang agrees to cooperate with GAFMC and to respond to reasonable inquiries and requests for information by GAFMC in connection with any matters in which he was involved during his employment with GAFMC, including any legal matters in which Lang may potentially be called as a witness for GAFMC. After the Severance Period expires, Lang agrees that he will continue to cooperate with GAFMC in the future in connection with any legal proceeding pending as of the expiration of the Severance Period in which he may be required to provide sworn testimony. Lang and GAFMC agree that if Lang is unavailable at any given time, the Parties will work cooperatively to schedule a mutually convenient time for any meetings, calls, witness preparation or witness appearances. Lang's agreement to cooperate with and to provide responses to such reasonable inquiries and requests for information by GAFMC or to cooperate in connection with any legal proceeding does not create any employment relationship between Lang and GAFMC. 7 8 9. Lang hereby waives any and all rights or claims that he may have to reinstatement, employment or reemployment with GAFMC. 10. Lang agrees that he shall not offer, use or consider this Agreement as evidence in any proceeding against GAFMC except to the extent necessary to enforce the terms of this Agreement or as required by a valid subpoena or other lawful process. If required by subpoena or other lawful process, Lang shall notify GAFMC promptly and before making any disclosure by telefaxing or mailing the subpoena or other lawful process to Patricia H. Kim, Esq., Vice President - Employment & Labor, GAF Materials Corporation, 1361 Alps Road, Wayne, New Jersey 07470, telefax no. (973) 628-4081 to enable GAFMC to contest, limit or overturn the subpoena or legal process. 11. This Agreement is not, and shall not, be construed as an admission by GAFMC or Lang of any acts or omissions that could or might be alleged with respect to any matter concerning Lang's employment or separation of employment with GAFMC. Without limiting the foregoing, this Agreement is not, and shall not be, construed as an admission by GAFMC of (i) any violation of any law, regulation, or ordinance; or (ii) any wrongful act toward Lang; or (iii) any liability whatsoever for any damages or injuries that are or could be claimed by him with respect to his hiring by GAFMC, his employment, or the separation of his employment. 12. Lang represents and warrants that he has not filed or otherwise initiated any proceeding, complaint, charge, or lawsuit with any court, government agency, or other entity relating to any claims being released by him under this Agreement, and that he shall not file any such proceeding, complaint, charge or lawsuit at any time hereafter relating to any claims being released by him herein. If Lang fails to comply with this Paragraph 12 by initiating a proceeding, complaint, charge, or lawsuit, he shall immediately withdraw such proceeding, complaint, charge or lawsuit, and shall pay all of GAFMC's costs in defending against that proceeding, complaint, charge, or lawsuit, including without limitation, reasonable attorneys' fees. This Paragraph 12 shall not apply to a claim under the Age Discrimination in Employment Act, including a challenge to the validity of the waiver and release agreement. 8 9 13. Lang and GAFMC agree not to make any defamatory or derogatory statement, written or verbal, to any third Parties regarding the facts or circumstances surrounding this Agreement or any other defamatory or derogatory statement that may be harmful to the other or may be injurious to the goodwill, reputation or business standing of the other. Lang agrees that he will not, directly or indirectly, take any action or omit to take any action which is, or could be construed to be, inimical to the best interests of GAFMC. If compelled to testify regarding GAFMC pursuant to a valid subpoena or other legally required process, Lang's testimony shall not constitute a breach of this Paragraph 13; provided, however, that Lang agrees to notify GAFMC of his receipt of any such subpoena or other legally required process promptly and before offering any such testimony to enable GAFMC to contest, limit or overturn the subpoena or other legal process. 14. If any one or more of the provisions contained herein shall for any reason be held to be unenforceable in any respect under the law of any state or of the United States of America, such unenforceability shall not affect any other provision of this Agreement, and said provision shall be ineffective, to the extent of such unenforceability, with respect only to that jurisdiction holding the provision to be unenforceable. 15. The construction, interpretation and performance of this Agreement shall be governed by the laws of the State of New Jersey, and any action to enforce any rights hereunder may only be commenced and prosecuted in the State of New Jersey. 16. This Agreement contains the entire agreement between Lang and GAFMC and fully supersedes any and all prior agreements or understandings pertaining to the subject matter hereof. Lang represents and acknowledges that in executing this Agreement he has not relied upon any representation or statement not set forth herein, made by any of the GAFMC Releasees or by any of the GAFMC Releasees' agents, representatives, or attorneys with regard to the subject matter of this Agreement. No other promise or agreement shall be binding unless in writing and signed by the Parties hereto. 17. All references to GAFMC in this Agreement include: (a) any affiliated, related, subsidiaries, or parent companies of GAF Materials Corporation; (b) any past or present officers, directors, shareholders, 9 10 attorneys, insurers, agents, representatives, and/or employees of GAFMC and or its parents, subsidiaries, affiliates and related companies; and (c) any and all respective predecessors, successors and assigns, and any and all benefit plans, of GAFMC and/or its affiliated companies (as well as the past or present officers, directors, shareholders, agents, representatives, and employees of such entity). 18. Lang acknowledges that he has been advised by GAFMC of his right to consult an attorney before signing this Agreement, and that he has been provided at least twenty-one (21) days after the date he received this document to consider the Agreement. Lang also understands that he may sign the Agreement prior to that date. Lang further understands that he may revoke and repudiate this Agreement within seven (7) days after signing it and that this Agreement shall not become effective or enforceable until the seven (7) day revocation period has expired. Should Lang revoke and repudiate this Agreement during the foregoing seven (7) day period, he shall be required to return or repay the value of any consideration under this Agreement he already received, except if he files a claim under the Age Discrimination in Employment Act, including a challenge to the validity of the waiver and release agreement. 10 11 19. BY SIGNING THIS SEPARATION AND GENERAL RELEASE AGREEMENT, LANG STATES THAT: (a) HE HAS READ IT; (b) HE UNDERSTANDS AND KNOWS THAT HE IS GIVING UP CERTAIN RIGHTS; (c) HE AGREES WITH EVERYTHING IN IT; (d) HE IS AWARE OF HIS RIGHT TO CONSULT AN ATTORNEY BEFORE SIGNING IT; AND (e) HE HAS SIGNED IT KNOWINGLY AND VOLUNTARILY. GAF Materials Corporation WITNESSED: /s/ Patricia Kim By: /s/ Richard A. Weinberg - ---------------------------------- --------------------------------- Executive Vice President and General Counsel Date: 3/7/2001 Date: 3/7/2001 ---------------------------- ------------------------------- WITNESSED: /s/ Linda Woytisek By: /s/ William C. Lang - ---------------------------------- --------------------------------- William C. Lang Date: 3/7/2001 Date: 3/7/2001 ---------------------------- ------------------------------- 11 EX-21 21 y46546ex21.txt SUBSIDIARIES OF BMCA 1 EXHIBIT 21 BUILDING MATERIALS CORPORATION OF AMERICA LIST OF SUBSIDIARIES
STATE OF COMPANY INCORPORATION BMCA Insulation Products Inc. Delaware BMCA Receivables Corporation Delaware Building Materials Investment Corporation Delaware Building Materials Manufacturing Corporation Delaware GAF Leatherback Corp. Delaware GAF Materials Corporation (Canada) Delaware GAF Premium Products Inc. Delaware Wind Gap Real Property Acquisition Corp. Delaware GAFTECH Corporation Delaware LL Building Products Inc. Delaware Ductwork Manufacturing Corporation Delaware
EX-23.1 22 y46546ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP 1 Exhibit 23.1 ------------ CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 28, 2001 except with respect to the matter discussed in Note 3, as to which the date is March 21, 2001, included in this Form 10-K, into Building Materials Corporation of America's previously filed Registration Statement on Form S-8 File No. 333-60589. /s/ Arthur Andersen LLP Arthur Andersen LLP Roseland, New Jersey March 30, 2001 -----END PRIVACY-ENHANCED MESSAGE-----