AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 2000
REGISTRATION NO. 333-34244
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
GEORGIA GULF CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 2821 58-1563799
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
GEORGIA GULF LAKE CHARLES, LLC
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 2869 06-1559251
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
GEORGIA GULF CHEMICALS & VINYLS, LLC
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 2821 06-1559253
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
NORTH AMERICA PLASTICS, LLC
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 3087 58-2463774
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
GG TERMINAL MANAGEMENT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 5169 58-1874434
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
GREAT RIVER OIL & GAS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1311 72-0895452
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
400 PERIMETER CENTER TERRACE, SUITE 595
ATLANTA, GEORGIA 30346
(770) 395-4500
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
----------------------------------
JOEL I. BEERMAN, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE, SUITE 595
ATLANTA, GEORGIA 30346/(770) 395-4523
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------------
COPIES TO:
LISA A. STATER, ESQ.
JONES, DAY, REAVIS & POGUE
3500 SUNTRUST PLAZA
303 PEACHTREE STREET
ATLANTA, GEORGIA 30308
(404) 521-3939
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
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If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS WILL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED APRIL 24, 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. GEORGIA
GULF MAY NOT SELL OR OFFER THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES, AND GEORGIA GULF IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
PROSPECTUS
$200,000,000
OFFER TO EXCHANGE
ALL OUTSTANDING 10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR 10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
GEORGIA GULF CORPORATION
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MAY 25, 2000.
------------------------
The exchange notes:
- The terms of the exchange notes to be issued are substantially identical
to the outstanding notes that Georgia Gulf issued on November 12, 1999,
except for transfer restrictions, registration rights and liquidated
damages provisions relating to the outstanding notes that will not apply
to the exchange notes.
- Interest on the exchange notes accrues at the rate of 10 3/8% per year,
payable in cash every six months on May 1 and November 1, with the first
payment on May 1, 2000.
- The exchange notes are unsecured and will be subordinated to all of our
existing and future senior debt. The exchange notes will rank equally with
any senior subordinated debt we incur in the future and senior to any
future subordinated debt.
- If we fail to make payments on the notes, our subsidiary guarantors must
make them instead. All of our existing and future domestic restricted
subsidiaries, other than our receivables subsidiary, and each foreign
subsidiary that guarantees or incurs obligations under our senior credit
facility will be guaranteeing our payments on the exchange notes. These
guarantees will be senior subordinated obligations of those subsidiary
guarantors.
Material terms of the exchange offer:
- The exchange offer expires at 5:00 p.m., New York City time, on May 25,
2000, unless extended.
- The exchange offer is subject to conditions, which we may waive.
- All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged for an equal principal amount of notes that are
registered under the Securities Act of 1933.
- You may withdraw your tender of outstanding notes at any time before the
expiration of the exchange offer.
- Georgia Gulf will not receive any cash proceeds from the exchange offer.
------------------------
PLEASE CONSIDER CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS
PROSPECTUS.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved the notes to be distributed in the exchange offer, nor
have any of these organizations determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
------------------------
The date of this prospectus is April 24, 2000.
REFERENCES TO ADDITIONAL INFORMATION
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT GEORGIA GULF THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS.
YOU MAY OBTAIN, WITHOUT CHARGE, DOCUMENTS THAT ARE FILED BY GEORGIA GULF WITH
THE SECURITIES AND EXCHANGE COMMISSION AND INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS BY REQUESTING THE DOCUMENTS, IN WRITING OR BY TELEPHONE, FROM THE
COMMISSION OR FROM:
GEORGIA GULF CORPORATION
400 PERIMETER CENTER TERRACE, SUITE 595
ATLANTA, GEORGIA 30346
ATTENTION: INVESTOR RELATIONS
TELEPHONE: (770) 395-4587
IF YOU WOULD LIKE TO REQUEST COPIES OF THESE DOCUMENTS, PLEASE DO SO BY
MAY 18, 2000 IN ORDER TO RECEIVE THEM BEFORE THE EXPIRATION OF THE EXCHANGE
OFFER. SEE "WHERE YOU CAN GET MORE INFORMATION."
TABLE OF CONTENTS
SUMMARY..................................................... 1
RISK FACTORS................................................ 9
Risk Factors Relating to Georgia Gulf..................... 9
Risk Factors Relating to the Notes........................ 13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 18
USE OF PROCEEDS............................................. 18
THE EXCHANGE OFFER.......................................... 19
Purpose and Effect of the Exchange Offer.................. 19
Resale of the Exchange Notes.............................. 19
Terms of the Exchange Offer............................... 20
Expiration Date; Extensions; Amendments................... 21
Conditions................................................ 22
Procedures for Tendering.................................. 22
Book-Entry Transfer....................................... 24
Guaranteed Delivery Procedures............................ 25
Withdrawal of Tenders..................................... 25
Termination of Registration Rights........................ 26
Exchange Agent............................................ 26
Fees and Expenses......................................... 26
Consequences of Failure to Exchange....................... 27
Accounting Treatment...................................... 27
DESCRIPTION OF THE NOTES.................................... 28
General................................................... 28
Optional Redemption....................................... 29
Ranking and Subordination................................. 30
Subsidiary Guarantees..................................... 32
Change of Control......................................... 32
Specified Covenants....................................... 35
Events of Default......................................... 47
Amendments and Waivers.................................... 50
Defeasance................................................ 51
No Personal Liability of Directors, Officers, Employees
and Stockholders........................................ 52
Concerning the Trustee.................................... 52
Governing Law............................................. 52
Definitions............................................... 52
PRINCIPAL UNITED STATES FEDERAL TAX CONSIDERATIONS TO
NON-U.S. HOLDERS.......................................... 74
BOOK-ENTRY; DELIVERY AND FORM............................... 77
PLAN OF DISTRIBUTION........................................ 78
LEGAL MATTERS............................................... 79
INDEPENDENT PUBLIC ACOUNTANTS............................... 79
WHERE YOU CAN FIND MORE INFORMATION......................... 80
i
SUMMARY
THIS SUMMARY HIGHLIGHTS BASIC INFORMATION ABOUT GEORGIA GULF AND THE
EXCHANGE OFFER, BUT IT DOES NOT CONTAIN ALL INFORMATION IMPORTANT TO YOU. YOU
SHOULD READ THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND THE
RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS AND INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS. UNLESS WE INDICATE OTHERWISE OR THE CONTEXT
OTHERWISE REQUIRES, "GEORGIA GULF", "WE", "US" OR "OUR" REFER TO GEORGIA GULF
CORPORATION AND OUR SUBSIDIARIES.
GEORGIA GULF
We are a leading North American manufacturer and international marketer of
two highly integrated product lines, chlorovinyls and aromatics. In our
chlorovinyls business, we are:
- the third largest North American producer of vinyl chloride monomer, or
VCM;
- the fourth largest North American producer of polyvinyl chloride, or PVC,
resins; and
- the second largest North American producer of PVC compounds.
In our aromatics business, we are:
- one of the two largest North American producers of cumene; and
- a leading North American producer and marketer of phenol.
Our manufacturing processes also generate caustic soda and acetone. The
primary products we sell include PVC resins, PVC compounds and caustic soda in
our chlorovinyls business and phenol and acetone in our aromatics business.
These products are used globally in a wide variety of end-use applications,
including construction and renovation, engineered plastics, pulp and paper
production, chemical intermediates, pharmaceuticals and consumer products. Our
integration provides us with the flexibility to shift our product sales mix
towards those products that are experiencing relatively more favorable market
conditions. We believe our vertical integration, world scale facilities,
operating efficiencies, facility locations and the productivity of our employees
provide us with a competitive cost position in our primary markets.
On November 12, 1999, we completed the purchase of substantially all the
assets and working capital of the vinyls business of CONDEA Vista Company. The
outstanding notes were issued in connection with this acquisition. Assets
acquired in the purchase include:
- one VCM facility with annual capacity of 950 million pounds;
- 50% ownership of PHH Monomers, L.L.C., a joint venture that operates a VCM
facility with capacity to produce 1.15 billion pounds of VCM annually,
which entitles us to one-half of the production capacity, or 575 million
pounds;
- two PVC resin facilities with combined capacity of 1.5 billion pounds
annually; and
- three PVC compound facilities with annual combined capacity of
265 million pounds.
Additionally, we entered into a long-term supply contract with CONDEA Vista
for the supply of ethylene and assumed a chlorine supply contract with PPG
Industries, Inc., our joint venture partner in PHH Monomers, for the acquired
VCM facilities.
On May 11, 1998, we acquired North American Plastics, Inc., a manufacturer
of flexible PVC compounds with two manufacturing locations in Mississippi having
a combined annual production capacity of 190 million pounds.
Our principal executive offices are located at 400 Perimeter Center Terrace,
Suite 595, Atlanta, Georgia 30346. Our telephone number is (770) 395-4500.
1
DISCONTINUATION OF METHANOL OPERATION
The methanol market continues to suffer from overcapacity and low-cost
imports as significant increases in global supply have created an imbalance
between supply and demand. As a result, several domestic methanol producers,
including us, idled their methanol plants. We had ceased operating our methanol
plant in December 1998. During 1999, we met our existing contractual obligations
to supply methanol to our customers by purchasing imported methanol. Although
the shutdown of several methanol plants resulted in a supply contraction and an
increase in spot prices during the first half of 1999, several new overseas
methanol plants that were scheduled to start-up later in 1999 added further
pressure on sales prices in the future. As a result of these trends, in
September 1999, we announced that we would exit the methanol business entirely
at the end of 1999. As a result, we incurred a charge against earnings of
$7.6 million, net of tax benefits, during the third quarter of 1999 to write-off
certain methanol assets and to accrue losses related to our methanol buy and
resale program through the end of the year.
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer.
THE EXCHANGE OFFER
The Exchange Offer........................ We are offering to exchange $200,000,000 in principal
amount of our 10 3/8% senior subordinated notes due
2007, which have been registered under the federal
securities laws, for $200,000,000 principal amount of
our outstanding unregistered 10 3/8% senior subordinated
notes due 2007 that we issued on November 12, 1999 in a
private offering. You have the right to exchange your
outstanding notes for exchange notes with substantially
identical terms, except that transfer restrictions,
registration rights, and liquidated damages provisions
currently relating to the outstanding notes do not apply
to the exchange notes.
In order for your outstanding notes to be exchanged, you
must properly tender them before the expiration of the
exchange offer. All outstanding notes that are validly
tendered and not validly withdrawn will be exchanged. We
will issue the exchange notes on or promptly after the
expiration of the exchange offer.
Registration Rights Agreement............. We sold the outstanding notes on November 12, 1999 to
Chase Securities Inc. At that time, we signed a
registration rights agreement with Chase Securities Inc.
that requires us to conduct this exchange offer.
This exchange offer is intended to satisfy those rights
set forth in the registration rights agreement. After
the exchange offer is complete, you will no longer be
entitled to registration rights with respect to
outstanding notes that you do not exchange.
If You Do Not Exchange Your Outstanding
Notes................................... If you do not exchange your outstanding notes for
exchange notes in the exchange offer, you will continue
to be subject to
2
the restrictions on transfer provided in the outstanding
notes and the indenture governing those notes. In
general, you may not offer or sell your outstanding
notes unless they are registered under the federal
securities laws or sold in a transaction exempt from, or
not subject to, the registration requirements of federal
and applicable state securities laws.
Expiration Date........................... The exchange offer will expire at 5:00 p.m., New York
City time, on May 25, 2000 unless we decide to extend
the expiration date. See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
Conditions to the Exchange Offer.......... The exchange offer is subject to conditions that we may
waive. The exchange offer is not conditioned upon any
minimum amount of outstanding notes being tendered for
exchange. See "The Exchange Offer--Conditions."
We reserve the right, subject to applicable law, at any
time and from time to time:
- to delay the acceptance of the outstanding notes;
- to terminate the exchange offer if specified
conditions have not been satisfied;
- to extend the expiration date of the exchange
offer and retain all tendered outstanding notes,
subject to the right of tendering holders to
withdraw their tender of outstanding notes; and
- to waive any condition or otherwise amend the
terms of the exchange offer in any respect.
See "The Exchange Offer--Expiration Date; Extensions;
Amendments."
Procedures for Tendering
Outstanding Notes....................... If you wish to tender your outstanding notes for
exchange, you must:
- complete and sign the enclosed letter of
transmittal by following the related instructions;
and
- send the letter of transmittal and any other
required documents, as directed in the instructions,
to the exchange agent, either (1) with the
outstanding notes to be tendered or (2) in
compliance with the specified procedures for
guaranteed delivery of the outstanding notes.
Brokers, dealers, commercial banks, trust companies and
other nominees may also effect tenders by book-entry
transfer.
3
Please do not send your letter of transmittal or
certificates representing your outstanding notes to
Georgia Gulf. Those documents should only be sent to the
exchange agent. Questions regarding how to tender and
requests for information should be directed to the
exchange agent. See "The Exchange Offer--Exchange
Agent."
Special Procedures for Beneficial
Owners.................................. If your outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or
other nominee, we urge you to contact that person
promptly if you wish to tender your outstanding notes in
the exchange offer. See "The Exchange Offer--Procedures
for Tendering."
Withdrawal Rights......................... You may withdraw your tender of outstanding notes at any
time before the expiration date of the exchange offer by
delivering a written notice of your withdrawal to the
exchange agent. You must also follow the withdrawal
procedures that are described under "The Exchange
Offer--Withdrawal of Tenders."
Resales of Exchange Notes................. We believe that you will be able to offer for resale,
resell or otherwise transfer exchange notes issued in
the exchange offer without compliance with the
registration and prospectus delivery provisions of the
federal securities laws, provided that:
- you are acquiring the exchange notes in the
ordinary course of business;
- you are not participating, and have no arrangement
or understanding with any person to participate, in
the distribution of the exchange notes; and
- you are not an affiliate of Georgia Gulf. An
affiliate of Georgia Gulf is a person that "controls
or is controlled by or is under common control
with" Georgia Gulf.
Our belief is based on interpretations by the Staff of
the Securities and Exchange Commission, as set forth in
no-action letters issued to third parties unrelated to
us. The Staff has not considered this exchange offer in
the context of a no-action letter, and we cannot assure
you that the Staff would make a similar determination
with respect to this exchange offer.
If our belief is not accurate and you transfer an
exchange note without delivering a prospectus meeting
the requirements of the federal securities laws or
without an exemption from these laws, you may incur
liability under the federal securities laws. We do not
and will not assume, or indemnify you against, this
liability.
4
Each broker-dealer that receives exchange notes for its
own account in exchange for outstanding notes that were
acquired by that broker-dealer as a result of
market-making or other trading activities must agree to
deliver a prospectus meeting the requirements of the
federal securities laws in connection with any resale of
the exchange notes. See "The Exchange Offer--Resale of
the Exchange Notes."
Exchange Agent............................ The exchange agent for this exchange offer is SunTrust
Bank. The address, telephone number and facsimile number
of the exchange agent are listed in "The Exchange
Offer--Exchange Agent" and in the letter of transmittal.
See "The Exchange Offer" for more detailed information about the exchange
offer.
THE EXCHANGE NOTES
THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT THE EXCHANGE NOTES
AND IS NOT INTENDED TO BE COMPLETE. IT DOES NOT CONTAIN ALL THE INFORMATION THAT
IS IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THE EXCHANGE NOTES,
PLEASE REFER TO THE SECTION OF THIS DOCUMENT ENTITLED "DESCRIPTION OF THE
NOTES." REFERENCES TO "GEORGIA GULF", "US", "WE" AND "OUR" IN THIS SECTION OF
THE SUMMARY REFER ONLY TO GEORGIA GULF CORPORATION AND DO NOT INCLUDE OUR
SUBSIDIARIES.
Issuer.................................... Georgia Gulf Corporation.
Exchange Notes............................ $200,000,000 in principal amount of 10 3/8% senior
subordinated notes due 2007.
Maturity Date............................. November 1, 2007.
Sinking Fund.............................. None.
Interest.................................. Annual rate: 10.375%.
Payment frequency: every six months on May 1 and
November 1.
First payment: May 1, 2000.
Optional Redemption....................... On or after November 1, 2003, we may redeem some or all
of the notes, including both the outstanding notes and
exchange notes, at the redemption prices listed in the
section entitled "Description of the Notes--Optional
Redemption." We may not redeem the notes before November
1, 2003, except that at any time on or before
November 1, 2002, we may redeem up to $70 million of the
notes with the proceeds of offerings of common equity at
a redemption price equal to 110.375%, together with
accrued and unpaid interest, so long as $130 million of
the notes remain outstanding after each permitted
redemption made with equity proceeds.
Change of Control......................... Upon the occurrence of a change of control, you will
have the right to require us to repurchase all or a
portion of your exchange notes at a price equal to 101%
of the principal amount, together with any accrued and
unpaid interest to the date of purchase.
5
Guarantees................................ The exchange notes are or will be guaranteed by each of
our existing and future domestic restricted
subsidiaries, other than our receivables subsidiary, and
each foreign subsidiary that guarantees or incurs
obligations under our senior credit facility. As of the
date of this prospectus, our subsidiary guarantors are
Georgia Gulf Chemicals & Vinyls, LLC, Georgia Gulf Lake
Charles, LLC, North America Plastics, LLC, Great River
Oil & Gas Corporation and GG Terminal Management
Corporation. The exchange notes and the guarantees are
unsecured senior subordinated debt.
Ranking................................... The exchange notes are subordinated in right of payment
to all of our existing and future senior indebtedness,
including our obligations in respect of our senior
credit facility. The guarantees of the exchange notes
are subordinated in right of payment to all existing and
future senior indebtedness of the subsidiary guarantors,
including any borrowings by subsidiaries and guarantees
by those subsidiaries under our senior credit facility.
The exchange notes rank equally in right of payment with
all of our future senior subordinated debt and senior to
all of our other future subordinated debt. The
guarantees of the notes rank equally in right of payment
with all senior subordinated debt and senior to all
subordinated debt of the subsidiary guarantors.
At December 31, 1999, we had about $133.2 million of
outstanding debt that ranked senior to the notes, which
includes $125.4 million as to which our subsidiaries are
co-obligors but excludes $87.0 million available to us
and our subsidiaries under our senior credit facility or
our guarantees of our subsidiaries' borrowings under our
senior credit facility, and no outstanding debt that
ranked equally or would be subordinated to the notes. At
December 31, 1999, our subsidiary guarantors had about
$563.4 million of guarantor senior debt to which their
guarantees as to the notes are subordinated, which
includes $125.4 million as to which we are a co-obligor
and $438.0 million borrowed by the subsidiary guarantors
under the senior credit facility, and no outstanding
debt that ranked equally or would be subordinated to
their guarantees of the notes.
The indenture relating to the notes permits us and our
subsidiaries to incur a significant amount of additional
senior debt.
Specified Covenants....................... The indenture governing the exchange notes contains
covenants that, among other things, limit our ability
and the ability of our subsidiaries to:
- borrow money;
- pay dividends on stock, redeem stock or redeem
subordinated debt;
6
- make investments;
- use assets as security in other transactions;
- sell assets;
- sell capital stock of subsidiaries;
- guarantee other indebtedness;
- enter into agreements that restrict dividends from
subsidiaries;
- merge or consolidate;
- incur debt that is junior to our senior debt but
senior to the exchange notes;
- enter into transactions with affiliates; and
- enter different lines of business.
Use of Proceeds........................... We will not receive any cash proceeds in the exchange
offer from the issuance of the exchange notes.
See "Description of the Notes" for more detailed information about the
notes, including the outstanding notes and the exchange notes.
RISK FACTORS
You should read the "Risk Factors" section beginning on page 9 of this
prospectus, as well as other cautionary statements included in or incorporated
by reference into this prospectus, to ensure that you understand the risks
associated with the exchange notes.
SUMMARY FINANCIAL INFORMATION
The following table shows our summary historical consolidated financial
data. The data for each of the three years in the period ended December 31, 1999
are derived from our consolidated financial statements, which have been audited
by Arthur Andersen LLP, independent public accountants. The data for each year
in the two year period ended December 31, 1996 are derived from our consolidated
financial statements, which have been restated to reflect the discontinuance of
the methanol business and have not been audited.
The data presented below is only a summary and should be read in conjunction
with our historical financial statements contained in reports filed with the
Commission. See "Where You Can Get More Information."
7
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
($ IN MILLIONS)
STATEMENT OF OPERATIONS DATA:
Net sales................................................... $976.7 $829.4 $871.4 $825.3 $857.8
Cost of sales (1)........................................... 660.2 666.2 710.1 652.3 714.2
Selling, general and administrative expenses................ 48.1 41.3 45.4 42.5 40.8
------ ------ ------ ------ ------
Operating income............................................ 268.4 121.9 115.9 130.5 102.8
Gain on sale of assets (2).................................. -- -- 8.6 -- --
Loss on interest rate hedge agreement (3)................... -- -- -- 9.5 --
Interest expense (net) (4).................................. 24.9 20.8 24.7 30.8 34.9
Provision for income taxes.................................. 93.7 38.4 37.8 33.6 24.8
------ ------ ------ ------ ------
Income from continuing operations........................... $149.9 $ 62.7 $ 62.0 $ 56.6 $ 43.1
====== ====== ====== ====== ======
Diluted earnings per share from continuing operations....... $ 3.80 $ 1.73 $ 1.83 $ 1.78 $ 1.38
Dividends per common share.................................. 0.32 0.32 0.32 0.32 0.32
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges.......................... 9.0x 4.3x 3.9x 3.1x 2.5x
AS OF DECEMBER 31,
----------------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
($ IN MILLIONS)
BALANCE SHEET DATA:
Working capital............................................. $ 72.5 $ 48.5 $ 54.3 $ 61.7 $ 95.6
Property, plant and equipment, net.......................... 296.2 379.1 396.7 388.2 671.6
Total assets................................................ 498.9 575.8 601.6 665.6 1,098.0
Total debt.................................................. 292.4 395.6 393.0 459.5 771.2
Stockholders' equity (deficit).............................. 50.6 18.6 35.6 28.9 57.2
- ------------------------------
(1) Cost of sales includes lease expense related to the co-generation facility
operating agreement of $2.9 million for 1997, $11.3 million for 1998 and
$9.9 million for 1999.
(2) In July 1997 Georgia Gulf completed the sale of specified oil and gas
properties representing substantially all of the assets of Great River
Oil & Gas Corporation, a subsidiary of Georgia Gulf. Net proceeds from this
sale were $16.5 million, on which Georgia Gulf recorded a pretax gain of
$8.6 million ($5.3 million, net of income taxes). Historically, the
operating results for this subsidiary have not been material to the
financial statements of Georgia Gulf.
(3) During the third quarter of 1998, Georgia Gulf incurred other expenses of
$9.5 million ($6.0 million net of taxes) related to the termination of an
interest rate hedge agreement.
(4) Interest capitalized was $1.6 million during 1995, $4.8 million during 1996,
$2.8 million during 1997, $0.7 million during 1998, and $0.9 million during
1999.
8
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION INCLUDED IN AND INCORPORATED BY REFERENCE INTO THIS PROSPECTUS
BEFORE DECIDING TO INVEST IN THE EXCHANGE NOTES.
RISK FACTORS RELATING TO GEORGIA GULF
THE CHEMICAL INDUSTRY IS CYCLICAL AND VOLATILE, WHICH AFFECTS OUR PROFITABILITY
AND COULD ADVERSELY AFFECT THE VALUE OF THE NOTES.
- OUR INDUSTRY EXPERIENCES ALTERNATING PERIODS OF TIGHT SUPPLY AND
OVERCAPACITY.
Our historical operating results reflect the cyclical and volatile nature of
the chemical industry. Historically, periods of tight supply have resulted in
increased prices and profit margins and have been followed by periods of
substantial capacity addition, resulting in oversupply and declining prices and
profit margins. As a result of changes in demand for our products, our earnings
fluctuate significantly, not only from year to year but also from quarter to
quarter. Capacity expansions or the announcements of these expansions have
generally led to a decline in the pricing of some of our products in the
affected product line. We cannot assure you that future growth in product demand
will be sufficient to utilize any additional capacity.
- RAW MATERIAL COSTS AND OTHER EXTERNAL FACTORS BEYOND OUR CONTROL CAN CAUSE
WIDE FLUCTUATIONS IN OUR MARGINS.
The cost of our raw materials and other costs may not correlate with changes
in the prices we receive for our products, either in the direction of the price
change or in absolute magnitude. Raw materials costs represent a substantial
part of our manufacturing costs. Most of the raw materials we use are
commodities, and the price of each can fluctuate widely for a variety of
reasons, including changes in availability because of major capacity additions
or significant facility operating problems. Other external factors beyond our
control can cause volatility in raw material prices, demand for our products,
product prices, sales volumes and margins. These factors include general
economic conditions, the level of business activity in the industries that use
our products, competitors' actions, international events and circumstances, and
governmental regulation in the United States and abroad. These factors can also
magnify the impact of economic cycles on our business. A number of our products
are highly dependent on markets that are particularly cyclical, such as the
construction, paper and pulp, and automotive markets.
- THE CYCLICALITY AND VOLATILITY OF THE CHEMICAL INDUSTRY AFFECTS OUR
CAPACITY UTILIZATION AND CAUSES FLUCTUATIONS IN OUR RESULTS OF OPERATIONS.
The operating rates at our facilities will impact the comparison of
period-to-period results. Different facilities may have differing operating
rates from period to period depending on many factors, such as feedstock costs,
transportation costs, and supply and demand for the product produced at the
facility during that period. As a result, individual facilities may be operated
below or above rated capacities in any period. We may idle a facility for an
extended period of time because an oversupply of a certain product or a lack of
demand for that product makes production uneconomical. The expenses of the
shut-down and restart of facilities may adversely affect quarterly results when
these events occur. In addition, a temporary shut-down may become permanent,
resulting in a write-down or write-off of the related assets.
THE CHEMICAL INDUSTRY IS HIGHLY COMPETITIVE, WITH SOME OF OUR COMPETITORS HAVING
GREATER FINANCIAL RESOURCES THAN WE HAVE; COMPETITION MAY ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS AND THE VALUE OF THE NOTES.
The chemical industry is highly competitive; we compete with many chemical
companies, a substantial number of whom are larger and have greater financial
resources than Georgia Gulf.
9
Moreover, barriers to entry, other than capital availability, are low in most
product segments of our business. Capacity additions or technological advances
by existing or future competitors also create greater competition, particularly
in pricing. We cannot assure you we will have access to the financing necessary
to upgrade our facilities in response to technological advances or other
competitive developments.
EXTENSIVE ENVIRONMENTAL, HEALTH AND SAFETY LAWS AND REGULATIONS IMPACT OUR
OPERATIONS AND ASSETS; COMPLIANCE WITH THESE REGULATIONS COULD ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS AND THE VALUE OF THE NOTES.
Our operations on and ownership of real property are subject to extensive
environmental, health and safety regulation at both the national and local
level. The nature of the chemical industry exposes us to risks of liability
under these laws and regulations due to the production, storage, transportation
and sale of materials that can cause contamination or personal injury if
released into the environment. Environmental laws may have a significant effect
on the costs of transportation and storage of raw materials and finished
products, as well as the costs of the storage and disposal of wastes. We may
incur substantial costs, including fines, damages, criminal or civil sanctions,
remediation costs, or experience interruptions in our operations for violations
arising under these laws.
Also, Superfund statutes may impose joint and several liability for the cost
of investigations and remedial actions on any company that generated the waste,
arranged for disposal of the waste, transported the waste to the disposal site,
selected the disposal site, or presently or formerly owned, leased or operated
the disposal site or a site otherwise contaminated by hazardous substances. Any
or all of the responsible parties may be required to bear all of the costs of
cleanup, regardless of fault, legality of the original disposal or ownership of
the disposal site. A number of environmental liabilities have been associated
with the facilities at Lake Charles, Louisiana and Mansfield, Massachusetts that
we acquired or leased as part of the acquisition of the vinyls business of
CONDEA Vista Company and which may be designated as Superfund sites. Any or all
responsible parties may be required to bear all of the costs of cleanup
regardless of fault, legality of the original disposal, or ownership of the
disposal site. Although CONDEA Vista retained substantially all financial
responsibility for environmental liabilities that relate to the facilities we
acquired from them and which arose before the closing of that acquisition, we
cannot assure you that CONDEA Vista will be able to satisfy its obligations in
this regard, particularly in light of the long period of time in which
environmental liabilities may arise. If CONDEA Vista fails to do so, then we
could be held responsible.
Our policy is to accrue costs relating to environmental matters when it is
probable that these costs will be required and can be reasonably estimated.
However, estimated costs for future environmental compliance and remediation may
be too low or we may not be able to quantify the potential costs. We expect to
continue to be subject to increasingly stringent environmental and health and
safety laws and regulations. It is difficult to predict the future
interpretation and development of these laws and regulations or their impact on
our future earnings and operations. We anticipate that compliance will continue
to require increased capital expenditures and operating costs. Any increase in
these costs could adversely affect our financial performance.
HAZARDS ASSOCIATED WITH CHEMICAL MANUFACTURING MAY OCCUR, WHICH WOULD ADVERSELY
AFFECT OUR RESULTS OF OPERATIONS AND THE VALUE OF THE NOTES.
The usual hazards associated with chemical manufacturing and the related
storage and transportation of raw materials, products and wastes may occur in
Georgia Gulf's operations. These hazards could lead to an interruption or
suspension of operations and have an adverse effect on the productivity and
profitability of a particular manufacturing facility or on Georgia Gulf as a
whole. These hazards include:
- pipeline and storage tank leaks and ruptures;
10
- explosions and fires;
- inclement weather and natural disasters;
- mechanical failure;
- unscheduled downtime;
- labor difficulties;
- transportation interruptions;
- remediation complications; and
- chemical spills and other discharges or releases of toxic or hazardous
substances or gases.
These hazards may cause personal injury and loss of life, severe damage to
or destruction of property and equipment, and environmental damage; any of these
could lead to claims under the environmental laws. In addition, individuals
could seek damages for alleged personal injury or property damage due to
exposure to chemicals at our facilities or to chemicals otherwise owned or
controlled by Georgia Gulf. Furthermore, Georgia Gulf is also subject to present
and future claims with respect to workplace exposure, workers' compensation and
other matters. Although we maintain property, business interruption and casualty
insurance of the types and in the amounts that we believe are customary for the
industry, we are not fully insured against all potential hazards incident to our
business.
WE RELY HEAVILY ON THIRD PARTY TRANSPORTATION, WHICH SUBJECTS US TO RISKS THAT
WE CANNOT CONTROL; THESE RISKS MAY ADVERSELY AFFECT OUR OPERATIONS AND THE VALUE
OF THE NOTES.
We rely heavily on railroads and shipping companies to transport raw
materials to our manufacturing facilities and to ship finished product to our
customers. Rail and shipping operations are subject to various hazards,
including extreme weather conditions, work stoppages and operating hazards. If
we are delayed or unable to ship finished product or unable to obtain raw
materials as a result of the railroads' or shipping companies' failure to
operate properly, or if there were significant changes in the cost of these
services, we may not be able to arrange efficient alternatives and timely means
to obtain raw materials or ship our goods, which could result in an adverse
effect on our revenues and costs of operations.
YEAR 2000 DISRUPTIONS IN OPERATIONS OF GEORGIA GULF OR THIRD PARTIES COULD
ADVERSELY AFFECT OUR OPERATIONS AND THE VALUE OF THE NOTES.
Although we did not experience any impact to our business as a result of the
date change from 1999 to 2000, it is possible that the full impact of the date
change has not been fully recognized. If any year 2000 disruptions arise, we
believe they would be minor and correctable; accordingly we have not developed
any contingency plans beyond our normal business interruption plans. We cannot
assure you that all of our systems, or the systems of third parties upon which
we rely, such as utilities, telecommunications providers and banks, will
continue to function properly. If a failure in any of our or a third party
provider's systems were to occur, our operations and financial performance could
be disrupted. In addition, we could still be negatively affected if our
customers or suppliers are adversely affected by year 2000 or similar issues.
WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS, WHICH COULD LIMIT OUR BUSINESS AND
OPERATIONS AND ADVERSELY AFFECT THE VALUE OF THE NOTES.
At December 31, 1999, we had approximately $771.2 million of indebtedness
outstanding. In addition, we had approximately $87.0 million of additional
credit available under our revolving credit
11
facility. As a result, Georgia Gulf is highly leveraged. This high level of
indebtedness could have important consequences to our operations, including:
- we may have difficulty borrowing money in the future for working capital,
capital expenditures, acquisitions or other purposes;
- we will need to use a large portion of our available cash for debt
service, which will reduce the amount of money available to finance our
operations and other business activities;
- some of our debt, including the debt under our senior credit facility, has
variable rates of interest, which exposes us to the risk of increased
interest rates;
- debt under our senior credit facility and 7 5/8% notes is secured and will
mature before the notes; and
- we may have a much higher level of debt than some of our competitors,
which may: put us at a competitive disadvantage; make us more vulnerable
to economic downturns and adverse developments in our business; and reduce
our flexibility in responding to changing business and economic
conditions.
We expect to obtain the money to pay our expenses and to pay principal and
interest on the notes and our other debt from our cash flow and from additional
loans under our senior credit facility. Our ability to meet these requirements
will depend on our future financial performance. We cannot be sure that our cash
flow will be sufficient to allow us to pay principal and interest on our debt,
including the notes, as well as meet our other obligations. If we do not have
enough money to do so, we may be required to refinance all or part of our debt,
sell assets or borrow more money. We cannot assure you that we will be able to
do so on commercially reasonable terms, if at all. In addition, the terms of our
existing or future debt agreements, including our senior credit facility and the
indenture relating to the notes, may restrict us from pursuing any of these
alternatives.
WE MAY ENCOUNTER DIFFICULTIES IN INTEGRATING THE ASSETS OF BUSINESSES WE
ACQUIRE, WHICH MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND THE VALUE OF
THE NOTES.
We cannot be sure that we will be able to successfully complete the
integration of the vinyls business of CONDEA Vista Company into our operations
without substantial costs, delays or other problems. We may face similar
problems with future acquisitions. The integration of any business we acquire
may be disruptive to our business and may result in a significant diversion of
management attention and operational resources. In addition, we may suffer a
loss of key employees, customers or suppliers, loss of revenues, increases in
costs or other difficulties.
OUR PARTICIPATION IN JOINT VENTURES EXPOSES US TO RISKS OF SHARED CONTROL.
As part of the vinyls business we acquired from CONDEA Vista Company, we
purchased a 50% interest in a joint venture, the remainder of which is
controlled by PPG Industries, Inc. which also supplies chlorine to the facility
operated by the joint venture. We may enter into additional joint ventures in
the future. The nature of a joint venture requires us to share control with
unaffiliated third parties. If our joint venture partners do not fulfill their
obligations, the affected joint venture may not be able to operate according to
its business plan. In that case, our operations may be adversely affected or we
may be required to increase our level of commitment to the joint venture. Also,
differences in views among joint venture participants may result in delayed
decisions or failures to agree on major issues. Any differences in our views or
problems with respect to the operations of our joint ventures could have a
material adverse effect on our business, financial condition, results of
operations or cash flows.
12
WE RELY ON OUTSIDE SUPPLIERS FOR SPECIFIED FEEDSTOCKS AND SERVICES.
In connection with our acquisition of the vinyls business of CONDEA Vista
Company, we entered into agreements with CONDEA Vista to provide specified
feedstocks for the Lake Charles facility. Moreover, this facility is dependent
upon CONDEA Vista's infrastructure for services such as waste water and ground
water treatment, site remediation, fire water supply and rail car management.
Any failure of CONDEA Vista to perform those agreements could adversely affect
the operation of the affected facilities and our results of operations. The
agreements relating to these feedstocks and services have initial terms of one
to ten years. Although most of these agreements provide for automatic renewal,
they may be terminated after specified notice periods. If we were required to
obtain an alternate source for these feedstocks or services, we may not be able
to obtain pricing on as favorable terms. Additionally, we may be forced to pay
additional transportation costs or to invest in capital projects for pipelines
or alternate facilities to accommodate railcar or other delivery or to replace
other services.
We also obtain a significant portion of our other raw materials from a few
key suppliers. If any of these suppliers is unable to meet its obligations under
present supply agreements, we may be forced to pay higher prices to obtain the
necessary raw materials. Any interruption of supply or any price increase of raw
materials could have an adverse effect on our business and results of
operations.
SALES MADE IN INTERNATIONAL MARKETS EXPOSE US TO RISKS THAT MAY ADVERSELY AFFECT
OUR OPERATIONS OR FINANCIAL CONDITION.
During 1999, 14% of our revenues were generated in international markets.
Substantially all of our international sales are made in U.S. dollars and, as a
result, any increase in the value of the U.S. dollar relative to foreign
currencies will increase the effective price of our products in international
markets. Our international sales are also subject to other risks, including
differing and changing legal and regulatory requirements in local jurisdictions;
export duties and import quotas; domestic and foreign customs and tariffs or
other trade barriers; potentially adverse tax consequences, including
withholding taxes or taxes on other remittances; and foreign exchange
restrictions. We cannot assure you that these factors will not have an adverse
effect on our financial condition or results of operations.
RISK FACTORS RELATING TO THE NOTES
THE NOTES AND GUARANTEES ARE SUBORDINATED IN RIGHT OF PAYMENT TO OUR SENIOR
DEBT.
The right to payment on the notes is subordinate to all of our existing and
future senior debt. The subsidiary guarantees are subordinated to their senior
debt. At December 31, 1999, we had $571.2 million of debt outstanding that is
senior to the notes, in addition to $87.0 million available under our senior
credit facility. The notes and the subsidiary guarantees are subordinate to all
of this outstanding debt.
In the event of bankruptcy or a similar proceeding with respect to Georgia
Gulf, our assets will be available to pay obligations on the notes and the
subsidiary guarantees only after all outstanding senior indebtedness has been
paid in full. There may not be sufficient assets remaining to make payment of
amounts due on any or all of the notes and the subsidiary guarantees then
outstanding.
In addition, all payments on the notes and the subsidiary guarantees will be
blocked in the event of a payment default on, or the acceleration of, specified
senior indebtedness, including the senior credit facility; these payments may be
blocked for up to 179 days out of 360 days if a nonpayment default occurs with
respect to specified senior indebtedness.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to Georgia Gulf, holders of the notes will participate on an
equal basis with specified trade creditors and all other holders of our senior
subordinated indebtedness. However, because the indenture requires
13
that amounts otherwise payable to holders of the notes in a bankruptcy or
similar proceeding be paid instead to holders of senior debt until they are paid
in full, holders of the notes may receive less, ratably, than holders of those
trade payables in any of these proceedings. In addition, any acceleration of the
indebtedness under the senior credit facility or our 7 5/8% notes will, and
acceleration of our other indebtedness may, constitute an event of default under
the indenture. If an event of default exists under the senior credit facility,
our 7 5/8% notes or specified other senior indebtedness, the indenture relating
to the notes may restrict payments on the notes until holders of the other
indebtedness are paid in full or the default is cured or waived or has otherwise
ceased to exist. In any of these cases, we may not have sufficient funds to pay
all of our creditors, and holders of notes may receive less, ratably, than the
holders of trade payables.
IF WE DO NOT RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS FROM OUR SUBSIDIARIES, WE
MAY NOT BE ABLE TO MAKE PAYMENTS ON THE NOTES.
Substantially all of our properties are owned by, and substantially all of
our operations are conducted through, our subsidiaries. As a result, we depend
on dividends and other payments from our subsidiaries to satisfy our financial
obligations and make payments to our investors. The ability of our subsidiaries
to pay dividends and make other payments to us is subject to restrictions. In a
bankruptcy, liquidation or reorganization or similar proceeding relating to a
subsidiary, the creditors of that subsidiary will generally be entitled to be
paid in full before any distribution may be made to us. In addition, under our
senior credit facility, our subsidiaries are restricted in their ability to make
distributions to us if a default or event of default exists or is caused by the
distribution, although we are able to cause our subsidiaries to pay dividends to
us to service the semi-annual interest payments under the notes. The ability of
a subsidiary to pay dividends to us will also be limited by the laws of its
jurisdiction of organization which limit the amount of funds available for the
payment of dividends. In the event of bankruptcy proceedings affecting a
subsidiary, to the extent we are recognized as a creditor of that subsidiary,
our claim would still be subordinate to any security interest in or other lien
on any assets of that subsidiary and to any of its debt and other obligations
that are senior to the payment of the notes. Since our principal subsidiaries
are co-borrowers under the senior credit facility and are co-obligors under our
7 5/8% notes, industrial revenue bonds, and other notes, our subsidiaries had
$563.4 million of guarantor senior debt to which their guarantees as to the
notes are subordinated as of December 31, 1999.
THE NOTES ARE UNSECURED.
The notes are not secured by any of our assets. The senior credit facility
is secured by substantially all of our assets and a pledge of the capital stock
of all of our subsidiaries. Our 7 5/8% notes are also secured by those assets.
If we become insolvent or are liquidated, or if payment under any of these
facilities is accelerated, our lenders would be entitled to exercise the
remedies available to a secured lender under applicable law and will have a
claim on those assets before the holders of the notes. We cannot be sure that
the liquidation value of our assets would be sufficient to repay in full the
indebtedness under the senior credit facility and the 7 5/8% notes, as well as
our other indebtedness, including the notes.
WE MAY NOT BE ABLE TO SATISFY OUR OBLIGATIONS TO HOLDERS OF THE NOTES UPON A
CHANGE OF CONTROL.
Upon the occurrence of a "change of control," as defined in the indenture,
each holder of the notes will have the right to require us to purchase its notes
at a price equal to 101% of the principal amount, together with any accrued and
unpaid interest to the date of purchase. However, our senior credit facility
effectively prevents the purchase of the notes by us if a change of control
occurs and the lenders do not consent to our purchase of the notes, unless all
amounts outstanding under the senior credit facility are repaid in full. Our
failure to purchase, or give notice of purchase of, the notes would
14
be a default under the indenture, which would in turn be a default under the
senior credit facility. Moreover, our failure to repay all amounts outstanding
under the senior credit facility upon a default would also be a default under
the indenture and could be a default under the indenture relating to our 7 5/8%
notes.
In addition, a change of control may constitute an event of default under
the senior credit facility. A default under our senior credit facility would
result in an event of default under the indenture if the lenders accelerate the
debt under the senior credit facility. In that case, the subordination
provisions of the notes require payment in full of the senior credit facility
before we could purchase the notes. Moreover, an event of default under the
senior credit facility would also trigger an event of default under the
indenture relating to our 7 5/8% notes. If that happens, the debt under our
7 5/8% notes would be paid before any payments on the notes. Any future credit
agreements or other agreements to which we become a party may contain similar
restrictions and provisions.
If a change of control occurs, we may not have enough assets to satisfy all
obligations under our senior credit facility, our 7 5/8% notes and the indenture
related to the notes. Upon the occurrence of a change of control, we could seek
to refinance the indebtedness under the senior credit facility, the 7 5/8% notes
and the notes or obtain a waiver from the lenders or noteholders. We cannot
assure you, however, that we would be able to obtain a waiver or refinance our
indebtedness on commercially reasonable terms, if at all.
THE INDENTURE FOR THE NOTES AND OUR SENIOR CREDIT FACILITY IMPOSE SIGNIFICANT
OPERATING AND FINANCIAL RESTRICTIONS, WHICH MAY PREVENT US FROM CAPITALIZING ON
BUSINESS OPPORTUNITIES AND TAKING SOME ACTIONS.
The indenture for the notes and our senior credit facility impose
significant operating and financial restrictions on us. These restrictions will
limit our ability to:
- incur additional indebtedness and liens;
- make capital expenditures;
- make investments and sell assets, including the stock of subsidiaries;
- make payments of dividends and other distributions;
- purchase Georgia Gulf stock;
- use the proceeds of the sale of specified assets;
- engage in business activities unrelated to our current business;
- enter into transactions with affiliates; or
- consolidate, merge or sell all or substantially all of our assets.
In addition, our senior credit facility requires us to maintain specified
financial ratios. We cannot assure you that these covenants will not adversely
affect our ability to finance our future operations or capital needs or to
pursue available business opportunities. A breach of any of these covenants
could result in a default in respect of the related indebtedness. If a default
occurs, the relevant lenders could elect to declare the indebtedness, together
with accrued interest and other fees, to be immediately due and payable and
proceed against any collateral securing that indebtedness. If, as a result of
such a failure, a default occurs with respect to senior debt, the subordination
provisions in the indenture would restrict payments to the holders of the notes.
15
THERE IS NO ESTABLISHED TRADING MARKET FOR THE NOTES, AND YOU MAY NOT BE ABLE TO
SELL THEM QUICKLY OR AT THE PRICE THAT YOU PAID.
There is no existing trading market for the outstanding notes. We cannot
assure you that any trading market for the exchange notes will develop. If such
a market were to develop, the outstanding notes and the exchange notes could
trade at prices that may be lower than the initial offering price of the notes,
depending on many factors, including prevailing interest rates, our operating
results and the market for similar securities.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused volatility in prices. It is possible that the
market for the notes and the exchange notes, will be subject to disruptions. Any
disruptions may have a negative effect on noteholders, regardless of our
prospects and financial performance.
IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES, YOU MAY HAVE DIFFICULTY IN
TRANSFERRING THEM AT A LATER TIME.
We will issue exchange notes in exchange for the outstanding notes after the
exchange agent receives your outstanding notes, the letter of transmittal, and
all related documents before the expiration of the exchange offer. You should
allow adequate time for delivery if you choose to tender your outstanding notes
for exchange. Outstanding notes that are not exchanged will remain subject to
restrictions on transfer and will not have any rights to registration.
If you do participate in the exchange offer for the purpose of participating
in the distribution of the exchange notes, you must comply with the registration
and prospectus delivery requirements of the Securities Act of 1933 for any
resale transaction. Each broker-dealer who holds outstanding notes for its own
account due to market-making or other trading activities and who receives
exchange notes for its own account must acknowledge that it will deliver a
prospectus in connection with any resale of the exchange notes. If any
outstanding notes are not tendered in the exchange or are tendered but not
accepted, the trading market for those outstanding notes could be negatively
affected due to the limited number of outstanding notes expected to remain
outstanding following the completion of the exchange offer.
NOT ALL SUBSIDIARIES ARE GUARANTORS, SO THE ASSETS OF THE NON-GUARANTOR
SUBSIDIARIES MAY NOT BE AVAILABLE TO MAKE PAYMENTS ON THE NOTES.
Our present and future foreign subsidiaries will not be guarantors of the
notes unless those entities guarantee senior debt of Georgia Gulf or incur
indebtedness under our senior credit facility. As of the date of this
prospectus, our domestic subsidiaries other than our receivables subsidiary have
guaranteed the notes. Payments on the notes are only required to be made by
Georgia Gulf and the subsidiary guarantors. As a result, no payments are
required to be made from assets of subsidiaries that did not guarantee the notes
unless those assets are transferred by dividend or otherwise to Georgia Gulf or
a subsidiary guarantor.
In the event of a bankruptcy, liquidation or reorganization of any of the
non-guarantor subsidiaries, holders of their indebtedness, including their trade
creditors, would generally be entitled to payment of their claims from the
assets of those subsidiaries before any assets are made available for
distribution to Georgia Gulf. As a result, the notes are effectively
subordinated to the indebtedness of the non-guarantor subsidiaries.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
THE GUARANTEES OF THE NOTES.
The issuance of the guarantees of the notes may be subject to review under
U.S. federal bankruptcy law and comparable provisions of state fraudulent
conveyance laws if a bankruptcy or reorganization case or lawsuit is commenced
by or on behalf of a subsidiary guarantor's unpaid
16
creditors. Under these laws, if a court were to find in such a bankruptcy or
reorganization case or lawsuit that, at the time the subsidiary guarantor issued
the guarantee of the notes:
- it issued the guarantee to delay, hinder or defraud present or future
creditors; or
- it received less than reasonably equivalent value or fair consideration
for issuing the guarantee; and
- at the time it issued the guarantee: it was insolvent or rendered
insolvent by reason of issuing the guarantee, and the application of the
proceeds of the guarantee; or it was engaged, or about to engage, in a
business or transaction for which its remaining unencumbered assets
constituted unreasonably small capital to carry on its business; or it
intended to incur, or believed that it would incur, debts beyond its
ability to pay as they mature; or it was a defendant in an action for
money damages, or had a judgment for money damages docketed against it if,
in either case, after final judgment, the judgment is unsatisfied;
then the court could void the obligations under the guarantees of the notes,
subordinate the guarantees of the notes to that subsidiary guarantor's other
debt or take other action detrimental to holders of the guarantees of the notes.
The measures of insolvency for purposes of fraudulent transfer laws vary
depending upon the law of the jurisdiction that is being applied in any
proceeding to determine whether a fraudulent transfer had occurred. Generally,
however, a person would be considered insolvent if, at the time it incurred the
debt:
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
We cannot be sure as to the standard that a court would use to determine
whether or not the subsidiary guarantor was solvent at the relevant time, or,
regardless of the standard that the court uses, that the issuance of the
guarantee of the notes would not be voided or the guarantee of the notes would
not be subordinated to that subsidiary guarantor's other debt. If such a case
were to occur, any guarantee of the notes incurred by one of the subsidiary
guarantors could also be subject to the claim that, since the guarantee was
incurred for Georgia Gulf's benefit, and only indirectly for the benefit of the
subsidiary guarantor, the obligations of the applicable guarantor were incurred
for less than fair consideration. A court could thus void the obligations under
the guarantee, subordinate the guarantee to the applicable guarantor's other
debt or take other action detrimental to holders of the notes.
17
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information in and incorporated by reference into this prospectus
includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to, among other things,
our outlook for future periods, supply and demand, pricing trends and market
forces within the chemical industry, cost reduction strategies and their
results, planned capital expenditures, long-term objectives of management and
other statements of expectations concerning matters that are not historical
facts.
Predictions of future results contain a measure of uncertainty. Actual
results could differ materially due to various factors. Factors that could
change forward-looking statements are, among others, changes in the general
economy, changes in demand for our products or increases in overall industry
capacity that could affect production volumes or pricing, changes or cyclicality
in the industries to which our products are sold, availability and pricing of
raw materials, technological changes affecting production, difficulty in plant
operations and product transportation, governmental and environmental
regulations and other unforeseen circumstances. A number of these factors are
discussed in this prospectus and in our other periodic filings with the
Commission. In addition to the disclosure contained in this prospectus, you
should carefully review risks and uncertainties contained in the documents that
we file from time to time with the Commission.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes. Because we are exchanging the exchange notes for the outstanding notes,
which have substantially identical terms, the issuance of the exchange notes
will not result in any increase in our indebtedness.
18
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On November 12, 1999, Georgia Gulf sold $200,000,000 in principal amount at
maturity of the outstanding notes in a private placement through Chase
Securities Inc. to a limited number of "Qualified Institutional Buyers," as
defined under the Securities Act of 1933, and to persons outside the United
States. In connection with the sale of the outstanding notes, Georgia Gulf, the
subsidiary guarantors and Chase Securities entered into a registration rights
agreement, dated as of November 12, 1999. Under that agreement, we must, among
other things, use our best efforts to file with the Commission a registration
statement under the Securities Act of 1933 covering the exchange offer and to
cause that registration statement to become effective under that act. Upon the
effectiveness of that registration statement, we must also offer each holder of
the outstanding notes the opportunity to exchange its securities for an equal
principal amount at maturity of exchange notes. You are a holder with respect to
the exchange offer if you are (1) a person in whose name any outstanding notes
are registered on Georgia Gulf's books or (2) any other person who has obtained
a properly completed assignment of outstanding notes from the registered holder.
We are making the exchange offer to comply with our obligations under the
registration rights agreement. A copy of the registration rights agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part.
In order to participate in the exchange offer, you must represent to Georgia
Gulf, among other things, that:
- the exchange notes being acquired in the exchange offer are being obtained
in the ordinary course of business of the person receiving the exchange
notes;
- neither you nor any other person is engaging in or intends to engage in a
distribution of those exchange notes;
- neither you nor any other person has an arrangement or understanding with
any third person to participate in the distribution of the exchange notes;
and
- neither you nor any other person is an affiliate of Georgia Gulf. An
affiliate is any person who "controls or is controlled by or is under
common control with" Georgia Gulf.
RESALE OF THE EXCHANGE NOTES
Based on a previous interpretation by the Staff of the Commission set forth
in no-action letters issued to third parties, including Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated
(available June 5, 1991), Mary Kay Cosmetics, Inc. (available June 5, 1991),
Warnaco, Inc. (available October 11, 1991), and K-III Communications Corp.
(available May 14, 1993), we believe that the exchange notes issued in the
exchange offer may be offered for resale, resold, and otherwise transferred by
you, except if you are an affiliate of Georgia Gulf, without compliance with the
registration and prospectus delivery provisions of the Securities Act of 1933 if
the representations described in "--Purpose and Effect of the Exchange Offer"
apply to you.
If you tender in the exchange offer with the intention of participating in a
distribution of the exchange notes, you cannot rely on the interpretation by the
Staff of the Commission as set forth in the Morgan Stanley & Co. Incorporated
no-action letter and other similar letters, and you must comply with the
registration and prospectus delivery requirements of the Securities Act of 1933
in connection with a secondary resale transaction. In the event that our belief
regarding resale is inaccurate, if you transfer exchange notes in violation of
the prospectus delivery provisions of the Securities Act of 1933 and without an
exemption from registration under the federal securities laws, you may incur
liability under these laws. We do not assume or indemnify you against this
liability.
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The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance of the exchange offer would not be in
compliance with the securities or blue sky laws of the particular jurisdiction.
Each broker-dealer that receives exchange notes for its own account in exchange
for outstanding notes, where the outstanding notes were acquired by that
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. See "Plan of Distribution." In order to
facilitate the disposition of exchange notes by broker-dealers participating in
the exchange offer, we have agreed, subject to specific conditions, to make this
prospectus, as it may be amended or supplemented from time to time, available
for delivery by those broker-dealers to satisfy their prospectus delivery
obligations under the Securities Act of 1933 for a period of 90 days after the
expiration date of the exchange offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, Georgia Gulf will accept any and all
outstanding notes validly tendered and not withdrawn before 5:00 p.m., New York
City time, on the day the exchange offer expires.
As of the date of this prospectus, $200,000,000 in principal amount at
maturity of the notes are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of the outstanding notes on
this date. There will be no fixed record date for determining registered holders
of the outstanding notes entitled to participate in the exchange offer; however,
holders of the outstanding notes must tender their certificates or cause their
outstanding notes to be tendered by book-entry transfer before the expiration
date of the exchange offer to participate.
The form and terms of the exchange notes will be the same as the form and
terms of the outstanding notes, except that the exchange notes will be
registered under the Securities Act of 1933 and therefore will not bear legends
restricting their transfer. Following consummation of the exchange offer, all
rights under the registration rights agreement accorded to holders of
outstanding notes, including the right to receive additional incremental
interest on the outstanding notes, to the extent and in the circumstances
specified in the registration rights agreement, will terminate.
We intend to conduct the exchange offer in accordance with the provisions of
the registration rights agreement and applicable federal securities laws.
Outstanding notes that are not tendered for exchange in the exchange offer will
remain outstanding and will be entitled to the rights set forth in the related
indenture. Any outstanding notes not tendered for exchange will not retain any
rights under the registration rights agreement and will remain subject to
transfer restrictions. See "--Consequences of Failure to Exchange."
We will be deemed to have accepted validly tendered outstanding notes when,
as and if we will have given oral or written notice of our acceptance to the
exchange agent. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the exchange notes from Georgia Gulf. If any
tendered outstanding notes are not accepted for exchange because of an invalid
tender, the occurrence of other events set forth in this prospectus, or
otherwise, certificates for any unaccepted outstanding notes will be returned,
or, in the case of outstanding notes tendered by book-entry transfer, those
unaccepted outstanding notes will be credited to an account maintained with The
Depository Trust Company, without expense to the tendering holder of those
outstanding notes, as promptly as practicable after the expiration date of the
exchange offer. See "--Procedures for Tendering."
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange pursuant
to the exchange offer. We will pay all charges and expenses, other than
applicable taxes described below, in connection with the exchange offer. See
"--Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date is 5:00 p.m., New York City time on May 25, 2000, unless
we, in our sole discretion, extend the exchange offer, in which case the
expiration date will be the latest date and time to which the exchange offer is
extended. We may, in our sole discretion, extend the expiration date of, or
terminate, the exchange offer.
To extend the exchange offer, we must notify the exchange agent by oral or
written notice before 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date and make a public announcement of
the extension.
We reserve the right:
- to delay accepting any outstanding notes, to extend the exchange offer, or
to terminate the exchange offer if any of the conditions set forth below
under "--Conditions" are not satisfied by giving oral or written notice of
the delay, extension, or termination to the exchange agent; or
- to amend the terms of the exchange offer in any manner consistent with the
registration rights agreement.
Any delay in acceptances, extension, termination, or amendment will be
followed as promptly as practicable by oral or written notice of the delay to
the registered holders of the outstanding notes. If we amend the exchange offer
in a manner that constitutes a material change, we will promptly disclose the
amendment by means of a prospectus supplement that will be distributed to the
registered holders of the outstanding notes, and we will extend the exchange
offer for a period of five to ten business days, depending upon the significance
of the amendment and the manner of disclosure to the registered holders of the
outstanding notes, if the exchange offer would otherwise expire during this
period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment, or termination of the exchange
offer, we will have no obligation to publish, advertise, or otherwise
communicate that public announcement, other than by making a timely release to
an appropriate news agency.
Upon satisfaction or waiver of all the conditions to the exchange offer, we
will accept, promptly after the expiration date of the exchange offer, all
outstanding notes properly tendered and will issue the exchange notes promptly
after acceptance of the outstanding notes. See "--Conditions" below. For
purposes of the exchange offer, we will be deemed to have accepted properly
tendered outstanding notes for exchange when, as and if we will have given oral
or written notice of our acceptance to the exchange agent.
In all cases, issuance of the exchange notes for outstanding notes that are
accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of certificates for those outstanding notes
or a timely confirmation of book-entry transfer of the outstanding notes into
the exchange agent's account at The Depository Trust Company, a properly
completed and duly executed letter of transmittal, and all other required
documents; provided, however, that we reserve the absolute right to waive any
defects or irregularities in the tender of outstanding notes or in the
satisfaction of conditions of the exchange offer by holders of the outstanding
notes. If any tendered outstanding notes are not accepted for any reason set
forth in the terms and conditions of the exchange offer, if the holder withdraws
previously tendered outstanding notes, or if outstanding notes are submitted for
a greater principal amount of outstanding notes than the holder desires to
exchange, then the unaccepted, withdrawn or portion of non-exchanged outstanding
notes, as appropriate, will be returned as promptly as practicable after the
expiration or termination of the exchange offer, or, in the case of outstanding
notes tendered by book-entry transfer, those unaccepted, withdrawn or portion of
non-exchanged outstanding notes, as appropriate, will be
21
credited to an account maintained with The Depository Trust Company, without
expense to the tendering holder of those notes.
CONDITIONS
Without regard to other terms of the exchange offer, we will not be required
to exchange any exchange notes for any outstanding notes and may terminate the
exchange offer before the acceptance of any outstanding notes for exchange, if:
- any action or proceeding is instituted or threatened in any court or by or
before any governmental agency with respect to the exchange offer which,
in our reasonable judgment, might materially impair our ability to proceed
with the exchange offer;
- the Staff of the Commission proposes, adopts or enacts any law, statute,
rule or regulation or issues any interpretation of any existing law,
statute, rule or regulation, which, in our reasonable judgment, might
materially impair our ability to proceed with the exchange offer; or
- any governmental approval or approval by holders of the outstanding notes
has not been obtained, which approval we will, in our reasonable judgment,
deem necessary for the consummation of the exchange offer.
If we determine that any of these conditions are not satisfied, we may:
- refuse to accept any outstanding notes and return all tendered outstanding
notes to the tendering holders, or, in the case of outstanding notes
tendered by book-entry transfer, credit those outstanding notes to an
account maintained with The Depository Trust Company;
- extend the exchange offer and retain all outstanding notes tendered before
the expiration of the exchange offer, subject to the rights of holders who
tendered the outstanding notes to withdraw their tendered outstanding
notes; or
- waive unsatisfied conditions with respect to the exchange offer and accept
all properly tendered outstanding notes that have not been withdrawn. If
the waiver constitutes a material change to the exchange offer, we will
promptly disclose the waiver by means of a prospectus supplement that will
be distributed to the registered holders of the outstanding notes, and we
will extend the exchange offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure
to the registered holders of the outstanding notes, if the exchange offer
would otherwise expire during this period.
PROCEDURES FOR TENDERING
To tender in the exchange offer, you must complete, sign and date an
original or facsimile letter of transmittal, have the signatures on the letter
of transmittal guaranteed if required by the letter of transmittal, and mail or
otherwise deliver the letter of transmittal to the exchange agent before the
expiration date of the exchange offer. In addition:
- certificates for the outstanding notes must be received by the exchange
agent, along with the letter of transmittal;
- a timely confirmation of transfer by book-entry of those outstanding
notes, if the book-entry procedure is available, into the exchange agent's
account at The Depository Trust Company, as set forth in the procedure for
book-entry transfer described below, must be received by the exchange
agent before the expiration date of the exchange offer; or
- you must comply with the guaranteed delivery procedures described below.
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To be tendered effectively, the exchange agent must receive the letter of
transmittal and other required documents at the address set forth below under
"--Exchange Agent" before the expiration of the exchange offer.
If you tender your outstanding notes and do not withdraw them before the
expiration date of the exchange offer, you will be deemed to have an agreement
with Georgia Gulf in accordance with the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL, AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR RISK. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT OR HAND DELIVERY
SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE OF THE EXCHANGE
OFFER. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO GEORGIA
GULF. YOU MAY REQUEST YOUR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES, OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender its outstanding notes should contact the registered holder promptly
and instruct that registered holder to tender the outstanding notes on the
beneficial owner's behalf. If the beneficial owner wishes to tender its
outstanding notes on the owner's own behalf, that owner must, before completing
and executing the letter of transmittal and delivering its outstanding notes,
either make appropriate arrangements to register ownership of the outstanding
notes in that owner's name or obtain a properly completed assignment from the
registered holder. The transfer of registered ownership of outstanding notes may
take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution unless the outstanding
notes tendered pursuant to that letter are tendered:
- by a registered holder who has not completed the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" on the letter of
transmittal, or
- for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, each of the
following is deemed an eligible institution:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank;
- a trust company having an office or correspondent in the United States; or
- an eligible guarantor institution as provided by Rule 17Ad-15 of the
Securities Exchange Act of 1934.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes, the outstanding notes must be endorsed or
accompanied by a properly completed bond power, signed by the registered holder
as his, her or its name appears on the outstanding notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any outstanding notes or bond power,
those persons should so indicate when signing, and evidence satisfactory to us
of their authority to so act must be submitted with the letter of transmittal,
unless we waive that requirement.
23
We will determine all questions as to the validity, form, eligibility,
including time of receipt, acceptance of tendered outstanding notes, and
withdrawal of tendered outstanding notes, in our sole discretion. All of these
determinations by us will be final and binding. We reserve the absolute right to
reject any and all outstanding notes not properly tendered or any outstanding
notes our acceptance of which would, in the opinion of our counsel, be unlawful.
We also reserve the right to waive any defects, irregularities or conditions of
tender as to particular outstanding notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in the letter of
transmittal will be final and binding on all parties. Unless waived, any defects
or irregularities in connection with tenders of outstanding notes must be cured
within the time we determine. Although we intend to notify holders of
outstanding notes of defects or irregularities with respect to tenders of
outstanding notes, neither we nor the exchange agent, or any other person, will
incur any liability for failure to give this notification. Tenders of
outstanding notes will not be deemed to have been made until defects or
irregularities have been cured or waived. Any outstanding notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders of outstanding notes, unless otherwise provided
in the letter of transmittal, as soon as practicable following the expiration
date of the exchange offer.
In addition, we reserve the right, in our sole discretion, to purchase or
make offers for any outstanding notes that remain outstanding after the
expiration date of the exchange offer or, as set forth above under
"--Conditions," to terminate the exchange offer and, to the extent permitted by
applicable law and the terms of our agreements relating to our outstanding
indebtedness, purchase outstanding notes in the open market, in privately
negotiated transactions, or otherwise. The terms of any purchases or offers
could differ from the terms of the exchange offer.
If the holder of outstanding notes is a broker-dealer participating in the
exchange offer that will receive exchange notes for its own account in exchange
for outstanding notes that were acquired as a result of market-making activities
or other trading activities, that broker-dealer will be required to acknowledge
in the letter of transmittal that it will deliver a prospectus in connection
with any resale of the exchange notes and otherwise agree to comply with the
procedures described above under "--Resale of the Exchange Notes"; however, by
so acknowledging and delivering a prospectus, that broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933.
In all cases, issuance of exchange notes pursuant to the exchange offer will
be made only after timely receipt by the exchange agent of certificates for the
outstanding notes or a timely confirmation of book-entry transfer of outstanding
notes into the exchange agent's account at The Depository Trust Company, a
properly completed and duly executed letter of transmittal, and all other
required documents. If any tendered outstanding notes are not accepted for any
reason set forth in the terms and conditions of the exchange offer or if
outstanding notes are submitted for a greater principal amount of outstanding
notes than the holder of outstanding notes desires to exchange, the unaccepted
or portion of non-exchanged outstanding notes will be returned as promptly as
practicable after the expiration or termination of the exchange offer, or, in
the case of outstanding notes tendered by book-entry transfer into the exchange
agent's account at The Depository Trust Company pursuant to the book-entry
transfer procedures described below, the unaccepted or portion of non-exchanged
outstanding notes will be credited to an account maintained with The Depository
Trust Company, without expense to the tendering holder of outstanding notes.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the outstanding notes at The Depository Trust Company for the purposes of the
exchange offer within two business days after the date of this prospectus, and
any financial institution that is a participant in The Depository Trust
Company's systems may make book-entry delivery of outstanding notes by causing
24
The Depository Trust Company to transfer the outstanding notes into the exchange
agent's account at The Depository Trust Company in accordance with The
Depository Trust Company's procedures for transfer. However, although delivery
of outstanding notes may be effected through book-entry transfer at The
Depository Trust Company, the letter of transmittal or facsimile of the letter,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the exchange agent at the address
set forth below under "--Exchange Agent" on or before the expiration date of the
exchange offer, unless the holder complies with the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and (1) whose outstanding
notes are not immediately available or (2) who cannot deliver their outstanding
notes, the letter of transmittal, or any other required documents to the
exchange agent before the expiration date, may effect a tender if:
- the tender is made through an eligible institution;
- before the expiration date of the exchange offer, the exchange agent
receives from the eligible institution a properly completed and duly
executed notice of guaranteed delivery, by facsimile transmission, mail or
hand delivery, setting forth the name and address of the holder, the
certificate number(s) of the outstanding notes and the principal amount of
outstanding notes tendered and stating that the tender is being made by
that notice and guaranteeing that, within three New York Stock Exchange
trading days after the expiration date of the exchange offer, the letter
of transmittal, together with the certificate(s) representing the
outstanding notes in proper form for transfer or a confirmation of
book-entry transfer, as the case may be, and any other documents required
by the letter of transmittal will be deposited by the eligible institution
with the exchange agent; and
- the exchange agent receives the properly completed and executed letter of
transmittal, as well as the certificate(s) representing all tendered
outstanding notes in proper form for transfer and other documents required
by the letter of transmittal within three New York Stock Exchange trading
days after the expiration date of the exchange offer.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided, tenders of outstanding notes may be withdrawn
at any time before 5:00 p.m., New York City time, on the expiration date of the
exchange offer.
To withdraw a tender of outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth in this prospectus before 5:00 p.m., New York
City time, on the expiration date of the exchange offer. This notice of
withdrawal must:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
- identify the outstanding notes to be withdrawn;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the outstanding notes were tendered or
be accompanied by documents of transfer sufficient to have the exchange
agent register the transfer of the outstanding notes in the name of the
person withdrawing the tender; and
25
- specify the name in which any outstanding notes are to be registered, if
different from that of the person who deposited the outstanding notes to
be withdrawn.
We will determine all questions as to the validity, form, and eligibility of
the notices, which determination will be final and binding on all parties. Any
outstanding notes so withdrawn will be deemed not to have been validly tendered
for purposes of the exchange offer, and no exchange notes will be issued with
respect to those outstanding notes unless the outstanding notes so withdrawn are
validly re-tendered.
Any outstanding notes that have been tendered but that are not accepted for
payment will be returned to the holder of those outstanding notes, or in the
case of outstanding notes tendered by book-entry transfer, will be credited to
an account maintained with The Depository Trust Company, without cost to the
holder as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn outstanding notes may be
re-tendered by following one of the procedures described above under
"--Procedures for Tendering" at any time before the expiration date of the
exchange offer.
TERMINATION OF REGISTRATION RIGHTS
All rights given to holders of outstanding notes under the registration
rights agreement will terminate upon the consummation of the exchange offer,
except with respect to our duty:
- to keep the registration statement effective until the closing of the
exchange offer and for a period not to exceed 90 days after the expiration
date of the exchange offer, and
- to provide copies of the latest version of this prospectus to any
broker-dealer that requests copies of this prospectus for use in
connection with any resale by that broker-dealer of exchange notes
received for its own account in the exchange offer in exchange for
outstanding notes acquired for its own account as a result of
market-making or other trading activities, subject to the conditions
described above under "--Resale of the Exchange Notes."
EXCHANGE AGENT
SunTrust Bank has been appointed exchange agent for the exchange offer.
Questions and requests for assistance, requests for additional copies of this
prospectus or the letter of transmittal, and requests for copies of the notice
of guaranteed delivery with respect to the outstanding notes, should be
addressed to the exchange agent as follows:
BY HAND OR OVERNIGHT COURIER: BY REGISTERED OR CERTIFIED MAIL:
SunTrust Bank SunTrust Bank
25 Park Place 25 Park Place
24th Floor 24th Floor
Atlanta, Georgia 30303 Atlanta, Georgia 30303
BY TELEPHONE (TO CONFIRM RECEIPT OF FACSIMILE): (404) 588-7296
BY FACSIMILE (FOR ELIGIBLE INSTITUTIONS ONLY): (404) 588-7335
FEES AND EXPENSES
We will pay the expenses of soliciting tenders in connection with the
exchange offer. The principal solicitation is being made by mail; however,
additional solicitation may be made by telecopier, telephone, or in person by
officers and regular employees of Georgia Gulf and its affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however,
26
pay the exchange agent reasonable and customary fees for its services and will
reimburse the exchange agent for its reasonable out-of-pocket expenses in
connection with the exchange offer.
We estimate that our cash expenses in connection with the exchange offer
will be approximately $175,000. These expenses include registration fees, fees
and expenses of the exchange agent, accounting and legal fees, and printing
costs, among others.
We will pay all transfer taxes, if any, applicable to the exchange of the
outstanding notes for exchange notes. The tendering holder of outstanding notes,
however, will pay applicable taxes if certificates representing outstanding
notes not tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
outstanding notes tendered, or:
- if tendered, the certificates representing outstanding notes are
registered in the name of any person other than the person signing the
letter of transmittal, or
- if a transfer tax is imposed for any reason other than the exchange of the
outstanding notes in the exchange offer.
If satisfactory evidence of payment of the transfer taxes or exemption from
payment of transfer taxes is not submitted with the letter of transmittal, the
amount of the transfer taxes will be billed directly to the tendering holder and
the exchange notes need not be delivered until the transfer taxes are paid.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. Holders of the outstanding
notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
Outstanding notes that are not exchanged for the exchange notes in the
exchange offer will not retain any rights under the registration rights
agreement and will remain restricted securities for purposes of the federal
securities laws. Accordingly, the outstanding notes may not be offered, sold,
pledged, or otherwise transferred except:
- to Georgia Gulf or any of its subsidiaries;
- under an effective registration statement under the Securities Act of
1933;
- to a "Qualified Institutional Buyer," within the meaning of Rule 144A
under the Securities Act of 1933, purchasing for its own account or for
the account of a qualified institutional buyer in a transaction meeting
the requirements of Rule 144A;
- in a sale outside the United States within the meaning of Regulation S
under the Securities Act of 1933;
- to "Institutional Accredited Investors" purchasing a minimum principal
amount of the notes of $250,000 in a transaction exempt from the
registration requirements of the Securities Act of 1933; or
- pursuant to another available exemption from registration under the
Securities Act of 1933;
and in each case, in accordance with all other applicable securities laws.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The exchange notes will be recorded at the same carrying
value as the outstanding notes, as reflected in our accounting records on the
date of the exchange. The expenses of the exchange offer will be amortized over
the remaining term of the exchange notes.
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DESCRIPTION OF THE NOTES
The outstanding notes were, and the exchange notes will be, issued under the
indenture, dated as of November 12, 1999 between Georgia Gulf Corporation, as
issuer, the subsidiary guarantors, and SunTrust Bank, Atlanta, as trustee. The
terms of the notes include those stated in the indenture and those made part of
the indenture by reference to the Trust Indenture Act of 1939. The following
summary of the indenture does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Trust Indenture Act of 1939
and to all of the provisions of the indenture, including the definitions of
terms used in the indenture and those terms made a part of the indenture by
reference to the Trust Indenture Act of 1939. References to "Georgia Gulf,"
"we," "our," and "us" mean only Georgia Gulf Corporation and not its
subsidiaries.
GENERAL
THE NOTES
The notes:
- are general unsecured, senior subordinated obligations of Georgia Gulf;
- are limited to an aggregate principal amount of $200,000,000;
- mature on November 1, 2007;
- will be issued in denominations of $1,000 and integral multiples of
$1,000;
- will be represented by one or more registered notes in global form, but in
certain circumstances may be represented by notes in definitive form. See
"--Book-Entry, Delivery and Form";
- are subordinated in right of payment to all existing and future Senior
Indebtedness of Georgia Gulf, including, among other things, Bank
Indebtedness;
- rank equally in right of payment to any future Senior Subordinated
Indebtedness of Georgia Gulf; and
- are unconditionally guaranteed on a senior subordinated basis by each
Domestic Subsidiary of Georgia Gulf other than Receivables Entities. See
"Subsidiary Guarantees."
INTEREST
Interest on the notes will compound semi-annually and will:
- accrue at the rate of 10.375% per annum;
- accrue from the date of issuance or the most recent interest payment date;
- be payable in cash semi-annually in arrears on May 1 and November 1,
commencing on May 1, 2000;
- be payable to the holders of record on the April 15 and October 15
immediately preceding the related interest payment dates; and
- be computed on the basis of a 360-day year comprised of twelve 30-day
months.
PAYMENTS ON THE NOTES
Principal of, premium, if any, and interest on the notes will be payable,
and the notes may be exchanged or transferred, at the office or agency of
Georgia Gulf in the Borough of Manhattan, The City of New York (which initially
will be an office of the trustee in New York, New York); at the option of
Georgia Gulf, however, payment of interest may be made by check mailed to the
address of
28
the holders as their addresses appear in the Note Register. Payment of principal
of, premium, if any, and interest on, notes in global form registered in the
name of or held by The Depositary Trust Company or its nominee will be made in
immediately available funds to The Depositary Trust Company or its nominee, as
the case may be, as the registered holder of that global note. No service charge
will be made for any registration of transfer or exchange of notes, but Georgia
Gulf may require payment of a sum sufficient to cover any transfer tax or other
similar governmental charge payable in connection therewith.
PAYING AGENT AND REGISTRAR
The trustee will initially act as paying agent and registrar. Georgia Gulf
may change the paying agent or registrar without prior notice to the holders of
the notes, and Georgia Gulf or any of its Restricted Subsidiaries may act as
paying agent or registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange its notes in accordance with the
indenture. The registrar and the trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and Georgia
Gulf may require a holder to pay any taxes and fees required by law or permitted
by the indenture. Georgia Gulf is not required to transfer or exchange any note
selected for redemption. Also, Georgia Gulf is not required to transfer or
exchange any note during the 15-day period before a selection of notes to be
redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
OPTIONAL REDEMPTION
Except as described below, the notes are not redeemable until November 1,
2003. On and after November 1, 2003, Georgia Gulf may redeem all or a part of
the notes from time to time upon not less than 30 nor more than 60 days' notice,
at the following redemption prices (expressed as a percentage of principal
amount) plus accrued and unpaid interest on the notes, if any, to the applicable
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the twelve-month period beginning on November 1 of the years
indicated below:
YEAR PERCENTAGE
- ---- ----------
2003........................................................ 105.188%
2004........................................................ 103.458%
2005........................................................ 101.729%
2006 and after.............................................. 100.000%
Before November 1, 2002, Georgia Gulf may on any one or more occasions
redeem up to 35% of the original principal amount of the notes with the Net Cash
Proceeds of one or more Equity Offerings at a redemption price of 110.375% of
the principal amount of the notes, plus accrued and unpaid interest, if any, to
the redemption date, subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date;
PROVIDED that:
(1) at least 65% of the original principal amount of the notes remains
outstanding after each redemption; and
(2) the redemption occurs within 60 days after the closing of any Equity
Offering.
In the case of any partial redemption, selection of the notes for redemption
will be made by the trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the notes are listed or, if the
notes are not listed, then on a pro rata basis, by lot or by another
29
method that the trustee in its sole discretion then deems to be fair and
appropriate, although no note of $1,000 in original principal amount or less
will be redeemed in part. If any note is to be redeemed in part only, the notice
of redemption relating to that note will state the portion of the principal
amount of that note to be redeemed. A new note in principal amount equal to the
unredeemed portion of that note will be issued in the name of the holder of that
note upon cancellation of the original note.
RANKING AND SUBORDINATION
The payment of the principal of, premium, if any, and interest on the notes
and any other payment obligations in respect of the notes, including any
obligation to repurchase the notes, will be subordinated to the prior payment in
full in cash or Cash Equivalents when due of all Senior Indebtedness of Georgia
Gulf. However, payment from the money or the proceeds of U.S. Government
Obligations held in any defeasance trust (as described under "Defeasance" below)
is not subordinate to any Senior Indebtedness or subject to these restrictions.
As a result of the subordination provisions described below, holders of the
notes may recover less than creditors of Georgia Gulf who are holders of Senior
Indebtedness in the event of an insolvency, bankruptcy, reorganization,
receivership or similar proceedings relating to Georgia Gulf. Moreover, the
notes will be structurally subordinated to the liabilities of the non-guarantor
Subsidiaries of Georgia Gulf. At December 31, 1999:
- outstanding Senior Indebtedness was $133.2 million, which includes
$125.4 million as to which our subsidiaries are co-obligors but does not
include $87.0 million available under the Senior Credit Agreement and
Georgia Gulf's guarantees of our Subsidiaries' Borrowings under the Senior
Credit Agreement, all of which would be secured;
- Georgia Gulf had no Senior Subordinated Indebtedness other than the notes;
and
- Restricted Subsidiaries had $563.4 million of guarantor senior debt to
which their guarantees as to the notes are subordinated, which includes
$125.4 million as to which Georgia Gulf is co-obligor and $438.0 million
borrowed under the Senior Credit Agreement.
Although the indenture will limit the amount of indebtedness that Georgia
Gulf and its Restricted Subsidiaries may incur, that indebtedness may be
substantial and all of it may be Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be.
Only Indebtedness of Georgia Gulf that is Senior Indebtedness will rank
senior to the notes in accordance with the provisions of the indenture. The
notes will in all respects rank equally with all other Senior Subordinated
Indebtedness of Georgia Gulf. Unsecured Indebtedness is not deemed to be
subordinate or junior to secured Indebtedness merely because it is unsecured. As
described in "--Limitation on Layering," Georgia Gulf may not incur any
indebtedness that is senior in right of payment to the Senior Subordinated
Indebtedness (including the notes), but junior in right of payment to Senior
Indebtedness.
Georgia Gulf may not pay principal of, premium on, if any, interest on, or
other payment obligations in respect of, the notes or make any deposit pursuant
to the provisions described under "Defeasance" below and may not otherwise
purchase, redeem or retire any notes (collectively, "pay the notes") if:
(1) any Senior Indebtedness is not paid when due in cash or Cash
Equivalents; or
(2) any other default on Senior Indebtedness occurs and the maturity of that
Senior Indebtedness is accelerated in accordance with its terms unless,
in either case, the default has been cured or waived and any acceleration
has been rescinded or the Senior Indebtedness has been paid in full in
cash or Cash Equivalents.
30
However, Georgia Gulf may pay the notes if Georgia Gulf and the trustee receive
written notice approving that payment from the Representative of the Senior
Indebtedness with respect to which either of the events set forth in clause (1)
or (2) of the immediately preceding sentence has occurred and is continuing.
Georgia Gulf also will not be permitted to pay the notes for a Payment
Blockage Period (as defined below) during the continuance of any default, other
than a default described in clause (1) or a default resulting in acceleration
described in clause (2) of the preceding paragraph, on any Designated Senior
Indebtedness that permits the holders of the Designated Senior Indebtedness to
accelerate its maturity immediately without either further notice (except any
notice as may be required to effect that acceleration) or the expiration of any
applicable grace periods.
A "Payment Blockage Period" commences on the receipt by the trustee (with a
copy to Georgia Gulf) of written notice (a "Blockage Notice") of a default of
the kind described in the immediately preceding paragraph from the
Representative of the holders of the Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ends 179 days after receipt
of the notice. The Payment Blockage Period will end earlier if the Payment
Blockage Period is terminated:
(1) by written notice to the trustee and Georgia Gulf from the Person or
Persons who gave the Blockage Notice;
(2) because the default giving rise to the Blockage Notice is no longer
continuing; or
(3) because the Designated Senior Indebtedness has been repaid in full.
Georgia Gulf may resume payments on the notes after the end of the Payment
Blockage Period, unless the holders of the Designated Senior Indebtedness or the
Representative of those holders have accelerated the maturity of the Designated
Senior Indebtedness. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness during that period.
In the event of:
(1) a total or partial liquidation or a dissolution of Georgia Gulf;
(2) a reorganization, bankruptcy, insolvency, receivership of or similar
proceeding relating to Georgia Gulf or its property; or
(3) an assignment for the benefit of creditors or marshaling of Georgia
Gulf's assets and liabilities, then
the holders of Senior Indebtedness will be entitled to receive payment in full
in cash or Cash Equivalents in respect of Senior Indebtedness (including
interest accruing after, or which would accrue but for, the commencement of any
proceeding at the rate specified in the applicable Senior Indebtedness, whether
or not a claim for that interest would be allowed) before the holders of the
notes will be entitled to receive any payment or distribution, if any, of the
assets or securities of Georgia Gulf. In addition, until the Senior Indebtedness
is paid in full in cash or Cash Equivalents, any payment or distribution to
which holders of the notes would be entitled but for the subordination
provisions of the indenture will be made to holders of the Senior Indebtedness
as their interests may appear. If a payment or distribution is made to holders
of the notes that, due to the subordination provisions, should not have been
made to them, those holders are required to hold it in trust for the holders of
Senior Indebtedness and pay the payment or distribution over to holders of
Senior Indebtedness as their interests may appear.
If payment of the notes is accelerated because of an Event of Default,
Georgia Gulf or the trustee will promptly notify the holders of the Designated
Senior Indebtedness or the Representative of those holders of the acceleration.
Georgia Gulf may not pay the notes until five Business Days after those
31
holders or the Representative of the Designated Senior Indebtedness receives
notice of the acceleration and, after that five Business Day period, may pay the
notes only if the subordination provisions of the indenture otherwise permit
payment at that time.
SUBSIDIARY GUARANTEES
The Subsidiary Guarantors will, jointly and severally, unconditionally
guarantee Georgia Gulf's obligations under the notes and all obligations under
the indenture. Each Subsidiary Guarantee will be subordinated to the prior
payment in full of all Guarantor Senior Indebtedness in the same manner and to
the same extent that the notes are subordinated to Senior Indebtedness. Each
Subsidiary Guarantee will rank equally with all other Guarantor Senior
Subordinated Indebtedness of that Subsidiary Guarantor. The Subsidiary
Guarantors will not be permitted to incur indebtedness that is junior in right
of payment to Guarantor Senior Indebtedness but senior in right of payment to
the Subsidiary Guarantee.
At December 31, 1999, Georgia Gulf had:
- outstanding Guarantor Senior Indebtedness of $563.4 million, including
$438.0 million borrowed under the Senior Credit Agreement, all of which is
secured but excluding an additional $87.0 million available to our
subsidiaries under the Senior Credit Agreement; and
- the Subsidiary Guarantors would have had no Guarantor Senior Subordinated
Indebtedness other than the Subsidiary Guarantees.
Although the indenture will limit the amount of indebtedness that Georgia Gulf
and its Restricted Subsidiaries may incur, that indebtedness may be substantial
and all of it may be Guarantor Senior Indebtedness.
The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
will be limited as necessary to prevent that Subsidiary Guarantee from
constituting a fraudulent conveyance or fraudulent transfer under applicable
law.
In the event a Subsidiary Guarantor is sold or disposed of (whether by
merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets (other than by lease)) and whether or not the
Subsidiary Guarantor is the surviving corporation in the transaction to a Person
which is not Georgia Gulf or a Restricted Subsidiary of Georgia Gulf (other than
a Receivables Entity), that Subsidiary Guarantor will be released from its
obligations under its Subsidiary Guarantee if:
(1) the sale or other disposition is in compliance with the indenture,
including the covenants "--Limitation on Sales of Assets and Subsidiary
Stock" and "--Limitation on Sales of Capital Stock of Restricted
Subsidiaries;" and
(2) all the obligations of that Subsidiary Guarantor under the Senior Credit
Agreement and related documentation and any other agreements relating to
any other indebtedness of Georgia Gulf or its Restricted Subsidiaries
terminate upon consummation of the transaction.
In addition, a Subsidiary Guarantor will be released from its obligations
under the indenture, the Subsidiary Guarantee and the registration rights
agreement if Georgia Gulf designates that Subsidiary as an Unrestricted
Subsidiary and the designation complies with the other applicable provisions of
the indenture.
CHANGE OF CONTROL
If a Change of Control occurs, each holder will have the right to require
Georgia Gulf to repurchase all or any part (in integral multiples of $1,000) of
that holder's notes at a purchase price in cash equal to 101% of the principal
amount of the notes plus accrued and unpaid interest, if any, to
32
the date of purchase (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
Within 30 days following any Change of Control, Georgia Gulf will mail a
notice (the "Change of Control Offer") to each holder, with a copy to the
trustee, stating:
(1) that a Change of Control has occurred and that the holder has the right
to require Georgia Gulf to purchase its notes at a purchase price in cash
equal to 101% of the principal amount of the notes plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
holders of record on a record date to receive interest on the relevant
interest payment date) (the "Change of Control Payment");
(2) the repurchase date, which will be no earlier than 30 days nor later
than 60 days from the date the notice is mailed (the "Change of Control
Payment Date"); and
(3) the procedures determined by Georgia Gulf, consistent with the
indenture, that a holder must follow in order to have its notes
repurchased.
On the Change of Control Payment Date, Georgia Gulf will, to the extent
lawful:
(1) accept for payment all notes or portions of notes in integral multiples
of $1,000 properly tendered under the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all notes or portions of notes so tendered; and
(3) deliver or cause to be delivered to the trustee the notes so accepted,
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions of notes being purchased by Georgia Gulf.
The paying agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for those notes, and the trustee will promptly
authenticate and mail, or cause to be transferred by book entry, to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; PROVIDED that each such new note will be in a principal
amount of $1,000 or an integral multiple of $1,000.
If the Change of Control Payment Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest, if any, will be paid to the Person in whose name a note is registered
at the close of business on that record date, and no additional interest will be
payable to holders who tender pursuant to the Change of Control Offer.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the indenture are applicable. Except as described
above with respect to a Change of Control, the indenture does not contain
provisions that permit the holders to require that Georgia Gulf repurchase or
redeem the notes in the event of a takeover, recapitalization or similar
transaction.
Before mailing a Change of Control Offer, and as a condition to that
mailing, (i) all Senior Indebtedness must be repaid in full, or Georgia Gulf
must offer to repay all Senior Indebtedness and repay all Senior Indebtedness
held by holders who accept the offer or (ii) the requisite holders of each issue
of Senior Indebtedness will have consented to the Change of Control Offer being
made and waived the event of default under that Senior Indebtedness, if any,
caused by the Change of Control. Georgia Gulf covenants to effect the repayment
or obtain the consent and waiver within 30 days following any Change of Control,
it being a default of the Change of Control provision of the indenture if
Georgia Gulf fails to comply with that covenant. A default under the indenture
will result in a cross-default under the Senior Credit Agreement. In the event
of a default under the Senior Credit Agreement, the subordination provisions of
the indenture would likely restrict payments to the holders of the notes.
33
Georgia Gulf will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by Georgia Gulf
and purchases all notes validly tendered and not withdrawn under the Change of
Control Offer.
Georgia Gulf will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the indenture, Georgia Gulf will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations described in the indenture by virtue of the conflict.
Georgia Gulf's ability to repurchase notes pursuant to a Change of Control
Offer may be limited by a number of factors. The occurrence of specified events
that constitute a Change of Control would constitute a default under the Senior
Credit Agreement. In addition, certain events that may constitute a change of
control under the Senior Credit Agreement and cause a default under that
agreement may not constitute a Change of Control under the indenture. Future
Indebtedness of Georgia Gulf and its Subsidiaries may also contain prohibitions
of certain events that would constitute a Change of Control or require that
Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise
by the holders of their right to require Georgia Gulf to repurchase the notes
could cause a default under that Indebtedness, even if the Change of Control
itself does not, due to the financial effect of that repurchase on Georgia Gulf.
Finally, Georgia Gulf's ability to pay cash to the holders upon a repurchase may
be limited by Georgia Gulf's then existing financial resources. There can be no
assurance that sufficient funds will be available when necessary to make any
required repurchases.
Even if sufficient funds were otherwise available, the terms of the Senior
Credit Agreement will (and other Indebtedness may) prohibit Georgia Gulf's
prepayment of notes before their scheduled maturity. Consequently, if Georgia
Gulf is not able to prepay the Bank Indebtedness and any such other Indebtedness
containing similar restrictions or obtain requisite consents, as described
above, Georgia Gulf will be unable to fulfill its repurchase obligations if
holders of notes exercise their repurchase rights following a Change of Control,
resulting in a default under the indenture. A default under the indenture will
result in a cross-default under the Senior Credit Agreement. In the event of a
default under the Senior Credit Agreement, the subordination provisions of the
indenture would likely restrict payments to the holders of the notes.
The Change of Control provisions described above may deter certain mergers,
tender offers and other takeover attempts involving Georgia Gulf by increasing
the capital required to effectuate these transactions. The definition of "Change
of Control" includes a disposition of all or substantially all of the property
and assets of Georgia Gulf and its Restricted Subsidiaries, taken as a whole, to
any Person. Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve a
disposition of "all or substantially all" of the property or assets of a Person.
As a result, it may be unclear whether a Change of Control has occurred and
whether a holder of notes may require Georgia Gulf to make an offer to
repurchase the notes as described above.
34
SPECIFIED COVENANTS
LIMITATION ON INDEBTEDNESS
Georgia Gulf will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness; PROVIDED, HOWEVER, that Georgia Gulf
and the Subsidiary Guarantors may Incur Indebtedness if on the date of the
Incurrence:
(1) the Consolidated Coverage Ratio for Georgia Gulf and its Restricted
Subsidiaries is at least (a) 2.00 to 1.00, if that Indebtedness is
Incurred on or before November 1, 2001 and (b) 2.25 to 1.00, if that
Indebtedness is Incurred after November 1, 2001; and
(2) no Default or Event of Default has occurred or is continuing or would
occur as a consequence of Incurring the Indebtedness.
The first paragraph of this covenant will not prohibit the incurrence of the
following Indebtedness:
(1) Indebtedness Incurred pursuant to the Senior Credit Agreement in an
aggregate principal amount up to $525 million at any one time outstanding
less the aggregate principal amount of all principal repayments with the
proceeds of Asset Dispositions permanently reducing the commitments under
the Senior Credit Agreement; provided that repayments with the proceeds
of Asset Sales will not reduce the amount permitted to be Incurred under
this clause (1) to an aggregate principal amount less than
$100.0 million;
(2) Indebtedness of Georgia Gulf owing to and held by any Restricted
Subsidiary (other than a Receivables Entity) or Indebtedness of a
Restricted Subsidiary owing to and held by Georgia Gulf or any Restricted
Subsidiary (other than a Receivables Entity); PROVIDED, HOWEVER,
(a) if Georgia Gulf is the obligor on the Indebtedness, the Indebtedness
is expressly subordinated to the prior payment in full in cash of all
obligations with respect to the notes; and
(b) (i) any subsequent issuance or transfer of Capital Stock or any other
event which results in any of the Indebtedness being beneficially
held by a Person other than Georgia Gulf or a Restricted Subsidiary
(other than a Receivables Entity) of Georgia Gulf; and
(ii) any sale or other transfer of any of the Indebtedness to a
Person other than Georgia Gulf or a Restricted Subsidiary (other than
a Receivables Entity) of Georgia Gulf
will be deemed, in each case, to constitute an Incurrence of that
Indebtedness by Georgia Gulf or that Subsidiary, as the case may be;
(3) Indebtedness represented by (a) the notes, (b) any Indebtedness (other
than the Indebtedness described in clauses (1), (2), (5), (6), (7),
(8) and (9)) outstanding on the Issue Date and (c) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this
clause (3) or clause (4) or Incurred pursuant to the first paragraph of
this covenant;
(4) Indebtedness of a Restricted Subsidiary Incurred and outstanding on the
date on which the Restricted Subsidiary was acquired by Georgia Gulf
(other than Indebtedness Incurred (a) to provide all or any portion of
the funds utilized to consummate the transaction or series of related
transactions pursuant to which the Restricted Subsidiary became a
Restricted Subsidiary or was otherwise acquired by Georgia Gulf or
(b) otherwise in connection with, or in contemplation of, the
acquisition); PROVIDED, HOWEVER, that at the time the Restricted
Subsidiary is acquired by Georgia Gulf, Georgia Gulf would have been able
to Incur $1.00 of additional Indebtedness pursuant to the first paragraph
of this covenant after giving effect to the Incurrence of the
Indebtedness pursuant to this clause (4);
35
(5) Indebtedness under Commodity Agreements, Currency Agreements and
Interest Rate Agreements; PROVIDED, that in the case of Currency
Agreements, those Currency Agreements are related to business
transactions of Georgia Gulf or its Restricted Subsidiaries entered into
in the ordinary course of business, or in the case of Currency Agreements
and Interest Rate Agreements, the Currency Agreements and Interest Rate
Agreements are entered into for bona fide hedging purposes of Georgia
Gulf or its Restricted Subsidiaries (as determined in good faith by the
Board of Directors or senior management of Georgia Gulf) and
substantially correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Indebtedness of Georgia
Gulf or its Restricted Subsidiaries Incurred without violation of the
indenture, or in the case of Commodity Agreements, the Commodity
Agreements are entered into for valid business purposes other than
speculative purposes (as determined by Georgia Gulf's or the Restricted
Subsidiary's principal financial officer in the exercise of his or her
good faith business judgment);
(6) the Subsidiary Guarantees and other Guarantees by the Subsidiary
Guarantors of Indebtedness Incurred in accordance with the provisions of
the indenture; PROVIDED that in the event the Indebtedness that is being
Guaranteed is (a) Senior Subordinated Indebtedness or Guarantor Senior
Subordinated Indebtedness, then the related Guarantee will rank equally
in right of payment to the Subsidiary Guarantee or (b) a Subordinated
Obligation or a Guarantor Subordinated Obligation, then the related
Guarantee will be subordinated in right of payment to the Subsidiary
Guarantee;
(7) Indebtedness incurred in respect of workers' compensation claims,
self-insurance obligations, performance, surety and similar bonds and
completion guarantees provided by Georgia Gulf in the ordinary course of
business;
(8) Indebtedness arising from agreements of Georgia Gulf or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or Capital Stock of a Restricted
Subsidiary, PROVIDED that the maximum aggregate liability in respect of
all of the Indebtedness will at no time exceed the gross proceeds
actually received by Georgia Gulf and its Restricted Subsidiaries in
connection with that disposition;
(9) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument (except in the case
of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, PROVIDED, HOWEVER, that the Indebtedness is
extinguished within five business days of Incurrence; and
(10) in addition to the items referred to in clauses (1) through (9) above,
Indebtedness of Georgia Gulf and the Subsidiary Guarantors in an
aggregate outstanding principal amount which, when taken together with
the principal amount of all other Indebtedness Incurred pursuant to this
clause (10) and then outstanding, will not exceed $75.0 million (it being
understood that any Indebtedness Incurred under this clause (10) will
cease to be deemed Incurred or outstanding for purposes of this
clause (10) but will be deemed to be Incurred for purposes of the first
paragraph of this covenant from and after the first date on which Georgia
Gulf could have Incurred the Indebtedness under the first paragraph of
this covenant without reliance on this clause (10)).
Georgia Gulf will not Incur any Indebtedness under the preceding paragraph
if the proceeds of the Indebtedness are used, directly or indirectly, to
refinance any Subordinated Obligations of Georgia Gulf unless the Indebtedness
will be subordinated to the notes to at least the same extent as the
Subordinated Obligations. No Subsidiary Guarantor will incur any indebtedness if
the proceeds of the indebtedness are used, directly or indirectly, to refinance
any Guarantor Subordinated Obligations of the Subsidiary Guarantor unless the
Indebtedness will be subordinated to the obligations of the
36
Subsidiary Guarantor under its Subsidiary Guarantee to at least the same extent
as the Guarantor Subordinated Obligations. No Subsidiary Guarantor will incur
any Indebtedness if the proceeds of the Indebtedness are used, directly or
indirectly, to refinance any Guarantor Senior Subordinated Indebtedness unless
the refinancing Indebtedness is either Guarantor Senior Subordinated
Indebtedness or Guarantor Subordinated Obligations. No Restricted Subsidiary
other than a Subsidiary Guarantor may Incur any Indebtedness if the proceeds are
used to refinance Indebtedness of Georgia Gulf.
For purposes of determining compliance with, and the outstanding principal
amount of any particular Indebtedness incurred pursuant to and in compliance
with, this covenant:
(1) in the event that Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the first and second paragraphs of
this covenant, Georgia Gulf, in its sole discretion, will classify the
item of Indebtedness on the date of Incurrence and only be required to
include the amount and type of the Indebtedness in one of the clauses;
PROVIDED that all Indebtedness Incurred under the Senior Credit Agreement
on the Issue Date will be Incurred exclusively pursuant to clause (1) of
the second paragraph of this covenant; and
(2) the amount of Indebtedness issued at a price that is less than the
principal amount of the Indebtedness will be equal to the amount of the
liability in respect of the Indebtedness determined in accordance with
GAAP.
Accrual of interest, accrual of dividends, the accretion of accreted value,
the payment of interest in the form of additional Indebtedness and the payment
of dividends in the form of additional shares of Preferred Stock will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant. The
amount of any Indebtedness outstanding as of any date will be (i) the accreted
value of the Indebtedness in the case of any Indebtedness issued with original
issue discount and (ii) the principal amount or liquidation preference of the
Indebtedness, together with any interest on the Indebtedness that is more than
30 days past due, in the case of any other Indebtedness.
In addition, Georgia Gulf will not permit any of its Unrestricted
Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified
Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of the Subsidiary will be
deemed to be Incurred by a Restricted Subsidiary of Georgia Gulf as of that date
(and, if the Indebtedness is not permitted to be Incurred as of that date under
this "Limitation on Indebtedness" covenant, Georgia Gulf will be in Default of
this covenant).
For purposes of determining compliance with any U.S. dollar-denominated
restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of Indebtedness denominated in a foreign currency will be
calculated based on the relevant currency exchange rate in effect on the date
the Indebtedness was Incurred, in the case of term Indebtedness, or first
committed, in the case of revolving credit Indebtedness; PROVIDED that if the
Indebtedness is Incurred to refinance other Indebtedness denominated in a
foreign currency, and the refinancing would cause the applicable U.S.
dollar-dominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of the refinancing, the U.S.
dollar-dominated restriction will be deemed not to have been exceeded so long as
the principal amount of the refinancing Indebtedness does not exceed the
principal amount of the Indebtedness being refinanced. Notwithstanding any other
provision of this covenant, the maximum amount of Indebtedness that Georgia Gulf
may Incur pursuant to this covenant will not be deemed to be exceeded solely as
a result of fluctuations in the exchange rate of currencies. The principal
amount of any Indebtedness incurred to refinance other Indebtedness, if Incurred
in a different currency from the Indebtedness being refinanced, will be
calculated based on the currency exchange rate applicable to the currencies in
which the Refinancing Indebtedness is denominated that is in effect on the date
of the refinancing.
37
QUALIFIED RECEIVABLES TRANSACTIONS
Georgia Gulf may, and any of its Restricted Subsidiaries may, sell
(including a sale in exchange for a Purchase Money Note of or Capital Stock in a
Receivables Entity) at any time and from time to time, accounts receivable to
any Receivables Entity; PROVIDED that the aggregate consideration received in
these sales is at least equal to the aggregate fair market value of the
receivables sold; PROVIDED FURTHER that Georgia Gulf and its Restricted
Subsidiaries will not engage in these sales unless, pro forma for these sales,
Georgia Gulf could Incur $1.00 of additional Indebtedness pursuant to the first
paragraph under "--Limitation on Indebtedness."
LIMITATION ON LAYERING
Georgia Gulf will not Incur any Indebtedness if the Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless the Indebtedness is Senior Subordinated Indebtedness or is contractually
subordinated in right of payment to Senior Subordinated Indebtedness. No
Subsidiary Guarantor will Incur any Indebtedness if the Indebtedness is
contractually subordinate or junior in ranking in any respect to any Guarantor
Senior Indebtedness of the Subsidiary Guarantor unless the Indebtedness is
Guarantor Senior Subordinated Indebtedness of the Subsidiary Guarantor or is
contractually subordinated in right of payment to Guarantor Senior Subordinated
Indebtedness of the Subsidiary Guarantor.
LIMITATION ON RESTRICTED PAYMENTS
Georgia Gulf will not, and will not permit any of its Restricted
Subsidiaries, directly or indirectly, to:
(1) declare or pay any dividend or make any distribution on or in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving Georgia Gulf or any of its Restricted
Subsidiaries) except:
(a) dividends or distributions payable in Capital Stock of Georgia Gulf
(other than Disqualified Stock) or in options, warrants or other
rights to purchase the Capital Stock of Georgia Gulf; and
(b) dividends or distributions payable to Georgia Gulf or a Restricted
Subsidiary of Georgia Gulf (and if the Restricted Subsidiary is not a
Wholly-Owned Subsidiary, to its other holders of common Capital Stock
on a pro rata basis);
(2) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of Georgia Gulf or any direct or indirect parent of Georgia Gulf
held by Persons other than Georgia Gulf or a Restricted Subsidiary of
Georgia Gulf (other than in exchange for Capital Stock of Georgia Gulf
(other than Disqualified Stock));
(3) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, before scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations or Guarantor
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations or Guarantor Subordinated
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due
within one year of the date of purchase, repurchase or acquisition); or
(4) make any Restricted Investment in any Person;
(any of these dividends, distributions, purchases, redemptions, repurchases,
defeasances, other acquisitions, retirements or Restricted Investments referred
to in clauses (1) through (4) will be
38
referred to in this prospectus as a "Restricted Payment"), if at the time
Georgia Gulf or the Restricted Subsidiary makes the Restricted Payment:
(a) a Default will have occurred and be continuing (or would result from
the Restricted Payment); or
(b) Georgia Gulf is not able to incur an additional $1.00 of Indebtedness
pursuant to the first paragraph under the "Limitation on
Indebtedness" covenant after giving effect to the Restricted Payment;
or
(c) the aggregate amount of the Restricted Payment and all other
Restricted Payments declared or made after the Issue Date would
exceed the sum of:
(i) 50% of Consolidated Net Income for the period (treated as one
accounting period) from the beginning of the first fiscal
quarter commencing after the date of the indenture to the end of
the most recent fiscal quarter ending before the date of the
Restricted Payment for which financial statements are in
existence (or, in case the Consolidated Net Income is a deficit,
minus 100% of the deficit);
(ii) the aggregate Net Cash Proceeds received by Georgia Gulf from
the issue or sale of its Capital Stock (other than Disqualified
Stock) or other capital contributions after the Issue Date
(other than Net Cash Proceeds received from an issuance or sale
of the Capital Stock to a Subsidiary of Georgia Gulf or an
employee stock ownership plan, option plan or similar trust to
the extent the sale to an employee stock ownership plan, option
plan or similar trust is financed by loans from or guaranteed
by Georgia Gulf or any Restricted Subsidiary unless the loans
have been repaid with cash on or before the date of
determination);
(iii) the amount by which Indebtedness of Georgia Gulf is reduced on
Georgia Gulf's balance sheet upon the conversion or exchange
(other than by a Subsidiary of Georgia Gulf) after the Issue
Date of any Indebtedness of Georgia Gulf convertible or
exchangeable for Capital Stock (other than Disqualified Stock)
of Georgia Gulf (less the amount of any cash, or other
property, distributed by Georgia Gulf upon the conversion or
exchange); and
(iv) the amount equal to the net reduction in Restricted Investments
made by Georgia Gulf or any of its Restricted Subsidiaries in
any Person resulting from:
(A) repurchases or redemptions of the Restricted Investments by
the Person, proceeds realized upon the sale of the Restricted
Investment to an unaffiliated purchaser, repayments of loans
or advances or other transfers of assets (including by way of
dividend or distribution) by that Person to Georgia Gulf or
any Restricted Subsidiary of Georgia Gulf; or
(B) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously
made by Georgia Gulf or any Restricted Subsidiary in that
Unrestricted Subsidiary,
which amount in each case under this clause (iv) was included in
the calculation of the amount of Restricted Payments; PROVIDED,
HOWEVER, that no amount will be included under this clause (iv)
to the extent it is already included in Consolidated Net Income.
39
The provisions of the preceding paragraph will not prohibit:
(1) any purchase or redemption of Capital Stock or Subordinated Obligations
of Georgia Gulf made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of Georgia Gulf (other
than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary or an employee stock ownership plan or similar trust to the
extent the sale to an employee stock ownership plan or similar trust is
financed by loans from or guaranteed by Georgia Gulf or any Restricted
Subsidiary unless the loans have been repaid with cash on or before the
date of determination); PROVIDED, HOWEVER, that (a) the purchase or
redemption will be excluded in subsequent calculations of the amount of
Restricted Payments and (b) the Net Cash Proceeds from the sale will be
excluded from clause (c)(ii) of the preceding paragraph;
(2) any purchase or redemption of Subordinated Obligations of Georgia Gulf
made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Subordinated Obligations of Georgia Gulf that
qualifies as Refinancing Indebtedness; PROVIDED, HOWEVER, that the
purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments;
(3) so long as no Default or Event of Default has occurred and is
continuing, any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted under "--Limitation on Sales
of Assets and Subsidiary Stock" below; PROVIDED, HOWEVER, that the
purchase or redemption will be excluded in subsequent calculations of the
amount of Restricted Payments;
(4) dividends paid within 60 days after the date of declaration if at the
date of declaration the dividend would have complied with this provision;
PROVIDED, HOWEVER, that the dividends will be included in subsequent
calculations of the amount of Restricted Payments;
(5) so long as no Default or Event of Default has occurred and is
continuing, loans or advances to employees or directors of Georgia Gulf
or any Subsidiary of Georgia Gulf the proceeds of which are used to
purchase Capital Stock of Georgia Gulf, in an aggregate amount not in
excess of $5.0 million at any one time outstanding; PROVIDED, HOWEVER,
that the amount of the loans and advances will be included in subsequent
calculations of the amount of Restricted Payments;
(6) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends to holders of any
class or series of Disqualified Stock of Georgia Gulf issued in
accordance with the terms of the indenture to the extent these dividends
are included in the definition of "Consolidated Interest Expense";
PROVIDED that the payment of the dividends will be excluded from the
calculation of Restricted Payments;
(7) repurchases of Capital Stock deemed to occur upon the exercise of stock
options if the Capital Stock represents a portion of the exercise price
of those options; PROVIDED, HOWEVER, that the repurchases will be
excluded from subsequent calculations of the amount of Restricted
Payments; and
(8) Restricted Payments in an amount not to exceed $25.0 million.
The amount of all Restricted Payments, other than cash, will be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be paid, transferred or issued by Georgia Gulf or the Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any cash Restricted Payment will be its face amount and any
non-cash Restricted Payment will be determined conclusively by the Board of
Directors acting in good faith whose resolution with respect thereto will be
delivered to the trustee, this determination to be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing
40
if the fair market value is estimated to exceed $50.0 million. Not later than
the date of making any Restricted Payment, Georgia Gulf will deliver to the
trustee an Officers' Certificate stating that the Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
LIMITATION ON LIENS
Georgia Gulf will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur or suffer to exist any
Lien (other than Permitted Liens) upon any of its property or assets (including
Capital Stock), whether owned on the date of the indenture or acquired after
that date, securing any Senior Subordinated Indebtedness, Subordinated
Obligations, Guarantor Senior Subordinated Indebtedness or Guarantor
Subordinated Obligations, unless contemporaneously with the incurrence of the
Liens effective provision is made to secure the Indebtedness due under the
indenture and the notes or, in respect of Liens on any Restricted Subsidiary's
property or assets, any Subsidiary Guarantee of the Restricted Subsidiary,
equally and ratably with (or before in the case of Liens with respect to
Subordinated Obligations or Guarantor Subordinated Obligations, as the case may
be) the Indebtedness secured by the Lien for so long as the Indebtedness is so
secured.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Georgia Gulf will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock or
pay any Indebtedness or other obligations owed to Georgia Gulf or any
Restricted Subsidiary;
(2) make any loans or advances to Georgia Gulf or any Restricted Subsidiary;
or
(3) transfer any of its property or assets to Georgia Gulf or any Restricted
Subsidiary.
The preceding provisions will not prohibit:
(i) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the date of the indenture, including, without
limitation, the indenture and the Senior Credit Agreement in effect
on that date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by a Restricted Subsidiary on or before the date on which
the Restricted Subsidiary was acquired by Georgia Gulf (other than
Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds utilized to consummate, the transaction or
series of related transactions pursuant to which the Restricted
Subsidiary became a Restricted Subsidiary or was acquired by
Georgia Gulf or in contemplation of the transaction) and
outstanding on that date;
(iii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement effecting a refinancing of
Indebtedness Incurred pursuant to an agreement referred to in
clause (i) or (ii) of this paragraph or this clause (iii) or
contained in any amendment to an agreement referred to in
clause (i) or (ii) of this paragraph or this clause (iii);
PROVIDED, HOWEVER, that the encumbrances and restrictions with
respect to the Restricted Subsidiary contained in any of these
agreements or amendments are no less favorable in any material
respect to the holders of the notes than the encumbrances and
restrictions contained in the agreements referred to in clause (i)
or (ii) of this paragraph on the Issue Date or the date the
Restricted Subsidiary became a Restricted Subsidiary, whichever is
applicable;
41
(iv) in the case of clause (3) of the first paragraph of this covenant,
any encumbrance or restriction:
(a) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is subject to a lease,
license or similar contract, or the assignment or transfer of any
of these leases, licenses or other contracts;
(b) contained in mortgages, pledges or other security agreements
permitted under the indenture securing Indebtedness of Georgia
Gulf or a Restricted Subsidiary to the extent the encumbrances or
restrictions restrict the transfer of the property subject to the
mortgages, pledges or other security agreements; or
(c) pursuant to customary provisions restricting dispositions of real
property interests set forth in any reciprocal easement
agreements of Georgia Gulf or any Restricted Subsidiary;
(v) purchase money obligations for property acquired in the ordinary
course of business that impose encumbrances or restrictions of the
nature described in clause (3) of the first paragraph of this
covenant on the property so acquired;
(vi) any Purchase Money Note or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receivables
Transaction relating exclusively to a Receivables Entity that, in
the good faith determination of the Board of Directors, are
necessary to effect the Qualified Receivables Transaction;
(vii) any restriction with respect to a Restricted Subsidiary (or any of
its property or assets) imposed pursuant to an agreement entered
into for the direct or indirect sale or disposition of all or
substantially all the Capital Stock or assets of the Restricted
Subsidiary (or the property or assets that are subject to the
restriction) pending the closing of the sale or disposition;
(viii) encumbrances or restrictions arising or existing by reason of
applicable law or any applicable rule, regulation or order; and
(ix) customary provisions with respect to the distribution of assets or
property in joint venture agreements.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK
Georgia Gulf will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition UNLESS:
(1) Georgia Gulf or the Restricted Subsidiary receives consideration at the
time of the Asset Disposition at least equal to the fair market value
(including as to the value of all non-cash consideration), as determined
in good faith by the Board of Directors, of the shares and assets subject
to the Asset Disposition;
(2) at least 75% of the consideration from the Asset Disposition received by
Georgia Gulf or the Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents; and
(3) an amount equal to 100% of the Net Available Cash from the Asset
Disposition is applied by Georgia Gulf or the Restricted Subsidiary, as
the case may be:
(a) FIRST, to the extent Georgia Gulf or any Restricted Subsidiary, as
the case may be, elects (or is required by the terms of any Senior
Indebtedness), to prepay, repay or purchase Senior Indebtedness or
Indebtedness (other than any Preferred Stock or Guarantor
Subordinated Obligation) of a Restricted Subsidiary that is a
Subsidiary Guarantor (in each case other than Indebtedness owed to
Georgia Gulf or an Affiliate of Georgia Gulf)
42
within 360 days from the later of the date of the Asset Disposition
or the receipt of the Net Available Cash; PROVIDED, HOWEVER, that, in
connection with any prepayment, repayment or purchase of Indebtedness
pursuant to this clause (a), Georgia Gulf or the Restricted
Subsidiary will retire the Indebtedness and will cause the related
commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased; and
(b) SECOND, to the extent of the balance of the Net Available Cash after
application in accordance with clause (a), to the extent Georgia Gulf
or the Restricted Subsidiary elects, to invest in Additional Assets
within 360 days from the later of the date of the Asset Disposition
or the receipt of the Net Available Cash.
Any Net Available Cash from Asset Sales that are not applied or invested as
provided in the preceding paragraph will be deemed to constitute "Excess
Proceeds." On the 361(st) day after an Asset Disposition, if the aggregate
amount of Excess Proceeds exceeds $50.0 million, Georgia Gulf will be required
to make an offer ("Asset Sale Offer") to all holders of notes and to the extent
required by the terms of other Senior Subordinated Indebtedness, to all holders
of other Senior Subordinated Indebtedness outstanding with similar provisions
requiring Georgia Gulf to make an offer to purchase the Senior Subordinated
Indebtedness with the proceeds from any Asset Disposition ("Pari Passu Notes"),
to purchase the maximum principal amount of notes and any the Pari Passu Notes
to which the Asset Sale Offer applies that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount of the Pari Passu Notes plus accrued and unpaid interest to the date of
purchase, in accordance with the procedures set forth in the indenture or the
agreements governing the Pari Passu Notes, as applicable, in each case in
integral multiples of $1,000. To the extent that the aggregate amount of notes
and Pari Passu Notes so validly tendered and not properly withdrawn pursuant to
an Asset Sale Offer is less than the Excess Proceeds, Georgia Gulf may use any
remaining Excess Proceeds for general corporate purposes, subject to the other
covenants contained in the indenture. If the aggregate principal amount of notes
surrendered by holders of the notes and other Pari Passu Notes surrendered by
holders or lenders, collectively, exceeds the amount of Excess Proceeds, the
trustee will select the notes and Pari Passu Notes to be purchased on a pro rata
basis on the basis of the aggregate principal amount of tendered notes and Pari
Passu Notes. Upon completion of the Asset Sale Offer, the amount of Excess
Proceeds will be reset at zero.
The Asset Sale Offer will remain open for a period of 20 Business Days
following its commencement, except to the extent that a longer period is
required by applicable law (the "Asset Sale Offer Period"). No later than five
Business Days after the termination of the Asset Sale Offer Period (the "Asset
Sale Purchase Date"), Georgia Gulf will purchase the principal amount of notes
and Pari Passu Notes required to be purchased pursuant to this covenant (the
"Asset Sale Offer Amount") or, if less than the Asset Sale Offer Amount has been
so validly tendered, all notes and Pari Passu Notes validly tendered in response
to the Asset Sale Offer.
If the Asset Sale Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
will be paid to the Person in whose name a note is registered at the close of
business on the record date, and no additional interest will be payable to
holders who tender notes pursuant to the Asset Sale Offer.
On or before the Asset Sale Purchase Date, Georgia Gulf will, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Asset Sale Offer Amount of notes and Pari Passu Notes or portions of notes and
Pari Passu Notes so validly tendered and not properly withdrawn pursuant to the
Asset Sale Offer, or if less than the Asset Sale Offer Amount has been validly
tendered and not properly withdrawn, all notes and Pari Passu Notes so validly
tendered and not properly withdrawn, in each case in integral multiples of
$1,000. Georgia Gulf will deliver to the trustee an Officers' Certificate
stating that the notes or portions of notes were accepted for payment by Georgia
Gulf in accordance with the terms of this covenant and, in addition, Georgia
Gulf will deliver all
43
certificates and notes required, if any, by the agreements governing the Pari
Passu Notes. Georgia Gulf or the paying agent, as the case may be, will promptly
(but in any case not later than five Business Days after the termination of the
Asset Sale Offer Period) mail or deliver to each tendering holder of notes or
holder or lender of Pari Passu Notes, as the case may be, an amount equal to the
purchase price of the notes or Pari Passu Notes so validly tendered and not
properly withdrawn by the holder or lender, as the case may be, and accepted by
Georgia Gulf for purchase, and Georgia Gulf will promptly issue a new note, and
the trustee, upon delivery of an Officers' Certificate from Georgia Gulf will
authenticate and mail or deliver the new note to the holder, in a principal
amount equal to any unpurchased portion of the note surrendered; PROVIDED that
each such new note will be in a principal amount of $1,000 or an integral
multiple of $1,000. In addition, Georgia Gulf will take any and all other
actions required by the agreements governing the Pari Passu Notes. Any note not
so accepted will be promptly mailed or delivered by Georgia Gulf to the holder
of the note. Georgia Gulf will publicly announce the results of the Asset Sale
Offer on the Asset Sale Purchase Date.
For the purposes of this covenant, the following will be deemed to be cash:
(1) the assumption by the transferee of Indebtedness (other than Senior
Subordinated Indebtedness, Subordinated Obligations or Disqualified
Stock) of Georgia Gulf or Indebtedness (other than Guarantor Senior
Subordinated Indebtedness, Guarantor Subordinated Obligations or
Preferred Stock) of any Restricted Subsidiary of Georgia Gulf and the
release of Georgia Gulf or the Restricted Subsidiary from all liability
on the Indebtedness in connection with the Asset Disposition (in which
case Georgia Gulf will, without further action, be deemed to have applied
the deemed cash to Indebtedness in accordance with clause (a) above); and
(2) securities, notes or other obligations received by Georgia Gulf or any
Restricted Subsidiary of Georgia Gulf from the transferee that are
promptly converted by Georgia Gulf or the Restricted Subsidiary into
cash.
Georgia Gulf will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of notes pursuant to the indenture. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, Georgia Gulf will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the indenture by virtue of any conflict.
LIMITATION ON AFFILIATE TRANSACTIONS
Georgia Gulf will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or conduct any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of Georgia Gulf (an "Affiliate
Transaction") UNLESS:
(1) the terms of the Affiliate Transaction are no less favorable to Georgia
Gulf or the Restricted Subsidiary, as the case may be, than those that
could be obtained in a comparable transaction at the time of the
transaction in arm's-length dealings with a Person who is not such an
Affiliate;
(2) in the event the Affiliate Transaction involves an aggregate amount in
excess of $10.0 million, the terms of the transaction have been approved
by a majority of the members of the Board of Directors of Georgia Gulf
and by a majority of the members of the Board having no personal stake in
the transaction, if any (and the majority or majorities, as the case may
be, determines that the Affiliate Transaction satisfies the criteria in
clause (1) above); and
44
(3) in the event the Affiliate Transaction involves an aggregate amount in
excess of $50.0 million, Georgia Gulf has received a written opinion from
an independent investment banking firm of nationally recognized standing
that the Affiliate Transaction is not materially less favorable than
those that might reasonably have been obtained in a comparable
transaction at that time on an arms-length basis from a Person that is
not an Affiliate.
The preceding paragraph will not apply to:
(1) any Restricted Payment (other than a Restricted Investment) permitted to
be made pursuant to the covenant described under "--Limitation on
Restricted Payments";
(2) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans and other
reasonable fees, compensation, benefits and indemnities paid or entered
into by Georgia Gulf or its Restricted Subsidiaries in the ordinary
course of business to or with officers, directors or employees of Georgia
Gulf and its Restricted Subsidiaries;
(3) loans or advances to employees in the ordinary course of business of
Georgia Gulf or any of its Restricted Subsidiaries;
(4) any transaction between Georgia Gulf and a Restricted Subsidiary (other
than a Receivables Entity) or between Restricted Subsidiaries (other than
a Receivables Entity);
(5) the payment of reasonable and customary fees paid to, and indemnity
provided on behalf of, officers, directors or employees of Georgia Gulf
or any Restricted Subsidiary of Georgia Gulf;
(6) sales or other transfers or dispositions of accounts receivable and
other related assets customarily transferred in an asset securitization
transaction involving accounts receivable to a Receivables Entity in a
Qualified Receivables Transaction, and acquisitions of Permitted
Investments in connection with a Qualified Receivables Transaction; and
(7) the performance of obligations of Georgia Gulf or any of its Restricted
Subsidiaries under the terms of any agreement to which Georgia Gulf or
any of its Restricted Subsidiaries is a party on the Issue Date and
identified on a schedule to the indenture on the Issue Date, as these
agreements may be amended, modified or supplemented from time to time;
PROVIDED, HOWEVER that any future amendment, modification or supplement
entered into after the Issue Date will be permitted to the extent that
its terms are not more disadvantageous to the holders of the notes than
the terms of the agreements in effect on the Issue Date.
LIMITATION ON SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
Georgia Gulf will not, and will not permit any Restricted Subsidiary of
Georgia Gulf to, transfer, convey, sell, lease or otherwise dispose of any
Voting Stock of any Restricted Subsidiary or to issue any of the Voting Stock of
a Restricted Subsidiary (other than, if necessary, shares of its Voting Stock
constituting directors' qualifying shares) to any Person except:
(1) to Georgia Gulf or a Wholly-Owned Subsidiary (other than a Receivables
Entity); or
(2) in compliance with the covenant described under "--Limitation on Sales
of Assets and Subsidiary Stock" and immediately after giving effect to
the issuance or sale, the Restricted Subsidiary would continue to be a
Restricted Subsidiary.
Notwithstanding the preceding paragraph, Georgia Gulf may sell all the
Voting Stock of a Restricted Subsidiary as long as Georgia Gulf complies with
the terms of the covenant described under "--Limitation on Sales of Assets and
Subsidiary Stock."
45
SEC REPORTS
Notwithstanding that Georgia Gulf may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, to the extent permitted
by the Exchange Act, Georgia Gulf will file with the Commission, and provide the
trustee and the holders of the notes with, the annual reports and the
information, documents and other reports (or copies of the portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act within the time periods
specified by those sections. In the event that Georgia Gulf is not permitted to
file the reports, documents and information with the Commission pursuant to the
Exchange Act, Georgia Gulf will nevertheless provide the Exchange Act
information to the trustee and the holders of the notes as if Georgia Gulf were
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
within the time periods specified by those sections.
If Georgia Gulf has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph will include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes to the financial
statements, and in Management's Discussion and Analysis of Results of Operations
and Financial Condition, of the financial condition and results of operations of
Georgia Gulf and its Restricted Subsidiaries.
MERGER AND CONSOLIDATION
Georgia Gulf will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, UNLESS:
(1) the resulting, surviving or transferee Person (the "Successor Company")
will be a corporation, partnership, trust or limited liability company
organized and existing under the laws of the United States of America,
any State of the United States of America or the District of Columbia and
the Successor Company (if not Georgia Gulf) will expressly assume, by
supplemental indenture, executed and delivered to the trustee, in form
satisfactory to the trustee, all the obligations of Georgia Gulf under
the notes and the indenture;
(2) immediately after giving effect to the transaction, and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of the transaction as
having been Incurred by the Successor Company or the Subsidiary at the
time of the transaction, no Default or Event of Default will have
occurred and be continuing;
(3) immediately after giving effect to the transaction, the Successor
Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to the first paragraph of the "--Limitation on
Indebtedness" covenant;
(4) each Subsidiary Guarantor (unless it is the other party to the
transactions above, in which case clause (1) will apply) will have by
supplemental indenture confirmed that its Subsidiary Guarantee will apply
to that Person's obligations in respect of the indenture and the notes
and its obligations under the Registration Rights Agreement will continue
to be in effect; and
(5) Georgia Gulf will have delivered to the trustee an Officers' Certificate
and an Opinion of Counsel, each stating that the consolidation, merger or
transfer and the supplemental indenture (if any) comply with the
indenture.
For purposes of this covenant, the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of Georgia Gulf, which properties and assets,
if held by Georgia Gulf instead of the Subsidiaries, would constitute
46
all or substantially all of the properties and assets of Georgia Gulf on a
consolidated basis, will be deemed to be the transfer of all or substantially
all of the properties and assets of Georgia Gulf.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, Georgia Gulf under the indenture, but, in the
case of a lease of all or substantially all its assets, Georgia Gulf will not be
released from the obligation to pay the principal of and interest on the notes.
Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve "all
or substantially all" of the property or assets of a Person.
Notwithstanding the preceding clause (3), (x) any Restricted Subsidiary of
Georgia Gulf (other than a Receivables Entity) may consolidate with, merge into
or transfer all or part of its properties and assets to Georgia Gulf and
(y) Georgia Gulf may merge with an Affiliate incorporated solely for the purpose
of reincorporating Georgia Gulf in another jurisdiction to realize tax or other
benefits.
FUTURE SUBSIDIARY GUARANTORS
After the Issue Date, Georgia Gulf will cause each Restricted Subsidiary
other than a Foreign Subsidiary or Receivables Entity which has not guaranteed
Senior Indebtedness or Guarantor Senior Indebtedness or Incurred Indebtedness
under the Senior Credit Agreement to execute and deliver to the trustee a
Subsidiary Guarantee pursuant to which the Subsidiary Guarantor will
unconditionally Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any, and interest on the notes on a
senior subordinated basis.
LIMITATION ON LINES OF BUSINESS
Georgia Gulf will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Related Business.
PAYMENTS FOR CONSENT
Neither Georgia Gulf nor any of its Restricted Subsidiaries will, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fees or otherwise, to any holder of any notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
indenture or the notes unless the consideration is offered to be paid or is paid
to all holders of the notes that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to the consent, waiver or
amendment.
EVENTS OF DEFAULT
Each of the following is an Event of Default:
(1) default in any payment of interest or additional interest (as required
by the Registration Rights Agreement) on any note when due, continued for
30 days, whether or not the payment is prohibited by the provisions
described under "Ranking and Subordination";
(2) default in the payment of principal of or premium, if any, on any note
when due at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise, whether or not the payment is
prohibited by the provisions described under "Ranking and Subordination";
(3) failure by Georgia Gulf or any Subsidiary Guarantor to comply with its
obligations under "Specified Covenants--Merger and Consolidation";
47
(4) failure by Georgia Gulf to comply for 30 days after notice (with notices
only given after the expiry of the periods permitted to perform an
obligation) with any of its obligations under the covenants described
under "Change of Control" above or under the covenants described under
"Certain Covenants" above (in each case, other than a failure to purchase
notes which will constitute an Event of Default under clause (2) above
and other than a failure to comply with "Certain Covenants--Merger and
Consolidation" which is covered by clause (3));
(5) failure by Georgia Gulf to comply for 60 days after notice (with notices
only given after the expiry of the periods permitted to perform an
obligation) with its other agreements contained in the indenture;
(6) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Georgia Gulf or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Georgia Gulf or
any of its Restricted Subsidiaries), other than Indebtedness owed to
Georgia Gulf or a Restricted Subsidiary, whether the Indebtedness or
guarantee now exists, or is created after the date of the indenture,
which default:
(a) is caused by a failure to pay principal of, or interest or premium,
if any, on the Indebtedness before the expiration of the grace period
provided in the Indebtedness ("payment default"); or
(b) results in the acceleration of the Indebtedness before its maturity
(the "cross acceleration provision");
and, in each case, the principal amount of that Indebtedness, together
with the principal amount of any other Indebtedness under which there has
been a payment default or the maturity of which has been so accelerated,
aggregates $25.0 million or more;
(7) certain events of bankruptcy, insolvency or reorganization of Georgia
Gulf or a Significant Subsidiary or group of Restricted Subsidiaries
that, taken together (as of the latest audited consolidated financial
statements for Georgia Gulf and its Restricted Subsidiaries), would
constitute a Significant Subsidiary (the "bankruptcy provisions");
(8) failure by Georgia Gulf or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together, as of the latest audited
consolidated financial statements for Georgia Gulf and its Restricted
Subsidiaries, would constitute a Significant Subsidiary to pay final
judgments aggregating in excess of $25.0 million (net of any amounts that
a reputable and creditworthy insurance company has acknowledged liability
for in writing), which judgments are not paid, discharged or stayed for a
period of 60 days (the "judgment default provision"); or
(9) any Subsidiary Guarantee of a Significant Subsidiary or group of
Restricted Subsidiaries that taken together as of the latest audited
consolidated financial statements for Georgia Gulf and its Restricted
Subsidiaries would constitute a Significant Subsidiary ceases to be in
full force and effect (except as contemplated by the terms of the
indenture) or is declared null and void in a judicial proceeding or any
Subsidiary Guarantor that is a Significant Subsidiary or group of
Restricted Subsidiaries that taken together as of the latest audited
consolidated financial statements for Georgia Gulf and its Restricted
Subsidiaries would constitute a Significant Subsidiary denies or
disaffirms its obligations under the indenture or its Subsidiary
Guarantee.
However, a default under clauses (4) and (5) of this paragraph will not
constitute an Event of Default until the trustee or the holders of at least 25%
in principal amount of the outstanding notes notify Georgia Gulf of the default
and Georgia Gulf does not cure the default within the time specified in clauses
(4) and (5) of this paragraph after receipt of the notice.
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If an Event of Default (other than an Event of Default described in
clause (7) above) occurs and is continuing, the trustee by notice to Georgia
Gulf, or the holders of at least 25% in principal amount of the outstanding
notes by notice to Georgia Gulf and the trustee, may, and the trustee at the
request of the holders will, declare the principal of, premium, if any, and
accrued and unpaid interest, if any, on all the notes to be due and payable.
Upon such a declaration, the principal, premium and accrued and unpaid interest
will be due and payable immediately; PROVIDED, HOWEVER, that so long as any
Indebtedness permitted by the provisions of the indenture to be incurred under
the Senior Credit Agreement will be outstanding, no such acceleration will be
effective until the earlier of (x) acceleration of any of the Indebtedness under
the Senior Credit Agreement or (y) five business days after the giving of the
acceleration notice to Georgia Gulf and the administrative agent under the
Senior Credit Agreement of the acceleration. In the event of a declaration of
acceleration of the notes because an Event of Default described in clause (6)
under "Events of Default" has occurred and is continuing, the declaration of
acceleration of the notes will be automatically annulled if the event of default
or payment default triggering the Event of Default pursuant to clause (6) is
remedied or cured by Georgia Gulf or a Restricted Subsidiary of Georgia Gulf or
waived by the holders of the relevant Indebtedness within 20 days after the
declaration of acceleration with respect thereto and if (1) the annulment of the
acceleration of the notes would not conflict with any judgment or decree of a
court of competent jurisdiction and (2) all existing Events of Default, except
nonpayment of principal, premium or interest on the notes that became due solely
because of the acceleration of the notes, have been cured or waived. If an Event
of Default described in clause (7) above occurs and is continuing, the principal
of, premium, if any, and accrued and unpaid interest on all the notes will
become and be immediately due and payable without any declaration or other act
on the part of the trustee or any holders. The holders of a majority in
principal amount of the outstanding notes may waive all past defaults (except
with respect to nonpayment of principal, premium or interest) and rescind any
such acceleration with respect to the notes and its consequences if
(1) rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (2) all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on the notes that
have become due solely by the declaration of acceleration, have been cured or
waived.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an Event of Default occurs and is continuing, the trustee will be
under no obligation to exercise any of the rights or powers under the indenture
at the request or direction of any of the holders unless the holders have
offered to the trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium, if any, or interest when due, no holder may pursue any
remedy with respect to the indenture or the notes UNLESS:
(1) the holder has previously given the trustee notice that an Event of
Default is continuing;
(2) holders of at least 25% in principal amount of the notes then
outstanding have requested the trustee to pursue the remedy;
(3) the holders have offered the trustee reasonable security or indemnity
against any loss, liability or expense;
(4) the trustee has not complied with the request within 60 days after the
receipt of the request and the offer of security or indemnity; and
(5) the holders of a majority in principal amount of the notes then
outstanding have not given the trustee a direction that, in the opinion
of the trustee, is inconsistent with the request within the 60-day
period.
Subject to certain restrictions, the holders of a majority in principal
amount of the notes then outstanding are given the right to 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. The
49
trustee, however, may refuse to follow any direction that conflicts with law or
the indenture or that the trustee determines is unduly prejudicial to the rights
of any other holder or that would involve the trustee in personal liability.
Before taking any action under the indenture, the trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking the action.
The indenture provides that if a Default occurs and is continuing and is
known to the trustee, the trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium, if any, or interest on any note, the trustee may
withhold notice if and so long as a committee of trust officers of the trustee
in good faith determines that withholding notice is in the interests of the
holders. In addition, Georgia Gulf is required to deliver to the trustee, within
120 days after the end of each fiscal year, a certificate indicating whether the
signers of the certificate know of any Default that occurred during the previous
year. Georgia Gulf also is required to deliver to the trustee, within 30 days
after the occurrence of a Default, written notice of any events which would
constitute certain Defaults, their status and what action Georgia Gulf is taking
or proposes to take in respect of that Default.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of Georgia Gulf with
the intention of avoiding payment of the premium that Georgia Gulf would have
had to pay if Georgia Gulf then had elected to redeem the notes pursuant to the
optional redemption provisions of the indenture or was required to repurchase
the notes, an equivalent premium will also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the notes. If an
Event of Default occurs before November 1, 2003 by reason of any willful action
(or inaction) taken (or not taken) by or on behalf of Georgia Gulf with the
intention of avoiding the prohibition on redemption of the notes before
November 1, 2003, the premium specified in the indenture will also become
immediately due and payable to the extent permitted by law upon the acceleration
of the notes.
AMENDMENTS AND WAIVERS
Subject to specified exceptions, the indenture may be amended with the
consent of the holders of a majority in principal amount of the notes then
outstanding (including without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, notes) and, subject to
specified exceptions, any past default or compliance with any provisions may be
waived with the consent of the holders of a majority in principal amount of the
notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
However, without the consent of each holder of an outstanding note affected, no
amendment may, among other things:
(1) reduce the amount of notes whose holders must consent to an amendment;
(2) reduce the stated rate of or extend the stated time for payment of
interest on any note;
(3) reduce the principal of or extend the Stated Maturity of any note;
(4) reduce the premium payable upon the redemption or repurchase of any note
or change the time at which any note may be redeemed or repurchased as
described above under "Optional Redemption," "Change of Control,"
"Specified Covenants--Limitation on Sales of Assets and Subsidiary Stock"
or any similar provision, whether through an amendment or waiver of
provisions in the covenants, definition or otherwise;
(5) make any note payable in money other than that stated in the note;
50
(6) impair the right of any holder to receive payment of, premium, if any,
principal of and interest on the holder's notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or
with respect to the holder's notes; or
(7) make any change in the amendment provisions which require each holder's
consent or in the waiver provisions.
Without the consent of any holder, Georgia Gulf and the trustee may amend
the indenture to:
(1) cure any ambiguity, omission, defect or inconsistency;
(2) provide for the assumption by a successor corporation, partnership,
trust or limited liability company of the obligations of Georgia Gulf
under the indenture;
(3) provide for uncertificated notes in addition to or in place of
certificated notes (PROVIDED that the uncertificated notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated notes are described in
Section 163(f)(2)(B) of the Code);
(4) add Guarantees with respect to the notes;
(5) secure the notes;
(6) add to the covenants of Georgia Gulf for the benefit of the holders or
surrender any right or power conferred upon Georgia Gulf;
(7) make any change that does not adversely affect the rights of any holder;
or
(8) comply with any requirement of the Commission in connection with the
qualification of the indenture under the Trust Indenture Act.
However, no amendment may be made to the subordination provisions of the
indenture that adversely affects the rights of any holder of Senior Indebtedness
then outstanding unless the holders of the Senior Indebtedness (or any group or
representative of those holders authorized to give a consent) consent to the
change.
The consent of the holders is not necessary under the indenture to approve
the particular form of any proposed amendment. It is sufficient if the consent
approves the substance of the proposed amendment. After an amendment under the
indenture becomes effective, Georgia Gulf is required to mail to the holders a
notice briefly describing the amendment. However, the failure to give the notice
to all the holders, or any defect in the notice, will not impair or affect the
validity of the amendment.
DEFEASANCE
Georgia Gulf at any time may terminate all its obligations under the notes
and the indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the notes, to replace mutilated, destroyed, lost or
stolen notes and to maintain a registrar and paying agent in respect of the
notes. If Georgia Gulf exercises its legal defeasance option, the Subsidiary
Guarantees in effect at that time will terminate.
Georgia Gulf at any time may terminate its obligations under covenants
described under "Specified Covenants" (other than "Merger and Consolidation"),
the operation of the cross-default upon a payment default, cross acceleration
provisions, the bankruptcy provisions with respect to Significant Subsidiaries,
the judgment default provision and the Subsidiary Guarantee provision described
under "Events of Default" above and the limitations contained in clause (3)
under "Certain Covenants--Merger and Consolidation" above ("covenant
defeasance").
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Georgia Gulf may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If Georgia Gulf exercises its
legal defeasance option, payment of the notes may not be accelerated because of
an Event of Default with respect to the notes. If Georgia Gulf exercises its
covenant defeasance option, payment of the notes may not be accelerated because
of an Event of Default specified in clause (4), (5), (6), (7) (with respect only
to Significant Subsidiaries), (8) or (9) under "Events of Default" above or
because of the failure of Georgia Gulf to comply with clause (3) under "Certain
Covenants--Merger and Consolidation" above.
In order to exercise either defeasance option, Georgia Gulf must irrevocably
deposit in trust (the "defeasance trust") with the trustee money or U.S.
Government Obligations for the payment of principal, premium, if any, and
interest on the notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the trustee of an
Opinion of Counsel (subject to customary exceptions and exclusions) to the
effect that holders of the notes will not recognize income, gain or loss for
Federal income tax purposes as a result of the 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 the deposit and defeasance had
not occurred. In the case of legal defeasance only, the Opinion of Counsel must
be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Georgia Gulf,
as such, will have any liability for any obligations of Georgia Gulf under the
notes, the indenture or the Subsidiary Guarantees or for any claim based on, in
respect of, or by reason of, the obligations or their creation. Each holder by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the notes. This waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
CONCERNING THE TRUSTEE
SunTrust Bank, Atlanta is the trustee under the indenture and has been
appointed by Georgia Gulf as registrar and paying agent with regard to the
notes.
GOVERNING LAW
The indenture provides that it and the notes will be governed by, and
construed in accordance with, the laws of the State of New York.
DEFINITIONS
"ADDITIONAL ASSETS" means:
(1) any property or assets (other than Indebtedness and Capital Stock) to be
used by Georgia Gulf or a Restricted Subsidiary in a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of the Capital Stock by Georgia Gulf or a
Restricted Subsidiary of Georgia Gulf; or
(3) Capital Stock constituting a minority interest in any Person that at
that time is a Restricted Subsidiary of Georgia Gulf;
PROVIDED, HOWEVER, that, in the case of clauses (2) and (3), the Restricted
Subsidiary is primarily engaged in a Related Business.
52
"AFFILIATE" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with the 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 the Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
PROVIDED that beneficial ownership of 10% or more of the Voting Stock of a
Person will be deemed to be control.
"ASSET DISPOSITION" means any direct or indirect sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer,
issuance or other disposition, or a series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan, of shares of Capital
Stock of a Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by Georgia Gulf or any of its Restricted Subsidiaries, including
any disposition by means of a merger, consolidation or similar transaction. For
purposes of this definition, any series of related transactions that, if
effected as a single transaction, would constitute an Asset Disposition, will be
deemed to be a single Asset Disposition effected when the last transaction which
is a part of that series is effected.
Notwithstanding the preceding, the following items will not be deemed to be
Asset Dispositions:
(1) a disposition by a Restricted Subsidiary to Georgia Gulf or by Georgia
Gulf or a Restricted Subsidiary to a Wholly-Owned Subsidiary (other than
a Receivables Entity);
(2) the sale of cash or Cash Equivalents in the ordinary course of business;
(3) a disposition of inventory in the ordinary course of business;
(4) a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of Georgia Gulf and its
Restricted Subsidiaries and that is disposed of in each case in the
ordinary course of business;
(5) transactions permitted under "Specified Covenants--Merger and
Consolidation";
(6) an issuance of Capital Stock by a Restricted Subsidiary of Georgia Gulf
to Georgia Gulf or to a Wholly-Owned Subsidiary (other than a Receivables
Entity);
(7) for purposes of "Specified Covenants--Limitation on Sales of Assets and
Subsidiary Stock" only, the making of a Permitted Investment or a
disposition subject to "Specified Covenants--Limitation on Restricted
Payments";
(8) an Asset Swap; PROVIDED that (a) at the time of entering into the Asset
Swap and immediately after giving effect to the Asset Swap, no Default or
Event of Default will have occurred and be continuing or would occur as a
consequence of the Asset Swap and (b) the terms of the Asset Swap have
been approved by a majority of the members of the Board of Directors of
Georgia Gulf;
(9) sales of accounts receivable and related assets or an interest in
accounts receivable and related assets of the type specified in the
definition of "Qualified Receivables Transaction" to a Receivables
Entity;
(10) dispositions of assets with an aggregate fair market value since the
Issue Date of less than $25.0 million;
(11) dispositions in connection with Permitted Liens;
(12) the licensing or sublicensing of intellectual property or other general
intangibles and licenses, leases or subleases of other property in the
ordinary course of business and which do not materially interfere with
the business of Georgia Gulf and its Restricted Subsidiaries;
(13) dispositions of assets included in Georgia Gulf's methanol business in
existence on the Issue Date to the extent the operation of the assets are
reflected on Georgia Gulf's consolidated financial statements as
discontinued operations; and
(14) foreclosure on assets.
53
"ASSET SWAP" means the concurrent purchase and sale or exchange of Related
Business Assets between Georgia Gulf or any of its Restricted Subsidiaries and
another Person; PROVIDED that any cash received must be applied in accordance
with "Limitation on Sales of Assets and Subsidiary Stock."
"ATTRIBUTABLE INDEBTEDNESS" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the notes, compounded semi-annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in the Sale/Leaseback Transaction (including any period for which
the lease has been extended).
"AVERAGE LIFE" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of the Indebtedness or
redemption or similar payment with respect to the Preferred Stock multiplied by
the amount of the payment by (2) the sum of all the payments.
"BANK INDEBTEDNESS" means any and all amounts, whether outstanding on the
Issue Date or Incurred after the Issue Date, payable under or in respect of the
Senior Credit Agreement and any related notes, collateral documents, letters of
credit and guarantees and any Interest Rate Agreement entered into in connection
with the Senior Credit Agreement, including principal, any premium, interest
(including interest accruing after or which would accrue but for the filing of
any petition in bankruptcy or for reorganization relating to Georgia Gulf or any
subsidiary at the rate specified in the Senior Credit Agreement whether or not a
claim for post filing interest is allowed in the proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
under the Senior Credit Agreement or in respect of the Senior Credit Agreement.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors of the
Person or any duly authorized committee of the board of directors.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participation or other equivalents of or interests
in (however designated) equity of the Person, including any Preferred Stock, but
excluding any debt securities convertible into the equity.
"CAPITALIZED LEASE OBLIGATIONS" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
the obligation will be the capitalized amount of the obligation at the time any
determination of the obligation is to be made as determined in accordance with
GAAP, and the Stated Maturity of the obligation will be the date of the last
payment of rent or any other amount due under the lease before the first date
the lease may be terminated without penalty.
"CASH EQUIVALENTS" means: (1) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality of the United States (provided that the full faith and credit of
the United States is pledged in support of those securities), having maturities
of not more than one year from the date of acquisition; (2) marketable general
obligations issued by any state of the United States of America or any political
subdivision of the state or any public instrumentality of the state maturing
within one year from the date of acquisition of those securities (provided that
the full faith and credit of the United States is pledged in support of those
securities) and, at the time of acquisition of those securities, having a credit
rating of "A" or better from either Standard & Poor's Ratings Services or
Moody's Investors Service, Inc.; (3) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition of those
deposits or bankers' acceptances issued by any commercial bank, the long-term
debt of which is rated at the time of acquisition of the debt at least "A" or
the equivalent rating by Standard & Poor's Ratings Services, or "A" or the
equivalent rating by Moody's Investors Service, Inc., and having combined
capital and surplus in excess of $500 million;
54
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (1), (2) and
(3) entered into with any bank meeting the qualifications specified in
clause (3) above; (5) commercial paper rated at the time of acquisition of the
commercial paper at least "A-2" or the equivalent rating by Standard & Poor's
Ratings Services or "P-2" or the equivalent rating by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings
of investments, and in any case maturing within one year after the date of
acquisition of the commercial paper; and (6)interests in any investment company
or money market fund which invests solely in instruments of the type specified
in clauses (1) through (5) above.
"CHANGE OF CONTROL" means:
(1) any "person" or "group" of related persons (as these terms are used in
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that the person or group will be deemed to have "beneficial
ownership" of all shares that any the person or group has the right to
acquire, whether the right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of Georgia Gulf (or its successor by
merger, consolidation or purchase of all or substantially all of its
assets) (for the purposes of this clause, the person or group will be
deemed to beneficially own any Voting Stock of Georgia Gulf held by an
entity, if the person or group "beneficially owns" (as defined above),
directly or indirectly, more than 35% of the voting power of the Voting
Stock of the entity); or
(2) the first day on which a majority of the members of the Board of
Directors of Georgia Gulf are not Continuing Directors; or
(3) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Georgia Gulf
and its Restricted Subsidiaries taken as a whole to any "person" (as the
term is used in Sections 13(d) and 14(d) of the Exchange Act); or
(4) the adoption by the stockholders of Georgia Gulf of a plan or proposal
for the liquidation or dissolution of Georgia Gulf.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMODITY AGREEMENT" means any commodity futures contract, commodity option
or other similar agreement or arrangement entered into by Georgia Gulf or any of
its Restricted Subsidiaries designed to protect Georgia Gulf or any of its
Restricted Subsidiaries against fluctuations in the price of raw materials or
power used in the ordinary course of Georgia Gulf or its Restricted
Subsidiaries.
"CONSOLIDATED COVERAGE RATIO" means as of any date of determination, with
respect to any Person, the ratio of (x) the aggregate amount of Consolidated
EBITDA of the Person for the period of the most recent four consecutive fiscal
quarters ending before the date of the determination for which financial
statements are in existence to (y) Consolidated Interest Expense for the four
fiscal quarters; PROVIDED, HOWEVER, that:
(1) if Georgia Gulf or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of the period that
remains outstanding on the date of determination or if the
transaction giving rise to the need to calculate the Consolidated
Coverage Ratio is an Incurrence of Indebtedness, Consolidated EBITDA
and Consolidated Interest Expense for the period will be calculated
after giving effect on a pro forma basis to the Indebtedness as if
the Indebtedness had been Incurred on the first day of the period
(except that in making the computation, the amount of
55
Indebtedness under any revolving credit facility outstanding on the
date of the calculation will be computed based on (i) the average
daily balance of the Indebtedness during the four fiscal quarters or
any shorter period for which the facility was outstanding or (ii) if
the facility was created after the end of the four fiscal quarters,
the average daily balance of the Indebtedness during the period from
the date of creation of the facility to the date of the calculation)
and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of the new
Indebtedness as if the discharge had occurred on the first day of the
period; or
(b) has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of the period that is no longer
outstanding on the date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio
involves a discharge of Indebtedness (in each case other than
Indebtedness incurred under any revolving credit facility unless the
Indebtedness has been permanently repaid and the related commitment
terminated), Consolidated EBITDA and Consolidated Interest Expense
for the period will be calculated after giving effect on a pro forma
basis to the discharge of the Indebtedness, including with the
proceeds of the new Indebtedness, as if the discharge had occurred on
the first day of the period;
(2) if since the beginning of the period Georgia Gulf or any Restricted
Subsidiary will have made any Asset Disposition or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is
an Asset Disposition:
(a) the Consolidated EBITDA for the period will be reduced by an amount
equal to the Consolidated EBITDA (if positive) directly attributable
to the assets which are the subject of the Asset Disposition for the
period or increased by an amount equal to the Consolidated EBITDA (if
negative) directly attributable thereto for the period; and
(b) Consolidated Interest Expense for the period will be reduced by an
amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness of Georgia Gulf or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to Georgia Gulf and its continuing Restricted Subsidiaries in
connection with the Asset Disposition for the period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for the period directly attributable to the
Indebtedness of the Restricted Subsidiary to the extent Georgia Gulf
and its continuing Restricted Subsidiaries are no longer liable for
the Indebtedness after the sale);
(3) if since the beginning of the period Georgia Gulf or any Restricted
Subsidiary (by merger or otherwise) will have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary or is merged with or into Georgia Gulf) or an acquisition of
assets, including any acquisition of assets occurring in connection with
a transaction causing a calculation to be made under the indenture, which
constitutes all or substantially all of an operating unit, division or
line of business, Consolidated EBITDA and Consolidated Interest Expense
for the period will be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if the Investment or
acquisition occurred on the first day of the period; and
(4) if since the beginning of the period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Georgia Gulf or
any Restricted Subsidiary since the beginning of the period) will have
made any Asset Disposition or any Investment or acquisition of assets
that would have required an adjustment pursuant to clause (2) or
(3) above if made by Georgia Gulf or a Restricted Subsidiary during the
period, Consolidated EBITDA and Consolidated Interest Expense for the
period will be calculated after giving pro
56
forma effect thereto as if the Asset Disposition or Investment or
acquisition of assets occurred on the first day of the period.
For purposes of this definition, whenever pro forma effect is to be given to any
calculation under this definition, the pro forma calculations will be determined
in good faith by a responsible financial or accounting officer of Georgia Gulf
(including pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on the Indebtedness will be calculated as if the rate in effect
on the date of determination had been the applicable rate for the entire period
(taking into account any Interest Rate Agreement applicable to the Indebtedness
if the Interest Rate Agreement has a remaining term in excess of 12 months).
"CONSOLIDATED EBITDA" for any period means, without duplication, the
Consolidated Net Income for the period, plus the following to the extent
deducted in calculating the Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) Consolidated Income Taxes;
(3) consolidated depreciation expense;
(4) consolidated amortization of intangibles; and
(5) other non-cash charges reducing Consolidated Net Income (excluding any
the non-cash charge to the extent it represents an accrual of or reserve
for cash charges in any future period or amortization of a prepaid cash
expense that was paid in a prior period not included in the calculation).
Notwithstanding the preceding sentence, clauses (2) through (5) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of the Person only to the extent (and in
the same proportion) that the net income (loss) of the Restricted Subsidiary was
included in calculating the Consolidated Net Income of the Person and, to the
extent the amounts set forth in clauses (2) through (5) are in excess of those
necessary to offset a net loss of the Restricted Subsidiary or if the Restricted
Subsidiary has net income for the period included in Consolidated Net Income,
only if a corresponding amount would be permitted at the date of determination
to be dividended to Georgia Gulf by the Restricted Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
"CONSOLIDATED INCOME TAXES" means, with respect to any Person for any
period, taxes imposed upon the Person or other payments required to be made by
the Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of the Person or the Person and
its Restricted Subsidiaries (to the extent the income or profits were included
in computing Consolidated Net Income for the period), regardless of whether the
taxes or payments are required to be remitted to any governmental authority.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest
expense of Georgia Gulf and its consolidated Restricted Subsidiaries, whether
paid or accrued, plus, to the extent not included in the interest expense:
(1) interest expense attributable to Capitalized Lease Obligations and the
interest portion of rent expense associated with Attributable
Indebtedness in respect of the relevant lease giving rise thereto,
determined as if the lease were a capitalized lease in accordance with
GAAP and the interest component of any deferred payment obligations;
(2) amortization of debt discount;
57
(3) non-cash interest expense;
(4) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;
(5) the interest expense on Indebtedness of another Person that is
Guaranteed by the Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of the Person or one of its Restricted Subsidiaries;
(6) net costs associated with Hedging Obligations (including amortization of
fees);
(7) the consolidated interest expense of the Person and its Restricted
Subsidiaries that was capitalized during the period;
(8) the product of (a) all dividends paid or payable in cash, Cash
Equivalents or Indebtedness or accrued during the period on any series of
Disqualified Stock of the Person or on Preferred Stock of its Restricted
Subsidiaries payable to a party other than Georgia Gulf or a Wholly-
Owned Subsidiary, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal,
state, provincial and local statutory tax rate of the Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance
with GAAP; and
(9) the cash contributions to any employee stock ownership plan or similar
trust to the extent the contributions are used by the plan or trust to
pay interest or fees to any Person (other than Georgia Gulf) in
connection with Indebtedness Incurred by the plan or trust; PROVIDED,
HOWEVER, that there will be excluded therefrom any interest expense of
any Unrestricted Subsidiary to the extent the related Indebtedness is not
Guaranteed or paid by Georgia Gulf or any Restricted Subsidiary.
For purposes of the foregoing, total interest expense will be determined after
giving effect to any net payments made or received by Georgia Gulf and its
Subsidiaries with respect to Interest Rate Agreements, but excluding net
payments made or received with respect to the termination of Interest Rate
Agreements terminated on or before March 31, 2000 relating to Indebtedness
existing on the Issue Date.
"CONSOLIDATED NET INCOME" means, for any period, the net income (loss) of
Georgia Gulf and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; PROVIDED, HOWEVER, that there will not be included in the
Consolidated Net Income:
(1) any net income (loss) of any Person if the Person is not a Restricted
Subsidiary, except that:
(a) subject to the limitations contained in clauses (4), (5) and
(6) below, Georgia Gulf's equity in the net income of any the Person
for the period will be included in the Consolidated Net Income up to
the aggregate amount of cash which could have been distributed by the
Person during the period to Georgia Gulf or a Restricted Subsidiary
as a dividend or other distribution (subject, in the case of a
dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (3) below); and
(b) Georgia Gulf's equity in a net loss of any the Person (other than an
Unrestricted Subsidiary) for the period will be included in
determining the Consolidated Net Income to the extent the loss has
been funded with cash from Georgia Gulf or a Restricted Subsidiary;
(2) any net income (loss) of any Person acquired by Georgia Gulf or a
Subsidiary in a pooling of interests transaction for any period before
the date of the acquisition;
58
(3) any net income (but not loss) of any Restricted Subsidiary if the
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by the Restricted
Subsidiary, directly or indirectly, to Georgia Gulf, except that:
(a) subject to the limitations contained in clauses (4), (5) and
(6) below, Georgia Gulf's equity in the net income of any the
Restricted Subsidiary for the period will be included in the
Consolidated Net Income up to the aggregate amount of cash that could
have been distributed by the Restricted Subsidiary during the period
to Georgia Gulf or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend to another Restricted Subsidiary,
to the limitation contained in this clause); and
(b) Georgia Gulf's equity in a net loss of any such Restricted Subsidiary
for the period will be included in determining the Consolidated Net
Income;
(4) any gain (loss) realized upon the sale or other disposition of any
property, plant or equipment of Georgia Gulf or its consolidated
Restricted Subsidiaries (including pursuant to any Sale/ Leaseback
Transaction but excluding sales, transfers or other dispositions in
connection with Qualified Receivables Transactions) which is not sold or
otherwise disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any Capital Stock
of any Person;
(5) any extraordinary gain or loss; and
(6) the cumulative effect of a change in accounting principles.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of
the Board of Directors of Georgia Gulf who:
(1) was a member of the Board of Directors on the date of the indenture; or
(2) was nominated for election or elected to the Board of Directors with the
approval of a majority of the Continuing Directors who were members of
the Board at the time of the nomination or election.
"CURRENCY AGREEMENT" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which the
Person is a party or a beneficiary.
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means (1) the Bank Indebtedness (to the
extent the Bank Indebtedness constitutes Senior Indebtedness) and (2) any other
Senior Indebtedness which, at the date of determination, has an aggregate
principal amount outstanding of, or under which, at the date of determination,
the holders of the Senior Indebtedness are committed to lend up to, at least
$25 million and is specifically designated in the instrument evidencing or
governing the Senior Indebtedness as "Designated Senior Indebtedness" for
purposes of the indenture.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock of
the Person which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock
(excluding Capital Stock which is convertible or exchangeable solely at
the option of Georgia Gulf or a Restricted Subsidiary); or
(3) is redeemable at the option of the holder of the Capital Stock, in whole
or in part,
59
in each case on or before the date that is 91 days after the date (a) on
which the notes mature or (b) on which there are no notes outstanding;
PROVIDED that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder of Capital Stock before that date
will be deemed to be Disqualified Stock; PROVIDED, FURTHER that any Capital
Stock that would constitute Disqualified Stock solely because the holders of
Capital Stock have the right to require Georgia Gulf to repurchase the
Capital Stock upon the occurrence of a change of control or asset sale (each
defined in a substantially identical manner to the corresponding definitions
in the indenture) will not constitute Disqualified Stock if the terms of the
Capital Stock (and all those securities into which it is convertible or for
which it is ratable or exchangeable) provide that Georgia Gulf may not
repurchase or redeem any the Capital Stock (and all those securities into
which it is convertible or for which it is ratable or exchangeable) pursuant
to the provision before compliance by Georgia Gulf with the provisions of
the indenture described under the captions "Change of Control" and
"Specified Covenants--Limitation on Sales of Assets and Subsidiary Stock"
and the repurchase or redemption complies with "Specified
Covenants--Restricted Payments."
"DOMESTIC SUBSIDIARY" means any Restricted Subsidiary that is organized
under the laws of the United States of America or any state of the United States
or the District of Columbia.
"EQUITY OFFERING" means an offering for cash by Georgia Gulf of its common
stock, or options, warrants or rights with respect to its common stock.
"FOREIGN SUBSIDIARY" means any Restricted Subsidiary that is not organized
under the laws of the United States of America or any state of the United States
or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in the other
statements by the other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the indenture will be computed in conformity with GAAP.
"GUARANTEE" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of the Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) the Indebtedness of the other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the obligee of
the Indebtedness of the payment of the Indebtedness or to protect the
obligee against loss in respect of the Indebtedness (in whole or in
part);
PROVIDED, HOWEVER, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"GUARANTOR SENIOR INDEBTEDNESS" means, with respect to a Subsidiary
Guarantor, the following obligations, whether outstanding on the date of the
indenture or issued after the date of the indenture, created, Incurred or
assumed, without duplication:
(1) the Bank Indebtedness Incurred by the Subsidiary Guarantor;
60
(2) all Guarantees by the Subsidiary Guarantor of Senior Indebtedness of
Georgia Gulf or Guarantor Senior Indebtedness of any other Subsidiary
Guarantor; and
(3) all obligations consisting of principal of, premium on, if any, accrued
and unpaid interest on, and fees and other amounts relating to, all other
Indebtedness of the Subsidiary Guarantor.
Guarantor Senior Indebtedness includes interest accruing after, or which would
accrue but for, the filing of any petition in bankruptcy or for reorganization
relating to the Subsidiary Guarantor regardless of whether post-filing interest
is allowed in the proceeding.
Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:
(1) any Indebtedness which, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that
the obligations in respect of the Indebtedness are not superior in right
of, or are subordinate to, payment of the notes and the Subsidiary
Guarantee;
(2) any obligations of the Subsidiary Guarantor to another Subsidiary or
Georgia Gulf;
(3) any liability for Federal, state, local, foreign or other taxes owed or
owing by the Subsidiary Guarantor;
(4) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including Guarantees of any accounts
receivable or other liabilities or instruments evidencing the
liabilities);
(5) any Indebtedness, Guarantee or obligation of the Subsidiary Guarantor
that is expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Subsidiary Guarantor,
including, without limitation, any Guarantor Senior Subordinated
Indebtedness and Guarantor Subordinated Obligations of the Guarantor; or
(6) any Capital Stock.
"GUARANTOR SENIOR SUBORDINATED INDEBTEDNESS" means, with respect to a
Subsidiary Guarantor, the obligations of the Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of the Subsidiary Guarantor
(whether outstanding on the Issue Date or Incurred after that date) that
specifically provides that the Indebtedness is to rank equally in right of
payment with the obligations of the Subsidiary Guarantor under the Subsidiary
Guarantee and is not expressly subordinated by its terms in right of payment to
any Indebtedness of the Subsidiary Guarantor which is not Guarantor Senior
Indebtedness of the Subsidiary Guarantor.
"GUARANTOR SUBORDINATED OBLIGATION" means, with respect to a Subsidiary
Guarantor, any Indebtedness of the Subsidiary Guarantor (whether outstanding on
the Issue Date or Incurred after that date) which is expressly subordinate in
right of payment to the obligations of the Subsidiary Guarantor under its
Subsidiary Guarantee pursuant to a written agreement.
"HEDGING OBLIGATIONS" of any Person means the obligations of the Person
pursuant to any Commodity Agreement, Interest Rate Agreement or Currency
Agreement.
"INCUR" means issue, create, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time the person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) will be deemed to be
incurred by the Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.
61
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium, if any, in respect of indebtedness of the
Person for borrowed money;
(2) the principal of and premium, if any, in respect of obligations of the
Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) the principal component of all obligations of the Person in respect of
letters of credit, bankers' acceptances or other similar instruments
(including reimbursement obligations with respect thereto except to the
extent the reimbursement obligation relates to a trade payable and the
obligation is satisfied within 30 days of Incurrence);
(4) the principal component of all obligations of the Person to pay the
deferred and unpaid purchase price of property (except trade payables),
which purchase price is due more than six months after the date of
placing the property in service or taking delivery and title thereto;
(5) Capitalized Lease Obligations and all Attributable Indebtedness of the
Person;
(6) the principal component or liquidation preference of all obligations of
the Person with respect to the redemption, repayment or other repurchase
of any Disqualified Stock or, with respect to any Subsidiary, any
Preferred Stock (but excluding, in each case, any accrued dividends);
(7) the principal component of all Indebtedness of other Persons secured by
a Lien on any asset of the Person, whether or not the Indebtedness is
assumed by the Person; PROVIDED, HOWEVER, that the amount of the
Indebtedness will be the lesser of (a) the fair market value of the asset
at the date of determination and (b) the amount of the Indebtedness of
the other Persons;
(8) the principal component of Indebtedness of other Persons to the extent
Guaranteed by the Person; and
(9) to the extent not otherwise included in this definition, net obligations
of the Person under Commodity Agreements, Currency Agreements and
Interest Rate Agreements (the amount of any obligations to be equal at
any time to the termination value of the agreement or arrangement giving
rise to the obligation that would be payable by the Person at that time);
PROVIDED that notwithstanding the preceding, the following items will not
constitute Indebtedness of a Person:
(1) Qualified Receivables Transactions entered into by the Person; and
(2) take-or-pay obligations contained in supply agreements entered into in
the ordinary course of business of the Person.
The amount of Indebtedness of any Person at any date will be the outstanding
balance at that date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at that date.
In addition, "Indebtedness" of any Person will include Indebtedness
described in the preceding paragraph that would not appear as a liability on the
balance sheet of the Person if:
(1) the Indebtedness is the obligation of a partnership or joint venture
that is not a Restricted Subsidiary (a "Joint Venture");
(2) the Person or a Restricted Subsidiary of the Person is a general partner
of the Joint Venture (a "General Partner"); and
62
(3) there is recourse, by contract or operation of law, with respect to the
payment of the Indebtedness to property or assets of the Person or a
Restricted Subsidiary of the Person; and then the Indebtedness will be
included in an amount not to exceed:
(a) the lesser of (i) the net assets of the General Partner and (ii) the
amount of the obligations to the extent that there is recourse, by
contract or operation of law, to the property or assets of the Person
or a Restricted Subsidiary of the Person; or
(b) if less than the amount determined pursuant to clause (a) immediately
above, the actual amount of the Indebtedness that is recourse to the
Person or a Restricted Subsidiary of the Person, if the Indebtedness
is evidenced by a writing and is for a determinable amount and the
related interest expense will be included in Consolidated Interest
Expense to the extent actually paid by Georgia Gulf or its Restricted
Subsidiaries.
"INTEREST RATE AGREEMENT" means with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which the Person is party or a beneficiary.
"INVESTMENT" means, with respect to any Person, all investments by the
Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, the Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED that
none of the following will be deemed to be an Investment:
(1) Hedging Obligations entered into in the ordinary course of business and
in compliance with the indenture;
(2) endorsements of negotiable instruments and documents in the ordinary
course of business; and
(3) an acquisition of assets, Capital Stock or other securities by Georgia
Gulf or a Subsidiary for consideration to the extent the consideration
consists of common equity securities of Georgia Gulf.
For purposes of "Specified Covenants--Limitation on Restricted Payments",
(1) "Investment" will include the portion (proportionate to Georgia Gulf's
equity interest in a Restricted Subsidiary to be designated as an
Unrestricted Subsidiary) of the fair market value of the net assets of
the Restricted Subsidiary of Georgia Gulf at the time that the Restricted
Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER,
that upon a redesignation of the Subsidiary as a Restricted Subsidiary,
Georgia Gulf will be deemed to continue to have a permanent "Investment"
in an Unrestricted Subsidiary in an amount (if positive) equal to
(a) Georgia Gulf's "Investment" in the Subsidiary at the time of the
redesignation less (b) the portion (proportionate to Georgia Gulf's
equity interest in the Subsidiary) of the fair market value of the net
assets (as conclusively determined by the Board of Directors of Georgia
Gulf in good faith) of the Subsidiary at the time that the Subsidiary is
so re-designated a Restricted Subsidiary; and
(2) any property transferred to or from an Unrestricted Subsidiary will be
valued at its fair market value at the time of the transfer, in each case
as determined in good faith by the Board of Directors of Georgia Gulf. If
Georgia Gulf or any Restricted Subsidiary of Georgia Gulf sells
63
or otherwise disposes of any Voting Stock of any Restricted Subsidiary of
Georgia Gulf such that, after giving effect to any such sale or
disposition, the entity is no longer a Subsidiary of Georgia Gulf,
Georgia Gulf will be deemed to have made an Investment on the date of any
such sale or disposition equal to the fair market value (as conclusively
determined by the Board of Directors of Georgia Gulf in good faith) of
the Capital Stock of the Subsidiary not sold or disposed of.
"ISSUE DATE" means November 12, 1999.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature of these interests).
"NET AVAILABLE CASH" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of the Asset Disposition or
received in any other noncash form) therefrom, in each case net of:
(1) all legal, accounting, investment banking, title and recording tax
expenses, commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be paid
or accrued as a liability under GAAP (after taking into account any
available tax credits or deductions and any tax sharing agreements), as a
consequence of the Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any assets
subject to the Asset Disposition, in accordance with the terms of any
Lien upon the assets, or which must by its terms, or in order to obtain a
necessary consent to the Asset Disposition, or by applicable law be
repaid out of the proceeds from the Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of the
Asset Disposition; and
(4) the deduction of appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the assets disposed of in the Asset Disposition and retained by Georgia
Gulf or any Restricted Subsidiary after the Asset Disposition.
"NET CASH PROCEEDS", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of the issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with the issuance or sale and net of taxes paid
or payable as a result of the issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).
"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither Georgia Gulf nor any Restricted Subsidiary
(a) provides any Guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would
constitute Indebtedness) or (b) is directly or indirectly liable (as a
guarantor or otherwise);
(2) no default with respect to which (including any rights that the holders
of the Indebtedness may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of Georgia Gulf or any
64
Restricted Subsidiary to declare a default under the other Indebtedness
or cause the payment of the Indebtedness to be accelerated or payable
before its stated maturity; and
(3) with respect to each Incurrence of Indebtedness having a principal
amount in excess of $100,000, the explicit terms of which provide there
is no recourse against any of the assets of Georgia Gulf or its
Restricted Subsidiaries.
"OFFICER" means the Chairman of the Board, the President, any Vice
President, the Treasurer, Corporate Controller or the Secretary of Georgia Gulf.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of Georgia
Gulf.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the trustee. The counsel may be an employee of or counsel to
Georgia Gulf or the trustee.
"PERMITTED INVESTMENT" means an Investment by Georgia Gulf or any Restricted
Subsidiary in:
(1) a Restricted Subsidiary (other than a Receivables Entity) or a Person
which will, upon the making of the Investment, become a Restricted
Subsidiary (other than a Receivables Entity); PROVIDED, HOWEVER, that the
primary business of the Restricted Subsidiary is a Related Business;
(2) another Person if as a result of the Investment the other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, Georgia Gulf or a Restricted Subsidiary
(other than a Receivables Entity); PROVIDED, HOWEVER, that the Person's
primary business is a Related Business;
(3) cash and Cash Equivalents;
(4) receivables owing to Georgia Gulf or any Restricted Subsidiary created
or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; PROVIDED,
HOWEVER, that the trade terms may include the concessionary trade terms
as Georgia Gulf or any such Restricted Subsidiary deems reasonable under
the circumstances;
(5) payroll, travel and similar advances to cover matters that are expected
at the time of the advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of business
consistent with past practices of Georgia Gulf or the Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to Georgia Gulf or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(8) Investments made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with
"Specified Covenants--Limitation on Sales of Assets and Subsidiary
Stock";
(9) Investments in existence on the Issue Date;
(10) Commodity Agreements, Currency Agreements, Interest Rate Agreements and
related Hedging Obligations, which transactions or obligations are
Incurred in compliance with "Specified Covenants--Limitation on
Indebtedness";
(11) Investments by Georgia Gulf or any of its Restricted Subsidiaries,
together with all other Investments pursuant to this clause (11), in an
aggregate amount at the time of the Investment not to exceed
$25.0 million outstanding at any one time;
65
(12) Guarantees issued in accordance with "Specified Covenants--Limitations
on Indebtedness";
(13) Investments by Georgia Gulf or a Restricted Subsidiary in a Receivables
Entity or any Investment by a Receivables Entity in any other Person, in
each case, in connection with a Qualified Receivables Transaction;
PROVIDED, HOWEVER, that any Investment in the Person is in the form of a
Purchase Money Note, or any equity interest or interests in accounts
receivable and related assets generated by Georgia Gulf or a Restricted
Subsidiary and transferred to any Person in connection with a Qualified
Receivables Transaction or the Person owning the accounts receivable; and
(14) Investments by Georgia Gulf or any of its Restricted Subsidiaries in a
Permitted Joint Venture, so long as (a) the Permitted Joint Venture does
not have any Indebtedness for borrowed money at any time on or after the
date of the Investment (other than Indebtedness owing to the equity
holders of the Permitted Joint Venture, Georgia Gulf or any Restricted
Subsidiary of Georgia Gulf), (b) the documentation governing the
Permitted Joint Venture does not contain a restriction on distributions
to Georgia Gulf or its Restricted Subsidiaries, (c) the Permitted Joint
Venture is engaged only in a Related Business and (d) after giving pro
forma effect to the Investment, Georgia Gulf would be permitted to Incur
$1.00 of additional Indebtedness under the first paragraph of "Specified
Covenants--Limitations on Indebtedness."
"PERMITTED JOINT VENTURE" means, with respect to any Person, (a) any
corporation, association, or other business entity (other than a partnership) of
which 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees of that Person is at the time of determination
owned or controlled, directly or indirectly, by the Person or one or more of the
Restricted Subsidiaries of that Person or a combination thereof and (b) any
partnership, joint venture, limited liability company or similar entity of which
(1) 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by the Person or one or more of the other
Restricted Subsidiaries of that Person or a combination thereof whether in the
form of membership, general, special or limited partnership interests or
otherwise and (2) either the Person or any Restricted Subsidiary of the Person
is a controlling general partner or no other Person controls the entity.
"PERMITTED LIENS" means, with respect to any Person:
(1) Liens securing Indebtedness and other obligations under the Senior
Credit Agreement and related Hedging Obligations and other Senior
Indebtedness and liens on assets of Restricted Subsidiaries securing
Guarantees of Indebtedness and other obligations under the Senior Credit
Agreement and other Guarantor Senior Indebtedness permitted to be
incurred under the indenture;
(2) pledges or deposits by the Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which the Person is a party, or
deposits to secure public or statutory obligations of the Person or
deposits or cash or United States government bonds to secure surety or
appeal bonds to which the Person is a party, or deposits as security for
contested taxes or import or customs duties or for the payment of rent,
in each case Incurred in the ordinary course of business;
(3) Liens imposed by law, including carriers', warehousemen's and mechanics'
Liens, in each case for sums not yet due or being contested in good faith
by appropriate proceedings if a reserve or other appropriate provisions,
if any, as will be required by GAAP will have been made in respect of
that Lien;
66
(4) Liens for taxes, assessments or other governmental charges not yet
subject to penalties for non-payment or which are being contested in good
faith by appropriate proceedings provided appropriate reserves required
pursuant to GAAP have been made in respect of that Lien;
(5) Liens in favor of issuers of surety or performance bonds or letters of
credit or bankers' acceptances issued pursuant to the request of and for
the account of the Person in the ordinary course of its business;
PROVIDED, HOWEVER, that the letters of credit do not constitute
Indebtedness;
(6) encumbrances, easements or reservations of, or rights of others for,
licenses, rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to
the use of real properties or liens incidental to the conduct of the
business of the Person or to the ownership of its properties which do not
in the aggregate materially adversely affect the value of said properties
or materially impair their use in the operation of the business of the
Person;
(7) Liens securing Hedging Obligations so long as the related Indebtedness
is, and is permitted to be under the indenture, secured by a Lien on the
same property securing the Hedging Obligation;
(8) leases and subleases of real property which do not materially interfere
with the ordinary conduct of the business of Georgia Gulf or any of its
Restricted Subsidiaries;
(9) judgment Liens not giving rise to an Event of Default so long as the
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of the judgment have not been
finally terminated or the period within which the proceedings may be
initiated has not expired;
(10) Liens for the purpose of securing the payment of all or a part of the
purchase price of, or Capitalized Lease Obligations with respect to,
assets or property acquired or constructed in the ordinary course of
business PROVIDED that:
(a) the aggregate principal amount of Indebtedness secured by the Liens
is otherwise permitted to be Incurred under the indenture and does
not exceed the cost of the assets or property so acquired or
constructed; and
(b) the Liens are created within 180 days of construction or acquisition
of the assets or property and do not encumber any other assets or
property of Georgia Gulf or any Restricted Subsidiary other than the
assets or property and assets affixed or appurtenant thereto;
(11) Liens arising solely by virtue of any statutory or common law
provisions relating to banker's Liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with
a depositary institution; PROVIDED that:
(a) the deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by Georgia Gulf in excess
of those set forth by regulations promulgated by the Federal Reserve
Board; and
(b) the deposit account is not intended by Georgia Gulf or any Restricted
Subsidiary to provide collateral to the depository institution;
(12) Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by Georgia Gulf and its
Restricted Subsidiaries in the ordinary course of business;
(13) Liens existing on the Issue Date;
67
(14) Liens on property or shares of stock of a Person at the time the Person
becomes a Restricted Subsidiary; PROVIDED, HOWEVER, that the Liens are
not created, incurred or assumed in connection with, or in contemplation
of, the other Person becoming a Restricted Subsidiary; PROVIDED FURTHER,
HOWEVER, that any the Lien may not extend to any other property owned by
Georgia Gulf or any Restricted Subsidiary;
(15) Liens on property at the time Georgia Gulf or a Restricted Subsidiary
acquired the property, including any acquisition by means of a merger or
consolidation with or into Georgia Gulf or any Restricted Subsidiary;
PROVIDED, HOWEVER, that the Liens are not created, incurred or assumed in
connection with, or in contemplation of, the acquisition; PROVIDED
FURTHER, HOWEVER, that the Liens may not extend to any other property
owned by Georgia Gulf or any Restricted Subsidiary;
(16) Liens securing Indebtedness or other obligations of a Restricted
Subsidiary owing to Georgia Gulf or a Wholly-Owned Subsidiary (other than
a Receivables Entity);
(17) Liens securing the notes and the Subsidiary Guarantees;
(18) Liens securing Refinancing Indebtedness incurred to refinance
Indebtedness that was previously so secured, PROVIDED that any the Lien
is limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions in
respect of that property or those assets) that secured (or, under the
written arrangements under which the original Lien arose, could secure)
the Indebtedness being refinanced or is in respect of property that is
the security for a Permitted Lien under the indenture; and
(19) Liens on assets transferred to a Receivables Entity or on assets of a
Receivables Entity, in either case incurred in connection with a
Qualified Receivables Transaction.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government or any agency or political subdivision of a
government or agency, or any other entity.
"PREFERRED STOCK", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of the Person, over shares
of Capital Stock of any other class of the Person.
"PURCHASE MONEY NOTE" means a promissory note of a Receivables Entity
evidencing a line of credit, which may be irrevocable, from Georgia Gulf or any
Restricted Subsidiary of Georgia Gulf in connection with a Qualified Receivables
Transaction to a Receivables Entity, which note is repayable from cash available
to the Receivables Entity, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owing to the investors and amounts owing
to the investors and amounts paid in connection with the purchase of newly
generated accounts receivable.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by Georgia Gulf or any of its Restricted
Subsidiaries pursuant to which Georgia Gulf or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Entity
(in the case of a transfer by Georgia Gulf or any of its Restricted
Subsidiaries) and (2) any other Person (in the case of a transfer by a
Receivables Entity), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of Georgia Gulf or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing the accounts receivable, all
contracts and all guarantees or other obligations in respect of the accounts
receivable, the proceeds of the receivables and other assets which are
customarily transferred, or in
68
respect of which security interests are customarily granted in connection with
asset securitizations involving accounts receivable.
"RECEIVABLES ENTITY" means a Wholly-Owned Subsidiary of Georgia Gulf (or
another Person in which Georgia Gulf or any Restricted Subsidiary of Georgia
Gulf makes an Investment and to which Georgia Gulf or any Restricted Subsidiary
of Georgia Gulf transfers accounts receivable and related assets) which engages
in no activities other than in connection with the financing of accounts
receivable and which is designated by the Board of Directors of Georgia Gulf (as
provided below) as a Receivables Entity:
(1) of which no portion of the Indebtedness or any other obligations
(contingent or otherwise):
(a) is guaranteed by Georgia Gulf or any Restricted Subsidiary of Georgia
Gulf (excluding guarantees of Obligations (other than the principal
of, and interest on, Indebtedness) pursuant to Standard
Securitization Undertakings);
(b) is recourse to or obligates Georgia Gulf or any Restricted Subsidiary
of Georgia Gulf in any way other than pursuant to Standard
Securitization Undertakings; or
(c) subjects any property or asset of Georgia Gulf or any Restricted
Subsidiary of Georgia Gulf, directly or indirectly, contingently or
otherwise, to the satisfaction of that Indebtedness, other than
pursuant to Standard Securitization Undertakings;
(2) with which neither Georgia Gulf nor any Restricted Subsidiary of Georgia
Gulf has any material contract, agreement, arrangement or understanding
(except in connection with a Purchase Money Note or Qualified Receivables
Transaction) other than on terms no less favorable to Georgia Gulf or the
Restricted Subsidiary than those that might be obtained at the time from
Persons that are not Affiliates of Georgia Gulf, other than fees payable
in the ordinary course of business in connection with servicing accounts
receivable; and
(3) to which neither Georgia Gulf nor any Restricted Subsidiary of Georgia
Gulf has any obligation to maintain or preserve the entity's financial
condition or cause the entity to achieve certain levels of operating
results.
The designation by the Board of Directors of Georgia Gulf will be evidenced
to the trustee by filing with the trustee a certified copy of the resolution
of the Board of Directors of Georgia Gulf giving effect to the designation
and an Officers' Certificate certifying that the designation complied with
the foregoing conditions.
"REFINANCING INDEBTEDNESS" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinance", "refinances", and
"refinanced" will have a correlative meaning) any Indebtedness existing on the
date of the indenture or Incurred in compliance with the indenture (including
Indebtedness of Georgia Gulf that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness, PROVIDED, HOWEVER, that:
(1) (a) if the Stated Maturity of the Indebtedness being refinanced is
earlier than or the same as the Stated Maturity of the notes, the
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being refinanced or (b) if the Stated
Maturity of the Indebtedness being refinanced is later than the Stated
Maturity of the notes, the Refinancing Indebtedness has a Stated Maturity
at least 91 days later than the Stated Maturity of the notes;
69
(2) the Refinancing Indebtedness has an Average Life at the time the
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced;
(3) the Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the sum of the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted
value) then outstanding of the Indebtedness being refinanced (plus,
without duplication, any additional Indebtedness incurred to pay interest
or premiums required by the instruments governing the existing
Indebtedness as in effect at the time of issuance of the Refinancing
Indebtedness and fees in connection therewith); and
(4) if the Indebtedness being refinanced is subordinated in right of payment
to the notes or the Subsidiary Guarantee, the Refinancing Indebtedness is
subordinated in right of payment to the notes or the Subsidiary Guarantee
on terms at least as favorable to the holders as those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"RELATED BUSINESS" means any business which is the same as or related,
ancillary or complementary to any of the businesses of Georgia Gulf and its
Restricted Subsidiaries on the Issue Date.
"RELATED BUSINESS ASSETS" means assets used or useful in a Related Business.
"REPRESENTATIVE" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness; PROVIDED that when used in connection with the
Senior Credit Agreement, the term "Representative" will refer to the
administrative agent under the Senior Credit Agreement.
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" means any Subsidiary of Georgia Gulf other than an
Unrestricted Subsidiary.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
owned or acquired in the future whereby Georgia Gulf or a Restricted Subsidiary
transfers the property to a Person and Georgia Gulf or a Restricted Subsidiary
leases it from the Person.
"SENIOR CREDIT AGREEMENT" means one or more debt facilities (including,
without limitation, the Credit Agreement, dated as of November 12, 1999, among
Georgia Gulf, the eligible subsidiaries referred to in that agreement, The Chase
Manhattan Bank, as Administrative Agent, Syndication Agent and Collateral Agent,
and the lenders parties thereto from time to time) or commercial paper
facilities to which Georgia Gulf is a party with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to the lenders or to special purpose
entities formed to borrow from the lenders against the receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time (and whether or not
with the original administrative agent and lenders or another administrative
agent or agents or other lenders and whether provided under the original credit
agreement or any other credit or other agreement or indenture).
"SENIOR INDEBTEDNESS" means, whether outstanding on the Issue Date or issued
after that date, created, Incurred or assumed, the Bank Indebtedness Incurred by
Georgia Gulf, Indebtedness relating to Georgia Gulf's $100 million aggregate
principal amount of 7 5/8% notes due 2005, and all other Indebtedness of Georgia
Gulf, including accrued and unpaid interest (including interest accruing after,
or which would accrue but for, the filing of any petition in bankruptcy or for
reorganization relating to Georgia Gulf at the rate specified in the
documentation with respect thereto whether or not a claim for
70
post-filing interest is allowed in the proceeding) and fees relating thereto;
PROVIDED, HOWEVER, that Senior Indebtedness will not include:
(1) any Indebtedness with respect to which, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that the obligations in respect of the Indebtedness are not
superior in right of, or are subordinate to, payment of the notes and the
Subsidiary Guarantee;
(2) any obligation of Georgia Gulf to any Subsidiary;
(3) any liability for Federal, state, foreign, local or other taxes owed or
owing by Georgia Gulf;
(4) any accounts payable or other liability to trade creditors arising in
the ordinary course of business (including Guarantees of the accounts
receivable or other liability or instruments evidencing the liabilities);
(5) any Indebtedness, Guarantee or obligation of Georgia Gulf that is
expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of Georgia Gulf, including, without
limitation, any Senior Subordinated Indebtedness and any Subordinated
Obligations; or
(6) any Capital Stock.
"SENIOR SUBORDINATED INDEBTEDNESS" means the notes and any other
Indebtedness of Georgia Gulf that specifically provides that the Indebtedness is
to rank equally with the notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of Georgia
Gulf which is not Senior Indebtedness.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of Georgia Gulf within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by Georgia Gulf or any Restricted
Subsidiary of Georgia Gulf which are reasonably customary in securitization of
accounts receivable transactions.
"STATED MATURITY" means, with respect to any security, the date specified in
the security as the fixed date on which the payment of principal of the security
is due and payable, including pursuant to any mandatory redemption provision,
but will not include any contingent obligations to repay, redeem or repurchase
the principal before the date originally scheduled for the payment of the
principal.
"SUBORDINATED OBLIGATION" means any Indebtedness of Georgia Gulf (whether
outstanding on the Issue Date or Incurred after that date) which is subordinate
or junior in right of payment to the notes pursuant to a written agreement.
"SUBSIDIARY GUARANTEE" means, individually, any Guarantee of payment of the
notes by a Subsidiary Guarantor pursuant to the terms of the indenture and any
supplemental indenture thereto, and, collectively, all the Guarantees. Each
Subsidiary Guarantee will be in the form prescribed by the indenture.
"SUBSIDIARY GUARANTOR" means each Subsidiary of Georgia Gulf in existence on
the Issue Date other than a Receivables Entity and any Restricted Subsidiary
created or acquired by Georgia Gulf after the Issue Date other than a Foreign
Subsidiary or a Receivables Entity which has not guaranteed Senior Indebtedness
or Guarantor Senior Indebtedness or Incurred Indebtedness under the Senior
Credit Agreement and any other Subsidiary that executes a Subsidiary Guarantee
in accordance with the terms of the indenture.
"SUBSIDIARY" of any Person means any corporation, association, partnership,
joint venture, limited liability company or other business entity of which more
than 50% of the total voting power of shares
71
of Capital Stock or other interests (including partnership and joint venture
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees of the Person is at the
time owned or controlled, directly or indirectly, by (1) the Person, (2) the
Person and one or more Subsidiaries of the Person or (3) one or more
Subsidiaries of the Person. Unless otherwise specified in this prospectus, each
reference to a Subsidiary will refer to a Subsidiary of Georgia Gulf.
"UNRESTRICTED SUBSIDIARY" means:
(1) any Subsidiary of Georgia Gulf that at the time of determination will
be designated an Unrestricted Subsidiary by the Board of Directors of
Georgia Gulf in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of Georgia Gulf may designate any Subsidiary of
Georgia Gulf (including any newly acquired or newly formed Subsidiary or a
Person becoming a Subsidiary through merger or consolidation or Investment in a
Subsidiary) to be an Unrestricted Subsidiary only if:
(1) the Subsidiary or any of its Subsidiaries does not own any Capital
Stock or Indebtedness of or have any Investment in, or own or hold
any Lien on any property of, any other Subsidiary of Georgia Gulf
which is not a Subsidiary of the Subsidiary to be so designated or
otherwise an Unrestricted Subsidiary;
(2) all the Indebtedness of the Subsidiary and its Subsidiaries will, at
the date of designation, and will at all times after that date,
consist of Non-Recourse Debt;
(3) the designation and the Investment of Georgia Gulf in the Subsidiary
complies with "Specified Covenants--Limitation on Restricted
Payments";
(4) the Subsidiary, either alone or in the aggregate with all other
Unrestricted Subsidiaries, does not operate, directly or indirectly,
all or substantially all of the business of Georgia Gulf and its
Subsidiaries;
(5) the Subsidiary is a Person with respect to which neither Georgia Gulf
nor any of its Restricted Subsidiaries has any direct or indirect
obligation:
(a) to subscribe for additional Capital Stock of the Person; or
(b) to maintain or preserve the Person's financial condition or to
cause the Person to achieve any specified levels of operating
results; and
(6) on the date the Subsidiary is designated an Unrestricted Subsidiary,
the Subsidiary is not a party to any agreement, contract, arrangement
or understanding with Georgia Gulf or any Restricted Subsidiary with
terms substantially less favorable to Georgia Gulf than those that
might have been obtained from Persons who are not Affiliates of
Georgia Gulf.
Any such designation by the Board of Directors of Georgia Gulf will be
evidenced to the trustee by filing with the trustee a resolution of the Board of
Directors of Georgia Gulf giving effect to the designation and an Officers'
Certificate certifying that the designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it will, after that date,
cease to be an Unrestricted Subsidiary for purposes of the indenture and any
Indebtedness of the Subsidiary will be deemed to be Incurred as of that date.
The Board of Directors of Georgia Gulf may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that immediately after giving
effect to the designation, no Default or Event of Default will have occurred and
be continuing or would occur as a consequence of the
72
designation and Georgia Gulf could incur at least $1.00 of additional
Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant on a pro forma basis taking into account the designation.
"VOTING STOCK" of a Person means all classes of Capital Stock of the Person
then outstanding and normally entitled to vote in the election of directors or
other governing body.
"WHOLLY-OWNED SUBSIDIARY" means a Restricted Subsidiary of Georgia Gulf, all
of the Capital Stock of which (other than directors' qualifying shares) is owned
by Georgia Gulf or another Wholly-Owned Subsidiary.
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PRINCIPAL UNITED STATES FEDERAL TAX CONSIDERATIONS TO NON-U.S. HOLDERS
The following is a summary of specified United States federal income, estate
and withholding tax matters. In the case of Non-U.S. Holders, as defined below,
this discussion summarizes the principal United States federal income tax
consequences of the exchange offer and of the purchase, ownership and
disposition of the notes. In the case of U.S. Holders, as defined below, this
discussion addresses only the United States federal income tax consequences of
the exchange offer.
As used in this prospectus, the term "U.S. Holder" means a beneficial owner
of notes that is, for United States tax purposes.
- a citizen or individual resident of the United States;
- a corporation or partnership (or other entity treated as a corporation or
partnership) created or organized in or under the laws of the United
States or any political subdivision of the United States;
- an estate, the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust over which a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States persons have the authority to control all substantial
decisions of the trust (including specified trusts in existence on
August 20, 1996 and treated as United States persons before that date that
timely elected to continue to be treated as a United States person).
The term "Non-U.S. Holder" means any holder that is not a U.S. Holder.
This summary is based on current law, is subject to change (perhaps
retroactively), is for general purposes only and should not be considered tax
advice. This summary deals only with notes held as capital assets within the
meaning of Section 1221 of the Code. This summary does not represent a detailed
description of the federal tax consequences to you in light of your particular
circumstances. In addition, it does not represent a detailed description of the
U.S. federal tax consequences applicable to you if you are subject to special
treatment under the U.S. federal tax laws, including if you are a financial
institution, tax-exempt organization, insurance company, dealer in securities or
foreign currencies, "controlled foreign corporation," "passive foreign
investment company" or "foreign personal holding company". We cannot assure you
that a change in law will not alter significantly the tax considerations that we
describe in this summary. You should consult your own tax advisor concerning the
particular United States federal tax consequences to you of the ownership of
notes, as well as the consequences to you arising under the laws of any other
taxing jurisdiction.
EXCHANGE OFFER
The exchange of the outstanding notes for exchange notes should not be
treated as a taxable transaction to U.S. Holders or to Non-U.S. Holders for
United States federal income tax purposes. Rather, the exchange notes received
should be treated as a continuation of the outstanding notes surrendered in
exchange. As a result, there should be no material United States federal income
tax consequences to U.S. Holders or to Non-U.S. Holders exchanging outstanding
notes for exchange notes.
OWNERSHIP AND DISPOSITION OF NOTES BY NON-U.S. HOLDERS
U.S. FEDERAL WITHHOLDING TAX
Unless an exception applies as described below, payments of premium and
interest on the notes to a Non-U.S. Holder will be subject to U.S. federal
withholding tax at a flat rate of 30% of the gross
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amount of the payment. However, the 30% U.S. federal withholding tax will not
apply to any payment of premium or interest on the notes if:
- the holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of our voting stock within the
meaning of the Code and the United States Treasury regulations;
- the holder is not a controlled foreign corporation that is related to us,
actually or constructively, through stock ownership;
- the holder is not a bank whose receipt of interest on the notes is
described in Section 881(c)(3)(A) of the Code; and
- (a) the holder provides its name and address on a properly executed IRS
Form W-8, IRS Form W-8BEN or successor form and certifies, under penalty
of perjury, that it is not a U.S. person or (b) a financial institution
holding the notes on the holder's behalf certifies, under penalty of
perjury, that it has received the IRS Form W-8, IRS Form W-8BEN or
successor form from the beneficial owner and provides us with a copy.
If the holder cannot satisfy the requirements described above, payments of
premium and interest made on the notes will be subject to the United States
federal withholding tax, unless the holder provides us with a properly executed
(1) IRS Form 1001, IRS Form W-8BEN or successor form claiming an exemption from
or reduction in withholding under the benefit of a tax treaty or (2) IRS
Form 4224, IRS Form W-8ECI or successor form stating that interest paid on the
notes is not subject to withholding tax because it is effectively connected with
the holder's conduct of a trade or business in the United States.
The 30% United States federal withholding tax will not apply to the payment
of principal or to any gain a Non-U.S. Holder realizes on the sale, exchange,
retirement or other disposition of the notes.
UNITED STATES FEDERAL ESTATE TAX
The estate of an individual who is not, for United States federal estate tax
purposes, a citizen or resident of the United States generally will not be
subject to United States federal estate tax on notes beneficially owned by the
individual at the time of death, provided that (1) the individual does not own
10% or more of the total combined voting power of all classes of our voting
stock, within the meaning of the Code and the United States Treasury
regulations, and (2) interest on the notes would not have been, if received at
the time of the individual's death, effectively connected with the conduct by
that individual of a trade or business in the United States.
UNITED STATES FEDERAL INCOME TAX
If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest on the notes is effectively connected with the conduct of that
trade or business, the Non-U.S. Holder will be subject to United States federal
income tax on that interest on a net income basis in the same manner as if it
were a United States person as defined under the Code, even though it will be
exempt from the withholding tax with respect to that interest. In addition, if
that Non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30%, or lower applicable treaty rate, of its earnings and
profits for the taxable year, subject to adjustments. For this purpose, interest
on the notes will be included in earnings and profits.
Any gain realized on the disposition of the notes generally will not be
subject to United States federal income tax unless (1) that gain or income is
effectively connected with that holder's conduct of a trade or business in the
United States or (2) the holder is an individual who is present in the United
75
States for 183 days or more in the taxable year of that disposition, and
specified other conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to some payments
of principal or interest paid on the notes and to the proceeds of sale of the
notes made to U.S. Holders other than some exempt recipients (such as
corporations). A 31% backup withholding tax will apply to payments of principal
or interest paid on the notes if the U.S. Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt status or
fails to report in full dividend and interest income.
In general, a Non-U.S. Holder will not be subject to information reporting
or backup withholding with respect to payments that we make to the holder,
provided that we do not have actual knowledge that the holder is a United States
person and the holder was provided the information described above under
"--United States Federal Withholding Tax."
In addition, a Non-U.S. Holder will not be subject to information reporting
or backup withholding with respect to the proceeds of the sale of notes within
the United States or conducted through specified United States-related financial
intermediaries, if the payor receives the statement described above and does not
have actual knowledge that the holder is a United States person, as defined
under the Code, or the holder otherwise establishes an exemption.
United States Treasury regulations were recently issued that generally
modify the information reporting and backup withholding rules applicable to
specified payments made after December 31, 2000. In general, the new United
States Treasury regulations would not significantly alter the present rules
discussed above, except in some special situations.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against the holder's United States federal income tax
liability provided the required information is furnished to the Internal Revenue
Service.
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BOOK-ENTRY; DELIVERY AND FORM
BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES
The exchange notes will initially be issued in the form of one global
certificate. The global exchange note will be deposited on the date of
consummation of the exchange offer with or on behalf of The Depository Trust
Company ("DTC") and registered in the name of DTC or its participants.
The descriptions of the operations and procedures of DTC set forth below are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of the settlement system of DTC and are subject to
change by DTC from time to time. We take no responsibility for these operations
or procedures, and investors are urged to contact DTC or its participants
directly to discuss these matters.
DTC has advised us that it is:
- a limited purpose trust company organized under the laws of the State of
New York;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended; and
- a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934.
DTC was created to hold securities for its participants and facilitates the
clearance and settlement of securities transactions between participants through
electronic book-entry changes to the accounts of its participants, which
eliminates the need for physical transfer and delivery of certificates. DTC's
participants include securities brokers and dealers; banks and trust companies;
clearing corporations and specified other organizations. Indirect access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies; these indirect participants clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Investors who are not participants may beneficially own securities held by or on
behalf of DTC only through participants or indirect participants.
So long as DTC or its nominee is the registered owner of a global note, DTC
or the nominee, as the case may be, will be considered the sole owner or holder
of the notes represented by the global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
note:
- will not be entitled to have notes represented by the global note
registered in their names;
- will not receive or be entitled to receive physical delivery of
certificated notes; and
- will not be considered the owners or holders of the notes under the
indenture for any purpose, including with respect to the giving of any
direction, instruction or approval to the trustee under the indenture.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if the holder is not a participant or an
indirect participant, on the procedures of the participant through which the
holder owns its interest, to exercise any rights of a holder of notes under the
indenture or the global note. We understand that under existing industry
practice, if we request any action of holders of notes or a holder that is an
owner of a beneficial interest in a global note desires to take any action that
DTC, as the holder of the global note, is entitled to take, then DTC would
authorize the participants to take the action and the participants would
authorize holders owning through participants to take the action or would
otherwise act upon the instruction of the holders. Neither we nor the trustee
will have any responsibility or liability for any aspect of the records relating
77
to or payments made on account of notes by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to the notes.
Payments with respect to the principal of, any premium, any liquidated
damages, and interest on any notes represented by a global note registered in
the name of DTC or its nominee on the applicable record date will be payable by
the trustee to or at the direction of DTC or its nominee, in its capacity as the
registered holder of the global note representing the notes under the indenture.
Under the terms of the indenture, we and the trustee may treat the persons in
whose names the notes, including the global notes, are registered as the owners
of the notes for the purpose of receiving payment on the notes and for any and
all other purposes whatsoever. Accordingly, neither we nor the trustee has or
will have any responsibility or liability for the payment of amounts to owners
of beneficial interests in a global note, including principal, any premium, any
liquidated damages, and interest. Payments by the participants and the indirect
participants to the owners of beneficial interests in a global note will be
governed by standing instructions and customary industry practice and will be
the responsibility of the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
Although DTC has agreed to the above procedures to facilitate transfers of
interests in the global notes among its participants, it is under no obligation
to perform or to continue to perform the procedures, and the procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC or its respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
CERTIFICATED NOTES
If:
- we notify the trustee in writing that DTC is no longer willing or able to
act as a depositary or DTC ceases to be registered as a clearing agency
under the Securities Exchange Act of 1934 and a successor depositary is
not appointed within 90 days of the notice or cessation;
- we, at our option, notify the trustee in writing that we elect to cause
the issuance of notes in definitive form under the indenture; or
- upon the occurrence of specified other events as provided in the
indenture;
then, certificated notes will be issued to each person that DTC identifies as
the beneficial owner of the notes represented by the global notes upon surrender
by DTC of the global notes. Upon the issuance of certificated notes, the trustee
is required to register certificated notes in the name of that person or
persons, or their nominee, and cause the certified notes to be delivered to
those persons.
Neither we nor the trustee will be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related notes and each of those persons may conclusively rely on, and will be
protected in relying on, instructions from DTC for all purposes, including with
respect to the registration and delivery, and the respective principal amounts,
of the notes to be issued.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of those exchange notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for outstanding notes where
those outstanding notes were acquired as a result of market-making activities or
other trading activities.
78
We have agreed that, for a period of 90 days after the expiration date of the
exchange offer, subject to limited exceptions, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any of these resales.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange notes or a combination of these methods of resale, at
market prices prevailing at the time of resale, at prices related to those
prevailing market prices, or at negotiated prices. Any of these resales may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from these broker-
dealers or the purchasers of any exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account in the exchange
offer and any broker or dealer that participates in a distribution of those
exchange notes may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, and any profit on any of these resales of exchange notes
and any commission or concessions received by any of these persons may be deemed
to be underwriting compensation under the Securities Act of 1933. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act of 1933.
For a period of 90 days after the expiration of the exchange offer, subject
to limited exceptions, we will promptly send additional copies of this
prospectus and any amendment or supplement to this prospectus to any
broker-dealer that requests them in the letter of transmittal. We have agreed to
pay all expenses incident to the exchange offer, including the specified
expenses of one counsel for the holders of the exchange notes, other than
commissions or concessions of any broker-dealers. We will indemnify the holders
of the notes, including any broker-dealers, against specified liabilities,
including liabilities under the Securities Act of 1933.
LEGAL MATTERS
Jones, Day, Reavis & Pogue, Atlanta, Georgia will pass upon the validity of
the exchange notes for Georgia Gulf.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements and schedules incorporated by reference into this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
79
WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy this information at the
Commission's Public Reference Room 1024, located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
public reference room by calling the Commission at 1-800-SEC-0330. Our filings
are also available on the Commission's Web site on the Internet at
http://www.sec.gov.
Statements in this prospectus concerning the contents of any contract,
agreement or other document are not necessarily complete. If Georgia Gulf filed
as an exhibit to any of its public filings with the Commission any contract,
agreement or other document referred to in this prospectus, you should read the
document itself for a more complete understanding of the document or matter
involved.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" information into this
prospectus. This means that we are disclosing information to you by referring
you to a document we filed with the Commission. We will make those documents
available to you without charge upon your oral or written request. Requests for
those documents should be directed to Georgia Gulf Corporation, 400 Perimeter
Center Terrace, Suite 595, Atlanta, Georgia 30346, Attention: Investor
Relations, telephone: (770) 395-4587.
This prospectus incorporates by reference the following documents:
- Annual Report on Form 10-K for the year ended December 31, 1999, filed
with the Commission on March 29, 2000; and
- Proxy Statement, dated and filed in definitive form on March 30, 2000 with
the Commission with respect to the information required by Items 401
(management), 402 (executive compensation), 403 (securities ownership) and
404 (certain relationships and related transactions) of Regulation S-K
promulgated under the Securities Act of 1933 and the Securities Exchange
Act of 1934.
We are also incorporating by reference additional documents we may file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus and before the exchange of the
outstanding notes for the exchange notes. This additional information is a part
of this prospectus from the date of filing of those documents.
Any statements made in this prospectus or in a document incorporated or
deemed to be incorporated by reference into this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference in
this prospectus modifies or supersedes that statement. Any statement modified or
superseded in this manner will not be deemed, except as modified or superseded,
to constitute a part of this prospectus.
The information relating to us contained in this prospectus should be read
together with the information in the documents incorporated by reference.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Set forth below is a description of the Certificate of Incorporation of
Georgia Gulf Corporation (the "Company"), the Bylaws of the Company, and the
Delaware General Corporation Law. This description is intended as a summary only
and is qualified in its entirety by reference to such Certificate of
Incorporation, Bylaws, and the Delaware General Corporation Law.
Article XIII of the Company's Certificate of Incorporation provides that to
the fullest extent permitted by the Delaware General Corporation Law, a director
of the Company will not be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Corporation Law, or (iv) for any transactions from which the
director derived any improper personal benefit.
The Company's Bylaws (Article XIII) provide that the Company will indemnify
any person who was or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a director or officer of the
Company or is or was serving at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, against all expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
With respect to indemnification of officers and directors, Section 145 of
the Delaware General Corporation Law provides that a corporation will have power
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Under this provision of
the Delaware General Corporation Law, the termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, will not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Furthermore, the Delaware General Corporation Law provides that a
corporation will have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
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attorney's fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification will be made in respect to
any claim, issue or matter as to which such person will have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought will determine upon application
that, despite the adjudication of liability but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such court will deem proper.
Section 145(g) of the Delaware General Corporation Law provides that a
corporation will have power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of Section 145.
The Company maintains several directors and officers liability policies
which, subject to the terms and exclusions of the policies, cover any claim or
claims made during the period the policies are in force, against all persons who
were, now are or will be duly elected directors or officers of the Company for
any actual or alleged error or misstatement or misleading statement or act or
omission or neglect or breach of duty by such persons insured while acting in
their individual or collective capacities, on any matter, nor excluded by the
terms and conditions of the policies, claimed against them solely by reason of
their being directors or officers of the Company. The limit of liability under
the policies is $60 million per policy year.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- --------------------- ----------------------
4.1 -- Indenture, dated as of November 15, 1995, between Georgia
Gulf and LaSalle National Bank, as trustee (including form
of notes) (filed September 28, 1995 as Exhibit 4 to Georgia
Gulf's Form S-3 (File No. 33-63051) and incorporated herein
by reference).
4.2 -- Amended and Restated Rights Agreement effective as of August
31, 1990 (filed May 11, 1990 as Exhibit 2 to Georgia Gulf's
Registration Statement on Form 8-A and incorporated herein
by reference).
4.3 -- Indenture, dated as of November 12, 1999, between Georgia
Gulf and SunTrust Bank, Atlanta, as trustee (including form
of notes) (filed on November 19, 1999 as Exhibit 4.1 to
Georgia Gulf's Current Report on Form 8-K and incorporated
herein by reference).
**4.4 -- Registration Rights Agreement, dated as of November 12,
1999, between Georgia Gulf, the Subsidiary Guarantors named
therein, and Chase Securities Inc.
*5 -- Opinion of Jones, Day, Reavis & Pogue regarding validity.
*8 -- Opinion of Jones, Day, Reavis & Pogue regarding certain tax
matters.
**12 -- Statement regarding computation of earnings to fixed
charges.
23.1 -- Consent of Jones, Day, Reavis & Pogue (included in
Exhibits 5 and 8).
*23.2 -- Consent of Arthur Andersen LLP.
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EXHIBIT
NUMBERS DESCRIPTION OF EXHIBIT
- --------------------- ----------------------
**24.1 -- Powers of Attorney for Georgia Gulf Corporation.
**24.2 -- Powers of Attorney for Georgia Gulf Lake Charles, LLC.
**24.3 -- Powers of Attorney for Georgia Gulf Chemicals & Vinyls, LLC.
**24.4 -- Powers of Attorney for North America Plastics, LLC.
**24.5 -- Powers of Attorney for GG Terminal Management Corporation.
**24.6 -- Powers of Attorney for Great River Oil & Gas Corporation
**25 -- Statement of eligibility under the Trust Indenture Act of
1939 on Form T-1.
*99.1 -- Letter of Transmittal.
*99.2 -- Notice of Guaranteed Delivery.
- ------------------------
* filed herewith
** previously filed
(b) Financial Statements Schedules.
None.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment of the prospectus) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by
the registrant pursuant to Sections 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed to
be a new registration statement relating to the
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securities offered in the post-effective amendment, and the offering of
those securities at that time will be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement will be deemed to be a new registration statement
relating to the securities offered in that registration statement, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed after the effective date of the registration statement through the date of
responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Georgia Gulf
Corporation has duly caused this amendment to its registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Atlanta, State of Georgia, on the 21st day of April 2000.
GEORGIA GULF CORPORATION
By: /s/ JOEL I. BEERMAN
-----------------------------------------
Joel I. Beerman
VICE PRESIDENT AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below for Georgia Gulf Corporation
by the following persons in the capacities indicated on the 21st day of
April 2000:
NAME TITLE
---- -----
*
------------------------------------------- President, Chief Executive Officer and
(Edward A. Schmitt) Director (Principal Executive Officer)
* Vice President--Finance, Chief Financial
------------------------------------------- Officer and Treasurer (Principal Financial
(Richard B. Marchese) and Accounting Officer)
*
------------------------------------------- Chairman of the Board and Director
(James R. Kuse)
*
------------------------------------------- Director
(John E. Akitt)
*
------------------------------------------- Director
(John D. Bryan)
*
------------------------------------------- Director
(Dennis M. Chorba)
*
------------------------------------------- Director
(Patrick J. Fleming)
*
------------------------------------------- Director
Charles T. Harris)
II-5
NAME TITLE
---- -----
*
------------------------------------------- Director
(Jerry R. Satrum)
*
------------------------------------------- Director
(Edward S. Smith)
/s/ *JOEL I. BEERMAN
------------------------------------------- Attorney-in-fact
(Joel I. Beerman)
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Georgia Gulf
Lake Charles, LLC has duly caused this amendment to its registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Atlanta, State of Georgia, on the 21st day of April 2000.
GEORGIA GULF LAKE CHARLES, LLC
By: /s/ JOEL I. BEERMAN
-----------------------------------------
Joel I. Beerman
VICE PRESIDENT AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below for Georgia Gulf Lake
Charles, LLC by the following persons in the capacities indicated on the 21st
day of April 2000:
NAME TITLE
---- -----
*
------------------------------------------- President, Chief Executive Officer and
(Edward A. Schmitt) Director (Principal Executive Officer)
* Vice President, Chief Financial Officer and
------------------------------------------- Director (Principal Financial and Accounting
(Richard B. Marchese) Officer)
/s/ JOEL I. BEERMAN
------------------------------------------- Vice President, General Counsel and Director
(Joel I. Beerman)
/s/ *JOEL I. BEERMAN
------------------------------------------- Attorney-in-fact
(Joel I. Beerman)
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Georgia Gulf
Chemicals & Vinyls, LLC has duly caused this amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on the 21st day of
April 2000.
GEORGIA GULF CHEMICALS & VINYLS, LLC
By: /s/ JOEL I. BEERMAN
-----------------------------------------
Joel I. Beerman
VICE PRESIDENT AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below for Georgia Gulf
Chemicals & Vinyls, LLC by the following persons in the capacities indicated on
the 21st day of April 2000:
NAME TITLE
---- -----
*
------------------------------------------- President, Chief Executive Officer and
(Edward A. Schmitt) Director (Principal Executive Officer)
* Vice President, Chief Financial Officer and
------------------------------------------- Director (Principal Financial and Accounting
(Richard B. Marchese) Officer)
/s/ JOEL I. BEERMAN
------------------------------------------- Vice President, General Counsel and Director
(Joel I. Beerman)
/s/ *JOEL I. BEERMAN
------------------------------------------- Attorney-in-fact
(Joel I. Beerman)
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, North America
Plastics, LLC has duly caused this amendment to its registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Atlanta, State of Georgia, on the 21st day of April 2000.
NORTH AMERICA PLASTICS, LLC
By: /s/ JOEL I. BEERMAN
-----------------------------------------
Joel I. Beerman
VICE PRESIDENT AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the registration statement has been signed below for North America Plastics, LLC
by the following persons in the capacities indicated on the 21st day of
April 2000:
NAME TITLE
---- -----
*
------------------------------------------- President, Chief Executive Officer and
(Edward A. Schmitt) Director (Principal Executive Officer)
* Vice President, Chief Financial Officer and
------------------------------------------- Director (Principal Financial and Accounting
(Richard B. Marchese) Officer)
/s/ JOEL I. BEERMAN
------------------------------------------- Vice President, General Counsel and Director
(Joel I. Beerman)
*
------------------------------------------- Vice President and Director
(Mark J. Seal)
/s/ *JOEL I. BEERMAN
------------------------------------------- Attorney-in-fact
(Joel I. Beerman)
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, GG Terminal
Management Corporation has duly caused this amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on the 21st day of
April 2000.
GG TERMINAL MANAGEMENT CORPORATION
By: /s/ JOEL I. BEERMAN
-----------------------------------------
Joel I. Beerman
VICE PRESIDENT AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below for GG Terminal Management
Corporation by the following persons in the capacities indicated on the 21st day
of April 2000:
NAME TITLE
---- -----
*
------------------------------------------- President and Director (Principal Executive
(Thomas G. Swanson) Officer)
*
------------------------------------------- Vice President, Treasurer and and Director
(Richard B. Marchese) (Principal Financial and Accounting Officer)
/s/ JOEL I. BEERMAN
------------------------------------------- Vice President, Secretary and Director
(Joel I. Beerman)
*
------------------------------------------- Assistant Secretary and Director
(Robert E. Harrison)
/s/ *JOEL I. BEERMAN
------------------------------------------- Attorney-in-fact
(Joel I. Beerman)
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Great River
Oil & Gas Corporation has duly caused this amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on the 21st day of
April 2000.
GREAT RIVER OIL & GAS CORPORATION
By: /s/ JOEL I. BEERMAN
-----------------------------------------
Joel I. Beerman
VICE PRESIDENT AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below for Great River Oil & Gas
Corporation by the following persons in the capacities indicated on the 21st day
of April 2000:
NAME TITLE
---- -----
*
------------------------------------------- President, Chief Executive Officer and
(Edward A. Schmitt) Director (Principal Executive Officer)
*
------------------------------------------- Vice President, Treasurer and Director
(Richard B. Marchese) (Principal Financial and Accounting Officer)
/s/ JOEL I. BEERMAN
------------------------------------------- Vice President, General Counsel and Director
(Joel I. Beerman)
/s/ *JOEL I. BEERMAN
------------------------------------------- Attorney-in-fact
(Joel I. Beerman)
II-11
EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- --------------------- -----------------------
*5 -- Opinion of Jones, Day, Reavis & Pogue regarding validity.
*8 -- Opinion of Jones, Day, Reavis & Pogue regarding certain tax
matters.
23.1 -- Consent of Jones, Day, Reavis & Pogue (included in Exhibits
5 and 8).
*23.2 -- Consent of Arthur Andersen LLP.
*99.1 -- Letter of Transmittal.
*99.2 -- Notice of Guaranteed Delivery.
- ------------------------
* filed herewith