As Filed with the Securities and Exchange Commission on April 26, 1996
Registration No. 33-62665
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COLLINS & AIKMAN PRODUCTS CO.
(Exact name of registrant as specified in its charter)
Delaware 13-0588710
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
and its Guarantor Parent
Collins & Aikman Corporation
(Exact name of registrant as specified in its charter)
Delaware 13-3489233
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
701 McCullough Drive
Charlotte, North Carolina 28262
(704) 547-8500
Elizabeth R. Philipp, Esq.
Executive Vice President, General Counsel and Secretary
Collins & Aikman Corporation
210 Madison Avenue, 6th Fl.
New York, New York 10016
(212) 578-1336
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Robert Rosenman, Esq. Robert A. Profusek, Esq.
Cravath, Swaine & Moore Jones, Day, Reavis & Pogue
825 Eighth Avenue 599 Lexington Avenue
New York, New York 10019 New York, New York 10022
(212) 474-1300 (212) 326-3800
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) 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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
Title of Each Class of Aggregate Amount to be Proposed Maximum Proposed Maximum Aggregate Amount of Registration Fee
Securities to be Registered Aggregate Offering Offering Price
Registered Price Per Unit
Debt Securities $400,000,000 N/A $400,000,000 (2) $137,931 (3)(5)
Guarantee of the Debt (1) N/A N/A N/A (4)
Securities
(1) The Debt Securities being registered will be irrevocably, fully and
unconditionally guaranteed on an unsecured senior basis or an unsecured
subordinated basis, as applicable, by Collins & Aikman Corporation.
Collins & Aikman Products Co. is a wholly owned subsidiary of Collins &
Aikman Corporation.
(2) In no event will the aggregate initial offering price of the Debt Securities
issued under this Registration Statement exceed $400,000,000, or the
equivalent thereof in one or more foreign or composite currencies.
(3) Calculated pursuant to Rule 457(o) under the Securities Act of 1933.
(4) No additional registration fee is payable in respect of the registration of
the Guarantees.
(5) Registration fee previously paid.
(Redherring appears down left side of page. The language appears below.)
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such state.
Subject to Completion, Dated April 26, 1996
PROSPECTUS
COLLINS & AIKMAN PRODUCTS CO.
Debt Securities
Unconditionally Guaranteed by Collins & Aikman Corporation
Collins & Aikman Products Co. (the "Company") may offer from time to
time, together or separately, unsecured notes, debentures or other evidences of
indebtedness ("Debt Securities"), which may be either senior (the "Senior
Securities") or subordinated (the "Subordinated Securities") in priority of
payment, having an aggregate initial public offering price not to exceed
$400,000,000 (including the U.S. dollar equivalent of securities for which the
initial public offering price is denominated in one or more foreign currencies
or composite currencies). The Debt Securities may be offered in one or more
series, in amounts, at prices and on terms determined at the time of sale and
set forth in a supplement to this Prospectus (a "Prospectus Supplement").
The Senior Securities will rank equally with all other unsubordinated
and unsecured indebtedness of the Company. The Subordinated Securities will be
unsecured and subordinated as described under "Subordinated Securities" and the
Senior Securities and the Subordinated Securities will be effectively
subordinated to all obligations of the subsidiaries of the Company.
The Debt Securities will be irrevocably, fully and unconditionally
guaranteed (the "Guarantee") on an unsecured senior basis, in the event Senior
Securities are issued, or on an unsecured subordinated basis, in the event
Subordinated Securities are issued, by Collins & Aikman Corporation ("C&A Co.").
The Company is a wholly owned subsidiary of C&A Co. None of the subsidiaries of
the Company will guarantee the Debt Securities. C&A Co. is a holding company
that derives all its operating income and cash flow from its subsidiary, the
Company, the common stock of which constitutes C&A Co.'s only material asset.
The specific terms of the Debt Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement, including, where applicable, whether they are Senior Securities or
Subordinated Securities, the specific designation, aggregate principal amount,
currency, denomination, maturity (which may be fixed or extendible), priority,
interest rate (or manner of calculation thereof), if any, time of payment of
interest, if any, terms for any redemption, terms for any repayment at the
option of the holder, terms for any sinking fund payments, the initial public
offering price, special provisions relating to Debt Securities in bearer form,
provisions regarding original issue discount securities, additional covenants
including event risk provisions, and any other specific terms of such Debt
Securities.
The Prospectus Supplement will also contain information, where
applicable and material, about certain United States Federal income tax
considerations relating to, and any listing on a securities exchange of, the
Debt Securities covered by the Prospectus Supplement.
For a discussion of risks associated with the Debt Securities, see
"Risk Factors" at page 5.
The Debt Securities may be offered directly, through underwriters,
dealers or agents as designated from time to time, or through a combination of
such methods. See "Plan of Distribution". If any agents of the Company or any
dealers or underwriters are involved in the offering of the Debt Securities in
respect of which this Prospectus is being delivered, the names of such agents,
dealers or underwriters and any applicable commissions or
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discounts will be set forth in the Prospectus Supplement. The net proceeds to
the Company from such sale will also be set forth in the Prospectus Supplement.
The Company may also issue contracts under which the counterparty may be
required to purchase Debt Securities. Such contracts would be issued with the
Debt Securities in amounts, at prices and on terms to be set forth in the
applicable Prospectus Supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
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AVAILABLE INFORMATION
C&A Co. is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by C&A Co. with the Commission pursuant to the informational requirements
of the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of
such material may be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information may also be inspected at the offices of the New
York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York, on
which C&A Co.'s Common Stock, par value $.01 per share (the "Common Stock"), is
listed. The Company is not currently subject to the periodic reporting and
other informational requirements of the Exchange Act because management of the
Company believes that the reports and other information, including the summary
financial statements of the Company to be included in the financial statements
of C&A Co. filed therewith, filed by C&A Co. will provide investors with all
material information with regard to the Company. If the Company is not required
to deliver annual reports of C&A Co. to holders of Debt Securities pursuant to
the Securities Exchange Act of 1934, the Company will deliver quarterly and
annual reports of C&A Co. to the holders of Debt Securities at the same time
that C&A Co. delivers such reports to its security holders.
This Prospectus constitutes part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company and C&A Co. with the
Commission under the Securities Act of 1933 (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related exhibits for
further information with respect to the Company and the Debt Securities.
Statements contained herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INFORMATION INCORPORATED BY REFERENCE
The Company incorporates herein by reference C&A Co.'s Annual Report on
Form 10-K for the fiscal year ended January 27, 1996 filed by C&A Co. with
the Commission (File No. 1-10218) pursuant to the Exchange Act and C&A Co.'s
Report on Form 8-K filed by C&A Co. with the Commission (File No. 1-10218)
on April 10, 1996 pursuant to the Exchange Act.
All documents and reports subsequently filed by C&A Co. pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
hereunder shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents.
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Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus or any Prospectus Supplement to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus and the accompanying Prospectus
Supplement are delivered, upon the written or oral request of such person, a
copy of any or all the documents incorporated herein by reference other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference in such documents, and any other documents specifically identified
herein as incorporated by reference into the Registration Statement to which
this Prospectus relates or into such other documents. Requests should be
directed to: Collins & Aikman Products Co., 701 McCullough Drive, P.O. Box
32665, Charlotte, NC 28232-2665 (telephone: (704) 548-2370), Attention: Director
- - Investor Relations.
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered in evaluating an
investment in the Debt Securities.
Cyclicality of Industries
The Company's business segments are highly cyclical. Downturns in North
American automotive production, consumer spending, commercial and residential
construction and renovation and by consumer confidence could have a
material adverse effect on the Company.
Dependence on Significant Automotive Customers and Car Models
The Company's sales are dependent on certain significant customers.
Sales to General Motors Corporation, Ford Motor Company and Chrysler Corporation
accounted for approximately 23.3%, 11.6% and 12.7%, respectively, of the
Company's 1995 net sales. In addition, certain of the Company's customers are
unionized and have in the past experienced labor disruptions. The loss of one or
more significant customers or a prolonged disruption in their production could
have a material adverse effect on the Company.
The Company principally competes for new business in its Automotive
Products segment at the design stage of new models and upon the redesign of
existing models. There can be no assurance that the Company will continue to be
able to obtain such new business or to improve or maintain its gross margins on
such new business. In addition, the Company may not be able to pass on raw
material price increases to its customers due to pricing pressure from its
customers. A decrease in demand for the models that generate the most sales for
the Company, the failure of the Company to obtain purchase orders for new or
redesigned models and pricing pressure from the major automotive companies could
have a material adverse effect on the Company.
Vulnerability to Changes in Consumer Tastes
Consumer tastes in automotive seat fabrics and interior furnishings
change over time. A shift in consumer preferences away from the products that
the Company produces or has the capability to produce could have a material
adverse effect on the Company.
Competition
The industries in which the Company operates are highly competitive.
There can be no assurance that the Company's products will compete successfully
with those of its competitors. Several competitors are larger and may have
greater financial and other resources available to them. There can be no
assurance that the Company will be able to maintain its operating margins if
the competitive environment changes.
Substantial Leverage
The substantial indebtedness of the Company and its subsidiaries could
have important consequences to holders of Debt Securities, including the
following: (i) the ability of the Company and its subsidiaries to obtain
additional financing in the future to refinance maturing debt or for working
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capital, capital expenditures, acquisitions and other general corporate purposes
could be impaired; (ii) a substantial portion of the cash flow from operations
of the Company and its subsidiaries must be dedicated to the payment of the
principal of and interest on existing indebtedness, which will have the effect
of decreasing the amount available for working capital, capital expenditures,
acquisitions or other general corporate purposes; (iii) the Company and its
subsidiaries could be more highly leveraged than certain of their competitors,
which may place the Company and its subsidiaries at a competitive disadvantage;
(iv) a significant portion of the borrowings of the Company and its subsidiaries
are at variable rates of interest, and consequently the Company and its
subsidiaries will be vulnerable to increases in interest rates; and (v) the high
degree of leverage of the Company and its subsidiaries may make the Company more
vulnerable to economic downturns. At January 27, 1996 the Company had an
aggregate of approximately $768.1 million of indebtedness outstanding (excluding
approximately $128.0 million in off-balance sheet financing under a receivables
facility, approximately $.7 million of indebtedness of the discontinued
Wallcoverings segment and approximately $28.1 million of outstanding letters of
credit) and unused borrowing availability of approximately $46.9 million under
a revolving credit facility and $5.5 million under a working capital facility
for a Canadian subsidiary. Issuance of additional debt would increase this
degree of leverage and, therefore, could exacerbate the consequences described
above. The Company intends to pursue a growth-oriented strategy and to consider
the incurrence of additional indebtedness and other capital market transactions
to finance its planned expansion.
Security Interests
The capital stock of the Company's principal subsidiaries and certain
real estate of the Company and its subsidiaries are subject to various security
interests and liens securing certain indebtedness of the Company and its
subsidiaries. In addition, substantially all the receivables of the Company and
its subsidiaries have been transferred to a trust in connection with a
receivables financing. See "Existing Credit Facilities".
Limitations Imposed by Existing Credit Facilities
The Company's existing credit facilities contain a number of
restrictive covenants which, among other things, limit the ability of the
Company and its subsidiaries to make capital expenditures, to incur other
indebtedness, to create liens and to make certain restricted payments, and which
require the Company to maintain certain specified financial ratios, some of
which become more restrictive over time. A failure by the Company to satisfy
such financial ratios or to comply with the restrictions contained in its credit
facilities could result in a default thereunder, which in turn could result in
such indebtedness being declared immediately due and payable. If the Company
were unable to repay such indebtedness, the lenders under the Company's credit
facilities could proceed against their collateral, which includes 100% of the
common stock of the Company and of its principal subsidiaries. See "Existing
Credit Facilities".
Historical Losses
C&A Co. has experienced net losses in four of the last five fiscal
years, and as of January 27, 1996 had an accumulated deficit of $770.1 million.
Even though C&A Co. is operating with lower interest charges and
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has been profitable since its initial public offering and recapitalization in
July 1994 (the "Recapitalization"), there can be no assurance as to whether C&A
Co.'s operations will remain profitable.
Collective Bargaining Agreements
The Company is a party to collective bargaining agreements with respect
to hourly employees of its continuing operations at six of its 42 U.S.
facilities, its seven Canadian facilities and its four Mexican facilities. The
Company's continuing operations employ 11,700 persons, approximately 2,900 of
which, all of whom are employed in the Company's Automotive Products segment,
are covered by such agreements. The Company has not experienced any significant
labor disruptions during the past five years. Although management believes that
its relationship with the employees covered by collective bargaining agreements
is good, there can be no assurance that the Company will be able to negotiate
new agreements on favorable terms.
Environmental Matters and Other Contingencies
The Company is subject to stringent Federal, state , local and foreign
laws and regulations concerning the environment. Changes in environmental laws
and regulations may require the Company to make substantial capital expenditures
and to incur substantial expenses with respect to its ongoing and divested
operations and properties. In addition, the Company has received notices that it
is a potentially responsible party ("PRP") in a number of proceedings for
cleanup of hazardous substances at various sites. The Company may be named as a
PRP at other sites in the future. It is difficult to estimate the total cost of
investigation and remediation due to various factors including incomplete
information regarding particular sites and other PRPs, uncertainty regarding the
extent of environmental problems and the Company's share, if any, of liability
for such problems, the selection of alternative compliance approaches, the
complexity of the environmental laws and regulations and changes in cleanup
standards and techniques. When it has been possible to provide reasonable
estimates of the Company's liability with respect to environmental sites,
provisions have been made in accordance with generally accepted accounting
principles. However, there can be no assurance that the Company has identified
or properly assessed all potential environmental liabilities arising from the
activities or properties of the Company, its present and former subsidiaries and
their corporate predecessors.
The Company has significant financial and legal obligations with
respect to certain divested and acquired businesses. In connection with the sale
and acquisition of certain businesses, the Company has agreed to indemnify the
purchasers and sellers for certain environmental liabilities, lease obligations
and other matters. In addition, the Company is contingently liable with respect
to certain lease and other obligations assumed by certain purchasers and may be
required to honor such obligations if such purchasers are unable or unwilling to
do so.
Absence of Public Market for the Debt Securities
The Debt Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Debt Securities are sold by
the Company for public offering and sale may make a market in such Debt
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the secondary market for any Debt Securities.
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Potential Applicability of Fraudulent Transfer Laws
Management believes that each of the Company and C&A Co., after the
issuance of the Debt Securities, will be solvent, will have sufficient capital
for carrying on its respective businesses and will be able to pay its debts as
they become due. Notwithstanding management's belief, if a court of competent
jurisdiction in a suit by an unpaid creditor or a representative of creditors
(such as a trustee in bankruptcy or a debtor in possession) were to find that
either the Company or C&A Co. did not receive fair consideration or reasonably
equivalent value for issuing the Debt Securities or the Guarantee, respectively,
and, at the time of the incurrence of indebtedness represented by the Debt
Securities or the Guarantee, the Company or C&A Co. was insolvent, was rendered
insolvent by reason of such incurrence, was engaged in a business or transaction
for which its remaining assets constituted unreasonably small capital, intended
to incur, or believed that it would incur, debts beyond its ability to pay as
such debts matured, or intended to hinder, delay or defraud its creditors, such
court could avoid such indebtedness or, quite apart from the express
subordination of such indebtedness of the Company or C&A Co., as applicable,
such court could subordinate such indebtedness to other existing and future
indebtedness of the Company or C&A Co., as applicable. The measure of insolvency
for purposes of the foregoing will vary depending upon the law of the relevant
jurisdiction. Generally, however, a company would be considered insolvent for
purposes of the foregoing if the sum of the company's debts is greater than all
the company's property at a fair valuation, or if the present fair saleable
value of the company's assets is less than the amount that will be required to
pay its probable liability on its existing debts as they become absolute and
matured.
THE COMPANY
The Company is a major supplier of interior textile and plastic trim
products to the North American automotive industry, with leading positions in
five major product lines. The Company is also a leading manufacturer of
residential upholstery, as well as a major provider of contract carpet products
in the United States. On April 9, 1996, the Company announced its intention to
spin off its Imperial Wallcoverings subsidiary ("Wallcoverings") to the
stockholders of C&A Co. The spin-off is subject to, among other things, the
consent of the Company's lenders and final approval of the Company's Board of
Directors. The financial results and net assets of Wallcoverings have been
accounted for as a discontinued operation. Accordingly, previously reported
financial results for all periods have been restated to reflect Wallcoverings
as a discontinued operation.
C&A Co. is a holding company whose only material asset is the common
stock of the Company. The Company's and C&A Co.'s principal executive offices
are located at 701 McCullough Drive, Charlotte, North Carolina 28262 and the
telephone number at that location is (704) 547-8500.
As used in this Prospectus, the term the "Company" refers to Collins &
Aikman Products Co. and its subsidiaries, unless the context otherwise
indicates.
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RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for C&A Co. is set forth below
for the periods indicated. For periods in which earnings before fixed charges
were insufficient to cover charges, the amount of coverage deficiency (in
millions), instead of the ratio is disclosed.
Fiscal Year Ending January
1992 1993 1994 1995 1996
Ratio of earnings to (Dollar amounts in millions)
fixed charges (or amounts
by which earnings were
inadequate to cover
fixed charges) ($92.4) ($85.2) ($173.1) 1.8X 2.3X
For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as income (loss) from continuing operations before income
taxes, plus fixed charges relating to continuing operations. Fixed charges
consist of interest expense on all indebtedness (including amortization of
deferred debt issuance costs), loss on sale of receivables, preferred stock
dividends of subsidiaries and the portion of operating lease rental expense that
is representative of the interest factor. Earnings were inadequate to cover
fixed charges for the fiscal years ended January 1992, 1993 and 1994.
On July 13, 1994, the Company effected the Recapitalization in
connection with its initial public offering. Prior to the Recapitalization,
fixed charges were higher due to larger average outstanding amounts, and higher
average interest rates, under C&A Co.'s various debt facilities. Additionally,
earnings from continuing operations for the fiscal years prior to the
Recapitalization were negatively impacted by various charges related to
restructuring, compensation and goodwill. Accordingly, the ratio for the fiscal
year ended January 1995 reflects the benefits of the Recapitalization for a part
of the year and for the fiscal year ended January 1996 reflects the benefits for
the full year.
USE OF PROCEEDS
Except as may otherwise be set forth in the Prospectus Supplement, the
net proceeds from the sale of the Debt Securities will be used for general
corporate purposes, including working capital, capital expenditures and
acquisitions.
EXISTING CREDIT FACILITIES
The Credit Agreement Facilities
C&A Co. and the Company are parties to a credit agreement dated as of
June 22, 1994, as amended (the "Credit Agreement"), with Chemical Bank
("Chemical") and the lenders named therein providing for (i) an eight-year
senior secured term loan facility in an aggregate principal amount of $475
million (the "Term Loan Facility"), which was drawn in full on July 13, 1994
to prepay other indebtedness in connection with the Recapitalization, and
(ii) a seven-year senior secured revolving credit facility (the "Revolving
Facility", and together with the Term Loan Facility, the "Credit Agreement
Facilities") in an aggregate principal amount of up to $150 million. At
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January 27, 1996, the Company had unused borrowing availability of approximately
$46.9 million under the Revolving Facility.
On December 22, 1995, C&A Co. and the Company entered into an
additional credit facility (as amended, the "Term Loan B Facility") to finance
the January 1996 purchase of Manchester Plastics. The Term Loan B
Facility provides for a term loan in the principal amount $197 million, all of
which was outstanding at January 27, 1996. In conjunction with the Term Loan B
Facility, the restrictive covenants of the Credit Agreement Facilities were
amended to permit the purchase of Manchester Plastics. The restrictive covenants
contained in the Term Loan B Facility are identical to those in the Credit
Agreement Facilities.
The Company is the borrower under the Credit Agreement Facilities and
the Term Loan B Facility, although a portion of the Term Loan Facility has been
borrowed by a Canadian subsidiary of the Company. Loans outstanding under the
Credit Agreement Facilities bear interest, due quarterly, at a per annum rate
equal to the Company's choice of (i) Chemical's Alternate Base Rate (which is
the highest of Chemical's announced prime rate, the Federal Funds Rate plus .5%
and Chemical's base certificate of deposit rate plus 1%) plus a margin ranging
from 0% to .75% or (ii) the offered rates for Eurodollar deposits ("LIBOR") of
one, two, three, six, nine or 12 months (as selected by the Company) plus a
margin ranging from 1% to 1.75%. Pursuant to the terms of the Credit Agreement,
at January 27, 1996 the Alternate Base Rate margin was .75% and the LIBOR
margin was 1.75%. Such margins under the Credit Agreement Facilities will
increase by 1/4% over the margins then in effect on July 13, 1999. Indebtedness
under the Term Loan B Facility bears interest at a per annum rate equal to the
Company's choice of (i) Chemical Bank's Alternate Base Rate as described above
plus a margin of 1.25% or (ii) LIBOR of one, two, three or six months, as
selected by the Company, plus a margin of 2.25%.
Loans under the Term Loan Facility and the Term Loan B Facility
amortize in annual amounts equal to (i) $41.9 million in 1996, (ii) $68.1
million in 1997, (iii) $88.9 million in 1998, (iv) $101.8 million in 1999, (v)
$109.4 million in each of 2000 and 2001 and (vi) the remainder in 2002. The
Revolving Facility will mature on July 13, 2001. In addition, the Credit
Agreement and the Term Loan B Facility provide for mandatory prepayments with
certain excess cash flow of the Company, net cash proceeds of certain asset
sales or other dispositions by the Company and its subsidiaries, net cash
proceeds of certain sale/leaseback transactions and net cash proceeds of certain
issuances of debt obligations (which are not expected to include Debt
Securities). Mandatory prepayments will be applied pro rata across remaining
scheduled maturities. Loans under the Credit Agreement Facilities and Term Loan
B Facility are voluntarily prepayable by the Company at any time without
penalty. Voluntary prepayments will be applied against the most current
scheduled maturities.
The Credit Agreement Facilities and the Term Loan B Facility are
guaranteed by C&A Co. and each existing and subsequently acquired or organized
United States subsidiary of C&A Co., subject to certain exceptions (the "Credit
Agreement Guarantees"). The Credit Agreement Facilities, the Term Loan B
Facility and the Credit Agreement Guarantees are secured by a first priority
pledge of all the capital stock of the Company and each subsidiary (other than
certain unrestricted subsidiaries) of the Company (or,
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in the case of any foreign subsidiary, 65% of the capital stock of such
subsidiary), subject to certain exceptions, and certain intercompany
indebtedness.
The Credit Agreement and the Term Loan B Facility contain various
restrictive covenants, including limitations on indebtedness of C&A Co. and its
subsidiaries (including the Company); limitations on dividends and on
redemptions and repurchases of capital stock; limitations on prepayments,
redemptions and repurchases of debt; limitations on liens and sale/leaseback
transactions; limitations on loans and investments; limitations on capital
expenditures; a prohibition on C&A Co.'s direct ownership of any subsidiary
other than the Company or certain unrestricted subsidiaries; limitations on
mergers, acquisitions and asset sales; limitations on transactions with
affiliates and stockholders; limitations on fundamental changes in business
conducted; and limitations on the amendment of debt and other material
agreements and licenses. In addition to the foregoing, the Credit Agreement and
Term Loan B Facility contain financial covenants applicable to C&A Co. and its
subsidiaries (including the Company) on a consolidated basis. Under these
covenants C&A Co. and its subsidiaries are required: to maintain, for each
period of four consecutive fiscal quarters, a ratio of EBITDA to cash interest
expense of 3.25 to 1.00 through April 30, 1996 and 3.50 to 1.00 from May 1, 1996
through January 31, 1997 (which ratio increases periodically thereafter, to 4.75
to 1.00 on and after February 1, 1998); to maintain a ratio of funded debt to
EBITDA for the preceding 12 consecutive months of not more than 3.95 to 1.00
until April 30, 1996 and 3.50 to 1.00 from May 1, 1996 through July 31, 1996
(which ratio decreases periodically thereafter, to 2.25 to 1.00 on and after
February 1, 1999); to have a minimum EBITDA of $175 million in each fiscal year;
and to maintain a ratio of current assets to current liabilities at the end of
each fiscal quarter of at least 1.25 to 1.00.
The Credit Agreement and the Term Loan B Facility also contain various
events of default (with customary qualifications and exceptions), including
nonpayment of principal or interest; violation of covenants; material breaches
of representations and warranties; cross default and cross acceleration;
bankruptcy; material undischarged judgments; certain ERISA events; invalidity of
security documents; invalidity of subordination provisions; and Change in
Control. "Change in Control" is defined in the Credit Agreement and Term Loan B
Facility as (a) a majority of the board of directors of C&A Co. ceases to be
comprised of Continuing Directors (defined as any director of C&A Co. who either
(x) was a member of the board of directors on July 13, 1994 or (y) after such
date became a member of the board of directors and whose election was approved
by vote of a majority of the Continuing Directors then on the board of directors
of C&A Co.), (b) a person or group (other than the Company's current principal
stockholders, Wasserstein Perella Partners, L.P. ("WP Partners"), Blackstone
Capital Partners L.P. ("Blackstone Partners"), and additional designated
persons) beneficially owns, directly or indirectly, shares representing more
than 25% of the aggregate ordinary voting power represented by the outstanding
capital stock of C&A Co. at any time that WP Partners, Blackstone Partners and
additional designated persons do not beneficially own shares representing at
least 50% of the aggregate ordinary voting power represented by the outstanding
capital stock of C&A Co. or (c) C&A Co. ceases to maintain direct ownership of
the Company, free of liens and claims (other than liens in connection with a
pledge under the Credit Agreement and Term Loan B
11
Facility).
In addition to the foregoing, the Credit Agreement and the Term Loan B
Facility contain other miscellaneous provisions, including provisions concerning
indemnification by the Company of each lender against losses, claims or other
expenses and payment by the Company of certain fees and expenses of the lenders
and their respective advisors and consultants.
The description of the Credit Agreement Facilities and the Term Loan B
Facility set forth above does not purport to be complete and is qualified in its
entirety by reference to the documents which are filed as exhibits and
incorporated by reference into the Registration Statement of which this
Prospectus forms a part.
Receivables Facility
The Company, through a trust (the "Trust") formed by its wholly-owned,
bankruptcy-remote subsidiary, Carcorp, Inc. ("Carcorp"), is a party to a
receivables facility (the "Receivables Facility") comprised of (i) term
certificates, which were issued on March 31, 1995 in an aggregate face amount of
$110 million and (ii) variable funding certificates, which represent revolving
commitments, of up to an aggregate of $75 million. The term certificates and the
variable funding certificates have a term of five years. Carcorp purchases on a
revolving basis and transfers to the Trust virtually all trade receivables
generated by the Company and certain of its subsidiaries (the "Sellers"). The
certificates represent the right to receive payments generated by the
receivables held by the Trust.
Availability under the variable funding certificates at any time
depends primarily on the amount of receivables generated by the Sellers from
sales to the auto industry, the rate of collection on those receivables and
other characteristics of those receivables which affect their eligibility (such
as bankruptcy or downgrading below investment grade of the obligor, delinquency
and excessive concentration). Based on these criteria, at January 27, 1996
approximately $19.8 million was available under the variable funding
certificates, of which approximately $18.0 million was utilized.
The proceeds received by Carcorp from collections on receivables, after
the payment of expenses and amounts due on the certificates, are used to
purchase new receivables from the Sellers. Collections on receivables are
required to remain in the Trust if at any time the Trust does not contain
sufficient eligible receivables to support the outstanding certificates. At
January 27, 1996, cash collateral of $8.7 million was required to be retained in
the Trust. Additionally, the Trust held $15.7 million of cash collections to be
distributed upon determination of eligibility. The Receivables Facility contains
certain other restrictions on Carcorp and on the Sellers customary for
facilities of this type and will terminate prior to its term upon the occurrence
of certain events of default. Under the Receivables Facility, the term
certificates bear interest at an average rate equal to the rate on one-month
LIBOR deposits plus 34 one-hundredths of one percent per annum and the variable
funding certificates bear interest, at Carcorp's option, at a LIBOR deposit rate
plus 40 one-hundredths of one percent per annum or a prime rate.
12
The description of the Receivables Facility set forth above does not
purport to be complete and is qualified in its entirety by reference to the
Receivables Facility and any amendments thereto which are filed as exhibits and
incorporated by reference into the Registration Statement of which this
Prospectus forms a part.
DESCRIPTION OF THE DEBT SECURITIES
General
The Debt Securities will constitute either Senior Securities or
Subordinated Securities. The Senior Securities will be issued under an Indenture
dated as of , 1996 (the "Senior Indenture"), between the Company and the trustee
named in the applicable Prospectus Supplement as trustee (the "Senior Trustee").
The Subordinated Securities will be issued under an Indenture dated as of , 1996
(the "Subordinated Indenture"), between the Company and the trustee named in the
applicable Prospectus Supplement as trustee ("the Subordinated Trustee"). The
Senior Indenture and the Subordinated Indenture are collectively referred to
herein as the "Indentures". References to the "Trustee" shall mean the Senior
Trustee or the Subordinated Trustee, as applicable. The statements under this
caption are brief summaries of certain provisions contained in the Indentures,
do not purport to be complete and are qualified in their entirety by reference
to the applicable Indenture, copies of which are exhibits to and incorporated in
the Registration Statement. Cross references to Sections of the Indentures
relate to both the Senior Indenture and the Subordinated Indenture, unless
otherwise indicated.
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions do not apply to such
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities.
Neither of the Indentures limits the amount of Debt Securities which
may be issued thereunder, and each Indenture provides that Debt Securities of
any series may be issued thereunder up to the aggregate principal amount which
may be authorized from time to time by the Company's board of directors or any
duly authorized committee of that board ("Board of Directors") and may be
denominated in any currency or composite currency designated by the Company.
(Section 3.01) Neither the Indentures nor the Debt Securities will limit or
otherwise restrict the amount of other indebtedness which may be incurred or the
other securities which may be issued by the Company or any of its subsidiaries.
Debt Securities of a series may be issuable in registered form with or
without coupons ("Registered Securities"), in bearer form with or without
coupons attached ("Bearer Securities") or in the form of one or more global
securities in registered or bearer form (each a "Global Security"). (Section
3.01) Bearer Securities, if any, will be offered only to non-United States
persons and to offices located outside the United States of certain United
States financial institutions. (Section 3.03) Reference is made to the
Prospectus Supplement for a description of the following terms, where
applicable, of each series of Debt Securities in respect of which this
13
Prospectus is being delivered: (1) the title of such Debt Securities; (2) the
limit, if any, on the aggregate principal amount or aggregate initial public
offering price of such Debt Securities; (3) the priority of payment of such Debt
Securities; (4) the price or prices (which may be expressed as a percentage of
the aggregate principal amount thereof) at which the Debt Securities will be
issued; (5) the date or dates on which the principal of the Debt Securities will
be payable; (6) the rate or rates (which may be fixed or variable) per annum at
which such Debt Securities will bear interest, if any, or the method of
determining the same; (7) the date or dates from which such interest, if any, on
the Debt Securities will accrue, the date or dates on which such interest, if
any, will be payable, the date or dates on which payment of such interest, if
any, will commence and the date, if any, specified in the Debt Security as the
"Regular Record Date" for such interest payment dates; (8) the extent to which
any of the Debt Securities will be issuable in temporary or permanent global
form, or the manner in which any interest payable on a temporary or permanent
global Debt Security will be paid; (9) each office or agency where, subject to
the terms of the applicable Indenture, the Debt Securities may be presented for
registration of transfer or exchange; (10) the place or places where the
principal of (and premium, if any) and interest, if any, on the Debt Securities
will be payable; (11) the date or dates, if any, after which such Debt
Securities may be redeemed or purchased in whole or in part, at the option of
the Company or mandatorily pursuant to any sinking, purchase or analogous fund
or may be required to be purchased or redeemed at the option of the holder, and
the redemption or repayment price or prices thereof; (12) the denomination or
denominations in which such Debt Securities are authorized to be issued; (13)
the currency, currencies or composite currency (including the European Currency
Unit as defined and revised from time to time by the Council of the European
Communities ("ECU")) based on or related to currencies for which the Debt
Securities may be purchased and the currency, currencies or composite currency
(including ECU) in which the principal of, premium, if any, and any interest on
such Debt Securities may be payable; (14) any index used to determine the amount
of payments of principal of, premium, if any, and interest on the Debt
Securities; (15) whether any of the Debt Securities are to be issuable as Bearer
Securities and/or Registered Securities, and if issuable as Bearer Securities,
any limitations on issuance of such Bearer Securities and any provisions
regarding the transfer or exchange of such Bearer Securities (including exchange
for registered Debt Securities of the same series); (16) the payment of any
additional amounts with respect to the Debt Securities; (17) whether any of the
Debt Securities will be issued as Original Issue Discount Securities (as defined
below); (18) information with respect to book-entry procedures, if any; (19) any
additional covenants or Events of Default not currently set forth in the
applicable Indenture; and (20) any other terms of such Debt Securities not
inconsistent with the provisions of the applicable Indenture.
If any of the Debt Securities are sold for one or more foreign
currencies or foreign currency units or if the principal of, premium, if any, or
interest on any series of Debt Securities is payable in one or more foreign
currencies or foreign currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue of
Debt Securities and such currencies or currency units will be set forth in the
Prospectus Supplement relating thereto. A judgment for money damages by courts
in the United States, including a money judgment based on
14
an obligation expressed in a foreign currency, will ordinarily be rendered only
in U.S. dollars. New York statutory law provides that a court shall render a
judgment or decree in the foreign currency of the underlying obligation and that
the judgment or decree shall be converted into U.S. dollars at the exchange rate
prevailing on the date of entry of the judgment or decree.
Debt Securities may be issued as original issue discount Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) ("Original Issue Discount Securities"), to be
sold at a substantial discount below the stated principal amount thereof due at
the stated maturity of such Debt Securities. (Section 3.01) There may not be any
periodic payments of interest on Original Issue Discount Securities as defined
herein. In the event of an acceleration of the maturity of any Original Issue
Discount Security, the amount payable to the holder of such Original Issue
Discount Security upon such acceleration will be determined in accordance with
the Prospectus Supplement, the terms of such security and the Indenture, but
will be an amount less than the amount payable at the maturity of the principal
of such Original Issue Discount Security. (Section 7.02) Federal income tax
considerations with respect to Original Issue Discount Securities will be set
forth in the Prospectus Supplement relating thereto.
Events of Default, Waivers, Etc.
An Event of Default with respect to Debt Securities of any series is
defined in the Indentures as (i) default in the payment of the principal of or
premium, if any, on any Debt Security of such series when due, (ii) default in
the payment of interest upon any Debt Security of such series when due and the
continuance of such default for a period of 30 days, (iii) default in the
observance or performance of any other covenant or agreement of the Company or
C&A Co. in the Debt Securities of such series or the Indenture with respect to
such Debt Securities of such series and continuance of such default for 90 days
after written notice, (iv) certain events of bankruptcy, insolvency or
reorganization of the Company or C&A Co. or (v) any other Event of Default
provided with respect to Debt Securities of any series. (Section 7.01)
If any Event of Default with respect to any series of Debt Securities
for which there are Debt Securities outstanding under the Indentures occurs and
is continuing, either the applicable Trustee or the holders of not less than 25%
in aggregate principal amount of the Debt Securities of such series may declare
the principal amount (or if such Debt Securities are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all Debt Securities of that series to be immediately
due and payable. The holders of a majority in aggregate principal amount of the
Debt Securities of any series outstanding under the Indentures may waive the
consequences of an Event of Default resulting in acceleration of such Debt
Securities, but only if all Events of Default have been remedied and all
payments due (other than those due as a result of acceleration) have been made.
(Section 7.02) If an Event of Default occurs and is continuing, the Trustee may
in its discretion, or at the written request of holders of not less than a
majority in aggregate principal amount of the Debt Securities of any series
outstanding under the Indentures and upon reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request
and subject to certain other conditions set forth in the Indentures, proceed to
protect the rights of the
15
holders of all the Debt Securities of such series. (Sections 7.03 and 7.07) If
the Trustee fails within 60 days after its receipt of such a written request and
offer of indemnity to institute any such proceeding, any holder of a Debt
Security who has previously given notice to the Trustee of a continuing Event of
Default may institute such a proceeding. (Section 7.07) The holders of a
majority in aggregate principal amount of Debt Securities of any series
outstanding under the Indentures may waive any past default under the Indentures
except a default in the payment of principal of, premium, if any, or interest on
the Debt Securities of such series and except for the waiver of a covenant or
provision that, pursuant to the Indentures, cannot be modified or amended
without the consent of holders of all such Debt Securities then outstanding.
(Section 7.13)
The Indentures provide that in the event of an Event of Default
specified in clauses (i) or (ii) of the first paragraph under "Events of
Default, Waivers, Etc.", the Company will, upon demand of the applicable
Trustee, pay to it, for the benefit of the holder of any such Debt Security, the
whole amount then due and payable on such Debt Security for principal, premium,
if any, and interest. The Indentures further provide that if the Company fails
to pay such amount forthwith upon such demand, the applicable Trustee may, among
other things, institute a judicial proceeding for the collection thereof.
(Section 7.03)
The Indentures also provide that notwithstanding any other provision of
the Indentures, the holder of any Debt Security of any series will have the
right to institute suit for the enforcement of any payment of principal of,
premium, if any, and interest on such Debt Security when due and that such right
may not be impaired without the consent of such holder. (Section 7.08)
The Company is required to file annually with the Trustee a written
statement of officers as to the existence or non-existence of defaults under the
Indentures or the Debt Securities. (Section 5.05)
Guarantee
C&A Co., as primary obligor and not merely as surety, will irrevocably,
fully and unconditionally guarantee on either an unsecured senior basis, an
unsecured senior subordinated basis or an unsecured junior subordinated basis,
as applicable, the performance and punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of the Company under
the Senior Indenture, Subordinated Indenture and the Debt Securities, whether
for principal of or interest on the Debt Securities, expenses, indemnification
or otherwise (all such obligations guaranteed by C&A Co. being herein called the
"Guaranteed Obligations"). C&A Co. will agree to pay, in addition to the amount
stated above, any and all expenses (including reasonable counsel fees and
expenses) incurred by the Trustee or the holders in enforcing any rights under
the Guarantee with respect to C&A Co. (Section 14.01 of Senior Indenture and
Section 15.01 of Subordinated Indenture) Such Guarantee, however, will be
limited in amount to an amount not to exceed the maximum amount that can be
guaranteed by C&A Co. without rendering the Guarantee, as it relates to C&A Co.,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer. (Section 14.02 of Senior Indenture and Section 15.02 of Subordinated
Indenture) C&A Co. has no material assets other than the common stock of the
Company.
The Guarantee is a continuing guarantee and will (i) remain in full
16
force and affect until payment in full of all the Guaranteed Obligations, (ii)
be binding upon C&A Co. and (iii) enure to the benefit of and be enforceable by
the Trustee, the holders and their successors, transferees and assigns. (Section
14.03 of Senior Indenture and Section 15.03 of Subordinated Indenture) Upon the
failure of the Company to pay the principal of or interest on any Guaranteed
Obligation when and as due, whether at maturity, by acceleration, by redemption
or otherwise, or to perform or comply with any other Guaranteed Obligations, C&A
Co. shall, upon receipt of written demand by the Trustee, pay or cause to be
paid, in cash, to the holders or the Trustee an amount equal to the sum of (a)
unpaid principal amount of such Guaranteed Obligations, (b) accrued and unpaid
interest on such Guaranteed Obligations (but only to the extent not prohibited
by law) and (c) all other monetary Guaranteed Obligations of the Company to the
holders and the Trustee. See "Events of Default, Waivers, Etc." for a
description of rights in an Event of Default.
Registration and Transfer
Unless otherwise indicated in the applicable Prospectus Supplement,
Debt Securities will be issued only as Registered Securities. (Section 2.01) If
Bearer Securities are issued, the United States Federal income tax consequences
and other special considerations, procedures and limitations applicable to such
Bearer Securities will be described in the Prospectus Supplement relating
thereto.
Unless otherwise indicated in the applicable Prospectus Supplement,
Debt Securities issued as Registered Securities will be without coupons. Debt
Securities issued as Bearer Securities will have interest coupons attached,
unless issued as zero coupon securities. (Section 2.01)
Registered Securities (other than a Global Security) may be presented
for transfer (with the form of transfer endorsed thereon duly executed) or
exchanged for other Debt Securities of the same series at the office of the
security registrar appointed by the Company (the "Security Registrar") specified
according to the terms of the applicable Indenture. The Company has agreed in
each of the Indentures that, with respect to Registered Securities having the
City of New York as a place of payment, the Company will appoint a Security
Registrar or a co-security registrar, as may be appropriate (the "Co-Security
Registrar") located in the City of New York for such transfer or exchange.
Unless otherwise provided in the applicable Prospectus Supplement, such transfer
or exchange shall be made without service charge, but the Company may require
payment of any taxes or other governmental charges as described in the
applicable Indenture. Provisions relating to the exchange of Bearer Securities
for other Debt Securities of the same series (including, if applicable,
Registered Securities) will be described in the applicable Prospectus
Supplement. In no event, however, will Registered Securities be exchangeable for
Bearer Securities. (Section 3.05)
Global Securities
Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Depositary") identified in the Prospectus Supplement
relating to such series. (Section 3.01) Global Securities may be
17
issued in either registered or bearer form and in either temporary or permanent
form. (Section 2.04) Unless and until it is exchanged in whole or in part for
the individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by the Depositary or any nominee to a
successor Depositary or any nominee of such successor. (Section 3.05)
The specific terms of the depositary arrangement with respect to a
series of Debt Securities and certain limitations and restrictions relating to a
series of Bearer Securities in the form of one or more Global Securities will be
described in the Prospectus Supplement relating to such series. The Company
anticipates that the following provisions will generally apply to depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. Such accounts shall be designated by the
underwriters or agents with respect to such Debt Securities. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the applicable Depositary ("participants") or persons that may
hold interests through participants. Ownership of beneficial interests in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities. (Sections 1.12 and 3.08)
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. None of the Company, the Trustee for such
Debt Securities, any person authorized by the Company to pay the principal of,
premium, if any, or interest on any Debt Securities or any coupons appertaining
thereto on behalf of the Company ("Paying Agent"), and the Security Registrar
for such Debt Securities will have any responsibility or
18
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. (Section 3.08)
Subject to certain restrictions relating to Bearer Securities, the
Company expects that the Depositary for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt Securities,
will credit participants' accounts immediately with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security for such Debt Securities as shown on the records of such
Depositary or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name". Such payments will be
the responsibility of such participants. With respect to owners of beneficial
interests in a temporary Global Security representing Bearer Securities, receipt
by such beneficial owners of payments of principal, premium or interest in
respect thereof will be subject to additional restrictions.
If the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Debt Securities of such series in definitive form in exchange
for the Global Security representing such series of Debt Securities. (Section
3.05) In addition, the Company may at any time and in its sole discretion,
subject to any limitations described in the Prospectus Supplement relating to
such Debt Securities, determine not to have any Debt Securities of a series
represented by one or more Global Securities and, in such event, will issue
individual Debt Securities of such series in definitive form in exchange for the
Global Security or Securities representing such series of Debt Securities.
(Section 3.05) Further, if the Company so specifies with respect to the Debt
Securities of a series, an owner of a beneficial interest in a Global Security
representing Debt Securities of such series may, on terms acceptable to the
Company, the Trustee and the Depositary for such Global Security, receive Debt
Securities of such series in definitive form in exchange for such beneficial
interests, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities. (Section 3.05) In any such instance, an owner
of a beneficial interest in a Global Security will be entitled to physical
delivery in definitive form of Debt Securities of the series represented by such
Global Security equal in principal amount to such beneficial interest and to
have such Debt Securities registered in its name (if the Debt Securities of such
series are issuable as Registered Securities). (Section 3.05) Debt Securities of
such series so issued in definitive form will be issued (i) as Registered
Securities in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof if the Debt Securities of such series are
issuable as Registered Securities, (ii) as Bearer Securities in the
denomination, unless otherwise specified by the Company, of $5,000 if the Debt
Securities of such series are issuable as Bearer Securities or (iii) as either
Registered or Bearer Securities, if the Debt Securities of such series are
issuable in either form. (Sections 3.02 and 3.05) Certain restrictions may
19
apply, however, on the issuance of a Bearer Security in definitive form in
exchange for an interest in a Global Security.
Payment and Paying Agents
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of principal of and premium, if any, on Registered Securities will be
made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time. At the option of the Company, payment of any
interest may be made (i) by check mailed to the address of the person entitled
thereto as such address shall appear in the applicable security register kept by
the Company ("Security Register") or (ii) by wire transfer to an account
maintained by the person entitled thereto as specified in the applicable
Security Register. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the person in whose name such Debt Security is registered at the
close of business on the Regular Record Date for such payment. (Sections 3.07
and 5.02)
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of principal of, premium, if any, and any interest on Bearer Securities
will be payable, subject to any applicable laws and regulations, at the offices
of such Paying Agents outside the United States as the Company may designate
from time to time or, at the option of the holder, by check mailed to any
address outside the United States or by transfer to an account maintained by the
payee with a bank located outside the United States. Unless otherwise indicated
in an applicable Prospectus Supplement, payment of interest on Bearer Securities
will be made only against surrender of the coupon relating to such interest
payment date. No payment with respect to any Bearer Security will be made at any
office or agency of the Company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States. (Sections 3.07, 5.01 and 5.02)
Consolidation, Merger or Sale of Assets
Each Indenture provides that the Company may not, without the consent
of the holders of the Debt Securities outstanding under the applicable
Indenture, consolidate with, merge into or transfer its assets substantially as
an entirety to any single person, unless (i) any such successor assumes the
Company's obligations on the applicable Debt Securities and under the applicable
Indenture, (ii) after giving effect thereto, no Event of Default shall have
happened and be continuing and (iii) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel each stating that such
consolidation, merger, conveyance or transfer and the supplemental indenture
pursuant to which the successor assumes the Company's obligations on the
applicable Debt Securities comply with Article 10 of the applicable Indenture
and that all conditions precedent therein provided for relating to such
transaction have been complied with. (Section 10.01) Accordingly, unless
otherwise specified in an applicable Prospectus Supplement, any such
consolidation, merger or transfer of assets substantially as an entirety that
meets the conditions described above, would not create any Event of Default
which would entitle holders of the Debt Securities, or the Trustee on their
behalf, to take any of the actions described above under "Events of Default,
Waivers, Etc." Additionally, upon any such consolidation or merger, or any
20
such conveyance or transfer of the properties and assets of the Company
substantially as an entirety, the successor person formed by such consolidation
or into which the Company is merged or to which such conveyance or transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under each Indenture with the same effect as if such
successor person had been named as the Company. In the event of any such
conveyance or transfer, the Company as the predecessor corporation and C&A Co.
shall be relieved of all obligations and covenants under each Indenture and may
be dissolved, wound up and liquidated at any time thereafter. (Section 10.02)
Leveraged and Other Transactions
Neither Indenture contains provisions which would afford holders of the
Debt Securities protection in the event of a highly leveraged or other
transaction involving the Company which could adversely affect the holders of
Debt Securities. Provisions, if any, applicable to any such transaction will be
described in an applicable Prospectus Supplement.
Modification of the Indenture; Waiver of Covenants
Each Indenture provides that, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding Debt
Securities of each affected series, modifications and alterations of such
Indenture may be made which affect the rights of the holders of such Debt
Securities, except that no such modification or alteration may be made without
the consent of the holder of each Debt Security so affected which would, among
other things, (i) change the maturity of the principal of, or of any installment
of interest (or premium, if any) on, any Debt Security issued pursuant to such
Indenture, or reduce the principal amount thereof or any premium thereon, or
change the method of calculation of interest or the currency of payment of
principal or interest (or premium, if any) on, or reduce the minimum rate of
interest thereon, or impair the right to institute suit for the enforcement of
any such payment on or with respect to any such Debt Security, or reduce the
amount of principal of an Original Issue Discount Security that would be due and
payable upon an acceleration of the maturity thereof or (ii) reduce the
above-stated percentage in principal amount of outstanding Debt Securities
required to modify or alter such Indenture. (Section 9.02)
Each Indenture also provides that, without the consent of any holder of
Debt Securities, the Company, when authorized by a resolution of its Board of
Directors, and the Trustee, at any time and from time to time, may enter into
one or more supplemental indentures to such Indenture to (i) evidence the
succession of another corporation or person to the Company or C&A Co., as the
case may be, in the Indenture and in the Debt Securities, (ii) evidence and
provide for a successor Trustee, (iii) add to the covenants of the Company or
C&A Co. for the benefit of the holders of Debt Securities of all or any series
or to surrender any right or power conferred upon the Company or C&A Co. in the
Indenture, (iv) cure any ambiguity, correct or supplement any provision which
may be inconsistent or make any other provisions with respect to matters or
questions arising under the Indenture, provided the interests of the holders of
Debt Securities of any series are not adversely affected in any material
respect, (v) add any additional Events of Default, (vi) make certain changes
with respect to Bearer Securities which do not adversely
21
affect the interests of the holders of Debt Securities of any series in any
material respect, (vii) add to, change or eliminate any provision of the
Indenture; provided that such addition, change or elimination (a) becomes
effective only when there is no Debt Security outstanding of a series created
prior to the execution of such supplemental indenture which is adversely
affected or (b) does not apply to any outstanding Debt Securities, (viii)
establish the form or terms of Debt Securities of any series as permitted under
the Indenture, (ix) add to or change provisions to permit or facilitate the
issuance of Debt Securities convertible into other securities, (x) evidence any
changes to corporate Trustee eligibility authorized by the Trust Indenture Act
of 1939, as in force as of the date an Indenture is executed and, to the extent
required by law, as thereafter amended (the "Trust Indenture Act"), or (xi) add
to or change or eliminate any provision of the Indenture as necessary to comply
with the Trust Indenture Act provided such action does not adversely affect the
interests of the holders of Debt Securities of any series in any material
respect. (Section 9.01).
Governing Law
The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
Regarding the Trustee
The Indentures contain certain limitations on the right of the Trustee,
if and when the Trustee becomes a creditor of the Company (or any other obligor
upon the Debt Securities), regarding the collection of such claims against the
Company (or any such other obligor). (Section 8.13) Except as provided in the
following sentence, the Indentures do not prohibit the Trustee from serving as
trustee under any other indenture to which the Company may be a party from time
to time or from engaging in other transactions with the Company. If the Trustee
acquires any conflicting interest and there is a default with respect to any
series of Debt Securities, it must eliminate such conflict or resign. (Section
8.08)
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the
Company and will rank pari passu with all outstanding unsecured senior
indebtedness of the Company.
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of
the Company and will be subject to the subordination provisions described below.
Subordination
The payment of the principal of, premium (if any) and interest on the
Subordinated Securities and other payment obligations of the Company in respect
of the Subordinated Securities is subordinated in right of payment, as set forth
in the Subordinated Indenture, to the payment in cash when due of all Senior
Indebtedness and, if applicable, Senior Subordinated Indebtedness of the
Company. (Section 14.01 of Subordinated Indenture)
22
However, payment from the money or the proceeds of U.S. government obligations
held in any defeasance trust is not subordinate to any Senior Indebtedness
or, if applicable, Senior Subordinated Indebtedness or subject to the
restrictions described herein if such money was permitted to be deposited in
such trust at the time of deposit. (Section 14.12 of Subordinated Indenture)
At January 27, 1996, outstanding Senior Indebtedness of the Company was
$711.7 million (excluding unused commitments, approximately $56.4 million
of indebtedness of continuing subsidiaries, approximately .7 million of
indebtedness of the discontinued Wallcoverings subsidiary, approximately
$128.0 million in off-balance sheet financing under the Receivables
Facility and approximately $28.1 million of outstanding letters of credit), the
Company did not have any Senior Subordinated Indebtedness and the liabilities
of the Company's subsidiaries as recorded in the subsidiaries' financial records
aggregated approximately $242.0 million (excluding intercompany balances
and liabilities of Wallcoverings). Claims of creditors of such subsidiaries,
including trade creditors, secured creditors and creditors holding guarantees
issued by such subsidiaries, and claims of preferred stockholders (if
any) of such subsidiaries generally will have priority with respect to the
assets and earnings of such subsidiaries over the claims of creditors of the
Company, including holders of the Subordinated Securities, even though such
obligations may not constitute Senior Indebtedness or Senior Subordinated
Indebtedness. The Subordinated Securities therefore will be effectively
subordinated to creditors (including trade creditors) and preferred stockholders
(if any) of subsidiaries of the Company. The domestic subsidiaries of the
Company have guaranteed the Company's obligations pursuant to the Credit
Agreement.
Senior Indebtedness is defined in the Subordinated Indenture as (A)
all obligations of the Company, whether direct or by guarantee, to pay
principal, interest (including all interest accruing after the filing of a
petition by or against the Company under any Bankruptcy Law, in accordance with
and at the rate, including any default rate, specified in the agreement or
instrument governing such Senior Indebtedness, whether or not a claim for such
interest is allowed as a claim after such filing in any proceeding under such
Bankruptcy Law), fees, expenses, reimbursement obligations, indemnities and
other amounts payable under or in connection with the Credit Agreement,
whether outstanding on the date of the Subordinated Indenture or thereafter
created, assumed or incurred, (B) the principal of, premium, if any, and
interest on (including all interest accruing after the filing of a petition by
or against the Company under any Bankruptcy Law, in accordance with and at
the rate, including any default rate, specified in the agreement or instrument
governing such Senior Indebtedness, whether or not a claim for such interest is
allowed as a claim after such filing in any proceeding under such Bankruptcy
Law), (i) all the Company's indebtedness for money borrowed, other than the
subordinated securities issued under the Subordinated Indenture, whether
outstanding on the date of execution of the Subordinated Indenture or thereafter
created, assumed or incurred, except such indebtedness as is by its terms
expressly stated to be not superior in right of payment to the subordinated
securities issued under the Subordinated Indenture or to rank pari passu with
the subordinated securities issued under the Subordinated Indenture and (ii)
any deferrals, renewals or extensions of any such Senior Indebtedness and (C)
all Interest Swap Obligations of the Company in respect of Senior Indebtedness,
except that Senior Indebtedness under clause (B) will not include (a) any
obligation of the Company to any subsidiary, (b) any liability for Federal,
state, local or other taxes owed or owing by the Company, (c) any accounts
payable or
23
other liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such
liabilities), (d) any indebtedness, guarantee or obligation of the Company which
is expressly subordinate or junior in right of payment in any respect to any
other indebtedness, guarantee or obligation of the Company, including any senior
subordinated indebtedness and any subordinated obligations, or (e) any
obligations with respect to any capital stock. The term "indebtedness for money
borrowed" as used in the foregoing sentence includes, without limitation, any
obligation of, or any obligation guaranteed by, the Company for the repayment of
borrowed money, whether or not evidenced by bonds, debentures, notes or other
written instruments, and any deferred obligation for the payment of the purchase
price of property or assets. (Section 1.01 of Subordinated Indenture) There is
no limitation on the issuance of additional Senior Indebtedness of the Company.
The Senior Securities constitute Senior Indebtedness under the Subordinated
Indenture.
The Subordinated Securities may rank pari passu with other subordinated
indebtedness of the Company or may, if indicated in the applicable Prospectus
Supplement, be subordinate to Senior Subordinated Indebtedness, including other
series of Subordinated Securities. (Section 3.01 Subordinated Indenture) "Senior
Subordinated Indebtedness" means any indebtedness of the Company that is not
subordinated by its terms in right of payment to any indebtedness or obligation
of the Company which is not Senior Indebtedness and which is senior in right of
payment to the Debt Securities. (Section 1.01 of Subordinated Indenture)
Neither the Company nor C&A Co. may directly or indirectly (nor shall
any direct or indirect payment or distribution be made by or on behalf of the
Company or C&A Co. in respect of the following) pay principal of, premium (if
any) or interest on the Subordinated Securities and other payment obligations
of the Company in respect of the Subordinated Securities, make any deposits
pursuant to the defeasance provisions in the Subordinated Indenture or
otherwise purchase, redeem or retire any Subordinated Securities
(collectively, "pay the Subordinated Securities") if (i) any Senior
Indebtedness and, if applicable, Senior Subordinated Indebtedness is not paid
when due or (ii) any other default on Senior Indebtedness, and, if applicable,
Senior Subordinated Indebtedness occurs and the maturity of such Senior
Indebtedness, and, if applicable, Senior Subordinated Indebtedness is
accelerated in accordance with its terms unless, in either case, the default has
been cured or waived and any such acceleration has been rescinded or such
Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness
has been paid in full in cash. However, the Company and C&A Co. may pay the
Subordinated Securities without regard to the foregoing if the Company, C&A
Co. and the Trustee receive written notice approving such payment from the
Representatives (as defined below) of the holders of Senior
Indebtedness, and, if applicable, Senior Subordinated Indebtedness with respect
to which either of the events set forth in clause (i) or
(ii) of the immediately preceding sentence has occurred and is continuing.
Representative of the holders of Senior Indebtedness or Senior Subordinated
Indebtedness means a trustee, agent or other representative (if any) for an
issue of such Senior Indebtedness or Senior Subordinated Indebtedness, as
applicable. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Senior Indebtedness, and, if applicable, Senior Subordinated
Indebtedness, pursuant to which the maturity thereof may be accelerated
immediately without further
24
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, neither the Company nor C&A Co.
may pay the Subordinated Securities for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company and
C&A Co.) of written notice (a "Blockage Notice") of such default from the
Representatives of the holders of such Senior Indebtedness and, if applicable,
Senior Subordinated Indebtedness, specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (a) by written notice to the Trustee, the
Company and C&A Co. from the Person or Persons who gave such Blockage Notice,
(b) because the default giving rise to such Blockage Notice is no longer
continuing or (c) because such Senior Indebtedness, and, if applicable,
Senior Subordinated Indebtedness has been repaid in full in cash).
Notwithstanding the provisions described in the immediately preceding sentence,
unless one of the events described in clause (i) or (ii) of this paragraph is
then continuing, the Company and C&A Co. may resume payments on the
Subordinated Securities after the end of such Payment Blockage Period. Not
more than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Senior Indebtedness,
and, if applicable, Senior Subordinated Indebtedness during such period.
(Section 14.03 of Subordinated Indenture)
Upon any payment or distribution of the assets or securities of the
Company or C&A Co. to creditors upon a total or partial liquidation or
dissolution or reorganization of or similar proceeding relating to the
Company or C&A Co. or their property, or in connection with a bankruptcy,
insolvency, receivership or similar proceeding relating to the Company or C&A
Co. or their respective property, or in connection with an assignment for the
benefit of creditors or any marshalling of assets and liabilities of the Company
or C&A Co., the holders of Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness will be entitled to receive payment in full in cash
of the Senior Indebtedness and, if applicable, Senior Subordinated Indebtedness
before the holders of Subordinated Securities are entitled to receive any
payment or distribution, and until the Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness is paid in full, any payment
or distribution to which holders of Subordinated Securities would be entitled
but for the subordination provisions of the Subordinated Indenture will be
made to holders of the Senior Indebtedness and, if applicable, Senior
Subordinated Indebtedness as their interests may appear. (Section 14.02 of
Subordinated Indenture) If a distribution is made to holders of Subordinated
Securities that, due to the subordination provisions, should not have been
made to them, such holders of Subordinated Securities are required to hold
it in trust for the holders of Senior Indebtedness or Senior Subordinated
Indebtedness, as the case may be, and pay it over to them as their interests
may appear. (Section 14.05 of Subordinated Indenture)
If payment of the Subordinated Securities is accelerated because of an
Event of Default, the Company, C&A Co. or the Trustee will promptly notify the
holders of Senior Indebtedness and, if applicable, Senior Subordinated
Indebtedness or the Representatives of such holders of the acceleration. The
Company may not pay the Subordinated Securities until five business days after
such holders or the Representatives of the Senior Indebtedness and, if
applicable, Senior Subordinated Indebtedness receive notice of such acceleration
and, thereafter, may pay the Subordinated Securities only if the subordination
provisions of the Subordinated Indenture otherwise permit
25
payment at that time. (Section 14.04 of Subordinated Indenture)
By reason of such subordination provisions contained in the
Subordinated Indenture, in the event of insolvency, creditors of the Company or
C&A Co. who are holders of Senior Indebtedness or Senior Subordinated
Indebtedness may recover more, ratably, than the holders of Subordinated
Securities, and creditors of the Company who are not holders of Senior
Indebtedness or Senior Subordinated Indebtedness may recover less, ratably, than
holders of Senior Indebtedness or Senior Subordinated Indebtedness, as the case
may be, and may recover more, ratably, than the holders of Subordinated
Indebtedness.
Definitions
"Designated Senior Indebtedness" means (i) the Credit Agreement and
(ii) from and after the first date on which all Senior Indebtedness under the
Credit Agreement has been paid in full in cash and the commitments under the
Credit Agreement have been terminated, each series of Senior Indebtedness having
an aggregate principal amount (or available commitments) of at least $ 50
million.
"Credit Agreement" means the collective reference to (i) the Credit
Agreement, dated as of June 22, 1994, by and among Collins & Aikman Corporation,
Collins & Aikman Products Co., Collins & Aikman Canada Inc., the Lenders
referred to therein, Continental Bank, N.A. and NationsBank, N.A., as Managing
Agents, and Chemical Bank, as Administrative Agent, and (ii) the Credit
Agreement dated as of December 22, 1995, by and among Collins & Aikman
Corporation, Collins & Aikman Products Co., the Lenders named therein and
Chemical Bank, as Administrative Agent, and all promissory notes, guarantees,
security agreements, pledge agreements, deeds of trust, mortgages, letters of
credit and other instruments, agreements and documents executed pursuant thereto
or in connection therewith, as each may be amended, extended, renewed, restated,
replaced, refinanced, supplemented or otherwise modified (in whole or in part,
and without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement governing Indebtedness incurred
to refund or refinance a portion of the borrowings and commitments then
outstanding or permitted to be outstanding under the Credit Agreement or such
agreement; provided that such refunding or refinancing by its terms states that
it is intended to be senior in right of payment to the Subordinated Securities.
The Company shall promptly notify the Trustee of any such refunding or
refinancing of the Credit Agreement; provided that failure to give such notice
shall not impair the subordination provisions hereof.
"Interest Swap Obligation" means any obligation of any person pursuant
to any arrangement with any other person whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount. The term
"Interest Swap Obligation" shall also include interest rate exchange, collar,
cap, swap option or similar agreements providing interest rate protection.
26
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to one or more underwriters
(acting alone or through underwriting syndicates led by one or more managing
underwriters) or dealers for public offering and sale by them or may sell the
Debt Securities to investors directly or through agents designated from time to
time. The Prospectus Supplement with respect to the Debt Securities offered
thereby describes the terms of the offering of such Debt Securities and the
method of distribution of the Debt Securities offered thereby and identifies any
firms acting as underwriters, dealers or agents in connection therewith.
The Debt Securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed from time to
time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at prices determined as specified in the
Prospectus Supplement. In connection with the sale of the Debt Securities,
underwriters, dealers or agents may be deemed to have received compensation from
the Company in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Debt Securities for whom they may act
as agent. Underwriters may sell the Debt Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the purchasers for whom they may act as agent. Certain of the
underwriters, dealers or agents who participate in the distribution of the Debt
Securities may engage in other transactions with, and perform other services
for, the Company in the ordinary course of business.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of the Debt Securities, and any
discounts, concessions or commissions allowed by underwriters to dealers, are
set forth in the Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Debt Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on the resale of the Debt Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters
and their controlling persons, dealers and agents may be entitled, under
agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company
will authorize underwriters or agents to solicit offers by certain institutions
to purchase Debt Securities from the Company pursuant to delayed delivery
contracts providing for payment and delivery at a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. Unless otherwise set forth in the applicable Prospectus Supplement,
the obligations of any purchaser under any such contract will not be subject to
any conditions except that (i) the purchase of the Debt Securities shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject, and (ii) if the Debt Securities are also being sold
to underwriters acting as principals for their own account, the underwriters
shall have
26
purchased such Debt Securities not sold for delayed delivery. The
underwriters and such other persons will not have any responsibility in respect
of the validity or performance of such contracts.
CERTAIN LEGAL MATTERS
Certain legal matters in connection with the Debt Securities will be
passed upon for the Company by Cravath, Swaine & Moore, Worldwide Plaza, 825
Eighth Ave., New York, NY 10019. Certain legal matters will be passed upon for
the underwriters or agents, if any, named in a Prospectus Supplement, by Jones,
Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York 10022. From time
to time, Jones, Day, Reavis & Pogue provides legal services to C&A Co. and the
Company and other entities in which the principal stockholders of C&A Co. have
equity interests.
EXPERTS
The consolidated financial statements and schedules of C&A Co.
incorporated by reference in this prospectus and elsewhere in the registration
statement to the extent and for the periods indicated in their reports have been
audited by Arthur Andersen LLP, independent public accountants, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or any
accompanying Prospectus Supplement in connection with the offer made by this
Prospectus or any Prospectus Supplement, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Company or by any underwriter, dealer or agent. This Prospectus and any
Prospectus Supplement do not constitute an offer to sell or a solicitation of an
offer to buy any securities other than those to which they relate. Neither the
delivery of this Prospectus and any accompanying Prospectus Supplement nor any
sale of or offer to sell the Debt Securities offered hereby shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company or that the information herein is correct as of any time
after the date hereof. This Prospectus and any accompanying Prospectus
Supplement do not constitute an offer to sell or a solicitation of an offer to
buy any of the Debt Securities offered hereby in any state to any person to whom
it is unlawful to make such offer or solicitation in such state.
28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated amounts of expenses,
other than underwriting discounts, to be borne by the registrant in connection
with the distribution of the Debt Securities.
Securities and Exchange Commission registration fee... $137,931
Trustees' fees and expenses........................... 20,000
Printing and engraving expenses....................... 25,000
Rating agency fees.................................... 160,000
Accounting fees and expenses.......................... 20,000
Legal fees and expenses............................... 75,000
Blue Sky fees and expenses
(including fees and expenses of counsel).............. 20,000
Miscellaneous expenses................................ 10,000
--------
Total Expenses................................... 467,931
Item 15. Indemnification of Directors and Officers
Each Registrant is a Delaware corporation. Section 145 of the Delaware
General Corporation Law (the "DGCL") provides that a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation-a "derivative action"), by reason of the fact that he
or she 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 or other enterprise (an "indemnitee")
against expenses (including attorneys' fees), judgements, fines and amounts paid
in settlement actually and reasonably incurred if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal actions
or proceedings, had no reasonable cause to believe his or her conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation with respect to any claim, issue or matter in the derivative
action. The statute further provides for the mandatory indemnification of an
indemnitee who is successful on the merits or otherwise in defending any action,
suit or proceeding described in the statute or in defence of any claim, issue or
matter therein, and authorizes a corporation to pay in advance any expenses
incurred by an indemnitee in any covered proceeding, provided that a director or
officer must furnish to the corporation an undertaking to repay the amounts
advanced if it is ultimately determined that the director or officer is not
entitled to indemnification. The statute provides that it is not exclusive of
other indemnification that may be granted by a corporation's charter, by-laws,
disinterested director
II - 1
vote, stockholder vote, agreement or otherwise.
Each Registrant's By-Laws provide that any person made a party to or
threatened to be made a party to or otherwise involved in any action, suit or
proceeding by reason of the fact he or she is or was a director or officer of
the Registrant, or is or was a director, officer, employee or agent of any other
enterprise for which he or she served as such at the request of the Registrant,
shall be indemnified by the Registrant to the fullest extent authorized by the
DGCL against all expenses (including attorneys' fees) reasonably incurred by
such indemnitee (except, with limited exceptions, for suits brought by the
indemnitee unless authorized by the Board of Directors of the Registrant). Such
right of indemnification includes the right to be paid, in advance, all expenses
incurred in connection with the defense of a proceeding (upon receipt of any
required undertaking) and is a contract right and shall not be deemed exclusive
of any other rights to which such director or officer may be entitled outside
the indemnification provisions of said ByLaws.
Section 102(b)(7) of the DGCL permits a corporation organized
thereunder to include in its certificate of incorporation a provision
eliminating or limiting, with certain exceptions, the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director. The Certificate of Incorporation of each of the
Registrants eliminates the liability of directors to the full extent permitted
by the DGCL (as it exists or may be amended).
The foregoing statements are subject to the detailed provisions of
Sections 145 and 102(b)(7) of the DGCL, Article VIII of Collins & Aikman
Corporation's By-Laws and Article Eighth of its Restated Certificate of
Incorporation and Article VIII of Collins & Aikman Products Co.'s By-Laws and
Article Eight of its Certificate of Incorporation, as applicable.
C&A Co. has insurance coverage under policies issued to it (which
policies also cover the Company) for losses by any person who is or hereafter
may be a director or officer of C&A Co. arising from claims against that person
for any wrongful act (subject to certain exceptions) in his or her capacity as a
director or officer of C&A Co. or any of its subsidiaries, including the
Company. The policies also provide for reimbursement to C&A Co. or its
subsidiaries for indemnification given by them pursuant to common or statutory
law or the Certificate of Incorporation or the By-Laws or any contract to
any such person arising from any such claims. The policies' present coverage
is limited to a maximum of $50 million for claims made in a single year and
there is a deductible of $1 million.
II - 2
Item 16. Exhibits
(1) - Proposed form of Debt Securities Underwriting Agreement.**
(4.1) - Form of Senior Indenture.**
(4.2) - Form of Subordinated Indenture.**
(5) - Opinion of Cravath, Swaine & Moore.**
(12) - Statement regarding the computation of the ratio of earnings
to fixed charges.**
(23.1) - Consent of Arthur Andersen LLP, Independent Public
Accountants.**
(23.2) - Consent of Counsel (included in Exhibit (5)).**
(24) - Powers of Attorney.**
(25) - Statement of Eligibility and Qualification on Form T-1 of
Trustee (bound separately).*
*To be filed.
**Previously filed.
Item 17. Undertakings
A. Undertaking Pursuant to Rule 415
The undersigned Registrants hereby undertake:
(a) 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 (the "Securities Act");
(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 thereof) 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 (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by one of
the Registrants pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that
are incorporated by reference in the Registration Statement;
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(b) that, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(c) 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. Undertaking Regarding Filings Incorporating Subsequent Exchange Act
Documents by Reference
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of Collins &
Aikman Corporation's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Undertaking in Respect of Indemnification
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described in Item 15 above, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
either of the Registrants of expenses incurred or paid by a director, officer or
controlling person of such Registrant in the successful defense of any action,
suit or proceeding) is asserted by such officer, director or controlling person
in connection with the securities being registered, the Registrants 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 of whether
or not such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
D. Undertaking in Respect of Rule 430A
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
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deemed to be the initial bona fide offering thereof.
E. Undertaking in Respect of Qualification of Trust Indentures Under the
Trust Indenture Act of 1939 for Delayed Offerings
The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on April 26,
1996.
COLLINS & AIKMAN PRODUCTS CO.
By /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below on the dates indicated
by the following persons in the capacities indicated.
Signature Title Date
/s/ Thomas E. Hannah Director, President and April 26, 1996
- -------------------------------- Chief Executive Officer
(Thomas E. Hannah) (Principal Executive Officer)
/s/ J. Michael Stepp Executive Vice President April 26, 1996
- -------------------------------- and Chief Financial Officer
(J. Michael Stepp) (Principal Financial and
Accounting Officer)
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Signature Title Date
/s/ David A. Stockman* Co-Chairman of the Board April 26, 1996
- -------------------------------- of Directors
(David A. Stockman)
/s/ Randall J. Weisenburger* Co-Chairman of the Board April 26, 1996
- -------------------------------- of Directors
(Randall J. Weisenburger)
*By /s/ Thomas E. Hannah
- -------------------------
Thomas E. Hannah
Attorney-In-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Charlotte, State of North Carolina, on April 26,
1996.
COLLINS & AIKMAN CORPORATION
By /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below on the dates indicated
by the following persons in the capacities indicated.
Signature Title Date
/s/ Thomas E. Hannah Director and Chief April 26, 1996
- -------------------------------- Executive Officer
(Thomas E. Hannah) (Principal Executive Officer)
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Signature Title Date
/s/ J. Michael Stepp Executive Vice President April 26, 1996
- -------------------------------- and Chief Financial Officer
(J. Michael Stepp) (Principal Financial and
Accounting Officer)
/s/ David A. Stockman* Co-Chairman of the Board April 26, 1996
- -------------------------------- of Directors
(David A. Stockman)
/s/ Randall J. Weisenburger* Co-Chairman of the Board April 26, 1996
- -------------------------------- of Directors
(Randall J. Weisenburger)
/s/ Robert C. Clark* Director April 26, 1996
- --------------------------------
(Robert C. Clark)
/s/ George L. Majoros, Jr.* Director April 26, 1996
- --------------------------------
(George L. Majoros, Jr.)
/s/ James J. Mossman* Director April 26, 1996
- --------------------------------
(James J. Mossman)
/s/ Warren B. Rudman* Director April 26, 1996
- --------------------------------
(Warren B. Rudman)
/s/ Stephen A. Schwarzman* Director April 26, 1996
- --------------------------------
(Stephen A. Schwarzman)
/s/ W. Townsend Ziebold, Jr.* Director April 26, 1996
- --------------------------------
(W. Townsend Ziebold, Jr.)
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*By /s/ Thomas E. Hannah
- --------------------------------
Thomas E. Hannah
Attorney-In-Fact
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