Common use of Distributions; Capital Change; Restricted Investments Clause in Contracts

Distributions; Capital Change; Restricted Investments. Neither the Borrower nor any of its Subsidiaries shall (a) directly or indirectly declare or make, or incur any liability to make, any Distribution, except Distributions to the Borrower by its Subsidiaries, (b) make any change in its capital structure which could have a Material Adverse Effect or (c) make any Restricted Investment. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing immediately before and after giving effect to the following, Borrower may: (i) purchase its common stock for any Plan not to exceed $1,000,000 in a single transaction or series of related transactions and not to exceed $3,000,000 in the aggregate in any Fiscal Year, (ii) make additional investments in its Subsidiaries formed in the United Kingdom or in its existing joint ventures not to exceed $10,000,000 in the aggregate through the Stated Termination Date; provided that during the first 12 months following the Closing Date, such aggregate investment shall not exceed $3,000,000, (iii) make a dividend to its stockholders once in each Fiscal Quarter commencing with the Fiscal Quarter beginning on June 1, 2003 so long as (A) Borrower has provided Agent with five (5) Business Days prior written notice of its proposal to make a dividend, (B) Agent shall have received Borrower’s quarterly or annual Financial Statements delivered pursuant to Section 5.2(a) or Section 5.2(g) hereof for the immediately prior Fiscal Quarter or Fiscal Year, as applicable, for which Borrower has received written notice from Agent that such Financial Statements are in form and substance satisfactory to Agent in Agent’s reasonable judgment, (C) Borrower’s Availability equals an amount no less than $20,000,000 after giving effect to such dividend and shall continue to exceed $20,000,000 on a pro forma basis for a period of at least 60 days after making such dividend; provided that at the time of making any dividend, Agent shall implement a Reserve against the Borrowing Base in an amount equal to such dividend which Reserve shall be released upon Agent’s determination that Borrower has maintained Availability (which calculation for purposes of this provision only shall exclude such Reserve) of at least $20,000,000 for a 60-day period following such dividend and (D) the aggregate amount of all dividends made in any Fiscal Year does not exceed the amount of dividends permitted to be made to the shareholders of the Borrower under the terms of the Indenture as in effect on the date hereof, and (iv) make Permitted Acquisitions.

Distributions; Capital Change; Restricted Investments. Neither the Borrower nor any of its Subsidiaries shall (a) directly or indirectly declare or make, or incur any liability to make, any Distribution, except Distributions to the Borrower by its Subsidiaries, (b) make any change in its capital structure which could have a Material Adverse Effect or (c) make any Restricted Investment. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing immediately before and after giving effect to the following, Borrower may: (i) purchase its common stock for any Plan not to exceed $1,000,000 in a single transaction or series of related transactions and not to exceed $3,000,000 in the aggregate in any Fiscal Year, (ii) make additional investments in its Subsidiaries formed in the United Kingdom or in its existing joint ventures not to exceed and/or purchase the equity interests of CPPC Decorative Products Co., Ltd. and CG Omnova Decorative Products (Shanghai) Co., Ltd. held by Chroen Pokphand Group; provided that (x) no more than $10,000,000 5,000,000 of Revolving Loans in the aggregate can be used to fund the aggregate amount of all such investments in its Subsidiaries formed in the United Kingdom through the Stated Termination Date; provided that during Date and no more than $5,000,000 of Revolving Loans in the first 12 months following aggregate can be used to fund the Closing Dateaggregate amount of all such purchases of the equity interests of CCPC Decorative Products Co., Ltd. and CG Omnova Decorative Products (Shanghai) Co., Ltd. held by Chroen Pokphand Group through the Stated Termination Date and (y) Borrower’s Availability equals an amount no less than $25,000,000 immediately prior and immediately after giving effect to any such aggregate investment shall not exceed $3,000,000or purchase, (iii) make a dividend to its stockholders once in each Fiscal Quarter commencing with the Fiscal Quarter beginning on June 1, 2003 2007 so long as (A) Borrower has provided Agent with five (5) Business Days prior written notice of its proposal to make a dividend, (B) Agent shall have received Borrower’s quarterly or annual Financial Statements delivered pursuant to Section 5.2(a) or Section 5.2(g) hereof for the immediately prior Fiscal Quarter or Fiscal Year, as applicable, for which Borrower has received written notice from Agent that such Financial Statements are in form and substance satisfactory to Agent in Agent’s reasonable judgment, (C) Borrower’s Availability equals an amount no less than $20,000,000 25,000,000 after giving effect to such dividend and shall continue to exceed $20,000,000 on a pro forma basis for a period of at least 60 days after making such dividend; provided that at the time of making any dividend, Agent shall implement a Reserve against the Borrowing Base in an amount equal to such dividend which Reserve shall be released upon Agent’s determination that Borrower has maintained Availability (which calculation for purposes of this provision only shall exclude such Reserve) of at least $20,000,000 for a 60-day period following such dividend and (D) the aggregate amount of all dividends made in any Fiscal Year does not exceed the amount of dividends permitted to be made to the shareholders of the Borrower under the terms of the Indenture Term Loan Agreement as in effect on the date hereof, hereof and (iv) make a Permitted AcquisitionsAcquisition; provided, that all the terms and conditions set forth in the definition of “Permitted Acquisition” are satisfied at or prior to the effective date of such Permitted Acquisition.