<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GREAT LAKES CARBON CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 2990 13-3637043
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification
Organization) Number)
</TABLE>
--------------------------
551 FIFTH AVENUE
SUITE 3600
NEW YORK, NEW YORK 10176
(212) 370-5770
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
JAMES D. MCKENZIE
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
551 FIFTH AVENUE
SUITE 3600
NEW YORK, NEW YORK 10176
(212) 370-5770
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
--------------------------
COPIES TO:
JEROME L. COBEN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 1/4% Series B Senior Subordinated Notes
due 2008.................................. $219,893,171 100% $219,893,171 $64,869
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes $44,893,171 of Additional Notes (as defined herein) which the
Company may elect to issue in lieu of four semiannual cash payments.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 21, 1998
PROSPECTUS
, 1998
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.
<PAGE>
OFFER FOR ALL OUTSTANDING
10 1/4% SENIOR SUBORDINATED NOTES DUE 2008 IN EXCHANGE FOR
[LOGO]
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 OF
GREAT LAKES CARBON CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED.
Great Lakes Carbon Corporation (the "Company") hereby offers the holders
(the "Holders") of its issued and outstanding 10 1/4% Senior Subordinated Notes
due 2008 (the "Old Notes"), upon the terms and subject to the conditions set
forth in this prospectus (this "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal," which together with this Prospectus
constitute the "Exchange Offer"), to exchange an aggregate principal amount at
maturity of up to $175,000,000 of its 10 1/4% Series B Senior Subordinated Notes
due 2008 (the "New Notes" and, together with the Old Notes, the "Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like principal amount at maturity of its Old Notes. The
Company is the surviving corporation of a merger (the "Merger") between Great
Lakes Merger Sub Corp. ("Merger Sub"), a wholly owned subsidiary of Great Lakes
Acquisition Corp. ("Holdings"), which was formed by American Industrial Partners
Capital Fund II, L.P. ("AIP"), and the Company. The terms of the New Notes are
identical in all material respects to the Old Notes except (i) that the New
Notes have been registered under the Securities Act, (ii) for certain transfer
restrictions and registration rights relating to the Old Notes and (iii) that
the New Notes will not contain certain provisions relating to Liquidated Damages
(as defined) to be paid to the Holders of Old Notes under certain circumstances
relating to the timing of the Exchange Offer and other registration
requirements. The Company issued $175,000,000 aggregate principal amount of Old
Notes on May 22, 1998 pursuant to exemptions from, or transactions not subject
to, the registration requirements of the Securities Act and applicable state
securities laws (the "Offering").
Concurrent with the Exchange Offer, Holdings will offer (the "Holdings
Exchange Offer") the holders of its issued and outstanding 13 1/8% Senior
Discount Debentures due 2009 (the "Old Holdings Debentures") upon the terms and
subject to the conditions set forth in a prospectus and the accompanying Letter
of Transmittal to exchange an aggregate principal amount at maturity of up to
$56,600,000 of its 13 1/8% Series B Senior Discount Debentures due 2009 (the
"New Holdings Debentures" and, together with the Old Holdings Debentures, the
"Holdings Debentures"), which have been registered under the Securities Act, for
a like principal amount at maturity of the Old Holdings Debentures.
Interest on the Old Notes are and the New Notes will be payable in cash
semiannually, in arrears, on May 15 and November 15 of each year, commencing on
November 15, 1998. For interest payments due through May 15, 2003, the Company
may, at its option, make up to four semiannual interest payments through the
issuance of Additional Notes (as defined) in an aggregate principal amount equal
to the amount of the interest that would be payable if the rate per annum were
equal to 11 3/4% (provided, that incremental amounts of less than $1,000 shall
be payable in cash). Additional Notes shall have the same terms as the Notes and
all references to Notes herein shall include the Additional Notes. For each Old
Note accepted for exchange, the Holder of such Old Note will receive a New Note
having a principal amount equal to that of the surrendered Old Note. The New
Notes will bear interest from the most recent date to which interest has been
paid on the Old Notes or, if no interest has been paid on the Old Notes, from
May 22, 1998. Old Notes accepted for exchange will cease to accrue interest from
and after the date of consummation of the Exchange Offer. Holders of Old Notes
whose Old Notes are accepted for exchange will not receive any payment in
respect of accrued interest on such Old Notes. Old Notes not accepted for
exchange will continue to accrue interest.
The Notes will mature on May 15, 2008. The Old Notes are and the New Notes
will be redeemable at the option of the Company, in whole or in part, at any
time on or after May 15, 2003, at the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
redemption. In addition, at any time prior to May 15, 2001, the Company may
redeem up to an aggregate of 35% of the aggregate principal amount of Notes
issued under the Indenture (as defined) (including Additional Notes) at a
redemption price equal to 110.250% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Equity Offerings (as
defined); PROVIDED HOWEVER, that at least $100 million aggregate principal
amount of the New Notes issued hereunder together with the Old Notes originally
issued and not exchanged in the Exchange Offer remain outstanding immediately
after such redemption. Upon a Change of Control (as defined), the Company will
be required to offer to purchase any or all of the Notes at a purchase price
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase. See "Risk
Factors--Possible Inability to Repurchase Notes Upon Change of Control" and
"Description of Notes--Optional Redemption" and "--Certain Covenants--Change of
Control."
The Old Notes are and the New Notes will be subordinated in right of payment
to all existing and future Senior Indebtedness (as defined) of the Company,
including borrowings under the New Credit Agreement (as defined). The Company
currently has no Subsidiaries (as defined) other than Foreign Subsidiaries (as
defined). The New Notes will be guaranteed by all of the Company's Subsidiaries,
if any, created subsequent to the Offering other than Foreign Subsidiaries,
Finance Subsidiaries and Receivables Subsidiaries (each as defined) (the
"Subsidiary Guarantors"). The guarantees of the Subsidiary Guarantors (the
"Subsidiary Guarantees") will be subordinated in right of payment to all
existing and future Senior Indebtedness of the Subsidiary Guarantors, including
guarantees under the New Credit Agreement. As of March 31, 1998, on a pro forma
basis giving effect to the Offering and the other Acquisition Transactions (as
defined), the Company would have had approximately $134.4 million of Senior
Indebtedness and the Foreign Subsidiaries would have had Indebtedness (as
defined) of approximately $15.9 million, all of which would effectively rank
senior in right of payment to the Notes. The Indenture (as defined) pursuant to
which the Old Notes were and the New Notes will be issued permits the Company
and its subsidiaries to incur additional Indebtedness, including Senior
Indebtedness, subject to certain limitations. See "Description of Notes--Certain
Covenants." Holdings guaranteed (the "Loan Guaranty") the Company's obligations
under the New Credit Agreement. The Loan Guaranty is secured by a pledge of all
of the capital stock of the Company. See "Description of Other Indebtedness--New
Credit Agreement."
The Company does not intend to apply for listing of the Notes on any
securities exchange or in any automated quotation system. The Notes are eligible
for trading in Private Offerings, Resales and Trading through Automatic Linkages
("PORTAL") market of the National Association of Securities Dealers, Inc. upon
issuance.
SEE "RISK FACTORS," BEGINNING ON PAGE 16, FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES
IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED 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 , 1998
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement (as
defined). Based on interpretations by the staff of the Division of Corporation
Finance (the "Staff") of the Securities and Exchange Commission (the "SEC"), as
set forth in no-action letters issued to third parties, the Company believes
that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by Holders thereof
(other than any Holder which is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act), without compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such Holder's business and such
Holder, other than a broker-dealer, has no arrangement with any person to engage
in a distribution of such New Notes. The Company has not sought and does not
intend to seek its own no-action letter in connection with the Exchange Offer
and there can be no assurance that the SEC would make a similar determination
with respect to the Exchange Offer. Each Holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. If any holder is an affiliate of the
Company and is engaged in or intends to engage in or has any arrangement with
any person to participate in the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, then such Holder (i) could not rely on the
applicable interpretations of the Staff and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes if such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date (as defined), it will make this prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. If the Company terminates the Exchange Offer and does not
accept for exchange any Old Notes, the Company will promptly return the Old
Notes to the Holders thereof. See "The Exchange Offer."
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes. The
Initial Purchasers (as defined) have advised the Company that they currently
intend to make a market in the New Notes. The Initial Purchasers are not
obligated to do so, however, and any market-making with respect to the New Notes
may be discontinued at any time without notice. The Company does not intend to
apply for listing or quotation of the New Notes on any securities exchange or
stock market. In addition, to comply with the securities laws of certain
jurisdictions, it may be necessary to qualify, for sale or register thereunder,
the New Notes prior to offering or selling such New Notes. The Company has
agreed, pursuant to the Registration Rights Agreement, subject to certain
limitations specified therein, to register or qualify the New Notes for offer or
sale under all applicable state securities or Blue Sky laws before the time the
Registration Statement (of which this Prospectus forms a part) is declared
effective by the SEC.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT TENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN
2
<PAGE>
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
The New Notes will be available initially only in book-entry form. The
Company expects that the New Notes issued pursuant to the Exchange Offer will be
issued in the form of one or more Global Notes (as defined) that will be
deposited with, or on behalf of, The Depository Trust Company ("DTC" or the
"Depositary") and registered in its name or in the name of Cede & Co., as its
nominee. Beneficial interests in the Global Note representing the New Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. So long as DTC or its nominee
is the registered owner or holder of the Global Note, DTC or such nominee, as
the case may be, will be considered the sole owner or holder of the Notes
represented by such Global Note for all purposes under the Indenture. Payments
of the principal of, premium, if any, interest and Liquidated Damages, if any,
on, the Global Note will be made to DTC or its nominee, as the case may be, as
the registered owners thereof. None of the Company, the Trustee (as defined) or
any Paying Agent (as defined) will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest. After the
initial issuance of such Global Note, New Notes in certificated form will be
issued in exchange for the Global Note only in accordance with the terms and
upon the conditions set forth in the Indenture. See "Description of Notes--Book
Entry; Delivery and Form."
3
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the SEC a registration statement on Form S-4
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the New Notes
offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further information
with respect to the Company and the New Notes offered hereby, reference is made
to the Registration Statement. Any statements made in this Prospectus concerning
the provisions of certain documents 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 filed with the SEC.
Since the consummation of the Acquisition Transactions, the Company has not
been subject to, but upon consummation of the Exchange Offer, the Company will
again become subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith will file reports and other information with the SEC. The Registration
Statement, and the reports and other information filed by the Company with the
SEC in accordance with the Exchange Act may be inspected, without charge, at the
Public Reference Section of the SEC located at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 and at the following Regional Offices of the SEC: 7
World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of the
material may be obtained from the Public Reference Section of the SEC upon
payment of the prescribed fees. The SEC also maintains a site on the World Wide
Web that contains reports, proxy and information statements and other
information at HTTP://WWW.SEC.GOV.
In the event that the Company is not required to be subject to the reporting
requirements of the Exchange Act in the future, as required under the Indenture,
the Company has agreed that, for so long as any of the Notes remain outstanding,
it will file with the SEC (unless the SEC will not accept such a filing) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's certified independent
accountants and (ii) all reports that would be required to be filed with the SEC
on Form 8-K if the Company were required to file such reports. In addition, for
so long as any of the Notes remain outstanding, the Company has agreed to make
available to any prospective purchaser of the Notes or beneficial owner of the
Notes in connection with any sale thereof the information required by Rule
144A(d)(4) under the Securities Act.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the "Summary," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
sections, contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, which can be identified by the
use of forward-looking terminology, such as "may," "intend," "will," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. In particular, any statements,
express or implied, concerning future operating results or the ability to
generate revenues, income or cash flow to service the Notes, including the
Adjusted Credit Data presented under "Summary Consolidated Financial and Other
Data" and information regarding the new La Plata Kiln presented elsewhere
herein, are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, there
can be no assurance that such expectations will prove to have been correct. All
forward-looking statements are expressly qualified by such cautionary
statements.
4
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED HEREIN AND IS
QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN CONJUNCTION WITH, THE MORE
DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES
THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT REQUIRES
OTHERWISE, ALL REFERENCES HEREIN TO THE "COMPANY" OR "GLC" MEAN GREAT LAKES
CARBON CORPORATION, ITS WHOLLY OWNED SUBSIDIARIES AND COPETRO, S.A. ("COPETRO"),
WHICH IS 99.8% OWNED BY THE COMPANY, AND ITS AND THEIR PREDECESSORS (TO THE
EXTENT THAT SUCH PREDECESSORS' ACTIVITIES RELATED TO THE BUSINESS OF THE COMPANY
DESCRIBED HEREIN), COLLECTIVELY. UNLESS OTHERWISE INDICATED, ALL REFERENCES TO
"TONS" MEAN SHORT TONS OF 2,000 POUNDS. UNLESS OTHERWISE INDICATED, ALL
REFERENCES TO "WESTERN WORLD" MEANS ALL COUNTRIES EXCEPT CHINA, EASTERN EUROPEAN
COUNTRIES AND THOSE COUNTRIES WHICH FORMERLY COMPRISED THE SOVIET UNION. ALL
REFERENCES TO NOTES HEREIN SHALL INCLUDE THE ADDITIONAL NOTES.
THE COMPANY
The Company is the largest producer of calcined petroleum coke ("CPC") in
the world. Anode grade CPC is the principal raw material used in the production
of carbon anodes for use in aluminum smelting, and is used by every producer of
primary aluminum in the world. Anode grade CPC sales represented approximately
81.9% of the Company's total 1997 sales. The Company believes that it has
approximately a 23.1% market share of U.S. anode grade CPC sales and a 15.7%
market share of Western World anode grade CPC sales. The Company also sells
industrial grade CPC for use in the production of titanium dioxide, as a carbon
additive in the manufacture of steel and foundry products and for use in other
specialty materials and chemicals markets. The Company produces CPC at its three
facilities located in Port Arthur, Texas, Enid, Oklahoma and La Plata,
Argentina. The Company's annual CPC production capacity of 1.6 million tons,
including a 220,000 ton increase as a result of its completion of a new kiln at
its Argentine facility (the "New La Plata Kiln") in May 1998, is approximately
60% greater than that of its next largest competitor. During the twelve months
ended March 31, 1998, the Company sold 1.5 million tons of CPC, had net sales of
$238.6 million and had EBITDA (as defined) of $62.5 million. Assuming the New La
Plata Kiln had been completed on April 1, 1997 and operated at 70% capacity
(representing the amount of capacity currently pre-contracted to customers for
the balance of 1998), EBITDA would have been $69.0 million for the twelve months
ended March 31, 1998 (assuming margins consistent with the Company's actual
financial performance during the period). The Company does not anticipate
operating the New La Plata Kiln at full capacity until 1999. See "Disclosure
Regarding Forward-Looking Statements" and the footnotes to "Summary Consolidated
Financial and Other Data."
CPC is produced from raw petroleum coke ("RPC") utilizing a
high-temperature, rotary-kiln process developed by the Company in the 1930s. RPC
is a by-product of the petroleum refining process and typically represents an
insignificant portion of overall refinery revenues. The alternative use for RPC,
as a fuel source, generates a significantly lower value to refiners than the
value they receive in selling RPC for use in the production of CPC. As a result,
CPC producers are able to obtain lower purchase prices for RPC in times of
declining CPC prices, enabling CPC producers to earn a relatively stable profit
spread even in periods of CPC price declines.
Carbon anodes, which are manufactured utilizing anode grade CPC, are used by
every primary aluminum smelter in the world as a key component in aluminum
smelting pot lines. Carbon anodes act as conductors of electricity and as a
source of carbon in the electrolytic cell that reduces alumina to aluminum
metal. In this electrochemical aluminum smelting process, the carbon anodes, and
hence the CPC, are consumed.
There are no known economic substitutes for anode grade CPC in the
manufacture of carbon anodes, nor have there been since anode grade CPC replaced
coal for this application in the 1930's. The Company believes that approximately
0.4 pounds of anode grade CPC are consumed for every one pound of primary
aluminum produced, and that such consumption ratio has been substantially
constant over the past ten
5
<PAGE>
years. Worldwide demand for anode grade CPC is directly tied to the level of
global production of primary aluminum.
Industrial grade CPC is used in the production of titanium dioxide, as a
carbon additive in the manufacture of steel and foundry products and for use in
other specialty materials and chemicals markets. Demand for industrial grade CPC
has grown largely due to the ongoing replacement by titanium dioxide producers
of the sulfate manufacturing process that does not utilize CPC with the
environmentally preferable chloride process that does utilize CPC. The Company's
participation in the industrial CPC sector diversifies its product offerings and
reduces its dependence on aluminum customers.
The Company believes that current anode grade CPC market fundamentals are
attractive. Western World primary aluminum production increased approximately
34.7% to 17.8 million tons in 1997 from 13.2 million tons in 1986, while anode
grade CPC production capacity did not increase significantly. Furthermore,
industry sources project continued strong growth in primary aluminum production
over the next several years. As a result, CPC industry operating rates are
currently at historically high levels. The Company has been operating at full
capacity since 1995 and believes that other major U.S. calciners are also
operating at or near full capacity.
The Company believes that the calcining industry will continue to operate at
or near full capacity, as anticipated capacity expansions in the anode grade CPC
market are expected to provide less additional capacity over the next several
years than required to meet aluminum demand projected by industry sources.
Further, the Company believes there are significant barriers to entry to the CPC
production industry. The Company estimates that a greenfield, minimum efficient
scale, stand-alone 200,000 ton calcining facility would, depending on location,
cost in excess of $50 million and take approximately three years to permit and
construct. Further impediments to the creation of new production capacity
include the difficulty in securing consistent sources of RPC supply and the
reluctance of aluminum smelters to change CPC supply sources.
The current high industry operating rates have led to anode grade CPC
pricing becoming less influenced by aluminum pricing than has been the case
historically. Instead, anode grade CPC pricing has become more influenced by the
demand generated from the volume of aluminum production. Accordingly, the
average price per ton realized by the Company for anode grade CPC increased by
over 60% from 1994 to 1997, while aluminum prices as quoted on the London Metal
Exchange increased only 9%.
The Company's management team is among the most experienced in the industry,
with an average tenure with the Company of over 22 years. James D. McKenzie, the
Company's Chief Executive Officer and President, has been with the Company for
over 27 years; A. Frank Baca, Senior Vice President of Operations and
Administration, 31 years; James W. Betts, Vice President of Raw Materials, 30
years; Robert C. Dickie, Vice President of Sales, 9 years; and Adele Robles,
Controller, 17 years. The address of the Company's principal executive offices
is 551 Fifth Avenue, Suite 3600, New York, New York 10176 and the telephone
number is (212) 370-5770.
BUSINESS STRATEGY
The Company's management team plans to sustain and build upon GLC's success
by focusing on the following strategic initiatives:
- MAINTAIN STRONG CUSTOMER RELATIONSHIPS--Over its 60-year history in CPC
production, the Company has forged customer relationships spanning several
decades with many of the world's largest aluminum producers, including
Aluminum Company of America ("Alcoa"), Alusaf Limited ("Alusaf") and
Alusuisse-Lonza Holding Ltd. ("Alusuisse"). The Company has developed and
expects to maintain these relationships by virtue of its industry
leadership position, its technical support and customer service and its
superior ability to produce anode grade CPC to customized specifications.
Although CPC represents only 5% to 7% of an aluminum smelter's total
costs, the
6
<PAGE>
quality and consistency of CPC are critical to a smelter. Through its
comprehensive "Total Quality Management" program, the Company was the
first domestic calciner to attain ISO 9002 registration for its ability to
meet internationally recognized quality and process standards. All of the
Company's facilities are ISO 9002 registered.
- MAINTAIN SUPERIOR ACCESS TO RAW MATERIALS--The Company's long history and
leading market position in CPC production has led to strong long-term
relationships with numerous RPC suppliers, including Exxon Corporation
("Exxon"), Conoco Inc. ("Conoco"), Chevron Corporation ("Chevron"), YPF
Sociedad Anonima ("YPF") and Marathon Oil Company ("Marathon"). The
Company's access to RPC supply from 18 refineries worldwide provides it
with a competitive advantage in cost-effectively blending various grades
of RPC to produce CPC to exact customer specifications.
- OPERATE DIVERSE, STATE-OF-THE-ART FACILITIES--The Company strives to
maintain geographically diverse, state-of-the-art production facilities
that provide a maximum level of operating flexibility. The Port Arthur,
Texas plant (680,000 tons per year) provides the Company with access to
RPC received by rail, barge or ship from the U.S. Gulf Coast and
international oil refiners and allows the Company to serve international
CPC markets. The Enid, Oklahoma plant (490,000 tons per year) is
strategically located to serve the domestic CPC markets and to access RPC
from refineries in the mid-continent region. The plant in La Plata,
Argentina (220,000 tons per year) provides the Company with access to high
quality RPC from a nearby oil refinery and also positions the Company well
to serve international CPC markets. The Company completed construction of
the New La Plata Kiln in May 1998, which doubled the facility's previous
production capacity.
- MAINTAIN STRONG PRESENCE IN INDUSTRIAL GRADE CPC--Since 1990, the Company
has pursued a strategy of diversifying its product mix by developing and
expanding its presence in the market for industrial grade CPC. GLC has
increased its net sales of industrial grade CPC by approximately 92.7%
since 1990 by focusing its industrial grade sales effort and investing in
value-added operations at its production facilities. Sales of industrial
grade CPC reduce the Company's dependence on aluminum customers.
- PURSUE SELECTIVE EXPANSION OPPORTUNITIES--The Company may explore
acquisition and expansion opportunities from time to time as warranted by
market conditions. Strong market conditions, together with an excellent
source of RPC supply, prompted the Company to expand its Argentinean
facility. The Company is currently evaluating several additional
opportunities in the petroleum coke industry.
ACQUISITION TRANSACTIONS
Pursuant to an Agreement and Plan of Merger dated as of April 21, 1998 (the
"Merger Agreement"), Holdings, a corporation formed by AIP, acquired all of the
issued and outstanding capital stock of the Company, through the merger of a
wholly owned subsidiary of Holdings into the Company. The aggregate
consideration paid by AIP, its affiliates and certain other individuals
associated with AIP pursuant to the Merger Agreement was approximately $376.9
million, (the "Merger Consideration"). The Company was the surviving corporation
in the Merger.
In order to finance the Merger, (i) AIP and affiliates of, and certain other
individuals associated with, AIP contributed $65.0 million and $330,000,
respectively to Holdings in exchange for common equity of Holdings (the "AIP
Equity Contribution"), (ii) Holdings contributed $92.4 million (the sum of $62.3
million of the AIP Equity Contribution and the proceeds from the issuance and
sale of the Holdings Debentures) to the equity of the Company (the "Holdings
Equity Contribution"), (iii) the Company entered into a syndicated senior
secured agreement (the "New Credit Agreement") providing for term loan
borrowings (the "Term Loan Facilities") in an aggregate principal amount of
approximately $111.0 million and a revolving loan facility (the "Revolving
Credit Facility") for borrowings of up to $25.0 million, and borrowed all of the
term loans available, and (iv) the Company issued and sold
7
<PAGE>
$175.0 million aggregate principal amount of the Old Notes offered pursuant to
an Offering Memorandum dated as of May 18, 1998 (the "Offering Memorandum").
In connection with the Merger, the Company commenced a tender offer (the
"Tender Offer") on April 24, 1998, for any and all of its outstanding $65.0
million aggregate principal amount of 10% Senior Secured Notes due 2006 (the
"10% Notes"). In addition, in connection with the Tender Offer, the Company
simultaneously solicited consents (the "Solicitation") from holders of the 10%
Notes to certain amendments to and waivers under the indenture (the "10%
Indenture") governing the 10% Notes and certain related collateral documents.
All of the outstanding 10% Notes were purchased by the Company pursuant to the
Tender Offer and Solicitation and such purchase was consummated concurrently
with the closing of the Offering. The aggregate consideration paid by the
Company in the Tender Offer and Solicitation was approximately $74.1 million
(including the amount paid to holders tendering 10% Notes in excess of the
principal amount being tendered (the "Tender Premium") of approximately $9.1
million, but excluding accrued interest).
As used herein, the term "Acquisition Transactions" means the Merger, the
AIP Equity Contribution, the Holdings Equity Contribution, the Holdings
Debenture Offering, the Company's execution of and borrowings under the New
Credit Agreement, the Offering, the Tender Offer, the Solicitation and the
execution of the Supplemental Indenture.
AMERICAN INDUSTRIAL PARTNERS
AIP is a private investment fund headquartered in San Francisco and New York
with committed capital of approximately $800.0 million. AIP seeks to invest in
companies which hold either a protected competitive position or proprietary
capability, ideally combined with a leading market share. The firm does not seek
to play a role in daily management; rather, AIP seeks to provide its portfolio
companies with access to the management expertise of its operating partners, all
of whom are former Chief Executive Officers of Fortune 500 corporations, through
active board-level participation as well as on-call advice when desired.
Following the consummation of the Acquisition Transactions, AIP, its
affiliates and certain other individuals associated with AIP, contributed $65.3
million in equity to Holdings, and Theodore C. Rogers, a general partner of AIP
and former Chairman and Chief Executive Officer of NL Industries, Inc., became
the Company's Non-Executive Chairman of the Board. Although no specific
arrangements are in place, AIP intends to offer the Company's executive officers
the opportunity to own up to approximately 5.0% of Holdings' equity through a
combination of direct investments and option programs.
8
<PAGE>
THE EXCHANGE OFFER
On May 22, 1998, the Company issued $175.0 million aggregate principal
amount of Old Notes. The Old Notes were sold pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws, in order to enable the Company to raise
funds on a more expeditious basis than necessarily would have been possible had
the initial sale been pursuant to an offering registered under the Securities
Act. Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex. Brown
Incorporated and BancAmerica Robertson Stephens (the "Initial Purchasers"), as a
condition to their purchase of the Old Notes, requested that the Company agree
to commence the Exchange Offer following the Offering.
<TABLE>
<S> <C>
Notes Offered....................... Up to $175,000,000 aggregate principal amount of
Series B 10 1/4% Senior Subordinated Notes due 2008.
The Exchange Offer.................. The New Notes are being offered in exchange for a
like principal amount of the Old Notes. Old Notes may
be tendered only in integral multiples of $1,000. The
issuance of the New Notes is intended to satisfy the
obligations of the Company contained in the
Registration Rights Agreement, dated as of May 22,
1998 among the Company and the Initial Purchasers
(the "Registration Rights Agreement"). For procedures
for tendering see--"The Exchange Offer."
Tenders, Expiration Date
Withdrawal........................ The Exchange Offer will expire at 5:00 p.m. New York
City time, on , 1998, or such later date
and time to which it is extended. Each Holder
tendering Old Notes must acknowledge that such Holder
is not engaging in, nor does such Holder intend to
engage in, a distribution of the New Notes. The
tender of Old Notes pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration
Date. Any Old Note not accepted for exchange for any
reason will be returned without expense to the
tendering Holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.
Conditions to Exchange Offer........ The Exchange Offer is not subject to any condition
other than that the Exchange Offer does not violate
any applicable law or regulation or interpretation of
the Staff.
United States Federal Income Tax
Considerations.................... There will be no United States Federal income tax
consequences to Holders who exchange Old Notes for
New Notes pursuant to the Exchange Offer. See
"Certain United States Federal Income Tax
Considerations."
Exchange Agent...................... State Street Bank and Trust Company of California,
N.A. (the "Exchange Agent") is serving as exchange
agent in connection with the Exchange Offer.
Use of Proceeds..................... There will be no proceeds to the Company from the
exchange pursuant to the Exchange Offer. See "Use of
Proceeds" and "Capitalization."
Shelf Registration Statement........ Under certain circumstances, certain holders of Notes
(including holders of Old Notes who are not permitted
to participate in the Exchange Offer or holders who
may not freely resell New Notes received in the
Exchange Offer) may require the Company to file and
cause to become effective, a Shelf Registration
Statement (as defined), which would cover resales of
Notes by such holders. See "Description of Notes--
Registration Rights; Liquidated Damages."
</TABLE>
9
<PAGE>
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. Subject to certain limited exceptions, holders
of Old Notes who do not exchange their Old Notes for New Notes in the Exchange
Offer will no longer have registration rights with respect to their Old Notes.
The Company does not currently anticipate that it will register the Old Notes
under the Securities Act. See "Description of Notes--Registration Rights;
Liquidated Damages." Based on interpretations by the Staff, as set forth in
no-action letters issued to third parties, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold or otherwise transferred by Holders thereof (other than any
Holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holder's business and such
Holder, other than a broker-dealer, has no arrangement with any person to
participate in the distribution of such New Notes. The Company has not sought
and does not intend to seek its own no-action letter in connection with the
Exchange Offer and there can be no assurance that the SEC would make a similar
determination with respect to the Exchange Offer. Each Holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of such New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes must
acknowledge that such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities and that it will deliver
this Prospectus in connection with any resale of such New Notes. See "Plan of
Distribution." In addition, to comply with the securities laws of certain
jurisdictions, it may be necessary to qualify for sale or register thereunder
the New Notes prior to offering or selling such New Notes. The Company has
agreed, pursuant to the Registration Rights Agreement, subject to certain
limitations specified therein, to register or qualify the New Notes for offer or
sale under all applicable state securities or Blue Sky laws before the time the
Registration Statement (of which this Prospectus forms a part) is declared
effective by the SEC. See "The Exchange Offer-- Consequences of Exchanging Old
Notes" and "Description of Notes--Registration Rights; Liquidated Damages."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except (i) that the New Notes have been registered under the
Securities Act, (ii) for certain transfer restrictions and registration rights
relating to the Old Notes and (iii) that the New Notes will not contain certain
provisions relating to Liquidated Damages to be paid to Holders of Old Notes
under certain circumstances relating to the timing of the Exchange Offer and to
other registration requirements. See "Description of Notes-- Registration
Rights; Liquidated Damages." The New Notes will bear interest from the most
recent date to which interest has been paid on the Old Notes or, if no interest
has been paid on the Old Notes, from May 22, 1998. Accordingly, registered
Holders of New Notes on the relevant record date for the first interest payment
date following the consummation of the Exchange Offer will receive interest
accruing from the most recent date to which interest has been paid on the Old
Notes or, if no interest has been paid, from May 22, 1998. Old Notes accepted
for exchange will cease to accrue interest from and after the date of
consummation of the Exchange Offer. Holders whose Old Notes are accepted for
exchange will not receive any payment in respect of interest on such Old Notes
otherwise payable on any interest payment date the record date for which occurs
on or after consummation of the Exchange Offer. Old Notes not accepted for
exchange will continue to accrue interest.
10
<PAGE>
<TABLE>
<S> <C>
Notes Offered............................ Up to $175,000,000 aggregate principal amount of
Series B 10 1/4% Senior Subordinated Notes due
2008.
Issuer................................... Great Lakes Carbon Corporation.
Maturity Date............................ May 15, 2008.
Interest................................. The Old Notes bear interest and the New Notes
will bear interest at the rate of 10 1/4% per
annum, payable semiannually on May 15 and
November 15, commencing November 15, 1998.
Optional Pay-in-Kind Interest............ For interest payments due through May 15, 2003,
the Company may, at its option, make up to four
semiannual interest payments through the
issuance of Additional Notes in an aggregate
principal amount equal to the amount of the
interest that would be payable if the rate per
annum were equal to 11 3/4% (provided, that
incremental amounts of less than $1,000 shall be
payable in cash). The maximum aggregate
principal amount of Additional Notes that the
Company may issue is $50.0 million, plus the
principal amount of Additional Notes required to
make the interest payments described in the
preceding sentence. If the Company elects to
make an interest payment on an Interest Payment
Date through the issuance of Additional Notes as
described above, it must provide the Trustee
with irrevocable notice of such election at
least ten and not more than thirty Business Days
prior to the immediately preceding interest
payment date. Notwithstanding the foregoing,
Additional Notes may not be used to make the
interest payment due November 15, 1998.
Optional Redemption...................... The Old Notes are and the New Notes will be
redeemable at the option of the Company, in
whole or in part, at any time on or after May
15, 2003, at the redemption prices set forth
herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of
redemption. In addition, at any time prior to
May 15, 2001, the Company may redeem up to an
aggregate of 35% of the aggregate principal
amount of Notes issued under the Indenture
(including Additional Notes) at a redemption
price equal to 110.250% of the aggregate
principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any,
to the redemption date, with the net cash
proceeds of one or more Equity Offerings (as
defined); PROVIDED HOWEVER, that at least $100.0
million aggregate principal amount of the New
Notes issued hereunder together with Old Notes
originally issued and not exchanged in the
Exchange Offer remain outstanding immediately
after such redemption. See "Description of
Notes--Optional Redemption."
Subsidiary Guarantees.................... The Company currently has no Subsidiaries other
than Foreign Subsidiaries. The Notes will be
unconditionally guaranteed on a senior
subordinated basis by the Subsidiary Guarantors,
which will consist of all future
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Subsidiaries of the Company other than Foreign
Subsidiaries, Finance Subsidiaries and
Receivables Subsidiaries. The Subsidiary
Guarantees may be released under certain
circumstances. See "Description of
Notes--Subsidiary Guarantees." The term
"Subsidiaries" does not include references to
"Unrestricted Subsidiaries," as defined herein.
Ranking.................................. The Old Notes are and the New Notes will be
subordinated in right of payment to all existing
and future Senior Indebtedness of the Company,
including borrowings under the New Credit
Agreement. The Subsidiary Guarantees will be
subordinated in right of payment to all existing
and future Senior Indebtedness of the Subsidiary
Guarantors, including guarantees of the New
Credit Agreement. As of March 31, 1998, on a pro
forma basis giving effect to the Acquisition
Transactions, the Company would have had
approximately $134.4 million of Senior
Indebtedness, and the Foreign Subsidiaries would
have had Indebtedness of approximately $15.9
million, all of which would effectively rank
senior to the Notes. The Indenture permits the
Company and its Subsidiaries to incur additional
Indebtedness, including Senior Indebtedness,
subject to certain limitations. The Indenture
prohibits the incurrence of any Indebtedness by
the Company and any Subsidiary Guarantors that
is senior to the Notes and any Subsidiary
Guarantees, as the case may be, and subordinated
to Senior Indebtedness of the Company or Senior
Indebtedness of the Subsidiary Guarantors, as
the case may be. See "Description of
Notes--Subordination" and "Description of
Notes--Certain Covenants."
Change of Control........................ Upon a Change of Control (as defined), the
Company is required to offer to purchase all of
the Notes then outstanding at a purchase price
equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of
purchase. See "Description of Notes--Certain
Covenants--Change of Control."
Certain Covenants........................ The Indenture contains certain covenants that,
among other things, limit the ability of the
Company, the Subsidiary Guarantors and the other
Subsidiaries to: (i) pay dividends or make
certain other Restricted Payments (as defined);
(ii) incur additional Indebtedness; (iii)
encumber or sell assets; (iv) enter into certain
guarantees of Indebtedness; (v) enter into
transactions with affiliates; and (vi) merge or
consolidate with any other entity or to transfer
or lease all or substantially all of their
assets. In addition, under certain
circumstances, the Company is required to offer
to purchase Notes at a price of 100% of the
principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any,
to the date of purchase with the proceeds of
certain Asset Sales (as defined). See
"Description of Notes--Certain Covenants."
</TABLE>
12
<PAGE>
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by a Holder prior to tendering their Old Notes in the Exchange Offer.
13
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following table presents summary historical consolidated statement of
operations, balance sheet and other data of the Company as of and for the three
years ended December 31, 1997, which are derived from the Company's audited
consolidated financial statements audited by Ernst & Young LLP, which are
included elsewhere herein. The summary historical consolidated statement of
operations, balance sheet and other data of the Company as of and for the
three-month periods ended March 31, 1997 and March 31, 1998 and for the twelve
months ended March 31, 1998, are derived from the unaudited consolidated
financial statements of the Company, and in the opinion of management, include
all adjustments necessary for a fair presentation of the data for such periods.
The results for the three-month period ended March 31, 1998 are not necessarily
indicative of the results to be expected for the year ending December 31, 1998
or any future period. The pro forma balance sheet data as of March 31, 1998 give
effect to the Acquisition Transactions as if they had occurred on such date. The
financial data set forth below should be read in conjunction with "Use of
Proceeds," "Selected Historical Financial and Other Data," "Unaudited Pro Forma
Condensed Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements of the Company and the related notes thereto included elsewhere
herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31, TWELVE MONTHS
------------------------------- --------------------- ENDED
1995 1996 1997 1997 1998 MARCH 31, 1998
--------- --------- --------- --------- ---------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER TON)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales............................. $ 178,628 $ 242,744 $ 231,911 $ 55,395 $ 62,070 $ 238,586
Gross profit.......................... 36,440 66,373 59,521 13,159 16,387 62,749
Operating income...................... 26,753 51,052 41,011 8,774 13,703 45,940
Net income (loss)..................... 13,818 27,559 21,984 4,348 8,067 25,703
OTHER DATA:
EBITDA(1)............................. $ 36,514 $ 66,563 $ 59,182 $ 13,214 $ 16,528 $ 62,496
EBITDA margin......................... 20.4% 27.4% 25.5% 23.9% 26.6% 26.2%
Capital expenditures(2)............... $ 5,774 $ 6,371 $ 21,391 $ 3,651 $ 4,942 $ 22,682
Quantity of CPC sold (000 tons)....... 1,484 1,452 1,443 346 387 1,485
Net sales per ton of CPC sold......... $ 120.35 $ 167.21 $ 160.67 $ 160.31 $ 160.45 $ 160.70
Gross profit per ton of CPC sold...... 24.55 45.72 41.24 38.08 42.36 42.26
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ADJUSTED CREDIT DATA(3):
Adjusted EBITDA(4)................................................................................ $ 68,978
Adjusted interest expense(5)...................................................................... 29,731
Ratio of adjusted EBITDA to adjusted interest expense(4)(5)....................................... 2.3x
Ratio of adjusted debt to adjusted EBITDA(4)...................................................... 4.5x
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
----------------------
HISTORICAL PRO FORMA
--------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................................... $ 89,482 $ 40,463
Total assets.............................................................................. 190,519 496,389
Total debt................................................................................ 88,437 309,437
Stockholders' equity...................................................................... 60,506 92,380
</TABLE>
14
<PAGE>
- --------------------------
(1) EBITDA is defined as operating income before depreciation, amortization,
fees and expenses paid to Horsehead Industries, Inc. ("HII") and payments
pursuant to employment and consulting agreements which will be terminated
upon consummation of the Acquisition Transactions and AIP management fees.
EBITDA is not defined in the same manner as "Consolidated EBITDA" in the
Indenture or in the "Description of Notes" herein. See "Description of
Notes--Certain Definitions." EBITDA is not intended to represent cash flow
from operations as defined by GAAP (as defined) and should not be used as an
alternative to net income as an indicator of operating performance or to
cash flows as a measure of liquidity. EBITDA is included in the Offering
Memorandum as it is a basis upon which the Company assesses its financial
performance, and certain covenants in the Company's borrowing arrangements
will be tied to similar measures. EBITDA, as presented, represents a useful
measure of assessing the Company's ongoing operating activities without the
impact of financing activity and nonrecurring charges. While EBITDA is
frequently used as a measure of operations and the ability to meet debt
service requirements, it is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in the
method of calculation.
(2) Capital expenditures include expenditures in connection with the New La
Plata Kiln of $13.4 million, $1.5 million, $4.0 million and $15.9 million
for the year ended December 31, 1997, the three months ended March 31, 1997
and 1998 and the twelve months ended March 31, 1998, respectively.
(3) The adjusted credit data for the twelve months ended March 31, 1998 give pro
forma effect to the Acquisition Transactions as if they had occured on April
1, 1997, and are further adjusted as described in the footnotes below. The
adjusted credit data constitutes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. See
"Disclosure Regarding Forward-Looking Statements" and "Risk Factors."
(4) Adjusted EBITDA gives effect to the assumed sales of CPC to be produced by
the New La Plata Kiln, as if it had been operational commencing on April 1,
1997 and had operated at 70% of capacity (representing the amount of
capacity currently pre-contracted to customers for the remainder of 1998
(the "Contracted Capacity")) throughout the twelve months ended March 31,
1998. Based on the Company's average EBITDA per ton sold margin for the
twelve months ended March 31, 1998 of $42.09, the Contracted Capacity would
have resulted in an incremental $6.5 million of EBITDA. Information
regarding the New La Plata Kiln constitutes a "forward-looking statement"
within the meaning of the Private Securities Litigation Reform Act of 1995.
There can be no assurance that such adjusted EBITDA would have been
realized, or will be realized in the future. Actual results may differ
materially from the adjusted EBITDA data presented due to various risks,
including by way of example, actual EBITDA per ton sold may have been lower,
the Contracted Capacity may not have been sold and the New La Plata Kiln may
not have been able to produce CPC in enough quantity to satisfy the
Contracted Capacity. See "Disclosure Regarding Forward-Looking Statements"
and "Risk Factors."
(5) Adjusted interest expense gives pro forma effect to the Acquisition
Transactions as if they had occurred on April 1, 1997 and the $15.9 million
of indebtedness borrowed under the Copetro Credit Agreement in connection
with the New La Plata Kiln was incurred on April 1, 1997 and remained
outstanding throughout the twelve months ended March 31, 1998, giving rise
to the recognition of $1.6 million of additional interest expense. See
"Description of Other Indebtedness--Copetro Credit Agreement." Adjusted
interest expense excludes amortization of financing fees.
15
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, HOLDERS
OF OLD NOTES SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS BEFORE TENDERING
THEIR OLD NOTES IN THE EXCHANGE OFFER. THIS PROSPECTUS, INCLUDING THE "SUMMARY,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," AND "BUSINESS" SECTIONS, CONTAINS "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995,
WHICH CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS
"MAY," "INTEND," "WILL," "EXPECT," "ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE
NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. IN
PARTICULAR, ANY STATEMENTS, EXPRESS OR IMPLIED, CONCERNING FUTURE OPERATING
RESULTS OR THE ABILITY TO GENERATE REVENUES, INCOME OR CASH FLOW TO SERVICE THE
NOTES, INCLUDING THE ADJUSTED CREDIT DATA PRESENTED UNDER "SUMMARY CONSOLIDATED
FINANCIAL AND OTHER DATA," AND INFORMATION REGARDING THE NEW LA PLATA KILN
PRESENTED ELSEWHERE HEREIN, ARE FORWARD-LOOKING STATEMENTS. THE MATTERS SET
FORTH BELOW CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT FACTORS WITH
RESPECT TO SUCH FORWARD-LOOKING STATEMENTS, INCLUDING CERTAIN RISKS AND
UNCERTAINTIES, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
IN SUCH FORWARD-LOOKING STATEMENTS.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged. On March 31, 1998, after giving pro forma
effect to the Offering and the other Acquisition Transactions, the Company had
total indebtedness of approximately $309.4 million (of which $175.0 million
consists of the Old Notes and $111.0 million consists of borrowings under the
New Credit Agreement) and stockholders' equity of approximately $92.4 million.
The Company and its Subsidiaries will be permitted to incur substantial
additional Indebtedness in the future. See "Capitalization" and "Description of
Notes--Certain Covenants--Incurrence of Indebtedness and Issuance of
Disqualified Stock."
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on, or to refinance, its
indebtedness (including the Notes), or to fund planned capital expenditures will
depend on its future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. Based upon the current level of operations
and anticipated cost savings and revenue growth, management believes that cash
flow from operations and available cash, together with available borrowings
under the New Credit Agreement, will be adequate to meet the Company's future
liquidity needs for at least the next several years. The Company may, however,
need to refinance all or a portion of the principal of the Notes on or prior to
maturity. There can be no assurance that the Company's business will generate
sufficient cash flow from operations, or that anticipated revenue growth and
operating improvements will be realized in an amount sufficient to enable the
Company to service its indebtedness, including the Notes, or to fund its other
liquidity needs. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including, but not limited to: (i) making
it more difficult for the Company to satisfy its obligations with respect to the
Notes, (ii) increasing the Company's vulnerability to general adverse economic
and industry conditions, (iii) limiting the Company's ability to obtain
additional financing to fund future working capital, capital expenditures and
other general corporate requirements, (iv) requiring the dedication of a
substantial portion of the Company's cash flow from operations to the payment of
principal of, interest on, and Liquidated Damages, if any, on its indebtedness,
thereby reducing the availability of such cash flow to fund working capital,
capital expenditures, research and development or other general corporate
purposes, (v) limiting the Company's flexibility in planning for, or reacting
to, changes in its business and the industry, (vi) placing the Company at a
competitive disadvantage relative to less leveraged competitors and (vii)
restricting the Company's ability to pay dividends to Holdings so that Holdings
can pay its debt service obligations on the Holdings Debentures (which payments
are scheduled to begin in
16
<PAGE>
2003), the failure of which may create an event of default under the Holdings
Debentures, which, if not cured or waived, could have a material adverse effect
on the Company.
SUBORDINATION
The Old Notes are, and the New Notes will be, subordinated in right of
payment to all Senior Indebtedness of the Company, including the indebtedness
under the New Credit Agreement. Any Subsidiary Guarantees will be subordinated
in right of payment to all Senior Indebtedness of the Subsidiary Guarantors,
including guarantees of the New Credit Agreement. The Notes, any Subsidiary
Guarantees and borrowings under the New Credit Agreement will be effectively
subordinated to the indebtedness of the Foreign Subsidiaries.
As of March 31, 1998, on a pro forma basis giving effect to the Offering and
the other Acquisition Transactions, the Company had approximately $134.4 million
of Senior Indebtedness, and the Foreign Subsidiaries had approximately $15.9
million of indebtedness, all of which effectively rank senior to the Notes and
any Subsidiary Guarantees. In the event of a bankruptcy, liquidation,
dissolution, reorganization or other winding-up of the Company or any of the
Subsidiary Guarantors, the assets of the Company or the Subsidiary Guarantors,
as the case may be, will be available to pay the Notes and the Subsidiary
Guarantees only after all Senior Indebtedness has been paid in full, and there
may not be sufficient assets remaining to pay amounts due on the Notes or
Subsidiary Guarantees. Additional Senior Indebtedness may be incurred by the
Company and the Subsidiary Guarantors from time to time, subject to certain
restrictions. See "Description of Other Indebtedness--New Credit Agreement" and
"Description of Notes--Subordination."
The Company's Foreign Subsidiaries will not guarantee the Company's
obligations on the Notes. As a result, all indebtedness of the Foreign
Subsidiaries will be structurally senior to the Notes. In addition, the
Company's ability to obtain funds from the Foreign Subsidiaries may be
restricted by the terms of the Copetro Credit Agreement and other borrowing
arrangements to which any Foreign Subsidiary is a party. See "Description of
Other Indebtedness--Copetro Credit Agreement."
RESTRICTIVE DEBT COVENANTS
The Indenture and the New Credit Agreement contain a number of significant
covenants that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional Indebtedness, prepay other
Indebtedness (including the Notes), amend certain debt instruments (including
the Indenture), pay dividends, create liens on assets, enter into sale and
leaseback transactions, make investments, loans or advances, make acquisitions,
engage in mergers or consolidations, make capital expenditures, change the
business conducted by the Company or its subsidiaries, or engage in certain
transactions with affiliates and certain other corporate activities. In
addition, under the New Credit Agreement, the Company is required to maintain
specified financial ratios and satisfy specified financial tests. See
"Description of Notes" and "Description of Other Indebtedness--New Credit
Agreement."
In addition, the Copetro Credit Agreement contains a number of covenants
which, among other things, requires Copetro to maintain specified financial
ratios, and restricts the ability of Copetro to pay dividends to the Company,
dispose of assets, engage in mergers or consolidations and create liens on
assets. See "Description of Other Indebtedness--Copetro Credit Agreement."
The Company's ability to comply with such agreements may be affected by
events beyond its control, including prevailing economic, financial and industry
conditions. The breach of any of such covenants or restrictions could result in
a default under the New Credit Agreement or the Indenture, which would permit
the senior lenders, or the holders of the Notes, or both, as the case may be, to
declare all amounts borrowed thereunder to be due and payable, together with
accrued and unpaid interest and, in the case of the Notes, Liquidated Damages,
if any, and the commitments of the senior lenders to make further extensions of
credit under the New Credit Agreement could be terminated. If the Company were
unable to
17
<PAGE>
repay its indebtedness to its senior lenders, such lenders could proceed against
the collateral securing such indebtedness, as described under "Description of
Other Indebtedness--New Credit Agreement."
POSSIBLE INABILITY TO REPURCHASE NOTES UPON CHANGE OF CONTROL
The New Credit Agreement generally prohibits the Company from purchasing any
of the Notes, including upon the occurrence of a Change of Control, and will
also provide that certain change of control events with respect to the Company
will constitute a default thereunder. Any future credit agreements or other
agreements relating to Senior Indebtedness to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when the Company is prohibited from purchasing the
Notes, the Company could seek the consent of its lenders to the purchase of the
Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such consent or repay such
borrowings, the Company would remain prohibited from purchasing the Notes by the
terms of the relevant Senior Indebtedness. In such case, the Company's failure
to purchase the tendered Notes would constitute an event of default under the
Indenture which would, in turn, constitute a default under the New Credit
Agreement and could constitute a default under other Senior Indebtedness. In
such circumstances, the subordination provisions in the Indenture would likely
restrict payments to the holders of the Notes until the Company's obligations
under the New Credit Agreement and any other Senior Indebtedness are paid in
full. Furthermore, no assurance can be given that the Company will have
sufficient resources to satisfy its repurchase obligation with respect to the
Notes following a Change of Control. See "Description of Notes" and "Description
of Other Indebtedness--New Credit Agreement."
RELIANCE ON THE ALUMINUM INDUSTRY
The Company's products are sold primarily to the worldwide aluminum
industry. The aluminum industry generally is cyclical in nature and experiences
fluctuations in production levels and significant fluctuations in profits based
on numerous factors. Historically, sales of the Company's products have been
adversely affected by weakness in the aluminum industry. Although the aluminum
industry has experienced growth on a long-term basis, there can be no assurance
that growth will continue or that conditions will remain favorable in the
aluminum industry as a whole, or for the Company's customers in particular. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."
DEPENDENCE ON CERTAIN CUSTOMERS
For the year ended December 31, 1997, the Company's top five customers
represented approximately 62.2% of the Company's net sales. During such period,
the Company's two largest customers, Alcoa and Alusaf, which have been customers
for over 50 years and 20 years, respectively, accounted for 23.7% and 15.5%,
respectively, of the Company's net sales. In June 1998, Alcoa acquired Alumax,
Inc. ("Alumax"), another long-standing customer of the Company, which accounted
for 6.4% of the net sales of the Company in 1997. The permanent loss of one or
more major customers could adversely affect the Company's operating results.
Although the Company expects to maintain its current relationships with its
major customers, there can be no assurance that a change will not occur.
DEPENDENCE ON RAW MATERIAL SUPPLY
The raw material used by the Company in the production of CPC is RPC, which
is a by-product of the petroleum refining industry. The Company purchases
approximately 46.1% of its RPC requirements from three petroleum refiners. The
Company believes that, under current conditions, RPC is available in sufficient
quantities and of adequate quality at current market prices. A substantial
increase in raw material prices or a substantial decrease in raw material supply
of sufficient quality could have a material adverse effect on the Company's
financial condition and results of operations. Historically, the price of
18
<PAGE>
anode grade RPC has moved in relation to the price of anode grade CPC; however,
there can be no assurance that the Company will be in a position to pass any
future raw material price increases on to its customers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."
COMPETITION
The CPC industry is highly competitive. Competition is based primarily on
price, product quality and access to raw material sources. Although the Company
believes that it is the world's largest supplier of CPC, several of the
Company's competitors are part of much larger companies and as such may have
greater resources than the Company. One of the Company's major competitors has
had access to RPC from its own petroleum refining operations for many years,
which could give such competitor a cost advantage. Although CPC industry
operating rates are currently at historically high levels, there can be no
assurance that the Company's current or future competitors will not increase
their operating capacity. Competitive factors could require price reductions or
increased spending that could materially adversely affect the Company's
financial condition and results of operations. See "Business."
ENVIRONMENTAL MATTERS
The Company's operations are subject to various federal, state, local and
foreign laws and regulations relating to the emission, release or discharge of
certain substances. While the Company believes that it is currently in material
compliance with all applicable laws and regulations, the Company has had
occasional exceedances of opacity emissions limitations at its Port Arthur,
Texas facility. In addition, some of the Company's facilities may be required to
obtain permits and comply with new standards applicable to air emissions to be
adopted by the United States Environmental Protection Agency (the "EPA") and
state environmental agencies over the next several years. There can be no
assurance that the Company will not incur significant costs to comply with
changes in existing laws and regulations. See "Business--Environmental Matters."
LABOR RELATIONS
Approximately one-third of the Company's employees are covered by collective
bargaining or similar agreements. The agreement covering 54 employees at the
Enid, Oklahoma facility expires in 2001. The agreement covering 28 employees of
Copetro may be subject to revision by the Argentine government. The Company has
not had any material work stoppages or strikes at Enid in more than 18 years and
has never had a work stoppage at Copetro. The Port Arthur plant is operated with
a nonunion workforce. The Company believes that it has satisfactory relations
with its employees. There can be no assurance, however, that new labor
agreements will be reached without work stoppage or strike or will be reached on
terms satisfactory to the Company. See "Business--Employees."
FRAUDULENT TRANSFER CONSIDERATIONS
The Company's obligations under the Notes may be subject to review under
state or federal fraudulent transfer laws in the event of the bankruptcy or the
financial difficulty of the Company.
Under those laws, if a court, in a lawsuit by an unpaid creditor or
representative of creditors of the Company, such as a trustee in bankruptcy or
the Company as a chapter 11 debtor in possession, were to find that when the
Company issued the Notes, it (a) received less than fair consideration or
reasonably equivalent value therefor and (b) either (i) was or was rendered
insolvent, (ii) was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital or (iii) intended to
incur or believed (or reasonably should have believed) that it would incur debts
beyond its ability to pay as such debts matured, the court could avoid the Notes
and the Company's obligations thereunder, or subordinate the Notes to all of the
Company's other obligations, and in either case direct the return of any amounts
paid thereunder to the Company or to a fund for the benefit of its creditors. It
19
<PAGE>
should be noted that a court could avoid the Notes and the Company's obligations
thereunder without regard to factors (a) and (b) above if it found that the
Company issued the Notes with actual intent to hinder, delay, or defraud its
creditors.
A court will likely find that the Company did not receive fair consideration
or reasonably equivalent value for its obligations under the Notes to the extent
that the proceeds of the Offering were used to pay the purchase price to the
seller under the Merger Agreement for the common equity of Holdings or otherwise
do not directly benefit the Company. In addition, if a court finds that the
factors in clause (b) above applied to the Company when it issued the 10% Notes,
it could also conclude that the Company did not receive fair consideration or
reasonably equivalent value for its obligations under the Notes to the extent
that the proceeds of the Offering were used to acquire the 10% Notes.
Similarly, a Subsidiary Guarantee may be subject to review in the event of
the bankruptcy or financial difficulty of any Subsidiary Guarantor. In that
event, if a court found that when a Subsidiary Guarantor issued its guarantee
(or, in some jurisdictions, when it became liable to make payments thereunder),
factors (a) and (b) above, applied to the Subsidiary Guarantor (or if the court
found that the Subsidiary Guarantor had issued its guarantee with actual intent
to hinder, delay, or defraud its creditors), then the court could avoid the
respective Subsidiary Guarantee and direct the repayment of any amounts paid
thereunder. A court will likely find that a Subsidiary Guarantor did not receive
fair consideration or reasonably equivalent value for its guarantee to the
extent that its liability thereunder exceeds any direct benefit it received from
the issuance of the Notes.
The Indenture will limit the liability of each Subsidiary Guarantor under
its guarantee to the maximum amount that it could pay without the guarantee
being deemed a fraudulent transfer. See "Description of Notes--Subsidiary
Guarantees." There can be no assurance that (if this limitation is effective)
the limited amount so guaranteed will suffice to pay amounts owed under the
Notes in full.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sum of its debts (including contingent or
unliquidated debts) is greater than all of its property at a fair valuation or
if the present fair salable value of its 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.
On the basis of historical financial information, recent operating history
and other factors, the Company believes that, after giving effect to the
indebtedness incurred in connection with the Offering and the other Acquisition
Transactions, it will not be insolvent, will not have unreasonably small capital
for the business in which it is engaged and will not incur debts beyond its
ability to pay such debts as they mature. There can be no assurance, however, as
to what standard a court would apply in making such determinations or that a
court would agree with the Company's conclusions in this regard.
INTERNATIONAL RISKS
The Company has invested significant resources in Argentina and intends to
continue to make investments in Argentina and other foreign countries in the
future. Accordingly, the Company may be subject to economic, political or social
instability or other developments not typical of investments made in the United
States. International operations are subject to risks in addition to those
discussed below, including the impact of foreign governmental regulations,
currency fluctuations, political uncertainties and differences in business
practices. There can be no assurance that Argentina or any other country in
which the Company may acquire operations or conduct business will not adopt
regulations or take other actions that would have a direct or indirect adverse
impact on the business or market opportunities of the Company within such
countries. While Argentina has been relatively stable during the last several
years, in the past Argentina has been characterized by varying degrees of
inflation, uneven growth rates, declining investment rates, significant
devaluations of Argentine currency, impositions of exchange controls and
political uncertainty. The Company currently does not have political risk
insurance with respect to its
20
<PAGE>
operations in Argentina and the value of the Company's investment in its
Argentine subsidiary could be adversely affected by changes in government
policy, such as the imposition of limitations on foreign ownership of investment
assets or the imposition of exchange controls. In addition, there can be no
assurance that future economic developments in Argentina, over which the Company
has no control, will not impair the Company's financial condition, results of
operations and business prospects.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any other
securities laws of any jurisdiction and, therefore, may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws or pursuant to
exemptions from, or in transactions not subject to, those requirements and, in
each case, in compliance with certain other conditions and restrictions. Holders
of Old Notes who do not exchange their Old Notes for New Notes pursuant to the
Exchange Offer will continue to be subject to such restrictions on transfer of
such Old Notes as set forth in the legend thereon. In addition, upon
consummation of the Exchange Offer, Holders of Old Notes which remain
outstanding will not be entitled to any rights to have such Old Notes registered
under the Securities Act or to any similar rights under the Registration Rights
Agreement (subject to certain limited exceptions). The Company does not
currently anticipate that it will register or qualify any Old Notes which remain
outstanding after consummation of the Exchange Offer for offer or sale in any
jurisdiction (subject to limited exceptions, if applicable). As a result of
these factors, to the extent that Old Notes are not tendered and accepted in the
Exchange Offer, a holder's ability to sell such Old Notes could be adversely
affected.
The New Notes and any Old Notes which remain outstanding after consummation
of the Exchange Offer will vote together as a single class for purposes of
determining whether holders of the requisite percentage thereof have taken
certain actions or exercised certain rights under the Indenture.
Upon consummation of the Exchange Offer, holders of Old Notes will not be
entitled to any Liquidated Damages or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See
"Description of Notes--Registration Rights; Liquidated Damages."
ABSENCE OF PUBLIC MARKET
The Old Notes were issued to, and the Company believes such securities are
currently owned by, a relatively small number of beneficial owners. The Old
Notes have not been registered under the Securities Act and will be subject to
restrictions on transferability if they are not exchanged for the New Notes.
Although the New Notes may be resold or otherwise transferred by the holders
(who are not affiliates of the Company) without compliance with the registration
requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. There can be no assurance that
such a market will develop. In addition, the New Notes will not be listed on any
national securities exchange. The New Notes may trade at a discount from the
initial offering price of the Old Notes, depending upon prevailing interest
rates, the market for similar securities, the Company's operating results and
other factors. The Company has been advised by the Initial Purchasers that it
currently intends to make a market in the New Notes, as permitted by applicable
laws and regulations; however, the Initial Purchasers are not obligated to do
so, and any such market-making activities may be discontinued at any time
without notice. In addition, such market-making activity may be limited during
the pendency of the Shelf Registration Statement (as defined). Therefore, there
can be no assurance that an active market for any of the New Notes will develop,
either prior to or after the Company performance of its obligations under the
Registration Rights Agreement. If an active public market does not develop, the
market price and liquidity of the New Notes may be adversely affected.
If a public trading market develops for the New Notes, future trading prices
will depend on many factors, including, among other things, prevailing interest
rates, the financial condition of the Company
21
<PAGE>
and the Guarantors, and the market for similar securities. Depending on these
and other factors, the New Notes may trade at a discount.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the New Notes will not
be subject to similar disruptions. Any such disruptions may have an adverse
effect on holders of the New Notes.
Notwithstanding the registration of the New Notes in the Exchange Offer,
holders who are "affiliates" (as defined under Rule 405 of the Securities Act)
of the Company may publicly offer for sale or resell the New Notes only in
compliance with the provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
EXCHANGE OFFER PROCEDURES
Subject to the conditions set forth under "The Exchange Offer--Conditions to
the Exchange Offer," delivery of New Notes in exchange for Old Notes tendered
and accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of (i) certificates for Old Notes or a
book-entry confirmation of a book-entry transfer of Old Notes into the Exchange
Agent's account at The Depository Trust Company, New York, New York as
depository (the "DTC"), including an Agent's Message (as defined) if the
tendering holder does not deliver a Letter of Transmittal, (ii) a completed and
signed Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message in lieu
of the Letter of Transmittal, and (iii) any other documents required by the
Letter of Transmittal. Therefore, Holders of Old Notes desiring to tender such
Old Notes in exchange for New Notes should allow sufficient time to ensure
timely delivery. The Company is under a duty to give notification of defects or
irregularities with respect to the tenders of Old Notes for exchange. Old Notes
that are not tendered or that are tendered but not accepted by the Company for
exchange will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof under the Securities
Act and, upon consummation of the Exchange Offer, certain registration and other
rights under the Registration Rights Agreement will terminate.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
PRINCIPAL STOCKHOLDER
Since the consummation of the Acquisition Transactions, AIP, its affiliates
and certain other individuals associated with AIP have been the only
stockholders of Holdings, which is the 100% parent of the Company, and AIP has
the ability to designate all of the directors of the Company. See "Description
of Company Common Stock," "Management," "Security Ownership" and "Acquisition
Transactions." AIP is therefore in a position to direct the management and
affairs of the Company and may cause the Company to enter into transactions that
could ultimately enhance stockholder value but may involve risks to holders of
the Notes.
22
<PAGE>
ACQUISITION TRANSACTIONS
Pursuant to the Merger Agreement, Holdings, a corporation formed by AIP,
acquired all of the issued and outstanding capital stock of the Company, through
the Merger of Merger Sub, a wholly owned subsidiary of Holdings, into the
Company. The aggregate consideration paid by AIP pursuant to the Merger
Agreement was approximately $376.9 million. The Company was the surviving
corporation in the Merger.
In order to finance the Merger, (i) AIP and affiliates of, and certain other
individuals associated with, AIP contributed the AIP Equity Contribution to
Holdings, (ii) Holdings issued and sold the Holdings Debentures and contributed
the Holdings Equity Contribution to the Company, (iii) the Company entered into
the Term Loan Facilities providing for term loan borrowings in the aggregate
principal amount of approximately $111.0 million and the Revolving Credit
Facility for borrowings of up to $25.0 million under the New Credit Agreement,
and borrowed all term loans available, and (iv) the Company issued and sold
$175.0 million aggregate principal amount of the Old Notes offered pursuant to
the Offering Memorandum.
In connection with the Merger, the Company commenced the Tender Offer on
April 24, 1998, for any and all of the 10% Notes and simultaneously conducted
the Solicitation of consents from holders of the 10% Notes to certain amendments
to and waivers under the 10% Indenture and certain related collateral documents.
All of the outstanding 10% Notes were purchased by the Company pursuant to the
Tender Offer and such purchase was consummated concurrently with the closing of
the Offering. The aggregate consideration paid by the Company in the Tender
Offer and Solicitation was approximately $74.1 million (including the amount
paid to holders tendering 10% Notes in excess of the principal amount being
tendered (the "Tender Premium") of approximately $9.1 million but excluding
accrued interest).
Following consummation of the Tender Offer and Solicitation, the Company
submitted the 10% Notes for cancellation. After such cancellation, the 10%
Indenture as supplemented by the Supplemental Indenture is of no further force
or effect.
Consummation of the Merger was conditioned upon the consummation of the
Tender Offer and Solicitation, the execution of and borrowings by the Company
under the New Credit Facility, the consummation of Offering or alternative
financing and the Holdings Equity Contribution.
AMERICAN INDUSTRIAL PARTNERS
AIP is a private investment fund headquartered in San Francisco and New York
with committed capital of approximately $800.0 million. AIP seeks to invest in
companies which hold either a protected competitive position or proprietary
capability, ideally combined with a leading market share. The firm does not seek
to play a role in daily management; rather, AIP seeks to provide its portfolio
companies with access to the management expertise of its operating partners, all
of whom are former Chief Executive Officers of Fortune 500 corporations, through
active board-level participation as well as on-call advice when desired.
Following the consummation of the Acquisition Transactions, AIP and
affiliates of, and certain other individuals associated with, AIP contributed
$65.0 million and $330,000, respectively, in equity to Holdings, and Theodore C.
Rogers, a general partner of AIP and former Chairman and Chief Executive Officer
of NL Industries, Inc., became the Company's Non-Executive Chairman of the
Board. Although no specific arrangements are in place, following the
consummation of the Acquisition Transactions, AIP intends to offer the Company's
executive officers the opportunity to own up to approximately 5.0% of Holdings'
equity through a combination of direct investments and option programs.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer.
23
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at March 31, 1998 and on a pro forma basis to give effect to the
Acquisition Transactions, including the Offering. The following table should be
read in conjunction with the "Unaudited Pro Forma Condensed Consolidated
Financial Data" and the related notes thereto included elsewhere herein and the
"Selected Historical Financial and Other Data" and the related notes thereto
included elsewhere herein.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
---------------------
ACTUAL PRO FORMA
-------- -----------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Long-term debt (includes
current portion):
Copetro Credit Agreement.... $ 15,850 $ 15,850
10% Notes................... 65,000 --
Other existing
indebtedness(a)........... 7,587 7,587
Revolving Credit
Facility(b)............... -- --
Term Loan Facilities........ -- 111,000
Notes....................... -- 175,000
-------- -----------
Total long-term debt...... 88,437 309,437
Stockholder's equity:
Total stockholders'
equity.................... 60,506 92,380
-------- -----------
Total capitalization........ $148,943 $401,817
-------- -----------
-------- -----------
</TABLE>
- ------------------------
(a) Includes various outstanding industrial revenue bonds, capitalized leases
and certain other miscellaneous indebtedness. In addition, the Company had
$15.0 million of available credit pursuant to a revolving credit facility
(the "Existing Credit Agreement") from which no funds were drawn as of March
31, 1998, which was terminated upon the consummation of the Acquisition
Transactions. As of March 31, 1998, approximately $3.4 million of letters of
credit were outstanding under the Existing Credit Agreement, and upon
Closing, such letters of credit were collateralized pursuant to a letter of
credit issued under the New Credit Agreement in connection with the
Acquisition Transactions. See "Description of Other Indebtedness--New Credit
Agreement."
(b) The Revolving Credit Facility under the New Credit Agreement provides for up
to $25.0 million of borrowing availability, subject to a borrowing base
limitation. See "Description of Other Indebtedness--New Credit Agreement."
24
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following Unaudited Pro Forma Condensed Consolidated Financial Data have
been derived by the application of pro forma adjustments to the Company's
historical financial data included elsewhere herein. The pro forma consolidated
statements of operations for the year ended December 31, 1997 and the three
months ended March 31, 1997 and March 31, 1998 give effect to the Acquisition
Transactions as if the Acquisition Transactions had been consummated as of
January 1, 1997. The pro forma consolidated balance sheet data give effect to
the Acquisition Transactions as if the Acquisition Transactions had been
consummated as of March 31, 1998. The adjustments are described in the
accompanying notes. The Unaudited Pro Forma Condensed Consolidated Financial
Data do not purport to represent what the Company's results of operations or
financial position actually would have been if the Acquisition Transactions had
been consummated on the dates indicated, or what such results of operations or
financial position will be for any future period or date. The Unaudited Pro
Forma Condensed Consolidated Financial Data should be read in conjunction with
the "Selected Historical Financial and Other Data" and the related notes thereto
and the Consolidated Financial Statements and related notes thereto included
elsewhere herein.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS DATA
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ACTUAL ADJUSTMENTS PRO FORMA
--------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales..................... $ 231,911 $ 231,911
Cost of goods sold............ 172,390 4,378(a) 176,768
--------- ---------
Gross profit.................. 59,521 55,143
Selling, general and
administrative expenses..... 18,510 (1,344)(b) 17,166
--------- ---------
Operating income........ 41,011 37,977
Other income (expense):
Interest expense, net......... (6,287) (24,056)(c) (30,343)
Other, net.................... (49) (49)
--------- ---------
Income before income taxes.... 34,675 7,585
Income tax expense............ 12,691 (8,077)(d) 4,614
--------- ---------
Net income.................. $ 21,984 $ 2,971
--------- ---------
--------- ---------
EBITDA(e)..................... $ 59,182 $ 59,182
</TABLE>
25
<PAGE>
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales......................................... $ 62,070 $ 62,070
Cost of goods sold................................ 45,683 1,312(f) 46,995
---------- ---------
Gross profit...................................... 16,387 15,075
Selling, general and administrative............... 2,684 1,164(g) 3,848
---------- ----------- ---------
Operating income............................ 13,703 11,227
Other income (expense):
Interest expense, net............................. (1,157) (6,368) (h) (7,525)
Other, net........................................ (72) (72)
---------- ---------
Income before income taxes........................ 12,474 3,630
Income tax expense................................ 4,407 (2,681)(d) 1,726
---------- ---------
Net income...................................... $ 8,067 $ 1,904
---------- ---------
---------- ---------
EBITDA(e)......................................... $ 16,528 $ 16,528
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales..................... $ 55,395 $ 55,395
Cost of goods sold............ 42,236 1,197(i) 43,433
---------- ---------
Gross profit.................. 13,159 11,962
Selling, general and
administrative.............. 4,385 (336)(j) 4,049
---------- ----------- ---------
Operating income........ 8,774 7,913
Other income (expense):
Interest expense, net......... (1,867) (5,852)(k) (7,719)
Other, net.................... (67) (67)
---------- ---------
Income before income taxes.... 6,840 127
Income tax expense............ 2,492 (1,989)(d) 503
---------- ---------
Net income (loss)........... $ 4,348 $ (376)
---------- ---------
---------- ---------
EBITDA(e)..................... $ 13,214 $ 13,214
</TABLE>
26
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(a) The increase in cost of goods sold relates to increased depreciation expense
of approximately $4.6 million resulting from the increase in fixed asset
value reflecting the allocation of a portion of the purchase price to the
write-up of fixed assets and an approximate $0.2 million decrease in
amortization expense resulting from the write-off of certain intangibles.
(b) Adjustments to selling, general and administrative expenses include the
following: (i) the elimination of approximately $6.4 million representing
the excess of fees and expenses paid to HII and compensation payments
pursuant to employment and consulting agreements which were terminated upon
consummation of the Acquisition Transactions over the amount of management
fees expected to be paid to AIP, (ii) an increase in amortization expense
for goodwill of approximately $4.6 million and for the non-compete agreement
of $0.4 million (assumes 40-year and 7-year amortization periods,
respectively).
(c) Adjustments to interest expense include the following: (i) the reduction of
approximately $0.3 million of existing financing fee amortization, (ii)
reduction of approximately $1.2 million of interest income, (iii) reduction
of approximately $0.1 million of expenses associated with the Existing
Credit Agreement for letters of credit and commitment fees, (iv) the
elimination of $6.5 million related to the 10% Notes, (v) the addition of
approximately $27.4 million related to the Notes and the New Credit
Agreement, (vi) approximately $0.2 million of incremental maintenance and
commitment fees and expenses on the New Credit Agreement, and (vii) the
increase of approximately $2.1 million in amortization relating to financing
fees and other transaction costs (amortized over 6-10 years).
(d) Reflects the tax effect of the pro forma adjustments and the
non-deductibility of certain intangible asset amortization.
(e) EBITDA is defined as operating income before depreciation, amortization,
fees and expenses paid to HII, compensation payments pursuant to employment
and consulting agreements which were terminated upon consummation of the
Acquisition Transactions and AIP management fees. EBITDA is not defined in
the same manner as "Consolidated EBITDA" in the Indenture or in "Description
of Notes" herein. See "Description of Notes--Certain Definitions." EBITDA is
not intended to represent cash flow from operations as defined by GAAP and
should not be used as an alternative to net income as an indicator of
operating performance or to cash flows as a measure of liquidity. EBITDA is
included in the Prospectus as it is a basis upon which the Company assesses
its financial performance, and certain covenants in the Company's borrowing
arrangements will be tied to similar measures. EBITDA, as presented,
represents a useful measure of assessing the Company's ongoing operating
activities without the impact of financing activity and nonrecurring
charges. While EBITDA is frequently used as a measure of operations and the
ability to meet debt service requirements, it is not necessarily comparable
to other similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.
(f) The increase in cost of goods sold relates to increased depreciation expense
of approximately $1.3 million resulting from the increase in fixed asset
value reflecting the allocation of a portion of the purchase price to the
write-up of fixed assets and a decrease in amortization expense resulting
from the write-off of certain intangibles.
(g) Adjustments to selling, general and administrative expenses include the
following: (i) the elimination of approximately $0.1 million representing
the excess of fees and expenses paid to HII and compensation payments
pursuant to employment and consulting agreements which were terminated upon
consummation of the Acquisition Transactions over the amount of management
fees expected to be paid to AIP and (ii) an increase in amortization expense
for goodwill of approximately $1.1 million and for the non-compete agreement
of $0.1 million (assumes 40-year and 7-year amortization period,
respectively).
27
<PAGE>
(h) Adjustments to interest expense include the following: (i) the reduction of
approximately $0.1 million of existing financing fee amortization, (ii)
reduction of approximately $0.7 million of interest income, (iii) reduction
of expenses associated with the Existing Credit Agreement for letters of
credit and commitment fees, (iv) the elimination of $1.6 million related to
the 10% Notes, (v) the addition of approximately $6.8 million related to the
Notes and the New Credit Agreement, (vi) approximately $0.1 million of
incremental maintenance and commitment fees and expenses on the New Credit
Agreement and (vii) the increase of approximately $0.5 million in
amortization relating to financing fees and other transaction costs
(amortized over 6 to 10 years).
(i) The increase in cost of goods sold relates to increased depreciation expense
of approximately $1.2 million resulting from the increase in fixed asset
value reflecting the allocation of a portion of the purchase price to the
write-up of fixed assets and an approximate $0.1 million decrease in
amortization expense resulting from the write-off of certain intangibles.
(j) Adjustments to selling, general, and administrative expenses include the
following: (i) the elimination of approximately $1.6 million representing
the excess of fees and expenses paid to HHI and compensation payments
pursuant to employment and consulting agreements which were terminated upon
consummation of the Acquisition Transactions over the amount of management
fees expected to be paid to AIP and (ii) an increase in amortization expense
for goodwill of approximately $1.1 million and for the non-compete agreement
amortization of $0.1 million (assumes a 40-year and 7-year amortization
period, respectively).
(k) Adjustments to interest expense include the following: (i) the reduction of
approximately $0.1 million of existing financing fee amortization, (ii)
reduction of approximately $0.1 million of interest income, (iii) reduction
of expenses associated with the Existing Credit Agreement for letters of
credit and commitment fees, (iv) a reduction of $1.6 million related to the
10% Notes, (v) the addition of approximately $6.8 million of interest
expense on the Notes and the New Credit Agreement, (vi) incremental
maintenance and commitment fees and expenses of approximately $0.1 million
on the New Credit Agreement and (vii) the addition of approximately $0.5
million in amortization relating to financing fees and other transaction
costs (amortized over 6 to 10 years).
28
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
---------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash.................................... $ 53,865 (50,644)(a) $ 3,221(b)
Accounts receivable..................... 33,566 33,566
Inventories............................. 30,905 30,905
Prepaid items/other..................... 5,127 5,127
-------- ---------
Total current assets................ 123,463 72,819
Net fixed assets........................ 61,852 153,148(c) 215,000
Goodwill................................ 0 183,708(c) 183,708
Capitalized financing costs............. 2,045 16,705(c) 18,750
Other assets............................ 3,159 2,953(d) 6,112
-------- ---------
Total assets........................ $190,519 $496,389
-------- ---------
-------- ---------
LIABILITIES & EQUITY
Accounts payable........................ $ 16,890 $ 16,890
Accruals................................ 10,378 (1,625)(a) 8,753
Taxes payable........................... 5,286 5,286
Current portion of long-term debt....... 1,427 1,427
-------- ---------
Total current liabilities........... 33,981 32,356
Long-term debt.......................... 87,010 221,000(a) 308,010
Deferred income taxes................... 4,814 53,924(c) 58,738
Other long-term liabilities............. 4,208 697(e) 4,905
Stockholders' equity.................... 60,506 31,874(f) 92,380
-------- ---------
Total liabilities and stockholders'
equity............................ $190,519 $496,389
-------- ---------
-------- ---------
</TABLE>
29
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DATA
(a) The net effect on cash reflects the following (dollars in thousands):
<TABLE>
<S> <C>
TOTAL SOURCES:
Cash.............................................. $ 50,644
Borrowings under New Credit Agreement............. 111,000
Notes offered hereby.............................. 175,000
Holdings Equity Contribution...................... 92,380
--------
$429,024
--------
--------
TOTAL USES:
Merger Consideration.............................. $331,292
Purchase of 10% Notes in the Tender Offer......... 65,000
Accrued interest on 10% Notes..................... 1,625
Tender premium.................................... 9,107
Transaction fees.................................. 22,000
--------
$429,024
--------
--------
</TABLE>
Reflects cash that was not used to fund the Acquisition Transactions.
30
<PAGE>
(c) The Merger has been accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16. The purchase cost has been
preliminarily allocated to tangible assets and liabilities and identifiable
intangible assets based on management's estimates of fair market value at March
31, 1998. The excess of the purchase price over amounts allocated to the
tangible assets and liabilities and identifiable intangible assets will be
amortized over 40 years.
The purchase cost and (preliminary) allocation of the excess of cost over
the net book value of assets acquired is as follows (dollars in thousands):
<TABLE>
<S> <C>
Purchase cost pursuant to the Merger
Agreement:
Enterprise value...................... $376,894
Less: assumed indebtedness............ (23,437)
Less: existing indebtedness to be
refinanced.......................... (65,000)
Less: accrued interest on existing
debt................................ (1,923)
Less: tender premium.................. (9,107)
Add: cash............................. 53,865
--------
Merger Consideration.................... 331,292
Transaction fees and expenses........... 22,000
--------
Total purchase cost..................... 353,292
Book value of net assets acquired..... (60,506)
Tender premium........................ 9,107
--------
Excess of purchase cost over the net
book value of assets acquired
(pre-allocations)................... $301,893
--------
--------
Allocated to:
Increase in value of property, plant
and equipment....................... $153,148
Recognize pension assets in excess of
the projected benefit obligation.... 457
Adjust accrued postretirement benefit
cost to the projected postretirement
benefit obligation.................. (1,154)
Write-off of existing deferred debt
issuance costs...................... (2,045)
Write-off of other existing
intangibles......................... (47)
Increase in deferred taxes............ (53,924)
Non-compete agreement................. 3,000
Deferred debt issuance costs.......... 18,750
Goodwill.............................. 183,708
--------
Total allocation........................ $301,893
--------
--------
</TABLE>
(d) Reflects the write-off of certain intangible assets and the
capitalization of $3.0 million relating to the non-compete agreement.
(e) Net adjustment of pension and postretirement benefit obligations to the
excess of the accumulated benefit obligation over the fair market value of plan
assets.
(f) Represents the net change in stockholders' equity as a result of the
Acquisition Transactions, including related financing and the application of the
proceeds thereof (dollars in thousands):
<TABLE>
<S> <C>
Holdings Equity Contribution...................................................... $ 92,380
---------
Pro forma stockholders' equity.................................................... 92,380
Net book value of assets acquired................................................. (60,506)
---------
Pro forma adjustments to stockholders' equity..................................... $ 31,874
---------
---------
</TABLE>
31
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OTHER DATA
The following table presents selected historical consolidated statement of
operations, balance sheet and other data of the Company as of and for the five
years ended December 31, 1997 which are derived from the Company's audited
consolidated financial statements. The selected historical consolidated
statement of operations, balance sheet and other data for the three-month
periods ended March 31, 1997 and 1998 are derived from the unaudited
consolidated financial statements of the Company and, in the opinion of
management, include all adjustments necessary for a fair presentation of the
data for such periods. The results for the three-month period ended March 31,
1998 are not necessarily indicative of the results to be expected for the year
ended December 31, 1998 or any future period. The data set forth below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements
of the Company and the related notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ --------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER TON) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................................... $149,225 $130,797 $178,628 $242,744 $231,911 $ 55,395 $ 62,070
Cost of goods sold................................ 124,760 109,883 142,188 176,371 172,390 42,236 45,683
-------- -------- -------- -------- -------- --------- ---------
Gross profit...................................... 24,465 20,914 36,440 66,373 59,521 13,159 16,387
Selling, general and administrative expenses...... 9,901 8,226 9,687 15,321 18,510 4,385 2,684
-------- -------- -------- -------- -------- --------- ---------
Operating income.................................. 14,564 12,688 26,753 51,052 41,011 8,774 13,703
Other income (expense):
Interest expense, net........................... (1,440) (1,358) (1,127) (7,573) (6,287) (1,867) (1,157)
Asset utilization fee to parent................. (6,440) (6,133) (6,286) -- -- -- --
Other........................................... (1,806) (5,142) 2,111 (772) (49) (67) (72)
-------- -------- -------- -------- -------- --------- ---------
(9,686) (12,633) (5,302) (8,345) (6,336) (1,934) (1,229)
Income before income taxes........................ 4,878 55 21,451 42,707 34,675 6,840 12,474
Income tax expense................................ 2,008 189 7,633 15,148 12,691 2,492 4,407
-------- -------- -------- -------- -------- --------- ---------
Net income (loss)................................. $ 2,870 $ (134) $ 13,818 $ 27,559 $ 21,984 $ 4,348 $ 8,067
-------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- --------- ---------
OTHER DATA:
EBITDA(1)......................................... $ 23,958 $ 21,986 $ 36,514 $ 66,563 $ 59,182 $ 13,214 $ 16,528
EBITDA margin..................................... 16.1% 16.8% 20.4% 27.4% 25.5% 23.9% 26.6%
Capital expenditures.............................. $ 6,973 $ 5,986 $ 5,774 $ 6,371 $ 21,391 $ 3,651 $ 4,942
Cash interest expense(2).......................... 1,796 1,572 1,310 7,964 8,172 1,968 2,138
Ratio of earnings to fixed charges(3)............. 2.7x 1.0x 10.2x 5.6x 4.6x 4.0x 6.0x
Quantity of CPC sold (in thousands of tons)....... 1,286 1,229 1,484 1,452 1,443 346 387
Net sales per ton of CPC sold..................... $ 116.01 $ 106.40 $ 120.35 $ 167.21 $ 160.67 $ 160.31 $ 160.45
Gross profit per ton of CPC sold.................. 19.02 17.01 24.55 45.72 41.24 38.08 42.36
BALANCE SHEET DATA (AT PERIOD END):
Working capital................................... $ 19,366 $ 15,828 $ 27,011 $ 56,818 $ 79,435 $ 89,482
Total assets...................................... 106,483 105,390 113,930 148,905 174,911 190,519
Total debt........................................ 17,986 11,907 74,291 72,885 84,014 88,437
Stockholders' equity.............................. 68,791 68,657 5,896 31,955 52,439 60,506
</TABLE>
- ------------------------------
(1) EBITDA is defined as operating income before depreciation, amortization,
fees and expenses paid to HII, compensation payments pursuant to employment
and consulting agreements which were terminated upon consummation of the
Acquisition Transactions and AIP management fees. EBITDA is not defined in
the same manner as "Consolidated EBITDA" in the Indenture or in "Description
of Notes" herein. See "Description of Notes--Certain Definitions." EBITDA is
not intended to represent cash flow from operations as defined by GAAP and
should not be used as an alternative to net income as an indicator of
operating performance or to cash flows as a measure of liquidity. EBITDA is
included in the Prospectus as it is a basis upon which the Company assesses
its financial performance, and certain covenants in the Company's borrowing
arrangements will be tied to similar measures. EBITDA, as presented,
represents a useful measure of assessing the Company's ongoing operating
activities without the impact of financing activity and nonrecurring
charges. While EBITDA is frequently used as a measure of operations and the
ability to meet debt service requirements, it is not necessarily comparable
to other similarly titled captions of other companies due to potential
inconsistencies in the method of calculation.
(2) Cash interest expense excludes the amounts of interest charged to earnings
relating to a capitalized lease which has been sublet for a term coterminous
with the primary lease and for a rental amount in excess of the rent payable
on the primary lease and the amortization of debt issuance costs under the
10% Notes.
(3) Earnings used in computing the ratio of earnings to fixed charges consist of
earnings before income taxes and discontinued operations plus fixed charges.
Fixed charges consist of interest expense plus that portion of operating
lease rental expense which is representative of an interest factor.
32
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is the world's largest producer of CPC. The Company produces
anode grade CPC, which is an essential raw material for primary aluminum
production, and industrial grade CPC, which is used in a variety of specialty
metals and materials applications. Historically, the Company's profitability has
been primarily a function of its sales volumes of CPC, CPC pricing and the cost
of RPC, which constitutes the largest single component of the Company's cost of
goods sold.
The Company has benefitted from the consistent growth in primary aluminum
production since 1995. The growth in primary aluminum production, which is
projected by a variety of industry sources to continue through the next several
years, has led to increased demand for CPC which has substantially outpaced the
growth in CPC production capacity. As a result, the calcining industry is
operating at historically high operating rates; the Company has operated at full
capacity since 1995. The selling price per ton realized by the Company has
increased 33.5% from 1995 to 1997. Consequently, the Company's net sales have
increased by 29.8% from $178.6 million to $231.9 million over the same period.
The Company produces CPC from RPC, which is a by-product of the petroleum
refining process. RPC generally represents an immaterial proportion of total
refinery sales. Petroleum refiners can either sell the RPC for its fuel value at
a relatively low price or sell the RPC at a significantly higher price for use
in the calcining industry. As a result of these factors, the price of RPC has
not increased as rapidly as the price of CPC since 1995. Consequently, the
Company has been able to increase its gross profit per ton of CPC sold from
$24.55 in 1995 to $41.24 in 1997. Furthermore, historically the Company has been
able to obtain lower purchase prices for RPC in times of declining CPC prices,
enabling the Company to earn a relatively stable profit spread even in periods
of CPC price declines.
The following table sets forth for the periods shown, the Company's sales
volumes in tons, the average selling price per ton, and gross profit per ton
sold:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales (thousands of tons).................................. 1,484 1,452 1,443 346 387
Average selling price per ton.............................. $ 120.35 $ 167.21 $ 160.67 $ 160.31 $ 160.45
Gross profit per ton sold.................................. 24.55 45.72 41.24 38.08 42.36
</TABLE>
The following table sets forth for the periods shown, net sales, cost of
goods sold, gross profit, selling general and administrative expense ("SG&A")
and EBITDA in million of dollars and as a percentage of net sales:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1997 1998
-------------------- -------------------- -------------------- -------------------- --------------------
Net sales........ $ 178.6 100.0% $ 242.7 100.0% $ 231.9 100.0% $ 55.4 100.0% $ 62.1 100.0%
Cost of goods
sold........... 142.2 79.6 176.4 72.7 172.4 74.3 42.2 76.2 45.7 73.6
Gross profit..... 36.4 20.4 66.4 27.3 59.5 25.7 13.2 23.8 16.4 26.4
SG&A............. 9.7 5.4 15.3 6.3 18.5 8.0 4.4 7.9 2.7 4.3
EBITDA........... 36.5 20.4 66.6 27.4 59.2 25.5 13.2 23.9 16.5 26.6
</TABLE>
33
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
The Company's net sales for the three months ended March 31, 1998 increased
12.0% to $62.1 million from $55.4 million for the comparable 1997 period. Net
sales of anode grade CPC increased 17.9% to $52.5 million while net sales of
industrial grade CPC decreased 13.3% to $9.1 million.
The increase in anode grade CPC net sales was primarily the result of a
22.4% increase in sales volume to 316,529 tons. This increase in sales volume
was partially offset by a decline of 3.7% in average selling price. The increase
in anode grade sales volume was primarily the result of scheduling more customer
shipments of anode grade CPC in the 1998 period. The moderate decline in average
selling price was a result of the continuation of the market stabilization after
CPC prices had increased substantially in 1996.
The decrease in industrial grade CPC net sales was the result of a 20.6%
decrease in sales volume to 64,997 tons which was partially offset by a 9.1%
increase in selling price. The decrease in sales volume was primarily the result
of the scheduling of greater anode grade CPC shipments in the 1998 period.
The Company's gross profit for the three months ended March 31, 1998
increased by 24.5% to $16.4 million from $13.2 million for the comparable 1997
period. The increase in gross profit was due to the increase in sales discussed
above which was partially offset by an increase in cost of goods. The higher
cost of sales was mainly the result of higher sales volume as the average cost
per ton decreased due mainly to lower raw material costs.
Operating income for the three months ended March 31, 1998 increased 56.2%
to $13.7 million from $8.8 million in the comparable 1997 period. The
improvement in operating income was due to the increase in gross profit
discussed above coupled with a decrease in selling, general and administrative
expenses. The decrease in selling, general and administrative expenses was
primarily the result of decreased compensation payments pursuant to employment
and consulting agreements which will be terminated upon consummation of the
Acquisition Transactions.
Income before income taxes for the three months ended March 31, 1998
increased 82.4% to $12.5 million from $6.8 million for the comparable 1997
period. The increase was attributable to the improved operating income discussed
above and a $0.7 million decrease in net interest expense primarily due to
increased interest income from larger cash balances in 1998. As a result of the
factors discussed above, net income for the three months ended March 31, 1998
increased to $8.1 million from $4.3 million in the comparable 1997 period.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
The Company's net sales for the year ended December 31, 1997 decreased 4.5%
to $231.9 million from $242.7 million in 1996. Net sales of anode grade CPC
decreased 4.8% to $189.9 million while net sales of industrial grade CPC
increased 4.2% to $40.2 million.
The decrease in anode grade CPC net sales was primarily the result of a 6.4%
decline in the average selling price per ton in 1997 from 1996. This decline in
average selling price was partially offset by an increase of 1.8% in sales
volume in 1997 to approximately 1.1 million tons. The moderate 1997 anode grade
CPC price decline was largely the result of a market stabilization after CPC
prices had increased substantially during 1996.
The increase in industrial grade CPC net sales was the result of an 8.3%
increase in average selling price which was partially offset by a 3.8% decrease
in sales volume. These changes were primarily the result of increased market
prices across most product applications and a slight decrease in titanium
dioxide shipments.
34
<PAGE>
The Company's 1997 gross profit decreased 10.3% to $59.5 million, from $66.4
million in 1996. The decrease in gross profit was due to the reduction in sales
discussed above which was partially offset by a decrease in cost of goods sold.
The lower cost of goods sold was primarily the result of lower raw material
costs.
Operating income decreased 19.7% to $41.0 million in 1997 from $51.1 million
in 1996. The decline in operating income was due to the decrease in gross profit
discussed above and an increase in selling, general and administrative expenses.
The increase in selling, general and adminstrative expenses was primarily the
result of increased compensation payments pursuant to employment and consulting
agreements which were terminated upon consummation of the Acquisition
Transactions.
Income before income taxes decreased 18.8% to $34.7 million in 1997 from
$42.7 million in 1996. The reduction was attributable to the reduced operating
income discussed above, partially offset by a $2.0 million decrease in other
expense. This decrease was primarily a result of greater interest income from
greater cash balances in 1997. As a result of the factors discussed above, net
income for 1997 decreased 20.2% to $22.0 million from $27.6 million in 1996.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
The Company's net sales for the year ended December 31, 1996 increased 35.9%
to $242.7 million from $178.6 million in 1995. Net sales of anode grade CPC
increased 34.8% to $199.4 million in 1996, while net sales of industrial grade
CPC increased 40.0% to $38.6 million.
The increase in anode grade CPC net sales was primarily the result of higher
average selling prices which grew approximately 45.8% in 1996. The increase in
average selling price for anode grade CPC was partially offset by a decrease in
selling volume of 7.5% to approximately 1.1 million tons. The higher prices were
the result of the attractive industry fundamentals experienced in 1996. The
lower sales volume of anode grade CPC was primarily attributable to the
unavailability of third-party produced CPC, which the Company had been able to
purchase for resale in 1995.
The increase in industrial grade CPC net sales was the result of a 22.5%
average price increase and a 14.4% increase in sales volume in 1996 compared to
1995. The increase in both industrial grade CPC selling prices and sales volume
was due to strong market conditions.
The Company's 1996 gross profit increased 82.1% to $66.4 million from $36.4
million in 1995. This increase in gross profit was due to the increase in sales
discussed above, partially offset by an increase in cost of sales. The higher
cost of goods sold was mainly the result of higher raw material costs.
Operating income increased 90.8% to $51.1 million in 1996 from $26.8 million
in 1995. The increase in operating income was due to the increase in gross
profit discussed above which was partially offset by an increase in selling,
general and administrative expenses. The increase in selling, general and
administrative expenses was primarily the result of increased compensation
payments pursuant to employment and consulting agreements which were terminated
upon consummation of the Acquisition Transactions.
Income before income taxes increased 99.1% to $42.7 million in 1996 from
$21.5 million in 1995 as a result of the improvement in operating income that
was partially offset by a $3.0 million increase in other expense. This increase
primarily resulted from a non-recurring income item in 1995. The increase in net
interest expense arising from the issuance of the 10% Notes in December 1995 was
offset by the reduction in the asset utilization fee to HII, under an agreement
which was terminated in December 1995. As a result of the factors discussed
above, net income for 1996 increased 99.4% to $27.6 million from $13.8 million
in 1995.
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LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL
Historically, the Company's principal source of liquidity has been cash flow
from operations. In addition, since 1997 the Company has supplemented its cash
flow with borrowings under the Copetro Credit Agreement to finance construction
of the New La Plata Kiln at the Company's La Plata, Argentina facility.
Net cash flow provided (used) by operating activities was $10.8 million and
$(8.2) million for the three months ended March 31, 1998 and 1997, respectively.
The increase in operating cash flow was a result of lower working capital
requirements in the 1998 period combined with an increase in net income. Net
cash flow provided by operating activities was $31.3 million, $27.7 million and
$17.2 million in 1997, 1996 and 1995, respectively. The Company's operating cash
flow improved in 1997 over 1996 primarily as a result of lower working capital
requirements offset in part by lower net income. The improvement in operating
cash flow in 1996 compared to 1995 was primarily the result of the increase in
net income experienced during 1996 which reflected the Company's substantially
improved financial performance in that period. This increase was partially
offset by higher working capital requirements which were necessary to support
the Company's higher sales volumes.
Capital expenditures were $4.9 million and $3.7 million for the three months
ended March 31, 1998 and 1997, respectively. The higher capital expenditures in
the 1998 period reflect the continued construction of the New La Plata Kiln.
Capital expenditures were $21.4 million, $6.4 million, and $5.8 million in 1997,
1996 and 1995, respectively. Of the increase in capital expenditures in 1997,
$13.4 million is attributable to the construction of the New La Plata Kiln and
$1.0 million was related to the construction of a new ship loader facility at
the Company's Port Arthur, Texas plant. Other capital expenditures in the period
1995 to 1997 were relatively constant, ranging from approximately $5.8 to $7.0
million. These expenditures generally related to the maintenance of the
Company's operating facilities, including kilns, increases in the Company's CPC
storage capability, and the expansion of the Company's crushing and screening
facilities used in the production of industrial grade CPC. The Company has
budgeted $15.0 million of capital expenditures in 1998 including 9.0 million to
complete the New La Plata Kiln.
The Company spent approximately $3.5 million on capital expenditures related
to pollution control facilities in 1997 and anticipates spending approximately
$3.5 million and $1.9 million for such facilities in 1998 and 1999,
respectively. Approximately half of the environmental expenditures in 1997 and
1998 will be in conjunction with the construction of the New La Plata Kiln.
The Company is financing the expansion of the Argentine facility with a
revolving credit facility (the "Copetro Credit Agreement") provided by Banca
Nazionale del Lavoro S.A. ("BNL"). The Copetro Credit Agreement is nonrecourse
to the Company, matures on June 30, 2002, and provides for a variable interest
rate (9.75% at March 31, 1998). The Copetro Credit Agreement had a maximum
availability of $20.0 million prior to June 30, 1998. As of March 31, 1998,
$15.9 million of borrowings were outstanding and the remaining $4.1 million of
availability will not be borrowed. The Copetro Credit Agreement remained in
place after the consummation of the Acquisition Transactions. The Copetro Credit
Agreement is secured by the property, plant and equipment of Copetro, including
the New La Plata Kiln. The Copetro Credit Agreement contains certain covenants
that require Copetro to maintain certain financial ratios and imposes certain
limitations on the payment of dividends to the Company. See "Description of
Other Indebtedness--Copetro Credit Agreement."
In December 1995, the Company issued $65.0 million of the 10% Notes. The
$62.5 million of net proceeds from such offering were used to pay a cash
dividend to HII in connection with the distribution of 100% of the Company's
common stock on a pro rata basis to the holders of the common stock of HII. The
10% Notes are secured by first priority liens on all material property and
equipment of the Company not otherwise pledged and certain other assets of the
Company.
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In connection with the Merger, the Company commenced a Tender Offer on April
24, 1998, for any and all of the 10% Notes and simultaneously conducted the
Consent Solicitation from holders of the 10% Notes to certain amendments to and
waivers under the 10% Indenture and certain related collateral documents. All of
the outstanding 10% Notes were purchased by the Company pursuant to the Tender
Offer and Solicitation and such purchase was consummated concurrently with the
closing of the Offering. The aggregate consideration paid by the Company in the
Tender Offer and Solicitation was approximately $74.1 million (including the
Tender Premium of approximately $9.1 million but excluding accrued interest).
Following consummation of the Tender Offer and Solicitation, the 10%
Indenture and the 10% Notes were terminated.
The Existing Credit Agreement provided for borrowings of up to $15.0
million, including a $10 million sublimit for letters of credit, which are
subject to borrowing base limitations. At March 31, 1998, the Company had no
borrowings under the facility and had outstanding letters of credit of $3.4
million. The Existing Credit Agreement was terminated upon the consummation of
the Acquisition Transactions and the $3.4 million in letters of credit were
collateralized pursuant to a letter of credit issued under the New Credit
Agreement.
POST-MERGER
The Company's principal sources of liquidity are cash flow from operations,
supplemented by borrowings under the Revolving Credit Facility and $15.9 million
currently outstanding under the Copetro Credit Agreement. The Company's
additional liquidity sources include various industrial revenue bonds and other
miscellaneous debt.
In connection with the Merger, the Company issued the Old Notes in an
aggregate principal amount of $175.0 million, Holdings offered the Holdings
Debentures in an aggregate principal amount at maturity of $56.6 million and
Holdings and the Company entered into the Term Loan Facilities and the Revolving
Credit Facility under the New Credit Agreement. Each of the Term Loan Facilities
is a single tranche term facility. The Term A Loan Facility, the Term B Loan
Facility, and the Term C Loan Facility are in principal amounts of $50.0
million, $31.0 million and $30.0 million, respectively. The Revolving Credit
Facility will provide revolving loans in an aggregate amount of up to $25.0
million, subject to a borrowing base limitation. Upon consummation of the
Acquisition Transactions, the Company borrowed the full amount available under
each of the Term Loan Facilities and did not draw under the Revolving Credit
Facility. Proceeds from the issuance of the Old Notes and the Holdings
Debentures, initial borrowings under the New Credit Agreement and the AIP Equity
Contribution were used to finance the Acquisition Transactions, and fees and
expenses in connection therewith and including the Tender Offer.
Borrowings under the New Credit Agreement bear interest at a rate per annum
equal (at the Company's option) to a margin over either a base rate or LIBOR.
The Revolving Credit Facility, the Term A Loan Facility, the Term B Loan
Facility and the Term C Loan Facility will mature in five, six, seven and eight
years, respectively. The Company's obligations under the New Credit Agreement
will be guaranteed by Holdings and any future Subsidiaries of the Company other
than Foreign Subsidiaries. The guarantee of the New Credit Agreement by Holdings
is secured by a pledge of all of the capital stock of the Company. The New
Credit Agreement and the guarantees thereof are secured by a perfected first
priority security interest in substantially all assets of the Company and its
future direct and indirect subsidiaries except Foreign Subsidiaries. The New
Credit Agreement contains covenants and events of default customary for
facilities of this nature including substantial restrictions on the Company's
ability to make dividends or distributions or incur additional indebtedness. See
"Description of Other Indebtedness--New Credit Agreement."
The Old Notes were and the New Notes will be issued by the Company and will
be guaranteed by any future Subsidiaries other than Foreign Subsidiaries,
Finance Subsidiaries and Receivables Subsidiaries. The Notes will mature on May
15, 2008. Interest on the Notes will be payable in cash semiannually, in
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<PAGE>
arrears, on May 15 and November 15 of each year, commencing on November 15,
1998. For interest payments due through May 15, 2003, the Company may, at its
option, make up to four semiannual payments through the issuance of Additional
Notes in an aggregate principal amount equal to the amount of the interest that
would be payable as if the rate per annum were equal to 11 3/4%. The Notes will
contain covenants and events of default customary for indebtedness of this
nature, including covenants that limit the ability of the Company and its
Subsidiaries to incur debt, pay dividends and make certain investments. See
"Description of Notes."
The Holdings Debentures will mature on May 15, 2009. Cash interest will not
accrue on the Holdings Debentures prior to May 15, 2003. Thereafter, interest on
the Holdings Debentures will be payable semiannually in cash. Under the New
Credit Agreement and the Notes, the Company is restricted in its ability to pay
dividends to Holdings so that Holdings can pay its debt service obligations on
the Holdings Debentures (which payments are scheduled to begin in 2003), the
failure of which may create an event of default under the Holdings Debentures,
which, if not cured or waived, could have a material adverse effect on the
Company. See "Description of Notes--Restricted Payments," "Description of Other
Indebtedness--Holdings Debentures" and "--New Credit Agreement."
Management believes that cash flow from operations and availability under
the Revolving Credit Facility will provide adequate funds for the Company's
foreseeable working capital needs, planned capital expenditures and debt service
obligations. The Company's ability to fund its operations and make planned
capital expenditures, to make scheduled debt payments, to refinance indebtedness
and to remain in compliance with all of the financial covenants under its debt
agreements depends on its future operating performance and cash flow, which in
turn, are subject to prevailing economic conditions and to financial, business
and other factors, some of which are beyond its control. See "Risk Factors."
YEAR 2000
The Company has conducted a preliminary evaluation of its Year 2000
compliance. Based on such evaluation the Company believes that Year 2000
compliance will not have a material adverse effect on the Company.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal (which together constitute the Exchange
Offer), the Company will accept for exchange Old Notes which are properly
tendered on or prior to the Expiration Date and not withdrawn as permitted
below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City
time, on 1998.
As of the date of this Prospectus, $175,000,000 aggregate principal amount
of the Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about the date hereof, to all Holders of
the Old Notes known to the Company. The Company's obligation to accept Old Notes
for exchange pursuant to the Exchange Offer is subject to certain conditions as
set forth under "--Certain Conditions to the Exchange Offer" below. Any Old
Notes not accepted for exchange for any reason will be returned without expense
to the tendering Holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the failure of satisfaction of any of the conditions of the
Exchange Offer specified below under "--Certain Conditions to the Exchange
Offer." The Company will give oral or written notice of any extension,
amendment, non-acceptance or termination to the Holders of the Notes as promptly
as practicable, such notice in the case of any extension to be issued by means
of a press release or other public announcement no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal or (in the case of a book-entry transfer)
an Agent's Message in lieu of such Letter of Transmittal, to the Exchange Agent
at the address set forth below under "Exchange Agent" on or prior to the
Expiration Date. In addition, either (i) certificates for such Old Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or (ii) a
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Old Notes, if such procedure is available, into the Exchange Agent's
account at DTC (the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date with the Letter of Transmittal or an Agent's
Message in lieu of such Letter of Transmittal, or (iii) the Holder must comply
with the guaranteed delivery procedures described below. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility to and
received by the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the tendering participant, which acknowledgment states that
such participant has received and agrees to be bound by the Letter of
Transmittal and that the Company may enforce such Letter of Transmittal against
such participant. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS.
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IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD
NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a Holder of the Old Notes who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered owner with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
their counsel, be unlawful. The Company also reserves the absolute right to
waive any defects or irregularities or conditions of the Exchange Offer as to
any particular Old Notes either before or after the Expiration Date (including
the right to waive the ineligibility of any Holder who seeks to tender Old Notes
in the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Note either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by powers of attorney, in either case signed exactly as the name or
names of the registered Holder or Holders that appear on the Old Notes.
If the Letter of Transmittal or any Old Notes or powers of attorneys are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted with the Letter of Transmittal.
By tendering, each Holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the Holder and that neither the Holder nor such
other person has any arrangement or understanding with any person to participate
in the distribution of the New Notes. If any Holder or any such other person is
an "affiliate", as defined under Rule 405 of the Securities Act, of the Company
and is engaged in or intends to engage in or has an arrangement or understanding
with any person to participate in a distribution of such New Notes to be
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acquired pursuant to the Exchange Offer, then such Holder or any such other
person (i) could not rely on the applicable interpretations of the Staff and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
this Prospectus in connection with any resale of such New Notes. See "Plan of
Distribution." The Letter of Transmittal states that by so acknowledging and by
delivering this Prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction of all of the conditions to the Exchange Offer, the
Company will accept, promptly after the Expiration Date, all Old Notes properly
tendered and will issue the New Notes promptly after acceptance of the Old
Notes. See "--Certain Conditions to the Exchange Offer" below. For purposes of
the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral
(promptly confirmed in writing) or written notice thereof to the Exchange Agent.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. Accordingly, registered holders of New Notes on the relevant record
date for the first interest payment date following the consummation of the
Exchange Offer will receive interest accruing from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid, from
May 22, 1998. Old Notes accepted for exchange will cease to accrue interest from
and after the date of consummation of the Exchange Offer. Pursuant to the
Registration Rights Agreement, certain Liquidated Damages are required to be
paid to Holders of Old Notes under certain circumstances relating to the timing
of the Exchange Offer and to other registration requirements contained therein.
Holders of Old Notes, who tender such Notes in the Exchange Offer agree to waive
any accrued but unpaid Liquidated Damages on such Old Notes. An amount equal to
the amount of accrued and unpaid Liquidated Damages on Old Notes tendered in the
Exchange Offer shall be payable, on such first interest payment date, to
registered holders of New Notes on the record date for the first interest
payment following the consummation of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (i) certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility, (ii) a properly completed and duly executed
Letter of Transmittal or an Agent's Message in lieu thereof and (iii) all other
required documents. If any tendered Old Notes are not accepted for any reason
set forth in the terms and conditions of the Exchange Offer or if Old Notes are
submitted for a greater principal amount than the Holder desires to exchange,
such unaccepted or non-exchanged Old Notes will be returned without expense to
the tendering Holder thereof (or, in the case of Old Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFERS
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer Facility
systems must make book-entry delivery of Old Notes by causing the Book-Entry
Transfer Facility to transfer such Old Notes into the Exchange Agent's accounts
at the Book-Entry Transfer Facility in accordance with such
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Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP")
procedures for transfer. Such participant using ATOP should transmit its
acceptance to the Book-Entry Transfer Facility on or prior to the Expiration
Date or comply with the guaranteed delivery procedures described below. The
Book-Entry Transfer Facility will verify such acceptance, execute a book-entry
transfer of the tendered Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility and then send to the Exchange Agent confirmation of
such book-entry transfer, including an Agent's Message confirming that the
Book-Entry Transfer Facility has received an express acknowledgment from such
participant that such participant has received and agrees to be bound by the
Letter of Transmittal and that the Company may enforce the Letter of Transmittal
against such participant. However, although delivery of Old Notes may be
effected through book-entry transfer at the Book-Entry Transfer Facility, an
Agent's Message and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth below
under "--Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a Holder of the Old Notes desires to tender such Old Notes and the Old
Notes are not immediately available, or time will not permit such Holders' Old
Notes or other required documents to reach the Exchange Agent before the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if (i) the tender is made through an
Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
received from such Eligible Institution a Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address of the
Holder of the Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within five New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed appropriate Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) with any
required signature guarantees and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed appropriate Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) with any
required signature guarantees and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be received by the Exchange Agent at one of
the addresses set forth below under "--Exchange Agent." Any such notice of
withdrawal must (i) specify the name of the person having tendered the Old Notes
to be withdrawn (ii) identify the Old Notes to be withdrawn (including the
principal amount of such Old Notes), and (iii) if certificates for Old Notes
have been transmitted, specify the name in which such Old Notes are registered,
if different from that of the withdrawing Holder. If certificates for Old Notes
have been delivered or otherwise identified to the Exchange Agent, then, prior
to the release of such certificates the withdrawing Holder must also submit the
serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Holder is an Eligible Institution. If Old Notes have been tendered
pursuant to the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Old Notes and otherwise
comply with the procedures of such facility. All questions as to the validity,
form and eligibility (including time of receipt) of such notices
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will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the Holder thereof without cost to such Holder (or,
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Old Notes), as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described under "--Procedures for Tendering Old Notes" above
at any time on or prior to 5:00 p.m., New York City time, on the Expiration
Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes, the Exchange Offer violates any
applicable law or regulation or interpretation of the Staff.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended.
EXCHANGE AGENT
State Street Bank and Trust Company of California, N.A. has been appointed
as the Exchange Agent for the Exchange Offer. All executed Letters of
Transmittal should be directed to the Exchange Agent at the address set forth
below. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
Delivery to: State Street Bank and Trust Company of California, N.A.,
As Exchange Agent c/o State Street Bank and Trust Company
<TABLE>
<CAPTION>
BY HAND: BY MAIL:
<S> <C>
2 International Place 2 International Place
Boston, MA 02110 Boston, MA 02110
Attn: Kellie Mullen Attn: Kellie Mullen
BY OVERNIGHT COURIER: BY FACSIMILE:
2 International Place (617) 644-5290
Boston, MA 02110 Attn: Kellie Mullen
Attn: Kellie Mullen Telephone: (617) 664-5587
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF
TRANSMITTAL.
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FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer except for reimbursement of mailing
expenses.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
approximately $300,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will be obligated to pay any
transfer taxes in connection with such exchange, as well as any other sale or
disposition of the Old Notes. Holders who instruct the Company to register New
Notes in the name of, or request that Old Notes not tendered or not accepted in
the Exchange Offer be returned to, a person other than the registered tendering
Holder will be responsible for the payment of any applicable transfer tax
thereon.
CONSEQUENCES OF NOT EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register any Old Notes which remain outstanding after consummation of
the Exchange Offer under the Securities Act (subject to certain limited
exceptions, if applicable). To the extent that Old Notes are not tendered and
accepted in the Exchange Offer, a holder's ability to sell such untendered Old
Notes could be adversely affected.
Holders of the New Notes and any Old Notes which remain outstanding after
consummation of the Exchange Offer will vote together as a single class for
purposes of determining whether holders of the requisite percentage thereof have
taken certain actions or exercised certain rights under the Indenture.
Upon consummation of the Exchange Offer, Holders of Old Notes will not be
entitled to any Liquidated Damages or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See
"Description of Notes--Registration Rights; Liquidated Damages."
CONSEQUENCES OF EXCHANGING OLD NOTES
Based on interpretations by the Staff, as set forth in no-action letters
issued to third parties, the Company believes that New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
or otherwise transferred by Holders thereof (other than any such Holder which is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holder's business and such Holder has no arrangement
or understanding with any person to participate in the distribution of such New
Notes. However, the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the Staff would make a
similar determination with respect to the Exchange Offer as in such other
circumstances. Each Holder, other than a broker-dealer, must acknowledge that it
is not engaged in, and does not intend to engage in, a distribution of such New
Notes and has no arrangement or understanding to participate in a distribution
of New Notes. If any Holder is an affiliate of the Company and is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) could not
44
<PAGE>
rely on the applicable interpretations of the Staff and (ii) must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes must acknowledge that such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities and that it will deliver this Prospectus
in connection with any resale of such New Notes. See "Plan of Distribution." In
addition, to comply with the securities laws of certain jurisdictions (including
any jurisdiction outside the United States), the New Notes may not be offered or
sold unless they have been registered or qualified for sale in such jurisdiction
or an exemption from registration or qualification is available and is complied
with. The Company has agreed, pursuant to the Registration Rights Agreement,
subject to certain limitations specified therein, to register or qualify the New
Notes for offer or sale under all applicable state or Blue Sky securities laws
by the time the Registration Statement (of which this Prospectus forms a part)
is declared effective by the SEC.
45
<PAGE>
BUSINESS
INTRODUCTION AND BACKGROUND
The Company is the largest producer of CPC in the world. Anode grade CPC is
the principal raw material used in the production of carbon anodes for use in
aluminum smelting, and is used by every producer of primary aluminum in the
world. Anode grade CPC sales represented approximately 81.9% of the Company's
total 1997 sales. The Company believes that it has approximately a 23.1% market
share of U.S. anode grade CPC sales and a 15.7% market share of Western World
anode grade CPC sales. The Company also sells industrial grade CPC for use in
the production of titanium dioxide, as a carbon additive in the manufacture of
steel and foundry products and for use in other specialty materials and
chemicals markets. The Company produces CPC at its three facilities located in
Port Arthur, Texas, Enid, Oklahoma and La Plata, Argentina. The Company's annual
CPC production capacity of 1.6 million tons, including a 220,000 ton increase as
a result of its completion of the New La Plata Kiln in May 1998, is
approximately 60% greater than that of its next largest competitor. During the
twelve months ended March 31, 1998, the Company sold 1.5 million tons of CPC,
had net sales of $238.6 million and had EBITDA of $62.5 million. Assuming the
New La Plata Kiln had been completed on April 1, 1997 and operated at 70%
capacity (representing the amount of capacity currently pre-contracted to
customers for the balance of 1998), EBITDA would have been $69.0 million for the
twelve months ended March 31, 1998 (assuming margins consistent with the
Company's actual financial performance during the period). The Company does not
anticipate operating the New La Plata Kiln at full capacity until 1999. See
"Disclosure Regarding Forward-Looking Statements" and the footnotes to "Summary
Consolidated Financial and Other Data."
CPC is produced from RPC utilizing a high-temperature, rotary-kiln process
developed by the Company in the 1930s. RPC is a by-product of the petroleum
refining process and typically represents an insignificant portion of overall
refinery revenues. The alternative use for RPC, as a fuel source, generates a
significantly lower value to refiners than the value they receive in selling RPC
for use in the production of CPC. As a result, CPC producers are able to obtain
lower purchase prices for RPC in times of declining CPC prices, enabling CPC
producers to earn a relatively stable profit spread even in periods of CPC price
declines.
Carbon anodes, which are manufactured utilizing anode grade CPC, are used by
every primary aluminum smelter in the world as a key component in aluminum
smelting pot lines. Carbon anodes act as conductors of electricity and as a
source of carbon in the electrolytic cell that reduces alumina to aluminum
metal. In this electrochemical aluminum smelting process, the carbon anodes, and
hence the CPC, are consumed.
There are no known economic substitutes for anode grade CPC in the
manufacture of carbon anodes, nor have there been since anode grade CPC replaced
coal for this application in the 1930s. The Company believes that approximately
0.4 pounds of anode grade CPC are consumed for every one pound of primary
aluminum produced, and that such consumption ratio has been substantially
constant over the past ten years. Worldwide demand for anode grade CPC is
directly tied to the level of global production of primary aluminum.
Industrial grade CPC is used in the production of titanium dioxide, as a
carbon additive in the manufacture of steel and foundry products and for use in
other specialty materials and chemicals markets. Demand for industrial grade CPC
has grown largely due to the ongoing replacement by titanium dioxide producers
of the sulfate manufacturing process that does not utilize CPC with the
environmentally preferable chloride process that does utilize CPC. The Company's
participation in the industrial CPC sector diversifies its product offerings and
reduces its dependence on aluminum customers.
The Company believes that current anode grade CPC market fundamentals are
attractive. Western World primary aluminum production increased approximately
34.7% to 17.8 million tons in 1997 from 13.2 million tons in 1986, while anode
grade CPC production capacity did not increase significantly.
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<PAGE>
Furthermore, industry sources project continued strong growth in primary
aluminum production over the next several years. As a result, CPC industry
operating rates are currently at historically high levels. The Company has been
operating at full capacity since 1995 and believes that other major U.S.
calciners are also operating at or near full capacity.
The Company believes that the calcining industry will continue to operate at
or near full capacity, as anticipated capacity expansions in the anode grade CPC
market are expected to provide less additional capacity over the next several
years than required to meet aluminum demand projected by industry sources.
Further, the Company believes there are significant barriers to entry to the CPC
production industry. The Company estimates that a greenfield, minimum efficient
scale, stand-alone 200,000 ton calcining facility would, depending on location,
cost in excess of $50 million and take approximately three years to permit and
construct. Further impediments to the creation of new production capacity
include the difficulty in securing consistent sources of RPC supply and the
reluctance of aluminum smelters to change CPC supply sources.
The current high industry operating rates have led to anode grade CPC
pricing becoming less influenced by aluminum pricing than has been the case
historically. Instead, anode grade CPC pricing has become more influenced by the
demand generated from the volume of aluminum production. Accordingly, the
average price per ton realized by the Company for anode grade CPC increased by
over 60% from 1994 to 1997, while aluminum prices as quoted on the London Metal
Exchange increased only 9%.
The Company's management team is among the most experienced in the industry,
with an average tenure with the Company of over 22 years. James D. McKenzie, the
Company's Chief Executive Officer and President, has been with the Company for
over 27 years; A. Frank Baca, Senior Vice President of Operations and
Administration, 31 years; James W. Betts, Vice President of Raw Materials, 30
years; Robert C. Dickie, Vice President of Sales, 9 years; and Adele Robles,
Controller, 17 years.
The Company was established in 1919 as Great Lakes Coal & Coke Co. During
the 1920s and 1930s the Company began to develop markets for RPC and pioneered
the first techniques in calcining petroleum coke for use in the aluminum
industry. In 1936, the Company began operation of the world's first commercial
calcining plant in Port Arthur, Texas. The Company has since maintained its
position as the largest producer of CPC. In 1985, the Company's predecessor,
also known as Great Lakes Carbon Corporation ("Old GLC"), was acquired by HII
from the descendants of Old GLC's founders. In 1992, the CPC operations of Old
GLC were reincorporated as the Company while 100% of the stock of Old GLC,
including its graphite operations, was sold by HII to Sigri GmbH. In 1995, the
net proceeds of the issuance and sale of the 10% Notes were distributed by the
Company as a dividend to HII, all indebtedness of HII owing to the Company was
cancelled and 100% of the common stock of the Company was distributed on a pro
rata basis to the holders of the common stock of HII. On May 22, 1998, the
Company was acquired by AIP in the Acquisition Transactions. The address of the
Company's principal executive office is 551 Fifth Avenue, Suite 3600, New York,
New York 10176 and the telephone number is (212) 370-5770.
BUSINESS STRATEGY
The Company's management team plans to sustain and build upon GLC's success
by focusing on the following strategic initiatives:
- MAINTAIN STRONG CUSTOMER RELATIONSHIPS--Over its 60-year history in CPC
production, the Company has forged customer relationships spanning several
decades with many of the world's largest aluminum producers, including
Alcoa, Alusaf and Alusuisse. The Company has developed and expects to
maintain these relationships by virtue of its industry leadership
position, its technical support and customer service and its superior
ability to produce anode grade CPC to customized specifications. Although
CPC represents only 5% to 7% of an aluminum smelter's total costs, the
quality and consistency of CPC are critical to a smelter. Through its
comprehensive "Total Quality Management" program, the Company was the
first domestic calciner to attain ISO 9002 registration
47
<PAGE>
for its ability to meet internationally recognized quality and process
standards. All of the Company's facilities are ISO 9002 registered.
- MAINTAIN SUPERIOR ACCESS TO RAW MATERIALS--The Company's long history and
leading market position in CPC production has led to strong long-term
relationships with numerous RPC suppliers, including Exxon, Conoco,
Chevron, YPF and Marathon. The Company's access to RPC supply from 18
refineries worldwide provides it with a competitive advantage in
cost-effectively blending various grades of RPC to produce CPC to exact
customer specifications.
- OPERATE DIVERSE, STATE-OF-THE-ART FACILITIES--The Company strives to
maintain geographically diverse, state-of-the-art production facilities
that provide a maximum level of operating flexibility. The Port Arthur,
Texas plant (680,000 tons per year) provides the Company with access to
RPC received by rail, barge or ship from the U.S. Gulf Coast and
international oil refiners and allows the Company to serve international
CPC markets. The Enid, Oklahoma plant (490,000 tons per year) is
strategically located to serve the domestic CPC markets and to access RPC
from refineries in the mid-continent region. The plant in La Plata,
Argentina (440,000 tons per year) provides the Company with access to high
quality RPC from a nearby oil refinery and also positions the Company well
to serve international CPC markets. The Company completed construction of
the New La Plata Kiln, in May 1998, which doubled the facility's previous
production capacity.
- MAINTAIN STRONG PRESENCE IN INDUSTRIAL GRADE CPC--Since 1990, the Company
has pursued a strategy of diversifying its product mix by developing and
expanding its presence in the market for industrial grade CPC. GLC has
increased its net sales of industrial grade CPC by approximately 92.7%
since 1990 by focusing its industrial grade sales effort and investing in
value-added operations at its production facilities. Sales of industrial
grade CPC reduce the Company's dependence on aluminum customers.
- PURSUE SELECTIVE EXPANSION OPPORTUNITIES--The Company may explore
acquisition and expansion opportunities from time to time as warranted by
market conditions. Strong market conditions, together with an excellent
source of RPC supply, prompted the Company to expand its Argentinean
facility. The Company is currently evaluating several additional new
opportunities in the petroleum coke industry.
INDUSTRY OVERVIEW
CPC DEMAND
CPC is sold primarily to the aluminum industry as the principal raw material
used in the manufacture of carbon anodes. Carbon anode manufacturers, which are
predominantly captive operations of aluminum smelting companies, purchase anode
grade CPC, mix it with pitch binders, press the mixture into blocks and then
bake the mixture to form finished, hardened carbon anodes. The carbon anodes are
consumed in the electrochemical smelting process. Although CPC represents only
5% to 7% of an aluminum smelter's total costs, the quality of the anode grade
CPC, in terms of both its physical and chemical properties, has an effect on
carbon anode life, which is an important economic factor in aluminum production,
and on the amount of impurities in the finished aluminum metal.
48
<PAGE>
Western World production of primary aluminum, the implied demand for anode
grade CPC (calculated based on a constant 0.4 pounds of CPC per pound of
aluminum) and annual growth in production and implied demand are set forth in
the following table:
<TABLE>
<CAPTION>
ANNUAL GROWTH IN
PRIMARY ALUMINUM IMPLIED ANODE GRADE PRODUCTION AND
PRODUCTION(1) CPC DEMAND(2) IMPLIED DEMAND
----------------- ------------------- -----------------
(000 TONS) (000 TONS) (%)
<S> <C> <C> <C>
1986....................... 13,217 5,287 0.0
1987....................... 13,898 5,559 5.1
1988....................... 14,882 5,953 7.1
1989....................... 15,501 6,200 4.2
1990....................... 15,637 6,255 0.9
1991....................... 16,290 6,516 4.2
1992....................... 16,273 6,509 (0.1)
1993....................... 16,517 6,607 1.5
1994....................... 15,847 6,339 (4.1)
1995....................... 16,149 6,459 1.9
1996....................... 17,035 6,814 5.5
1997....................... 17,802 7,121 4.5
</TABLE>
- ------------------------
(1) Source: The Aluminum Association Incorporated.
(2) Calculated based on a constant 0.4 pounds of CPC per pound of aluminum.
Historically, worldwide production of primary aluminum has increased
commensurately with general economic growth, and demand for anode grade CPC has
increased accordingly. From 1986 to 1997, Western World primary aluminum
production increased by 4.6 million tons, or 34.7%, resulting in a 1.8 million
ton increase in demand for anode grade CPC to approximately 7.1 million tons.
The production of primary aluminum, and the resulting implied demand for anode
grade CPC, is geographically diverse, with less than 25% of Western World
aluminum production occurring in the United States.
The steady growth in primary aluminum production experienced an interruption
during the period from 1991 to 1994. Additions to Western World aluminum smelter
capacity in the early 1990s, slow economic growth in major aluminum consuming
countries during 1992 and 1993 and a significant decline in the consumption of
aluminum in the countries which comprised the former Soviet Union which resulted
in substantial exports of aluminum from such countries after 1990, caused an
oversupply of aluminum and a corresponding increase in primary aluminum
inventories in the Western World.
In early 1994, government officials from the European Union, the United
States, Canada, Norway, Australia and the Russian Federation met in a
multilateral conference to discuss the excess global supply of primary aluminum.
The participants ratified a trade agreement in the form of a Memorandum of
Understanding ("MOU"), which specified reductions in primary aluminum production
in the participating countries. Primarily as a result of these MOU reductions,
1994 Western World annual aluminum production was 15.8 million tons,
approximately 670,000 tons below 1993 production levels. Therefore, during 1994,
demand for anode grade CPC declined to 6.3 million tons. Since that time,
however, anode grade CPC demand has rebounded sharply growing at a compounded
annual rate of 4.0% to 7.1 million tons of demand in 1997.
CPC is also used in a number of other (non-aluminum) industrial
applications. This industrial grade CPC is used in the production of titanium
dioxide, as a recarburizer in the manufacture of steel and foundry products and
for use in other specialty materials and chemicals markets. The Company
estimates that these applications consumed approximately 2.0 million tons of CPC
in 1997.
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<PAGE>
Titanium dioxide is a widely used brilliant white pigment, the primary
applications for which are in paints, plastics and paper. Demand for titanium
dioxide is dependent upon the construction and automotive markets. CPC is used
as an energy and carbon source in the production of titanium dioxide from
titanium-bearing ores using the chloride process. The primary factor increasing
the usage of CPC by the titanium dioxide industry is the continuing trend of
replacing the sulfate manufacturing process that does not utilize CPC with the
environmentally preferable chloride process that does utilize CPC. As a result
of this trend, the Company believes that demand for industrial grade CPC from
international titanium dioxide markets is growing.
Industrial grade CPC is also used as a recarburizer (carbon additive) in the
production of steel and foundry products. Demand for this use of CPC depends
upon steel production levels and this market is considered to be mature.
Industrial grade CPC is also used as a carbon source in certain chemical
processes and in the production of plastics.
CPC SUPPLY
CPC is sold in a world market. However, calcining and transportation
economics dictate that producers of CPC are most efficiently located near
petroleum refining operations, which are the source of RPC. As a by-product of
the oil refining process, RPC constitutes the solid fraction remaining after the
refinery has essentially removed all of the liquid petroleum products from the
crude oil. Many, but not all, oil refineries produce RPC. Sales of RPC do not
constitute a material portion of oil refiners' revenues.
CPC quality, which is extremely important to aluminum smelters, is dependent
upon the quality of the RPC utilized in the calcining process. The RPC produced
by different oil refineries covers a range of physical and chemical properties
depending upon both the types of crude oils being refined and the specific
process being employed by the refinery. Only a portion of the RPC produced by
the world's oil refineries is of suitable quality for producing anode grade or
industrial grade CPC, with anode grade requirements being generally more
stringent than industrial grade requirements. Most of the RPC that is not
suitable for calcining is sold at much lower prices strictly for its fuel value.
Because a substantial portion of worldwide petroleum refining capacity is
based domestically, the United States has a majority of worldwide CPC production
capacity. Domestic anode grade CPC production is sufficient to satisfy
approximately 50% of worldwide anode grade CPC demand. GLC, along with most
other domestic CPC producers, supplies CPC to primary aluminum producers both
domestically and internationally (including smelters in the countries which
comprised the former Soviet Union). Growth of Western World CPC production
capacity has been significantly slower than the growth in demand since 1986.
Since 1995, the Company has been operating at full capacity and believes that
its primary domestic competitors have been doing so as well.
Market pricing for anode grade CPC is based on a number of factors. Anode
grade CPC prices have been affected by worldwide aluminum production and
aluminum prices, as well as by the availability of anode grade RPC required to
produce CPC. Historically, anode grade CPC pricing followed aluminum pricing
with an approximate one-year lag. However, as a result of the current, higher
industry operating rates, anode grade CPC pricing has become less tied to
aluminum pricing and more impacted by the growth in volume of aluminum
production relative to CPC production capacity.
50
<PAGE>
MANUFACTURING OPERATIONS
As shown in the chart below, the Company operates rotary kilns to calcine
RPC into both anode grade and industrial grade CPC. The calcining process
essentially drives off moisture, impurities and volatile matter from the RPC at
high temperatures, resulting in a purer form of carbon in the form of CPC.
[GRAPHIC]
Anode grade and industrial grade CPC are manufactured by the Company to
specific customer specifications. The Company purchases RPC from a number of
sources and has the capability to blend raw cokes specifically to meet a
customer's required chemical and physical properties. After blending, the RPC is
fed into the higher end of a rotating kiln, which is up to 12 feet in diameter
and up to 220 feet long. The coke in the kiln is tumbled by rotation and moves
down-kiln countercurrent to the heat produced by burning natural gas or oil at
the lower, firing end of the kiln. Kiln temperatures range from 2,200 to 2,500
degrees Fahrenheit. Typically, coke is retained in the kiln for approximately
one hour, with the resident time and heating rates critical to the production of
the proper quality CPC. The moisture, impurities and volatile matter in the coke
are driven off in the kiln. As the coke is discharged from the kiln, it drops
into a cooling chamber, where it is quenched with water, treated with dedusting
agents and carried by conveyor to silos to be kept in covered storage until
shipped to customers by truck, rail, barge or ship. In the case of certain
industrial grade products, the CPC is crushed and screened to meet proper sizing
requirements and packaged for shipment.
Since CPC quality is very important to end-users, the Company has invested
in laboratory facilities and has instituted Total Quality Management and
statistical process control procedures to ensure that its CPC meets customer
specifications. The Company was the first U.S. producer of calcined coke to
attain ISO 9002 registration, which is a rating determined by the International
Standards Organization with respect to the Company's ability to meet recognized
quality and process standards. All of the Company's facilities are ISO 9002
registered.
FACILITIES
The Company currently has the capacity to produce approximately 1.6 million
tons of CPC per year at its three facilities in Port Arthur, Texas, Enid,
Oklahoma and La Plata, Argentina, including the Company's recent expansion of
its capacity through the construction of the New La Plata Kiln. GLC's facilities
operate continuously, except during periods of downtime as part of the regular
maintenance program to
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<PAGE>
extend kiln life or periodic upgrades to maintain state-of-the-art technology.
The Company also owns a distribution center in Pond Creek, Oklahoma.
The plant at Port Arthur has the capacity to produce 680,000 tons per year
of anode grade and industrial grade CPC. The Port Arthur plant commenced
operations in 1936, and the newest and largest of Port Arthur's four kilns was
installed in 1979. Automated crushing and screening facilities were added to the
plant in 1993 to enable the Company to serve export markets for industrial grade
CPC. Port Arthur is also the site of the Company's primary laboratory and
testing facility. Located on the U.S. Gulf Coast, the Port Arthur facility is
ideally located to receive raw petroleum coke from Gulf Coast and international
oil refiners and serves international anode and industrial grade CPC markets.
Port Arthur has substantial CPC storage capacity and the capability to both
receive RPC and ship CPC by truck, rail, barge or ship. The Company operates the
Port Arthur plant with a nonunion workforce.
The Company's Port Arthur plant site provides ample room to store a wide
range of RPC for blending to customer specifications. The 115-acre property on
which the plant is located is leased by the Company under a long-term lease,
which was originally executed in the 1930s and the most recent renewal of which
expires in January 2010. Under a waste heat recovery arrangement the Company
receives revenue from its delivery of flue gas from the Port Arthur kilns to a
waste heat recovery facility that is owned by a third party, which is accounted
for as a reduction of cost of goods sold.
The plant at Enid has the capacity to produce 490,000 tons per year of anode
grade and industrial grade CPC. Enid's three kilns were built in the late 1960s
and early 1970s. In 1992, the Company modernized and automated its crushing
facilities at Enid to more effectively serve the domestic industrial grade CPC
market. The Enid plant acquires its RPC primarily from mid-continent oil
refineries and essentially serves the domestic anode grade and industrial grade
CPC markets. The Enid plant has the capability to receive and ship material by
truck or rail and operates with a union workforce. The Enid plant is located on
320 acres of property owned by the Company.
The Company's La Plata facility, which is owned by Copetro, was constructed
in 1982 and had a single kiln with the capacity to produce 220,000 tons per year
of anode grade CPC. Copetro recently completed construction of the New La Plata
Kiln, with an annual capacity of 220,000 tons of anode grade CPC, at an
estimated cost of approximately $22 million. The Company anticipates that the
New La Plata Kiln, which was completed in May 1998, will double the capacity of
the La Plata facility. The plant is located on 30 acres of land at the port of
La Plata, which provides the capability to serve South American and
international anode grade CPC markets via truck or ship. The La Plata location
is less than two miles from an oil refinery operated by YPF, which produces a
high-quality RPC. Certain employees of Copetro are members of a
government-sponsored union.
PRODUCTS AND MARKETS
GLC manufactures and markets two basic grades of CPC products: anode grade
and industrial grade. In 1997, for the third year in a row, aluminum production
increased primarily due to restarts of capacity that was idled in 1993 and 1994
and also due to expansion of existing smelting capacity. As a result of the
strong demand for CPC, the Company operated at effective capacity in 1997.
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<PAGE>
The Company's sales volume and net sales by product grade for the three
years ended December 31, 1997 are set forth in the following table.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------------- --------------------
1995 1996 1997 1997
-------------------- -------------------- -------------------- --------------------
SALES TONS SALES TONS SALES TONS SALES TONS
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anode grade CPC.......................... $ 147.9 1.19 $ 199.4 1.10 $ 189.9 1.12 $ 44.5 0.26
Industrial grade CPC..................... 27.6 0.27 38.6 0.31 40.2 0.30 10.5 0.08
Non-CPC revenue.......................... 3.2 0.02 4.7 0.04 1.8 0.02 0.4 0.01
<CAPTION>
1998
--------------------
SALES TONS
--------- ---------
<S> <C> <C>
Anode grade CPC.......................... $ 52.5 0.32
Industrial grade CPC..................... 9.1 0.06
Non-CPC revenue.......................... 0.5 0.01
</TABLE>
ANODE GRADE CPC
GLC produces anode grade CPC for the worldwide primary aluminum industry by
calcining suitable anode grade RPC. Anode grade CPC is the raw material for
carbon anodes required for aluminum smelting. Anode grade CPC is approximately
97% pure carbon; however, anode grade CPC varies based on the content of sulfur
and other trace elements in the finished product as well as on its physical
properties. GLC produces a full range of anode grade CPC tailored to the
specific needs of its aluminum company customers and believes that it has the
capability to produce anode grade CPC to meet the specifications of any of the
aluminum smelters in the world.
INDUSTRIAL GRADE CPC
GLC produces industrial grade CPC for sale both domestically and
internationally to the titanium dioxide, ferrous metals (steel and foundry),
specialty materials and chemical industries. Industrial grade CPC is used by
titanium dioxide producers as an energy and carbon source. It is used by the
ferrous metals industry as a recarburizer, which is an additive used to increase
the carbon content of steel mill and foundry products. Industrial grade CPC also
is used as a carbon source in a variety of chemical processes, including as an
additive in the production of plastic. Industrial grade CPC is generally similar
to anode grade CPC in its physical characteristics, but typically has higher
chemical impurities. In addition, industrial grade CPC is usually further
processed to meet sizing specifications and packaged for sale to end users in
smaller quantities than is anode grade CPC.
The Company has increased its net sales of industrial grade CPC by
approximately 92.7% since 1990. The Company has increased its market share by
focusing its sales efforts, increasing its sales staff and investing in
additional equipment at its production facilities.
FOREIGN OPERATIONS
The Company conducts significant foreign operations, primarily in South
America and particularly in Argentina. See Note 11 to the Consolidated Financial
Statements herein. Such operations are subject to certain risks. See "Risk
Factors--International Risks."
RAW MATERIALS AND SUPPLIERS
The Company purchases a range of RPC from a number of refineries with the
objective of using its blending capabilities to meet the specific quality
requirements of its customers at the lowest raw material cost. The Company
believes that there is sufficient supply of anode grade RPC available in the
world market to meet the needs of its operations.
RPC is typically purchased by the Company under contracts with a term of one
or more years, although the Company does make some spot purchases. Contracts
specify annual purchase quantities and quality specifications, and typically
provide for quarterly or semiannual price resetting based on either a previously
determined formula or a renegotiation. Generally, oil refineries supply RPC to
more than one
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<PAGE>
calciner. The Company's La Plata facility has a long-term RPC supply contract
with YPF expiring in 2007. This contract currently provides the Company with up
to 550,000 tons per year of RPC, which amount includes a recent increase of
250,000 upon the commencement of the operation of the New La Plata Kiln.
MARKETING
The Company sells its CPC to end-users through its direct sales staff and
exclusive sales representatives. Substantially all sales are shipped directly to
end-users. GLC's domestic sales activity is organized by product grade, I.E.,
anode and industrial, with all selling activities handled by the Company's
direct sales staff. Internationally, GLC's direct sales staff is supplemented by
exclusive sales representatives based in the United Kingdom, Brazil, Australia
and Mexico. These representatives are involved in both anode grade and
industrial grade CPC sales.
The Company typically sells anode grade CPC under contracts with a term of
one or more years, although a small percentage is sold on a spot basis. Under a
typical sales contract, which specifies overall annual quantity as well as
detailed quality specifications, prices are reset either quarterly or
semiannually based on either a previously determined formula or a renegotiation.
CPC is shipped by the Company in bulk quantities to its customers via truck,
railcar, barge or ship. Export shipments are often in large quantities and can
range up to 25,000 tons. Industrial grade CPC is generally sold to customers
under annual contracts or on a purchase order basis and is shipped in smaller
quantities in bulk or packaged to meet customer requirements.
In 1997, approximately 36.6% of the Company's net sales were to U.S.-based
customers and approximately 63.4% were to customers in international markets.
The Company's top five customers, each of which is a major worldwide aluminum
producer, represented approximately 62.2% of the Company's 1997 net sales.
During 1997, Alcoa and Alusaf accounted for 23.7% and 15.5%, respectively, of
the Company's net sales. Such producers have been significant customers of the
Company for over 50 years and 20 years, respectively. In June 1998, Alcoa
acquired Alumax, another long-standing customer of the Company, which accounted
for 6.4% of the net sales of the Company in 1997.
COMPETITION
The Company is the largest producer of CPC in the world and competes with
domestic and foreign calciners in a worldwide market with respect to both anode
and industrial grade CPC sales. Marketing of CPC to both anode and industrial
grade customers is based primarily on price and quality. Worldwide demand for
anode grade CPC is tied directly to the global production of primary aluminum.
Sales of industrial grade CPC are dependent on the particular demands of the
titanium dioxide, steel and foundry, and certain chemical markets.
GLC is one of five major domestic calciners of anode grade CPC. Two
calciners, GLC and Calciner Industries Inc., are independent. The other
calciners are Atlantic Richfield Company, whose petroleum refining operations
provide its raw material supply, Reynolds Metals Co., which uses some of its CPC
for internal consumption, and Venture Coke Company ("Venco"), which is 50% owned
by Conoco. GLC believes that its domestic calcining capacity is the largest of
these five companies, and GLC is the only one of the five to have an
international production facility. Currently, GLC's U.S. operations sell
approximately 23.1% of the anode grade CPC sold in the United States.
The Company believes that it is among the largest domestic producers of
industrial grade CPC. The Company competes primarily with Venco (which through
Conoco is an affiliate of E.I. duPont de Nemours & Company, the world's largest
producer of titanium dioxide) for sales to the titanium dioxide market and with
Unocal, Inc. (which sells primarily through third parties) for sales to the
recarburizer market. GLC produces and markets CPC directly to the recarburizer
market, competing primarily with resellers of CPC.
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EMPLOYEES
As of December 31, 1997, the Company employed 254 persons. The Company is a
party to collective bargaining agreements at two of its three facilities,
covering approximately one-third of its employees. The Company's collective
bargaining agreement with the International Association of Machinists and
Aerospace Workers covers hourly employees at the Enid, Oklahoma facility and
expires in 2001. Certain employees at the La Plata, Argentina facility are
covered by an annual labor contract with an Argentine government union. The Port
Arthur plant is operated with a nonunion workforce. Overall, the Company
believes that its relationship with its employees is satisfactory. However,
there can be no assurance that new labor agreements will be reached without a
strike.
ENVIRONMENTAL MATTERS
The Company's facilities and operations are subject to various federal,
state, local and foreign governmental laws and regulations with respect to the
protection of the environment, including regulations relating to air and water
quality. The Company believes that it possesses all of the permits required for
the conduct of its operations and that it is currently in material compliance
with all relevant environmental regulations. The Company spent approximately
$3.5 million on capital expenditures related to pollution control facilities in
1997 and anticipates spending approximately $3.5 million and $1.9 million for
such facilities in 1998 and 1999, respectively. Approximately half of the
environmental expenditures in 1997 and 1998 will be in conjunction with the
facility expansion at Copetro.
The Company's Port Arthur facility is currently operating under an Agreed
Final Judgment (the "Judgment") entered into on April 19, 1989 (as amended on
July 16, 1990, January 2, 1996 and October 1, 1996) between the Company and the
State of Texas. The Judgment specifies that the Company shall undertake certain
measures to enable the Company to comply with applicable particulate emission
limitations and enable the Company to monitor the opacity of its emissions. The
Judgment specifies stipulated penalties in the event that the Port Arthur
facility fails to meet the specified emission or opacity limits. The Company
believes that it is in material compliance with the Judgment. The Company has
had occasional exceedances of opacity limitations at the Port Arthur facility
and is reviewing its alternatives to maintain continuous compliance with such
limitations, the costs of which are not expected to have a material adverse
effect on the financial condition of the Company.
The Clean Air Act was amended in 1990. While the Company believes that its
facilities meet current regulatory standards applicable to air emissions, some
of its facilities will be required to comply with new standards for air
emissions to be adopted by the EPA and state environmental agencies over the
next several years. In addition, the amendments to the Clean Air Act will result
in revisions to state implementation plans, which may necessitate the
installation of additional controls for certain of the Company's emission
sources. At this time, the Company cannot estimate when new standards will be
imposed by the EPA or relevant state agencies or what control technologies or
changes in processes the Company may be required to install or undertake in
order to achieve compliance with any new requirements. Based on information
currently available to it, the Company believes that compliance with such
regulations will not have a material adverse effect on the financial position or
results of operations of the Company.
See also "--Legal Proceedings."
LEGAL PROCEEDINGS
Copetro is a party to a number of legal proceedings arising from alleged
emissions from its La Plata facility. The claims in these proceedings include
damages for personal injury, emotional distress and property damage. In two
proceedings, four plaintiffs obtained judgments for emotional distress and
property damages totaling $118,000 and applicable interest of approximately
$190,000, plus court costs. Two additional proceedings, involving 154 plaintiffs
from 55 families and arising out of the same general circumstances, are in the
early stages of discovery. In another case involving one plaintiff arising out
of the
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same general circumstances, a different court awarded property damages of $5,000
plus applicable interest of approximately $6,000 plus court costs. Copetro
believes, on advice of counsel, that it has substantial defenses to these
allegations and is conducting vigorous defenses in all of these proceedings,
including appeal of the judgments entered to date. Although the judgments in the
first two proceedings described above have been affirmed by the provincial
appellate courts, Copetro has sought an appeal in Argentine federal court for
these matters. The Company's management, after discussion with legal counsel, is
of the opinion that the final disposition of these proceedings will not have a
material adverse effect on the financial condition of the Company.
The Company is a party to other legal proceedings which are in various
stages of resolution. Management, after discussion with legal counsel, is of the
opinion that the ultimate resolution of these matters will not have a material
adverse effect on the financial condition of the Company.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age as of July 15, 1998 and
position of each person who is expected to serve as director or executive
officer of the Company following the Acquisition Transactions.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------- --- --------------------------------------------------------------------
<S> <C> <C>
James D. McKenzie..................... 53 President and Chief Executive Officer, Director
A. Frank Baca......................... 54 Senior Vice President, Operations and Administration
Robert C. Dickie...................... 49 Vice President, Sales
James W. Betts........................ 60 Vice President, Raw Materials
Theodore C. Rogers.................... 63 Non-Executive Chairman of the Board, Director
W. Richard Bingham.................... 62 Director
Lawrence W. Ward, Jr.................. 45 Director
Kim A. Marvin......................... 36 Director
</TABLE>
Each of the Company's directors and executive officers is elected annually
and holds office until his or her successor is elected and qualified.
Mr. McKenzie has served as President and Chief Executive Officer of the
Company since June 1995. He served as Executive Vice President of the Company
and President of the Calcined Petroleum Coke business of the Company and Old GLC
from 1989 to June 1995. From 1971 to 1989, he held a number of positions with
Old GLC, including Vice President, General Counsel.
Mr. Baca has been Senior Vice President, Operations and Administration of
the Company since September 1995 and was Vice President, Operations from 1991 to
August 1995. Since joining Old GLC in 1967, he has held a number of operating
positions, including Plant Manager of the Port Arthur, Texas calcining facility.
Mr. Dickie has been Vice President, Sales of the Company since September
1995 and was Director of Sales from 1992 to August 1995. He held the position of
Plant Manager of the Enid, Oklahoma calcining facility for Old GLC from 1989 to
1992. Prior to joining Old GLC in 1989, he spent 15 years with Alumax, holding
various positions in aluminum smelting operations.
Mr. Betts has been Vice President, Raw Materials of the Company since 1996.
Since joining GLC in 1968, he has held a variety of positions in the areas of
sales and raw materials procurement. Since 1992, he has been a director of
Zoltek Companies, Inc.
Mr. Rogers is a Director, the Chairman of the Board and the Secretary of
American Industrial Partners Corporation. He co-founded AIP Management Co. and
has been a director and officer of AIP Management Co. since 1989. Mr. Rogers is
currently a director of Bucyrus International, Inc., Derby International, Easco
Corporation, RBX Corporation, Stanadyne Automotive Corp. and Sweetheart
Holdings, Inc.
Mr. Bingham is a Director, the President, the Treasurer and the Assistant
Secretary of American Industrial Partners Corporation. He co-founded AIP
Management Co. and has been a director and officer of AIP Management Co. since
1989. Mr. Bingham is also a director of Bucyrus International, Inc., Stanadyne
Automotive Corp., SF Holdings Inc., RBX Corporation and Sweetheart Holdings,
Inc.
Mr. Ward has been an employee of American Industrial Partners Corporation
since 1992. From 1989 to 1992, he was Vice President and Chief Financial Officer
of Plantronics, Inc., a telecommunications equipment company. Mr. Ward is
currently a director of Bucyrus International, Inc., Easco Corporation, RBX
Corporation, Stanadyne Automotive Corp. and Sweetheart Holdings, Inc.
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<PAGE>
Mr. Marvin joined the San Francisco office of American Industrial Partners
in 1997 from the Mergers & Acquisitions Department of Goldman, Sachs & Co.,
where he was employed since 1994. Mr. Marvin is a director of Bucyrus
International Inc.
COMPENSATION OF DIRECTORS
Directors are not expected to receive compensation for their services as
directors.
COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION
The following table sets forth information concerning cash compensation paid
by the Company for each of the three years ended December 31, 1997 to the
Company's Chief Executive Officer and each of the three most highly compensated
executive officers of the Company. The Company does not have any noncash
compensation or stock appreciation rights plans.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------- ALL OTHER
NAME AND POSITION YEAR SALARY BONUS(1) OTHER(2) COMPENSATION(3)
- ----------------------------------------------------- --------- ---------- ---------- --------- -----------------
<S> <C> <C> <C> <C> <C>
James D. McKenzie.................................... 1997 $ 250,008 $ 300,000 $ -- $ 4,750
President and Chief 1996 250,008 150,000 -- --
Executive Officer 1995 210,000 -- -- --
A. Frank Baca........................................ 1997 157,500 37,440 -- 4,725
Senior Vice President, 1996 150,000 17,524 7,134 --
Operations and 1995 120,936 8,686 320 --
Administration
Robert C. Dickie..................................... 1997 130,002 29,952 4,883 3,900
Vice President, Sales 1996 120,000 15,361 34,736 --
1995 106,008 7,893 25,263 --
James W. Betts....................................... 1997 112,500 26,208 33,817 3,375
Vice President, 1996 105,000 13,910 67,000 --
Raw Materials 1995 96,000 7,392 5,000 --
</TABLE>
- ------------------------
(1) The amounts shown in this column reflect payments under the Profit Sharing
Plan.
(2) The amounts shown in this column reflect the Company's payment of relocation
allowances and income tax reimbursement with respect to such relocation
allowances.
(3) The amounts shown in this column reflect the Company's contribution to the
named executive officer's 401(k) account.
PROFIT SHARING PLAN. The Company's practice has been to maintain a
profit-sharing plan which is established annually. Under the current plan, each
eligible employee receives profit-sharing distributions based on the Company's
achievement of profitability targets established each year by the Board of
Directors.
SAVINGS PLANS. The Company currently sponsors two Savings Plans for
employees. One Savings Plan is for salaried employees and one Savings Plan is
for employees covered by the collective bargaining agreement at the Enid plant.
Each of the Savings Plans is qualified under Section 401(k) of the Internal
Revenue Code and provides that employees may make contributions to an account in
the employee's name of up to 15% of gross base wages. The Company makes
contributions to both of the Savings Plans of up to 50% of each employee's
contribution, but not greater than 3% of such employee's salary.
RETIREMENT PLANS. The Company currently maintains three retirement plans
for the benefit of its employees. One plan is for the benefit of hourly
employees, one is for the benefit of salaried employees (the "Salaried Plan")
and one is a nonqualified supplemental plan for the benefit of Mr. McKenzie (the
"SERP"). Each of the plans provides eligible employees with certain benefits at
retirement based on the employee's years of service and, in the case of the
Salaried Plan and the SERP, such employee's average
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salary. For purposes of the foregoing, an employee's average salary is equal to
the highest salary earned in three out of the previous ten years or the average
of all years of service, if less than three.
The following table shows the estimated annual straight-life annuity benefit
payable under the Salaried Plan and the SERP to the executives who participate
in such plans, with the specified remuneration and specified years of service
upon retirement at age 65, after giving effect to adjustments for Social
Security benefits. Mr. McKenzie is the only participant in the SERP and the
benefit payable to him upon retirement at age 65 is determined based upon his
full salary and years of service. The benefit payable upon retirement at age 65
to each of the other named executive officers is determined based upon each such
executive's salary (limited by the limitations imposed by Section 401(a)(17) of
the Internal Revenue Code of 1986, as amended (the "Code") currently $160,000),
and years of service.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30 35
- ----------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$100,000........................... $ 23,229 $ 30,972 $ 38,715 $ 48,458 $ 54,201
$150,000........................... 36,354 48,472 60,590 72,708 84,826
$200,000........................... 49,479 65,972 82,465 98,958 115,451
$250,000........................... 62,604 83,472 104,304 125,208 146,076
</TABLE>
The compensation of participants used to calculate the retirement benefit
consists solely of annual base salary as disclosed in the Summary Compensation
Table. For the four individuals named above, the 1997 compensation used to
calculate the remuneration and the number of years of credited service are as
follows: Mr. McKenzie, $250,000, 26 years; Mr. Baca, $157,500, 26 years; Mr.
Dickie, $130,000, 8.5 years; and Mr. Betts, $112,500, 26 years.
LIMITATION ON DIRECTOR'S LIABILITY
The Company has adopted provisions in its Certificate of Incorporation and
Bylaws which limit the liability of its directors and provide for
indemnification of its officers and directors to the full extent permitted under
Delaware law. Under the Company's Certificate of Incorporation, and as permitted
under the Delaware General Corporation Law, directors are not liable to the
Company or its stockholders for monetary damages arising from a breach of their
fiduciary duty of care as directors. Such provision does not, however, affect
liability for any breach of a director's duty of loyalty to the Company or its
stockholders for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, under Section 174 of
the Delaware General Corporation Law or for any transaction from which a
director derives an improper personal benefit. Such provision would have no
effect on the availability of equitable remedies, such as an injunction, for
breach of fiduciary duty. Further, it is the position of the SEC that such
limitation of liability in no way limits the liability of the Company or its
directors for violations of, or otherwise relieves the Company or the directors
from the necessity of complying with, the federal securities laws.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At the close of the Acquisition Transactions, AIP was paid a fee of $5.0
million and reimbursed for out-of-pocket expenses in connection with the
negotiation of the Acquisition Transactions and for providing certain investment
banking services to the Company, including the arrangement and negotiation of
the terms of the New Credit Agreement and the arrangement and negotiation of the
terms of the Old Notes and the Holdings Debentures, and for other financial
advisory and management consulting services. In connection with the Acquisition
Transactions, affiliates of, and certain other individuals associated with, AIP
contributed $330,000 to Holdings in exchange for common equity of Holdings.
AIP expects to provide substantial ongoing financial and management services
to the Company utilizing the extensive operating and financial experience of
AIP's principals. AIP will receive an annual fee of $1.9 million for providing
general management, financial and other corporate advisory services to
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<PAGE>
the Company, payable semiannually 45 days after the scheduled interest payment
date for the Notes, and will be reimbursed for out-of-pocket expenses. The fees
will be paid to AIP pursuant to a management services agreement among AIP and
the Company and will be subordinated in right of payment to the Notes.
SECURITY OWNERSHIP
Immediately following the consummation of the Acquisition Transactions, (a)
Holdings became the sole holder of the common stock of the Company, par value
$.01 per share (the "Company Common Stock"), and (b) AIP, its affiliates and
certain other individuals associated with AIP became the only holders of record
of the common stock of Holdings, par value $.01 per share ("Holdings Common
Stock"). The following table sets forth certain information regarding beneficial
ownership of Company Common Stock immediately following the closing of the
Acquisition Transactions by (i) each person who is known by the Company to be
the beneficial owner of more than 5% of Company Common Stock, (ii) each of the
Company's directors and the named executive officers set forth in the table
under "Management-- Compensation of Executive Officers and Other Information"
and (iii) all directors and executive officers as a group. Except as indicated
below, the address for each person listed below is One Maritime Plaza, Suite
2525, San Francisco, CA 94111.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMPANY
NAME COMMON STOCK(1) PERCENTAGE(2)
- --------------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Holdings......................................................................... 1,000 100%
American Industrial Partners Capital Fund II, L.P.(3)............................ 1,000 100%
W. Richard Bingham(3)............................................................ 1,000 100%
Theodore C. Rogers(3)............................................................ 1,000 100%
All directors and executive officers as a group (8 persons)...................... 1,000 100%
</TABLE>
- ------------------------
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under the
Exchange Act. No options to purchase Holdings Common Stock are currently
outstanding. The persons named in this table have sole voting and investment
power with respect to all shares of Holdings Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and except as indicated in the other footnotes to this table.
(2) Based upon 1,000 shares of Company Common Stock outstanding following
consummation of the Acquisition Transactions.
(3) Messrs. Bingham and Rogers share investment and voting power with respect to
the securities owned by AIP, which owns all of the outstanding shares of
Company Common Stock, but each disclaims beneficial ownership of any shares
of Company Common Stock. The business address of Mr. Rogers is 551 Fifth
Avenue, Suite 3800, New York, NY 10176.
DESCRIPTION OF COMPANY COMMON STOCK
The Company's authorized capital stock consists of 1,000 shares of Company
Common Stock. All of the issued and outstanding shares of the Company's capital
stock are fully paid and nonassessable. There are no outstanding options,
warrants or other rights to purchase any of the Company's capital stock. Holders
of shares of Company Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders. The holders of shares of the Company's
common stock are entitled to receive such dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion from funds legally
available therefor, and upon liquidation or dissolution are entitled to receive
all assets available for distribution to the stockholders. Since consummation of
the Acquisition Transactions, AIP, its affiliates and certain other individuals
associated with AIP are the only stockholders of Holdings, which is the 100%
parent of the Company, and AIP has the ability to designate all of the directors
of the Company.
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DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued pursuant to the Indenture (the "Indenture")
between the Company and State Street Bank and Trust Company of California, N.A.,
as trustee (the "Trustee"), dated as of May 22, 1998, a copy of which has been
filed as an exhibit to the Registration Statement of which this Prospectus
constitutes a part. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (the "TIA"). The Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement thereof. The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to, and qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. The definitions
of certain terms used in the following summary are set forth below under
"--Certain Definitions." For purposes of this summary, the term "Company" refers
only to Great Lakes Carbon Corporation and not to any of its Subsidiaries.
The New Notes are identical in all material respects to the terms of the Old
Notes except (i) that the New Notes have been registered under the Securities
Act, (ii) for certain transfer restrictions and registration rights relating to
the Old Notes and (iii) that the New Notes will not contain certain provisions
relating to Liquidated Damages to be paid to the Holders of Old Notes under
certain circumstances relating to the timing of the Exchange Offer and to other
registration requirements described below under "--Registration Rights;
Liquidated Damages." The Trustee will authenticate and deliver New Notes for
original issue only in exchange for a like principal amount of Old Notes. Any
Old Notes that remain outstanding after the consummation of the Exchange Offer,
together with the New Notes, will be treated as a single class of securities
under the Indenture.
The Old Notes are and the New Notes will be senior subordinated, unsecured,
general obligations of the Company. The Notes will be guaranteed by the
Subsidiary Guarantors, which will consist of all of the Company's future
Subsidiaries other than Foreign Subsidiaries, Receivables Subsidiaries and
Finance Subsidiaries. As of the Issue Date, the Notes will not be guaranteed by
any Subsidiaries of the Company. See "--Subsidiary Guarantees." The Subsidiary
Guarantees will be senior subordinated, unsecured, general obligations of the
Subsidiary Guarantors. As of March 31, 1998, after giving pro forma effect to
the Offering, and the other Acquisition Transactions, the Company had
approximately $134.4 million of Senior Indebtedness outstanding, and the Foreign
Subsidiaries had approximately $15.9 million of Indebtedness outstanding, all of
which effectively ranks senior in right of payment to the Notes.
As of the Issue Date, none of the Company's Subsidiaries will be
Unrestricted Subsidiaries. However, under certain circumstances, the Company
will be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes will mature on May 15, 2008. Interest on the Notes will accrue at
the rate of 10 1/4% per annum and will be payable semi-annually in arrears on
each May 15 and November 15, commencing on November 15, 1998, to Holders of
record on the immediately preceding May 1 and November 1. Interest on the Notes
will accrue from the most recent date to which interest has been paid on the Old
Notes or, if no interest has been paid, from the date of original issuance.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Principal, premium, if any, and interest and Liquidated Damages,
if any, on the Notes will be payable at the office or agency of the Company
maintained for such purpose within the City and State of New York or, at the
option of the Company, payment of interest and Liquidated Damages, if any, may
be made by check mailed to the Holders of the Notes at their respective
addresses set forth in the register of Holders of Notes; PROVIDED that all
payments of principal, premium, if any, interest and Liquidated Damages, if any,
with respect to Notes the Holders of which have given wire
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transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof. Registered holders of New Notes on the relevant record date
for the first interest payment date following the consummation of the Exchange
Offer will receive interest accruing from the most recent date to which interest
has been paid on the Old Notes or, if no interest has been paid, from May 22,
1998. Old Notes accepted for exchange will cease to accrue interest from and
after the date of consummation of the Exchange Offer. Holders whose Old Notes
are accepted for exchange will not receive any payment in respect of interest on
such Old Notes otherwise payable on any interest payment date the record date
for which occurs on or after the consummation of the Exchange Offer.
The Indenture provides, in addition to the $175 million aggregate principal
amount of Old Notes outstanding and the $175 million aggregate principal amount
of New Notes which may be issued in exchange therefor, for the issuance of
additional Notes having identical terms and conditions to the Notes (the
"Additional Notes"). The aggregate principal amount of Notes and Additional
Notes will be limited to the sum of $225.0 million plus the amount necessary to
make the interest payments described in the next sentence. For interest payments
due through May 15, 2003, the Company may, at its option, make up to four
semiannual interest payments through the issuance of Additional Notes in an
aggregate principal amount equal to the amount of the interest that would be
payable if the rate per annum were equal to 11 3/4% (PROVIDED, that incremental
amounts of less than $1,000 shall be payable in cash). The Company must give the
Trustee irrevocable notice of its election to pay interest through issuance of
Additional Notes on an interest payment date at least ten and not more than 30
Business Days prior to the immediately preceding interest payment date (the date
such notice is issued being the "PIK Notice Date"). The Company may not issue
Additional Notes to pay interest on the initial interest payment date. Interest
will accrue on Additional Notes issued pursuant to the Indenture from and
including the date of issuance of such Additional Notes. Any such Additional
Notes shall be issued on the same terms as the Notes and shall constitute part
of the same series of securities as the Notes and will vote together with the
Notes as one series on all matters with respect to the Notes. All references to
Notes herein shall include the Additional Notes.
SUBORDINATION
The payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Old Notes are and New Notes will be subordinated in
right of payment, as set forth in the Indenture, to the prior payment in full in
cash or Cash Equivalents of all Senior Indebtedness, whether outstanding on the
Issue Date or thereafter incurred. In addition, as set forth in "Subsidiary
Guarantees" below, the Subsidiary Guarantees, if any, will be general unsecured
obligations of the Subsidiary Guarantors subordinated in right of payment to
Senior Indebtedness of the applicable Subsidiary Guarantor. The Notes will be
effectively subordinated to indebtedness of the Foreign Subsidiaries.
Upon any distribution to creditors of the Company or a Subsidiary Guarantor
in a liquidation or dissolution of the Company or a Subsidiary Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property or a Subsidiary Guarantor or its
property or an assignment for the benefit of creditors or any marshalling of the
assets and liabilities of the Company or a Subsidiary Guarantor, the holders of
Senior Indebtedness of the Company or such Subsidiary Guarantor, as applicable,
will be entitled to receive payment in full of all Obligations due in respect of
such Senior Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness, whether
or not allowable as a claim in any such proceeding) before the Holders of Notes
or such Subsidiary Guarantee, as applicable, will be entitled to receive any
payment with respect to the Notes or such Subsidiary Guarantee, and until all
Obligations with respect to such applicable Senior Indebtedness are paid in full
in cash or Cash Equivalents, any distribution to which the Holders of Notes or
such Subsidiary Guarantee would be entitled shall be made
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<PAGE>
to the holders of the applicable Senior Indebtedness (except that Holders of
Notes or such Subsidiary Guarantee may receive Permitted Junior Securities and
payments made from the trust described under "--Legal Defeasance and Covenant
Defeasance").
The Company and the Subsidiary Guarantors also may not make any payment upon
or in respect of the Notes or the applicable Subsidiary Guarantees (except in
Permitted Junior Securities or from the trust described under "--Legal
Defeasance and Covenant Defeasance") if (i) a default in the payment of the
principal of, premium, if any, interest or any other amount on Designated Senior
Indebtedness occurs and is continuing (a "Payment Default") or (ii) any other
default occurs and is continuing with respect to Designated Senior Indebtedness
that permits holders of the Designated Senior Indebtedness as to which such
default relates to accelerate its maturity (a "Nonpayment Default") and the
Trustee receives a notice of such default (a "Payment Blockage Notice") from the
Company or from a Representative of the holders of any Designated Senior
Indebtedness. Payments on the Notes may and shall be resumed (a) in the case of
a Payment Default, upon the date on which such Payment Default is cured or
waived and (b) in the case of a Nonpayment Default, the earlier of the date on
which such Nonpayment Default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity of
any Designated Senior Indebtedness has been accelerated and such acceleration
has not been rescinded or waived. No new period of payment blockage may be
commenced unless and until (i) 360 days have elapsed since the effectiveness of
the immediately prior Payment Blockage Notice and (ii) all scheduled payments of
principal, premium, if any, and interest on the Notes that have come due have
been paid in full in cash or through the issuance of Additional Notes pursuant
to the terms of the Notes. No Nonpayment Default (other than subsequent
violations of a financial covenant following a waiver or cure of a prior
violation of such covenant) that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.
The Indenture will further require that the Company promptly notify holders
of Senior Indebtedness if payment of the Notes is accelerated because of an
Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, it is possible that the claims of Holders of Notes
would not be satisfied until the claims of holders of Senior Indebtedness are
satisfied in full. The Indenture will limit, subject to certain financial tests,
the amount of additional Indebtedness, including Senior Indebtedness, that the
Company and its Subsidiaries can incur. See "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Disqualified Stock."
No provision contained in the Indenture, the Notes or the Subsidiary
Guarantees will affect the obligation of the Company and the Subsidiary
Guarantors, which is absolute and unconditional, to pay, when due, principal of,
premium, if any, and interest on the Notes. The subordination provisions of the
Indenture, the Notes and the Subsidiary Guarantees will not prevent the
occurrence of any Default or Event of Default under the Indenture or limit the
rights of the Trustee or any Holder to pursue any other rights or remedies with
respect to the Notes or the Subsidiary Guarantees.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes will be jointly and
severally guaranteed on an unconditional, subordinated basis (the "Subsidiary
Guarantees") by each of the Subsidiary Guarantors. The obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee will be subject to various
laws for the protection of creditors, including, without limitation, laws
governing fraudulent conveyances and transfers. To the extent that the
obligations of the Subsidiary Guarantor under its Subsidiary Guarantee were held
to be unenforceable as a fraudulent conveyance or transfer or for other reasons,
the holders of Notes would cease to have any direct claim against the Subsidiary
Guarantor. In an attempt to avoid this result, the Subsidiary Guarantees will
provide that the obligations of each Subsidiary Guarantor thereunder will be
limited to the maximum amount as will not constitute a fraudulent conveyance or
fraudulent transfer under applicable law. Such amount could be substantially
less than the obligations on the Notes. See "Risk Factors--Fraudulent Transfer
Considerations."
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The Indenture will provide that no Subsidiary Guarantor may consolidate with
or merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation or other Person, whether or not affiliated with
such Subsidiary Guarantor, unless (i) subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations of such
Subsidiary Guarantor under the Notes, the Indenture and the Registration Rights
Agreement pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee; and (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; PROVIDED, that the
provisions of clause (ii) above shall not apply to the merger of two or more
Subsidiary Guarantors with and into each other or the merger of any Subsidiary
Guarantor with or into the Company.
The Indenture will provide that in the event of a sale or other disposition
of all of the assets of any Subsidiary Guarantor, or a sale or other disposition
of all of the Capital Stock of any Subsidiary Guarantor by way of merger,
consolidation or otherwise, in each case to a Person which is not the Company or
a Subsidiary of the Company, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of such a merger, consolidation or otherwise,
of all of the Capital Stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all of the assets of
such Subsidiary Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee and the Indenture; PROVIDED that the Net Proceeds
of such sale or other disposition are applied in accordance with the provisions
of the Indenture described under "--Certain Covenants--Asset Sales."
The Company conducts certain of its foreign operations through Foreign
Subsidiaries. Accordingly, the Company's ability to meet its cash obligations
may in part depend upon the ability of such Foreign Subsidiaries and any future
Foreign Subsidiaries to make cash distributions to the Company. Furthermore, any
right of the Company to receive the assets of any such Foreign Subsidiary upon
such Foreign Subsidiary's liquidation or reorganization (and the consequent
right of the Holders of the Notes to participate in the distribution of the
proceeds of those assets) effectively will be subordinated by operation of law
to the claims of such Foreign Subsidiary's creditors (including the lenders
under the Copetro Credit Agreement and trade creditors) and holders of its
preferred stock, except to the extent that the Company or its Subsidiaries are
recognized as creditors or preferred stockholders of such Foreign Subsidiary, in
which case the claims of the Company or its Subsidiaries would still be
subordinate to any indebtedness or preferred stock of such Foreign Subsidiaries
senior in right of payment to that held by the Company or its Subsidiaries. The
Foreign Subsidiaries will not, and future Foreign Subsidiaries are not expected
to, guarantee the Notes.
In the event that the Company elects to conduct any of its operations in the
future through Subsidiary Guarantors, the Company's ability to meet its cash
obligations may in part depend upon the ability of such Subsidiary Guarantors to
make cash distributions to the Company. Furthermore, any right of the Company to
receive assets of any such Subsidiary Guarantor will be subordinated to the
claims of holders of Senior Indebtedness of such Subsidiary Guarantor.
OPTIONAL REDEMPTION
The Old Notes are and the New Notes will be subject to redemption at any
time on or after May 15, 2003 at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus
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accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the 12-month period commencing
May 15 of the years set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2003.............................................................................. 105.125%
2004.............................................................................. 103.417%
2005.............................................................................. 101.708%
2006 and thereafter............................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time or from time to time on or prior
to May 15, 2001, the Company may redeem up to 35% of the aggregate principal
amount of Notes issued under the Indenture at a redemption price of 110.250% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the redemption date, with the Net Cash Proceeds of
one or more Equity Offerings; PROVIDED that at least $100.0 million aggregate
principal amount of New Notes issued hereunder together with the Old Notes
originally issued and not exchanged in the Exchange Offer remain outstanding
immediately after the occurrence of such redemption; and PROVIDED, FURTHER, that
such redemption shall occur within 90 days of the date of the closing of such
Equity Offering.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee will deem fair and appropriate; PROVIDED
that no Notes of $1,000 or less will be redeemed in part. Notices of redemption
will be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note will state the portion of the principal amount thereof
to be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on Notes
or portions of them called for redemption.
CERTAIN COVENANTS
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
Holdings is required to offer to purchase all Notes then outstanding pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase
(the "Change of Control Payment"). Within 35 days following any Change of
Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes pursuant to the procedures required by the Indenture and
described in such notice. The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control. To the
extent the provisions of any such securities laws or regulations conflict with
the provisions of this covenant,
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compliance by the Company or any of the Subsidiary Guarantors with such laws,
rules and regulations shall not in and of itself cause a breach of its
obligations under this covenant.
The Change of Control Offer will remain open for a period not to exceed 60
days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Change of Control Offer
Period"). No later than five Business Days after the termination of the Change
of Control Offer Period (the "Change of Control Purchase Date"), the Company
will purchase all Notes tendered in response to the Change of Control Offer.
Payment for any Notes so purchased will be made in the same manner as interest
payments are made.
If the Change of Control Purchase Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest will be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest will be
payable to Holders who tender Notes pursuant to the Change of Control Offer.
On the Change of Control Purchase Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; PROVIDED that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company and, thus, the removal of incumbent
management.
The phrase "all or substantially all" of the assets of the Company will
likely be interpreted under applicable state law and will be dependent upon
particular facts and circumstances. As a result, there may be a degree of
uncertainty in ascertaining whether a sale or transfer of "all or substantially
all" of the assets of the Company has occurred. In addition, no assurances can
be given that the Company will be able to acquire Notes tendered upon the
occurrence of a Change of Control.
The New Credit Agreement prohibits the purchase of Notes in the event of a
Change of Control and provides that certain change of control events with
respect to the Company would constitute an event of default thereunder. Any
future credit agreements or other agreements relating to Senior Indebtedness to
which the Company becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when the Company
is prohibited from purchasing Notes, the Company could seek the consent of its
lenders to the purchase of Notes or could attempt to repay or refinance the
borrowings that contain such prohibition and terminate any unutilized
commitments under the New Credit Agreement or other agreements. If the Company
does not obtain such a consent or repay or refinance such borrowings, the
Company will remain prohibited from purchasing Notes. In such case, the
Company's failure to purchase tendered Notes would constitute an Event of
Default under clause (iii) of the Events of Default described below which would,
in turn, constitute as default under the New Credit Agreement. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to the Holders of Notes.
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The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes a Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, engage in an Asset Sale in excess of $1.0 million unless
(i) the Company (or the Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value of the
assets or Equity Interests sold or otherwise disposed of, and in the case of a
lease of assets, a lease providing for rent and other conditions which are no
less favorable to the Company (or the Subsidiary, as the case may be) in any
material respect than the then prevailing market conditions (in each case as set
forth in an Officers' Certificate delivered to the Trustee), (ii) at least 75%
of the consideration therefor received by the Company or such Subsidiary is in
the form of cash or Cash Equivalents; PROVIDED that the amount of (x) any
liabilities (as shown on the Company's or such Subsidiary's most recent balance
sheet or in the notes thereto, excluding contingent liabilities and trade
payables) of the Company or any Subsidiary (other than liabilities that are by
their terms subordinated to, or PARI PASSU with, the Notes or the Subsidiary
Guarantees) that are assumed by the transferee of any such assets and (y) any
notes or other obligations received by the Company or any such Subsidiary from
such transferee that are promptly, but in no event more than 30 days after
receipt, converted by the Company or such Subsidiary into cash (to the extent of
the cash received), will be deemed to be cash for purposes of this provision and
the receipt of such cash shall be treated as cash received from an Asset Sale
for which such Notes or obligations were received.
The Company or any of its Subsidiaries may apply the Net Proceeds from each
Asset Sale, at its option, within 360 days after the consummation of such Asset
Sale, (a) to permanently reduce any Senior Indebtedness (and in the case of any
senior revolving indebtedness to correspondingly permanently reduce commitments
with respect thereto), or (b) for the acquisition of another business or the
acquisition of other property or assets, in each case, in the same or a Related
Business or (c) for any combination of the foregoing. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce Senior
Revolving Debt or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") and to holders of other
Indebtedness of the Company outstanding ranking on a PARI PASSU basis with the
Notes with provisions requiring the Company to make an offer (or otherwise
redeem or prepay) with proceeds from the asset sales, pro rata in proportion to
the respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other Indebtedness
then outstanding, to purchase (or otherwise redeem or prepay) the maximum
principal amount (or accreted value, as applicable) of Notes and such other
Indebtedness, if any, that may be purchased (or redeemed or prepaid) out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount (or accreted value, as applicable) thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase,
in accordance with the procedures set forth in the Indenture. If the aggregate
principal amount (or accreted value, as applicable) of Notes and such
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such Indebtedness to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
The term "Asset Sale," as defined in the Indenture, excludes certain sales
and other dispositions of assets. See "--Certain Definitions." As a result, the
Company and its Subsidiaries will be permitted to sell certain assets without
compliance with the foregoing covenant.
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The Asset Sale Offer will remain open for a period not to exceed 30 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Asset Sale Offer Period"). No
later than five Business Days after the termination of the Asset Sale Offer
Period (the "Asset Sale Purchase Date"), the Company will purchase the principal
amount of Notes required to be purchased pursuant to this covenant (the "Asset
Sale Offer Amount") or, if less than the Asset Sale Offer Amount has been
tendered, all Notes tendered in response to the Asset Sale Offer. Payment for
any Notes so purchased will be made in the same manner as interest payments are
made. The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations were applicable in connection with the
repurchase of the Notes as a result of an Asset Sale Offer. To the extent the
provisions of any such securities laws or regulations conflict with the
provisions of this covenant, compliance by the Company or any of the Subsidiary
Guarantors with such laws, rules and regulations shall not in and of itself
cause a breach of its obligations under this covenant.
If the Asset Sale Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid interest
will be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
On or before the Asset Sale Purchase Date, the Company will, to the extent
lawful, accept for payment, on a PRO RATA basis to the extent necessary, the
Asset Sale Offer Amount of Notes or portions thereof tendered pursuant to the
Asset Sale Offer, or if less than the Asset Sale Offer Amount has been tendered,
all Notes tendered, and will deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this covenant. The Company, the
Depositary or the Paying Agent, as the case may be, will promptly (but in any
case not later than five Business Days after the Asset Sale Purchase Date) mail
or deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Company for purchase, and the
Company will promptly issue a new Note, and the Trustee, upon delivery of an
Officers' Certificate from the Company, will authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any Note not so accepted will be promptly
mailed or delivered by the Company to the Holder thereof.
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any distribution on account of the Company's or any of its Subsidiaries' or
Holdings' Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or to any Subsidiary Guarantor); (ii)
purchase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any Subsidiary Guarantor or any direct or indirect parent of
the Company (other than any such Equity Interests owned by the Company or any
Subsidiary Guarantor); (iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
contractually subordinated to the Notes or any of the Subsidiary Guarantees as
applicable (and other than Notes or the Subsidiary Guarantees, as applicable),
except for any scheduled repayment (including any sinking fund or similar
payment) or at final maturity thereof; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv)
above, unless a Permitted Investment, being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default will have occurred and be continuing
or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving PRO FORMA effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter
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period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Disqualified Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the Issue
Date (excluding Restricted Payments permitted by clauses (ii), (iii), (iv),
(v), (vi) and (x) of the next succeeding paragraph), is less than the sum of
(i) $7.5 million, plus (ii) 50% of the Consolidated Net Income (adjusted to
exclude any amounts that are otherwise included in this clause (c) to the
extent there would be, and to avoid, any duplication in the crediting of any
such amounts) of the Company for the period (taken as one accounting period)
from the beginning of the first fiscal quarter commencing after the Issue
Date to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (iii) to the extent not included
in the amount described in clause (ii) above, 100% of the aggregate Net Cash
Proceeds received after the Issue Date by the Company from the issue or sale
of, or from capital contributions in respect of, Equity Interests of the
Company or of debt securities of the Company or any Subsidiary Guarantor
that have been converted into, or cancelled in exchange for, Equity
Interests of the Company (other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into Disqualified Stock),
plus (iv) 100% of any dividends or other distributions received by the
Company or a Subsidiary of the Company after the Issue Date from an
Unrestricted Subsidiary of the Company, plus (v) 100% of the cash proceeds
(or Cash Equivalents) realized upon the sale of any Unrestricted Subsidiary
(less the amount of any reserve established for purchase price adjustments
and less the maximum amount of any indemnification or similar contingent
obligation for the benefit of the purchaser, any of its Affiliates or any
other third party in such sale, in each case as adjusted for any permanent
reduction in any such amount on or after the date of such sale, other than
by virtue of a payment made to such Person) following the Issue Date, plus
(vi) to the extent that any Restricted Investment that was made after the
Issue Date is sold for cash (or Cash Equivalents) or otherwise liquidated or
repaid for cash (or Cash Equivalents), the amount of cash proceeds (or Cash
Equivalents) received with respect to such Restricted Investment plus (vii)
upon the redesignation of an Unrestricted Subsidiary as a Subsidiary, the
lesser of (x) the fair market value of such Subsidiary or (y) the aggregate
amount of all Investments made in such Subsidiary subsequent to the Issue
Date by the Company and its Subsidiaries.
The foregoing provisions do not prohibit, if and to the extent any of the
following would otherwise constitute a Restricted Payment, (i) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of the
Indenture; (ii) if no Default or Event of Default shall have occurred and be
continuing (and shall not have been waived) or shall occur as a consequence
thereof, the payment by the Company of a management fee to AIP in an amount not
to exceed $1.85 million in any fiscal year and the reimbursement by the Company
of AIP's reasonable out-of-pocket expenses incurred in connection with the
rendering of management services to or on behalf of the Company; PROVIDED,
HOWEVER, that no such fees may be paid, and no such expenses may be reimbursed,
unless the obligation of the Company to pay such management fee has been
subordinated to the payment of all Obligations with respect to the Notes (and
any Subsidiary Guarantee thereof); (iii) the making of any Restricted Investment
in exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of, or from substantially concurrent
additional capital contributions in respect of, Equity Interests of the Company
(other than Disqualified Stock); PROVIDED, that any Net Cash Proceeds that are
utilized for any such Restricted Investment will be excluded from clause
(c)(iii) of the preceding paragraph; (iv) the redemption, repurchase, retirement
or other acquisition of any Equity Interests of the Company in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of, or from substantially concurrent capital
contributions in respect of, other Equity Interests of the Company (other
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than any Disqualified Stock); PROVIDED that any Net Cash Proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition,
will be excluded from clause (c)(iii) of the preceding paragraph; (v) the
defeasance, redemption or repurchase of, or the making of a principal payment
on, or the acquisition or retirement for value of, subordinated Indebtedness in
exchange for or with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or the substantially concurrent sale (other than to a
Subsidiary of the Company) of, or from substantially concurrent capital
contributions in respect of, Equity Interests of the Company (other than
Disqualified Stock); PROVIDED, that any net cash proceeds that are utilized for
any such defeasance, redemption or repurchase will be excluded from clause
(c)(iii) of the preceding paragraph; (vi) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company,
Holdings or any Subsidiary of the Company held by any member of the Company's
(or Holdings' or any of its Subsidiaries') management pursuant to any management
agreement or stock option agreement or upon the death, disability or termination
of employment of such member; PROVIDED that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests will not exceed
$5.0 million in the aggregate (net of the Net Cash Proceeds received by
Holdings, the Company or any of its Subsidiaries from subsequent reissuances of
such Equity Interests to new members of such management), and no Default or
Event of Default will have occurred and be continuing immediately after such
transaction; (vii) the acquisition by a Receivables Subsidiary in connection
with a Qualified Receivables Transaction of Equity Interests of a trust or other
Person established by such Receivables Subsidiary to effect such Qualified
Receivables Transaction; (viii) pro rata dividends and other distributions on
the Equity Interests of any Subsidiary of the Company by such Subsidiary; (ix)
payments in lieu of fractional shares in an amount not to exceed $50,000 in the
aggregate; (x) Permitted Payments to Holdings; and (xi) so long as no Default or
Event of Default has occurred and is continuing, from and after one Business Day
prior to November 15, 2003, payments of cash dividends to Holdings in an amount
sufficient to enable Holdings to make payments of interest required to be made
in respect of the Holdings Debentures in accordance with the terms thereof in
effect on the date of the Indenture, provided such interest payments are made
with the proceeds of such dividends.
The Board of Directors may designate any Subsidiary to be an Unrestricted
Subsidiary if such designation would not cause a Default. For purposes of making
such determination, all outstanding Investments by the Company and its
Subsidiaries (except to the extent repaid in cash or Cash Equivalents) in the
Subsidiary so designated will be deemed to be Restricted Payments at the time of
such designation and will reduce the amount available for Restricted Payments
under the first paragraph of this covenant. All such outstanding Investments
will be deemed to constitute Investments in an amount equal to the greatest of
(x) the net book value of such Investments at the time of such designation, (y)
the fair market value of such Investments at the time of such designation and
(z) the original fair market value of such Investments at the time they were
made. Such designation will only be permitted if such Restricted Payment would
be permitted at such time and if such Subsidiary otherwise meets the definition
of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash or Cash Equivalents)
will be the fair market value (as and to the extent set forth in an Officers'
Certificate delivered to the Trustee pursuant to the next sentence) on the date
of the Restricted Payment of the asset(s) proposed to be transferred by the
Company or such Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than five Business Days' following the date of making any
Restricted Payment in excess of $1,000,000, the Company will deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this covenant were computed, which calculations may be based upon the Company's
latest available financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
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Acquired Indebtedness) and the Company will not issue or otherwise incur any
Disqualified Stock and will not permit any of its Subsidiaries to issue or
otherwise incur any shares of Disqualified Stock; PROVIDED, HOWEVER, that the
Company may incur Indebtedness (including Acquired Indebtedness) or issue or
otherwise incur shares of Disqualified Stock and the Subsidiary Guarantors may
incur Indebtedness (including Acquired Indebtedness) and issue or otherwise
incur Disqualified Stock and Foreign Subsidiaries may incur Indebtedness
(including Acquired Indebtedness) if: (i) the Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued or
incurred would have been at least 2.0 to 1, determined on a PRO FORMA basis
(including a PRO FORMA application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued or incurred, as the case may be, at the beginning of such four-quarter
period; and (ii) no Default or Event of Default will have occurred and be
continuing or would occur as a consequence thereof; PROVIDED, that no Guarantee
may be incurred pursuant to this paragraph unless the guaranteed Indebtedness is
incurred by the Company or a Subsidiary pursuant to this paragraph; and PROVIDED
FURTHER, that all Indebtedness incurred by Foreign Subsidiaries pursuant to this
paragraph must be secured and must not be subordinated in right of payment to
any other Indebtedness.
The foregoing provisions will not apply to:
(i) the incurrence by the Company or any Subsidiary Guarantors of Senior
Term Debt (and Guarantees thereof by Subsidiary Guarantors and the Company);
PROVIDED that the aggregate principal amount of all Senior Term Debt
outstanding under this clause (i) after giving effect to such incurrence
does not exceed $120.0 million less the aggregate amount of all Net Proceeds
of Asset Sales applied to repay Senior Term Debt pursuant to the covenant
described above under the caption "--Asset Sales";
(ii) the incurrence by the Company or any Subsidiary Guarantors of
Senior Revolving Debt (and Guarantees thereof by Subsidiary Guarantors and
the Company) and reimbursement obligations in respect of letters of credit
in an aggregate principal amount at any time outstanding under this clause
(ii) (with letters of credit obligations being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Subsidiaries that are Subsidiary Guarantors with respect thereto) not to
exceed an amount equal to the greater of (a) $25.0 million, less the
aggregate amount of all Net Proceeds of Asset Sales applied to permanently
reduce the outstanding amount or, as applicable, the commitments with
respect to such Indebtedness pursuant to the covenant described above under
the caption "--Asset Sales," and (b) an amount equal to the Borrowing Base;
(iii) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness (including any Permitted Refinancing Indebtedness incurred to
refinance, retire, renew, defease, refund or otherwise replace such
Indebtedness);
(iv) the incurrence by the Company of Indebtedness represented by the
(x) Notes issued as of the Issue Date, (y) Exchange Notes and (z) Additional
Notes issued to satisfy interest payment obligations of the Company under
the Notes, as described above and the incurrence by Subsidiaries of
Indebtedness represented by the Subsidiary Guarantees;
(v) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, Mortgage Financings
or Purchase Money Obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in the business or a Related Business of the
Company or such Subsidiary, in an aggregate principal amount not to exceed
$10.0 million at any time outstanding under this clause (v) (including any
Permitted Refinancing Indebtedness incurred to refinance, retire, renew,
defease, refund or otherwise replace any such Indebtedness);
(vi) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace,
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defease or refund, Indebtedness that was permitted by the Indenture to be
incurred or was outstanding on the Issue Date, after giving effect to the
Acquisition Transactions;
(vii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness (a) between or among the Company and any of the
Subsidiary Guarantors or Foreign Subsidiaries, (b) between or among any
Subsidiary Guarantors, (c) between or among any Foreign Subsidiaries and (d)
between or among any Subsidiary Guarantors and Foreign Subsidiaries;
PROVIDED, HOWEVER, that (x) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than the Company, a Subsidiary Guarantor or a Foreign Subsidiary and (y) any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Subsidiary Guarantor or Foreign Subsidiary will be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Subsidiary, as the case may be;
(viii) the incurrence by the Company or any of its Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging (a)
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the Indenture to be incurred or (b) currency risk (to the
extent incurred in the ordinary course of business and not for purposes of
speculation);
(ix) the incurrence by the Company or any of the Subsidiary Guarantors
of Indebtedness (in addition to Indebtedness permitted by any other clause
of this covenant) in an aggregate principal amount at any time outstanding
under this clause (ix) not to exceed the sum of $20.0 million (including
Permitted Refinancing Indebtedness incurred to refinance, retire, renew,
defease, refund or otherwise replace any such Indebtedness); provided that
such Indebtedness may, but need not, be incurred under the New Credit
Agreement;
(x) Indebtedness incurred by the Company or any of the Subsidiary
Guarantors or Foreign Subsidiaries arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from guarantees of letters of credit, bankers' acceptances, surety bonds or
performance bonds securing the performance of the Company or any of its
Subsidiary Guarantors or Foreign Subsidiaries to any Person acquiring all or
a portion of such business or assets of the Company or a Subsidiary of the
Company for the purpose of financing such acquisition, in a principal amount
not to exceed 25% of the gross proceeds (with proceeds other than cash or
Cash Equivalents being valued at the fair market value thereof as determined
by the Company in good faith) actually received by the Company or any of its
Subsidiaries in connection with such disposition;
(xi) the incurrence by a Receivables Subsidiary of Indebtedness in a
Qualified Receivables Transaction that is without recourse to the Company or
to any other Subsidiary of the Company or their assets (other than such
Receivables Subsidiary and its assets and, as to the Company or any
Subsidiary of the Company, other than pursuant to representations,
warranties, covenants and indemnities customary for such transactions) and
is not guaranteed by any such Person;
(xii) the incurrence by Foreign Subsidiaries of Indebtedness (in addition
to Indebtedness permitted by any other provision of this covenant) in an
aggregate amount not to exceed $25.0 million at any time outstanding under
this clause (xii) (including any Permitted Refinancing Indebtedness incurred
to refinance, retire, renew, defease, refund or otherwise replace any such
Indebtedness);
(xiii) Indebtedness in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds entered into by the Company and
its Subsidiaries in the ordinary course of their business;
(xiv) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; and
(xv) Finance Subsidiary Indebtedness.
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Notwithstanding any other provision of this covenant, a Guarantee of
Indebtedness permitted by the terms of the Indenture at the time such
Indebtedness was incurred or at the time the guarantor thereof became a
Subsidiary Guarantor will not constitute a separate incurrence, or amount
outstanding, of Indebtedness. Upon each incurrence of Indebtedness by the
Company or any of its Subsidiaries, the Company may designate pursuant to which
provision of this covenant such Indebtedness is being incurred and such
Indebtedness shall not be deemed to have been incurred or outstanding under any
other provision of this covenant, except as stated otherwise in the foregoing
provision.
Indebtedness or Disqualified Stock of any Person which is outstanding at the
time such Person becomes a Subsidiary of the Company (including upon designation
of any subsidiary or other person as a Subsidiary) or is merged with or into or
consolidated with the Company or a Subsidiary of the Company shall be deemed to
have been incurred at the time such Person becomes a Subsidiary of the Company
or is merged with or consolidated with the Company or a Subsidiary of the
Company, as applicable.
LIENS
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens, unless the Notes are secured by such Lien on an equal
and ratable basis.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any Indebtedness owed to the Company or any of its
Subsidiaries, (ii) make loans or advances to the Company or any of its
Subsidiaries or (iii) transfer any of its properties or assets to the Company or
any of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the Issue Date,
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, PROVIDED that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in the applicable Existing Indebtedness as in effect on the Issue
Date, (b) the New Credit Agreement as in effect as of the Issue Date, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, PROVIDED that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
the New Credit Agreement as in effect on the Issue Date, (c) the Indenture and
the Notes or any Indebtedness ranking on a PARI PASSU basis with the Notes or
the Subsidiary Guarantees, as applicable, PROVIDED such restrictions are no more
restrictive, taken as a whole, than those contained in the Indenture, (d)
applicable law, (e) any instrument governing Acquired Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Subsidiaries as in
effect at the time of such acquisition (except to the extent such Acquired
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (f) by reason of customary non-
assignment provisions in leases and licenses entered into in the ordinary course
of business, (g) Purchase Money Obligations, Mortgage Financings or Capital
Lease Obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) agreements relating to the financing of the
acquisition of real or tangible personal property acquired on or after the Issue
Date, PROVIDED, that such encumbrance or restriction
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relates only to the property which is acquired and in the case of any
encumbrance or restriction that constitutes a Lien, such Lien constitutes a
Permitted Lien, (i) Indebtedness or other contractual requirements of a
Receivables Subsidiary in connection with a Qualified Receivables Transaction,
PROVIDED that such restrictions apply only to such Receivables Subsidiary, (j)
any restriction or encumbrance contained in contracts for sale of assets
permitted by the Indenture in respect of the assets being sold pursuant to such
contract, (k) Indebtedness permitted to be incurred under the Indenture and
incurred on or after the Issue Date, PROVIDED, that such encumbrances or
restrictions in such Indebtedness are no more onerous, taken as a whole, than
the restrictions contained in the New Credit Agreement on the Issue Date or as
the New Credit Agreement may be amended, modified, restated, renewed, increased,
supplemented, refunded, replaced or refinanced as set forth in clause (b) above,
(l) restrictions contained in Indebtedness of Foreign Subsidiaries incurred
under the covenant entitled "Incurrence of Indebtedness and Issuance of
Disqualified Stock", (m) Permitted Refinancing Indebtedness, PROVIDED that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced, (n) restrictions with respect to
the Company or a Subsidiary of the Company imposed pursuant to a binding
agreement entered into for the sale or disposition of Equity Interests or assets
of such Person permitted pursuant to the Indenture or (o) agreements relating to
Permitted Liens or Indebtedness related thereto; provided that such encumbrance
or restriction relates only to the property subject to such Permitted Lien.
LIMITATION ON LAYERING OF INDEBTEDNESS
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for Indebtedness that by its terms
or the terms of any document or instrument relating thereto is expressly
subordinate or junior in right of payment to any Senior Indebtedness and senior
in right of payment to the Notes and (ii) no Subsidiary Guarantor will incur,
create, issue, assume, guarantee or otherwise become liable for Indebtedness
that by its terms or the terms of any document or instrument relating thereto is
expressly subordinate or junior in right of payment to any Senior Indebtedness
of such Subsidiary Guarantor and senior in right of payment to its Subsidiary
Guarantee, PROVIDED that this prohibition shall not prohibit Acquired
Indebtedness (other than Acquired Indebtedness incurred in connection with or in
contemplation of a merger of the Company or any Subsidiary Guarantor or in
connection with another transaction pursuant to which a Person becomes a
Subsidiary of the Company).
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or guarantee with,
or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person and (ii) the Company delivers to the Trustee (a) with
respect to any Affiliate Transaction entered into after the Issue Date involving
aggregate consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members (if any) of the
Board of Directors and (b) with respect to any Affiliate Transaction involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Company or such Subsidiary of such Affiliate Transaction from a
financial point of view issued by an investment banking firm of national
standing or, in the event such transaction is of a type that investment bankers
do not generally render fairness opinions, a valuation or appraisal firm of
national reputation; PROVIDED that the following will not be deemed to be
Affiliate Transactions: (w) the provision of administrative or management
services by the Company or any of its officers to any of its Subsidiaries in the
ordinary course of business, (x) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business, (y)
transactions between or among the Company and/or its Subsidiaries or
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transactions between a Receivables Subsidiary or a Finance Subsidiary and any
Person in which the Receivables Subsidiary or Finance Subsidiary has an
Investment and (z) transactions permitted by the covenant entitled "Restricted
Payments." In addition, none of the Acquisition Transactions or the transactions
contemplated thereby shall be deemed to be Affiliate Transactions.
ADDITIONAL SUBSIDIARY GUARANTEES
The Indenture provides that all Subsidiaries of the Company (other than
Receivables Subsidiaries, Finance Subsidiaries and Foreign Subsidiaries)
substantially all of whose assets are located in the United States or that
conduct substantially all of their business in the United States will be
Subsidiary Guarantors.
LINE OF BUSINESS
The Indenture provides that neither the Company nor any of its Subsidiaries
will directly or indirectly engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of the Company, is a Related Business.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the SEC, so long as any Notes are outstanding beginning with the
year ended December 31, 1998, the Company will furnish to the Trustee and all
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K, as
applicable, if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports, in each case within the time periods specified in
the SEC's rules and regulations; provided that the foregoing shall not require
the Company to furnish separate financial results of its Subsidiaries. In
addition, whether or not required by the rules and regulations of the SEC, the
Company will file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company has agreed that, for so long as any Notes
remain outstanding, it will furnish to the Trustee, Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company will not, in a single transaction or
series of related transactions, consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made (such surviving corporation or transferee
Person, the "Surviving Entity") is a corporation organized or existing under the
laws of the United States, any state thereof or the District of Columbia; (ii)
the Surviving Entity assumes all the obligations of the Company under the Notes
and the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; (iv) the Company or the entity or Person formed by
or surviving any such consolidation or merger (if other than the Company), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional
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Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Disqualified Stock"; and (v) the Company will have delivered to the
Trustee an Officers' Certificate stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or disposition and such supplemental
indenture, if any, comply with this Indenture and that such supplemental
indenture is enforceable.
Upon the occurrence of any transaction described in the immediately
preceding paragraph in which the Company is not the continuing corporation, the
successor corporation formed by such a consolidation or into which the Company
is merged or to which such transfer is made will succeed to, and be substituted
for, and may exercise every right and power of, the Company under the Indenture
and the Notes with the same effect as if such successor corporation had been
named as the Company therein.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes; (ii) default in payment when due
of the principal of or premium, if any, on the Notes; (iii) failure by the
Company to make or consummate a Change of Control Offer or Asset Sale Offer in
accordance with the provisions described under the captions "--Change of
Control" and "--Asset Sales"; (iv) the failure by the Company or any of its
Subsidiaries for 30 days after notice to comply with the provisions described
under the captions "--Restricted Payments" and "--Incurrence of Indebtedness and
Issuance of Disqualified Stock"; (v) failure by the Company or any of its
Subsidiaries for 60 days after notice to comply with any of its other agreements
in the Indenture, the Notes or the Subsidiary Guarantees; (vi) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries or the payment of which is guaranteed by the
Company or any of its Subsidiaries whether such Indebtedness or guarantee now
exists, or is created after the Issue Date, which default (a) is caused by a
failure to pay principal upon final stated maturity of such Indebtedness
following the expiration of any grace period provided in such Indebtedness or
(b) results in the acceleration of such Indebtedness prior to its final stated
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a default in the payment of principal upon final stated maturity
which has not been cured and is continuing following the expiration of any
applicable grace period or the maturity of which has been so accelerated and has
not been satisfied, aggregates $7.5 million or more; (vii) failure by the
Company or any of its Significant Subsidiaries to pay final judgments
aggregating in excess of $7.5 million, which judgments are not paid, discharged
or stayed for a period of 60 days; (viii) except as permitted by the Indenture,
any Subsidiary Guarantee will be held in any judicial proceeding to be
unenforceable or invalid or will cease for any reason to be in full force and
effect or any Subsidiary Guarantor, or any person acting on behalf of any
Subsidiary Guarantor, will deny or disaffirm its obligations under its
Subsidiary Guarantee; and (ix) certain events of bankruptcy or insolvency with
respect to the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by notice in writing to
the Company and the Representative of holders of Designated Senior Indebtedness
(an "Acceleration Notice"). Notwithstanding the foregoing, (i) in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, all outstanding Notes will become due and payable
without further action or notice or (ii) if there is any Designated Senior
Indebtedness outstanding, all outstanding Notes will become due and payable
immediately upon the first to occur of an acceleration under such Designated
Senior Indebtedness or five Business Days after receipt by the Company and the
Representative of the holders of such Designated Senior Indebtedness of the
Acceleration Notice, but only if an Event of Default is then continuing. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of
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any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the event of a declaration of acceleration because an Event of Default
set forth in clause (vi) above has occurred and is continuing, such declaration
of acceleration shall be automatically rescinded and annulled if the default
triggering such Event of Default shall be remedied or cured by the Company or
relevant Subsidiary or waived by the holders of the relevant Indebtedness within
60 days after the declaration of acceleration with respect thereto.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture, the Notes and the Subsidiary Guarantees, except a continuing
Default or Event of Default in the payment of interest on, or the principal of,
the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or the Subsidiary Guarantors, as such, will have any
liability for any obligations of the Company under the Notes, the Subsidiary
Guarantees, the Indenture and the Registration Rights Agreement or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes and the obligations
of the Subsidiary Guarantors with respect to the Subsidiary Guarantees ("Legal
Defeasance"), except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Notes when such payments are due from
the trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants in the
Indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations will not constitute a Default or Event of Default with respect
to the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, and, solely for a period of 91 days following the deposit
referred to in clause (i) of the next paragraph, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes, and the
Subsidiary Guarantees will be released.
Legal Defeasance and Covenant Defeasance will be deemed to occur on the date
of the deposit referred to in clause (i) of this paragraph, so long as the other
conditions thereto referred to in this paragraph are satisfied as of such date.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the
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outstanding Notes on the stated maturity or on the applicable redemption date,
as the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date; (ii) in the case of
Legal Defeasance, the Company will have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the Issue Date, there has been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel will confirm that, the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company will have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred; (iv) no Default or Event of Default will have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit); (v) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and (vii) the Company must deliver to the Trustee an Officers'
Certificate stating that all conditions precedent provided for relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, the
Notes or the Subsidiary Guarantees may be amended or supplemented with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture, the Notes and the
Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes). In connection with any amendment, supplement or
waiver under the Indenture, the Company may, but shall not be obligated to,
offer to any Holder who consents to such amendment, supplement or waiver, or to
all Holders, consideration for such Holder's consent to such amendment,
supplement or waiver.
Without the consent of each Holder affected (it being understood that the
covenants described above under the captions "--Change of Control" or "--Asset
Sales" may be amended as provided in the immediately preceding paragraph), an
amendment or waiver may not (with respect to any Notes held by a nonconsenting
Holder): (i) reduce the principal amount of Notes whose Holders must consent to
an
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amendment, supplement or waiver of the Indenture, Notes or Subsidiary
Guarantees, (ii) reduce the principal of or change the final stated maturity of
any Note or alter the provisions with respect to the redemption of the Notes at
the option of the Company, (iii) reduce the rate of or change the time for
payment of interest on any Note, (iv) waive a past Default or past Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of a
majority in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration), (v) make any Note payable in
money other than that stated in the Notes, (vi) except as otherwise provided in
this paragraph, make any change in the provisions of the Indenture, Notes or
Subsidiary Guarantees relating to waivers of past Defaults or Events of Defaults
or the rights of Holders of Notes to receive payments of principal of or
premium, if any, or interest on the Notes, or (vii) make any change in the
foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture, the Notes or
the Subsidiary Guarantees to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
Notes in the case of a merger or consolidation or sale of all or substantially
all of the Company's assets, to make any change that would provide any
additional rights or benefits to the Holders of Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, to comply with
the procedures of the Depositary, Euroclear or Cedel or the Trustee with respect
to the provisions of the Indenture and the Notes relating to transfers and
exchanges of Notes or beneficial interests therein or to comply with
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue or
resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default will
occur (which will not be cured), the Trustee will be required, in the exercise
of its power, to use the degree of care of a prudent man in the conduct of his
own affairs. Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request of
any Holder of Notes, unless such Holder will have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
the Registration Rights Agreement without charge by writing to the Company at
551 Fifth Avenue, Suite 3600, New York, New York 10176, Attention: Corporate
Secretary.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such
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specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person, and (ii) Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person.
"AFFILIATE" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, will mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; PROVIDED
that beneficial ownership of 10% or more of the voting securities of a Person
will be deemed to be control. Notwithstanding the foregoing, (a) the limited
partners of AIP Capital Funds will not be deemed to be Affiliates of AIP Capital
Funds or AIP solely by reason of their investment in AIP Capital Funds and (b)
no Person (other than the Company or any Subsidiary of the Company) in whom a
Receivables Subsidiary makes an Investment in connection with a Qualified
Receivables Transaction will be deemed to be an Affiliate of the Company or any
of its Subsidiaries solely by reason of such Investment.
"AIP" means American Industrial Partners, a Delaware general partnership.
"AIP CAPITAL FUNDS" means American Industrial Partners Capital Fund, L.P., a
Delaware limited partnership, and American Industrial Partners Capital Fund II,
L.P., a Delaware limited partnership.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition that
does not constitute a Restricted Payment or an Investment by such Person of any
of its non-cash assets (including, without limitation, by way of a sale and
leaseback and including the issuance, sale or other transfer of any of the
Capital Stock of any Subsidiary of such Person) other than to the Company or to
any of the Subsidiary Guarantors; and (ii) the issuance of Equity Interests in
any Subsidiaries or the sale of any Equity Interests in any Subsidiaries, in
each case, in one or a series of related transactions, PROVIDED, that
notwithstanding the foregoing, the term "Asset Sale" will not include: (a) the
sale, lease, conveyance, disposition or other transfer of all or substantially
all of the assets of the Company, as permitted pursuant to the covenant entitled
"Merger, Consolidation or Sale of Assets"; (b) the sale or lease of equipment,
inventory, accounts receivable or other assets in the ordinary course of
business and to the extent that such sales or leases are not part of a sale of
the business (unless such sale of such business would not be an Asset Sale) in
which such equipment was used or in which such inventory or accounts receivable
arose; (c) a transfer of assets by the Company to a Subsidiary Guarantor or by a
Subsidiary Guarantor to the Company or another Subsidiary Guarantor or by a
Subsidiary of the Company that is not a Subsidiary Guarantor to the Company or
another Subsidiary of the Company; (d) an issuance of Equity Interests by a
Subsidiary Guarantor to the Company or to another Subsidiary Guarantor or by a
Subsidiary of the Company that is not a Subsidiary Guarantor to the Company or
another Subsidiary of the Company; (e) the surrender or waiver of contract
rights or the settlement, release or surrender of contract, tort or other claims
of any kind; (f) the grant in the ordinary course of business of any license of
patents, trademarks, registrations therefor and other similar intellectual
property; (g) Permitted Investments or Permitted Liens; (h) sales of accounts
receivable and related assets of the type specified in the definition of
"Qualified Receivables Transaction" to a Receivables Subsidiary for the fair
market value thereof, including cash in an amount at least equal to 75% of the
book value thereof as determined in accordance with GAAP; (i) transfers of
accounts receivable and related assets of the type specified in the definition
of "Qualified Receivables Transaction" (or a fractional undivided interest
therein) by a Receivables Subsidiary in a Qualified Receivables Transaction; and
(j) the sale or disposal of damaged, worn out or other obsolete personal
property, inventory or equipment in the ordinary course of business so long as
such property is no longer necessary for the proper conduct of the business of
the Company or such Subsidiary, as applicable. For the purposes of clause (h),
notes received in exchange for the transfer of accounts receivable and related
assets will be deemed cash if the Receivables Subsidiary or other payor is
required to repay said notes as soon as practicable from available cash
collections less amounts required to be established as reserves pursuant to
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contractual agreements with entities that are not Affiliates of the Company
entered into as part of a Qualified Receivables Transaction.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"BORROWING BASE" means, as of any date, an amount equal to the sum of (a)
75% of the face amount of all accounts receivable owned by the Company and its
Subsidiaries as of such date that are not more than 90 days past due, and (b)
50% of the book value of all inventory owned by the Company and its Subsidiaries
as of such date, minus (c) the aggregate amount of trade payables of the Company
and its Subsidiaries outstanding as of such date, all calculated on a
consolidated basis and in accordance with GAAP. To the extent that information
is not available as to the amount of accounts receivable or inventory or trade
payables as of a specific date, the Company may utilize the most recent
available information for purposes of calculating the Borrowing Base.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States is pledged in support thereof) having maturities not more than twelve
months from the date of acquisition, (b) U.S. dollar denominated (or foreign
currency fully hedged) time deposits, certificates of deposit, Eurodollar time
deposits or Eurodollar certificates of deposit of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of $100.0
million or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved Lender
(or by the parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-2 (or the equivalent thereof) or
better by S&P or P-2 (or the equivalent thereof) or better by Moody's and
maturing within twelve months of the date of acquisition, (d) repurchase
agreements with a bank or trust company or recognized securities dealer having
capital and surplus in excess of $100.0 million for direct obligations issued by
or fully guaranteed by the United States of America in which the Company will
have a perfected first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market value of at least
100% of the amount of repurchase obligations, (e) interests in money market
mutual funds which invest solely in assets or securities of the type described
in subparagraphs (a), (b), (c) or (d) hereof and (f) in the case of any Foreign
Subsidiary: (i) direct obligations of the sovereign nation (or any agency
thereof) in which such Foreign Subsidiary is organized and is conducting
business or in obligations fully and unconditionally guaranteed by such
sovereign nation (or any agency thereof), (ii) investments of the type and
maturity described in clauses (a) through (e) above of foreign obligors, which
investments or obligors (or the direct or indirect parents of such obligors)
have ratings described in such clauses or equivalent ratings from comparable
foreign rating agencies or (iii) investments of the type
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and maturity described in clauses (a) through (e) above of foreign obligors (or
the direct or indirect parents of such obligors), which investments or obligors
(or the direct or indirect parents of such obligors) are not rated as provided
in such clauses or in clause (ii) above but which are, in the reasonable
judgment of the Company, comparable in investment quality to such investments
and obligors (or the direct or indirect parent of such obligors).
"CHANGE OF CONTROL" means such time as (i) prior to the initial public
offering by the Company or any direct or indirect parent of the Company of its
common stock (other than a public offering pursuant to a registration statement
on Form S-8), AIP, AIP Capital Funds or any of their respective Affiliates
(collectively, the "Initial Investors") cease to be, directly or indirectly, the
beneficial owners, in the aggregate, of a majority of the voting power of the
voting Capital Stock of the Company or (ii) after the initial public offering by
the Company or any direct or indirect parent of the Company of its common stock
(other than a public offering pursuant to a registration statement on Form S-8),
(A) any Schedule 13D, Form 13F or Schedule 13G under the Exchange Act, or any
amendment to such Schedule or Form, is received by the Company which indicates
that, or the Company otherwise becomes aware that, a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) other than the
Initial Investors or their Related Parties (as defined below) has become,
directly or indirectly, the "beneficial owner," by way of merger, consolidation
or otherwise, of 35% or more of the voting power of the voting Capital Stock of
the Company and (B) such person or group has become, directly or indirectly, the
beneficial owner of a greater percentage of the voting Capital Stock of the
Company than beneficially owned by the Initial Investors or their Related
Parties, or (iii) the sale, lease or transfer of all or substantially all of the
assets of the Company to any person or group (other than a Subsidiary Guarantor
or the Initial Investors or their Related Parties), or (iv) during any period of
two consecutive calendar years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by the Board of Directors of the Company or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors of the Company, then in office. "Related Party" with
respect to any Initial Investor means (A) any controlling stockholder, 80% (or
more) owned Subsidiary, or spouse, or immediate family member (in the case of
any individual) of such Initial Investor or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or persons beneficially holding an 80% or more controlling interest of which
consist of such Initial Investor and/or such other persons referred to in the
immediately preceding clause (A).
"CONSOLIDATED EBITDA" means, with respect to the Company and its
Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) the Fixed Charges for such
period, plus (iii) provision for taxes based on income or profits for such
period (to the extent such income or profits were included in computing
Consolidated Net Income for such period), plus (iv) consolidated depreciation,
amortization and other non-cash charges of the Company and its Subsidiaries
required to be reflected as expenses on the books and records of the Company,
minus (v) cash payments with respect to any non-recurring, non-cash charges
previously added back pursuant to clause (iv), and (vi) excluding the impact of
foreign currency translations. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and other non-cash charges of, a Subsidiary of a Person will be added to
Consolidated Net Income to compute Consolidated EBITDA only to the extent (and
in the same proportion) that the Net Income of such Subsidiary was included in
calculating the Consolidated Net Income of such Person.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; PROVIDED
that (i) the Net Income (but not loss) of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting will be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Subsidiary, (ii) the Net
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Income of any Subsidiary will be excluded solely to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (which has not been obtained) or by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders (PROVIDED that the Company's equity in Net Income of any such
Subsidiary shall be included up to the aggregate amount of dividends or similar
distributions that could have been declared or paid consistent with such
restrictions during such period), (iii) the Net Income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition will be excluded, (iv) the cumulative effect of a change in
accounting principles will be excluded, (v) the Net Income of, or any dividends
or other distributions from, any Unrestricted Subsidiary, to the extent
otherwise included, shall be excluded, except to the extent cash or Cash
Equivalents are distributed to the Company or one of its Subsidiaries in a
transaction that does not relate to the liquidation of such Unrestricted
Subsidiary and (vi) all other extraordinary gains and extraordinary losses will
be excluded.
"COPETRO CREDIT AGREEMENT" means the credit agreement, dated as of February
4, 1997, between Copetro S.A., Banca Nazionale del Lavoro S.A. and the other
lenders party thereto, as amended, restated, supplemented or otherwise modified
from time to time.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DEPOSITARY" means, with respect to the Notes issuable or issued in whole or
in part in global form, the Person specified in the Indenture as the Depositary
with respect to the Notes, until a successor will have been appointed and become
such Depositary pursuant to the applicable provision of the Indenture, and,
thereafter, "Depositary" will mean or include such successor.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) the Indebtedness under the New
Credit Agreement and (ii) any other Senior Indebtedness of the Company or any
Subsidiary of the Company permitted under the Indenture the original principal
amount of which is $25.0 million or more and that has been designated by the
Company as "Designated Senior Indebtedness."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (other than customary change
of control or asset sale provisions), matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the Holder thereof, in whole or in part, prior to the final stated
maturity of the Notes.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means an underwritten public offering pursuant to a
registration statement filed with the SEC in accordance with the Securities Act
of (i) Equity Interests (other than Disqualified Stock) of the Company or (ii)
Equity Interests (other than Disqualified Stock) of the Company's parent or
indirect parent to the extent that the cash proceeds therefrom are contributed
to the equity capital of the Company or are used to purchase Equity Interests
(other than Disqualified Stock) of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE NOTES" means the securities substantially similar to the Notes or
Additional Notes, issued pursuant to an Exchange Offer.
"EXCHANGE OFFER" means an offer that may be made by the Company pursuant to
the Registration Rights Agreement (or another similar agreement entered into in
connection with the issuance of Additional Notes) to exchange Notes for Exchange
Notes.
"EXISTING INDEBTEDNESS" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Agreement) in
existence on the Issue Date or incurred subsequent to
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the Issue Date pursuant to commitments under the Copetro Credit Agreement as in
effect on the Issue Date, until such amounts are repaid.
"FINANCE SUBSIDIARY" means any Subsidiary of the Company (other than a
Subsidiary Guarantor or a Foreign Subsidiary) organized for the sole purpose of
issuing Capital Stock or other securities and loaning the proceeds thereof to
the Company or a Subsidiary Guarantor and which engages in no other transactions
except those incidental thereto.
"FINANCE SUBSIDIARY INDEBTEDNESS" means Indebtedness of or Disqualified
Stock issued by a Finance Subsidiary which Indebtedness or Disqualified Stock
does not have a final stated maturity and is not mandatorily redeemable or
redeemable at the option of the holder thereof (other than pursuant to customary
change of control or asset sale provisions), in whole or in part, prior to the
final stated maturity of the Notes.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), and (ii) the consolidated interest expense of such
Person and its Subsidiaries that was capitalized during such period, and (iii)
any interest expense on Indebtedness of another Person that is Guaranteed by
such Person or one of its Subsidiaries or secured by a Lien on assets of such
Person or one of its Subsidiaries (whether or not such Guarantee or Lien is
called upon), and (iv) all cash dividend payments on any series of preferred
stock of such Person payable to a party other than the Company or a Subsidiary
of the Company.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated EBITDA of such Person and its Subsidiaries
for such period to the Fixed Charges of such Person and its Subsidiaries for
such period. In the event that the Company or any of its Subsidiaries incurs,
issues, assumes, retires, Guarantees, defeases or redeems any Indebtedness
(other than revolving credit borrowings) or preferred stock subsequent to the
commencement of the four-quarter reference period for which the Fixed Charge
Coverage Ratio is being calculated but on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated
giving PRO FORMA effect to such incurrence, issuance, assumption, retirement,
Guarantee, defeasance or redemption of Indebtedness or preferred stock, as if
the same had occurred at the beginning of the applicable four-quarter reference
period. For purposes of making the computation referred to above, (i)
acquisitions that have been made by the Company or any of its Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date will be deemed to have
occurred on the first day of the four-quarter reference period, and (ii) the
Consolidated EBITDA attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of on or prior to
the Calculation Date, will be excluded, and (iii) the Fixed Charges attributable
to discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of on or prior to the Calculation Date, will
be excluded, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referent Person or any of its
Subsidiaries following the Calculation Date.
"FOREIGN SUBSIDIARIES" means (i) Copetro S.A., an Argentine corporation, and
Great Lakes International Sales Corp., a Barbados corporation, and (ii) any
Subsidiary organized and incorporated in a jurisdiction outside of the United
States.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements
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by such other entity as have been approved by a significant segment of the
accounting profession, which are in effect on the Issue Date. All ratios and
computations based on GAAP contained in the Indenture shall be computed in
conformity with GAAP applied on a consistent basis, except that calculations
made for purposes of determining compliance with the terms of the covenants and
with other provisions of the Indenture shall be made without giving effect to
depreciation, amortization or other expenses recorded as a result of the
application of purchase accounting in accordance with Accounting Principles
Board Opinion Nos. 16 and 17.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates and (ii) currency swap or protection agreements and other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange rates.
"HOLDER" means a Person in whose name a Note is registered on the
Registrar's books.
"HOLDINGS DEBENTURES" means the Senior Discount Debentures due 2009 issued
by Holdings.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any such Indebtedness of any other Person; provided
that any indebtedness which has been defeased in accordance with GAAP or
defeased pursuant to the deposit of cash or Government Securities (in an amount
sufficient to satisfy all such indebtedness obligations at maturity or
redemption, as applicable, and all payments of interest and premium, if any,) in
a trust or account created or pledged for the sole benefit of the holders of
such indebtedness, and subject to no other Liens, and the other applicable terms
of the instrument governing such indebtedness, shall not constitute
"Indebtedness."
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including guarantees of Indebtedness or other obligations but excluding
guarantees of Indebtedness of the Company or any of its Subsidiaries), advances
or capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities and all other items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; PROVIDED that an acquisition
of assets, Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company or any direct or indirect
parent of the Company will not be deemed to be an Investment.
"ISSUE DATE" means the date of first issuance of the Notes under the
Indenture.
"JOINT VENTURES" means joint ventures entered into by the Company or any of
its Subsidiaries for the primary purpose of operating a Related Business.
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"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest will accrue for
the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
of a security agreement, any option or other agreement to grant or give a
security interest in and, except in connection with any Qualified Receivables
Transaction, any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant to the
Registration Rights Agreement.
"MOODY'S" means Moody's Investor Services.
"MORTGAGE FINANCINGS" means any mortgage, deed of trust or other instrument
creating a lien on an estate in fee simple or a leasehold estate in a property,
secured by a note or other evidence of an obligor indebtedness under such
mortgage, deed of trust or other instrument.
"NET CASH PROCEEDS" means the aggregate amount of cash and Cash Equivalents
received by the Company or any direct or indirect parent of the Company in the
case of a sale or equity contribution in respect of Equity Interests (other than
Disqualified Stock) plus, in the case of an issuance of Equity Interests (other
than Disqualified Stock) upon any exercise, exchange or conversion of securities
(including options, warrants, rights and convertible or exchangeable debt) of
the Company or any direct or indirect parent of the Company that were issued for
cash after the Issue Date, the amount of cash originally received by the Company
or any direct or indirect parent of the Company upon the issuance of such
securities (including options, warrants, rights and convertible or exchangeable
debt) less the sum of all payments, fees, commissions, and customary and
reasonable expenses (including, without limitation, the fees and expenses of
legal counsel and investment banking fees and expenses) incurred in connection
with such sale or equity contribution in respect of Equity Interests (other than
Disqualified Stock).
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries and
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss).
"NET PROCEEDS" means the aggregate cash proceeds and Cash Equivalents
received by the Company or any of its Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than the Notes, the Subsidiary Guarantees
or Indebtedness under the New Credit Agreement) secured by a Lien on the asset
or assets that were the subject of such Asset Sale, any reserve for adjustment
in respect of the sale price of such asset or assets or liabilities associated
with such Asset Sale and retained by the Company or such Subsidiary established
in accordance with GAAP, all distributions and other payments required to be
made to minority interest holders in Subsidiaries or other parties to any Joint
Ventures as a result of such
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Asset Sale and all Purchase Money Obligations (and Permitted Refinancing
Indebtedness thereof) assumed by the purchaser in connection with such Asset
Sale.
"NEW CREDIT AGREEMENT" means that certain Credit Agreement, dated as of the
Issue Date, by and among Holdings, the Company, Bankers Trust Company, as
syndication and administrative agent, DLJ Capital Funding, Inc., as
documentation agent, Bank of America National Trust and Savings Association, as
co-agent, and the lenders parties thereto, including any related notes,
guarantees, collateral documents, instruments and agreements (including, without
limitation, agreements with respect to Hedging Obligations with lenders party to
the New Credit Agreement or their Affiliates) executed in connection therewith,
and in each case as amended, supplemented, modified, renewed, refunded,
replaced, restated or refinanced from time to time, including any agreement
restructuring or adding Holdings or Subsidiaries of the Company as additional
borrowers or guarantors thereunder and whether by the same or any other agent,
lender or group of lenders.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness (i) as to which neither the
Company nor any of its Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the Offering of the Notes by the Company.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary, any Assistant Secretary or any Vice-President of such Person.
"PERMITTED INVESTMENTS" means (a) any Investments in the Company or in a
Subsidiary Guarantor that is engaged in one or more Related Businesses; (b) any
Investment by the Company or a Subsidiary Guarantor in a Receivables Subsidiary
or any Investment by a Receivables Subsidiary in any other Person in connection
with a Qualified Receivables Transaction PROVIDED, that the foregoing Investment
is in the form of a note or other instrument that the Receivables Subsidiary or
other Person is required to repay as soon as practicable from available cash
collections less amounts required to be established as reserves pursuant to
contractual agreements with entities that are not Affiliates of the Company
entered into as part of a Qualified Receivables Transaction; (c) any Investments
in Cash Equivalents; (d) Investments by the Company or any Subsidiary of the
Company in a Person if as a result of such Investment (i) such Person becomes a
Subsidiary Guarantor that is engaged in one or more Related Businesses or (ii)
such Person is merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the Company
or a Subsidiary Guarantor that is engaged in one or more Related Businesses; (e)
Investments made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with the covenant
entitled "Asset Sales"; (f) Investments outstanding as of the Issue Date; (g)
Investments in the form of promissory notes of members of the Company's or
Holdings' management in consideration of the purchase by such members of Equity
Interests (other than Disqualified Stock) in the Company; (h) Investments which
constitute Existing Indebtedness of the Company of any of its Subsidiaries; (i)
accounts receivable, endorsements for collection or deposits arising in the
ordinary course of business; (j) other Investments in any Person that do not
exceed $10.0 million at any time outstanding under and pursuant to this clause
(j), without giving effect to changes in the value of such Investment occurring
after the date of such Investment, but giving effect to all dividends,
distributions, principal, interest and other payments received in respect of
such Investments
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in cash or Cash Equivalents; (k) Investments in Foreign Subsidiaries or Joint
Ventures that do not exceed $35.0 million at any time outstanding under and
pursuant to this clause (k), without giving effect to changes in the value of
such Investment occurring after the date of such Investment, but giving effect
to all dividends, distributions, principal, interest and other payments received
in respect of such Investments in cash or Cash Equivalents; (l) Investments
constituting Indebtedness owed by one Foreign Subsidiary to one or more other
Foreign Subsidiaries or Investments by a Foreign Subsidiary in one or more other
Foreign Subsidiaries; (m) Investments constituting Indebtedness permitted under
clause (vii) of the covenant described above under the caption "--Incurrence of
Indebtedness and Issuance of Disqualified Stock"; and (n) capital stock,
obligations or other securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Subsidiaries.
"PERMITTED JUNIOR SECURITIES" means securities that are subordinated at
least to the same extent as the Notes or a Subsidiary Guarantee to Designated
Senior Indebtedness of the Company or a Subsidiary Guarantor as applicable, and
that have a final maturity date, that is the same as or later than, and a
weighted average life to maturity that is the same as or greater than, the Notes
or the applicable Subsidiary Guarantees.
"PERMITTED LIENS" means (i) Liens securing the New Credit Agreement and
other Senior Indebtedness of the Company or the Subsidiary Guarantors and
Permitted Refinancing Indebtedness related thereto; (ii) Liens in favor of the
Company or any Subsidiary Guarantor; (iii) Liens on property of a Person
existing at the time such Person is merged into or consolidated with or acquired
by the Company or any Subsidiary of the Company in accordance with the
provisions of the Indenture; PROVIDED that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, PROVIDED that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens existing on the Issue Date and Liens securing any Permitted
Refinancing Indebtedness incurred to refinance any Indebtedness secured by such
Liens; (vii) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, PROVIDED that any
reserve or other appropriate provision as will be required in conformity with
GAAP will have been made therefor; (viii) Liens incurred in the ordinary course
of business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Subsidiary; (ix) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (x) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
business of the Company or any of its Subsidiaries; (xi) Purchase Money Liens
(including extensions and renewals thereof and Liens securing any Permitted
Refinancing Indebtedness incurred in respect of the applicable Purchase Money
Obligations); (xii) Liens securing reimbursement obligations with respect to
letters of credit and banker's acceptances which encumber only documents and
other property relating to such letters of credit and the products and proceeds
thereof; (xiii) judgment and attachment Liens not giving rise to an Event of
Default; (xiv) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements; (xv) Liens
arising out of consignment or similar arrangements for the sale of goods; (xvi)
any interest or title of a lessor in property subject to any Capital Lease
Obligation or operating lease; (xvii) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xviii) Liens on assets
of the Company or its Subsidiaries with respect to Acquired Indebtedness (and
Permitted Refinancing Indebtedness with respect thereto) provided that such
Liens
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were not created in contemplation of or in connection with such acquisition;
(xix) Liens on assets of the Company or a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction; (xx) Liens securing
Indebtedness of any Foreign Subsidiary; (xxi) Liens securing the Notes and any
other obligations ranking PARI PASSU with the Notes; and (xxii) Liens securing
Permitted Refinancing Indebtedness incurred to refinance any indebtedness that
was previously subject to a Lien, in a manner no more adverse, taken as a whole,
to the Holders of the Notes, than the Liens securing such refinanced
Indebtedness.
"PERMITTED PAYMENTS TO HOLDINGS" means without duplication, (a) payments to
Holdings in an amount sufficient to permit Holdings to pay reasonable and
necessary operating expenses and other general corporate expenses to the extent
such expenses relate or are fairly allocable to the Company and its
Subsidiaries, including any reasonable professional fees and expenses not in
excess of $300,000 in any fiscal year, but excluding all expenses payable to or
to be paid to or on behalf of AIP, and (b) payments to Holdings to enable
Holdings to pay foreign, federal, state or local tax liabilities ("Tax
Payments"), not to exceed the amount of any tax liabilities that would be
otherwise payable by the Company and its Subsidiaries and Unrestricted
Subsidiaries to the appropriate taxing authorities if they filed separate tax
returns to the extent that Holdings has an obligation to pay such tax
liabilities relating to the operations, assets or capital of the Company or its
Subsidiaries and Unrestricted Subsidiaries; PROVIDED, HOWEVER, that (i),
notwithstanding the foregoing, in the case of determining the amount of a Tax
Payment that is permitted to be paid by the Company and any of its United States
Subsidiaries in respect of their Federal income tax liability, such payment
shall be determined on the basis of assuming that Company is the parent company
of an affiliated group (the "Company Affiliated Group") filing a consolidated
Federal income tax return and that Holdings and each such United States
Subsidiary is a member of the Company Affiliated Group and (ii) any Tax Payments
shall either be used by Holdings to pay such tax liabilities within 90 days of
Holdings' receipt of such payment or refunded to the payee.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the Company or any of its Subsidiaries; PROVIDED that: (i) the
principal amount (or accreted value, if issued with an original issue discount)
of such Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if issued with an original issue discount) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith, the
accrued or unpaid interest thereon and any premium owed in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to,
the Notes on terms at least as favorable, taken as a whole, to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded and the final
maturity date of such Permitted Refinancing Indebtedness is later than the final
maturity date of the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof (including
any subdivision or ongoing business of any such entity or substantially all of
the assets of any such entity, subdivision or business).
"PURCHASE MONEY LIEN" means a Lien granted on an asset or property to secure
a Purchase Money Obligation permitted to be incurred under the Indenture and
incurred solely to finance the purchase (or
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lease), or the cost of construction or improvement, of such asset or property;
PROVIDED, HOWEVER, that such Lien encumbers only such asset or property and is
granted within 180 days of such acquisition.
"PURCHASE MONEY OBLIGATIONS" of any Person means any obligations of such
Person to any seller or any other Person incurred or assumed to finance the
purchase (or lease), or the cost of construction or improvement, of real or
personal property to be used in the business of such Person or any of its
Subsidiaries in an amount that is not more than 100% of the cost, or fair market
value, as appropriate, of such property, and incurred within 180 days after the
date of such acquisition (excluding accounts payable to trade creditors incurred
in the ordinary course of business).
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any of its Subsidiaries may sell, convey or
otherwise transfer to (i) a Receivables Subsidiary (in the case of a transfer by
the Company or any of its Subsidiaries) and (ii) any other Person (in the case
of a transfer by a Receivables Subsidiary), or may grant a security interest in,
any accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Subsidiary of the Company which engages in
no activities other than in connection with the financing of accounts receivable
and which is designated by the Board of Directors of the Company (as provided
below) as a Receivables Subsidiary (a) no portion of the Indebtedness or any
other Obligations (contingent or otherwise) of which (i) is guaranteed by the
Company or any Subsidiary of the Company (excluding guarantees of Obligations
(other than the principal of, and interest on, Indebtedness) pursuant to
representations, warranties, covenants and indemnities entered into in the
ordinary course of business in connection with a Qualified Receivables
Transaction), (ii) is recourse to or obligates the Company or any Subsidiary of
the Company in any way other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of the Company or any Subsidiary of the Company (other than
accounts receivable), directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction, (b) with which neither the
Company nor any Subsidiary of the Company has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to the
Company or such Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company, other than fees payable in the
ordinary course of business in connection with servicing accounts receivable and
(c) with which neither the Company nor any Subsidiary of the Company has any
obligation to maintain or preserve such Subsidiary's financial condition or
cause such Subsidiary to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company will be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the Issue Date, by and among the Company and the other parties named
on the signature pages thereof, as such agreement may be amended, modified or
supplemented from time to time.
"RELATED BUSINESS" means the business conducted by the Company and its
Subsidiaries as of the Issue Date and any and all businesses that in the good
faith judgment of the Board of Directors of the Company are related businesses,
including reasonable extensions or expansions thereof.
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"REPRESENTATIVE" means the indenture trustee or other trustee, agent or
representative for any Designated Senior Indebtedness.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" means the following obligations of the Company or the
Subsidiary Guarantors, whether outstanding on the Issue Date or thereafter
Incurred: (i) all Indebtedness and other Obligations under, and Guarantees of,
the New Credit Agreement and (ii) all other Indebtedness and all other monetary
obligations of the Company or the Subsidiary Guarantors (other than the Notes
and the Subsidiary Guarantees), unless such Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is PARI PASSU with, or subordinated in right of payment to, the Notes or
the Subsidiary Guarantees, as the case may be; PROVIDED that the term "Senior
Indebtedness" shall not include (a) any Indebtedness of the Company or the
Subsidiary Guarantors that, when Incurred, was without recourse to the Company
or the Subsidiary Guarantors, as the case may be, (b) any Indebtedness of the
Company to a Subsidiary of the Company, or to a Joint Venture in which the
Company has an interest, (c) any repurchase, redemption or other obligation in
respect of Disqualified Stock, (d) any Indebtedness to any employee of the
Company or any of its Subsidiaries, (e) any liability for taxes owed or owing by
the Company or any of its Subsidiaries, or (f) any trade payables. Senior
Indebtedness will also include interest accruing subsequent to events of
bankruptcy of the Company and its respective Subsidiaries at the rate provided
for in the document governing such Senior Indebtedness, whether or not such
interest is an allowed claim enforceable against the debtor in a bankruptcy case
under bankruptcy law.
"SENIOR REVOLVING DEBT" means revolving Indebtedness under the New Credit
Agreement as such agreement may be restated, further amended, supplemented or
otherwise modified, renewed, refunded, replaced or refinanced, in whole or in
part, from time to time.
"SENIOR TERM DEBT" means term Indebtedness under the New Credit Agreement as
such agreement may be restated, further amended, supplemented or otherwise
modified, renewed, refunded, replaced or refinanced, in whole or in part, from
time to time.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Exchange Act, as such Regulation is in effect on the date
hereof.
"SUBSIDIARY" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person (or a combination thereof).
Unrestricted Subsidiaries will not be included in the definition of Subsidiary
for any purposes of the Indenture (except, as the context may otherwise require,
for purposes of the definition of "Unrestricted Subsidiary.")
"SUBSIDIARY GUARANTORS" means each Subsidiary of the Company that executes a
Subsidiary Guarantee in accordance with the provisions of the Indenture, and
their respective successors and assigns.
"S&P" means Standard & Poor's Financial Information Services.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SectionSection
77aaa-77bbbb) as in effect on the date on which the Indenture is qualified under
the TIA.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution;
but only to the extent that such Subsidiary:
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(a) has no Indebtedness other than Non-Recourse Indebtedness; (b) is not party
to any agreement, contract, arrangement or understanding with the Company or any
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Subsidiaries has any obligation (x) to subscribe for
additional Equity Interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Subsidiaries. Any such designation by the Board of Directors will be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant entitled "Restricted Payments" hereof. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
will be deemed to be incurred by a Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant entitled "Limitation on Indebtedness and Issuance of Disqualified
Stock" hereof, the Company will be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Subsidiary; PROVIDED that such designation will be deemed to be an
incurrence of Indebtedness by a Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (i) such Indebtedness is permitted under the covenant entitled
"Incurrence of Indebtedness and Issuance of Disqualified Stock" hereof, and (ii)
no Default or Event of Default would be in existence following such designation.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part.
The Company and the Initial Purchasers entered into the Registration Rights
Agreement on May 22, 1998 (the "Closing Date"). Pursuant to the Registration
Rights Agreement, the Company agreed to file with the SEC this Exchange Offer
Registration Statement with respect to the Exchange Notes. Upon the
effectiveness of the Exchange Offer Registration Statement, the Company will
offer to the Holders of Transfer Restricted Securities (as defined below)
pursuant to the Exchange Offer who are able to make certain representations the
opportunity to exchange their Transfer Restricted Securities for Exchange Notes.
If (i) the Company is not required to file the Exchange Offer Registration
Statement or permitted to consummate the Exchange Offer because the Exchange
Offer is not permitted by applicable law or SEC policy or (ii) any Holder of
Transfer Restricted Securities notifies the Company prior to the 20th day
following consummation of the Exchange Offer that (a) it is prohibited by law or
SEC policy from participating in the Exchange Offer or (b) that it may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales or (c)
that it is a broker-dealer and owns Old Notes acquired directly from the Company
or an affiliate of the Company, the
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Company will file with the SEC a Shelf Registration Statement to cover resales
of the Old Notes by the Holders thereof who satisfy certain conditions relating
to the provision of information in connection with the Shelf Registration
Statement. The Company will use its reasonable best efforts to cause the
Registration Statement of which this Prospectus forms a part to be declared
effective as promptly as reasonably practicable by the SEC. For purposes of the
foregoing, "Transfer Restricted Securities" means each Old Note until the
earliest to occur of (i) the date on which such Old Note is exchanged in the
Exchange Offer for a New Note which is entitled to be resold to the public by
the Holder thereof without complying with the prospectus delivery requirements
of the Securities Act (other than as a result of the Holder's status as an
Affiliate of the Company), (ii) the date on which such Old Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Notes that do not bear the Private Placement
Legend set forth in the Indenture), or (iv) the date on which such Old Note is
distributed to the public pursuant to Rule 144 under the Securities Act or may
be sold under Rule 144(k) under the Securities Act (and purchasers thereof have
been issued Notes that do not bear the Private Placement Legend set forth in the
Indenture) and each New Note until the date on which such New Note is disposed
of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Registration Statement of which this Prospectus forms a part (including the
delivery of this Prospectus).
The Registration Rights Agreement provides that (i) the Company will file
this Exchange Offer Registration Statement with the SEC on or prior to 60 days
after the Closing Date, (ii) the Company will use its reasonable best efforts to
have this Exchange Offer Registration Statement declared effective by the SEC on
or prior to 135 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or SEC policy, the Company will
commence the Exchange Offer and use its reasonable best efforts to issue, on or
prior to 30 Business Days after the date on which the Exchange Offer
Registration Statement was declared effective by the SEC, New Notes in exchange
for all Old Notes tendered prior thereto in the Exchange Offer and (iv) if
obligated to file the Shelf Registration Statement, the Company will use its
reasonable best efforts to file the Shelf Registration Statement with the SEC on
or prior to 30 days after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the SEC on or prior to 90 days after
such obligation arises. If (a) the Company fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the SEC on or prior to the date specified for such
effectiveness (the "Effectiveness Deadline"), (c) the Company fails to
consummate the Exchange Offer within 30 business days of the Effectiveness
Deadline with respect to the Exchange Offer Registration Statement or (d) the
Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Transfer Restricted Securities affected
thereby, with respect to the first 90-day period immediately following the
occurrence of the first Registration Default, in an amount equal to $.05 per
week per $1,000 principal amount of Transfer Restricted Securities held by such
Holder for each week that the Registration Default continues. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.25 per week per $1,000 principal
amount of Transfer Restricted Securities. All accrued Liquidated Damages will be
paid by the Company to the Global Note Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated Notes
by wire transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified. The Company shall
not be required to pay Liquidated Damages for more than one Registration Default
at any given time. Following the cure of all Registration Defaults, the accrual
of Liquidated Damages will cease.
Holders of Old Notes are required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and are required to
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deliver information to be used in connection with the Shelf Registration
Statement within the time periods set forth in the Registration Rights Agreement
in order to have their Old Notes included in the Shelf Registration Statement
and benefit from the provisions regarding Liquidated Damages set forth above.
BOOK-ENTRY; DELIVERY AND FORM
The New Notes initially will be in the form of one or more registered,
global notes without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited on the date on which the Exchange Offer is
consummated with the Trustee, as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Notes for Certificated Notes."
Initially, the Trustee will act as Paying Agent and Registrar. The Notes may
be presented for registration of transfer and exchange at the offices of the
Registrar.
DEPOSITARY PROCEDURES
The following description of the operations and procedures of DTC, Euroclear
and Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them from time to time. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Notes and (ii) ownership of such interests in the Global
Notes will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interest in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and Cedel) which are Participants in such
system. All interests in a Global Note, including those held through Euroclear
or Cedel, may be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Cedel may also be subject to the procedures
and requirements of such systems. The laws of some states require that certain
persons take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interests in a Global Note to
such persons will be limited to
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that extent. Because DTC can act only on behalf of Participants, which in turn
act on behalf of Indirect Participants and certain banks, the ability of a
person having beneficial interests in a Global Note to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and premium, if any, Liquidated
Damages, if any, and interest on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee will treat the persons in whose names the Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company, the Trustee nor any agent of the Company or the Trustee has or will
have any responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interest in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Notes or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Company that its current practice, upon receipt of any payment in
respect of securities such as the Notes (including principal and interest), is
to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in the
principal amount of beneficial interest in the relevant security as shown on the
records of DTC unless DTC has reason to believe it will not receive payment on
such payment date. Payments by the Participants and the Indirect Participants to
the beneficial owners of Notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Trustee or
the Company. Neither the Company nor the Trustee will be liable for any delay by
DTC or any of its Participants in identifying the beneficial owners of the
Notes, and the Company and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. See "--Same Day Settlement and
Payment."
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same day funds, and transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the Notes
described herein, cross-market transfers between the Participants in DTC, on the
one hand, and Euroclear or Cedel participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Cedel, as the case may be, by the counterparty in such system in accordance with
the rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by delivering
or receiving interests in the relevant Global Note in DTC, and making or
receiving payment in
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accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and Cedel participants may not deliver instructions
directly to the depositories for Euroclear or Cedel.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the right
to exchange the Global Notes for Notes in certificated form, and to distribute
such Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the Global Notes among Participants in DTC,
Euroclear and Cedel, they are under no obligation to perform or to continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trustee nor any of their respective agents will have
any responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive New Notes in certificated form
("Certificated Notes") if (i) DTC (x) notifies the Company that it is unwilling
or unable to continue as depositary for the Global Notes and the Company
thereupon fails to appoint a successor depositary within 120 days thereafter or
(y) has ceased to be a clearing agency registered under the Exchange Act, (ii)
the Company, at its option, notifies the Trustee in writing that it elects to
cause the issuance of the Certificated Notes or (iii) upon the request of the
Trustee or holders of a majority of the aggregate principal amount of
outstanding Notes if there shall have occurred and be continuing a Default or
Event of Default with respect to the Notes. In addition, beneficial interests in
a Global Note may be exchanged for Certificated Notes upon request but only in
accordance with the procedures specified in the Indenture. In all cases,
Certificated Notes delivered in exchange for any Global Note or beneficial
interests therein will be registered with the Company in the names, and issued
in any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the New Notes represented
by the Global Notes (including principal, premium, if any, interest and
Liquidated Damages, if any) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. With respect to
Certificated Notes, the Company will make all payments of principal, premium, if
any, interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such Holder's registered
address. The Notes represented by the Global Notes are expected to be eligible
to trade in the PORTAL market and to trade in the Depositary's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by the Depositary to be settled in
immediately available funds. The Company expects that secondary trading in any
Certificated Notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. DTC has advised the Company that cash received in
Euroclear or Cedel as a result of sales of interests in a Global Note by or
through a Euroclear or Cedel participant to a Participant in DTC will be
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received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following DTC's settlement date.
DESCRIPTION OF OTHER INDEBTEDNESS
NEW CREDIT AGREEMENT
On May 22, 1998, as part of the consummation of the Acquisition
Transactions, the Company entered into the New Credit Agreement among the
Company, Holdings, the several lenders from time to time parties thereto
(collectively, the "Lenders"), Bankers Trust Company, as syndication agent and
as administrative agent (the "Administrative Agent"), DLJ Capital Funding, Inc.,
as documentation agent, and Bank of America NT&SA ("Bank of America NT&SA"), as
co-agent. The following is a summary description of the principal terms of the
New Credit Agreement and the other loan documents related thereto. The
description set forth below does not purport to be complete and is qualified in
its entirety by reference to certain agreements setting forth the principal
terms and conditions of the New Credit Agreement, a copy of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
Company's obligations under the New Credit Agreement constitute Senior
Indebtedness and Designated Senior Indebtedness with respect to the Notes.
The Company borrowed $111.0 million of Term Loan Facilities on the Closing
Date to partially finance the Acquisition Transactions and to pay certain fees
and expenses related thereto. The New Credit Agreement also provides to a
Revolving Credit Facility that may be utilized to fund the Company's working
capital requirements, including issuance of stand-by and trade letters of
credit, and for other general corporate purposes.
The Term A Loan Facility is a single tranche term facility of approximately
$50.0 million that has a maturity of May 31, 2004, and is expected to amortize
over a six-year period, with annual principal payments ranging from $0.5 million
to $12.5 million. The Term B Loan Facility is a single tranche term facility of
approximately $31.0 million that has a maturity of May 31, 2006. The Term C Loan
Facility is a single tranche term facility of approximately $30.0 million that
has a maturity of May 31, 2006. The Term B and C Loan Facilities are each
expected to amortize at a rate of approximately $0.3 million per year, with the
remainder due in the final year of each such facility. Loans and letters of
credit under the Revolving Credit Facility will be available at any time during
its five-year term (which expires on May 31, 2003) subject to the fulfillment of
customary conditions precedent, including the absence of a default under the New
Credit Agreement. The full amount under each of the Term Loan Facilities is
currently outstanding.
SECURITY; GUARANTY. The Company's obligations under the New Credit
Agreement are guaranteed by Holdings. The New Credit Agreement is secured by a
perfected first priority security interest in substantially all of the assets of
the Company including: (i) all real property owned by the Company; (ii) all
accounts receivable, inventory and intangibles; and (iii) 65% of the capital
stock of the Foreign Subsidiaries. The guaranty by Holdings is secured by a
pledge of all of the capital stock of the Company.
INTEREST, MATURITY. Borrowings under the New Credit Agreement bear interest
at a rate per annum equal (at the Company's option) to: (i) the Administrative
Agent's reserve-adjusted LIBO rate ("LIBOR") or (ii) an alternate base rate
equal to the highest of the Administrative Agent's prime rate, plus an
applicable margin. Initially, the applicable margin for the Term A Loan Facility
and the Revolving Credit Facility is 2.25% per annum for LIBOR loans and 1.25%
per annum for alternate base rate loans; the applicable margin for the Term B
Loan Facility is 2.75% per annum for LIBOR loans and 1.75% per annum for
alternate base rate loans; and the applicable margin for the Term C Loan
Facility is 3.00% per annum for LIBOR loans and 2.00% per annum for alternate
base rate loans. After the first six months following the closing date, such
margins will be subject to reduction based on the Company's leverage ratio.
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FEES. The Company is required to pay the Lenders, on a quarterly basis, a
commitment fee on the undrawn portion of the Revolving Credit Facility at a rate
equal to 0.50% per annum. The Company is also obligated to pay (i) a per annum
letter of credit fee on the aggregate amount of outstanding letters of credit;
(ii) a fronting bank fee for the letter of credit issuing bank; and (iii)
customary agent, arrangement and other similar fees.
COVENANTS. The New Credit Agreement contains a number of covenants that,
among other things, restrict the ability of Holdings, the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, prepay other
indebtedness or amend certain debt instruments (including the Indenture), pay
dividends, create liens on assets, enter into sale and leaseback transactions,
make investments, loans or advances, make acquisitions, engage in mergers or
consolidations, make capital expenditures, change the business conducted by the
Company or its subsidiaries or engage in certain transactions with affiliates
and otherwise restrict certain corporate activities. In addition, under the New
Credit Agreement, the Company is required to maintain specified financial ratios
and satisfy specified financial tests, including leverage ratios and interest
coverage tests. The New Credit Agreement permits the Company to make dividends
to Holdings for the purposes of paying interest owed on the Holdings' Debentures
(after the fifth anniversary of the Issue Date) so long as (i) no default or
event of default under the New Credit Agreement has occurred and is continuing
and (ii) before and after giving effect to such payment, the Consolidated Fixed
Charge Coverage Ratio (as defined in the New Credit Agreement) shall be equal to
or greater than 1.0:1.0. See "Risk Factors--Restrictive Debt Covenants."
EVENTS OF DEFAULT. The New Credit Agreement contains events of default
customary for facilities of this nature, including nonpayment of principal,
interest or fees, material inaccuracy of representations and warranties,
violation of covenants, cross-default to certain other indebtedness, certain
events of bankruptcy and insolvency, material judgments against the Company and
its Subsidiaries, invalidity of any guarantee or security interest and a change
of control of the Company in certain circumstances as set forth therein.
COPETRO CREDIT AGREEMENT
The Copetro Credit Agreement, dated as of February 4, 1997, among Copetro,
the financial institutions parties thereto and BNL, as agent, provided for
borrowings by Copetro prior to June 30, 1998 of up to $20.0 million, $16.0
million of such funds to be used by Copetro in order to finance the expansion of
plant facilities and $4.0 million to be used for working capital. Approximately
$15.9 million is currently outstanding under the Copetro Credit Agreement and
the remaining $4.1 million available prior to June 30, 1998 will not be
borrowed. The Copetro Credit Agreement, which is nonrecourse to the Company,
remains in effect after the consummation of the Acquisition Transactions. The
following is a summary description of the principal terms of the Copetro Credit
Agreement and other loan documents related thereto. The description set forth
below does not purport to be complete and is qualified in its entirety by
reference to certain agreements setting forth the principal terms and conditions
of the Copetro Credit Agreement, which are available upon request from the
Company. Copetro's obligations under the Copetro Credit Agreement will
constitute Senior Indebtedness of Copetro. Borrowings under the Copetro Credit
Agreement will be repaid in seven consecutive semiannual installments beginning
on June 30, 1999. The Copetro Credit Agreement imposes a prepayment penalty
equal to 1.0% per annum of the amount prepaid, calculated from the date of the
prepayment until the maturity date of the loan.
SECURITY. Copetro's obligations under the Copetro Credit Agreement are
secured by a first priority pledge in favor of BNL of Copetro's fixed assets.
Until September 30, 1998, Copetro must maintain a ratio of the assessed value of
pledged assets to the unpaid loan amount of at least 82%.Thereafter, such ratio
must be maintained at 120%. The Copetro Credit Agreement provides for the
release of pledged assets or the pledging of new property or other guarantees,
as the case may be, in order to maintain such ratio.
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INTEREST, MATURITY. Borrowings under the Copetro Credit Agreement bear
interest at a rate per annum equal to LIBOR plus 4.0%, payable semiannually. The
final maturity date of the Copetro Credit Agreement is June 30, 2002.
COVENANTS. Under the Copetro Credit Agreement, (i) any change in control of
the ownership of Copetro requires prior written approval of BNL; (ii) any
payment of cash dividends from Copetro is prohibited if Copetro is in default as
a result of non-compliance with specified financial ratios as set forth below,
or if such declaration or payment could result in future noncompliance with the
financial ratios; and (iii) the Company will not collect any fee or other
royalty payments from Copetro in connection with technical and commercial
assistance, if a payment default thereunder has occurred and is continuing.
Copetro is required to maintain the following financial ratios: (i) the
ratio of current assets over current liabilities must be greater than 1.5 to 1;
(ii) the ratio of long-term liabilities over net worth cannot exceed 1 to 1; and
(iii) the ratio of total liabilities to net worth cannot exceed 1.2 to 1. The
Copetro Credit Agreement contains covenants which, among other things, limit
Copetro's ability to dispose of assets, engage in mergers or consolidations and
create liens on assets.
EVENTS OF DEFAULT. The Copetro Credit Agreement contains customary events
of default, including, without limitation, nonpayment of principal, interest or
fees, material inaccuracy of representations and warranties, violation of
covenants, cross-acceleration to other obligations of Copetro, certain events of
bankruptcy and insolvency, material judgments against Copetro and a change of
control of Copetro in certain circumstances as set forth therein. Following an
event of default, interest (and interest on interest) accrues at a penalty rate
50% in excess of the rate otherwise applicable.
HOLDINGS DEBENTURES
The Old Holdings Debentures were and the New Holdings Debentures will be
issued at a discount to their aggregate principal amount at maturity. The
issuance of the Old Holdings Debentures generated gross proceeds to Holdings of
approximately $30.1 million (before deducting discounts and commissions). The
Company is currently conducting the Debenture Exchange Offer to exchange New
Holdings Debentures for the Old Holdings Debentures. The yield to maturity of
the Holdings Debentures will be approximately 13 1/8% (computed on a semiannual
bond equivalent basis), calculated from May 22, 1998. The Old Holdings
Debentures were and the New Holdings Debentures will be issued under an
Indenture dated as of May 22, 1998 (the "Holdings Indenture") between Holdings
and the Trustee, and are senior unsecured obligations of Holdings. Cash interest
will not accrue or be payable on the Holdings Debentures prior to May 15, 2003.
Thereafter, cash interest on the Holdings Debentures will accrue at a rate of
13 1/8% per annum and will be payable in arrears on May 15 and November 15 of
each year, commencing November 15, 2003. The Holdings Debentures will mature on
May 15, 2009.
The Old Holdings Debentures are and the New Holdings Debentures will be
redeemable at the option of Holdings, in whole or in part, at any time on or
after May 15, 2003, in cash at the redemption prices set forth below, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of redemption if redeemed during the 12-month period commencing May 15 of the
years set forth below.
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ 106.563%
2004........................................................................ 104.375%
2005........................................................................ 102.188%
2006 and thereafter......................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to May 15, 2001,
Holdings may use the net proceeds of one or more Equity Offerings (as defined
therein) to redeem up to 35% of the Holdings Debentures at a redemption price
equal to 113.125% of the Accreted Value thereof plus Liquidated
99
<PAGE>
Damages (both as defined in the Holdings Indenture), if any, thereon to the
redemption date; PROVIDED that at least 65% of the original aggregate principal
amount at maturity of the New Holdings Debentures and the Old Holdings
Debentures not exchanged in the Debentures Exchange Offer remains outstanding
immediately after each such redemption.
In the event of a Change of Control (as defined in the Holdings Indenture),
each holder of Old Holdings Debentures has and each holder of New Exchange
Debentures will have the right to require the repurchase of such holder's
Holdings Debentures at a purchase price equal to 101% of the Accreted Value
thereof, plus Liquidated Damages, if any, thereon, in the case of any such
purchase prior to May 15, 2003, or 101% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon in the case
of any such purchase on or after May 15, 2003.
The Holdings Indenture contains covenants that, among other things, limit
the ability of Holdings to enter into certain mergers or consolidations or incur
certain liens and of Holdings and its subsidiaries to incur additional
indebtedness, pay dividends, redeem capital stock or make certain other
restricted payments and engage in certain transactions with affiliates. Under
certain circumstances, Holdings will be required to make an offer to purchase
the Holdings Debentures with the proceeds of certain asset sales at a price
equal to 100% of the Accreted Value thereof, plus Liquidated Damages, if any,
thereon in the case of any such purchase prior to May 15, 2003, or of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase, in the case of any purchase on or
after May 15, 2003. The Holdings Indenture contains certain events of defaults
customary for securities of this nature, which include the failure to pay
interest and principal, the failure to comply with certain covenants in the
Holdings Debentures or the Holdings Indenture, an acceleration under certain
indebtedness, the imposition of certain final judgments or warrants of
attachment and certain events occurring under bankruptcy laws.
100
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States Federal income tax
considerations associated with the exchange of Old Notes for New Notes and the
ownership and disposition of the Notes and the disposition of the New Notes.
This discussion is based upon existing United States Federal income tax law,
which is subject to change, possibly retroactively. This discussion does not
describe all relevant aspects of United States Federal income taxation that may
be important to particular Holders in light of their individual investment
circumstances or certain types of Holders subject to special tax rules (E.G.,
financial institutions, insurance companies, broker-dealers, tax-exempt
organizations or, except to the extent discussed below, Non-U.S. Holders (as
defined below)) or to persons that hold or will hold the Notes as part of a
straddle, hedging, or synthetic security transaction, all of whom may be subject
to tax rules that differ significantly from those described below. In addition,
this discussion does not describe any foreign, state or local tax
considerations. This summary addresses tax consequences only to current Holders
of the Notes and assumes that such Holders hold their Notes as "capital assets"
(generally, property held for investment) for United States Federal income tax
purposes. Current Holders of the Notes are urged to consult their tax advisors
concerning the particular tax consequences of the exchange of Old Notes for New
Notes and the ownership and disposition of the Notes, including the
applicability and effect of any United States Federal, state, local and foreign
income and other tax laws.
For purposes of this discussion, a "U.S. Holder" is a beneficial owner of a
Note who is (i) an individual citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, (iii) an
estate that is subject to United States Federal income taxation without regard
to the source of its income, or (iv) a trust whose administration is subject to
the primary supervision of a United States court and which has one or more
United States persons who have the authority to control all substantial
decisions of the trust. For purposes of this discussion, a "Non-U.S. Holder" is
any Holder who is not a U.S. Holder.
U.S. HOLDERS AND NON-U.S. HOLDERS
There will be no United States Federal income tax consequences to a U.S.
Holder or Non-U.S. Holder exchanging an Old Note for a New Note pursuant to the
Exchange Offer and such Holder will have the same adjusted basis and holding
period in the New Note as it had in the Old Note immediately before the
exchange.
U.S. HOLDERS
ORIGINAL ISSUE DISCOUNT
Because the Notes provide that the Company may elect to issue Additional
Notes in lieu of the payment of interest in cash due thereon as described above
under the heading "--Principal, Maturity, and Interest," the Notes have been
issued with original issue discount for United States Federal income tax
purposes. Consequently, subject to adjustment under the acquisition premium
rules discussed below, U.S. Holders will be required to include original issue
discount in ordinary income over the period that they hold the Notes in advance
of the receipt of cash attributable thereto. In general, in the event that the
Company determines not to exercise its election to issue Additional Notes in
lieu of the payment of interest in cash, the amount of original issued discount
includible in income during a complete taxable year should be equal to the
amount of scheduled interest payments made during such year.
The initial amount of original issue discount on the Notes is equal to the
excess of (i) the sum of the principal amount due at maturity plus all scheduled
interest payments over (ii) the issue price of the Notes. The amount of original
issue discount to be included in income will be determined using a constant
yield method, which will result in a greater portion of such discount being
included in income in the later part of the term of the Notes. Any amount of
discount included in income will increase a Holder's tax basis in the Notes and
any payments of interest in cash will decrease such Holder's tax basis in the
Notes.
101
<PAGE>
The Company will report annually to the Internal Revenue Service and to
record U.S. Holders information with respect to the amount of original issue
discount accruing during the calendar year.
EXERCISE OF ELECTION TO ISSUE ADDITIONAL NOTE. In the event that the Company
elects to issue Additional Notes, the issuance of the Additional Notes will not
be treated, for United States Federal income tax purposes, as a payment of
interest and the Notes will be deemed to be "reissued" on the PIK Notice Date
solely for purposes of computing the amount of original issue discount
includible in income during the then remaining term of the Notes. Under these
rules, the Notes will be deemed to be reissued at their then adjusted issue
price (I.E., their original issue price plus accrued original issue discount
less previous payments of interest in cash). The amount of original issue
discount includible in ordinary income over the remaining term of the Notes,
determined on the basis of a constant yield method described above, will be
equal to the excess of (i) the sum of the principal amount due at maturity, the
Additional Notes issued in lieu of cash payments, plus all remaining cash
payments of stated interest over (ii) the adjusted issue price of the Notes.
REDEMPTION, SALE OR EXCHANGE OF NOTES
A U.S. Holder will recognize capital gain or loss upon the sale, redemption
or other disposition of a Note in an amount equal to the difference between the
amount realized from such disposition and his adjusted tax basis in the Note.
Net capital gain (I.E., generally, capital gain in excess of capital loss)
recognized by an individual upon the disposition of a Note that has been held
for (i) more than 18 months will generally be subject to tax at a rate not to
exceed 20%, (ii) more than 12 months but not more than 18 months will be subject
to tax at a rate not to exceed 28%, and (iii) 12 months or less will be subject
to tax at ordinary income tax rates. Pursuant to the Internal Revenue Service
Restructuring and Reform Act of 1998 passed by Congress, but awaiting the
President's signature, the minimum holding period to qualify for the 20% rate of
tax imposed upon net capital gain would, if the act were enacted into law, be
reduced from 18 months to 12 months. In addition, any net capital gain
recognized by a corporation upon the disposition of a Note will be subject to
tax at ordinary income tax rates.
MARKET DISCOUNT AND ACQUISITION PREMIUM
U.S. Holders, other than original purchasers of the Old Notes in the
original offering, should be aware that the sale of the New Notes may be
affected by the market discount and acquisition premium provisions of the Code.
MARKET DISCOUNT RULES. The market discount rules generally provide that if
a U.S. Holder of a Note purchased the Note, subsequent to the original offering,
at a "market discount" (i.e., at an amount less than the adjusted issue price of
the Note as determined on the date of such purchase) in excess of a
statutorily-defined DE MINIMIS amount, and thereafter recognizes gain upon a
disposition (including a partial redemption) of the New Note received in
exchange for an Old Note, the lesser of such gain or the portion of the market
discount that accrued while the Old Note and New Note were held by such U.S.
Holder will be treated as ordinary interest income at the time of disposition.
The rules also provide that a U.S. Holder who acquires a Note at a market
discount may be required to defer a portion of any interest expense that may
otherwise be deductible on any indebtedness incurred or maintained to purchase
or carry such Note until the U.S. Holder disposes of such Note in a taxable
transaction. If a holder of such a Note elects to include market discount in
income currently, both of the foregoing rules would not apply.
ACQUISITION PREMIUM RULES. The acquisition premium rules generally provide
that if a U.S. Holder of a Note purchased the Note, subsequent to the original
offering, at an acquisition premium (i.e., at an amount greater than the
adjusted issue price of the Note as determined on the date of such purchase),
the amount of original issue discount that the U.S. Holder includes in gross
income is reduced to reflect such acquisition premium. Acquisition premium is
allocated on a pro rata basis to each accrual of original issue discount
reducing original issue discount by a constant fraction, the numerator of which
is the excess of the
102
<PAGE>
adjusted basis of the Note over its adjusted issue price and the denominator of
which is the excess of the sum of all amounts payable on the Note after the
purchase date over its adjusted issue price.
APPLICATION OF AHYDO RULES
The Notes will constitute "applicable high yield discount obligations"
("AHYDOs"), for United States Federal income tax purposes, if the yield to
maturity of such Notes exceeds the sum of the "applicable Federal rate" in
effect at the time of their issuance (the "AFR") plus five percentage points. If
the Notes are AHYDOs, the Company will not be entitled to claim a deduction for
original issue discount that accrues with respect to such Notes for United
States Federal income tax purposes, until amounts attributable to such original
issue discount are paid in cash. In addition, to the extent that the yield to
maturity of the Notes exceeds the sum of the AFR plus six percentage points (the
"Excess Yield"), any deduction claimed by the Company that is attributable to
such Excess Yield will be disallowed. Subject to otherwise applicable
limitations, U.S. Holders that are corporations will be entitled to a dividends
received deduction (generally at a 70% rate) with respect to any disqualified
portion of the accrued original issue discount to the extent that the Company
has sufficient current or accumulated earnings and profits. If the disqualified
portion exceeds the Company's current and accumulated earnings and profits, the
excess will continue to be subject to tax as ordinary original issue discount
income in accordance with the original issue discount rules described above.
NON-U.S. HOLDERS
Under present United States Federal income and estate tax law, assuming
certain certification requirements are satisfied (which include identification
of the beneficial owner of the instrument), and subject to the discussion of
backup withholding below:
(a) payments of interest on the Notes to any Non-U.S. Holder generally will
not be subject to United States Federal income or withholding tax,
provided that (1) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (2) the Non-U.S.
Holder is not a controlled foreign corporation that is related to the
Company through stock ownership, and (3) such interest payments are not
effectively connected with the conduct of a United States trade or
business of the Non.U.S. Holder;
(b) a Non-U.S. Holder generally will not be subject to the United States
Federal income tax on gain realized on the sale, exchange or other
disposition of the Note, unless (1) such Non-U.S. Holder is an
individual who is present in the United States for 183 days or more
during the taxable year and certain other requirements are met or (2)
the gain is effectively connected with the conduct of a United States
trade or business of the Non-U.S. Holder; and
(c) if interest on the Notes is exempt from withholding of United States
Federal income tax under the rules described above, the Notes will not
be included in the estate of a deceased Non-U.S. Holder for United
States Federal estate tax purposes.
The certification referred to above may be made on an Internal Revenue
Service Form W-8 or substantially similar substitute form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments of
principal and interest on a Note, and the proceeds of the sale of a Note before
maturity within the United States (and, under certain circumstances, outside of
the United States) to, and to the accrual of original issue discount with
respect to, non-corporate Holders. A Holder of a Note may be subject to backup
withholding at the rate of 31% with respect to interest paid on the Note and
proceeds from the sale, exchange, redemption or retirement
103
<PAGE>
of the Note, unless such Holder (a) is a corporation or comes within certain
other exempt categories, and, when required, demonstrates such fact, (b)
provides a correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules or (c) in the case of a Non-U.S.
Holder, such holder certifies as to its status as a Non-U.S. Holder on an
Internal Revenue Service Form W-8 or substantially similar substitute form. A
U.S. Holder who does not provide the Company with the Holder's correct taxpayer
identification number may be subject to penalties imposed by the Internal
Revenue Service.
Amounts withheld under the backup withholding rules may be credited against
a Holder's tax liability, and a Holder may obtain a refund or any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the Internal Revenue Service.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver this Prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Until , 1998, all dealers effecting transactions
in the New Notes may be required to deliver this Prospectus. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchaser of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any commission
or concessions received by any such person may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering this Prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Company has agreed to pay all expenses in connection with
the Exchange Offer and to reimburse the Initial Purchasers for the reasonable
fees and expenses of counsel for the Holders of the Notes. Each Holder will pay
all expenses of its counsel other than as described in the preceding sentence,
transfer taxes, if any, and any commissions or concessions of any brokers or
dealers. The Company has agreed in the Registration Rights Agreement to
indemnify the Holders of the Notes (including any broker-dealer) against certain
liabilities, including liabilities under the Securities Act.
In addition, to comply with the securities laws of certain jurisdictions,
the New Notes may not be offered or sold unless they have been registered or
qualified for offer and sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement, subject to certain
limitations specified therein, to register
104
<PAGE>
or qualify the New Notes for offer or sale under all applicable state securities
or Blue Sky laws by the time the Registration Statement (of which this
Prospectus forms a part) is declared effective by the SEC.
LEGAL MATTERS
Certain legal matters with respect to the New Notes offered hereby will be
passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP, Los
Angeles, California.
EXPERTS
The consolidated financial statements of Great Lakes Carbon Corporation at
December 31, 1996 and 1997, and for each of the three years in the period ended
December 31, 1997, appearing in this Prospectus have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
105
<PAGE>
INDEX TO FINANCIAL STATEMENTS
GREAT LAKES CARBON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors....................................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997......................... F-3
Consolidated Statements of Operations for the years ended December 31, 1995, 1996,
1997............................................................................... F-4
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1995, 1996 and 1997................................................................ F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and
1997............................................................................... F-6
Notes to Consolidated Financial Statements........................................... F-7
Condensed Consolidated Balance Sheet as of March 31, 1998 (unaudited)................ F-16
Condensed Consolidated Statements of Operations for the Three Months Ended March 31,
1997 and 1998 (unaudited).......................................................... F-17
Condensed Consolidated Statement of Stockholders' Equity for the Three Months Ended
March 31, 1998 (unaudited)......................................................... F-18
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31,
1998 (unaudited)................................................................... F-19
Notes to Condensed Consolidated Financial Statements (unaudited)..................... F-20
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Great Lakes Carbon Corporation
We have audited the accompanying consolidated balance sheets of Great Lakes
Carbon Corporation and subsidiaries as of December 31, 1996 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Great Lakes
Carbon Corporation and subsidiaries at December 31, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 13, 1998
F-2
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---------- ----------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................................... $ 24,097 $ 43,596
Accounts receivable--net of allowance for doubtful accounts of $600 in 1996 and 1997.... 28,934 29,908
Inventories............................................................................. 39,872 32,455
Other current assets.................................................................... 2,958 4,349
---------- ----------
Total current assets...................................................................... 95,861 110,308
Property, plant and equipment, net........................................................ 47,530 59,165
Other assets.............................................................................. 5,514 5,438
---------- ----------
Total assets.............................................................................. $ 148,905 $ 174,911
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................................................ $ 22,222 $ 13,601
Accrued expenses........................................................................ 11,592 14,057
Income taxes payable.................................................................... 3,840 1,796
Current portion of long-term debt....................................................... 1,389 1,419
---------- ----------
Total current liabilities................................................................. 39,043 30,873
Long-term debt, less current portion...................................................... 71,496 82,595
Other long-term liabilities............................................................... 3,857 4,190
Deferred taxes............................................................................ 2,554 4,814
Stockholders' equity:
Common Stock, par value $0.01 per share, 100,000 shares authorized and outstanding...... 1 1
Additional paid-in capital.............................................................. 5,509 5,509
---------- ----------
Retained earnings....................................................................... 26,445 46,929
---------- ----------
Total stockholders' equity................................................................ 31,955 52,439
---------- ----------
Total liabilities and stockholders' equity................................................ $ 148,905 $ 174,911
---------- ----------
---------- ----------
</TABLE>
See accompanying notes.
F-3
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales.................................................................... $ 178,628 $ 242,744 $ 231,911
Cost of goods sold........................................................... 142,188 176,371 172,390
---------- ---------- ----------
Gross profit................................................................. 36,440 66,373 59,521
Selling, general and administrative expenses................................. 9,687 15,321 18,510
---------- ---------- ----------
Operating income............................................................. 26,753 51,052 41,011
Other income (expense):
Interest expense, net........................................................ (1,127) (7,573) (6,287)
Asset utilization fee to parent.............................................. (6,286) -- --
Other, net................................................................... 2,111 (772) (49)
---------- ---------- ----------
(5,302) (8,345) (6,336)
---------- ---------- ----------
Income before income taxes................................................... 21,451 42,707 34,675
Income tax expense........................................................... 7,633 15,148 12,691
---------- ---------- ----------
Net income................................................................... $ 13,818 $ 27,559 $ 21,984
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
F-4
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
PAID-IN RETAINED STOCKHOLDERS'
COMMON STOCK CAPITAL EARNINGS EQUITY
------------- ----------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at January 1, 1995....................................... $ 1 $ 53,637 $ 15,019 $ 68,657
Net income..................................................... -- -- 13,818 13,818
Distributions.................................................. -- (48,128) (28,451) (76,579)
--
----------- ---------- ------------
Balance at December 31, 1995..................................... $ 1 $ 5,509 $ 386 $ 5,896
Net income..................................................... -- -- 27,559 27,559
Dividends...................................................... -- -- (1,500) (1,500)
--
----------- ---------- ------------
Balance at December 31, 1996..................................... $ 1 $ 5,509 $ 26,445 $ 31,955
Net income..................................................... -- -- $ 21,984 $ 21,984
Dividends...................................................... -- -- (1,500) (1,500)
--
----------- ---------- ------------
Balance at December 31, 1997..................................... $ 1 $ 5,509 $ 46,929 $ 52,439
--
--
----------- ---------- ------------
----------- ---------- ------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................................... $ 13,818 $ 27,559 $ 21,984
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization........................................... 8,420 9,551 10,220
Deferred taxes.......................................................... 4,181 462 2,260
Changes in operating assets and liabilities:
Accounts receivable................................................... (8,418) (6,851) (974)
Inventories........................................................... (7,167) (13,701) 7,417
Other current assets.................................................. 621 306 (1,391)
Income taxes payable.................................................. 3,523 743 (2,044)
Accounts payable and accrued expenses................................. 4,103 8,158 (6,156)
Other, net............................................................ (1,846) 1,495 (55)
---------- ---------- ----------
Net cash provided by operating activities..................................... 17,235 27,722 31,261
INVESTING ACTIVITIES
Capital expenditures.......................................................... (5,774) (6,371) (21,391)
---------- ---------- ----------
Net cash used in investing activities......................................... (5,774) (6,371) (21,391)
FINANCING ACTIVITIES
Repayments of long-term debt................................................ (2,616) (1,406) (1,389)
Additions to long-term debt................................................. 65,000 -- 12,518
Transfers to parent......................................................... (68,503) -- --
Dividends................................................................... -- (1,500) (1,500)
---------- ---------- ----------
Net cash provided by (used in) financing activities........................... (6,119) (2,906) 9,629
Increase in cash and cash equivalents......................................... 5,342 18,445 19,499
Cash and cash equivalents at beginning of year................................ 310 5,652 24,097
---------- ---------- ----------
Cash and cash equivalents at end of year...................................... $ 5,652 $ 24,097 $ 43,596
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes.
F-6
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Great Lakes Carbon Corporation (the "Company") is a producer of calcined
coke principally for customers in the aluminum industry. The consolidated
financial statements include the accounts of the Company and its subsidiaries.
Significant intercompany accounts have been eliminated in consolidation.
On December 20, 1995, the Company, formerly a wholly-owned subsidiary of
Horsehead Industries, Inc. ("Horsehead"), sold $65,000,000 of 10% Senior Secured
Notes due 2006. Immediately upon the completion of the sale, the net proceeds
therefrom were distributed by the Company as a cash dividend to Horsehead, all
indebtedness of Horsehead owing to the Company was canceled and 100% of the
common stock of the Company was distributed by Horsehead on a pro rata basis to
the holders of the common stock of Horsehead.
Through December 20, 1995 a monthly asset utilization fee was charged by
Horsehead equal to 1% of the Company's net assets, adjusted for intercompany
balances and tax assets and liabilities. A portion of this fee ($1,400,000 in
1995) is included in selling, general and administrative expenses, as it
represents estimates of various ongoing management services provided to the
Company by Horsehead. The balance is included in other income (expense).
Management believes that the allocation method is reasonable and that, after
giving affect to such allocation, selling, general and administrative expenses
in 1995 approximate what the costs would have been for the Company if it had
operated as an unaffiliated entity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts and disclosures reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
CASH EQUIVALENTS
Investments with maturities of less than 90 days when purchased are
considered the equivalent of cash.
INVENTORIES
Inventories are stated at the lower of cost (principally average cost
method) or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost. Enhancements
are capitalized and depreciated over the period benefited. The provision for
depreciation is determined by the straight-line method over the estimated useful
lives of the related assets.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" effective January 1, 1996, which requires impairment
losses to be recorded on long-lived assets used in operations
F-7
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. The adoption did not have an effect on the financial condition of the
Company.
SIGNIFICANT CUSTOMERS
The Company had one customer which represented 15.1% of net sales in 1995,
two customers which represented 22% and 15.3% of net sales in 1996 and 23.7% and
15.5% of net sales in 1997.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
1996 1997
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Raw materials.......................................................... $ 26,377 $ 18,483
Finished goods......................................................... 8,534 7,821
Supplies and spare parts............................................... 4,961 6,151
--------- ----------
$ 39,872 $ 32,455
--------- ----------
--------- ----------
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
1996 1997
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Land and improvements.................................................. $ 2,449 $ 2,718
Buildings.............................................................. 8,835 9,193
Machinery, equipment and other......................................... 110,955 116,786
Construction in progress............................................... 2,175 16,866
--------- ----------
124,414 145,563
Accumulated depreciation............................................... (76,884) (86,398)
--------- ----------
$ 47,530 $ 59,165
--------- ----------
--------- ----------
</TABLE>
4. ACCRUED EXPENSES
Accrued expenses included interest payable of $3,370,000 and $3,467,000 at
December 31, 1996 and 1997, respectively.
F-8
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
5. LONG-TERM DEBT
Long-term debt and capital lease obligations consist of the following:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
10% Senior Secured Notes due January 1, 2006............................ $ 65,000 $ 65,000
Various pollution control and industrial revenue bonds bearing interest
at rates from 6.75% to 7.125% due in varying amounts at various dates
through 2002.......................................................... 5,919 4,834
Facility expansion credit line bearing interest at LIBOR plus 4% (9.9%
at December 31, 1997) due in varying amounts semi-annually from June
1999 through June 2002................................................ -- 11,850
Capital lease obligations, bearing interest of 9.3%..................... 1,966 1,662
Other................................................................... -- 668
--------- ---------
72,885 84,014
Current portion......................................................... (1,389) (1,419)
--------- ---------
$ 71,496 $ 82,595
--------- ---------
--------- ---------
</TABLE>
The Senior Secured Notes are secured by essentially all property, plant and
equipment not otherwise pledged and certain other assets of the Company. At the
option of the Company, the Senior Secured Notes may be redeemed, in whole or in
part, commencing January 1, 2001 at various redemption prices ranging from 105%
in 2001 to par in 2004 and beyond. The Senior Secured Notes indenture imposes
limitations on restricted payments, including dividends.
The pollution control and industrial development revenue bonds were issued
by various state and local governmental authorities. Under agreements with these
authorities, the Company has either leased (with nominal value purchase options)
or purchased on an installment basis the facilities constructed with the funds
financed. The Company has the option of redeeming the bonds in whole or in part
at par.
The facility expansion credit line provides for credit of up to $20,000,000
for use in connection with a major facility expansion at the Company's La Plata,
Argentina plant operated by its wholly-owned subsidiary, Copetro S.A.
("Copetro"). The loan is secured by the property, plant and equipment of Copetro
including, upon completion, the assets constructed with funds financed. The
agreement requires that Copetro satisfy certain financial ratios and imposes
limitations on the payment of dividends.
The Company's revolving credit agreement, which is in effect until December
1998, provides for borrowings, subject to borrowing base limitations, of up to
$15,000,000 (with a $10,000,000 sublimit for letters of credit). The agreement
is secured by substantially all domestic accounts receivable and inventory of
the Company and requires that the Company satisfy certain financial ratios. At
December 31, 1996 and 1997, there were no borrowings under this credit agreement
and outstanding letters of credit were $6,153,000 and $3,420,000, respectively.
The fair market value of the Company's long-term debt obligations
approximated $77,400,000 and $89,000,000 at December 31, 1996 and 1997,
respectively.
F-9
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
5. LONG-TERM DEBT (CONTINUED)
Maturities of long-term debt for the succeeding five years and thereafter
are as follows:
<TABLE>
<CAPTION>
LONG-TERM CAPITAL
DEBT LEASES TOTAL
----------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
1998......................................................... $ 1,085 $ 334 $ 1,419
1999......................................................... 3,568 367 3,935
2000......................................................... 4,768 403 5,171
2001......................................................... 4,906 442 5,348
2002......................................................... 2,869 116 2,985
Thereafter................................................... 65,156 -- 65,156
----------- --------- ---------
$ 82,352 $ 1,662 $ 84,014
----------- --------- ---------
----------- --------- ---------
</TABLE>
Interest paid amounted to $1,223,000, $4,989,000 and $7,773,000 for the
years ended December 31, 1995, 1996 and 1997 respectively.
The Company capitalized interest on construction in progress of $808,000 for
the year ended December 31, 1997.
6. LEASES
The Company leases various production equipment under capital leases, some
of which contain renewal options and/or options to purchase. Amortization under
capital leases is included in depreciation expense.
Future minimum payments as of December 31, 1997, by year and in the
aggregate, under capital leases and noncancelable operating leases with initial
or remaining terms of one year or more consist of the following:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
1998..................................................................... $ 615 $ 1,622
1999..................................................................... 615 892
2000..................................................................... 615 857
2001..................................................................... 615 648
2002..................................................................... 154 633
Thereafter............................................................... -- 2,085
--------- -----------
Total minimum lease payments............................................. 2,614 $ 6,737
-----------
-----------
Amounts representing interest............................................ (952)
---------
Present value of net minimum lease payments.............................. $ 1,662
---------
---------
</TABLE>
Rental expense for all operating leases was $2,691,000, $2,685,000, and
$2,770,000 for the years ended December 31, 1995, 1996 and 1997, respectively.
F-10
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
7. PENSION PLAN
The Company has various defined benefit retirement plans which cover
substantially all employees. Benefits are based upon the number of years of
service and the employee's compensation under varying formulas. The funding
policy is generally to contribute at least the minimum amount that is acceptable
under federal law. Contributions are intended to provide not only for benefits
attributed to service to date, but also for those expected to be earned in the
future. As of December 31, 1997, the assets of the plan were invested
principally in listed stocks, bonds, money market certificates and cash.
Pension expense for the plans related to the Company included the following:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost...................................................... $ 481 $ 545 $ 501
Interest cost..................................................... 411 483 571
Actual return on assets........................................... (905) (889) (1,595)
Net amortization and deferral..................................... 541 498 1,010
--------- --------- ---------
$ 528 $ 637 $ 487
--------- --------- ---------
--------- --------- ---------
</TABLE>
The following table sets forth the plans' funded status and amounts
recognized in the Company's balance sheets:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.............................................. $ (5,310) $ (6,781)
--------- ---------
--------- ---------
Accumulated benefit obligation......................................... $ (5,673) $ (7,146)
--------- ---------
--------- ---------
Projected benefit obligation........................................... $ (7,041) $ (8,538)
Plan assets, at fair value............................................... 6,763 9,003
--------- ---------
Projected benefit obligation less than (in excess of) plan assets........ (278) 465
Unrecognized net gain.................................................... (45) (542)
Prior service cost....................................................... (9) 80
--------- ---------
Pension asset (liability) recognized in the balance sheet................ $ (332) $ 3
--------- ---------
--------- ---------
</TABLE>
The expected long-term rate of return on plan assets was 9% for 1995, 1996
and 1997. The weighted average discount rate and weighted average rate of
increase in future compensation levels used were 7.25% and 4.25% for 1995, 8%
and 5% for 1996, and 7.5% and 5% for 1997.
8. POSTRETIREMENT OBLIGATIONS
The Company provides certain health care and life insurance benefits to all
full time employees who satisfy certain eligibility requirements and reach
retirement age while employed by the Company. The Company does not fund these
benefits and accrues for the related cost generally over the employees' service
period.
F-11
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
8. POSTRETIREMENT OBLIGATIONS (CONTINUED)
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost.......................................................... $ 196 $ 198 $ 204
Interest cost......................................................... 175 184 223
Amortization of transition obligation................................. 68 68 68
--------- --------- ---------
Net periodic postretirement benefit liability......................... $ 439 $ 450 $ 495
--------- --------- ---------
--------- --------- ---------
</TABLE>
Postretirement benefit obligations at December 31, 1996 and 1997 were as
follows:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Accumulated Postretirement Benefit Obligation (APBO):
Retirees............................................................... $ (544) $ (653)
Active fully-eligible.................................................. (1,106) (1,459)
Other active........................................................... (1,145) (1,265)
--------- ---------
Total APBO............................................................... (2,795) (3,377)
Unrecognized net loss.................................................... 50 267
Unrecognized transition obligation....................................... 1,088 1,020
--------- ---------
Accrued postretirement benefit liability................................. $ (1,657) $ (2,090)
--------- ---------
--------- ---------
</TABLE>
The health care cost trend used in determining the APBO was 6.31% grading
down to 5.0% in three years. That assumption may have a significant effect on
the amounts reported. To illustrate, increasing the assumed trend by 1% for all
years would increase the APBO as of December 31, 1997 by $478,000 and the
service and interest cost components of net periodic postretirement benefit cost
for the year then ended by $71,000.
Assumptions used to develop net periodic postretirement benefit cost and the
actuarial present value of accumulated benefit obligations include the weighted
average rate of increase in future compensation levels and the weighted average
discount rate of 5% and 7.25% for 1995, 5% and 8% for 1996, and 5% and 7.5% for
1997.
9. OTHER INCOME (EXPENSE)
Other income (expense) consists of the following:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Department of Energy refund........................................ $ 2,390 $ -- $ --
Other.............................................................. (279) (772) (49)
--------- --------- ---------
$ 2,111 $ (772) $ (49)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-12
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
10. INCOME TAXES
The Company was included in the consolidated federal income tax return of
Horsehead through December 20, 1995. Income taxes have been provided in the
Company's 1995 statements of operations as if the Company was a separate taxable
entity. Components of the Company's deferred tax liabilities and assets are as
follows:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Book over tax depreciable basis.......................................... $ 3,601 $ 4,460
Other--net............................................................... 605 2,315
--------- ---------
Total deferred tax liabilities............................................. 4,206 6,775
Deferred tax assets:
Accrued liabilities...................................................... 1,333 1,571
Other--net............................................................... 319 390
--------- ---------
Total deferred tax assets.................................................. 1,652 1,961
--------- ---------
Net deferred tax liability................................................. $ 2,554 $ 4,814
--------- ---------
--------- ---------
</TABLE>
The differences between tax expense computed at the statutory federal income
tax rate and actual tax expense are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax expense at statutory rates applied to pretax earnings..... $ 7,508 $ 14,947 $ 12,143
State income tax, net of federal tax effects.................. 428 1,029 1,020
Tax exempt earnings........................................... (371) (480) (938)
Effects of foreign operations................................. 45 (657) (91)
Other......................................................... 23 309 557
--------- --------- ---------
$ 7,633 $ 15,148 $ 12,691
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-13
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
10. INCOME TAXES (CONTINUED)
Income taxes consist of the following:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal..................................................... $ 1,934 $ 9,252 $ 7,229
State....................................................... 240 1,465 1,481
Foreign..................................................... 1,278 3,969 2,852
--------- --------- ---------
3,452 14,686 11,562
Deferred:
Federal..................................................... 3,763 564 1,001
State....................................................... 418 118 88
Foreign..................................................... -- (220) 40
--------- --------- ---------
4,181 462 1,129
--------- --------- ---------
Total......................................................... $ 7,633 $ 15,148 $ 12,691
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes paid were approximately $161,000, $13,723,000 and $12,485,000
in 1995, 1996 and 1997, respectively.
U.S. income taxes have not been provided on the undistributed earnings of
Copetro ($23,415,000 as of December 31, 1997) because such earnings are expected
to be reinvested. Upon distribution of those earnings, the Company would be
subject to U.S. income taxes (subject to an adjustment for foreign tax credits
and withholding taxes, if any).
Income before income taxes attributable to domestic operations (which
included results from export sales) was $16,356,000, $30,601,000 and $25,723,000
for the years ended December 31, 1995, 1996 and 1997, respectively, while income
before income taxes attributable to foreign operations was $5,095,000,
$12,106,000, $8,952,000 for the years ended December 31, 1995, 1996 and 1997,
respectively.
F-14
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
11. OPERATIONS BY GEOGRAPHIC AREA
The following is a summary of the Company's operations by geographic area:
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales:
United States.......................................... $ 146,819 $ 197,296 $ 189,730
Foreign................................................ 31,809 45,448 42,181
---------- ---------- ----------
$ 178,628 $ 242,744 $ 231,911
---------- ---------- ----------
---------- ---------- ----------
Operating income:
United States.......................................... $ 21,841 $ 38,266 $ 32,358
Foreign................................................ 4,912 12,786 8,653
---------- ---------- ----------
$ 26,753 $ 51,052 $ 41,011
---------- ---------- ----------
---------- ---------- ----------
Assets:
United States.......................................... $ 90,153 $ 114,864 $ 125,448
Foreign................................................ 23,777 34,041 49,463
---------- ---------- ----------
$ 113,930 $ 148,905 $ 174,911
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Exports of U.S. produced products were approximately $87,287,000,
$111,482,000 and $104,826,000 for the years ended December 31, 1995, 1996 and
1997, respectively. Export sales as a percentage of United States net sales
represented 25.6%, 23.0% and 22.9% to Western Europe in 1995, 1996 and 1997,
respectively, 11.1%, 18.8% and 18.9% to Africa in 1995, 1996 and 1997,
respectively. The Company's foreign operations are conducted principally in
South America.
12. LITIGATION AND CONTINGENCIES
The Company is a party to several proceedings which are in various stages of
resolution. Management of the Company, after discussion with legal counsel, is
of the opinion that the ultimate resolution of these matters will not have a
material effect upon the financial condition of the Company.
F-15
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, 1998
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash............................................................................ $ 53,865
Accounts receivable, net........................................................ 33,566
Inventories..................................................................... 30,905
Prepaid expenses and other current assets....................................... 5,127
---------
Total current assets.............................................................. 123,463
Property, plant and equipment, net................................................ 61,852
Other assets...................................................................... 5,204
---------
$ 190,519
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................ $ 16,890
Accrued expenses................................................................ 10,378
Income taxes payable............................................................ 5,286
Current portion of long-term debt............................................... 1,427
---------
Total current liabilities......................................................... 33,981
Long-term debt, less current portion.............................................. 87,010
Other long-term liabilities....................................................... 4,208
Deferred taxes.................................................................... 4,814
Stockholders' equity:
Common stock, par value; $0.01 per share, 100,000 shares authorized and
outstanding................................................................... 1
Additional paid-in capital...................................................... 5,509
Retained earnings............................................................... 54,996
---------
60,506
---------
$ 190,519
---------
---------
</TABLE>
See notes to condensed consolidated financial statements.
F-16
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
<S> <C> <C>
1997 1998
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Net sales................................................................................... $ 55,395 $ 62,070
Cost of goods sold.......................................................................... 42,236 45,683
--------- ---------
Gross profit................................................................................ 13,159 16,387
Selling, general and administrative expenses................................................ 4,385 2,684
--------- ---------
Operating income............................................................................ 8,774 13,703
Other income (expense):
Interest, net............................................................................. (1,867) (1,157)
Other, net................................................................................ (67) (72)
--------- ---------
(1,934) (1,229)
--------- ---------
Income before income taxes.................................................................. 6,840 12,474
Provision for income taxes.................................................................. 2,492 4,407
--------- ---------
Net income.................................................................................. $ 4,348 $ 8,067
--------- ---------
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
F-17
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
----------- ----------- --------- ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Balance at December 31, 1997...................................... $ 1 $ 5,509 $ 46,929 $ 52,439
Net income...................................................... -- -- 8,067 8,067
Dividends....................................................... -- -- -- --
----- ----------- --------- ------------
Balance at March 31, 1998......................................... $ 1 $ 5,509 $ 54,996 $ 60,506
----- ----------- --------- ------------
----- ----------- --------- ------------
</TABLE>
See notes to condensed consolidated financial statements.
F-18
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------
<S> <C> <C>
1997 1998
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Net cash provided by (used in) operating activities.......................................... $ (8,208) $ 10,788
Net cash used in investing activities........................................................ (3,651) (4,942)
Financing activities
Repayment of long-term debt.................................................................. (90) (97)
Additions to long-term debt.................................................................. -- 4,520
Dividends.................................................................................... (375) --
--------- ---------
Net cash provided by (used in) financing activities.......................................... (465) 4,423
Increase (decrease) in cash.................................................................. (12,324) 10,269
Cash at beginning of period.................................................................. 24,097 43,596
--------- ---------
Cash at end of period........................................................................ $ 11,773 $ 53,865
--------- ---------
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
F-19
<PAGE>
GREAT LAKES CARBON CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Article 10 of Regulation S-X and, therefore, do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles. The information furnished reflects all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair summary of the results of
operations.
2. INVENTORIES
Inventories are as follows:
<TABLE>
<CAPTION>
MARCH
31, 1998
-------------
<S> <C>
(IN
THOUSANDS)
Raw materials.................................................................. $ 20,524
Finished goods................................................................. 4,327
Supplies and spare parts....................................................... 6,054
-------------
$ 30,905
-------------
-------------
</TABLE>
3. ACCRUED EXPENSES
Accrued expenses included interest payable of $1,923,000 at March 31, 1998.
4. SUBSEQUENT EVENTS
On April 22, 1998, the Company issued a press release announcing that the
Company had entered into an agreement with an affiliate of American Industrial
Partners providing for the acquisition (by merger) of the Company by a company
organized by American Industrial Partners. The foregoing is qualified in its
entirety by reference to such press release, which was filed with the Company's
report on Form 8-K on April 23, 1998.
F-20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE NOTES OFFERED HEREBY, TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 16
Acquisition Transactions.................................................. 23
Use of Proceeds........................................................... 23
Capitalization............................................................ 24
Unaudited Pro Forma Condensed Consolidated Financial Data................. 25
Selected Historical Financial and Other Data.............................. 32
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 33
The Exchange Offer........................................................ 39
Business.................................................................. 46
Management................................................................ 57
Certain Relationships and Related Transactions............................ 59
Security Ownership........................................................ 60
Description of Company Common Stock....................................... 60
Description of Notes...................................................... 61
Description of Other Indebtedness......................................... 97
Certain United States Federal Income Tax Considerations................... 101
Plan of Distribution...................................................... 104
Legal Matters............................................................. 105
Experts................................................................... 105
Index to Financial Statements............................................. F-1
</TABLE>
$175,000,000
[LOGO]
GREAT LAKES CARBON CORPORATION
10 1/4% SERIES B
SENIOR SUBORDINATED NOTES
DUE 2008
---------------------------
PROSPECTUS
---------------------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Corporation Law") empowers a Delaware corporation to indemnify any
person who is, or is threatened to be made, a party to any threatened, pending
or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation) by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided that such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A Delaware corporation also has the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnify for such expenses
which the Court of Chancery or such other court shall deem proper. To the extent
that a present or former director or officer has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to above, or
in defense of any claim, issue or matter therein, the Company must indemnify
such person against expenses actually and reasonably incurred by such person in
connection therewith.
Article Fifth, Section 7 of the Certificate of Incorporation of the Company,
as amended, a copy of which is filed as Exhibit 3.1 to the Registration
Statement, allows the Company to maintain insurance to protect itself and any
director, officer, employee or agent of the Company or such other corporation,
partnership joint venture, trust or other enterprise. Article Fifth, Section 7
of the Company's Certificate of Incorporation, as amended, provides for
indemnification of the officers and directors of the Company, to the fullest
extent permitted by applicable law.
Pursuant to Section 102(b)(7) of the Delaware Corporation Law, Article
Fifth, Section 6, of the Certificate of Incorporation of the Company, as
amended, no director of the Company shall be personally liable to the Company or
its shareholders for monetary damages for any breach of fiduciary duty as a
director; provided, however, that such clause shall not apply to any liability
of a director (1) for any breach of the Director's duty of loyalty to the
Company or its stockholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (3)
pursuant to Section 174 of the Delaware Corporation Act, or (4) for any
transaction from which the director derived an improper personal benefit.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement dated May 18, 1998, between the Great Lakes Carbon Corporation (the "Company") and
Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex. Brown Incorporated and BancAmerica
Robertson Stephens (the "Initial Purchasers").
*3.1 Certificate of Incorporation of the Company, as amended to date.
3.2 By-Laws of the Company, as amended to date.
4.1 Indenture, dated as of May 22, 1998, among the Company, the Subsidiary Guarantors (as defined
therein) and State Street Bank and Trust Company of California, N.A. (formerly First Trust National
Association), as Trustee, relating to the 10 1/4% Series B Senior Subordinated Notes due 2008 of
the Company (the "New Notes") and the 10 1/4% Series A Senior Subordinated Notes due 2008 of the
Company (the "Old Notes").
4.2 Form of New Note (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of May 22, 1998, by and among the Company and the Initial
Purchasers.
*5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company.
10.1 Credit Agreement among Great Lakes Acquisition Corp., Great Lakes Carbon Corporation, various banks,
Bank of America NT&SA as co-agent, DLJ Capital Funding, Inc. as Documentation Agent and Bankers
Trust Company, as Syndication Agent and as Administrative Agent dated as of May 22, 1998.
10.2 Lease Agreement between the Company and Rice-Carden Corporation (as successor to Kansas City Southern
Industries, Inc.), as amended (Incorporated herein by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-1 (File No. 33-98522)).
**10.3 Calcined Coke Supply Agreement between the Company and Aluminum Company of America (Incorporated
herein by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1 (File No.
33-98522)).
**10.4 Green Anode Coke Sales Agreement between the Company and Conoco Inc.
10.5 Petroleum Coke Sales Agreement between Copetro S.A. and YPF S.A. (Incorporated herein by reference to
Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File No. 33-98522)).
**10.6 Amendment No. 1 to the Petroleum Coke Sales Agreement between Copetro S.A. and YPF S.A.
**10.7 Coke Supply Agreement between the Company and Exxon Company, U.S.A.
12.1 Statement regarding the computation of ratio of earnings to fixed charges for the Company.
21.1 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company (included in Exhibit
5.1).
24.1 Power of Attorney (included in signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 of State Street Bank and Trust Company of
California, N.A., as Trustee under the Indenture relating to the New Notes.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter of Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4 Form of Letter to Clients.
99.5 Form of Exchange Agent Agreement.
99.6 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
</TABLE>
- ------------------------
* To be filed by amendment.
** To be filed in connection with an application for confidential treatment
pursuant to Rule 406 under the Securities Act.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (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 and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement.
(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;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the Offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
II-3
<PAGE>
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of New York, New York,
on the day of 1998.
<TABLE>
<S> <C>
GREAT LAKES CARBON CORPORATION
By: /s/ JAMES D. MCKENZIE
------------------------------------------
James D. McKenzie
CHIEF EXECUTIVE OFFICER AND PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL THOSE BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James D. McKenzie, his true and lawful attorney
in fact, each with full power of substitution and revocation, for him and in his
name, place and stead, in any and all capacities (including his capacity as a
director and/or officer of Great Lakes Carbon Corporation) to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto each such attorney in fact and agent, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said attorneys
in fact and agents or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES D. MCKENZIE
- ------------------------------ President, Chief Executive July 21, 1998
James D. McKenzie Officer and Director
/s/ A. FRANK BACA Senior Vice President,
- ------------------------------ Operations and July 21, 1998
A. Frank Baca Administration
/s/ ROBERT C. DICKIE
- ------------------------------ Vice President, Sales July 21, 1998
Robert C. Dickie
/s/ JAMES W. BETTS
- ------------------------------ Vice President, Raw July 21, 1998
James W. Betts Materials
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ THEODORE C. ROGERS
- ------------------------------ Non-Executive Chairman of July 21, 1998
Theodore C. Rogers the Board, Director
/s/ RICHARD W. BINGHAM
- ------------------------------ Director July 21, 1998
Richard W. Bingham
/s/ LAWRENCE W. WARD, JR.
- ------------------------------ Director July 21, 1998
Lawrence W. Ward, Jr.
/s/ KIM A. MARVIN
- ------------------------------ Director July 21, 1998
Kim A. Marvin
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement dated May 18, 1998, between the Great Lakes Carbon Corporation (the "Company") and
Donaldson, Lufkin & Jenrette Securities Corporation, BT Alex. Brown Incorporated and BancAmerica
Robertson Stephens (the "Initial Purchasers").
*3.1 Certificate of Incorporation of the Company, as amended to date.
3.2 By-Laws of the Company, as amended to date.
4.1 Indenture, dated as of May 22, 1998, among the Company, the Subsidiary Guarantors (as defined
therein) and State Street Bank and Trust Company of California, N.A. (formerly First Trust National
Association), as Trustee, relating to the 10 1/4% Series B Senior Subordinated Notes due 2008 of
the Company (the "New Notes") and the 10 1/4% Series A Senior Subordinated Notes due 2008 of the
Company (the "Old Notes").
4.2 Form of New Note (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of May 22, 1998, by and among the Company and the Initial
Purchasers.
*5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company.
10.1 Credit Agreement among Great Lakes Acquisition Corp., Great Lakes Carbon Corporation, various banks,
Bank of America NT&SA as co-agent, DLJ Capital Funding, Inc. as Documentation Agent and Bankers
Trust Company, as Syndication Agent and as Administrative Agent dated as of May 22, 1998.
10.2 Lease Agreement between the Company and Rice-Carden Corporation (as successor to Kansas City Southern
Industries, Inc.), as amended (Incorporated herein by reference to Exhibit 10.3 to the Company's
Registration Statement on Form S-1 (File No. 33-98522)).
**10.3 Calcined Coke Supply Agreement between the Company and Aluminum Company of America.
**10.4 Green Anode Coke Sales Agreement between the Company and Conoco Inc.
10.5 Petroleum Coke Sales Agreement between Copetro S.A. and YPF S.A. (Incorporated herein by reference to
Exhibit 10.7 to the Company's Registration Statement on Form S-1 (File No. 33-98522)).
**10.6 Amendment No. 1 to the Petroleum Coke Sales Agreement between Copetro S.A. and YPF S.A.
**10.7 Coke Supply Agreement between the Company and Exxon Company, U.S.A.
12.1 Statement regarding the computation of ratio of earnings to fixed charges for the Company.
21.1 Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Company (included in Exhibit
5.1).
24.1 Power of Attorney (included in signature page).
25.1 Statement of Eligibility and Qualification on Form T-1 of State Street Bank and Trust Company of
California, N.A., as Trustee under the Indenture relating to the New Notes.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter of Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4 Form of Letter to Clients.
99.5 Form of Exchange Agent Agreement.
99.6 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
</TABLE>
- ------------------------
* To be filed by amendment.
** To be filed in connection with an application for confidential treatment
pursuant to Rule 406 under the Securities Act.
<PAGE>
$175,000,000
10 1/4% Series A Senior Subordinated Notes due 2008
of Great Lakes Carbon Corporation
PURCHASE AGREEMENT
May 18, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT ALEX. BROWN INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Great Lakes Merger Sub Corp., a Delaware corporation ("MERGER
SUB"), proposes to issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), BT Alex. Brown Incorporated and BancAmerica Robertson
Stephens (each an "INITIAL PURCHASER," and collectively the "Initial
Purchasers") an aggregate of $175,000,000 in principal amount of its 10 1/4%
Series A Senior Subordinated Notes due 2008 (the "SERIES A NOTES"), subject
to the terms and conditions set forth herein. Following the consummation of
the Merger (as defined below), the Series A Notes are to be issued pursuant
to the provisions of an indenture (the "INDENTURE"), to be dated as of the
Closing Date (as defined below), between Great Lakes Carbon Corporation, a
Delaware corporation (the "COMPANY"), and State Street Bank and Trust Company
of California, N.A., as trustee (the "TRUSTEE"). The Series A Notes and the
Series B Notes (as defined below) issuable in exchange therefor are
collectively referred to herein as the "NOTES." The Notes will be
unconditionally guaranteed (the "SUBSIDIARY GUARANTEES") as to payment of
principal, interest, premium, if any, and Liquidated Damages (as defined in
the Indenture), if any, on an unsecured senior subordinated basis, jointly
and severally, by all of the Company's Subsidiaries (as defined in the
Indenture) other than Foreign Subsidiaries, Finance Subsidiaries and
Receivables Subsidiaries (each as defined in the Indenture) (each a
"GUARANTOR," and collectively the "GUARANTORS").
Pursuant to the terms of an Agreement and Plan of Merger (the
"MERGER AGREEMENT") dated as of April 21, 1998, between the Company and Great
Lakes Acquisition Corp., a Delaware corporation ("HOLDINGS"), Merger Sub,
which is a wholly owned subsidiary of Holdings, will merge (the "MERGER")
with and into the Company. Upon consummation of the Merger, the Company will
continue as the surviving corporation and a wholly owned subsidiary of
Holdings, and by operation of law will assume all of the obligations of
Merger Sub hereunder. In connection with the Merger, American Industrial
Partners Capital Fund II, L.P. ("AIP") will contribute $65.0 million to
Holdings in exchange for common equity of Holdings (the "AIP EQUITY
CONTRIBUTION"), (ii) Holdings will contribute $92.0 million
1
<PAGE>
to the equity of the Company (the "HOLDINGS EQUITY CONTRIBUTION"), (iii) the
Company and Holdings will enter into a syndicated senior secured credit
agreement (the "NEW CREDIT AGREEMENT") providing for term loan borrowings in
an aggregate principal amount of approximately $111.0 million and a revolving
loan facility for borrowings of up to $25.0 million, and will borrow all
term loans available, (iv) the Company will issue the Series A Notes, and (v)
Holdings will issue and sell (the "DEBENTURE OFFERING") $56,600,000 million
aggregate principal amount at maturity of its 13 1/8% Senior Discount Debentures
due 2009. In connection with the Merger, the Company will purchase (the
"TENDER OFFER") all $65.0 million aggregate principal amount of its
outstanding 10% Senior Secured Notes due 2006 (the "EXISTING NOTES") and has
solicited (the "SOLICITATION") consents to certain amendments to, and waivers
under, the indenture governing the Existing Notes and certain related
collateral documents (the "PROPOSED AMENDMENTS"). As of May 8, 1998, all of
the Existing Notes had been tendered and the requisite consents had been
received pursuant to the Solicitation and a supplemental indenture giving
effect to the Proposed Amendments (the "SUPPLEMENTAL INDENTURE") was executed
and will become effective upon consummation of the Tender Offer. The Tender
Offer will be consummated concurrently with the Merger, the Debenture
Offering and the offering of the Series A Notes.
The Merger, the AIP Equity Contribution, the Holdings Equity
Contribution, the offering of the Series A Notes, the execution of and
initial borrowings under the New Credit Agreement, the Debenture Offering,
the Tender Offer, the Solicitation and execution of the Supplemental
Indenture are referred to collectively herein as the "ACQUISITION
TRANSACTIONS."
1. OFFERING MEMORANDUM. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"ACT"). Merger Sub and the Company have prepared a preliminary offering
memorandum, dated May 5, 1998 (the "PRELIMINARY OFFERING MEMORANDUM"), and a
final offering memorandum, dated May 18, 1998 (the "OFFERING MEMORANDUM"),
relating to the Series A Notes.
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF
OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE ACT)(A "QIB"), (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE ACT OR (C) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE ACT (AN "IAI"), (2) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
2
<PAGE>
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT (AND, IF REQUESTED, BASED UPON
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, Merger Sub (or
following the Merger, the Company) agrees to issue and sell to the Initial
Purchasers, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Merger Sub (or following the Merger, the Company) the
principal amounts of Series A Notes set forth opposite the name of such
Initial Purchaser on Schedule A hereto at a purchase price equal to 97.25% of
the principal amount thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING. The Initial Purchasers have advised Merger
Sub and the Company that the Initial Purchasers will make offers (the "EXEMPT
RESALES") of the Series A Notes purchased hereunder on the terms set forth in
the Offering Memorandum, as amended or supplemented, solely to (i) persons
whom the Initial Purchasers reasonably believe to be "qualified institutional
buyers" as defined in Rule 144A under the Act ("QIBS"), and (ii) to persons
permitted to purchase the Series A Notes in offshore transactions in reliance
upon Regulation S under the Act (each, a "REGULATION S PURCHASER") (such
persons specified in clauses (i) and (ii) being referred to herein as the
"ELIGIBLE PURCHASERS"). The Initial Purchasers will offer the Series A Notes
to Eligible Purchasers initially at a
3
<PAGE>
price equal to 100% of the principal amount thereof. Such price may be
changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes
will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing
Date, in substantially the form of Exhibit A hereto, for so long as such
Series A Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights
Agreement, the Company will agree to file with the Securities and Exchange
Commission (the "COMMISSION") under the circumstances set forth therein, (i)
a registration statement under the Act (the "EXCHANGE OFFER REGISTRATION
STATEMENT") relating to the Company's 10 1/4% Series B Senior Subordinated
Notes due 2008 (the "SERIES B NOTES"), to be offered in exchange for the
Series A Notes (such offer to exchange being referred to as the "EXCHANGE
OFFER") and (ii) a shelf registration statement pursuant to Rule 415 under
the Act (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange
Offer Registration Statement, the "REGISTRATION STATEMENTS") relating to the
resale by certain holders of the Series A Notes and to use its best efforts
to cause such Registration Statements to be declared and remain effective and
usable for the periods specified in the Registration Rights Agreement and to
consummate the Exchange Offer. This Agreement, the Indenture, the Notes, the
Registration Rights Agreement, the Merger Agreement and the New Credit
Agreement are hereinafter sometimes referred to collectively as the
"OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Series A Notes shall be made at the offices of Skadden, Arps, Slate, Meagher
& Flom, LLP, 919 Third Avenue, New York, New York 10022, or such other
location as may be mutually acceptable. Such delivery and payment shall be
made at 9:00 a.m. New York City time, on May 22, 1998 or at such other time
on the same date or such other date as shall be agreed upon by the Initial
Purchasers and Merger Sub in writing. The time and date of such delivery and
the payment for the Series A Notes are herein called the "CLOSING DATE."
(b) One or more of the Series A Notes in definitive global
form, registered in the name of Cede & Co., as nominee of the Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to
the aggregate principal amount of the Series A Notes (collectively, the
"GLOBAL NOTE"), shall be delivered by the Company to the Initial Purchasers
(or as the Initial Purchasers direct) in each case with any transfer taxes
thereon duly paid by the Company against payment by the Initial Purchasers of
the Purchase Price thereof by wire transfer in same day funds to the order of
the Company. The Global Note shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m., New York City time, on
the business day immediately preceding the Closing Date.
5. AGREEMENTS OF MERGER SUB AND THE COMPANY. Merger Sub (or
following the Merger, the Company) hereby agrees with the Initial Purchasers
as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, to confirm such advice in writing, (i)
of the issuance by any state securities commission of any stop order
suspending the qualification or exemption from qualification of any Series A
Notes for
4
<PAGE>
offering or sale in any jurisdiction designated by the Initial Purchasers
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory
authority for such purpose and (ii) of the happening of any event during the
period referred to in Section 5(c) below that makes any statement of a
material fact made in the Preliminary Offering Memorandum or the Offering
Memorandum untrue or that requires any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to make
the statements therein not misleading. Merger Sub (or following the Merger,
the Company) shall use its best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption of any Series A
Notes under any state securities or Blue Sky laws and, if at any time any
state securities commission or other federal or state regulatory authority
shall issue an order suspending the qualification or exemption of any Series
A Notes under any state securities or Blue Sky laws, Merger Sub (or following
the Merger, the Company) shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to Merger Sub (or following the Merger,
the Company) as many copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments or supplements thereto, as the
Initial Purchasers may reasonably request for the time period specified in
Section 5(c). Subject to the Initial Purchasers' compliance with their
representations and warranties and agreements set forth in Section 7 hereof,
Merger Sub (or following the Merger, the Company) consents to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered
in connection with Exempt Resales by the Initial Purchasers and in connection
with market-making activities of the Initial Purchasers for so long as any
Series A Notes are outstanding, (i) not to make any amendment or supplement
to the Offering Memorandum of which the Initial Purchasers shall not
previously have been advised or to which the Initial Purchasers shall
reasonably object after being so advised and (ii) to prepare promptly upon
the Initial Purchasers' reasonable request, any amendment or supplement to
the Offering Memorandum which may be necessary or advisable in connection
with such Exempt Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend
or supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion of
counsel to the Initial Purchasers, it is necessary to amend or supplement the
Offering Memorandum to comply with any applicable law, forthwith to prepare
an appropriate amendment or supplement to such Offering Memorandum so that
the statements therein, as so amended or supplemented, will not, in the light
of the circumstances when it is so delivered, be misleading, or so that such
Offering Memorandum will comply with applicable law, and to furnish to the
Initial Purchasers and such other persons as the Initial Purchasers may
designate such number of copies thereof as the Initial Purchasers may
reasonably request.
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(e) Prior to the sale of all Series A Notes pursuant to
Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchasers and counsel to the Initial Purchasers in connection with the
registration or qualification of the Series A Notes for offer and sale to the
Initial Purchasers and pursuant to Exempt Resales under the securities or
Blue Sky laws of such United States jurisdictions as the Initial Purchasers
may request and to continue such registration or qualification in effect so
long as required for Exempt Resales and to file such consents to service of
process or other documents as may be necessary in order to effect such
registration or qualification; PROVIDED, HOWEVER, that neither the Company
nor any of its subsidiaries shall be required in connection therewith to
qualify as a foreign corporation in any jurisdiction in which it is not now
so qualified or to take any action that would subject it to general consent
to service of process or taxation other than as to matters and transactions
relating to the Preliminary Offering Memorandum, the Offering Memorandum or
Exempt Resales, in any jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, (i) to mail and
make generally available as soon as practicable after the end of each fiscal
year to the record holders of the Notes a financial report of the Company and
its subsidiaries on a consolidated basis (and a similar financial report of
all unconsolidated subsidiaries, if any), all such financial reports to
include a consolidated balance sheet, a consolidated statement of operations,
a consolidated statement of cash flows and a consolidated statement of
stockholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified
by the Company's independent public accountants and (ii) to mail and make
generally available as soon as practicable after the end of each quarterly
period (except for the last quarterly period of each fiscal year) to such
holders, a consolidated balance sheet, a consolidated statement of operations
and a consolidated statement of cash flows (and similar financial reports of
all unconsolidated subsidiaries, if any) as of the end of and for such
period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) So long as the Notes are outstanding, to furnish to the
Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company to its security holders or furnished
to or filed with the Commission or any national securities exchange on which
any class of securities of the Company is listed and such other publicly
available information concerning the Company and/or its subsidiaries
published, issued, created or filed by the Company or its subsidiaries as the
Initial Purchasers may reasonably request.
(h) So long as any of the Series A Notes remain outstanding
and during any period in which the Company is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), to make available to any holder of Series A Notes in connection with
any sale thereof and any prospective purchaser of such Series A Notes from
such holder, the information ("RULE 144A INFORMATION") required by Rule
144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to
be paid all expenses incident to the performance of the obligations of Merger
Sub (or following the Merger, the Company) under this Agreement, including:
(i) the fees, disbursements and expenses of counsel to Merger Sub (or
following the Merger, the Company) and accountants of the Company in
connection with the sale and delivery of
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the Series A Notes to the Initial Purchasers and pursuant to Exempt Resales,
and all other fees and expenses in connection with the preparation, printing,
filing and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivering of
copies thereof to the Initial Purchasers and persons designated by them in
the quantities specified herein, (ii) all costs and expenses related to the
transfer and delivery of the Series A Notes to the Initial Purchasers and
pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection with
the offering, purchase, sale or delivery of the Series A Notes, (iv) all
expenses in connection with the registration or qualification of the Series A
Notes for offer and sale under the securities or Blue Sky laws of the several
states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A
Notes, (vi) all expenses and listing fees in connection with the application
for quotation of the Series A Notes in the National Association of Securities
Deales, Inc. ("NASD") Automated Quotation System-- PORTAL ("PORTAL"), (vii)
the fees and expenses of the Trustee and the Trustee's counsel in connection
with the Indenture and the Notes, (viii) the costs and charges of any
transfer agent, registrar and/or depositary (including DTC), (ix) any fees
charged by rating agencies for the rating of the Notes, (x) all costs and
expenses of the Exchange Offer and any Registration Statement, as set forth
in the Registration Rights Agreement, and (xi) and all other costs and
expenses incident to the performance of the obligations of Merger Sub (or
following the Merger, the Company) hereunder for which provision is not
otherwise made in this Section.
(j) To use its best efforts to effect the inclusion of the
Series A Notes in PORTAL and to maintain the listing of the Series A Notes on
PORTAL for so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer
of the Notes, and to comply with all of its agreements set forth in the
representation letter of the Company to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company
or any warrants, rights or options to purchase or otherwise acquire debt
securities of the Company substantially similar to the Notes (other than (i)
the Notes (ii) borrowings under the New Credit Agreement and (iii) commercial
paper issued in the ordinary course of business), without the prior written
consent of the Initial Purchasers, which shall not be unreasonably withheld.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes to the Initial
Purchasers or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes.
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(o) To cause the Exchange Offer to be made in the appropriate
form to permit Series B Notes registered pursuant to the Act to be offered in
exchange for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it
prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Series A Notes.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MERGER SUB. As
of the date hereof Merger Sub represents and warrants to, and agrees with,
the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph
(a) shall not apply to statements in or omissions from the Preliminary
Offering Memorandum or the Offering Memorandum (or any supplement or
amendment thereto) based upon information relating to the Initial Purchasers
furnished to the Company in writing by the Initial Purchasers expressly for
use therein. No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has
been issued.
(b) Each of Merger Sub, the Company and its subsidiaries has
been duly incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the corporate
power and authority to carry on its business as described in the Preliminary
Offering Memorandum and the Offering Memorandum and to own, lease and operate
its properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not (x)
have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole, (y) adversely affect the Company's ability to issue the Notes or
(z) adversely affect the validity of this Agreement or any other Operative
Document or otherwise adversely affect the Company's ability to consummate
any of the Acquisition Transactions (any of the events set forth in clauses
(x), (y) or (z), a "MATERIAL ADVERSE EFFECT").
(c) All outstanding shares of capital stock of Merger Sub
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights and are
owned by Holdings free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "LIEN"). Upon
consummation of the Merger, all outstanding shares of capital stock of the
Company will have been duly authorized and validly issued and will be fully
paid, non-assessable and not subject to any preemptive or similar rights and
will be owned by Holdings
8
<PAGE>
free and clear of any Lien, except that Holdings will guarantee the Company's
obligations under the New Credit Agreement and such guarantee will be secured
by a pledge of all of the capital stock of the Company.
(d) There are no subsidiaries, direct or indirect, of Merger
Sub. The entities listed on Schedule B hereto are the only subsidiaries,
direct or indirect, of the Company, and the Company owns a minority interest
in India Carbon, Ltd., an Indian corporation. All of the outstanding shares
of capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and are,
or upon consummation of the Merger will be, owned by the Company directly or
indirectly through one or more subsidiaries (except an approximate 0.2%
interest in Copetro, S.A., an Argentine corporation) free and clear of any
Lien, other than the pledge of such shares to secure the obligations of the
Company under the New Credit Agreement.
(e) This Agreement has been duly authorized, executed and
delivered by Merger Sub.
(f) On the Closing Date, the Indenture will have been duly
authorized and validly executed and delivered by the Company. When the
Indenture has been validly executed and delivered by the Company, and
assuming the due authorization, execution and delivery of the Indenture by
the Trustee, the Indenture will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
to the extent enforcement thereof may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (y) general principles
of equity (regardless of whether enforceability is considered in law or at
equity). On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as amended
(the "TIA" or "TRUST INDENTURE ACT"), and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
(g) On the Closing Date, the Series A Notes will have been
duly authorized and validly executed and delivered by the Company. When the
Series A Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, the Series
A Notes will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company, enforceable in accordance with their
terms except to the extent enforcement thereof may be limited by (x)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (y)
general principles of equity (regardless of whether enforceability is
considered in law or at equity). On the Closing Date, the Series A Notes
will conform in all material respects as to legal matters to the description
thereof contained in the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will have been
duly authorized by the Company. When the Series B Notes are issued, executed
and authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except to the
extent enforcement thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
9
<PAGE>
relating to creditors' rights generally and (y) general principles of equity
(regardless of whether enforceability is considered in law or at equity).
(i) On the Closing Date, the Registration Rights Agreement
will have been duly authorized, executed and delivered by the Company. When
the Registration Rights Agreement has been duly executed and delivered by the
Company, assuming the due authorization, execution and delivery of the
Registration Rights Agreement by the Initial Purchasers, the Registration
Rights Agreement will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except to the
extent enforcement thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (y) general principles of equity
(regardless of whether enforceability is considered in law or at equity), and
any rights to indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations. On the Closing
Date, the Registration Rights Agreement will conform in all material respects
as to legal matters to the description thereof in the Offering Memorandum.
(j) The Merger Agreement has been duly authorized, executed
and delivered by the Company and constitutes a valid and binding agreement of
the Company in accordance with its terms, except to the extent enforcement
thereof may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (y) general principles of equity (regardless
of whether enforceability is considered in law or at equity). Merger Sub has
delivered to the Initial Purchasers true and correct copies of the Merger
Agreement and all documents and agreements related thereto, including all
amendments, alterations, modifications or waivers thereto and all exhibits
and schedules thereto.
(k) On the Closing Date, the New Credit Agreement will have
been duly authorized and validly executed and delivered by the Company. When
the New Credit Agreement has been duly executed and delivered by the Company,
assuming the due authorization, execution and delivery of the New Credit
Agreement by the parties thereto (other than Holdings, the Company and its
subsidiaries), the New Credit Agreement will be a valid and binding agreement
of the Company enforceable against the Company in accordance with its terms
except to the extent enforcement thereof may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (y) general principles
of equity (regardless of whether enforceability is considered in law or at
equity). On the Closing Date, the New Credit Agreement will conform in all
material respects as to legal matters to the description thereof in the
Offering Memorandum.
(l) Merger Sub is not in violation of its charter, by-laws or
other organizational documents or in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material
to Merger Sub to which Merger Sub is a party or by which Merger Sub or its
property is bound. Neither the Company nor any of its subsidiaries is in
violation of its respective charter, by-laws or other organizational
documents or in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument listed on Schedule 2.10 to the Merger
Agreement that is material to the Company and its
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subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, which default would have a Material
Adverse Effect.
(m) The execution, delivery and performance of this Agreement
and the other Operative Documents by Merger Sub (or following the Merger, the
Company), compliance by Merger Sub and the Company with all provisions hereof
and thereof and the consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of the
various states or as have been obtained), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter,
by-laws or other organizational documents of Merger Sub, the Company or any
of its subsidiaries or any indenture, loan agreement, mortgage, lease or
other agreement or instrument listed on Schedule 2.10 of the Merger Agreement
that is material to the Company and its subsidiaries, taken as a whole, to
which Merger Sub, the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body
or agency having jurisdiction over Merger Sub, the Company or any of its
subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any
agreement or instrument to which Merger Sub, the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, or (v) result in the termination,
suspension or revocation of any Authorization (as defined below) of Merger
Sub, the Company or any of its subsidiaries or result in any other impairment
of the rights of the holder of any such Authorization.
(n) Except as described in the Preliminary Offering
Memorandum and the Offering Memorandum, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a
party or to which any of their respective property is subject, or, to Merger
Sub's knowledge, threatened to which the Company or any of its subsidiaries
could be a party or to which any of their respective property could be
subject, which might result, singly or in the aggregate, in a Material
Adverse Effect.
(o) Except as described in the Preliminary Offering
Memorandum and the Offering Memorandum, neither the Company nor any of its
subsidiaries has violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any
provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(p) Except as described in the Preliminary Offering
Memorandum and the Offering Memorandum, there are no costs or liabilities
associated with Environmental Laws (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any Authorization, any
related constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a Material
Adverse Effect.
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(q) Except as described in the Preliminary Offering
Memorandum and the Offering Memorandum, each of the Company and its
subsidiaries has such permits, licenses, consents, exemptions, franchises,
authorizations and other approvals (each, an "AUTHORIZATION") of, and has
made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to have any
such Authorization or to make any such filing or notice would not, singly or
in the aggregate, have a Material Adverse Effect. Each such Authorization is
valid and in full force and effect and each of the Company and its
subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including,
without limitation, the receipt of any notice from any authority or governing
body) which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or results
or, after notice or lapse of time or both, would result in any other
impairment of the rights of the holder of any such Authorization; and such
Authorizations contain no restrictions that are burdensome to the Company or
any of its subsidiaries; except where such failure to be valid and in full
force and effect or to be in compliance, the occurrence of any such event or
the presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
(r) Ernst & Young LLP, the accountants that have certified
the financial statements included in the Preliminary Offering Memorandum and
the Offering Memorandum, are independent public accountants with respect to
the Company and its subsidiaries, as required by the Act and the Exchange
Act. The historical financial statements, together with related notes, set
forth in the Preliminary Offering Memorandum and the Offering Memorandum
comply as to form in all material respects with the requirements applicable
to registration statements on Form S-1 under the Act.
(s) The historical financial statements, together with
related notes forming part of the Offering Memorandum (and any amendment or
supplement thereto), present fairly in all material respects the consolidated
financial position, results of operations and changes in financial position
of the Company and its subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which
they apply; such statements and related notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial information regarding the Company set forth in the Offering
Memorandum (and any amendment or supplement thereto) is, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(t) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum have been
prepared on a basis consistent with the historical financial statements of
the Company and its subsidiaries and give effect to assumptions used in the
preparation thereof on a reasonable basis and in good faith and on such basis
present fairly the historical and proposed transactions contemplated by the
Preliminary Offering Memorandum and the Offering Memorandum; and such pro
forma financial statements comply as to form in all material respects with
the requirements of Rule 11-02 of Regulation S-X under the Act. The other
pro forma financial information included in the Offering Memorandum is, in
all material respects, fairly presented and
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prepared on a basis consistent with the pro forma financial statements,
provided that Merger Sub makes no representation as to whether the Adjusted
Credit Data presented in the Offering Memorandum under the caption "Summary
Consolidated Financial and Other Data" complies with Rule 11-02 of Regulation
S-X under the Act.
(u) The Company is not and, after giving effect to the
offering and sale of the Series A Notes and the application of the net
proceeds thereof as described in the Offering Memorandum, will not be, an
"investment company," as such term is defined in the Investment Company Act
of 1940, as amended.
(v) Except for the Registration Rights Agreement, there are
no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Notes registered
pursuant to any Registration Statement.
(w) The issuance or sale of the Series A Notes, and the use
of proceeds therefrom as described in the Preliminary Offering Memorandum and
the Offering Memorandum will not violate Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System.
(x) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Act (i) has imposed (or to Merger Sub's knowledge, has informed the
Company that it is considering imposing) any condition (financial or
otherwise) on the Company's retaining any rating assigned to the Company or
any securities of the Company or (ii) to Merger Sub's knowledge, has
indicated to the Company that it is considering (a) the downgrading,
suspension, or withdrawal of, or any review for a possible change that does
not indicate the direction of the possible change in, any rating so assigned
or (b) any change in the outlook for any rating of the Company or any
securities of the Company.
(y) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement), (i) there has not occurred any material adverse
change or any development involving a prospective material adverse change in
the condition, financial or otherwise, or the earnings, business, management
or operations of the Company and its subsidiaries, taken as a whole, (ii)
there has not been any material adverse change or any development involving a
prospective material adverse change in the capital stock or in the long-term
debt of the Company or any of its subsidiaries and (iii) neither the Company
nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent, except in the ordinary course of business.
(z) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified
in, and meeting the requirements of, Rule 144A(d)(4) under the Act.
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(aa) When the Series A Notes are issued and delivered pursuant
to this Agreement, the Series A Notes will not be of the same class (within
the meaning of Rule 144A under the Act) as any security of the Company that
is listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(bb) No form of general solicitation or general advertising
(each as defined in Regulation D under the Act) was used by Merger Sub, or to
the knowledge of Merger Sub, the Company or any of its representatives (other
than the Initial Purchasers, as to whom Merger Sub makes no representation)
in connection with the offer and sale of the Series A Notes contemplated
hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold
by Merger Sub or the Company within the six-month period immediately prior to
the date hereof.
(cc) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
(dd) None of Merger Sub, the Company nor any of their
affiliates or any person acting on their behalf (other than the Initial
Purchasers, as to whom Merger Sub makes no representation) has engaged or
will engage in any directed selling efforts within the meaning of Regulation
S under the Act ("REGULATION S") with respect to the Series A Notes.
(ee) All Series A Notes offered and sold in reliance on
Regulation S by Merger Sub, the Company and its affiliates and all persons
acting on their behalf (other than the Initial Purchasers, as to whom Merger
Sub makes no representation) have been and will be offered and sold only in
offshore transactions.
(ff) Merger Sub, the Company and its affiliates and all
persons acting on their behalf (other than the Initial Purchasers, as to whom
Merger Sub makes no representation) have complied with and will comply with
the offering restrictions requirements of Regulation S in connection with the
offering of the Series A Notes outside the United States and, in connection
therewith, the Offering Memorandum will contain the disclosure required by
Rule 902(h).
(gg) The Company is a "reporting issuer," as defined in Rule
902 under the Act.
(hh) The sale of the Series A Notes pursuant to Regulation S
is not part of a plan or scheme to evade the registration provisions of the
Act.
(ii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming the accuracy of the
Initial Purchasers' representations and warranties and agreements set forth
in Section 7 hereof.
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(jj) Neither the Company nor any of its subsidiaries intends
to or believes that it will incur debts beyond its ability to pay as such
debts mature. Immediately before and after giving effect to the issuance of
the Notes and consummation of the Acquisition Transactions, (i) the present
fair saleable value of the assets of the Company and its subsidiaries, on a
consolidated basis, will exceed the amount that will be required to pay their
probable liability on their existing debts and other liabilities (including
contingent liabilities) as they become absolute and matured, and (ii) the
assets of each of the Company and its subsidiaries will not constitute
unreasonably small capital to carry out their businesses as now or as
anticipated to be conducted.
(kk) The Company and its subsidiaries have good and marketable
title to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and
its subsidiaries, in each case free and clear of all Liens and defects,
except such as are described in the Preliminary Offering Memorandum and the
Offering Memorandum and such as would not have a Material Adverse Effect; and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as would not have a Material Adverse Effect and except
as described in the Preliminary Offering Memorandum and the Offering
Memorandum.
(ll) The Company and each of its subsidiaries own or possess,
or can acquire on reasonable terms, all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
("INTELLECTUAL PROPERTY") currently employed by them in connection with the
business now operated by them except where the failure to own or possess or
otherwise be able to acquire such intellectual property would not, singly or
in the aggregate, have a Material Adverse Effect; and neither the Company
nor any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of such
intellectual property which, singly or in the aggregate, if the subject of
any unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
(mm) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which it is engaged; and the
Company (i) has not received notice from any insurer or agent of such insurer
that substantial capital improvements or other material expenditures will
have to be made in order to continue such insurance or (ii) has no reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers at a cost that would not have a Material Adverse Effect.
(nn) Except as described in the Offering Memorandum, no
relationship, direct or indirect, exists between or among the Company or any
of its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which would be required by the Act to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.
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(oo) There is no (i) significant unfair labor practice
complaint, grievance or arbitration proceeding pending or, to the knowledge
of Merger Sub, threatened against the Company or any of its subsidiaries
before the National Labor Relations Board or any state or local labor
relations board, (ii) strike, labor dispute, slowdown or stoppage pending or,
to the knowledge of Merger Sub, threatened against the Company or any of its
subsidiaries or (iii) union representation question existing with respect to
the employees of the Company or any of its subsidiaries who are not currently
covered by a collective bargaining agreement, except in the case of clauses
(i), (ii) and (iii) for such actions which, singly or in the aggregate, would
not have a Material Adverse Effect.
(pp) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria applicable to
such statements and to maintain asset accountability; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(qq) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been filed,
taking into account all applicable extensions, other than those filings being
contested in good faith, and all material taxes, including withholding taxes,
penalties and interest, assessments, fees and other charges due and payable
pursuant to such returns or pursuant to any assessment received by the
Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(rr) No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of any
of the Operative Documents or the issuance of the Series A Notes, or suspends
the sale of the Series A Notes in any jurisdiction referred to in Section
5(e); and no injunction, restraining order or other order or relief of any
nature by a federal or state court or other tribunal of competent
jurisdiction has been issued with respect to the Company or any of its
subsidiaries which would prevent or suspend the issuance or sale of the
Series A Notes in any jurisdiction referred to in Section 5(e).
(ss) Each certificate signed by any officer of Merger Sub, the
Company or any of its subsidiaries and delivered to the Initial Purchasers or
counsel for the Initial Purchasers in connection with the transactions
contemplated hereby shall be deemed to be a representation and warranty by
Merger Sub, the Company or such subsidiary, as applicable, to the Initial
Purchasers as to the matters covered thereby.
Merger Sub acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
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7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of
the Initial Purchasers, severally and not jointly, represents and warrants to
Merger Sub (or following the Merger, the Company) and agrees that:
(a) Such Initial Purchaser is either a QIB or an
institutional "accredited investor", as defined in Rule 501(a)(1), (2), (3),
or (7) under the Act (an "ACCREDITED INSTITUTION"), in either case, with such
knowledge and experience in financial and business matters as is necessary in
order to evaluate the merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A
Notes with a view to any distribution thereof or with any present intention
of offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or
any other applicable jurisdiction and (B) will be reoffering and reselling
the Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in
offshore transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (each within the meaning of Regulation D
under the Act) has been or will be used by the Initial Purchasers or any of
their representatives in connection with the offer and sale of the Series A
Notes pursuant hereto, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, the Initial Purchasers will solicit offers to buy the Series
A Notes only from, and will offer to sell the Series A Notes only to,
Eligible Purchasers. Each of the Initial Purchasers further agrees that it
will offer to sell the Series A Notes only to, and will solicit offers to buy
the Series A Notes only from (A) Eligible Purchasers that the Initial
Purchasers reasonably believe are QIBs and (B) Regulation S Purchasers, in
each case, that agree that (x) the Series A Notes purchased by them may be
resold, pledged or otherwise transferred within the time period referred to
under Rule 144(k) (taking into account the provisions of Rule 144(d) under
the Act, if applicable) under the Act, as in effect on the date of the
transfer of such Series A Notes, only (I) to the Company or any of its
subsidiaries, (II) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Act, (III) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the requirements
of Rule 904 of the Act, (IV) in a transaction meeting the requirements of
Rule 144 under the Act, (V) to an Accredited Institution that, prior to such
transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of
such Series A Note (the form of which is available from the Trustee) and, if
such transfer is in respect of an aggregate principal amount of Series A
Notes less than $250,000, an opinion of counsel acceptable to the Company
that such transfer is in compliance with the Act, (VI) in accordance with
another exemption from the registration requirements of the Act (and, if
requested, based upon an opinion of counsel acceptable to the Company) or
(VII) pursuant to an effective registration statement and, in each case, in
accordance with the applicable securities laws of any state of he United
States or any other applicable jurisdiction and (y) they will deliver to each
person to whom
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such Series A Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect to
the Series A Notes.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of
a plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Series A Notes in the United States or
to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Act (i) as part
of its distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering of the Series A Notes pursuant
hereto and the Closing Date, other than in accordance with Regulation S of
the Act or another exemption from the registration requirements of the Act.
Such Initial Purchaser agrees that, during such 40-day restricted period, it
will not cause any advertisement with respect to the Series A Notes
(including any "tombstone" advertisement) to be published in any newspaper or
periodical or posted in any public place and will not issue any circular
relating to the Series A Notes, except such advertisements as are permitted
by and include the statements required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes by it to any distributor, dealer or
person receiving a selling concession, fee or other remuneration during
40-day restricted period referred to in Rule 903(c)(2) under the Act, it will
send to such distributor, dealer or person receiving a selling concession,
fee or other remuneration a confirmation or notice to substantially the
following effect:
"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are exempt
from the registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Series A Notes
covered hereby in reliance on Regulation S during the period referred
to above to any distributor, dealer or person receiving a selling
concession fee or other remuneration, you must deliver a notice to
substantially the foregoing effect. Terms used above have the
meanings assigned to them in Regulation S."
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<PAGE>
(j) Such Initial Purchaser agrees that the Series A Notes
offered and sold in reliance on Regulation S will be represented upon issuance
by a global security that may not be exchanged for definitive securities until
the expiration of the 40-day restricted period referred to in Rule 903(c)(3) of
the Act and only upon certification of beneficial ownership of such Series A
Notes by non-U.S. persons or U.S. persons who purchased such Series A Notes in
transactions that were exempt from the registration requirements of the Act.
Each of the Initial Purchasers acknowledge that Merger Sub (or
following the Merger, the Company) and, for purposes of the opinions to be
delivered to each Initial Purchaser pursuant to Section 9 hereof, counsel to the
Company and counsel to the Initial Purchasers will rely upon the accuracy and
truth of the foregoing representations and such Initial Purchasers hereby
consent to such reliance.
8. INDEMNIFICATION.
(a) Merger Sub (or following the Merger, the Company) agrees to
indemnify and hold harmless each of the Initial Purchasers, their directors,
their officers and each person, if any, who controls such Initial Purchasers
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by Merger Sub or the Company to any holder or prospective
purchaser of Series A Notes pursuant to Section 5(h) or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information that such Initial Purchaser provides in writing to Merger
Sub or the Company relating to such Initial Purchaser; provided, however, that
the foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial Purchaser who failed to
deliver a Final Offering Memorandum (as then amended or supplemented, provided
by Merger Sub or the Company to the several Initial Purchasers in the requisite
quantity and on a timely basis to permit proper delivery on or prior to the
Closing Date) to the person asserting any losses, claims, damages and
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Memrandum, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured in the Final Offering Memorandum.
(b) Each of the Initial Purchasers, severally and not jointly,
agrees to indemnify and hold harmless Merger Sub (or following the Merger, the
Company) and its directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
Merger Sub (or following the Merger, the Company) to the same extent as the
foregoing indemnity from Merger Sub (or following the Merger, the Company) to
the Initial Purchasers
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but only with reference to the information that such Initial Purchaser
provides to Merger Sub or the Company in writing expressly relating to such
Initial Purchaser for use in the Preliminary Offering Memorandum or the
Offering Memorandum, and not with respect to the information provided by any
other Initial Purchasers.
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a)
or 8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly
notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel, as incurred (except that in the case of any action
in respect of which indemnity may be sought pursuant to both Sections 8(a)
and 8(b), the Initial Purchasers shall not be required to assume the defense
of such action pursuant to this Section 8(c), but may employ separate counsel
and participate in the defense thereof, but the fees and expenses of such
counsel, except as provided below, shall be at the expense of the Initial
Purchasers). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties
to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
the indemnified party). In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expeses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson,
Lufkin & Jenrette Securities Corporation, in the case of the parties
indemnified pursuant to Section 8(a), and by Merger Sub (or following the
Merger, the Company), in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written
consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
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(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages, liabilities or judgments referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Merger Sub and Company, on the one hand, and the Initial Purchasers,
severally and not jointly, on the other hand from the offering of the Series
A Notes or (ii) if the allocation provided by clause 8(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) above but also
the relative fault of Merger Sub and the Company, on the one hand, and the
Initial Purchasers, severally and not jointly, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by Merger Sub and
the Company, on the one hand, and the Initial Purchasers, on the other hand,
shall be deemed to be in the same proportion as the total net proceeds from
the offering of the Series A Notes (after underwriting discounts and
commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by each Initial Purchaser bear to
the total price to investors of the Series A Notes, in each case as set forth
in the table on the cover page of the Offering Memorandum. The relative
fault of Merger Sub and the Company, on the one hand, and the Initial
Purchasers, severally and not jointly, on the other hand, shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Merger Sub or the Company,
on the one hand, or such Initial Purchaser, but only with reference to the
information that such Initial Purchaser furnished, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Merger Sub (or following the Merger, the Company) and the
Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchasers exceeds the amount of any damages which
the Initial Purchasers have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute pursuant to this Section 8(d) are several in
proportion to the respective principle amount of Series A Notes purchased by
each of the Initial Purchasers hereunder and not joint.
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(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of Merger Sub (or
following the Merger, the Company) contained in this Agreement shall be true and
correct on the Closing Date with the same force and effect as if made on and as
of the Closing Date (provided that any representations and warranties relating
specifically to Merger Sub shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date immediately
prior to the effectiveness of the Merger).
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of the Company or any securities of the Company (including, without
limitation, the placing of any of the foregoing ratings on credit watch with
negative or developing implications or under review with an uncertain direction)
by any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have
occurred any change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Company or any securities
of the Company by any such rating organization and (iii) no such rating
organization shall have given notice that it has assigned (or is considering
assigning) a lower rating to the Notes than that on which the Notes were
marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement), (i) there shall not have occurred any change or
any development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, (ii) there shall not have been any
change or any development involving a prospective change in the capital stock
or in the long-term debt of the Company or any of its subsidiaries and (iii)
neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any
such case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your
judgment, is material and adverse and, in your judgment, makes it
impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by the President or a Vice President of the
Company, confirming the matters set forth in Sections 6(y), 9(a) and 9(b) and
stating that Merger Sub and the Company have complied with all the agreements
and satisfied all of the conditions herein contained and required to be
complied with or satisfied on or prior to the Closing Date.
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(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Skadden, Arps, Slate, Meagher & Flom, LLP, counsel for the
Company, to the effect that:
(i) each of Merger Sub and the Company is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and corporate authority to carry
on its business and to own, lease and operate its properties, in both cases
as described in the Offering Memorandum;
(ii) the Company is duly qualified to do business and is in
good standing as a foreign corporation authorized to do business in
Alabama, Indiana, New York, Ohio, Oklahoma, Tennessee and Texas;
(iii) all the outstanding shares of capital stock of
Merger Sub have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights;
(iv) the issuance and sale of the Series A Notes have been
duly authorized by requisite corporate action on the part of the Company,
and when executed and authenticated in accordance with the terms of the
Indenture and delivered to and paid for the Initial Purchasers in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms, except (a) to the extent enforcement thereof may be
limited by (x) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (y) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and (b)
the waiver contained in Section 4.06 of the Indenture may be deemed
unenforceable;
(v) the Indenture has been duly authorized, executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by the Trustee, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (a) to
the extent enforcement thereof may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (y) general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or in equity) and (b) the waiver contained in Section
4.06 of the Indenture may be deemed unenforceable;
(vi) this Agreement has been duly authorized, executed and
delivered by Merger Sub, and following the Merger, the Company;
(vii) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Initial Purchasers, is a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms except (a) to the extent enforcement thereof may
be limited by (x) bankruptcy, insolvency, reorganization, moratorium or
other similar laws
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<PAGE>
now or hereafter in effect relating to creditors' rights generally and
(y) general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity); (b) any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations; and (c) such counsel
need express no opinion with respect to Section 5 of the Registration
Rights Agreement;
(viii) the Series B Notes have been duly authorized by
requisite corporate action on the part of the Company;
(ix) the statements under the captions "Summary--Acquisition
Transactions," "Acquisition Transactions," "Description of Company Common
Stock," "Description of Notes," "Description of Other Indebtedness" and
"Plan of Distribution" in the Offering Memorandum, insofar as they purport
to constitute a summary of the provisions of the documents described
therein, fairly summarize the provisions of such documents purported to be
described. The statements under the caption "Certain United States Federal
Income Tax Considerations" fairly summarize the matters addressed therein
in all material respects;
(x) the execution and delivery of this Agreement by Merger
Sub and the other Operative Documents by the Company and Merger Sub's and
the Company's respective performance of its obligations under each of the
Operative Documents in accordance with its terms do not (i) require any
consent, approval, authorization of, or filing, recordation or registration
with, any court or governmental body or agency (except such as may be
required under the securities or Blue Sky laws of the various states or
that has been obtained prior to the Closing Date), (ii) conflict with the
charter or by-laws of the Company or constitute a violation of or a default
under the agreements listed in a schedule attached to such opinion, (iii)
contravene any law of the State of New York, which in the experience of
such counsel, is normally applicable to transactions of the type
contemplated by this Agreement and the other Operative Documents and are
not the subject of a specific opinion herein referring expressly to a
particular law or laws or (iv) cause the creation of any security interest
or Lien (other than the Liens contemplated by the Operative Documents)
under any agreement or instrument listed in a schedule to such opinion to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective property is bound.
Such counsel need express no opinion, however, as to whether execution,
delivery or performance by Merger Sub and the Company of their respective
obligations under each of the Operative Documents in accordance with its
terms will constitute a violation of or a default under any covenant,
restriction or provision with respect to financial ratios or tests or any
aspect of the financial condition or results of operations of the Company;
(xi) to such counsel's knowledge, other than as set forth in
the Offering Memorandum, there are no legal or governmental proceedings in
the United States pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is
subject, which might result, singly or in the aggregate, in a Material
Adverse Effect;
24
<PAGE>
(xii) the Company is not and, after giving effect to the
offering and sale of the Series A Notes and the application of the net
proceeds thereof as described in the Offering Memorandum, will not be
required to be registered as, and is not registered as, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended;
(xiii) to the best of such counsel's knowledge, there are
no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Notes
registered pursuant to any Registration Statement;
(xiv) the Indenture is in such form that would not
preclude qualification under the TIA and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
Assuming (i) the accuracy of the representations and warranties of Merger
Sub set forth in Sections 6(u), (aa), (bb), (dd), (ee), (ff), (gg) and (hh)
of this Agreement and of the Initial Purchasers in Section 7 of this
Agreement, and (ii) the due performance by Merger Sub (or following the
Merger, the Company) and the due performance by the Initial Purchasers of
the covenants and agreements set forth in this Agreement, it is not
necessary in connection with the offer, sale and delivery of the Series A
Notes to the Initial Purchasers in the manner contemplated by this
Agreement or in connection with the Exempt Resales to qualify the Indenture
under the TIA; and
(xv) assuming (i) the accuracy of the representations and
warranties of Merger Sub set forth in Sections 6(u), (aa), (bb), (dd),
(ee), (ff), (gg) and (hh) of this Agreement and of the Initial Purchasers
in Section 7 of this Agreement, (ii) the due performance by Merger Sub (or
following the Merger, the Company) and the due performance by the Initial
Purchasers of the covenants and agreements set forth in this Agreement,
(iii) compliance by the Initial Purchasers with the offering and transfer
procedures and restrictions described in the Offering Memorandum, (iv) the
accuracy of the representations and warranties made in accordance with this
Agreement and the Offering Memorandum by purchasers to whom the Initial
Purchasers initially resell Series A Notes and (v) that purchasers to whom
the Initial Purchasers initially resell Series A Notes receive a copy of
the Offering Memorandum prior to such sale, the offer, sale and delivery of
the Series A Notes to the Initial Purchasers in the manner contemplated by
this Agreement and the Offering Memorandum and the initial resale of the
Series A Notes by the Initial Purchasers in the manner contemplated in the
Offering Memorandum and this Agreement, do not require registration under
the Securities Act of 1933, as amended, it being understood that such
counsel need express no opinion as to any subsequent resale of any Series A
Note.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of Merger Sub and the
Company, representatives of the independent accountants of the Company, and the
Initial Purchasers and the Initial Purchasers' counsel at which the contents of
the Offering Memorandum and related matters were discussed and, although such
counsel need not pass upon, and shall not assume any responsibility for, the
accuracy, completeness or fairness of
25
<PAGE>
the statements contained in the Offering Memorandum and need make no
independent check or verification thereof, on the basis of the foregoing, no
facts have come to such counsel's attention that have led such counsel to
believe that the Offering Memorandum, as of its date and as of the Closing
Date, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need express no opinion or belief with
respect to the financial statements, and other financial and statistical data
included therein or excluded therefrom.
The opinion of counsel for the Company described in Section 9(e)
above shall be rendered to you at the request of the Company and shall so state
therein.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(g) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers from Ernst & Young LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(h) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(i) The Company and the Trustee shall have executed the
Indenture and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company and the Trustee.
(j) The Company shall have executed the Registration Rights
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company.
(k) On the Closing Date, the certificate of merger relating to
the Merger shall have been filed with the Secretary of State of the State of
Delaware, and Merger Sub shall have merged with and into the Company, with the
Company as the surviving corporation.
(l) The New Credit Agreement shall have been executed by the
parties thereto and, on the Closing Date, the closing under the New Credit
Agreement (including, without limitation, the borrowing of all term loans
thereunder) shall have been consummated, and the Initial Purchasers shall have
received counterparts, conformed as executed, of the New Credit Agreement and
any and all other ancillary documents related thereto.
(m) Holdings shall have made the Holdings Equity Contribution to
the Company.
(n) The Tender Offer and Solicitation shall have been
consummated and the
26
<PAGE>
Supplemental Indenture shall be in full force and effect.
(o) The Initial Purchasers shall have received on the Closing
Date an opinion addressed to them, dated the Closing Date, of Valuation
Research, with respect to the solvency of the Company.
(p) On the Closing Date, the Company shall have approved,
adopted, ratified and confirmed the execution, delivery and performance of this
Agreement by Merger Sub and the Initial Purchasers shall have received a
counterpart of this Agreement executed by the Company as a party hereto.
(q) Merger Sub (or following the Merger, the Company) shall not
have failed on or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with by it
on or prior to the Closing Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company or any Guarantor on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States.
If on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder or such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount to of the Series A Notes to be purchased on
such date by all Initial Purchasers, each non-defaulting Initial Purchaser shall
be obligated severally, in the proportion which the principal amount of the
Series A Notes set forth opposite its name in Schedule B bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, have agreed to
27
<PAGE>
purchase, or in such other proportion as you may specify, to purchase the
Series A Notes which such defaulting Initial Purchasers agreed but failed or
refused to purchase on such date; PROVIDED that in no event shall the
aggregate principal amount of the Series A Notes which any Initial Purchaser
has agreed to purchase pursuant to Section 2 hereof be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount
of the Series A Notes without the written consent of such Initial Purchaser.
If on the Closing Date any Initial Purchaser shall fail or refuse to purchase
the Series A Notes and the aggregate principal amount of the Series A Notes
with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Series A Notes to be purchased by all
Initial Purchasers and arrangements satisfactory to the Initial Purchasers
and Merger Sub for purchase of such the Series A Notes are not made within 48
hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Initial Purchasers and Merger Sub. In any
such case which does not result in termination of this Agreement, either you
or Merger Sub shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Offering Memorandum or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Initial Purchasers from liability in respect of any default of any
such Initial Purchasers under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to Merger Sub, to Great Lakes
Merger Sub Corp. (or following the Merger, to Great Lakes Carbon Corporation),
c/o American Industrial Partners, One Maritime Plaza, Suite 2525, San Francisco,
California, 94111, Attention: Lawrence W. Ward, and (ii) if to the Initial
Purchasers, Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, or in any
case to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of Merger Sub (or following the Merger, the
Company) and the Initial Purchasers set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Series A Notes, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Initial Purchasers, the officers or directors of the Initial Purchasers, any
person controlling the Initial Purchasers, Merger Sub (or following the Merger,
the Company), the officers or directors of Merger Sub (or following the Merger,
the Company), or any person controlling Merger Sub (or following the Merger, the
Company), (ii) acceptance of the Series A Notes and payment for them hereunder
and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), Merger Sub (or following the Merger, the
Company) agrees to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, Merger Sub (or following the
Merger, the Company) shall be liable for all expenses which it has agreed to pay
pursuant to Section 5(i) hereof. Merger Sub (or following the Merger, the
Company) also agrees to reimburse the Initial Purchasers and their officers,
directors and each person, if any, who controls such Initial Purchasers within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act for any
and all fees and expenses (including without
28
<PAGE>
limitation the fees and expenses of counsel) incurred by them in connection
with enforcing their rights under this Agreement (including without
limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon Merger Sub (or following
the Merger, the Company), AIP, the Initial Purchasers, the Initial
Purchasers' directors and officers, any controlling persons referred to
herein, the directors of Merger Sub (or following the Merger, the Company)
and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Series A Notes from the
Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York (including, without limitation, Section
5-1401 of the New York General Obligations Law).
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
29
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among Great Lakes Merger Sub Corp. and the Initial Purchasers.
Very truly yours,
GREAT LAKES MERGER SUB CORP.
By: /s/ JAMES MCKENZIE
------------------------------------
Name: James McKenzie
Title: President and CEO
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT ALEX. BROWN INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
By Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ MICHAEL HOOKS
----------------------------------
Name: Michael Hooks
Title: Managing Director
S-1
<PAGE>
The undersigned hereby agrees to be bound by the foregoing Purchase
Agreement, and assumes all of the rights and obligations of Merger Sub
thereunder, as of the effective time of the Merger on May 22, 1998.
Very truly yours,
GREAT LAKES CARBON CORPORATION
By: /s/ JAMES MCKENZIE
-------------------------------------
Name: James McKenzie
Title: President and CEO
S-2
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
INITIAL PURCHASERS OF NOTES
------------------ ----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation....... $108,150,000
BT Alex. Brown Incorporated............................... $ 46,375,000
BancAmerica Robertson Stephens............................ $ 20,475,000
------------
Total............................................... $175,000,000
------------
------------
</TABLE>
A-1
<PAGE>
SCHEDULE B
SUBSIDIARIES
Copetro, S.A., an Argentine corporation
Great Lakes International Sales Corp., a Barbados corporation
B-1
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
Filed herewith as Exhibit 4.3
<PAGE>
BYLAWS
OF
GREAT LAKES CARBON HOLDINGS CORPORATION
(a Delaware Corporation)
----------------------------------------
ARTICLE I
DEFINITIONS
-----------
As used in these Bylaws, unless the context otherwise requires, the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "Bylaws" means the initial Bylaws of the Corporation, amended from
time to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from
time to time.
1.6 "Chairman of the Board" means the Chairman of the Board of
Directors of the Corporation.
1.7 "Chief Executive Officer" means the Chief Executive Officer of the
Corporation.
1.8 "Corporation" means Great Lakes Carbon Holdings Corporation.
1.9 "Directors" means directors of the Corporation.
1.10 "General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended from time to time.
1.11 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the
<PAGE>
General Corporation Law to the contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholders" means the stockholders of the Corporation.
1.15 "Total number of directors" means the total number of directors
determined in accordance with Section 141(b) of the General Corporation Law
and Section 3.2 of the Bylaws.
1.16 "Treasurer" means the Treasurer of the Corporation.
1.17 "Vice President" means a Vice President, including an Executive
Vice President or Senior Vice President, if any, of the Corporation.
1.18 "Whole Board" means the total number of directors of the
Corporation.
ARTICLE 2
STOCKHOLDERS
------------
2.1 PLACE OF MEETINGS. Every meeting of stockholders shall be held at
the office of the Corporation or at such other place within or without the
State of Delaware as shall be specified or fixed in the notice of the meeting
or in any waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of stockholders shall be held annually
for the election of directors and the transaction of such other business as
properly may come before the meeting at a location, date and time determined
by the Board.
2.3 SPECIAL MEETINGS. A special meeting of stockholders (other than a
special meeting for the election of directors), unless otherwise prescribed
by statute, may be called at any time by the Board or by the Chairman of the
Board or Chief Executive Officer or President to be held on the date and at
the time and place within or without the State of Delaware as the Board, the
Chairman of the Board, the Chief
-2-
<PAGE>
Executive Officer or the President, whichever has called the meeting, shall
direct. At any special meeting of stockholders, the only business that may be
transacted shall be business related to the purpose or purposes of the
meeting set forth in the notice thereof given pursuant to Section 2.5 of the
Bylaws or in any waiver of notice thereof given pursuant to Section 2.6 of the
Bylaws.
2.4 FIXING RECORD DATE. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board may fix, in advance, a date as the record date for
any such determination of stockholders. The record date shall not be more
than sixty nor less than ten days before the date of the meeting, nor more
than sixty days prior to any other action. If no record date is fixed:
2.4.1 The record date for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day immediately preceding the
day on which notice is given or, if no notice is given or if notice
is waived, at the close of business on the day immediately preceding
the day on which the meeting is held;
2.4.2 The record date for determining stockholders entitled
to express consent to corporate action in writing without a
meeting, when no prior action by the Board is necessary, shall be
the day on which the first written consent setting forth the action
taken or proposed to be taken is delivered to the Corporation;
2.4.3 The record date for determining stockholders for any
purpose other than those specified in Sections 2.4.1 and 2.4.2
shall be at the close of business on the day on which the Board
adopts the resolution relating thereto.
When a determination of stockholders entitled to notice of or to vote at any
meeting of stockholders has been made as provided in this Section 2.4, the
determination shall apply to any adjournment thereof, unless the Board fixes
a new record date for the adjourned meeting.
-3-
<PAGE>
2.5 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise
provided in Sections 2.4 and 2.6 of the Bylaws, whenever under the General
Corporation Law or the Certificate of Incorporation or the Bylaws,
stockholders are required or permitted to take any action at a meeting,
written notice shall be given stating the place, date and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called. Except as otherwise provided by the General Corporation
Law, a copy of the notice of any meeting shall be given, personally or by
mail, not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to notice of or to vote at such
meeting. If mailed, such notice shall be deemed to be given when deposited in
the United States mail, with postage prepaid, directed to the stockholder at
his address as it appears on the records of the Corporation. An affidavit of
the Secretary or an Assistant Secretary or of the transfer agent of the
Corporation that the notice required by this section has been given shall, in
the absence of fraud, be PRIMA FACIE evidence of the facts stated therein.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting
any business may be transacted that might have been transacted at the meeting
as originally called. If, however, the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
2.6 WAIVER OF NOTICE. Whenever notice is required to be given to
a stockholder under any provision of the General Corporation Law or the
Certificate of Incorporation or the Bylaws, a written waiver thereof, signed
by the stockholder entitled to notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a
stockholder at a meeting shall constitute a waiver of notice of the meeting,
except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business on grounds that the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders need to be specified in any written
waiver of notice.
2.7 LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
or cause to be prepared and made, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged
-4-
<PAGE>
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. The stockholders
list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified, or at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by an stockholder who is present.
2.8 QUORUM OF STOCKHOLDERS; ADJOURNMENT. The holders of one-half of the
shares of stock entitled to vote at any meeting of stockholders, present in
person or represented by proxy, shall constitute a quorum for the transaction
of any business at the meeting. When a quorum is once present to organize a
meeting of stockholders, it is not broken by the subsequent withdrawal of any
stockholders. The holders of a majority of the shares of stock present in
person or represented by proxy at any meeting of stockholders, including an
adjournment meeting, whether or not a quorum is then present, may adjourn the
meeting to another time and place.
2.9 VOTING; PROXIES. Unless otherwise provided in the Certificate of
Incorporation, every stockholder of record shall be entitled at every meeting
of stockholders to one vote for each share of capital stock standing in his
name on the record of stockholders determined in accordance with Section 2.4
of the Bylaws. The provisions of Section 212 and 217 of the General
Corporation Law shall apply in determining whether any shares of capital
stock may be voted and the persons, if any, entitled to vote these shares,
but the Corporation shall be protected in treating the persons in whose names
shares of capital stock stand on the record of stockholders as owners thereof
for all purposes. At any meeting of stockholders (at which a quorum was
present to organize the meeting), all matters, except as otherwise provided
by law or by the Certificate of Incorporation or by the Bylaws, shall be
decided by a majority of the votes cast at that meeting by the holders of
shares present in person or represented by proxy and entitled to vote
thereon, whether or not a quorum is present when the vote is taken. All
elections of directors shall be by written ballot unless otherwise provided
in the Certificate of Incorporation. In voting on any other questions on
which a vote by ballot is required by law or is demanded by any stockholder
entitled to vote, the voting shall be by ballot. Each ballot shall be signed
by the stockholder voting or by his proxy, and shall state the number of
shares voted. On all other questions, the voting may be VIVA VOCE. Every
stockholder entitled to vote at a meeting of stock-
-5-
<PAGE>
holders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. The validity and enforceability of any proxy shall be determined in
accordance with Section 211 of the General Corporation Law.
2.10 SELECTION AND DUTIES OF INSPECTORS AT MEETING OF STOCKHOLDERS. The
Board, in advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors
are not so appointed, the person presiding at the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint one or
more inspectors. In case any person appointed fails to appear or act, the
vacancy may be filled by appointment made by the Board in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at the meeting with strict
impartiality and according to the best of his ability. The inspector or
inspectors shall determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and shall do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting or any stockholder entitled to vote
thereat, the inspector or inspectors shall make a report in writing of any
challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them. Any report or certificate made
by the inspector or inspectors shall be PRIMA FACIE evidence of the facts
stated and of the vote as certified by him or them.
2.11 ORGANIZATION. At every meeting of stockholders, the Chairman of the
Board, or in the absence of the Chairman of the Board, the Chief Executive
Officer or, if the same as the Chairman of the Board, then the President,
shall act as chairman of the meeting. In case none of the officers above
designated to act as chairman or secretary of the meeting, respectively,
shall be present, a chairman or a secretary of the meeting, as the case may
be, shall be chosen by a majority of the votes cast at the meeting by the
holders of shares present in person or represented by proxy and entitled to
vote at the meeting.
2.12 ORDER OF BUSINESS. The order of business at all meetings of
stockholders shall be determined by the
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chairman of the meeting, but the order of business to be followed at any
meeting at which a quorum is present may be changed by a majority of the
votes case at the meeting by the holders of shares of capital stock present
in person or represented by proxy and entitled to vote at the meeting.
2.13 WRITTEN CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required
by the General Corporation Law to be taken at any annual or special meeting
of stockholders of the Corporation, or any action that may be taken at any
annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in
writing.
ARTICLE 3
DIRECTORS
---------
3.1 GENERAL POWERS. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed
under the direction of its Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or the
Bylaws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by the Bylaws, the Board may exercise all powers and
perform all acts that are not required by the Bylaws or the Certificate of
Incorporation or by law to be exercised and performed by the stockholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall consist of
one or more members. The total number of directors shall be fixed initially
by the incorporator and may thereafter be changed from time to time by action
of the stockholders or by action of the Board. Directors need not be
stockholders. Each director shall hold office until his successor is elected
and qualified or until his earlier death, resignation or removal.
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3.3 ELECTION. Directors shall, except as otherwise required by law or
by the Certificate of Incorporation, be elected by a plurality of the votes
cast at a meeting of stockholders by the holders of shares entitled to vote
in the election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise
provided in the Certificate of Incorporation, newly created directorships
resulting from an increase in the number of directors and vacancies occurring
in the Board for any other reason, including the removal of directors with
cause, may be filled by vote of a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, or may be
elected by a plurality of the votes cast by the holders of shares of capital
stock entitled to vote in the election at a special meeting of stockholders
called for that purpose. A director elected to fill a vacancy shall be
elected to hold office until his successor is elected and qualified, or until
his earlier death, resignation or removal.
3.5 RESIGNATIONS. Any director may resign at any time by written
notice to the Corporation. A director's resignation shall take effect at the
time therein specified and, unless otherwise specified, the acceptance of any
resignation shall not be necessary to make it effective.
3.6 REMOVAL OF DIRECTORS. Subject to the provisions of Section 141(k)
of the General Corporation Law, any or all of the directors may be removed
with or without cause, by the holders of a majority of the shares of capital
stock then entitled to vote at an election of directors.
3.7 COMPENSATION. Each director, in consideration of his service as
such, shall be entitled to receive from the Corporation such amount per annum
or such fees for attendance at directors' meetings, or both, as the Board
from time to time may determine, together with reimbursement for the
reasonable expenses incurred by him in connection with the performance of his
duties. Each director who shall serve as a member of any committee of
directors in consideration of his serving as such shall be entitled to such
additional amount per annum or such fees for attendance at committee
meetings, or both, as the Board from time to time may determine, together
with reimbursement for the reasonable expenses incurred by him in the
performance of his duties. Nothing contained in this section shall preclude
any director from serving the Corporation or its subsidiaries in any other
capacity and receiving proper compensation therefor.
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3.8 PLACE AND TIME OF MEETINGS OF THE BOARD. Meetings of the Board,
regular or special, may be held at any place within or without the State of
Delaware. The times and places for holding meetings of the Board may be fixed
from time to time by resolution of the Board or (unless contrary to
resolution of the Board) in the notice of the meeting.
3.9 ANNUAL MEETINGS. On the day when and at the place where the annual
or special meeting of stockholders for the election of directors is held, and
as soon as practicable thereafter, the Board may hold its annual meeting,
without notice of the meeting, for the purposes of organization, the election
of officers and the transaction of other business. The annual meeting of the
Board may be held at any other time and place specified in a notice given as
provided in Section 3.11 of the Bylaws for special meetings of the Board or
in a waiver of notice thereof.
3.10 REGULAR MEETINGS. Regular meetings of the Board may be held at such
times and places as may be fixed from time to time by the Board. Unless
otherwise required by the Board, regular meetings of the Board may be held
without notice. If any day fixed for a regular meeting of the Board shall be
a Saturday or Sunday or a legal holiday at the place where the meeting is to
be held, then the meeting shall be held at the same hour at the same place on
the first business day thereafter that is not a Saturday, Sunday or legal
holiday.
3.11 SPECIAL MEETINGS. Special meetings of the Board shall be held
whenever called by the Chairman of the Board, the President or the Secretary
or by any two or more directors. Notice of each special meeting of the Board
shall, if mailed, be addressed to each director at the address designated by
him for that purpose or, if none is designated, at his last known address at
least three days before the date on which the meeting is to be held; or the
notice shall be sent to each director at his address by telegraph, cable,
wireless, or be delivered to him personally, not later than the day before
the date on which the meeting is to be held. Every notice shall state the
time and place of the meeting but need not state the purposes of the meeting,
except to the extent required by law. If mailed, each notice shall be deemed
given when deposited, with postage thereof prepaid, in a post office or
official depository under the exclusive care and custody of the United States
Postal Service. The mailing shall be by first class mail.
3.12 ADJOURNMENT MEETINGS. A majority of the directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum
is present, may
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adjourn the meeting to another time and place. Notice of any adjourned
meeting of the Board need not be given to any director whether or not present
at the time of the adjournment. Any business may be transacted at any
adjourned meeting that might have been transacted at the meeting as
originally called.
3.13 WAIVER OF NOTICE. Whenever notice is required to be given to any
director or member of a committee of directors under any provision of the
General Corporation Law or of the Certificate of Incorporation or Bylaws, a
written waiver thereof, signed by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of
notice of the meeting, except when the person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on grounds that the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors, or of a committee of
directors, need be specified in any written waiver of notice.
3.14 ORGANIZATION. At each meeting of the Board, the Chairman of the
Board, or in the absence of the Chairman of the Board, the President of the
Corporation, shall preside. The Secretary shall act as Secretary at each
meeting of the Board. In case the Secretary shall be absent from any meeting
of the Board, an Assistant Secretary shall perform the duties of Secretary at
such meeting; in the absence from any such meeting of the Secretary and
Assistant Secretaries, the person presiding at the meeting may appoint any
person to act as Secretary of the meeting.
3.15 QUORUM OF DIRECTORS. One-half of the total number of directors
shall constitute a quorum for the transaction of business or of any specified
item of business at any meeting of the Board.
3.16 ACTION BY THE BOARD. All corporate action taken by the Board or any
committee thereof shall be taken at a meeting of the Board, or of such
committee, as the case may be, except that any action required or permitted
to be taken at any meeting of the Board, or of any committee thereof, may be
taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee. Members of the
Board, or any committee designated by the Board, may participate in a meeting
of the Board, or of such committee, as the case may be, by means of which all
persons participating in the meeting
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pursuant to this Section 3.16 shall constitute presence in person at the
meeting. Except as otherwise provided by the Certificate of Incorporation or
Bylaws, the vote of a majority of the directors present (including those who
participate by means of conference telephone or similar communications
equipment) at the time of the vote, if a quorum is present at that time,
shall be the act of the Board.
ARTICLE 4
EXECUTIVE COMMITTEE, OTHER COMMITTEES AND ADVISORY BOARD
---------------------------------------------------------
4.1 COMMITTEES. The Board may, by resolution passed by a majority
of the Whole Board, designate one or more committees, each to consist of two
or more of the directors of the Corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the
absence of disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another member of
the Board to act at the meeting in place of any absent or disqualified
member. Any committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger
or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or
a revocation of a dissolution, or amending the Bylaws of the Corporation; and
unless the resolution designating it expressly so provides, no committee
shall have the power of authority to declare a dividend or to authorize the
issuance of stock. The term of office of the members of each committee shall
be as fixed from time to time by the Board, subject to the term of office of
the directors and these Bylaws; PROVIDED, HOWEVER, that any committee member
who ceases to be a member of the Board shall IPSO FACTO cease to be a
committee member.
4.2 ADVISORY BOARD. The Board may designate from among its
members and/or among outside advisors or consultants an Advisory Board, which
shall advise the Board as to matters specifically submitted thereto but shall
have no authority to
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act in the place of the Board or to bind the Board in any matter. Each of
the members of the Advisory Board shall serve at the pleasure of the Board.
ARTICLE 5
OFFICERS
--------
5.1 OFFICERS. The Board may elect or appoint a Chairman of the
Board, a Chief Executive Officer, a President, a Secretary and a Treasurer;
it may also elect or appoint one or more Vice Presidents and such other
Officers, including a Chief Operating Officer, as it may determine. The
Board may designate one or more Vice Presidents as Executive Vice Presidents,
and may use descriptive words or phrases to designate the standing, seniority
or area of special competence of the Vice Presidents elected or appointed by
it. Each officer shall hold his office until his successor is elected and
qualified or until his earlier death, resignation or removal in the manner
provided in Section 5.2 of the Bylaws. Any two or more offices may be held
by the same person. All officers as between themselves and the Corporation
shall have such authority and perform such duties in the management of the
Corporation as may be provided in the Bylaws or as the Board may from time to
time determine.
5.2 REMOVAL OF OFFICERS. Any officer elected or appointed by the
Board may be removed by the Board with or without cause. The removal of an
officer without cause shall be without prejudice to his contract rights, if
any. The election or appointment of an officer shall not itself create
contract rights.
5.3 RESIGNATIONS. Any officer may resign at any time by
notifying the Board or the President or the Secretary in writing. A
resignation shall take effect at the date of receipt of the notice or at any
later time as is therein specified and, unless otherwise specified, the
acceptance of the resignation shall not be necessary to make it effective.
The resignation of an officer shall be without prejudice to the contract
rights of the Corporation, if any.
5.4 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in the Bylaws for
the regular election or appointment to that office.
5.5 COMPENSATION. Salaries or other compensation
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of the officers may be fixed from time to time by the Board. No officer shall
be prevented from receiving a salary or other compensation by reason of the
fact that he is also a director.
5.6 CHAIRMAN OF THE BOARD. The Chairman of the Board shall be a member
of the Board and shall preside at all meetings of the Board. He shall have
general supervision over the business of the Corporation and such specific
powers as the Board may assign.
5.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the
chief executive officer of the Corporation and shall have general and
operational supervision over the business of the Corporation, subject,
however, to the control of the Board and any duly authorized committee of
directors. In the absence of the Chairman of the Board, the Chief Executive
Officer shall, if present, preside at all meetings of the stockholders. He
may, with the President or Secretary or the Treasurer or an Assistant
Secretary or Assistant Treasurer, sign certificates for shares of capital
stock of the Corporation. He may sign and execute, in the name of the
Corporation, deeds, mortgages, bonds, contracts and other instruments,
except in cases where the signing and execution thereof shall be expressly
delegated by the Board or by the Bylaws to some other officer or agent of the
Corporation, or shall be required by law otherwise to be signed or executed;
and, in general, he shall perform all duties incident to the office of Chief
Executive Officer and such other duties as from time to time may be assigned
to him by the Board.
5.8 PRESIDENT. The President shall be the chief operating officer of
the Corporation and shall be responsible for the general and day-to-day
management of the business of the Corporation. In the absence of the Chief
Executive Officer or upon his request, the President shall perform the duties
of Chief Executive Officer and when so acting shall have all the powers of
the Chief Executive Officer. The offices of Chief Executive Officer and
President may, alternatively, be held by the same person.
5.9 VICE PRESIDENTS. At the request of the Chairman of the Board, the
Chief Executive Officer and the President, or in their absence, at the
request of the Board, the Vice Presidents shall (in such order as may be
designated by the Board or, in the absence of any such designation, in order
of seniority based on age) perform all of the duties of the President and so
acting shall have all the powers of and be subject to all restrictions upon
the President. Any Vice President may also, with the Secretary or the
Treasurer or an Assistant Secretary or Assistant Treasurer, sign certificates
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for shares of capital stock of the Corporation; may sign and execute in the
name of the Corporation, deeds, mortgages, bonds, contracts or other
instruments authorized by the Board, except in cases where the signing and
execution thereof shall be expressly delegated by the Board or by the Bylaws
to some other officer or agent of the Corporation, or shall be required by
law otherwise to be signed or executed; and shall perform such other duties
as from time to time may be assigned to him by the Board or by the Chairman
of the Board, the Chief Executive Officer or the President.
5.10 SECRETARY. The Secretary, if present, shall act as Secretary of
all meetings of the stockholders and of the Board, and shall keep the minutes
thereof in the proper book or books to be provided for that purpose; he shall
see that all notices required to be given by the Corporation are duly given
and served; he may, with the President or a Vice President, sign certificates
for shares of capital stock of the Corporation; he shall be custodian
of the seal of the Corporation and may seal, with the seal of the Corporation
or a facsimile thereof, all certificates for shares of capital stock of the
Corporation and all documents the execution of which on behalf of the
Corporation under its corporate seal is authorized in accordance with the
provisions of the Bylaws; he shall have charge of the stock ledger and also
of the other books, records and papers of the Corporation relating to its
organization and management as a Corporation, and shall see that the
reports, statements and other documents required by law are properly kept
and filed; and shall, in general, perform all the duties incident to the
office of Secretary and such other duties as from time to time may be
assigned to him by the Board, the Chairman of the Board, the Chief Executive
Officer or by the President.
5.11 TREASURER. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for moneys due and payable to the Corporation from any
sources whatsoever; deposit all such moneys in the name of the Corporation in
such banks, trust companies or other depositaries as shall be selected in
accordance with these Bylaws; against proper vouchers, cause such funds to be
disbursed by checks or drafts on the authorized depositaries of the
Corporation signed in such manner as shall be determined in accordance with
any provisions of the Bylaws, and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books to be kept by him or under direction full and adequate account of all
moneys received or paid by him for the account of the Corporation; have the
right to require, from time to time, reports or statements giving such
information as he may desire with respect to any and all
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financial transactions of the Corporation from the officers or agents
transacting the same; render to the Chairman of the Board, the Chief
Executive Officer, the President and the Board, whenever they shall require
him so to do, an account of the financial condition of the Corporation and of
all his transactions as Treasurer; exhibit at all reasonable times his books
of account and other records to any of the directors upon application at the
office of the Corporation where those books and records are kept; and, in
general, perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Board or by
the Chairman of the Board, the Chief Executive Officer or the President; and
he may sign with such officers certificates for shares of capital stock of
the Corporation.
5.12 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by
the Board or the President. Assistant Secretaries and Assistant Treasurers
may, with the Chairman of the Board, the Chief Executive Officer or the
President or a Vice President, sign certificates for shares of capital stock
of the Corporation.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
-----------------------------------------------
6.1 EXECUTION OF CONTRACTS. The Board may authorize any officer,
employee or agent, in the name and on behalf of the Corporation, to enter
into any contract or execute and satisfy any instrument, and any such
authority may be general or confined to specific instances, or otherwise
limited.
6.2 LOANS. The Chief Executive Officer, the President or any other
officer, employee or agent authorized by the Bylaws or by the Board may
effect loans and advances at any time for the Corporation from any bank,
trust company or other institutions or from any firm, corporation or
individual and for such loans and advances may make, execute and deliver
promissory notes, bonds or other certificates or evidences of indebtedness of
the Corporation and, when authorized by the Board so to do, may pledge and
hypothecate or transfer any securities or other property of the Corporation
as security for any such loans or advances. The aforementioned authority
conferred by the Board may be general or confined to specific instances, or
otherwise limited.
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6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in the manner determined from time to time by resolution of the
Board.
6.4 DEPOSITS. The funds of the Corporation not otherwise employed shall
be deposited from time to time to the order of the Corporation in such banks,
trust companies or other depositaries as the Board may select or as may be
selected by an officer, employees or agent of the Corporation to whom such
power may from time to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
-------------------
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital stock of the
Corporation and any warrants or other securities of the Corporation shall be
represented by certificates in such form (consistent with the provisions of
Section 158 of the General Corporation Law) as shall be approved by the
Board. Certificates shall be signed by the Chief Executive Officer, the
President or a Vice President and by the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer, and may be sealed with the seal
of the Corporation or a facsimile thereof. The signatures of the officers
upon a certificate may be facsimiles, if the certificate is countersigned by
a transfer agent or registered by a registrar other than the Corporation
itself or its employee. In case any officer, transfer agent or registrar who
has signed or whose facsimile signature has been placed upon any certificate
shall have ceased to be an officer, transfer agent or registrar of the
Corporation before the certificate is issued, the certificate may, unless
otherwise ordered by the Board, be issued by the Corporation with the same
effect as if that signatory continued to be an officer, transfer agent or
registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of the
Corporation or other securities of the Corporation shall be made only on the
books of the Corporation by the holder thereof or by his duly authorized
attorney appointed by a power of attorney duly executed and filed with the
Secretary or a transfer agent of the Corporation, and on surrender of the
certificate or certificates representing such shares of capital stock or
other securities of the Corporation
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properly endorsed for transfer and upon payment of all necessary transfer
taxes. Every certificate exchanged, returned or surrendered to the
Corporation shall be marked "Cancelled", with the date of cancellation, by
the Secretary or an Assistant Secretary or the transfer agent of the
Corporation. A person in whose name shares of capital stock or other
securities of the Corporation shall stand on the books of the Corporation
shall be deemed the owner thereof and, in case of shares of capital stock of
the Corporation, to receive dividends, to vote as such owner and for all
other purposes as respects the Corporation. No transfer of shares of capital
stock of the Corporation shall be valid as against the Corporation, its
stockholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until
the transfer shall have been entered on the books of the Corporation by an
entry showing from and to whom transferred.
7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time to time
maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The holder of
any shares or other securities of the Corporation shall, immediately notify
the Corporation of any loss, destruction, theft or mutilation of the
certificate representing those securities, and the Corporation may issue a new
certificate to replace the certificate alleged to have been lost, destroyed,
stolen or mutilated. The Board may, in its discretion, as a condition to the
issue of any new certificate, require the owner of the lost, destroyed,
stolen or mutilated certificate, or his legal representatives, to make proof
satisfactory to the Board of the loss, destruction, theft or mutilation and
to advertise that fact in such manner as the Board may require, and to give
the Corporation or its transfer agents and registrars a bond in such form, in
such sums and with such surety or sureties as the Board may direct, to
indemnify the Corporation and its transfer agents and registrars against any
claim that may be made against any of them on account of the continued
existence of any certificate so alleged to have been lost, destroyed, stolen
or mutilated and against any expense in connection with that claim.
7.5 REGULATIONS. The Board may make such rules and regulations as it may
deem expedient, not inconsistent with the Bylaws or with the Certificate of
Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock and other securities of
the Corporation.
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7.6 RESTRICTION ON TRANSFER OF STOCK. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted
conspicuously on the certificate representing the capital stock, may be
enforced against the holder of the restricted capital stock or any successor
or transferee of the holder including an executor, administrator, trustee,
guardian or other fiduciary entrusted with like responsibility for the person
or estate of the holder. Unless noted conspicuously on the certificate
representing the capital stock, a restriction even though permitted by
Section 202 of the General Corporation Law shall be ineffective except
against a person with actual knowledge of the restriction. A restriction on
the transfer or registration of transfer of capital stock of the Corporation
may be imposed either by the Certificate of Incorporation or by an agreement
among any number of stockholders or among stockholders and the Corporation.
No restriction so imposed shall be binding with respect to capital stock
issued prior to the adoption of the restriction unless the holders of the
capital stock are parties to an agreement or voted on favor of the
restriction.
7.7 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the
Certificate or Incorporation and of applicable law, the Board:
7.7.1 May declare and pay dividends or make other distributions on
the outstanding shares of capital stock of the Corporation in such
amounts and at such time or times, as in its discretion, the condition
of the affairs of the Corporation shall render advisable;
7.7.2 May use and apply, in its discretion, any of the surplus of
the Corporation in purchasing or acquiring any shares of capital stock
of the Corporation, or purchase warrants therefor, in accordance with
applicable law, or any of its bonds, debentures, notes, scrip or other
securities or evidences or indebtedness;
7.7.3 May set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as
a reserve fund to meet contingencies, or for equalizing dividends or for
the purpose of maintaining or increasing the property or business of the
Corporation, or for any other purpose it may deem conducive to the best
interests of the Corporation.
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ARTICLE 8
INDEMNIFICATION
---------------
8.1 INDEMNIFICATION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or his
testator or intestate is or was a director, officer, employee or agent of the
Corporation (or any constituent or predecessor corporation) as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, to the fullest extent permitted under the
General Corporation Law. The foregoing provisions of this Section 8.1 shall
be deemed to be a contract between the Corporation and each director and
officer who serves in such capacity at any time while this Article 8 and the
relevant provisions of the General Corporation Law and other applicable law,
if any, are in effect, and any repeal or modification thereof shall not
affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part
upon any such state of acts. Such right of indemnification shall not be
deemed exclusive of any other rights to which any such person may be entitled
apart from the foregoing provisions.
8.2 INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of the Certificate of
Incorporation, Section 8.1 of the Bylaws or under the General Corporation Law
or any other provision of law.
ARTICLE 9
BOOKS AND RECORDS
-----------------
9.1 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account and minutes of the proceedings of the
stockholders, the Board and any committee of the Board at such places, within
or without the
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State of Delaware, as the Board may from time to time determine. The
Corporation shall keep at the office designated in the Certificate of
Incorporation, or at the office of the Corporation or of the transfer
agent or registrar of the Corporation, a record containing the names and
addresses of all stockholders, the number and class of shares of capital
stock and/or other securities of the Corporation held by each and the dates
when they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form of, magnetic tape or
disks, photographs, microphotographs or any other information storage device,
provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided by
law, the Board shall determine from time to time whether and, if allowed,
when and under what conditions and regulations, the accounts, books, minutes
and other records of the Corporation, or any of them, shall be open to the
inspection of the stockholders.
ARTICLE 10
SEAL
----
The Board may adopt a corporate seal which shall be in the form of a
circle and shall bear the full name of the Corporation, the year of its
incorporation and the word "Delaware".
ARTICLE 11
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be determined and may be changed
by resolution of the Board.
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<PAGE>
ARTICLE 12
VOTING OF SHARES HELD
---------------------
Unless otherwise provided by resolution of the Board, the President may,
from time to time, appoint one or more attorneys or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the votes
which the Corporation may be entitled to cast as a stockholder or otherwise
in any other corporation, any of whose shares or securities may be held by
the Corporation, at meetings of the holders of stock or other securities of
such other corporation, or to consent in writing to any action by any such
corporation, and may instruct the person or persons so appointed as to the
manner of casting votes or giving consent, and may execute or cause to be
executed on behalf of the Corporation and under its corporate seal, or
otherwise, written proxies, consents, waivers or other instruments as he may
deem necessary or proper in the premises; or the President may himself attend
any meeting of the holders of the stock or other securities of any such other
corporation and thereat vote or exercise any or all other powers of the
Corporation as the holder of such stock or other securities of such other
corporation.
ARTICLE 13
AMENDMENTS
----------
The Bylaws may be altered, amended, supplemented or repealed, or new
Bylaws may be adopted, by vote of the holders of the shares of capital stock
of the Corporation entitled to vote in the election of directors. The Bylaws
may be altered, amended, supplemented or repealed, or new Bylaws may be
adopted, by the Board. Any Bylaws adopted, altered, amended or supplemented
by the Board may be altered, amended, supplemented or repealed by the
stockholders entitled to vote thereon.
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<PAGE>
GREAT LAKES CARBON CORPORATION
AS ISSUER
101/4% SENIOR SUBORDINATED NOTES DUE 2008
_____________
INDENTURE
DATED AS OF MAY 22, 1998
_____________
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
TRUSTEE
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. OTHER DEFINITIONS . . . . . . . . . . . . . . . . . . 26
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . 26
SECTION 1.04. RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . 27
ARTICLE 2. THE NOTES
SECTION 2.01. FORM AND DATING . . . . . . . . . . . . . . . . . . . 27
SECTION 2.02. EXECUTION AND AUTHENTICATION. . . . . . . . . . . . . 28
SECTION 2.03. REGISTRAR AND PAYING AGENT. . . . . . . . . . . . . . 29
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST . . . . . . . . . 29
SECTION 2.05. HOLDER LISTS. . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.06. TRANSFER AND EXCHANGE . . . . . . . . . . . . . . . . 30
SECTION 2.07. REPLACEMENT NOTES . . . . . . . . . . . . . . . . . . 44
SECTION 2.08. OUTSTANDING NOTES . . . . . . . . . . . . . . . . . . 44
SECTION 2.09. TREASURY NOTES. . . . . . . . . . . . . . . . . . . . 44
SECTION 2.10. TEMPORARY NOTES . . . . . . . . . . . . . . . . . . . 45
SECTION 2.11. CANCELLATION. . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.12. DEFAULTED INTEREST. . . . . . . . . . . . . . . . . . 45
ARTICLE 3. REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE. . . . . . . . . . . . . . . . . . 46
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED . . . . . . . . . . 46
SECTION 3.03. NOTICE OF REDEMPTION. . . . . . . . . . . . . . . . . 46
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. . . . . . . . . . . . 47
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . 47
SECTION 3.06. NOTES REDEEMED IN PART. . . . . . . . . . . . . . . . 48
SECTION 3.07. OPTIONAL REDEMPTION . . . . . . . . . . . . . . . . . 48
SECTION 3.08. NO MANDATORY REDEMPTION . . . . . . . . . . . . . . . 49
ARTICLE 4. COVENANTS
SECTION 4.01. PAYMENT OF NOTES. . . . . . . . . . . . . . . . . . . 49
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . 50
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SECTION 4.03. SEC REPORTS AND REPORTS TO HOLDERS. . . . . . . . . . 50
SECTION 4.04. COMPLIANCE CERTIFICATE. . . . . . . . . . . . . . . . 51
SECTION 4.05. TAXES . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.06. STAY, EXTENSION AND USURY LAWS. . . . . . . . . . . . 51
SECTION 4.07. LIMITATION ON INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK . . . . . . . . . . . . . . . . . 52
SECTION 4.08. LIMITATION ON LIENS . . . . . . . . . . . . . . . . . 55
SECTION 4.09. LIMITATION ON RESTRICTED PAYMENTS . . . . . . . . . . 55
SECTION 4.10. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES . . . . . . . . . . . . . . . 59
SECTION 4.11. LIMITATION ON LINES OF BUSINESS . . . . . . . . . . . 60
SECTION 4.12. LIMITATION ON TRANSACTIONS WITH AFFILIATES. . . . . . 61
SECTION 4.13. LIMITATION ON ASSET SALES . . . . . . . . . . . . . . 61
SECTION 4.14. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL. . . . . 65
SECTION 4.15. LIMITATION ON LAYERING INDEBTEDNESS . . . . . . . . . 65
SECTION 4.16. ADDITIONAL SUBSIDIARY GUARANTEES. . . . . . . . . . . 65
ARTICLE 5. SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS . . . . . . . 66
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED . . . . . . . . . . 66
ARTICLE 6. DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.. . . . . . . . . . . . . . . . . . 67
SECTION 6.02. ACCELERATION. . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.03. OTHER REMEDIES. . . . . . . . . . . . . . . . . . . . 69
SECTION 6.04. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . 69
SECTION 6.05. CONTROL BY MAJORITY . . . . . . . . . . . . . . . . . 70
SECTION 6.06. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . 70
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT . . . . 71
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. . . . . . . . . . . . . . 71
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. . . . . . . . . . . 71
SECTION 6.10. PRIORITIES. . . . . . . . . . . . . . . . . . . . . . 72
SECTION 6.11. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . 72
ARTICLE 7. TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . 73
SECTION 7.02. RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . 74
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. . . . . . . . . . . . . 75
SECTION 7.04. TRUSTEE'S DISCLAIMER. . . . . . . . . . . . . . . . . 75
SECTION 7.05. NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . 76
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. . . . . . 76
SECTION 7.07. COMPENSATION AND INDEMNITY. . . . . . . . . . . . . . 76
SECTION 7.08. REPLACEMENT OF TRUSTEE. . . . . . . . . . . . . . . . 77
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. . . . . . . . . . . 78
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . 78
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY . . 79
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE. . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. . . . . . . . . . . . 79
SECTION 8.03. COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . 80
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. . . . . . 81
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS. . . . . . . 82
SECTION 8.06. REPAYMENT TO COMPANY. . . . . . . . . . . . . . . . . 83
SECTION 8.07. REINSTATEMENT . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES . . . . . . . . . 84
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. . . . . . . . . . . 85
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT . . . . . . . . . 86
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS . . . . . . . . . . 87
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. . . . . . . . . . . 87
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.. . . . . . . . . . . 87
ARTICLE 10. SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . 87
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES. . . 89
SECTION 10.03. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS. . . . . . . . . . . . . . . . . . . 90
SECTION 10.04. RELEASES . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 10.05. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY . . . 92
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SECTION 10.06. APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE
SUBSIDIARY GUARANTORS. . . . . . . . . . . . . . . 92
SECTION 10.07. SUBORDINATION OF SUBSIDIARY GUARANTEES . . . . . . . 93
ARTICLE 11. SUBORDINATION
SECTION 11.01. AGREEMENT TO SUBORDINATE.. . . . . . . . . . . . . . 93
SECTION 11.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY . . . . . . . . 94
SECTION 11.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS. . . . . . 94
SECTION 11.04. ACCELERATION OF NOTES. . . . . . . . . . . . . . . . 95
SECTION 11.05. WHEN DISTRIBUTION MUST BE PAID OVER . . . . . . . . 95
SECTION 11.06. NOTICE BY COMPANY. . . . . . . . . . . . . . . . . . 95
SECTION 11.07. SUBROGATION. . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.08. RELATIVE RIGHTS. . . . . . . . . . . . . . . . . . . 96
SECTION 11.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY . . . . 96
SECTION 11.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE . . . . . . 96
SECTION 11.11. RIGHTS OF TRUSTEE AND PAYING AGENT . . . . . . . . . 97
SECTION 11.12. AUTHORIZATION TO EFFECT SUBORDINATION. . . . . . . . 97
SECTION 11.13. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE 12. MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . 98
SECTION 12.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES . . . . . . . . . . . . . . . . . . . . . 99
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . 99
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. . . .100
SECTION 12.06. RULES BY TRUSTEE AND AGENTS. . . . . . . . . . . . .100
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS . . . . . . . . . . . .101
SECTION 12.08. GOVERNING LAW. . . . . . . . . . . . . . . . . . . .101
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. . . .101
SECTION 12.10. SUCCESSORS . . . . . . . . . . . . . . . . . . . . .101
SECTION 12.11. SEVERABILITY . . . . . . . . . . . . . . . . . . . .101
SECTION 12.12. COUNTERPART ORIGINALS. . . . . . . . . . . . . . . .101
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.. . . . . . . . . .102
</TABLE>
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<PAGE>
EXHIBITS
EXHIBIT A FORM OF NOTE AND SUBSIDIARY GUARANTEE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE
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<PAGE>
INDENTURE, dated as of May 22, 1998, among Great Lakes
Carbon Corporation, a Delaware corporation (the "Company"), the Subsidiary
Guarantors (as defined) and State Street Bank and Trust Company of
California, N.A., as trustee (the "Trustee").
Each party agrees as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10 1/4%
Series A Senior Subordinated Notes due 2008 (the "Series A Notes") and the
10 1/4% Series B Senior Subordinated Notes due 2008 (the "Series B Notes" and,
together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS
"144A GLOBAL NOTE" means a global note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"ACCRUED BANKRUPTCY INTEREST" means, with respect to any
Indebtedness, all interest accruing thereon after the filing of a petition by
or against the Company or any of its Subsidiaries under any Bankruptcy Law,
in accordance with and at the rate (including any rate applicable upon any
default or event of default, to the extent lawful) specified in the documents
evidencing or governing such Indebtedness, whether or not the claim for such
interest is allowed as a claim after such filing in any proceeding under such
Bankruptcy Law.
"ACQUIRED INDEBTEDNESS" means, with respect to any
specified Person, (i) Indebtedness of any other Person existing at the time
such other Person is merged with or into or became a Subsidiary of such
specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
"ACQUISITION TRANSACTIONS" means the transactions
contemplated by (i) the Merger Agreement, (ii) the Company's Offer to
Purchase and Consent Solicitation Statement dated April 24, 1998 with respect
to the Company's offer to purchase any and
<PAGE>
all of its outstanding 10% Senior Secured Notes due 2006, (iii) the execution
of, and initial borrowings under, the New Credit Agreement, and (iv) the
execution of this Indenture and the issuance of the Series A Notes hereunder
on the Issuance Date.
"ADDITIONAL NOTES" means additional Notes which may be
issued after the Issue Date pursuant to this Indenture (other than pursuant
to an Exchange Offer or otherwise in exchange for or in replacement of
outstanding Notes). All references herein to "Notes" shall be deemed to
include Additional Notes.
"AFFILIATE" means, with respect to any specified Person,
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, will mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise; PROVIDED that beneficial ownership of 10% or more of the voting
securities of a Person will be deemed to be control. Notwithstanding the
foregoing, (a) the limited partners of AIP Capital Funds will not be deemed
to be Affiliates of AIP Capital Funds or AIP solely by reason of their
investment in AIP Capital Funds and (b) no Person (other than the Company or
any Subsidiary of the Company) in whom a Receivables Subsidiary makes an
Investment in connection with a Qualified Receivables Transaction will be
deemed to be an Affiliate of the Company or any of its Subsidiaries solely by
reason of such Investment.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"AIP" means American Industrial Partners, a Delaware general
partnership.
"AIP CAPITAL FUNDS" means American Industrial Partners
Capital Fund, L.P., a Delaware limited partnership, and American Industrial
Partners Capital Fund II, L.P., a Delaware limited partnership.
"APPLICABLE PROCEDURES" means, with respect to any
transfer or exchange of or for beneficial interests in any Global Note, the
rules and procedures of the Depositary, Euroclear and Cedel that apply to
such transfer or exchange.
"ASSET SALE" means (i) the sale, lease, conveyance or
other disposition that does not constitute a Restricted Payment or an
Investment by such Person of any of its non-cash assets (including, without
limitation, by way of a sale and leaseback and including the issuance, sale
or other transfer of any of the Capital Stock of any
2
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Subsidiary of such Person) other than to the Company or to any of the
Subsidiary Guarantors; and (ii) the issuance of Equity Interests in any
Subsidiaries or the sale of any Equity Interests in any Subsidiaries, in each
case, in one or a series of related transactions, PROVIDED, that
notwithstanding the foregoing, the term "Asset Sale" will not include: (a)
the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company, as permitted pursuant to
Section 5.01; (b) the sale or lease of equipment, inventory, accounts
receivable or other assets in the ordinary course of business and to the
extent that such sales or leases are not part of a sale of the business
(unless such sale of such business would not be an Asset Sale) in which such
equipment was used or in which such inventory or accounts receivable arose;
(c) a transfer of assets by the Company to a Subsidiary Guarantor or by a
Subsidiary Guarantor to the Company or another Subsidiary Guarantor or by a
Subsidiary of the Company that is not a Subsidiary Guarantor to the Company
or another Subsidiary of the Company; (d) an issuance of Equity Interests by
a Subsidiary Guarantor to the Company or to another Subsidiary Guarantor or
by a Subsidiary of the Company that is not a Subsidiary Guarantor to the
Company or another Subsidiary of the Company; (e) the surrender or waiver of
contract rights or the settlement, release or surrender of contract, tort or
other claims of any kind; (f) the grant in the ordinary course of business of
any license of patents, trademarks, registrations therefor and other similar
intellectual property; (g) Permitted Investments or Permitted Liens; (h)
sales of accounts receivable and related assets of the type specified in the
definition of "Qualified Receivables Transaction" to a Receivables Subsidiary
for the fair market value thereof, including cash in an amount at least equal
to 75% of the book value thereof as determined in accordance with GAAP; (i)
transfers of accounts receivable and related assets of the type specified in
the definition of "Qualified Receivables Transaction" (or a fractional
undivided interest therein) by a Receivables Subsidiary in a Qualified
Receivables Transaction; and (j) the sale or disposal of damaged, worn out or
other obsolete personal property, inventory or equipment in the ordinary
course of business so long as such property is no longer necessary for the
proper conduct of the business of the Company or such Subsidiary, as
applicable. For the purposes of clause (h), notes received in exchange for
the transfer of accounts receivable and related assets will be deemed cash if
the Receivables Subsidiary or other payor is required to repay said notes as
soon as practicable from available cash collections less amounts required to
be established as reserves pursuant to contractual agreements with entities
that are not Affiliates of the Company entered into as part of a Qualified
Receivables Transaction.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"BOARD RESOLUTION" means a resolution duly adopted by the
Board of Directors.
3
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"BORROWING BASE" means, as of any date, an amount equal
to the sum of (a) 75% of the face amount of all accounts receivable owned by
the Company and its Subsidiaries as of such date that are not more than 90
days past due, and (b) 50% of the book value of all inventory owned by the
Company and its Subsidiaries as of such date, minus (c) the aggregate amount
of trade payables of the Company and its Subsidiaries outstanding as of such
date, all calculated on a consolidated basis and in accordance with GAAP. To
the extent that information is not available as to the amount of accounts
receivable or inventory or trade payables as of a specific date, the Company
may utilize the most recent available information for purposes of calculating
the Borrowing Base.
"BROKER-DEALER" means any broker-dealer that receives
Exchange Notes for its own account in the Exchange Offer in exchange for
Notes that were acquired by such broker-dealer as a result of market-making
or other trading activities.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the amount of the liability in respect
of a capital lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any
and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other
interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CASH EQUIVALENTS" means (a) securities issued or
directly and fully guaranteed or insured by the United States of America or
any agency or instrumentality thereof (PROVIDED that the full faith and
credit of the United States is pledged in support thereof) having maturities
not more than twelve months from the date of acquisition, (b) U.S. dollar
denominated (or foreign currency fully hedged) time deposits, certificates of
deposit, Eurodollar time deposits or Eurodollar certificates of deposit of
(i) any domestic commercial bank of recognized standing having capital and
surplus in excess of $100,000,000 or (ii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof (any such bank being
an "Approved Lender"), in each case with maturities of not more than twelve
months from the date of acquisition, (c) commercial paper and variable or
fixed rate notes issued by any Approved Lender (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or
the equivalent thereof) or better by Moody's and maturing within twelve
months of the date of acquisition, (d) repurchase
4
<PAGE>
agreements with a bank or trust company or recognized securities dealer
having capital and surplus in excess of $100,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which the
Company will have a perfected first priority security interest (subject to no
other Liens) and having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of repurchase obligations, (e) interests in
money market mutual funds which invest solely in assets or securities of the
type described in subparagraphs (a), (b), (c) or (d) hereof and (f) in the
case of any Foreign Subsidiary: (i) direct obligations of the sovereign
nation (or any agency thereof) in which such Foreign Subsidiary is organized
and is conducting business or in obligations fully and unconditionally
guaranteed by such sovereign nation (or any agency thereof), (ii) investments
of the type and maturity described in clauses (a) through (e) above of
foreign obligors, which investments or obligors (or the direct or indirect
parents of such obligors) have ratings described in such clauses or
equivalent ratings from comparable foreign rating agencies or (iii)
investments of the type and maturity described in clauses (a) through (e)
above of foreign obligors (or the direct or indirect parents of such
obligors), which investments or obligors (or the direct or indirect parents
of such obligors) are not rated as provided in such clauses or in clause (ii)
above but which are, in the reasonable judgment of the Company, comparable in
investment quality to such investments and obligors (or the direct or
indirect parent of such obligors).
"CEDEL" means Cedel Bank, S.A., or its successors.
"CHANGE OF CONTROL" means such time as (i) prior to the
initial public offering by the Company or any direct or indirect parent of
the Company of its common stock (other than a public offering pursuant to a
registration statement on Form S-8), AIP, AIP Capital Funds or any of their
respective Affiliates (collectively, the "Initial Investors") cease to be,
directly or indirectly, the beneficial owners, in the aggregate, of a
majority of the voting power of the voting Capital Stock of the Company or
(ii) after the initial public offering by the Company or any direct or
indirect parent of the Company of its common stock (other than a public
offering pursuant to a registration statement on Form S-8), (A) any Schedule
13D, Form 13F or Schedule 13G under the Exchange Act, or any amendment to
such Schedule or Form, is received by the Company which indicates that, or
the Company otherwise becomes aware that, a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) other than the
Initial Investors or their Related Parties (as defined below) has become,
directly or indirectly, the "beneficial owner," by way of merger,
consolidation or otherwise, of 35% or more of the voting power of the voting
Capital Stock of the Company and (B) such person or group has become,
directly or indirectly, the beneficial owner of a greater percentage of the
voting Capital Stock of the Company than beneficially owned by the Initial
Investors or their Related Parties, or (iii) the sale, lease or transfer of
all or substantially all of the assets of the Company to any person or group
(other than a
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Subsidiary Guarantor or the Initial Investors or their Related Parties), or
(iv) during any period of two consecutive calendar years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by the Board of
Directors of the Company or whose nomination for election by the stockholders
of the Company was approved by a vote of a majority of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the directors of the Company, then
in office. "Related Party" with respect to any Initial Investor means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse, or
immediate family member (in the case of any individual) of such Initial
Investor or (B) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or persons beneficially holding
an 80% or more controlling interest of which consist of such Initial Investor
and/or such other persons referred to in the immediately preceding clause
(A).
"CONSOLIDATED EBITDA" means, with respect to the Company
and its Subsidiaries for any period, the sum of, without duplication, (i) the
Consolidated Net Income for such period, plus (ii) the Fixed Charges for such
period, plus (iii) provision for taxes based on income or profits for such
period (to the extent such income or profits were included in computing
Consolidated Net Income for such period), plus (iv) consolidated
depreciation, amortization and other non-cash charges of the Company and its
Subsidiaries required to be reflected as expenses on the books and records of
the Company, minus (v) cash payments with respect to any non-recurring,
non-cash charges previously added back pursuant to clause (iv), and (vi)
excluding the impact of foreign currency translations. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of
a Person will be added to Consolidated Net Income to compute Consolidated
EBITDA only to the extent (and in the same proportion) that the Net Income of
such Subsidiary was included in calculating the Consolidated Net Income of
such Person.
"CONSOLIDATED NET INCOME" means, with respect to any
Person for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; PROVIDED that (i) the Net Income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method
of accounting will be included only to the extent of the amount of dividends
or distributions paid in cash to the referent Person or a Subsidiary, (ii)
the Net Income of any Subsidiary will be excluded solely to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (which has not been obtained) or by
operation of the terms of its
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charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders
(PROVIDED that the Company's equity in Net Income of any such Subsidiary shall
be included up to the aggregate amount of dividends or similar distributions
that could have been declared or paid consistent with such restrictions during
such period), (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, (iv) the cumulative effect of a change in accounting principles
will be excluded, (v) the Net Income of, or any dividends or other distributions
from, any Unrestricted Subsidiary, to the extent otherwise included, shall be
excluded, except to the extent cash or Cash Equivalents are distributed to the
Company or one of its Subsidiaries in a transaction that does not relate to the
liquidation of such Unrestricted Subsidiary and (vi) all other extraordinary
gains and extraordinary losses will be excluded.
"COPETRO CREDIT AGREEMENT" means the credit agreement,
dated as of February 4, 1997, between Copetro S.A., Banca Nazionale del
Lavoro S.A. and the other lenders party thereto, as amended, restated,
supplemented or otherwise modified from time to time.
"CORPORATE TRUST OFFICE" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"DEFAULT" means any event that is or with the passage of
time or the giving of notice or both would be an Event of Default.
"DEFINITIVE NOTE" means a certificated Note registered in
the name of the Holder thereof and issued in accordance with Section 2.06
hereof, in the form of Exhibit A hereto except that such Note shall not bear
the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"DEPOSITARY" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section
2.03 hereof as the Depositary with respect to the Notes, until a successor
will have been appointed and become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" will mean or
include such successor.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) the
Indebtedness under the New Credit Agreement and (ii) any other Senior
Indebtedness of the Company or any Subsidiary of the Company permitted under
this Indenture, the original principal amount of which is $25,000,000 or more
and that has been designated by the Company as "Designated Senior
Indebtedness."
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"DISQUALIFIED STOCK" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event (other than
customary change of control or asset sale provisions), matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the Holder thereof, in whole or in part,
prior to the final stated maturity of the Notes.
"EQUITY INTERESTS" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means an underwritten public offering
pursuant to a registration statement filed with the SEC in accordance with
the Securities Act of (i) Equity Interests (other than Disqualified Stock) of
the Company or (ii) Equity Interests (other than Disqualified Stock) of the
Company's parent or indirect parent to the extent that the cash proceeds
therefrom are contributed to the equity capital of the Company or are used to
purchase Equity Interests (other than Disqualified Stock) of the Company.
"EUROCLEAR" means Morgan Guaranty Trust Company of New
York, Brussels office, or its successor, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"EXCHANGE NOTES" means Series B Notes issued pursuant to
an Exchange Offer.
"EXCHANGE OFFER" means an offer that may be made by the
Company pursuant to the Registration Rights Agreement (or another similar
agreement entered into in connection with the issuance of Additional Notes)
to exchange Exchange Notes for Series A Notes.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall have the
meaning set forth in the Registration Rights Agreement.
"EXISTING INDEBTEDNESS" means the Indebtedness of the
Company and its Subsidiaries (other than Indebtedness under the New Credit
Agreement) in existence on the Issue Date, or incurred subsequent to the
Issue Date pursuant to commitments under the Copetro Credit Agreement as in
effect on the Issue Date, until such amounts are repaid.
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"FAIR MARKET VALUE" means the price that would be paid in
an arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to
buy, as determined in good faith by the Company.
"FINANCE SUBSIDIARY" means any Subsidiary of the Company
(other than a Subsidiary Guarantor or a Foreign Subsidiary) organized for the
sole purpose of issuing Capital Stock or other securities and loaning the
proceeds thereof to the Company or a Subsidiary Guarantor and which engages
in no other transactions except those incidental thereto.
"FINANCE SUBSIDIARY INDEBTEDNESS" means Indebtedness of, or
Disqualified Stock issued by, a Finance Subsidiary which Indebtedness or
Disqualified Stock does not have a final stated maturity and is not mandatorily
redeemable or redeemable at the option of the holder thereof (other than
pursuant to customary change of control or asset sale provisions), in whole or
in part, prior to the final stated maturity of the Notes.
"FIXED CHARGES" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest
expense of such Person and its Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net payments (if any) pursuant to Hedging Obligations), and (ii) the
consolidated interest expense of such Person and its Subsidiaries that was
capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of
its Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon), and (iv)
all cash dividend payments on any series of preferred stock of such Person
payable to a party other than the Company or a Subsidiary of the Company.
"FIXED CHARGE COVERAGE RATIO" means with respect to any
Person for any period, the ratio of the Consolidated EBITDA of such Person
and its Subsidiaries for such period to the Fixed Charges of such Person and
its Subsidiaries for such period. In the event that the Company or any of its
Subsidiaries incurs, issues, assumes, retires, Guarantees, defeases or
redeems any Indebtedness (other than revolving credit borrowings) or
preferred stock subsequent to the commencement of the four-quarter reference
period for which the Fixed Charge Coverage Ratio is being calculated but on
or prior to the date on which the event for which the calculation of the
Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio
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will be calculated giving pro forma effect to such incurrence, issuance,
assumption, retirement, Guarantee, defeasance or redemption of Indebtedness
or preferred stock, as if the same had occurred at the beginning of the
applicable four-quarter reference period. For purposes of making the
computation referred to above, (i) acquisitions that have been made by the
Company or any of its Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on
or prior to the Calculation Date will be deemed to have occurred on the first
day of the four-quarter reference period, and (ii) the Consolidated EBITDA
attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of on or prior to the Calculation
Date, will be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of on or prior to the Calculation Date,
will be excluded, but only to the extent that the obligations giving rise to
such Fixed Charges will not be obligations of the referent Person or any of
its Subsidiaries following the Calculation Date.
"FOREIGN SUBSIDIARIES" means (i) Copetro S.A., an Argentine
corporation, and Great Lakes International Sales Corp., a Barbados corporation,
and (ii) any Subsidiary organized and incorporated in a jurisdiction outside of
the United States.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect on the Issue Date.
All ratios and computations based on GAAP contained in this Indenture shall
be computed in conformity with GAAP applied on a consistent basis, except
that calculations made for purposes of determining compliance with the terms
of the covenants and with other provisions of this Indenture shall be made
without giving effect to depreciation, amortization or other expenses
recorded as a result of the application of purchase accounting in accordance
with Accounting Principles Board Opinion Nos. 16 and 17.
"GLOBAL NOTES" means, individually and collectively, each
of the Restricted Global Notes and the Unrestricted Global Notes, in the form
of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"GLOBAL NOTE LEGEND" means the legend set forth in
Section 2.06(g)(ii), which is required to be placed on all Global Notes
issued under this Indenture.
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"GOVERNMENT SECURITIES" means direct obligations of,
or obligations fully guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and credit of the
United States of America is pledged.
"GUARANTEE" means a guarantee (other than by endorsement
of negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part
of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates and (ii) currency swap or protection agreements and other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange rates.
"HOLDER" means a Person in whose name a Note is
registered on the Registrar's books.
"HOLDINGS" means Great Lakes Acquisition Corp., a Delaware
corporation.
"HOLDINGS DEBENTURES" means the 13 1/8% Senior Discount
Debentures due 2009 of Holdings.
"INCUR" means, with respect to any Indebtedness, to
incur, create, issue, assume, Guarantee or otherwise become liable for or
with respect to, or become responsible for, the payment of, contingently or
otherwise, such Indebtedness, including an "Incurrence" of Acquired
Indebtedness; PROVIDED that neither the accrual of interest nor the accretion
of original issue discount shall be considered an Incurrence of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of
the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not
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such indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any such Indebtedness of any other
Person; PROVIDED that any indebtedness which has been defeased in accordance
with GAAP or defeased pursuant to the deposit of cash or Government Securities
(in an amount sufficient to satisfy all such indebtedness obligations at
maturity or redemption, as applicable, and all payments of interest and premium,
if any, thereon) in a trust or account created or pledged for the sole benefit
of the holders of such indebtedness, and subject to no other Liens, and the
other applicable terms of the instrument governing such indebtedness, shall not
constitute "Indebtedness."
"INDENTURE" means this Indenture, as amended or supplemented
from time to time.
"INITIAL PURCHASERS" mean the initial purchasers of the
Series A Notes under the Purchase Agreement, dated May 18, 1998, with respect to
the Series A Notes.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution
that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, who is not also a QIB.
"INVESTMENT" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the
form of direct or indirect loans (including guarantees of Indebtedness or
other obligations but excluding guarantees of Indebtedness of the Company or
any of its Subsidiaries), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP; PROVIDED that an acquisition of assets,
Equity Interests or other securities by the Company for consideration
consisting of common equity securities of the Company or any direct or
indirect parent of the Company will not be deemed to be an Investment.
"ISSUE DATE" means the date of first issuance of Notes
under this Indenture.
"JOINT VENTURES" means joint ventures entered into by the
Company or any of its Subsidiaries for the primary purpose of operating a
Related Business.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, or the city in which the principal
corporate trust office of the Trustee is located, or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of
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payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to
be prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"LIEN" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature of a security agreement, any option or
other agreement to grant or give a security interest in and, except in
connection with any Qualified Receivables Transaction, any filing of or
agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all Liquidated Damages then owing
pursuant to the Registration Rights Agreement.
"MERGER AGREEMENT" means that certain Agreement and Plan of
Merger dated as of April 21, 1998 by and between the Company and Holdings.
"MOODY'S" means Moody's Investors Service, Inc. and its
successors.
"MORTGAGE FINANCINGS" means any mortgage, deed of trust
or other instrument creating a lien on an estate in fee simple or a leasehold
estate in a property, secured by a note or other evidence of an obligor's
indebtedness under such mortgage, deed of trust or other instrument.
"NET CASH PROCEEDS" means the aggregate amount of cash and
Cash Equivalents received by the Company or any direct or indirect parent of the
Company in the case of a sale or equity contribution in respect of Equity
Interests (other than Disqualified Stock) plus, in the case of an issuance of
Equity Interests (other than Disqualified Stock) upon any exercise, exchange or
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the Company or any direct or indirect parent of the
Company that were issued for cash after the Issue Date, the amount of cash
originally received by the Company or any direct or indirect parent of the
Company upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less the sum of all payments, fees,
commissions, and customary and reasonable expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with
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such sale or equity contribution in respect of Equity Interests (other than
Disqualified Stock).
"NET INCOME" means, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of preferred stock dividends, excluding, however,
(i) any gain (but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or any
of its Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds and Cash
Equivalents received by the Company or any of its Subsidiaries in respect of
any Asset Sale (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received in any Asset
Sale), net of the direct costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness (other than the Notes, the
Subsidiary Guarantees or Indebtedness under the New Credit Agreement) secured
by a Lien on the asset or assets that were the subject of such Asset Sale,
any reserve for adjustment in respect of the sale price of such asset or
assets or liabilities associated with such Asset Sale and retained by the
Company or such Subsidiary established in accordance with GAAP, all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or other parties to any Joint Ventures as a result of
such Asset Sale and all Purchase Money Obligations (and Permitted Refinancing
Indebtedness thereof) assumed by the purchaser in connection with such Asset
Sale.
"NEW CREDIT AGREEMENT" means that certain Credit
Agreement, dated as of the Issue Date, by and among Holdings, the Company,
Bankers Trust Company, as syndication and administrative agent, DLJ Capital
Funding, Inc., as documentation agent, Bank of America National Trust and
Savings Association, as co-agent, and the lenders parties thereto, including
any related notes, guarantees, collateral documents, instruments and
agreements (including, without limitation, agreements with respect to Hedging
Obligations with lenders party to the New Credit Agreement or their
Affiliates) executed in connection therewith, and in each case as amended,
supplemented, modified, renewed, refunded, replaced, restated or refinanced
from time to time, including any agreement
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restructuring or adding Holdings or Subsidiaries of the Company as
additional borrowers or guarantors thereunder and whether by the same or any
other agent, lender or group of lenders.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness (i) as to
which neither the Company nor any of its Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; and (ii) no default
with respect to which (including any rights that the holders thereof may have
to take enforcement action against an Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
the Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior
to its stated maturity.
"NOTES CUSTODIAN" means the Trustee, as custodian with
respect to the Notes in global form, or any successor entity thereto.
"OBLIGATIONS" means any principal, interest, penalties,
fees, indemnifications, reimbursements, damages or other liabilities payable
under the documentation governing any Indebtedness.
"OFFER TO PURCHASE" means an offer to purchase Notes by
the Company from the Holders commenced by mailing a notice to the Trustee and
each Holder stating: (i) the Section of this Indenture pursuant to which the
offer is being made and that all Notes validly tendered will be accepted for
payment on a PRO RATA basis; (ii) the purchase price and the date of purchase
(which shall be a Business Day no later than five Business Days following the
termination of the Offer to Purchase (the "Payment Date"); (iii) that the
Offer to Purchase shall remain open for a period not to exceed 60 days
following its commencement, except to the extent that a longer period is
required by applicable law; (iv) that any Note not tendered will continue to
accrue interest pursuant to its terms; (v) that, unless the Company defaults
in the payment of the purchase price, any Note accepted for payment pursuant
to the Offer to Purchase shall cease to accrue interest on and after the
Payment Date; (vi) that Holders electing to have a Note purchased pursuant to
the Offer to Purchase will be required to surrender the Note, together with
the form entitled "Option of the Holder to Elect Purchase" on the reverse
side of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day immediately
preceding the Payment Date; (vii) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Payment Date, a
telegram, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Notes delivered for purchase and a statement
that such Holder is withdrawing his election to have such Notes purchased;
and (viii) that Holders whose
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Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered;
PROVIDED that each Note purchased and each new Note issued shall be in a
principal amount of $1,000 or integral multiples thereof. On the Payment
Date, the Company shall (i) accept for payment on a PRO RATA basis Notes or
portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with
the Paying Agent money sufficient to pay the purchase price of all Notes or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee all Notes or portions thereof so accepted together with an
Officers' Certificate specifying the Notes or portions thereof accepted for
payment by the Company. The Paying Agent shall promptly mail to the Holders
of Notes so accepted payment in an amount equal to the purchase price, and
the Trustee shall promptly authenticate and mail to such Holders a new Note
equal in principal amount to any unpurchased portion of the Note surrendered;
PROVIDED that each Note purchased and each new Note issued shall be in a
principal amount of $1,000 or integral multiples thereof. The Company will
publicly announce the results of an Offer to Purchase as soon as practicable
after the Payment Date. The Trustee shall act as the Paying Agent for an
Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the
Company is required to repurchase Notes pursuant to an Offer to Purchase. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions for such Offer to Purchase, the Company will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations with respect to such Offer to Purchase by virtue
thereof.
"OFFERING" means the offering of the Series A Notes by the
Company.
"OFFICER" means, with respect to any Person, the Chairman
of the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary, any Assistant Secretary or any Vice President
of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on
behalf of the Company by two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer
or the principal accounting officer of the Company, that meets the
requirements of Sections 12.04 and 12.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel
who is reasonably acceptable to the Trustee, that meets the requirements of
Sections 12.04 and 12.05 hereof. The counsel may be an employee of or
counsel to the Company or any Subsidiary of the Company.
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"PARTICIPANT" means, with respect to the Depositary,
Euroclear or Cedel, a Person who has an account with the Depositary,
Euroclear or Cedel, respectively (and, with respect to The Depository Trust
Company, shall include Euroclear and Cedel).
"PERMITTED INVESTMENTS" means (a) any Investments in the
Company or in a Subsidiary Guarantor that is engaged in one or more Related
Businesses; (b) any Investment by the Company or a Subsidiary Guarantor in a
Receivables Subsidiary or any Investment by a Receivables Subsidiary in any
other Person in connection with a Qualified Receivables Transaction PROVIDED,
that the foregoing Investment is in the form of a note or other instrument
that the Receivables Subsidiary or other Person is required to repay as soon
as practicable from available cash collections less amounts required to be
established as reserves pursuant to contractual agreements with entities that
are not Affiliates of the Company entered into as part of a Qualified
Receivables Transaction; (c) any Investments in Cash Equivalents; (d)
Investments by the Company or any Subsidiary of the Company in a Person if as
a result of such Investment (i) such Person becomes a Subsidiary Guarantor
that is engaged in one or more Related Businesses or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Subsidiary Guarantor that is engaged in one or more Related Businesses; (e)
Investments made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.13; (f)
Investments outstanding as of the Issue Date; (g) Investments in the form of
promissory notes of members of the Company's or Holdings' management in
consideration of the purchase by such members of Equity Interests (other than
Disqualified Stock) in the Company; (h) Investments which constitute Existing
Indebtedness of the Company of any of its Subsidiaries; (i) accounts
receivable, endorsements for collection or deposits arising in the ordinary
course of business; (j) other Investments in any Person that do not exceed
$10,000,000 at any time outstanding under and pursuant to this clause (j),
without giving effect to changes in the value of such Investment occurring
after the date of such Investment, but giving effect to all dividends,
distributions, principal, interest and other payments received in respect of
such Investments in cash or Cash Equivalents; (k) Investments in Foreign
Subsidiaries or Joint Ventures that do not exceed $35,000,000 at any time
outstanding under and pursuant to this clause (k), without giving effect to
changes in the value of such Investment occurring after the date of such
Investment, but giving effect to all dividends, distributions, principal,
interest and other payments received in respect of such Investments in cash
or Cash Equivalents; (l) Investments constituting Indebtedness owed by one
Foreign Subsidiary to one or more other Foreign Subsidiaries or Investments
by a Foreign Subsidiary in one or more other Foreign Subsidiaries; (m)
Investments constituting Indebtedness permitted under clause (vii) of Section
4.07; and (n) capital stock, obligations or other securities received in
settlement of debts
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<PAGE>
created in the ordinary course of business and owing to the Company or any of
its Subsidiaries.
"PERMITTED JUNIOR SECURITIES" means securities that are
subordinated at least to the same extent as the Notes or a Subsidiary
Guarantee to Designated Senior Indebtedness of the Company or a Subsidiary
Guarantor as applicable, and that have a final maturity date, that is the
same as or later than, and a weighted average life to maturity that is the
same as or greater than, the Notes or the applicable Subsidiary Guarantees.
"PERMITTED LIENS" means (i) Liens securing the New Credit
Agreement and other Senior Indebtedness of the Company or the Subsidiary
Guarantors and Permitted Refinancing Indebtedness related thereto; (ii) Liens
in favor of the Company or any Subsidiary Guarantor; (iii) Liens on property
of a Person existing at the time such Person is merged into or consolidated
with or acquired by the Company or any Subsidiary of the Company in
accordance with the provisions of this Indenture; PROVIDED that such Liens
were in existence prior to the contemplation of such merger or consolidation
and do not extend to any assets other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Subsidiary of the Company, PROVIDED
that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like
nature incurred in the ordinary course of business; (vi) Liens existing on
the Issue Date and Liens securing any Permitted Refinancing Indebtedness
incurred to refinance any Indebtedness secured by such Liens; (vii) Liens for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, PROVIDED that any
reserve or other appropriate provision as will be required in conformity with
GAAP will have been made therefor; (viii) Liens incurred in the ordinary
course of business of the Company or any Subsidiary of the Company with
respect to obligations that do not exceed $5,000,000 at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially
detract from the value of the property or materially impair the use thereof
in the operation of business by the Company or such Subsidiary; (ix) Liens
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security; (x) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Company or any
of its Subsidiaries; (xi) Purchase Money Liens (including extensions and
renewals thereof and Liens securing any Permitted Refinancing
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<PAGE>
Indebtedness incurred in respect of the applicable Purchase Money
Obligations); (xii) Liens securing reimbursement obligations with respect to
letters of credit and bankers' acceptances which encumber only documents and
other property relating to such letters of credit and the products and
proceeds thereof; (xiii) judgment and attachment Liens not giving rise to an
Event of Default; (xiv) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements;
(xv) Liens arising out of consignment or similar arrangements for the sale of
goods; (xvi) any interest or title of a lessor in property subject to any
Capital Lease Obligation or operating lease; (xvii) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; (xviii) Liens
on assets of the Company or its Subsidiaries with respect to Acquired
Indebtedness (and Permitted Refinancing Indebtedness with respect thereto)
PROVIDED that such Liens were not created in contemplation of or in
connection with such acquisition; (xix) Liens on assets of the Company or a
Receivables Subsidiary incurred in connection with a Qualified Receivables
Transaction; (xx) Liens securing Indebtedness of any Foreign Subsidiary;
(xxi) Liens securing the Notes and any other obligations ranking PARI PASSU
with the Notes; and (xxii) Liens securing Permitted Refinancing Indebtedness
incurred to refinance any Indebtedness that was previously secured by a Lien,
in a manner no more adverse, taken as a whole, to the Holders of the Notes
than the Liens securing such refinanced Indebtedness.
"PERMITTED PAYMENTS TO HOLDINGS" means without duplication,
(a) payments to Holdings in an amount sufficient to permit Holdings to pay
reasonable and necessary operating expenses and other general corporate expenses
to the extent such expenses relate or are fairly allocable to the Company and
its Subsidiaries, including any reasonable professional fees and expenses not in
excess of $300,000 in any fiscal year, but excluding all expenses payable to or
to be paid to or on behalf of AIP, and (b) payments to Holdings to enable
Holdings to pay foreign, federal, state or local tax liabilities ("Tax
Payments"), not to exceed the amount of any tax liabilities that would be
otherwise payable by the Company and its Subsidiaries and Unrestricted
Subsidiaries to the appropriate taxing authorities if they filed separate tax
returns to the extent that Holdings has an obligation to pay such tax
liabilities relating to the operations, assets or capital of the Company or its
Subsidiaries and Unrestricted Subsidiaries; PROVIDED, HOWEVER, that (i),
notwithstanding the foregoing, in the case of determining the amount of a Tax
Payment that is permitted to be paid by the Company and any of its United States
Subsidiaries in respect of their Federal income tax liability, such payment
shall be determined on the basis of assuming that Company is the parent company
of an affiliated group (the "Company Affiliated Group") filing a consolidated
Federal income tax return and that Holdings and each such United States
Subsidiary is a member of the Company Affiliated Group and (ii) any Tax Payments
shall either be used by Holdings to pay such
19
<PAGE>
tax liabilities within 90 days of Holdings' receipt of such payment or refunded
to the payee.
"PERMITTED REFINANCING INDEBTEDNESS" means any
Indebtedness of the Company or any of its Subsidiaries issued in exchange for,
or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, other Indebtedness of the Company or any of its
Subsidiaries; PROVIDED that: (i) the principal amount (or accreted value, if
issued with an original issue discount) of such Permitted Refinancing
Indebtedness does not exceed the principal amount (or accreted value, if
issued with an original issue discount) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith, the accrued or unpaid
interest thereon and any premium owed in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness is subordinated in right of
payment to, the Notes on terms at least as favorable, taken as a whole, to
the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded and the final maturity date of such Permitted Refinancing
Indebtedness is later than the final maturity date of the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Subsidiary who is
the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or agency or political
subdivision thereof (including any subdivision or ongoing business of any
such entity or substantially all of the assets of any such entity,
subdivision or business).
"PREFERRED STOCK" means, with respect to any Person, any
and all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether outstanding on the Issue Date or issued thereafter,
including, without limitation, all series and classes of such preferred or
preference stock.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture
except where otherwise permitted by the provisions of this Indenture.
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"PURCHASE MONEY LIEN" means a Lien granted on an asset or
property to secure a Purchase Money Obligation permitted to be incurred under
this Indenture and incurred solely to finance the purchase (or lease), or the
cost of construction or improvement, of such asset or property; PROVIDED,
HOWEVER, that such Lien encumbers only such asset or property and is granted
within 180 days of such acquisition.
"PURCHASE MONEY OBLIGATIONS" of any Person means any
obligations of such Person to any seller or any other Person incurred or
assumed to finance the purchase (or lease), or the cost of construction or
improvement, of real or personal property to be used in the business of such
Person or any of its Subsidiaries in an amount that is not more than 100% of
the cost, or fair market value, as appropriate, of such property, and
incurred within 180 days after the date of such acquisition (excluding
accounts payable to trade creditors incurred in the ordinary course of
business).
"QIB" means a "qualified institutional buyer" as defined
in Rule 144A.
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction
or series of transactions that may be entered into by the Company or any of
its Subsidiaries pursuant to which the Company or any of its Subsidiaries may
sell, convey or otherwise transfer to (i) a Receivables Subsidiary (in the
case of a transfer by the Company or any of its Subsidiaries) and (ii) any
other Person (in the case of a transfer by a Receivables Subsidiary), or may
grant a security interest in, any accounts receivable (whether now existing
or arising in the future) of the Company or any of its Subsidiaries, and any
assets related thereto including, without limitation, all collateral securing
such accounts receivable, all contracts and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets which are customarily transferred or in respect
of which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Subsidiary of the
Company which engages in no activities other than in connection with the
financing of accounts receivable and which is designated by the Board of
Directors of the Company (as provided below) as a Receivables Subsidiary (a)
no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which (i) is guaranteed by the Company or any Subsidiary of the
Company (excluding guarantees of Obligations (other than the principal of,
and interest on, Indebtedness) pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction), (ii) is recourse to or
obligates the Company or any Subsidiary of the Company in any way other than
pursuant to representations, warranties, covenants and indemnities entered
into in the ordinary course of business in connection with a Qualified
Receivables Transaction or (iii) subjects any property or asset of the
Company or any Subsidiary of the Company (other than accounts
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<PAGE>
receivable), directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction, (b) with which neither
the Company nor any Subsidiary of the Company has any material contract,
agreement, arrangement or understanding other than on terms no less favorable
to the Company or such Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company, other than fees
payable in the ordinary course of business in connection with servicing
accounts receivable and (c) with which neither the Company nor any Subsidiary
of the Company has any obligation to maintain or preserve such Subsidiary's
financial condition or cause such Subsidiary to achieve certain levels of
operating results. Any such designation by the Board of Directors of the
Company will be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of the Company
giving effect to such designation and an Officers' Certificate certifying
that such designation complied with the foregoing conditions.
"REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement, dated as of the Issue Date, by and among the Company and
the Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time.
"REGULATION S" means Regulation S promulgated under the
Securities Act, as it may be amended from time to time, and any successor
provision thereto.
"REGULATION S GLOBAL NOTE" means a permanent global Note
in the form of Exhibit A hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Notes initially sold in reliance on
Rule 903 of Regulation S.
"RELATED BUSINESS" means the business conducted by the
Company and its Subsidiaries as of the Issue Date and any and all businesses
that in the good faith judgment of the Board of Directors of the Company are
related businesses, including reasonable extensions or expansions thereof.
"REPRESENTATIVE" means the indenture trustee or other
trustee, agent or representative for any Designated Senior Indebtedness.
"RESTRICTED DEFINITIVE NOTE" means a Definitive Note
bearing the Private Placement Legend.
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<PAGE>
"RESTRICTED GLOBAL NOTE" means a Global Note bearing the
Private Placement Legend.
"RESTRICTED INVESTMENT" means an Investment other than a
Permitted Investment.
"RESTRICTED PERIOD" means the 40-day restricted period as
defined in Regulation S.
"RULE 144A" means Rule 144A promulgated under the
Securities Act, as it may be amended from time to time, and any successor
provision thereto.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SENIOR INDEBTEDNESS" means the following obligations of
the Company or the Subsidiary Guarantors, whether outstanding on the Issue
Date or thereafter Incurred: (i) all Indebtedness and other Obligations
under, and Guarantees of, the New Credit Agreement and (ii) all other
Indebtedness and all other monetary obligations of the Company or the
Subsidiary Guarantors (other than the Notes and the Subsidiary Guarantees),
unless such Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is PARI PASSU with,
or subordinated in right of payment to, the Notes or the Subsidiary
Guarantees, as the case may be; PROVIDED that the term "Senior Indebtedness"
shall not include (a) any Indebtedness of the Company or the Subsidiary
Guarantors that, when Incurred, was without recourse to the Company or the
Subsidiary Guarantors, as the case may be, (b) any Indebtedness of the
Company to a Subsidiary of the Company, or to a Joint Venture in which the
Company has an interest, (c) any repurchase, redemption or other obligation
in respect of Disqualified Stock, (d) any Indebtedness to any employee of the
Company or any of its Subsidiaries, (e) any liability for taxes owed or owing
by the Company or any of its Subsidiaries, or (f) any trade payables. Senior
Indebtedness will also include Accrued Bankruptcy Interest.
"SENIOR REVOLVING DEBT" means revolving Indebtedness
under the New Credit Agreement as such agreement may be restated, further
amended, supplemented or otherwise modified, renewed, refunded, replaced or
refinanced, in whole or in part, from time to time.
"SENIOR TERM DEBT" means term Indebtedness under the New
Credit Agreement as such agreement may be restated, further amended,
supplemented or
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otherwise modified, renewed, refunded, replaced or refinanced, in whole or in
part, from time to time.
"SHELF REGISTRATION STATEMENT" shall have the meaning set
forth in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would
be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Exchange Act, as such Regulation
is in effect on the date hereof.
"S&P" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, and its successors.
"STATED MATURITY" means, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable
and (ii) with respect to any scheduled installment of principal of or
interest on any debt security, the date specified in such debt security as
the fixed date on which such installment is due and payable.
"SUBSIDIARY" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof). Unrestricted Subsidiaries will not be
included in the definition of Subsidiary for any purposes of this Indenture
(except, as the context may otherwise require, for purposes of the definition
of "Unrestricted Subsidiary.")
"SUBSIDIARY GUARANTORS" means any Subsidiary that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"TRANSFER RESTRICTED NOTES" means securities that bear,
or that are required to bear, the Private Placement Legend.
"TRUSTEE" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
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<PAGE>
"UNRESTRICTED DEFINITIVE NOTE" means one or more
Definitive Notes that do not bear and are not required to bear the Private
Placement Legend.
"UNRESTRICTED GLOBAL NOTE" means a permanent global Note
in the form of Exhibit A attached hereto that bears the Global Note Legend
and that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, and that is deposited with or on behalf of and registered
in the name of the Depositary, representing a series of Notes that do not
bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that
is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a Board Resolution; but only to the extent that such Subsidiary:
(a) has no Indebtedness other than Non-Recourse Indebtedness; (b) is not
party to any agreement, contract, arrangement or understanding with the
Company or any Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
the Company or such Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Subsidiaries has any
obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (d) has not
guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Subsidiaries. Any such
designation by the Board of Directors will be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by
Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail
to meet the foregoing requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary will be deemed to be
incurred by a Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section
4.07 hereof, the Company will be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Subsidiary; PROVIDED that such designation will be deemed
to be an incurrence of Indebtedness by a Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
will only be permitted if (i) such Indebtedness is permitted under Section
4.07 hereof, and (ii) no Default or Event of Default would be in existence
following such designation.
"U.S. PERSON" means a U.S. person as defined in Rule
902(o) under the Securities Act.
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<PAGE>
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied
to any Indebtedness at any date, the number of years obtained by dividing (i)
the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
SECTION 1.02. OTHER DEFINITIONS
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" 4.12
"Authentication Order" 2.02
"Bankruptcy Law" 6.01
"Benefitted Party" 10.01
"Company Obligations" 4.01
"Covenant Defeasance" 8.03
"Custodian" 6.01
"DTC" 2.03
"Guarantee Obligations" 10.01
"Legal Defeasance" 8.02
"Nonpayment Default" 11.03
"Paying Agent" 2.03
"Payment Blockage Notice" 11.03
"Payment Date" 1.01
"Payment Default" 11.03
"Registrar" 2.03
"Restricted Payments" 4.09
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
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<PAGE>
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee;
"OBLIGOR" on the Notes means the Company and any
successor obligor upon the Notes.
All other terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by SEC
rule under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act and the Exchange Act shall be deemed to include
substitute, replacement of successor sections or rules adopted
by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING
(a) GENERAL. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage.
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<PAGE>
Each Note shall be dated the date of its authentication. The Notes shall be
in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Subsidiary Guarantors and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby. However, to the extent any provision of any Note
conflicts with the express provisions of this Indenture, the provisions of
this Indenture shall govern and be controlling.
(b) GLOBAL NOTES. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the
Global Note Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Notes Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.
(c) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms
and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Global
Notes that are held by Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION
An Officer shall sign the Notes for the Company by manual
or facsimile signature. The Company's seal shall be reproduced on the Notes
and may be in facsimile form. If an Officer whose signature is on a Note no
longer holds that office at the time a Note is authenticated, the Note shall
nevertheless be valid. A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture. The Trustee
shall, upon a written order of the Company signed by an Officer (an
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<PAGE>
"Authentication Order"), authenticate Notes for issuance up to the aggregate
principal amount stated in such Authentication Order; PROVIDED that (i) Notes
authenticated for issuance on the Issue Date shall not exceed $175,000,000 in
aggregate principal amount, (ii) Additional Notes authenticated for issuance
on an Interest Payment Date (as defined in the Notes) shall, subject to the
provisions of the Notes relating to the payment of interest, not exceed the
aggregate principal amount required to pay interest on the outstanding Notes
through the issuance of such Additional Notes, and (iii) Additional Notes
authenticated for issuance on any other date shall not exceed $50,000,000 in
aggregate principal amount. The aggregate principal amount of Notes
outstanding at any time may not exceed $225,000,000, plus the aggregate
principal amount of Additional Notes issued to pay interest on the Notes
pursuant to the terms thereof, except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with Holders or an Affiliate of the
Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where
Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be presented for
payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar. The Company initially appoints The Depository
Trust Company ("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and Paying
Agent and to act as Notes Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent will hold in trust for
the benefit of Holders or the Trustee all money held by the Paying Agent for
the payment of principal, premium or Liquidated Damages, if any, or interest
on the Notes, and will notify the Trustee of any
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default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it
to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company, the Trustee
shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company shall otherwise comply with
TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE
(a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global
Note may not be transferred as a whole except by the Depositary to a nominee
of the Depositary, by a nominee of the Depositary to the Depositary or to
another nominee of the Depositary, or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary. All
Global Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer
a clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after
the date of such notice from the Depositary, (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should
be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee or (iii) upon request of the Trustee or Holders of a
majority of the aggregate principal amount of outstanding Notes if there
shall have occurred and be continuing a Default or Event of Default with
respect to the Notes. Upon the occurrence of any of the preceding events in
(i), (ii) or (iii) above, Definitive Notes shall be issued in such names as
the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in
lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06
or Section 2.07 or
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2.10 hereof, shall be authenticated and delivered in the form of, and shall
be, a Global Note. A Global Note may not be exchanged for another Note other
than as provided in this Section 2.06(a), however, beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b),
(c) or (f) hereof.
(b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE
GLOBAL NOTES. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Notes also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME
GLOBAL NOTE. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; PROVIDED, HOWEVER,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Regulation S Global Note may not be made to a
U.S. Person or for the account or benefit of a U.S. Person (other than a
Initial Purchaser). Beneficial interests in any Unrestricted Global Note may
be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 2.06(b)(i).
(ii) ALL OTHER TRANSFERS AND EXCHANGES OF
BENEFICIAL INTERESTS IN GLOBAL NOTES. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section 2.06(b)(i)
above, the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) an order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given
in accordance with the Applicable Procedures containing information regarding
the Participant account to be credited with such increase or (B) (1) an order
from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial interest
to be transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose name
such Definitive Note shall be registered to effect the transfer or exchange
referred to in (B)(1) above. Upon consummation of an
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Exchange Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Notes. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER
RESTRICTED GLOBAL NOTE. A beneficial interest in any Restricted Global Note
may be transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the Registrar
receives the following:
(A) if the transferee will take delivery in
the form of a beneficial interest in the 144A Global Note,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (1)
thereof; and
(B) if the transferee will take delivery in
the form of a beneficial interest in the Regulation S Global
Note, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof.
(iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS
IN A RESTRICTED GLOBAL NOTE FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED
GLOBAL NOTE. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an Unrestricted
Global Note or transferred to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the beneficial
interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
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(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following: (1)
if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for
a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof; or (2) if
the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and, in each such case set
forth in this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Registrar and the Company to the
effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph
(B) or (D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above. Beneficial interests in an Unrestricted
Global Note cannot be exchanged for, or transferred to Persons who take
delivery thereof in the form of, a beneficial interest in a Restricted Global
Note.
(c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR
DEFINITIVE NOTES.
(i) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL
NOTES TO RESTRICTED DEFINITIVE NOTES. If any holder of a beneficial interest
in a Restricted Global Note proposes to exchange such beneficial interest for
a Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
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(A) if the holder of such beneficial interest
in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such beneficial interest is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such beneficial interest is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such beneficial interest is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and, upon receipt of an Authentication
Order pursuant to Section 2.02, the Trustee shall authenticate and deliver to
the Person designated in the instructions a Restricted Definitive Note in the
appropriate principal amount. Any Restricted Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note
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pursuant to this Section 2.06(c) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions from
the Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Restricted Definitive Notes to the Persons in whose names
such Notes are so registered. Any Restricted Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL
NOTES TO UNRESTRICTED DEFINITIVE NOTES. A holder of a beneficial interest in
a Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following: (1)
if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for
a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(b) thereof;
or (2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof; and, in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Registrar and the Company to the effect that such exchange
or transfer is in compliance with the
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Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities
Act.
(iii) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL
NOTES TO UNRESTRICTED DEFINITIVE NOTES. If any holder of a beneficial
interest in an Unrestricted Global Note proposes to exchange such beneficial
interest for an Unrestricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Unrestricted Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall execute
and, upon receipt of an Authentication Order pursuant to Section 2.02, the
Trustee shall authenticate and deliver to the Person designated in the
instructions an Unrestricted Definitive Note in the appropriate principal
amount. Any Unrestricted Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.
The Trustee shall deliver such Unrestricted Definitive Notes to the Persons
in whose names such Notes are so registered. Any Unrestricted Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR
BENEFICIAL INTERESTS.
(i) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES. If any Holder of a Restricted
Definitive Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes to a
Person who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted
Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note, a certificate
from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is
being transferred to a QIB in accordance with Rule 144A under
the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof; or
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(C) if such Restricted Definitive Note is
being transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2)
thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to
be increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause (B)
above, the 144A Global Note, and in the case of clause (C) above, the
Regulation S Global Note.
(ii) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL
INTERESTS IN UNRESTRICTED GLOBAL NOTES. A Holder of a Restricted Definitive
Note may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following: (1)
if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or (2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and, in each such case set
forth in this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Registrar and the Company to the
effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are
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no longer required in order to maintain compliance with the
Securities Act. Upon satisfaction of the conditions of any of
the subparagraphs in this Section 2.06(d)(ii), the Trustee
shall cancel the Restricted Definitive Notes so transferred or
exchanged and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii) UNRESTRICTED DEFINITIVE NOTES TO BENEFICIAL
INTERESTS IN UNRESTRICTED GLOBAL NOTES. A Holder of an Unrestricted
Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate principal
amount of one of the Unrestricted Global Notes. If any such exchange or
transfer from a Definitive Note to a beneficial interest is effected pursuant
to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.02
hereof, the Trustee shall authenticate one or more Unrestricted Global Notes
in an aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR
DEFINITIVE NOTES. Upon request by a Holder of Definitive Notes and such
Holder's compliance with the provisions of this Section 2.06(e), the
Registrar shall register the transfer or exchange of Definitive Notes. Prior
to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Registrar the Definitive Notes duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by its attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant
to the following provisions of this Section 2.06(e).
(i) RESTRICTED DEFINITIVE NOTES TO RESTRICTED
DEFINITIVE NOTES. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to
Rule 144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to
Rule 903 or Rule 904, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
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(C) if the transfer will be made pursuant to
any other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) RESTRICTED DEFINITIVE NOTES TO UNRESTRICTED
DEFINITIVE NOTES. Any Restricted Definitive Note may be exchanged by the
Holder thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to
the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following: (1)
if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof; or (2) if
the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and, in each
such case set forth in this subparagraph (D), an Opinion of
Counsel in form reasonably acceptable to the Registrar and the
Company to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions
on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance
with the Securities Act.
(iii) UNRESTRICTED DEFINITIVE NOTES TO UNRESTRICTED
DEFINITIVE NOTES. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person
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who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
(f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the sum of (A) the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance by
Persons that certify in the applicable Letters of Transmittal that (x) they are
not Broker-Dealers, (y) they are not participating in a distribution of the
Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the
Company, and accepted for exchange in the Exchange Offer and (B) the principal
amount of Definitive Notes exchanged or transferred for beneficial interests in
Unrestricted Global Notes in connection with the Exchange Offer pursuant to
Section 2.06(d)(ii) and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes accepted for
exchange in the Exchange Offer (other than Definitive Notes described in clause
(i)(B) immediately above). Concurrently with the issuance of such Notes, the
Trustee shall cause the aggregate principal amount of the applicable Restricted
Global Notes to be reduced accordingly, and the Company shall execute and, upon
receipt of an Authentication Order pursuant to Section 2.02, the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) LEGENDS. The following legends shall appear on the face
of all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) PRIVATE PLACEMENT LEGEND.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE US
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS
ACQUISITION HEREOF OR
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OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT
(I) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE ACT)(A "QIB"), (II) IT HAS ACQUIRED THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE ACT
OR (III) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE ACT
(AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (I) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
THE ACT, (IV) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE ACT, (V) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE ACT, (VI) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (VII) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING.
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii),
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(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06
(and all Notes issued in exchange therefor or substitution thereof)
shall not bear the Private Placement Legend.
(ii) GLOBAL NOTE LEGEND. To the extent required by the
Depositary, each Global Note shall bear a legend in substantially the following
form:
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN
WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV)
THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such
time as all beneficial interests in a particular Global Note have been
exchanged for Definitive Notes or a particular Global Note has been redeemed,
repurchased or cancelled in whole and not in part, each such Global Note
shall be returned to or retained and cancelled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note or for Definitive Notes, the principal amount of Notes
represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if
the beneficial interest is being exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
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(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of an Authentication Order.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 4.13 and 4.14 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon
any registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning
at the opening of business 15 days before the day of any selection of Notes
for redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (C) to register the transfer of
or to exchange a Note between a record date and the next succeeding interest
payment date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute owner
of such Note for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
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(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss
that any of them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note. Every replacement Note is an
additional obligation of the Company and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes
duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth
in Section 2.09 hereof, a Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note. If a Note is replaced
pursuant to Section 2.07 hereof, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. If the principal amount of any Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue. If the Paying Agent (other than the Company, a Subsidiary
or an Affiliate of any thereof) holds, on a redemption date or the maturity
date, money sufficient to pay Notes payable on that date, then on and after
that date such Notes shall be deemed to be no longer outstanding and shall
cease to accrue interest.
SECTION 2.09. TREASURY NOTES
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes
owned by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company,
shall be considered as though not outstanding, except that for the purposes
of determining whether the Trustee shall be
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protected in relying on any such direction, waiver or consent, only Notes
that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes. Holders of temporary Notes shall be entitled to
all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes
shall be delivered to the Company. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate
provided in the Notes and in Section 4.01 hereof. The Company shall notify
the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Note and the date of the proposed payment. The Company shall
fix or cause to be fixed each such special record date and payment date;
PROVIDED that no such special record date shall be less than 10 days prior to
the related payment date for such defaulted interest. At least 15 days
before the special record date, the Company (or, upon the written request of
the Company, the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
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ARTICLE 3.
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 45 days (unless a shorter period is acceptable to the
Trustee) but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which
the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders of the
Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes
are not so listed, on a PRO RATA basis, by lot or in accordance with any
other method the Trustee considers fair and appropriate. In the event of
partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes
not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or integral
multiples of $1,000; except that if all of the Notes of a Holder are to be
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not an integral multiple of $1,000, shall be redeemed. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Notes
called for redemption also apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Notes are to be redeemed at its
registered address.
The notice shall identify the Notes to be redeemed and shall
state:
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(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue
on and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that
the Company shall have delivered to the Trustee, at least 45 days prior to
the redemption date, an Officers' Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable
on the redemption date at the redemption price. A notice of redemption may
not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
On the Business Day immediately prior to the redemption date,
the Company shall deposit with the Trustee or with the Paying Agent
immediately available funds sufficient to pay the redemption price of and
accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall promptly return to the
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Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of,
and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue
on the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the unpaid principal,
from the redemption date until such principal is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case at the
rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole
or in part, at any time or from time to time, on or after May 15, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first class mail to each Holder's last registered address, at the
following redemption prices (expressed in percentages of principal amount),
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, if redeemed during the 12-month period commencing May 15, of
the years set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 . . . . . . . . . . . . . . . . . . . . . . 105.125%
2004 . . . . . . . . . . . . . . . . . . . . . . 103.417%
2005 . . . . . . . . . . . . . . . . . . . . . . 101.708%
2006 and thereafter . . . . . . . . . . . . . . . 100.000%
</TABLE>
In addition, at any time or from time to time on or prior to
May 15, 2001, the Company may redeem up to 35% of the principal amount of the
Notes issued under
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this Indenture, at a redemption price (expressed as a percentage of principal
amount) of 110.250%, plus accrued and unpaid interest and Liquidated Damages,
if any, to the redemption date with the Net Cash Proceeds of one or more
Equity Offerings; PROVIDED that at least $100,000,000 aggregate principal
amount of Notes remains outstanding after the occurrence of each such
redemption; and PROVIDED FURTHER, that such redemption occurs within 90 days
of the date of the closing of such Equity Offering.
SECTION 3.08. NO MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof, holds as of 12:00 noon Eastern time on the
due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due; PROVIDED that interest which, under the Notes, may be paid
with Additional Notes shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 12:00
noon Eastern time on the due date Additional Notes (along with the amount of
cash, in immediately available funds, necessary to satisfy the requirement
that Additional Notes that would be in incremental amounts of less than
$1,000 shall be payable in cash) sufficient to pay all interest then due.
The Company shall pay all Liquidated Damages, if any, in the same manner on
the dates and in the amounts set forth in the Registration Rights Agreement.
The Company's Obligations under the Notes, this Indenture and the
Registration Rights Agreement are referred to herein as the "Company
Obligations."
The Company shall pay interest (including Accrued Bankruptcy
Interest in any proceeding under any Bankruptcy Law) on overdue principal at
the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including Accrued Bankruptcy Interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same rate to
the extent lawful.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain an office or agency (which may
be an office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for registration of transfer or
for exchange and where notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office.
The Company may also from time to time designate one or
more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office
as one such office or agency of the Company in accordance with Section 2.03
hereof.
SECTION 4.03. SEC REPORTS AND REPORTS TO HOLDERS
Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, beginning with the year ending
December 31, 1998 the Company shall furnish to the Holders of Notes and the
Trustee (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and, with respect to the annual information only, a report thereon by the
Company's certified independent accountants and (ii) all current reports that
would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports; PROVIDED that the foregoing shall not require
the Company to furnish separate financial results of its Subsidiaries. In
addition, whether or not required by the rules and regulations of the SEC,
the Company will file a copy of all such information and reports with the SEC
for public availability (unless the SEC will not accept such a filing) and
make such information available to securities analysts and prospective
investors upon request. In addition, for so long as any Notes remain
outstanding, the Company and the Subsidiary Guarantors shall furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
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SECTION 4.04. COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 105
days after the end of each fiscal year, an Officers' Certificate stating that
a review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company and its Subsidiaries
have kept, observed, performed and fulfilled their obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company and its
Subsidiaries are not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred and be continuing, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, within five Business Days of any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.05. TAXES
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment would not
have a material adverse effect on the ability of the Company and the
Subsidiary Guarantors to satisfy their obligations under the Notes, the
Subsidiary Guarantees and this Indenture.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it shall not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the
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Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.07. LIMITATION ON INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly incur any Indebtedness (including
Acquired Indebtedness) and the Company shall not issue or otherwise incur any
Disqualified Stock and shall not permit any of its Subsidiaries to issue or
otherwise incur any shares of Disqualified Stock; PROVIDED, HOWEVER, that the
Company may incur Indebtedness (including Acquired Indebtedness) or issue or
otherwise incur shares of Disqualified Stock and the Subsidiary Guarantors
may incur Indebtedness (including Acquired Indebtedness) and issue or
otherwise incur Disqualified Stock and Foreign Subsidiaries may incur
Indebtedness (including Acquired Indebtedness) if: (i) the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued or incurred would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock had been issued or incurred, as the case may be, at
the beginning of such four-quarter period; and (ii) no Default or Event of
Default will have occurred and be continuing or would occur as a consequence
thereof; PROVIDED, that no Guarantee may be incurred pursuant to this
paragraph unless the guaranteed Indebtedness is incurred by the Company or a
Subsidiary pursuant to this paragraph; and PROVIDED FURTHER, that all
Indebtedness incurred by Foreign Subsidiaries pursuant to this paragraph must
be secured and must not be subordinated in right of payment to any other
Indebtedness.
The foregoing provisions will not apply to:
(i) the incurrence by the Company or any Subsidiary
Guarantors of Senior Term Debt (and Guarantees thereof by Subsidiary
Guarantors and the Company); PROVIDED that the aggregate principal amount of
all Senior Term Debt outstanding under this clause (i) after giving effect to
such incurrence does not exceed $120,000,000 less the aggregate amount of all
Net Proceeds of Asset Sales applied to repay Senior Term Debt pursuant to
Section 4.13 hereof;
(ii) the incurrence by the Company or any Subsidiary
Guarantors of Senior Revolving Debt (and Guarantees thereof by Subsidiary
Guarantors and the Company) and reimbursement obligations in respect of
letters of credit in an aggregate principal amount at any time outstanding
under this clause (ii) (with letters of credit obligations being deemed to
have a principal amount equal to the maximum
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potential liability of the Company and its Subsidiaries that are Subsidiary
Guarantors with respect thereto) not to exceed an amount equal to the greater
of (a) $25,000,000, less the aggregate amount of all Net Proceeds of Asset
Sales applied to permanently reduce the outstanding amount or, as applicable,
the commitments with respect to such Indebtedness pursuant to Section 4.13
hereof and (b) an amount equal to the Borrowing Base;
(iii) the incurrence by the Company and its
Subsidiaries of the Existing Indebtedness (including any Permitted
Refinancing Indebtedness incurred to refinance, retire, renew, defease,
refund or otherwise replace such Indebtedness);
(iv) the incurrence by the Company of Indebtedness
represented by the (x) Notes issued as of the Issue Date, (y) Exchange Notes
and (z) Additional Notes issued to satisfy interest payment obligations of
the Company under the Notes (as set forth in the Notes) and the incurrence by
Subsidiaries of Indebtedness represented by the Subsidiary Guarantees;
(v) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
Mortgage Financings or Purchase Money Obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property used in the business or a Related
Business of the Company or such Subsidiary, in an aggregate principal amount
not to exceed $10,000,000 at any time outstanding under this clause (v)
(including any Permitted Refinancing Indebtedness incurred to refinance,
retire, renew, defease, refund or otherwise replace any such Indebtedness);
(vi) the incurrence by the Company or any of its
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease
or refund, Indebtedness that was permitted by this Indenture to be incurred
or was outstanding on the Issue Date after giving effect to the Acquisition
Transactions;
(vii) the incurrence by the Company or any of
its Subsidiaries of intercompany Indebtedness (a) between or among the
Company and any of the Subsidiary Guarantors or Foreign Subsidiaries, (b)
between or among any Subsidiary Guarantors, (c) between or among any Foreign
Subsidiaries and (d) between or among any Subsidiary Guarantors and Foreign
Subsidiaries; PROVIDED, HOWEVER, that (x) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the Company, a Subsidiary Guarantor or a Foreign Subsidiary
and (y) any sale or other transfer of any such Indebtedness to a Person that
is not either the Company or a Subsidiary Guarantor or Foreign Subsidiary
will be deemed,
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in each case, to constitute an incurrence of such Indebtedness by the Company
or such Subsidiary, as the case may be;
(viii) the incurrence by the Company or any of
its Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging (a) interest rate risk with respect to any floating rate
Indebtedness that is permitted by this Indenture to be incurred or (b)
currency risk (to the extent incurred in the ordinary course of business and
not for purposes of speculation);
(ix) the incurrence by the Company or any of the
Subsidiary Guarantors of Indebtedness (in addition to Indebtedness permitted
by any other clause of this covenant) in an aggregate principal amount at any
time outstanding under this clause (ix) not to exceed the sum of $20,000,000
(including Permitted Refinancing Indebtedness incurred to refinance, retire,
renew, defease, refund or otherwise replace any such Indebtedness); PROVIDED
that such Indebtedness may, but need not, be incurred under the New Credit
Agreement;
(x) Indebtedness incurred by the Company or any of
the Subsidiary Guarantors or Foreign Subsidiaries arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees of letters of credit, bankers' acceptances,
surety bonds or performance bonds securing the performance of the Company or
any of its Subsidiary Guarantors or Foreign Subsidiaries to any Person
acquiring all or a portion of such business or assets of the Company or a
Subsidiary of the Company for the purpose of financing such acquisition, in a
principal amount not to exceed 25% of the gross proceeds (with proceeds other
than cash or Cash Equivalents being valued at the fair market value thereof
as determined by the Company in good faith) actually received by the Company
or any of its Subsidiaries in connection with such disposition;
(xi) the incurrence by a Receivables Subsidiary of
Indebtedness in a Qualified Receivables Transaction that is without recourse
to the Company or to any other Subsidiary of the Company or their assets
(other than such Receivables Subsidiary and its assets and, as to the Company
or any Subsidiary of the Company, other than pursuant to representations,
warranties, covenants and indemnities customary for such transactions) and is
not guaranteed by any such Person;
(xii) the incurrence by Foreign Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other provision of
this covenant) in an aggregate amount not to exceed $25,000,000 at any time
outstanding under this clause (xii) (including any Permitted Refinancing
Indebtedness incurred to refinance, retire, renew, defease, refund or
otherwise replace any such Indebtedness);
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(xiii) Indebtedness in respect of performance
bonds, bankers' acceptances, letters of credit and surety or appeal bonds
entered into by the Company and its Subsidiaries in the ordinary course of
their business;
(xiv) Indebtedness arising from the honoring by
a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; and
(xv) Finance Subsidiary Indebtedness.
Notwithstanding any other provision of this Section 4.07,
a Guarantee of Indebtedness permitted by the terms of this Indenture at the
time such Indebtedness was incurred or at the time the guarantor thereof
became a Subsidiary Guarantor will not constitute a separate incurrence, or
amount outstanding, of Indebtedness. Upon each incurrence of Indebtedness by
the Company or any of its Subsidiaries, the Company shall designate pursuant
to which provision of this Section 4.07 such Indebtedness is being incurred
and such Indebtedness shall not be deemed to have been incurred or
outstanding under any other provision of this Section 4.07, except as stated
otherwise in the foregoing provision.
Indebtedness or Disqualified Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a
Subsidiary) or is merged with or into or consolidated with the Company or a
Subsidiary of the Company shall be deemed to have been incurred at the time
such Person becomes a Subsidiary of the Company or is merged with or
consolidated with the Company or a Subsidiary of the Company, as applicable.
SECTION 4.08. LIMITATION ON LIENS
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens, unless the Notes are secured by such Lien on an equal
and ratable basis.
SECTION 4.09. LIMITATION ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any distribution on account of the Company's or any of its Subsidiaries'
or Holdings' Equity Interests (other than
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dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or dividends or distributions payable to
the Company or to any Subsidiary Guarantor); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or
any Subsidiary Guarantor or any direct or indirect parent of the Company
(other than any such Equity Interests owned by the Company or any Subsidiary
Guarantor and other than pursuant to the Acquisition Transactions); (iii)
make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is contractually
subordinated to the Notes or any of the Subsidiary Guarantees as applicable
(and other than Notes or the Subsidiary Guarantees, as applicable), except
for any scheduled repayment (including any sinking fund or similar payment)
or at final maturity thereof; or (iv) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (iv) above,
unless a Permitted Investment, being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(a) no Default or Event of Default will have occurred
and be continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.07; and
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its Subsidiaries
after the Issue Date (excluding Restricted Payments permitted by clauses
(ii), (iii), (iv), (v), (vi) and (x) of the next succeeding paragraph), is
less than the sum of (i) $7,500,000, plus (ii) 50% of the Consolidated Net
Income (adjusted to exclude any amounts that are otherwise included in this
clause (c) to the extent there would be, and to avoid, any duplication in the
crediting of any such amounts) of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter commencing
after the Issue Date to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (iii) to the extent not
included in the amount described in clause (ii) above, 100% of the aggregate
Net Cash Proceeds received after the Issue Date by the Company from the issue
or sale of, or from capital contributions in respect of, Equity Interests of
the Company or of debt securities of the Company or any Subsidiary Guarantor
that have been converted into, or cancelled in exchange for, Equity Interests
of the Company (other than Equity Interests (or convertible debt securities)
sold to a Subsidiary of the Company and other than
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Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iv) 100% of any dividends or other distributions
received by the Company or a Subsidiary of the Company after the Issue Date
from an Unrestricted Subsidiary of the Company, plus (v) 100% of the cash
proceeds (or Cash Equivalents) realized upon the sale of any Unrestricted
Subsidiary (less the amount of any reserve established for purchase price
adjustments and less the maximum amount of any indemnification or similar
contingent obligation for the benefit of the purchaser, any of its Affiliates
or any other third party in such sale, in each case as adjusted for any
permanent reduction in any such amount on or after the date of such sale,
other than by virtue of a payment made to such Person) following the Issue
Date, plus (vi) to the extent that any Restricted Investment that was made
after the Issue Date is sold for cash (or Cash Equivalents) or otherwise
liquidated or repaid for cash (or Cash Equivalents), the amount of cash
proceeds (or Cash Equivalents) received with respect to such Restricted
Investment plus (vii) upon the redesignation of an Unrestricted Subsidiary as
a Subsidiary, the lesser of (x) the fair market value of such Subsidiary or
(y) the aggregate amount of all Investments made in such Subsidiary
subsequent to the Issue Date by the Company and its Subsidiaries.
The foregoing provisions shall not prohibit, if and to
the extent any of the following would otherwise constitute a Restricted
Payment: (i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture; (ii) if no Default or Event
of Default shall have occurred and be continuing (and shall not have been
waived) or shall occur as a consequence thereof, the payment by the Company
of a management fee to AIP in an amount not to exceed $1,850,000 in any
fiscal year and the reimbursement by the Company of AIP's reasonable
out-of-pocket expenses incurred in connection with the rendering of
management services to or on behalf of the Company; PROVIDED, HOWEVER, that
no such fees may be paid, and no such expenses may be reimbursed, unless the
obligation of the Company to pay such management fee has been subordinated to
the payment of all Obligations with respect to the Notes (and any Subsidiary
Guarantee thereof); (iii) the making of any Restricted Investment in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than
to a Subsidiary of the Company) of, or from substantially concurrent
additional capital contributions in respect of, Equity Interests of the
Company (other than Disqualified Stock); PROVIDED, that any Net Cash Proceeds
that are utilized for any such Restricted Investment shall be excluded from
clause (c)(iii) of the preceding paragraph; (iv) the redemption, repurchase,
retirement or other acquisition of any Equity Interests of the Company in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Subsidiary of the Company) of, or from substantially concurrent
capital contributions in respect of, other Equity Interests of the Company
(other than any Disqualified Stock); PROVIDED that any Net Cash Proceeds that
are utilized for any such redemption, repurchase, retirement
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or other acquisition, shall be excluded from clause (c)(iii) of the preceding
paragraph; (v) the defeasance, redemption or repurchase of, or the making of
a principal payment on, or the acquisition or retirement for value of,
subordinated Indebtedness in exchange for or with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness or the substantially
concurrent sale (other than to a Subsidiary of the Company) of, or from
substantially concurrent capital contributions in respect of, Equity
Interests of the Company (other than Disqualified Stock); PROVIDED, that any
net cash proceeds that are utilized for any such defeasance, redemption or
repurchase shall be excluded from clause (c)(iii) of the preceding paragraph;
(vi) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Company, Holdings or any Subsidiary of the
Company held by any member of the Company's (or Holdings' or any of its
Subsidiaries') management pursuant to any management agreement or stock
option agreement or upon the death, disability or termination of employment
of such member; PROVIDED that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests will not exceed
$5,000,000 in the aggregate (net of the Net Cash Proceeds received by
Holdings, the Company or any of its Subsidiaries from subsequent reissuances
of such Equity Interests to new members of such management), and no Default
or Event of Default will have occurred and be continuing immediately after
such transaction; (vii) the acquisition by a Receivables Subsidiary in
connection with a Qualified Receivables Transaction of Equity Interests of a
trust or other Person established by such Receivables Subsidiary to effect
such Qualified Receivables Transaction; (viii) PRO RATA dividends and other
distributions on the Equity Interests of any Subsidiary of the Company by
such Subsidiary; (ix) payments in lieu of fractional shares in an amount not
to exceed $50,000 in the aggregate; (x) Permitted Payments to Holdings; and
(xi) so long as no Default or Event of Default has occurred and is
continuing, from and after one Business Day prior to November 15, 2003,
payments of cash dividends to Holdings in an amount sufficient to enable
Holdings to make payments of interest required to be made in respect of the
Holdings Debentures in accordance with the terms thereof in effect on the
Issue Date, provided such interest payments are made with the proceeds of
such dividends.
The Board of Directors may designate any Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Subsidiaries (except to the extent repaid in cash or Cash
Equivalents) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this Section 4.09. All
such outstanding Investments shall be deemed to constitute Investments in an
amount equal to the greatest of (x) the net book value of such Investments at
the time of such designation, (y) the fair market value of such Investments
at the time of such designation and (z) the original fair market value of
such Investments at the time they
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were made. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash or Cash
Equivalents) shall be the fair market value (as and to the extent set forth in
an Officers' Certificate delivered to the Trustee pursuant to the next sentence)
on the date of the Restricted Payment of the asset(s) proposed to be transferred
by the Company or such Subsidiary, as the case may be, pursuant to the
Restricted Payment. Not later than five Business Days following the date of
making any Restricted Payment in excess of $1,000,000, the Company shall deliver
to the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section were computed, which calculations may be based upon the Company's
latest available financial statements.
SECTION 4.10. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the Issue Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, PROVIDED that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
are no more restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in the applicable Existing
Indebtedness as in effect on the Issue Date, (b) the New Credit Agreement as
in effect as of the Issue Date, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, PROVIDED that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are no more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in the New
Credit Agreement as in effect on the Issue Date, (c) this Indenture and the
Notes or any Indebtedness ranking on a PARI PASSU basis with the Notes or the
Subsidiary Guarantees, as applicable, PROVIDED such restrictions are no more
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restrictive, taken as a whole, than those contained in this Indenture, (d)
applicable law, (e) any instrument governing Acquired Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Subsidiaries as in
effect at the time of such acquisition (except to the extent such Acquired
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or
the property or assets of the Person, so acquired, (f) by reason of customary
non-assignment provisions in leases and licenses entered into in the ordinary
course of business, (g) Purchase Money Obligations, Mortgage Financings or
Capital Lease Obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii)
above on the property so acquired, (h) agreements relating to the financing
of the acquisition of real or tangible personal property acquired on or after
the Issue Date, PROVIDED, that such encumbrance or restriction relates only
to the property which is acquired and in the case of any encumbrance or
restriction that constitutes a Lien, such Lien constitutes a Permitted Lien,
(i) Indebtedness or other contractual requirements of a Receivables
Subsidiary in connection with a Qualified Receivables Transaction, PROVIDED
that such restrictions apply only to such Receivables Subsidiary, (j) any
restriction or encumbrance contained in contracts for sale of assets
permitted by this Indenture in respect of the assets being sold pursuant to
such contract, (k) Indebtedness permitted to be incurred under Section 4.07
hereof and incurred on or after the Issue Date, PROVIDED, that such
encumbrances or restrictions in such Indebtedness are no more onerous, taken
as a whole, than the restrictions contained in the New Credit Agreement on
the Issue Date or as the New Credit Agreement may be amended, modified,
restated, renewed, increased, supplemented, refunded, replaced or refinanced
as set forth in clause (b) above, (l) restrictions contained in Indebtedness
of Foreign Subsidiaries incurred under Section 4.07, (m) Permitted
Refinancing Indebtedness, PROVIDED that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (n) restrictions with respect to the Company or a
Subsidiary of the Company imposed pursuant to a binding agreement entered
into for the sale or disposition of Equity Interests or assets of such Person
permitted pursuant to this Indenture, or (o) agreements relating to Permitted
Liens or Indebtedness related thereto; provided that such encumbrance or
restriction relates only to the property subject to such Permitted Lien.
SECTION 4.11. LIMITATION ON LINES OF BUSINESS
Neither the Company nor any of its Subsidiaries shall directly
or indirectly engage to any substantial extent in any line or lines of
business activity other
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than that which, in the reasonable good faith judgment of the Board of Directors
of the Company, is a Related Business.
SECTION 4.12. LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter
into or make any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on
terms that are no less favorable to the Company or the relevant Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction entered
into after the Issue Date involving aggregate consideration in excess of
$5,000,000, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause
(i) above and that such Affiliate Transaction has been approved by a majority
of the disinterested members (if any) of the Board of Directors and (b) with
respect to any Affiliate Transaction involving aggregate consideration in
excess of $10,000,000, an opinion as to the fairness to the Company or such
Subsidiary of such Affiliate Transaction from a financial point of view
issued by an investment banking firm of national standing or, in the event
such transaction is of a type that investment bankers do not generally render
fairness opinions, a valuation or appraisal firm of national reputation;
PROVIDED that the following will not be deemed to be Affiliate Transactions:
(w) the provision of administrative or management services by the Company or
any of its officers to any of its Subsidiaries in the ordinary course of
business, (x) any employment agreement entered into by the Company or any of
its Subsidiaries in the ordinary course of business, (y) transactions between
or among the Company and/or its Subsidiaries or transactions between a
Receivables Subsidiary or a Finance Subsidiary and any Person in which the
Receivables Subsidiary or Finance Subsidiary has an Investment and (z)
transactions permitted by Section 4.09. In addition, none of the Acquisition
Transactions shall be deemed to be Affiliate Transactions.
SECTION 4.13. LIMITATION ON ASSET SALES
The Company shall not, and shall not permit any of its
Subsidiaries to, engage in an Asset Sale in excess of $1,000,000 unless (i)
the Company (or the Subsidiary, as the case may be) receives consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets or Equity Interests sold or otherwise disposed of, and in the case of
a lease of assets, a lease providing for rent and other conditions which are
no less favorable to the Company (or the Subsidiary, as the case may be) in
any material respect than the then prevailing market conditions (in each case
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as set forth in an Officers' Certificate delivered to the Trustee), (ii) at
least 75% of the consideration therefor received by the Company or such
Subsidiary is in the form of cash or Cash Equivalents; PROVIDED that the
amount of (x) any liabilities (as shown on the Company's or such Subsidiary's
most recent balance sheet or in the notes thereto, excluding contingent
liabilities and trade payables) of the Company or any Subsidiary (other than
liabilities that are by their terms subordinated to, or PARI PASSU with, the
Notes or the Subsidiary Guarantees) that are assumed by the transferee of any
such assets and (y) any notes or other obligations received by the Company or
any such Subsidiary from such transferee that are promptly, but in no event
more than 30 days after receipt, converted by the Company or such Subsidiary
into cash (to the extent of the cash received), will be deemed to be cash for
purposes of this provision and the receipt of such cash shall be treated as
cash received from an Asset Sale for which such Notes or obligations were
received.
The Company or any of its Subsidiaries may apply the Net
Proceeds from each Asset Sale, at its option, within 360 days after the
consummation of such Asset Sale, (a) to permanently reduce any Senior
Indebtedness (and in the case of any senior revolving indebtedness to
correspondingly permanently reduce commitments with respect thereto), or (b)
for the acquisition of another business or the acquisition of other property
or assets, in each case, in the same or a Related Business or (c) for any
combination of the foregoing. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce Senior Revolving Debt or
otherwise invest such Net Proceeds in any manner that is not prohibited by
this Indenture. Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this paragraph will be deemed
to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company will be required to make an offer to all
Holders of Notes (an "Asset Sale Offer") and to holders of other Indebtedness
of the Company outstanding ranking on a PARI PASSU basis with the Notes with
provisions requiring the Company to make an offer (or otherwise redeem or
prepay) with proceeds from the asset sales, PRO RATA in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other
Indebtedness then outstanding, to purchase (or otherwise redeem or prepay)
the maximum principal amount (or accreted value, as applicable) of Notes and
such other Indebtedness, if any, that may be purchased (or redeemed or
prepaid) out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount (or accreted value, as applicable)
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase, in accordance with the procedures set forth
in this Section. If the aggregate principal amount (or accreted value, as
applicable) of Notes and such Indebtedness surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such Indebtedness
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to be purchased on a PRO RATA basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
The Asset Sale Offer will remain open for a period not to
exceed 30 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the "Asset
Sale Offer Period"). No later than five Business Days after the termination
of the Asset Sale Offer Period (the "Asset Sale Purchase Date"), the Company
will purchase the principal amount of Notes required to be purchased pursuant
to this covenant (the "Asset Sale Offer Amount") or, if less than the Asset
Sale Offer Amount has been tendered, all Notes tendered in response to the
Asset Sale Offer. Payment for any Notes so purchased will be made in the same
manner as interest payments are made. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations were
applicable in connection with the repurchase of the Notes as a result of an
Asset Sale Offer. To the extent the provisions of any such securities laws or
regulations conflict with the provisions of this covenant, compliance by the
Company or any of the Subsidiary Guarantors with such laws, rules and
regulations shall not in and of itself cause a breach of its obligations
under this covenant.
If the Asset Sale Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued
and unpaid interest will be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Notes pursuant to the Asset
Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The
Asset Sale Offer shall be made to all Holders. The notice, which shall
govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
covenant and the length of time the Asset Sale Offer shall remain open;
(b) the Asset Sale Offer Amount, the purchase price and the
Asset Sale Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
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(d) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete or accrue interest after the Asset Sale Purchase Date;
(e) that Holders electing to have a Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer the Note by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Asset Sale Purchase
Date;
(f) that Holders shall be entitled to withdraw their election
if the Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(g) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Asset Sale Offer Amount, the Trustee shall
select the Notes to be purchased on a PRO RATA basis (with such adjustments
as may be deemed appropriate by the Trustee so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased);
and
(h) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Asset Sale Purchase Date, the Company will,
to the extent lawful, accept for payment, on a PRO RATA basis to the extent
necessary, the Asset Sale Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount
has been tendered, all Notes tendered, and will deliver to the Trustee an
Officers' Certificate stating that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this
covenant. The Company, the Depositary or the Paying Agent, as the case may
be, will promptly (but in any case not later than five Business Days after
the Asset Sale Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company will promptly issue a
new Note, and the Trustee, upon delivery of an Officers' Certificate from the
Company, will authenticate and mail or deliver such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note
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surrendered. Any Note not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof.
SECTION 4.14. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 35 days of the occurrence of
a Change of Control, and consummate an Offer to Purchase for all Notes then
outstanding, at a purchase price equal to 101% of the principal amount
thereof, plus accrued interest (if any) to the Payment Date.
The Company will not be required to make an Offer to Purchase
pursuant to this covenant if a third party makes an Offer to Purchase in
compliance with this covenant and repurchases all Notes validly tendered and
not withdrawn under such Offer to Purchase.
SECTION 4.15. LIMITATION ON LAYERING INDEBTEDNESS
The Company shall not incur, create, issue, assume, guarantee
or otherwise become liable for Indebtedness that by its terms or the terms of
any document or instrument relating thereto is expressly subordinate or
junior in right of payment to any Senior Indebtedness and senior in right of
payment to the Notes, and no Subsidiary Guarantor shall incur, create, issue,
assume, guarantee or otherwise become liable for Indebtedness that by its
terms or the terms of any document or instrument relating thereto is
expressly subordinate or junior in right of payment to any Senior
Indebtedness of such Subsidiary Guarantor and senior in right of payment to
its Subsidiary Guarantee; PROVIDED that this prohibition shall not prohibit
Acquired Indebtedness (other than Acquired Indebtedness incurred in
connection with or in contemplation of a merger of the Company or any
Subsidiary Guarantor or in connection with another transaction pursuant to
which a Person becomes a Subsidiary of the Company).
SECTION 4.16. ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Subsidiaries shall acquire or
create another Subsidiary (other than a Foreign Subsidiary, Finance
Subsidiary or Receivables Subsidiary) after the date of this Indenture, then
such newly acquired or created Subsidiary shall execute a Subsidiary
Guarantee substantially in the form of Exhibit E hereto and deliver an
Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee regarding the due authorization, execution and delivery of the
Subsidiary Guarantee.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not, in a single transaction or series of
related transactions, consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (the "Surviving Entity")
is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the Surviving Entity
assumes all the obligations of the Company, under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; (iv) the Surviving Entity shall, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09; and (v) the Company shall have delivered to the
Trustee an Officers' Certificate addressed to the Trustee stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or
disposition and such supplemental indenture, if any, comply with this
Indenture and that such supplemental indenture is enforceable.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all
of the assets of the Company in accordance with Section 5.01 hereof, the
successor corporation formed by such consolidation or into or with which the
Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for (so that from and after the date of such consolidation, merger, sale,
lease, conveyance or other disposition, the provisions of this Indenture
referring to the "Company" shall refer instead to the successor corporation
and not to the Company), and may exercise every right and power of the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein; PROVIDED, HOWEVER, that the predecessor
of the Company shall not be relieved from the obligation to pay the principal
of and interest on the Notes.
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ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT
Each of the following constitutes an Event of Default:
(a) default in the payment of interest on, or Liquidated
Damages with respect to, any Note when the same becomes due and payable, and
such default continues for a period of 30 days;
(b) default in the payment of principal of or premium,
if any, on any Note when the same becomes due and payable;
(c) the Company fails to make or consummate an Asset
Sale Offer in accordance with Section 4.13 or an Offer to Purchase in
accordance with Section 4.14;
(d) the failure by the Company or any of its
Subsidiaries for 30 days after written notice by the Trustee or the Holders
of 25% or more in aggregate principal amount of the Notes to comply with
Section 4.07 or Section 4.09;
(e) the Company or any Subsidiary Guarantor defaults in
the performance of or breaches any other covenant or agreement of the Company
or any Subsidiary Guarantor in this Indenture, the Notes or the Subsidiary
Guarantees and such default or breach continues for a period of 60 days after
written notice by the Trustee or the Holders of 25% or more in aggregate
principal amount of the Notes;
(f) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries
or the payment of which is guaranteed by the Company or any of its
Subsidiaries whether such Indebtedness or guarantee now exists, or is created
after the Issue Date, which default (A) is caused by a failure to pay
principal upon final stated maturity of such Indebtedness following the
expiration of any grace period provided in such Indebtedness or (B) results
in the acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been a default in the payment of principal upon final stated maturity which
has not been cured and is continuing following the expiration of any
applicable grace period or the maturity of which has been so accelerated and
has not been satisfied, aggregates $7,500,000 or more;
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(g) any final judgment or order for the payment of money
shall be rendered against the Company or any Significant Subsidiary in excess
of $7,500,000 in the aggregate for all such final judgments or orders against
all such Persons and shall not be paid or discharged, and there shall be any
period of 60 consecutive days following entry of the final judgment or order
that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed
$7,500,000;
(h) except as permitted by this Indenture, any
Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force
and effect in any material respect or any Subsidiary Guarantor, or any Person
acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee;
(i) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any Significant
Subsidiary in an involuntary case under any applicable Bankruptcy Law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and,
in each case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(j) the Company or any Significant Subsidiary (A)
commences a voluntary case under any applicable Bankruptcy Law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary
or for all or substantially all of the property and assets of the Company or
any Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors.
The term "Bankruptcy Law" means Title 11, U.S. Code or
any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION
If an Event of Default (other than an Event of Default
specified in clause (i) or (j) of Section 6.01 that occurs with respect to
the Company) occurs and is continuing under this Indenture, the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes, then
outstanding, by written notice to the Company (and
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to the Trustee if such notice is given by the Holders), may, and the Trustee
at the request of such Holders shall, declare the principal of, premium, if
any, and accrued interest (including Liquidated Damages) on the Notes to be
immediately due and payable. Upon a declaration of acceleration, such
principal of, premium, if any, and accrued interest shall be immediately due
and payable; PROVIDED that any such declaration of acceleration shall not
become effective until the earlier of (A) five Business Days after receipt of
the acceleration notice by the Representative of the holders of Designated
Senior Indebtedness and the Company or (B) acceleration of the maturity of
Designated Senior Indebtedness; PROVIDED FURTHER that such acceleration shall
automatically be rescinded and annulled without any further action required
on the part of the Holders in the event that any and all Events of Default
specified in the acceleration notice under this Indenture shall have been
cured, waived or otherwise remedied as provided in this Indenture prior to
the expiration of the period referred to in the preceding clauses (A) and
(B). In the event of a declaration of acceleration because an Event of
Default set forth in clause (f) above has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled if
the default triggering such Event of Default pursuant to clause (f) shall be
remedied or cured by the Company or the relevant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default specified in
clause (i) or (j) above occurs with respect to the Company, the principal of,
premium, if any, and accrued interest on the Notes then outstanding shall
IPSO FACTO become and be immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder.
SECTION 6.03. OTHER REMEDIES
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal,
premium, if any, and interest on the Notes or to enforce the performance of
any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS
The Holders of at least a majority in principal amount of
the outstanding Notes by written notice to the Company and to the Trustee,
may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if (i) all existing
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Events of Default, other than the nonpayment of the principal of, premium, if
any, and interest on the Notes that have become due solely by such
declaration of acceleration, have been cured or waived and (ii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
SECTION 6.05. CONTROL BY MAJORITY
Holders of at least a majority in aggregate principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee
or exercising any trust or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture that
the Trustee determines in good faith may be unduly prejudicial to the rights
of other Holders of Notes not joining in the giving of such direction or that
may involve the Trustee in personal liability and the Trustee may take any
other action it deems proper that is not inconsistent with any such direction
received from Holders of the Notes.
SECTION 6.06. LIMITATION ON SUITS
A Holder of a Note may pursue a remedy with respect to
this Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in aggregate principal
amount of the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
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A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture,
the right of any Holder of a Note to receive payment of the principal of,
premium and Liquidated Damages, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in connection with
an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(a) or
(b) occurs and is continuing, the Trustee is authorized to recover judgment
in its own name and as trustee of an express trust against the Company for
the whole amount of principal of, premium and Liquidated Damages, if any, and
interest remaining unpaid on the Notes and interest on overdue principal and,
to the extent lawful, interest and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders of the Notes allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes), its creditors
or its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same
shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
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Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee and
the costs and expenses of collection;
SECOND: to Holders of Notes for amounts due and unpaid
on the Notes for principal and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages,
if any, and interest, respectively; and
THIRD: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for
any payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken
or omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section does not apply to a suit by the Trustee,
a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding Notes.
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ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in its
exercise, as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of an Event of
Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and opinions
to determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph (c) does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by an Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to Sections 7.01 and 7.02.
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(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under
this Indenture at the request of any Holders, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE
(a) In connection with the Trustee's rights and duties
under this Indenture, the Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the
proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting
under this Indenture, it may require an Officers' Certificate or an Opinion
of Counsel or both. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel. The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or
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indemnity against the costs, expenses and liabilities that might be incurred
by it in compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the
Trustee shall have no duty to inquire as to the performance of the Company's
covenants in Article 4 hereof. In addition, the Trustee shall not be deemed
to have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.01(a), 6.01(b) and 4.01 or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
(h) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee may, in its
discretion, make such further inquiry or investigation into such facts or
matters as it may see fit and if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company personally or by agent or attorney.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the Company
or any Affiliate of the Company with the same rights it would have if it were
not Trustee. However, in the event that the Trustee acquires any conflicting
interest (as defined in the TIA) it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes or any money paid to the Company or upon the Company's direction under
any provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of
the Notes or pursuant to this Indenture other than its certificate of
authentication.
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SECTION 7.05. NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to Holders of Notes
a notice in the manner and to the extent provided by Section 313(c) of the
TIA of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal
of, premium, if any, or interest on any Note, the Trustee may withhold the
notice if and so long as a committee of its Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES
Within 60 days after each May 15 beginning with the May
15 following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the 12
months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall
also transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and
each stock exchange on which the Notes are listed in accordance with TIA
Section 313(d). The Company shall promptly notify the Trustee when the Notes
are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse
the Trustee promptly upon request for all reasonable disbursements, advances
and expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and
all losses, liabilities or expenses (including reasonable attorneys' fees)
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this
Section 7.07) and defending itself against any claim (whether asserted by the
Company or any Holder or any other Person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except
to the extent any
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such loss, liability or expense may be attributable to its negligence, bad
faith or willful misconduct. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Sections 6.01(i) or 6.01(j) hereof
occurs, the expenses and the compensation for the services (including the
fees and expenses of its agents and counsel) are intended to constitute
expenses of administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA
Section 313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the successor
Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
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(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. Within one year after the successor Trustee
takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the retiring Trustee,
the Company, or the Holders of Notes of at least 10% in principal amount of
the then outstanding Notes may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a
Note who has been a Holder of a Note for at least six months, fails to comply
with Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee;
PROVIDED all sums owing to the Trustee hereunder have been paid and subject
to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement
of the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall
be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder that is a
corporation (or a member of a bank holding company) organized and doing
business under the laws of the
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United States of America or of any state thereof that is authorized under
such laws to exercise corporate trustee power, that is subject to supervision
or examination by federal or state authorities and that has (or the bank
holding company of which it is a member has) a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual
report of condition.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is
subject to TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee is subject to TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE
Upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.02, each of the Company and the
Subsidiary Guarantors, as applicable, shall, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and
Subsidiary Guarantees, as applicable, on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose,
Legal Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes and
the Subsidiary Guarantors shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Subsidiary Guarantees,
which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.05 hereof and the other Sections of this Indenture referred to in
(a) and (b) below, and to have satisfied all its other obligations under such
Notes, such Subsidiary Guarantees and this Indenture (and the Trustee, on
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demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund
described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages, if any, on such Notes when such payments are
due, (b) the Company's obligations with respect to such Notes under Article 2
and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE
Upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, subject to the satisfaction of
the conditions set forth in Section 8.04 hereof, the Company be released from
its obligations under Sections 4.03, 4.04, 4.05, 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15 and 4.16 hereof and the Subsidiary Guarantors
shall be released from their obligations under Section 10.03(b) hereof, in
each case on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes and the Subsidiary
Guarantees shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it
being understood that such Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference
in any such covenant to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or an Event of
Default under Section 6.01 hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, (x) Sections 6.01(c) through
6.01(h) hereof shall not constitute Events of Default and (y) Sections
6.01(i) and 6.01(j) shall not constitute Events of Default as of the 91st day
following the occurrence of the Company's exercise of Covenant Defeasance.
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application
of either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium and
Liquidated Damages, if any, and interest on the outstanding Notes on the
stated date for payment thereof or on the applicable redemption date, as the
case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02
hereof, the Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of an election under Section 8.03
hereof, the Company shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance had
not occurred;
(d) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit (other than a Default or Event
of Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article 8 concurrently with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under, any
material agreement or
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instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders over any other creditors of the
Company or with the intent of defeating, hindering, delaying or defrauding
any other creditors of the Company; and
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
Legal Defeasance and Covenant Defeasance shall be deemed
to occur on the date of the deposit required under Section 8.04(a), so long
as all of the other conditions set forth in Section 8.04 are satisfied as of
such date.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.06 hereof, all money and
non-callable Government Securities (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of
this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof
or the principal and interest received in respect thereof.
Anything in this Article 8 to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which
may be the opinion delivered under Section 8.04(a) hereof), are in excess of
the amount
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thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of,
premium, if any, Liquidated Damages or interest on any Note and remaining
unclaimed for two years after such principal, and premium, if any, Liquidated
Damages, if any, or interest has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as a creditor,
look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any
United States dollars or non-callable Government Securities in accordance
with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time
as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
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ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES
Notwithstanding Section 9.02 of this Indenture, the
Company and the Trustee may amend or supplement this Indenture or the Notes,
and the Subsidiary Guarantors and the Trustee may amend or supplement any
Subsidiary Guarantee, without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to
or in place of certificated Notes;
(c) to provide for the assumption of the Company's
obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article 5 hereof;
(d) to provide for additional Subsidiary Guarantors as
set forth in Section 4.16 or for the release or assumption of a Subsidiary
Guarantee in compliance with this Indenture;
(e) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely
affect the legal rights hereunder of any Holder of the Note;
(f) to comply with the provisions of the Depositary,
Euroclear or Cedel or the Trustee with respect to the provisions of this
Indenture or the Notes relating to transfers and exchanges of Notes or
beneficial interests therein; or
(g) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon receipt by the Trustee of the
documents described in Section 7.02 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture authorized
or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but
the Trustee shall not be obligated to enter into such amended or supplemental
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Indenture that adversely affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES
Except as provided below in this Section 9.02, the
Company and the Trustee may amend or supplement this Indenture (including
Sections 4.13 and 4.14 hereof), and the Notes, and the Subsidiary Guarantors
and the Trustee may amend or supplement the Subsidiary Guarantees, with the
consent of the Holders of a majority in aggregate principal amount of the
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default
or Event of Default (other than a Default or Event of Default in the payment
of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived
with the consent of the Holders of a majority in aggregate principal amount
of the then outstanding Notes (including consents obtained in connection with
a purchase of, or tender offer or exchange offer for, the Notes).
In connection with any amendment, supplement or waiver
under this Article 9, the Company may, but shall not be obligated to, offer
to any Holder who consents to such amendment, supplement or waiver, or to all
Holders, consideration for such Holder's consent to such amendment,
supplement or waiver.
Upon the request of the Company accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes
as aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture adversely affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders
of Notes under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to the Holders of Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect
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the validity of any such amended or supplemental Indenture or waiver.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes then outstanding may waive compliance
in a particular instance by the Company with any provision of this Indenture
or the Notes. However, without the consent of each Holder affected (it being
understood that Sections 4.13 and 4.14 may be amended, waived or modified in
accordance with the first paragraph of Section 9.02), an amendment or waiver
may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity
of any Note or alter or waive any of the provisions with respect to the
redemption of the Notes, under Section 3.07;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a past Default or past Event of Default in the
payment of principal of or premium, if any, or interest on the Notes (except
a rescission of acceleration of the Notes by the Holders of a majority in
aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that
stated in the Notes;
(f) except as otherwise provided in this fifth paragraph
of Section 9.02 (including clauses (a) through (g) hereof), make any change
in the provisions of this Indenture, the Notes or the Subsidiary Guarantees
relating to waivers of past Defaults or Events of Default or the rights of
Holders of Notes to receive payments of principal of, premium or Liquidated
Damages, if any, or interest on the Notes; or
(g) make any change in the foregoing amendment and
waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the
Notes shall be set forth in an amended or supplemental Indenture that
complies with the TIA as then in effect.
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SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes
effective (as determined by the Company), a consent to it by a Holder of a
Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same Indebtedness as
the consenting Holder's Note, even if notation of the consent is not made on
any Note. However, any such Holder of a Note or subsequent Holder of a Note
may revoke the consent as to its Note if the Trustee receives written notice
of revocation before the date the waiver, supplement or amendment becomes
effective (as determined by the Company). An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall
authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new
Note shall not affect the validity and effect of such amendment, supplement
or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental
Indenture authorized pursuant to this Article 9 if the amendment or
supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture
is authorized or permitted by this Indenture.
ARTICLE 10.
SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEES
Subject to the provisions of this Article 10, each
Subsidiary Guarantor, jointly and severally, hereby unconditionally
guarantees to each Holder of a Note
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authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (a) the principal of, and premium and interest
and Liquidated Damages, if any, on the Notes shall be duly and punctually
paid in full when due, whether at maturity, by acceleration or otherwise, and
interest on overdue principal, and premium, if any, and (to the extent
permitted by law) interest on any interest, if any, on the Notes and all
other obligations of the Company to the Holders or the Trustee hereunder or
under the Notes (including fees, expenses or other) shall be promptly paid in
full or performed, all in accordance with the terms hereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise (collectively, the
"Guarantee Obligations"). Failing payment when due of any Guarantee
Obligation or failing performance of any other obligation of the Company to
the Holders, for whatever reason, each Subsidiary Guarantor shall be
obligated to pay, or to perform or to cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under this Subsidiary Guarantee, and shall
entitle the Trustee or the Holders of Notes to accelerate the Guarantee
Obligations of each Subsidiary Guarantor hereunder in the same manner and to
the same extent as the Obligations of the Company. Each Subsidiary Guarantor
hereby agrees that its Guarantee Obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect to any thereof,
the entry of any judgment against the Company, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary
Guarantor hereby waives and relinquishes: (a) any right to require the
Trustee, the Holders or the Company (each, a "Benefitted Party") to proceed
against the Company, the Subsidiaries or any other Person or to proceed
against or exhaust any security held by a Benefitted Party at any time or to
pursue any other remedy in any secured party's power before proceeding
against the Subsidiary Guarantors; (b) any defense that may arise by reason
of the incapacity, lack of authority, death or disability of any other Person
or Persons or the failure of a Benefitted Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person or Persons; (c) demand, protest and notice of any kind
(except as expressly required by this Indenture), including but not limited
to notice of the existence, creation or incurring of any new or additional
Indebtedness or obligation or of any action or non-action on the part of the
Subsidiary Guarantors, the Company, the Subsidiaries, any Benefitted Party, any
creditor of the Subsidiary Guarantors, the Company or the Subsidiaries or on
the part of any other Person whomsoever in connection with any obligations the
performance of which are hereby guaranteed; (d) any defense based upon an
election of remedies by a Benefitted Party, including but not limited to an
election to proceed against the Subsidiary
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Guarantors for reimbursement; (e) any defense based upon any statute or rule
of law which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than that of the principal;
(f) any defense arising because of a Benefitted Party's election, in any
proceeding instituted under the Bankruptcy Law, of the application of Section
1111(b)(2) of the Bankruptcy Code; and (g) any defense based on any borrowing
or grant of a security interest under Section 364 of the Bankruptcy Code.
The Subsidiary Guarantors hereby covenant that, except as otherwise provided
therein, the Subsidiary Guarantees shall not be discharged except by payment
in full of all Guarantee Obligations, including the principal, premium, if
any, and interest on the Notes and all other costs provided for under this
Indenture or as provided in Section 8.01.
If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or the Subsidiary Guarantors, or
any trustee or similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by the Company or the Subsidiary
Guarantors to the Trustee or such Holder, the Subsidiary Guarantees, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each of the Subsidiary Guarantors agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Guarantee
Obligations hereby until payment in full of all such obligations. Each
Subsidiary Guarantor agrees that, as between it, on the one hand, and the
Holders of Notes and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes hereof, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guarantee
Obligations, and (y) in the event of any acceleration of such obligations as
provided in Article 6 hereof, such Guarantee Obligations (whether or not due
and payable) shall forthwith become due and payable by such Subsidiary
Guarantor for the purpose of the Subsidiary Guarantee.
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES
To evidence the Subsidiary Guarantees set forth in
Section 10.01 hereof, each of the Subsidiary Guarantors agrees that a
notation of the Subsidiary Guarantees substantially in the form included in
Exhibit A hereto shall be endorsed on each Note authenticated and delivered
by the Trustee and that this Indenture shall be executed on behalf of the
Subsidiary Guarantors by the Chairman of the Board, any Vice Chairman, the
President or one of the Vice Presidents of the Subsidiary Guarantors, under a
facsimile of its seal reproduced on this Indenture and attested to by an
Officer other than the Officer executing this Indenture.
Each of the Subsidiary Guarantors agree that the
Subsidiary Guarantees set forth in this Article 10 will remain in full force
and effect and apply to all the Notes
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notwithstanding any failure to endorse on each Note a notation of the
Subsidiary Guarantees.
If an Officer whose facsimile signature is on a Note no
longer holds that office at the time the Trustee authenticates the Note on
which the Subsidiary Guarantees are endorsed, the Subsidiary Guarantees shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantees set forth in this Indenture on behalf of the Subsidiary
Guarantors.
SECTION 10.03. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Nothing contained in this Indenture or in the Notes
shall prevent any consolidation or merger of a Subsidiary Guarantor with or
into the Company or another Subsidiary Guarantor, or shall prevent the
transfer of all or substantially all of the assets of a Subsidiary Guarantor
to the Company or another Subsidiary Guarantor. Upon any such consolidation,
merger, transfer or sale, the Subsidiary Guarantee of such Subsidiary
Guarantor shall no longer have any force or effect.
(b) Except for a merger or consolidation in which a
Subsidiary Guarantor is sold and its Subsidiary Guarantee is released in
compliance with the provisions of Section 10.04, no Subsidiary Guarantor
shall, in a single transaction or series of related transactions, consolidate
or merge with or into (whether or not such Subsidiary Guarantor is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or
more related transactions, to another corporation, Person or entity other
than the Company or another Subsidiary Guarantor unless (i) the entity or
Person formed by or surviving any such consolidation or merger (if other than
such Subsidiary Guarantor) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the Guarantee Obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee and this Indenture pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee; (ii)
immediately after such transaction no Default or Event of Default exists;
(iii) unless such merger or consolidation involves only Subsidiaries and the
surviving Person is a Subsidiary Guarantor, the Company would be able to, at
the time of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Interest Coverage Ratio test set forth in the first paragraph
of Section 4.07; and (iv) such Subsidiary Guarantor shall have delivered to
the Trustee an Officers' Certificate addressed to the Trustee, each stating
that such consolidation,
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merger, sale, assignment, transfer, lease, conveyance or disposition and such
supplemental indenture, if any, comply with this Indenture and that such
supplemental indenture is enforceable. In case of any such consolidation,
merger or transfer of assets and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and reasonably satisfactory in form to the Trustee, of the Subsidiary
Guarantees endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of this Indenture to be performed by such
Guarantor, such successor corporation shall succeed to and be substituted for
such Subsidiary Guarantor with the same effect as if it had been named herein
as a Subsidiary Guarantor. Such successor corporation thereupon may cause to
be signed any or all of the Subsidiary Guarantees to be endorsed upon all of
the Notes issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
(c) The Trustee, subject to the provisions of Section
12.04 hereof, shall be entitled to receive an Officers' Certificate as
conclusive evidence that any such consolidation, merger, sale or conveyance,
and any such assumption of Guarantee Obligations, comply with the provisions
of this Section 10.03. Such Officers' Certificate shall comply with the
provisions of Section 12.05.
SECTION 10.04. RELEASES
Notwithstanding Section 10.03(b), in the event of (a) a
sale or other disposition of all or substantially all of the assets of any
Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all (or substantially all) of the Capital Stock of
any Subsidiary Guarantor, or (b) a designation of a Subsidiary Guarantor as
an Unrestricted Subsidiary, which sale or other disposition or which
designation otherwise complies with the terms of this Indenture, then such
Subsidiary Guarantor (in the event of a sale or other disposition, by way of
such a merger, consolidation or otherwise, of all or substantially all of the
Capital Stock of such Subsidiary Guarantor or in the event of a designation
of such Subsidiary Guarantor as an Unrestricted Subsidiary) or the
corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Subsidiary
Guarantor) shall be released from and relieved of any Guarantee Obligations
under its Subsidiary Guarantee; PROVIDED that the Net Cash Proceeds from such
sale or other disposition are applied (or are held for application) in
accordance with the provisions of Section 4.13 hereof. Upon delivery by the
Company to the Trustee of an Officer's Certificate, to the effect that such
sale or other disposition or that such designation was made by the
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Company in accordance with the provisions of this Indenture, the Trustee
shall execute any documents reasonably required in order to evidence the
release of any such Subsidiary Guarantor from its Guarantee Obligations under
its Subsidiary Guarantee. Except as provided in Section 10.03(a), any
Subsidiary Guarantor not released from its Guarantee Obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of any Subsidiary
Guarantor under this Indenture as provided in this Article 10.
SECTION 10.05. LIMITATION OF SUBSIDIARY GUARANTOR'S LIABILITY
Each Subsidiary Guarantor, and by its acceptance hereof
each Holder, hereby confirms that it is the intention of all such parties
that the Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary
Guarantee not constitute a fraudulent transfer or conveyance for purposes of
any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent Transfer Act or any similar federal or state law. To effectuate
the foregoing intention, the Holders and such Subsidiary Guarantor hereby
irrevocably agree that the Guarantee Obligations of such Subsidiary Guarantor
under this Article 10 shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such
Subsidiary Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the Guarantee Obligations of such other Subsidiary Guarantor under this
Article 10, result in the Guarantee Obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee of such Subsidiary Guarantor not constituting
a fraudulent transfer or conveyance.
SECTION 10.06. APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE SUBSIDIARY
GUARANTORS
(a) For purposes of any provision of this Indenture
which provides for the delivery by any Subsidiary Guarantor of an Officers'
Certificate and/or an Opinion of Counsel, the definitions of such terms in
Section 1.01 shall apply to such Subsidiary Guarantor as if references
therein to the Company were references to such Subsidiary Guarantor.
(b) Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the holders of Notes to or on any Subsidiary Guarantor may be given or served
as described in Section 12.02 as if references therein to the Company were
references to such Subsidiary Guarantor.
(c) Upon any demand, request or application by any
Subsidiary Guarantor to the Trustee to take any action under this Indenture,
such Subsidiary Guarantor shall furnish to the Trustee such certificates and
opinions as are required in
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Section 12.04 hereof as if all references therein to the Company were
references to such Subsidiary Guarantor.
SECTION 10.07. SUBORDINATION OF SUBSIDIARY GUARANTEES
The obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee pursuant to this Article 10 is subordinated in right of
payment to the prior payment in full in cash of all Senior Indebtedness of
such Subsidiary Guarantor on the same basis as the Notes are subordinated to
Senior Indebtedness of the Company. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to receive and/or
retain payments by any of the Subsidiary Guarantors only at such times as
they may receive and/or retain payments in respect of Notes pursuant to this
Indenture, including Article 11 hereof. In the event that the Trustee
receives any Subsidiary Guarantor payment at a time when the Trustee has
actual knowledge that such payment is prohibited by the foregoing sentence,
such Subsidiary Guarantor payment shall be paid over and delivered to the
holders of the Senior Indebtedness of such Subsidiary Guarantor remaining
unpaid, to the extent necessary to pay in full all such Senior Indebtedness.
In the event that a Holder receives any Subsidiary Guarantor payment at a
time when such payment is prohibited by the foregoing sentence, such
Subsidiary Guarantor payment shall be paid over and delivered to the holders
of the Senior Indebtedness of such Subsidiary Guarantor remaining unpaid, to
the extent necessary to pay in full all such Senior Indebtedness.
Each Holder of a Note by its acceptance thereof (a)
agrees to and shall be bound by the provisions of this Section 10.07, (b)
authorizes and directs the Trustee on the Holder's behalf to take such action
as may be necessary and appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee as the Holder's attorney-in-fact for
any and all such purposes.
ARTICLE 11.
SUBORDINATION
SECTION 11.01. AGREEMENT TO SUBORDINATE
The Company agrees, and each Holder by accepting a Note
agrees, that the payment of principal of, premium, if any and interest,
including Liquidated Damages, on the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article, to the
prior payment in full in cash of all Senior Indebtedness, whether outstanding
on the date hereof or hereafter incurred, and that the subordination
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provisions in Article 11 and Section 10.07 are for the benefit of the holders
of such Senior Indebtedness.
SECTION 11.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY
Upon any distribution to creditors of the Company or a
Subsidiary Guarantor in a liquidation or dissolution of the Company or a
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property or
a Subsidiary Guarantor or its property or an assignment for the benefit of
creditors or any marshalling of the assets and liabilities of the Company or
a Subsidiary Guarantor, the holders of Senior Indebtedness of the Company or
such Subsidiary Guarantor, as applicable, will be entitled to receive payment
in full of all Obligations due in respect of such Senior Indebtedness
(including Accrued Bankruptcy Interest) before the Holders of Notes or such
Subsidiary Guarantee, as applicable, will be entitled to receive any payment
with respect to the Notes or such Subsidiary Guarantee, and until all
Obligations with respect to such applicable Senior Indebtedness are paid in
full in cash or Cash Equivalents, any distribution to which the Holders of
Notes or such Subsidiary Guarantee would be entitled shall be made to the
holders of the applicable Senior Indebtedness (except that Holders of Notes
may receive Permitted Junior Securities and payments made from the trust
described Article 8).
SECTION 11.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS
The Company and the Subsidiary Guarantors also may not
make any payment upon or in respect of the Notes or the applicable Subsidiary
Guarantees (except in Permitted Junior Securities or from the trust described
in Article 8) if (i) a default in the payment of the principal of, premium,
if any, interest or any other amount on Designated Senior Indebtedness occurs
and is continuing (a "Payment Default") or (ii) any other default occurs and
is continuing with respect to Designated Senior Indebtedness that permits
holders of the Designated Senior Indebtedness as to which such default
relates to accelerate its maturity (a "Nonpayment Default") and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the
Company or from a Representative of the holders of any Designated Senior
Indebtedness. Payments on the Notes may and shall be resumed (a) in the case
of a Payment Default, upon the date on which such Payment Default is cured or
waived and (b) in the case of a Nonpayment Default, the earlier of the date
on which such Nonpayment Default is cured or waived or 179 days after the
date on which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Indebtedness has been accelerated and such
acceleration has not been rescinded or waived. No new period of payment
blockage may be commenced unless and until (i) 360 days have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice and (ii)
all scheduled payments of principal, premium, if any, and interest on the
Notes that have come due
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have been paid in full in cash or through the issuance of Additional Notes
pursuant to the terms of the Notes. No Nonpayment Default (other than
subsequent violations of a financial covenant following a waiver or cure of a
prior violation of such covenant) that existed or was continuing on the date
of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
SECTION 11.04. ACCELERATION OF NOTES
If payment of the Notes is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.
SECTION 11.05. WHEN DISTRIBUTION MUST BE PAID OVER
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Securities at a time when the
Trustee or such Holder, as applicable, has actual knowledge that such payment
is prohibited by Section 11.03 hereof, such payment shall be held by the
Trustee or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered, upon written request, to, the holders of Senior
Indebtedness as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness
may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior
Indebtedness remaining unpaid to the extent necessary to pay such Obligations
in full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 11, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness,
and shall not be liable to any such holders if the Trustee shall pay over or
distribute to or on behalf of Holders or the Company or any other Person
money or assets to which any holders of Senior Indebtedness shall be entitled
by virtue of this Article 11, except if such payment is made as a result of
the willful misconduct or gross negligence of the Trustee.
SECTION 11.06. NOTICE BY COMPANY
The Company shall promptly notify the Trustee and the
Paying Agent of any facts known to the Company that would cause a payment of
any Obligations with respect to the Notes to violate this Article, but
failure to give such notice shall not affect the subordination of the Notes
to the Senior Indebtedness as provided in this Article.
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SECTION 11.07. SUBROGATION
After all Senior Indebtedness is paid in full and until
the Notes are paid in full, Holders shall be subrogated (equally and ratably
with all other Indebtedness PARI PASSU with the Notes) to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness. A
distribution made under this Article to holders of Senior Indebtedness that
otherwise would have been made to Holders is not, as between the Company and
Holders, a payment by the Company on the Notes.
SECTION 11.08. RELATIVE RIGHTS
This Article defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall: (1) impair,
as between the Company and Holders, the obligation of the Company, which is
absolute and unconditional, to pay principal of and interest on the Notes in
accordance with their terms; (2) affect the relative rights of Holders and
creditors of the Company other than their rights in relation to holders of
Senior Indebtedness; or (3) prevent the Trustee or any Holder from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive distributions
and payments otherwise payable to Holders.
If the Company fails because of this Article to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 11.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY
No right of any holder of Senior Indebtedness to enforce
the subordination of the Indebtedness evidenced by the Notes shall be
impaired by any act or failure to act by the Company or any Holder or by the
failure of the Company or any Holder to comply with this Indenture.
SECTION 11.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE
Whenever a distribution is to be made or a notice given
to holders of Senior Indebtedness, the distribution may be made and the
notice given to their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 11, the Trustee and the Holders shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction
or upon any certificate of such
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Representative or of the liquidating trustee or agent or other Person making
any distribution to the Trustee or to the Holders for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 11.
SECTION 11.11. RIGHTS OF TRUSTEE AND PAYING AGENT
Notwithstanding the provisions of this Article 11 or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment or distribution by the Trustee, and the Trustee and the Paying Agent
may continue to make payments on the Notes, unless the Trustee shall have
received at its Corporate Trust Office written notice of facts that would
cause the payment of any Obligations with respect to the Notes to violate
this Article. Only the Company or a Representative may give the notice.
Nothing in this Article 11 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.
The Trustee shall be entitled to rely on the delivery to
it of a written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a Representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness
or a Representative on behalf of such holder. In the event that the Trustee
determines in good faith that further evidence is required with respect to
the right of any Person who is a holder of Senior Indebtedness to participate
in any payment or distribution pursuant to this Article, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article, and if such evidence is not furnished the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment or until such time as the Trustee shall be
otherwise satisfied as to the right of such Person to receive such payment.
The Trustee in its individual or any other capacity may
hold Senior Indebtedness with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 11.12. AUTHORIZATION TO EFFECT SUBORDINATION
Each Holder of a Note by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action
as may be necessary or
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appropriate to effectuate the subordination as provided in this Article 11,
and appoints the Trustee to act as the Holder's attorney-in-fact for any and
all such purposes. If the Trustee does not file a proper proof of claim or
proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the agent or agents under the New Credit Agreement are hereby
authorized to file an appropriate claim for and on behalf of the Holders of
the Notes.
SECTION 11.13. AMENDMENTS
The provisions of this Article 11 shall not be amended or
modified in a manner adverse to the holder of Designated Senior Indebtedness
without the written consent of the holders of Designated Senior Indebtedness.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by the TIA, the imposed duties shall
control.
SECTION 12.02. NOTICES
Any notice or communication by the Company or the Trustee
to the others is duly given if in writing and delivered in Person or mailed
by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company:
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Telephone No.: (281) 775-4700
Telecopier No.: (281) 775-4722
Attention: President
If to the Trustee:
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State Street Bank and Trust Company of California, N.A.
633 West Fifth Street, 12th Floor
Los Angeles, California 90071
Telephone No.: (213) 362-7369
Telecopier No.: (213) 362-7357
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a Holder shall be mailed
by first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also
be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not
the addressee receives it.
If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES
Holders may communicate pursuant to TIA Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall furnish to
the Trustee:
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(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements
set forth in Section 12.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements
set forth in Section 12.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the
provisions of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied; PROVIDED,
HOWEVER, that with respect to matters of fact, an Opinion of Counsel may rely
on an Officers' Certificate or certificate of public officials.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at
a meeting of Holders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
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SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or the Subsidiary Guarantors, as
such, shall have any liability for any Obligations of the Company or the
Subsidiary Guarantors under the Notes, the Subsidiary Guarantees or this
Indenture or for any claim based on, in respect of, or by reason of, such
Obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY
GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of
any other Person. Any such indenture, loan or debt agreement may not be used
to interpret this Indenture.
SECTION 12.10. SUCCESSORS
All agreements of the Company in this Indenture and the
Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY
In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
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SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[SIGNATURES ON FOLLOWING PAGE]
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SIGNATURES
Dated as of May 22, 1998 GREAT LAKES CARBON CORPORATION
By: /s/ JAMES MCKENZIE
-------------------------------------
Name: James McKenzie
Title: President and CEO
Attest:
(SEAL)
/s/ ADELE ROBLES
- ------------------------------------
Name: Adele Robles
Title: Corporate Secretary
Dated as of May 22, 1998 STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, N.A.
By: /s/ SCOTT EMMONS
-------------------------------------
Name: Scott Emmons
Title: Assistant Vice President
S-1
<PAGE>
EXHIBIT A
(Face of Note)
CUSIP No:[ (144A)]
[ (Reg. S)]
[ (ISIN)]
FOR PURPOSES OF SECTIONS 1272 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, (i) WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT DUE AT
MATURITY, THE ISSUE PRICE OF THIS SECURITY IS $1,000 AND THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $1,023.01, (ii) THE ISSUE DATE IS MAY 22, 1998,
AND (iii) THE YIELD TO MATURITY IS 10.25%
10 1/4% [Series A] [Series B] Senior Subordinated Notes due 2008
No. $__________
GREAT LAKES CARBON CORPORATION
promises to pay to _____________________ or registered assigns,
the principal sum of ___________________________________ Dollars on
May 15, 2008
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Dated: GREAT LAKES CARBON CORPORATION
By:
-------------------------------------
Name:
Title:
(SEAL)
A-1
<PAGE>
Certificate of Authentication:
This is one of the [Global] Notes
referred to in the within-mentioned Indenture:
State Street Bank and Trust Company of California, N.A.
By:
---------------------------------
Authorized Signatory
Dated:
A-2
<PAGE>
(Back of Note)
10 1/4% [Series A] [Series B] Senior Subordinated Notes due 2008
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]1/
[THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE US SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE
- ---------------------
1. To be included only on Global Notes deposited with DTC as Depositary.
A-3
<PAGE>
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT
(I) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE ACT)(A "QIB"), (II) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE ACT OR (III) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (I) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (III) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (IV) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (V) TO AN IAI THAT, PRIOR
TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE ACT, (VI) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (VII) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.]
Capitalized terms used herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise
indicated.
A-4
<PAGE>
1. INTEREST. Great Lakes Carbon Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 10 1/4% per annum from May 22, 1998 until maturity and shall
pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages, if any, semi-annually on May 15 and November
15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). For interest
payments due through May 15, 2003, the Company may, at its option, make up to
four semiannual interest payments through the issuance of Additional Notes in
an aggregate principal amount equal to the amount of the interest that would
be payable if the rate per annum were equal to 11 3/4% (PROVIDED, that
incremental amounts of less than $1,000 shall be payable in cash). Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from
such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the first
Interest Payment Date shall be November 15, 1998. The Company shall pay
interest (including Accrued Bankruptcy Interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time
on demand at the rate then in effect; it shall pay interest (including
Accrued Bankruptcy Interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to
any applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. If the Company elects to make an interest payment
on an Interest Payment Date through the issuance of Additional Notes as
provided above, it must provide the Trustee and the Holders with irrevocable
notice of such election at least ten (10) and not more than thirty (30)
Business Days prior to the immediately preceding Interest Payment Date.
Notwithstanding the foregoing, Additional Notes may not be used to make the
interest payment due November 15, 1998.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the May 1 or
November 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture (as defined below) with
respect to defaulted interest. The Notes will be payable as to principal,
premium, interest and Liquidated Damages at the office or agency of the
Company maintained for such purpose, or, at the option of the Company,
payment of interest (other than payment of interest through the issuance of
Additional Notes) and Liquidated Damages may be made by check mailed to the
Holders at their addresses set
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<PAGE>
forth in the register of Holders, and PROVIDED that payment by wire transfer
of immediately available funds to an account within the United States will be
required with respect to principal of and interest (other than payment of
interest through the issuance of Additional Notes), premium and Liquidated
Damages on all Global Notes. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank
and Trust Company of California, N.A., the Trustee under the Indenture, will
act as Paying Agent and Registrar. The Company may change any Paying Agent
or Registrar without notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an
Indenture dated as of May 22, 1998 ("Indenture") among the Company, any
Subsidiary Guarantors party thereto and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Notes will be limited in aggregate principal amount to
$225,000,000, plus the aggregate principal amount of Notes required to make
the interest payments in the form of Additional Notes described in the second
sentence of Section 1 above.
5. OPTIONAL REDEMPTION. The Notes will be redeemable, at
the Company's option, in whole or in part, at any time or from time to time,
on or after May 15, 2003 and prior to maturity, upon not less than 30 nor
more than 60 days' prior notice mailed by first class mail to each Holder's
last registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date, if redeemed during the
12-month period commencing May 15, of the years set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
----------
<S> <C>
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.125%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.417%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.708%
2006 and thereafter. . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
In addition, at any time prior to May 15, 2001, the Company
may redeem up to 35% of the principal amount of the Notes issued under the
Indenture with the proceeds of one or more Equity Offerings, at any time or
from time to time in part, at a
A-6
<PAGE>
redemption price (expressed as a percentage of principal amount) of 110.250%,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date; PROVIDED that at least $100,000,000 aggregate principal
amount of Notes remains outstanding after each such redemption; and PROVIDED
FURTHER, that such redemption occurs within 90 days of the date of the
closing of each such Equity Offering.
6. MANDATORY REDEMPTION. The Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. OFFERS TO PURCHASE.
(a) CHANGE OF CONTROL. The Company must commence,
within 35 days of the occurrence of a Change of Control, and consummate an
Offer to Purchase for all Notes then outstanding, at a purchase price equal
to 101% of the principal amount thereof, plus accrued interest (if any) to
the Payment Date.
(b) ASSET SALE. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in an Asset Sale in excess of
$1,000,000 unless (i) the Company (or the Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests sold or otherwise
disposed of, and in the case of a lease of assets, a lease providing for rent
and other conditions which are no less favorable to the Company (or the
Subsidiary, as the case may be) in any material respect than the then
prevailing market conditions (in each case as set forth in an Officers'
Certificate delivered to the Trustee), (ii) at least 75% of the consideration
therefor received by the Company or such Subsidiary is in the form of cash or
Cash Equivalents; PROVIDED that the amount of (x) any liabilities (as shown
on the Company's or such Subsidiary's most recent balance sheet or in the
notes thereto, excluding contingent liabilities and trade payables) of the
Company or any Subsidiary (other than liabilities that are by their terms
subordinated to, or PARI PASSU with, the Notes or the Subsidiary Guarantees)
that are assumed by the transferee of any such assets and (y) any notes or
other obligations received by the Company or any such Subsidiary from such
transferee that are promptly, but in no event more than 30 days after
receipt, converted by the Company or such Subsidiary into cash (to the extent
of the cash received), will be deemed to be cash for purposes of this
provision and the receipt of such cash shall be treated as cash received from
an Asset Sale for which such Notes or obligations were received.
The Company or any of its Subsidiaries may apply the Net
Proceeds from each Asset Sale, at its option, within 360 days after the
consummation of such Asset Sale, (a) to permanently reduce any Senior
Indebtedness (and in the case of any senior revolving indebtedness to
correspondingly permanently reduce commitments with respect thereto), or (b)
for the acquisition of another business or the acquisition of other
A-7
<PAGE>
property or assets, in each case, in the same or a Related Business or (c)
for any combination of the foregoing. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce Senior Revolving Debt
or otherwise invest such Net Proceeds in any manner that is not prohibited by
this Indenture. Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this paragraph will be deemed
to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $5,000,000, the Company will be required to make an offer to all
Holders of Notes (an "Asset Sale Offer") and to holders of other Indebtedness
of the Company outstanding ranking on a PARI PASSU basis with the Notes with
provisions requiring the Company to make an offer (or otherwise redeem or
prepay) with proceeds from the asset sales, PRO RATA in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other
Indebtedness then outstanding, to purchase (or otherwise redeem or prepay)
the maximum principal amount (or accreted value, as applicable) of Notes and
such other Indebtedness, if any, that may be purchased (or redeemed or
prepaid) out of the Excess Proceeds, at an offer price in cash in an amount
equal to 100% of the principal amount (or accreted value, as applicable)
thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase, in accordance with the procedures set forth
in this Section. If the aggregate principal amount (or accreted value, as
applicable) of Notes and such Indebtedness surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such Indebtedness to be purchased on a PRO RATA basis. Upon completion of
such offer to purchase, the amount of Excess Proceeds shall be reset at zero.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected
for redemption, except for the unredeemed portion of any Note being redeemed
in part. Also, it need not exchange or register the transfer of any Notes
for a period of 15 days before a selection of Notes to be redeemed or during
the period between a record date and the corresponding Interest Payment Date.
9. PERSONS DEEMED OWNERS. The registered Holder of a Note
may be treated as its owner for all purposes.
10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Notes or the Subsidiary Guarantees may be
amended or supplemented with
A-8
<PAGE>
the consent of the Holders of at least a majority in principal amount of
thethen outstanding Notes, and any existing Default or compliance with any
provision of the Indenture, the Notes or the Subsidiary Guarantees may be
waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes. Without the consent of any Holder of a Note, the
Indenture, the Notes or the Subsidiary Guarantees may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the
Notes in case of a merger or consolidation, to provide for additional
Subsidiary Guarantees as set forth in the Indenture or for the release or
assumption of Subsidiary Guarantees in compliance with the Indenture, to make
any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such Holder, to comply with the provisions of the
Depositary, Euroclear or Cedel or the Trustee with respect to the provisions
of the Indenture or the Notes relating to transfers and exchanges of Notes or
beneficial interests therein, or to comply with the requirements of the SEC
in order to effect or maintain the qualification of the Indenture under the
TIA.
11. DEFAULTS AND REMEDIES. The Indenture provides that each
ofthe following constitutes an Event of Default: (a) default in the payment
of principal of (or premium, if any, on) any Note when the same becomes due
and payable at maturity, upon acceleration, redemption or otherwise, whether
or not such payment is prohibited by the provisions described below under
"--Ranking"; (b) default in the payment of interest on, or Liquidated Damages
with respect to, any Note when the same becomes due and payable, and such
default continues for a period of 30 days, whether or not such payment is
prohibited by the provisions described below under "--Ranking"; (c) the
failure to make or consummate an Asset Sale Offer in accordance with
provisions of Section 4.13 (Limitation on Asset Sales) or an Offer to
Purchase in accordance with Section 4.14 (Change of Control) of the
Indenture; (d) the Company or any of its Subsidiaries defaults in the
performance of or breaches Section 4.07 (Limitation on Incurrence of
Indebtedness and Issuance of Disqualified Stock) or Section 4.09 (Limitation
on Restricted Payments) and such default or breach continues for a period of
30 days after written notice by the Trustee or the Holders of 25% or more in
aggregate principal amount of the Notes; (e) the Company or any of its
Subsidiaries defaults in the performance of or breaches any other covenant or
agreement of the Company or such Subsidiary in the Indenture or under the
Notes (other than a default specified in clause (a), (b), (c) or (d) above)
and such default or breach continues for a period of 60 days after written
notice by the Trustee or the Holders of 25% or more in aggregate principal
amount of the Notes; (f) there occurs any default under any mortgage,
indenture or instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by the Company or
any of its
A-9
<PAGE>
Subsidiaries or the payment of which is guaranteed by the Company
or any of its Subsidiaries whether such Indebtedness or guarantee now exists,
or is created after the Issue Date, which default (I) is caused by a failure
to pay principal of such Indebtedness upon final stated maturity following
the expiration of any grace period provided in such Indebtedness or (II)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a default in the payment of principal upon final stated
maturity which has not been cured and is continuing following the expiration
of any applicable grace period or the maturity of which has been so
accelerated and has not been satisfied, aggregates $7,500,000 or more; (g)
any final judgment or order for the payment of money shall be rendered
against the Company or any Significant Subsidiary in excess of $7,500,000 in
the aggregate for all such final judgments or orders against all such Persons
and shall not be paid or discharged, and there shall be any period of 60 days
following entry of the final judgment or order that causes the aggregate
amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $7,500,000; (h) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect in any material respect or any
Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; (i) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant Subsidiary
in an involuntary case under any applicable Bankruptcy Law now or hereafter
in effect, (B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any Significant
Subsidiary or for all or substantially all of the property and assets of the
Company or any Significant Subsidiary or (C) the winding up or liquidation of
the affairs of the Company or any Significant Subsidiary and, in each case,
such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (j) the Company or any Significant Subsidiary (A)
commences a voluntary case under any applicable Bankruptcy Law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary
or for all or substantially all of the property and assets of the Company or
any Significant Subsidiary or (C) effects any general assignment for the
benefit of creditors.
12. RANKING. The Notes and the Subsidiary Guarantees are
subordinated in right of payment, to the extent and in the manner provided in
Article 11 and Section 10.07 of the Indenture, to the prior payment in full
of all Senior Indebtedness. The Company agrees, and each Holder by accepting
a Note consents and agrees, to the subordination provided in the Indenture
and authorizes the Trustee to give it effect.
A-10
<PAGE>
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from,
andperform services for the Company or its Affiliates, and may otherwise deal
with the Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
16. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED
NOTES. In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Transferred Restricted Notes shall have all the rights
set forth in the Registration Rights Agreement dated as of the date of the
Indenture, among the Company and the Initial Purchasers (the "Registration
Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated
bythe Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
A-11
<PAGE>
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture and/or the Registration
Rights Agreement. Requests may be made to:
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Attention: President
Telephone No.: (281) 775-4700
A-12
<PAGE>
SUBSIDIARY GUARANTEE
The Subsidiary Guarantors listed below (hereinafter
referred to as the "Subsidiary Guarantors," which term includes any
successors or assigns under the Indenture and any additional Subsidiary
Guarantors), have irrevocably and unconditionally guaranteed the Guarantee
Obligations, which include (i) the due and punctual payment of the principal
of, premium, if any, and interest and Liquidated Damages, if any, on the
10 1/4% Senior Subordinated Notes due 2008 (the "Notes") of Great Lakes Carbon
Corporation, a Delaware corporation (the "Company"), whether at stated
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and premium, if any, and (to the extent
permitted by law) interest on any interest or Liquidated Damages, if any, on
the Notes, and the due and punctual performance of all other obligations of
the Company, to the Holders or the Trustee all in accordance with the terms
set forth in Article 10 of the Indenture and (ii) in case of any extension of
time of payment or renewal of any Notes or any such other obligations, that
the same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
The obligations of each Subsidiary Guarantor to the
Holders and to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly set forth in Article 10 of the Indenture and
reference is hereby made to such Indenture for the precise terms of this
Subsidiary Guarantee.
The obligations of each Subsidiary Guarantor to the
Holders and to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly subordinated to Senior Indebtedness of the Subsidiary
Guarantor as set forth in Section 10.07 of the Indenture and reference is
hereby made to such Section for the precise terms of such subordination.
No stockholder, employee, officer, director or
incorporator, as such, past, present or future of each Subsidiary Guarantor
shall have any liability under this Subsidiary Guarantee by reason of his or
its status as such stockholder, employee, officer, director or incorporator.
This is a continuing Guarantee and shall remain in full
force and effect and shall be binding upon each Subsidiary Guarantor and its
successors and assigns until full and final payment of all of the Company's
obligations under the Notes and Indenture or until released or legally
defeased in accordance with the Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Holders, and, in the event
of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in
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<PAGE>
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Guarantee of payment and not of collectibility.
This Subsidiary Guarantee shall not be valid or
obligatory for any purpose until the certificate of authentication on the
Note upon which this Subsidiary Guarantee is noted shall have been executed
by the Trustee under the Indenture by the manual signature of one of its
authorized officers.
The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall be limited to the extent necessary to insure that
it does not constitute a fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE 10 OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings
given in the Indenture unless otherwise indicated.
Dated as of ---------
By:
-------------------------------
Name:
Title:
- ------------------------------------ (SEAL)
Name:
Title:
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<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign
and transfer this Note to
-----------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint------------------------------------------
to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
-----------------------------------------------------------------
Date:
--------------------------
Your Signature:
-------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
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<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or 4.14 of the Indenture, check the box below:
// Section 4.13 // Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.13 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $-----------
Date: Your Signature:
-------------------- -------------------------------
(Sign exactly as your name appears on the Note)
Tax Identification No.:______________
Signature Guarantee.
A-16
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest
in another Global Notes or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal
Amount of Amount of Amount of Signature of
decrease in increase in this Global authorized
Principal Principal Note officer of
Amount of Amount of following such Trustee or
Date of this Global this Global decrease Note
Exchange Note Note (or increase) Custodian
-------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
- ------------------
*This should be included only if the Note is issued in global form.
A-17
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Attention: President
State Street Bank and Trust Company of California, N.A.
633 West Fifth Street, 12th Floor
Los Angeles, California 90071
Attention: Corporate Trust Group
Re: 10 1/4% Senior Subordinated Notes due 2008
Dear Sirs:
Reference is hereby made to the Indenture, dated as of May 22, 1998 (the
"Indenture"), among Great Lakes Carbon Corporation, as issuer (the "Company"),
the Subsidiary Guarantors party thereto and State Street Bank and Trust Company
of California, N.A., as trustee. Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture. ______________, (the
"Transferor") owns and proposes to transfer the Note[s] or interest in such
Note[s] specified in Annex A hereto, in the principal amount of $___________ in
such Note[s] or interests (the "Transfer"), to __________ (the "Transferee"),
as further specified in Annex A hereto. In connection with the Transfer, the
Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. // CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE
144A.The Transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further certifies
that the beneficial interest or Definitive Note is being transferred to a
Person that the Transferor reasonably believed and believes is purchasing the
beneficial interest or Definitive Note for its own account, or for one or
more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A and such Transfer is in compliance
B-1
<PAGE>
with any applicable blue sky securities laws of any State of the United
States.Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the 144A Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
2. // CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance
with Rule 903 or Rule 904 under the Securities Act and, accordingly, the
Transferor hereby further certifies that (i) the Transfer is not being made
to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor
and any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed
in, on or through the facilities of a designated offshore securities market
and neither such Transferor nor any Person acting on its behalf knows that
the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements
of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not
being made to a U.S. Person or for the account or benefit of a U.S. Person
(other than a Initial Purchaser) and the interest transferred will be held
immediately thereafter through Euroclear or Cedel. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed
on the Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. // CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE
SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being
effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act and any
applicable blue sky securities laws of any State of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) // Such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act; or
(b) // Such Transfer is being effected to the Company or
a subsidiary thereof; or
B-2
<PAGE>
(c) // Such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the
Securities Act; or
(d) // such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the
registration requirements of the Securities Act other than Rule
144A, Rule 144 or Rule 904, and the Transferor hereby further
certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and
the Transfer complies with the transfer restrictions applicable
to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by
the Transferee in a form of Exhibit D to the Indenture and (2) if
such Transfer is in respect of a principal amount of Notes at the
time of transfer of less than $250,000, an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification and provided to the
Company, which has confirmed its acceptability), to the effect
that such Transfer is in compliance with the Securities Act.
Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the Definitive Note will be subject
to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Definitive Notes and in the
Indenture and the Securities Act.
4. // CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) // CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The
Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act and in compliance with the
transfer restrictions contained in the Indenture and any
applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive
Notes and in the Indenture.
(b) // CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904
under
B-3
<PAGE>
the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any
applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend
are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be
subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes,
on Restricted Definitive Notes and in the Indenture.
(c) // CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.
(i) The Transfer is being effected pursuant to and in compliance
with an exemption from the registration requirements of the
Securities Act other than Rule 144, Rule 903 or Rule 904 and in
compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the
restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.
B-4
<PAGE>
This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.
__________________________ Dated:______________
[Insert Name of Transferor]
By:_______________________
Name:
Title:
B-5
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) // a beneficial interest in the:
(i) // 144A Global Note (CUSIP ), or
---------
(ii) // Regulation S Global Note (CUSIP ), or
----------
(b) // a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) // a beneficial interest in the:
(i) // 144A Global Note (CUSIP ), or
---------
(ii) // Regulation S Global Note (CUSIP ), or
---------
(iii) // Unrestricted Global Note (CUSIP ); or
---------
(b) // a Restricted Definitive Note; or
(c) // an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-6
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Attention: President
State Street Bank and Trust Company of California, N.A.
633 West Fifth Street, 12th Floor
Los Angeles, California 90071
Attention: Corporate Trust Group
Re: 10 1/4% Senior Subordinated Notes due 2008
Dear Sirs:
Reference is hereby made to the Indenture, dated as of
May 22, 1998 (the "Indenture"), between Great Lakes Carbon Corporation, as
issuer (the "Company"), the Subsidiary Guarantors party thereto and State
Street Bank and Trust Company of California, N.A., as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in
the Indenture.
____________, (the "Owner") owns and proposes to exchange
the Note[s]or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE. In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global
Note in an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Global Notes and pursuant to
C-1
<PAGE>
and in accordance with the United States Securities Act of 1933, as amended
(the "Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any State of the United States.
(b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any State
of the United States.
(c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE
NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Owner's Exchange of a Restricted Definitive Note for a beneficial
interest in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant
to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest is being acquired in compliance with any applicable blue
sky securities laws of any State of the United States.
(d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE
NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note
is being
C-2
<PAGE>
acquired in compliance with any applicable blue sky securities laws of any
State of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE
NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with
the Exchange of the Owner's Restricted Definitive Note for a beneficial
interest in the: [CHECK ONE] / / 144A Global Note or / / Regulation S Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant
to and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any State of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the
relevant Restricted Global Note and in the Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are
made for your benefit and the benefit of the Company.
- --------------------------
[Insert Name of Owner]
By:-----------------------
Name:
Title:
Dated:
----------------
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Attention: President
State Street Bank and Trust Company of California, N.A.
633 West Fifth Street, 12th Floor
Los Angeles, California 90071
Attention: Corporate Trust Group
Re: 10 1/4% Senior Subordinated Notes due 2008
Dear Sirs:
Reference is hereby made to the Indenture, dated as of
May 22, 1998 (the "Indenture"), between Great Lakes Carbon Corporation, as
issuer (the "Company"), the Subsidiary Guarantors party thereto and State
Street Bank and Trust Company of California, N.A., as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in
the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of: (a) a beneficial interest in a Global Note, or
(b) a Definitive Note, we confirm that:
1. We understand that any subsequent transfer of the
Notes or any interest therein is subject to certain restrictions and
conditions set forth in the Indenture and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Notes or any interest
therein except in compliance with, such restrictions and conditions and the
United States Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Notes
have not been registered under the Securities Act, and that the Notes and any
interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should
sell the Notes or any interest therein, we will do so only (A) to the Company
D-1
<PAGE>
or any subsidiary thereof, (B) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein), (c)
to an institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company a signed letter substantially in the
form of this letter and, if the proposed transfer is in respect of an
aggregate principal amount of Notes of less than $250,000, an Opinion of
Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities Act,
(E) pursuant to the provisions of Rule 144 under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and
we further agree to provide to any person purchasing the Definitive Note from
us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the
Notes or beneficial interest therein, we will be required to furnish to you
and the Company such certifications, legal opinions and other information as
you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Notes purchased by us will bear a legend to the foregoing effect. We further
understand that any subsequent transfer by us of the Notes or beneficial
interest therein acquired by us must be effected through one of the Initial
Purchasers.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest
therein purchased by us for our own account or for one or more accounts (each
of which is an institutional "accredited investor") as to each of which we
exercise sole investment discretion.
D-2
<PAGE>
You and the Company are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Dated:
- ------------------------------------ ------------------------
[Insert Name of Accredited Investor]
By:_______________________________
Name:
Title:
D-3
<PAGE>
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT
SUBSIDIARY GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
____, among _____ (the "Guaranteeing Subsidiary"), a subsidiary of Great Lakes
Carbon Corporation (or its permitted successor), a Delaware corporation (the
"Company"), the Company, any other Subsidiary Guarantors (as defined in the
Indenture referred to herein) party thereto and State Street Bank and Trust
Company of California, N.A., as trustee under the indenture referred to below
(the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of May 22, 1998 providing
for the issuance of 10 1/4% Senior Subordinated Notes due 2008 (the
"Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which newly-acquired or created Subsidiary Guarantors
shall unconditionally guarantee all of the Company's Obligations under the Notes
and the Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee
is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for
the equal and ratable benefit of the Holders of the Notes as
follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary
irrevocably and unconditionally guarantees the Guarantee Obligations, which
include (i) the due and punctual payment of the principal of, premium, if
any, and interest and Liquidated Damages, if any, on the Notes, whether at
stated maturity, by acceleration or otherwise, the due and punctual payment
of interest on the overdue principal and premium, if any, and (to the extent
permitted by law) interest on any interest and
E-1
<PAGE>
Liquidated Damages, if any, on the Notes, and the due and punctual
performance of all other obligations of the Company, to the Holders or the
Trustee all in accordance with the terms set forth in Article 10 of the
Indenture, and (ii) in case of any extension of time of payment or renewal of
any Notes or any such other obligations, that the same will be promptly paid
in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of Guaranteeing Subsidiary to the Holders and to
the Trustee pursuant to this Subsidiary Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture and reference is hereby
made to such Indenture for the precise terms of this Subsidiary
Guarantee.
No stockholder, employee, officer, director or incorporator, as
such, past, present or future of the Guaranteeing Subsidiary shall have any
liability under this Subsidiary Guarantee by reason of his or its status as
such stockholder, employee, officer, director or incorporator.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Guaranteeing Subsidiary and its
successors and assigns until full and final payment of all of the Company's
obligations under the Notes and Indenture or until released in accordance
with the Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested
in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Guarantee of payment and not of collectibility.
The Obligations of the Guaranteeing Subsidiary under its
Subsidiary Guarantee shall be limited to the extent necessary to insure that
it does not constitute a fraudulent conveyance under applicable
law.
THE TERMS OF ARTICLE 10 OF THE INDENTURE ARE INCORPORATED HEREIN
BY REFERENCE.
3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
E-2
<PAGE>
4. COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.
5. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
E-3
<PAGE>
REGISTRATION RIGHTS AGREEMENT
Dated as of May 22, 1998
by and between
GREAT LAKES CARBON CORPORATION
and
Donaldson, Lufkin & Jenrette Securities Corporation
BT Alex. Brown Incorporated
and
BancAmerica Robertson Stephens
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made
and entered into as of May 22, 1998 by and between Great Lakes Carbon
Corporation, a Delaware corporation (the "COMPANY"), and Donaldson, Lufkin &
Jenrette Securities Corporation, BT Alex. Brown Incorporated and BancAmerica
Robertson Stephens (each an "INITIAL PURCHASER" and collectively, the
"INITIAL PURCHASERS"), each of whom has agreed to purchase the Company's
10 1/4% Series A Senior Subordinated Notes due 2008 (the "SERIES A NOTES")
pursuant to the Purchase Agreement dated as of May 18, 1998 (the "PURCHASE
AGREEMENT"), by and between the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to purchase the
Series A Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 2
of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the Indenture, dated May
22, 1998, between the Company and State Street Bank and Trust Company of
California, N.A., as Trustee, relating to the Series A Notes and the Series B
Notes (the "INDENTURE").
The parties hereby agree as follows:
Section 1. DEFINITIONS.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the
Exchange Act.
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of all of the following
events: (i) the filing and effectiveness under the Act of the Exchange Offer
Registration Statement relating to the Series B Notes to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement effective
and the keeping of the Exchange Offer open for a period not less than the
period required pursuant to Section 3(b) hereof, and (iii) the delivery by
the Company to the Registrar under the Indenture of Series B Notes in the
same aggregate principal amount as the aggregate principal amount of Series A
Notes tendered by Holders thereof pursuant to the Exchange Offer.
1
<PAGE>
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a)
hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as
amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal
amount of Series A Notes that are tendered by Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial
Purchasers propose to sell the Series A Notes to (i) certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act and
(ii) pursuant to Regulation S under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDER: As defined in Section 2(b) hereof.
INITIAL PURCHASERS: As defined in the preamble hereto.
INTEREST PAYMENT DATE: As defined in the Indenture and the
Notes.
NASD: National Association of Securities Dealers, Inc.
NOTES: The Series A Notes and the Series B Notes.
PERSON: An individual, partnership, corporation, limited
liability company, joint venture, association, trust or other organization,
whether or not a legal entity, or a government or agency or political
subdivision thereof.
PROSPECTUS: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the
Company relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer
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Restricted Securities pursuant to the Shelf Registration Statement, which is
filed pursuant to the provisions of this Agreement, in each case, including
the Prospectus included therein, all amendments and supplements thereto
(including post-effective amendments) and all exhibits and material
incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: RULE 144 PROMULGATED UNDER THE ACT.
SERIES A NOTES: As defined in the preamble hereto.
SERIES B NOTES: The Company's 101/4% Series B Senior
Subordinated Notes due 2008 to be issued pursuant to the Indenture: (i) in
the Exchange Offer or (ii) as contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Series A Note, until the
earliest to occur of (a) the date on which such Series A Note is exchanged in
the Exchange Offer for a Series B Note which is entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Act (other than as a result of the Holder's status as an
Affiliate of the Company), (b) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Notes that do not bear the Private
Placement Legend set forth in the Indenture), or (c) the date on which such
Series A Note is distributed to the public pursuant to Rule 144 under the Act
or may be sold under Rule 144(k) under the Act (and purchasers thereof have
been issued Notes that do not bear the Private Placement Legend set forth in
the Indenture) and each Series B Note until the date on which such Series B
Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS.
A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted
Securities.
SECTION 3. REGISTERED EXCHANGE OFFER.
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section 6(a)(i)
below have been complied with), the Company shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date, but in no event later than 60 days after
the Closing Date (such 60th day being the
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"FILING DEADLINE"), (ii) use its reasonable best efforts to cause such
Exchange Offer Registration Statement to become effective at the earliest
possible time, but in no event later than 135 days after the Closing Date
(such 135th day being the "EFFECTIVENESS DEADLINE"), (iii) in connection with
the foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause it to become
effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration
and qualification of the Series B Notes to be made under the Blue Sky laws of
such United States jurisdictions as are necessary to permit Consummation of
the Exchange Offer, PROVIDED, HOWEVER, that the Company shall not be required
in connection therewith to register or qualify as a foreign corporation in
any jurisdiction where it is not now so registered or qualified or to take
any action that would subject it to service of process in suits or to
taxation, other than as to matters and transactions relating to the Exchange
Offer Registration Statement, in any jurisdiction where it is not now so
subject, and (iv) upon the effectiveness of such Exchange Offer Registration
Statement, commence and Consummate the Exchange Offer. The Exchange Offer
shall be on the appropriate form permitting (i) registration of the Series B
Notes to be offered in exchange for the Series A Notes that are Transfer
Restricted Securities and (ii) resales of Series B Notes by Broker-Dealers
that tendered into the Exchange Offer Series A Notes that such Broker-Dealer
acquired for its own account as a result of market making activities or other
trading activities (other than Series A Notes acquired directly from the
Company or any of its Affiliates) as contemplated by Section 3(c) below.
(b) The Company shall use its reasonable best efforts to
cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the
minimum period required under applicable federal and state securities laws to
Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall such
period be less than 20 Business Days. The Company shall cause the Exchange
Offer to comply with all applicable federal and state securities laws. No
securities other than the Series B Notes (and guarantees thereof, if any)
shall be included in the Exchange Offer Registration Statement. The Company
shall use its reasonable best efforts to cause the Exchange Offer to be
Consummated on or prior to 30 Business Days after the Exchange Offer
Registration Statement has become effective (such 30th Business Day being the
"CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer Registration
Statement and indicate therein that any Broker-Dealer who holds Transfer
Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Series A Notes acquired directly from the Company or
any Affiliate of the Company), may exchange such Transfer Restricted
Securities pursuant to the Exchange Offer. Such "Plan of Distribution"
section shall also contain all other information with respect to such sales
by such Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name
any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by
the Commission as a result of a change in policy, rules or regulations after
the date of this Agreement.
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Because such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any Series B Notes received by such Broker-Dealer in the Exchange
Offer, the Company shall permit the use of the Prospectus contained in the
Exchange Offer Registration Statement by such Broker-Dealer to satisfy such
prospectus delivery requirement. To the extent necessary to ensure that the
prospectus contained in the Exchange Offer Registration Statement is
available for sales of Series B Notes by Broker-Dealers, the Company agrees
to use its reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as
required by and subject to the provisions of Section 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of one year from the Consummation Deadline or such
shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold pursuant thereto. The
Company shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event
later than one day after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION.
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not
permitted by applicable law (after the Company has complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Company prior to the 20th day
following the Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange
Offer or (B) such Holder may not resell the Series B Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder
is a Broker-Dealer and holds Series A Notes acquired directly from the
Company or any of its Affiliates, then the Company shall:
(x) use its best efforts to cause to be filed, on or
prior to 30 days after the earlier of (i) the date on which the Company
determines that the Exchange Offer Registration Statement cannot be filed as
a result of clause (a)(i) above and (ii) the date on which the Company
receives the notice specified in clause (a)(ii) above, (such earlier date,
the "FILING DEADLINE"), a shelf registration statement pursuant to Rule 415
under the Act (which may be an amendment to the Exchange Offer Registration
Statement (the "SHELF REGISTRATION STATEMENT")), relating to all Transfer
Restricted Securities, and
(y) use its best efforts to cause such Shelf
Registration Statement to become effective on or prior to 90 days after the
obligation to file such Shelf Registration Statement arises (such 90th day
the "EFFECTIVENESS DEADLINE").
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company
is required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law
(i.e., clause (a)(i) above), then the filing of the Exchange Offer
Registration Statement shall be deemed to
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satisfy the requirements of clause (x) above; PROVIDED that, in such event,
the Company shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y).
To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a) and the other
securities required to be registered therein pursuant to Section 6(b)(ii)
hereof, the Company shall use its best efforts to keep any Shelf Registration
Statement required by this Section 4(a) continuously effective, supplemented,
amended and current as required by and subject to the provisions of Sections
6(b) and (c) hereof and in conformity with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission
as announced from time to time, for a period of at least two years (as
extended pursuant to Section 6(c)(i)) following the Closing Date, or such
shorter period as will terminate when all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold pursuant thereto.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION
WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Company in writing, within 20 days after receipt of a
request therefor, the information specified in Item 507 or 508 of Regulation
S-K, as applicable, of the Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein or prospectus supplement thereto. No Holder of Transfer Restricted
Securities shall be entitled to liquidated damages pursuant to Section 5
hereof unless and until such Holder shall have provided all such information.
Each selling Holder agrees to promptly furnish additional information
required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES.
If (i) any Registration Statement required by this Agreement
is not filed with the Commission on or prior to the applicable Filing
Deadline, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the applicable Effectiveness
Deadline, (iii) the Exchange Offer has not been Consummated on or prior to
the Consummation Deadline (except in the situation described in Section
4(a)(i) above when Section 4(a)(x)(i) has been satisfied) or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within two Business Days by a
post-effective amendment to such Registration Statement (or a new
Registration Statement) that cures such failure and that is itself declared
effective within five Business Days of filing such post-effective amendment
to such Registration Statement (each such event referred to in clauses (i)
through (iv), a "REGISTRATION DEFAULT"), then the Company hereby agrees to
pay to each Holder of Transfer Restricted Securities affected thereby
liquidated damages in an amount equal to $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities held by such Holder for
each week or portion thereof that the Registration Default continues for the
first 90-day period immediately following the occurrence of such Registration
Default. The amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to
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each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of liquidated damages of $.25 per week per
$1,000 in principal amount of Transfer Restricted Securities; PROVIDED that
the Company shall in no event be required to pay liquidated damages for more
than one Registration Default at any given time. Notwithstanding anything to
the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the
Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of
the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a
result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders
entitled thereto, in the manner provided for the payment of interest in the
Indenture, on each Interest Payment Date, as more fully set forth in the
Indenture and the Notes. Notwithstanding the fact that any securities for
which liquidated damages are due cease to be Transfer Restricted Securities,
all obligations of the Company to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES.
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection
with the Exchange Offer, the Company shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use its best efforts to effect such
exchange and to permit the resale of Series B Notes by any Broker-Dealer that
tendered in the Exchange Offer Series A Notes that such Broker-Dealer
acquired for its own account as a result of its market making activities or
other trading activities (other than Series A Notes acquired directly from
the Company or any of its Affiliates) being sold in accordance with the
intended method or methods of distribution thereof, and (z) comply with all
of the following provisions:
(i) If, following the date hereof there has been
announced a change in Commission policy with respect to exchange
offers such as the Exchange Offer, that in the reasonable opinion of
counsel to the Company raises a substantial question as to whether
the Exchange Offer is permitted by applicable federal law, the
Company hereby agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to Consummate an
Exchange Offer for such Transfer Restricted Securities. The Company
hereby agrees to pursue the issuance of such a decision to the
Commission staff level. In connection with the foregoing, the
Company hereby agrees to take all such other actions as may be
requested by the Commission or otherwise required in connection with
the issuance of such decision, including without limitation (A)
participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel
to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not
be favorable) by the
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Commission staff. Notwithstanding the foregoing, the Company shall
not be required to take commercially unreasonable action to comply
with the requests of the Commission referred to in the previous
sentence in order to secure a favorable resolution.
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker Dealer) shall
furnish, upon the request of the Company, prior to the Consummation
of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by
the Exchange Offer Registration Statement) to the effect that (A) it
is not an Affiliate of the Company, (B) it is not engaged in, and
does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of
the Series B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Series B Notes in its ordinary course of business. As
a condition to its participation in the Exchange Offer each Holder
using the Exchange Offer to participate in a distribution of the
Series B Notes shall acknowledge and agree that, if the resales are
of Series B Notes obtained by such Holder in exchange for Series A
Notes acquired directly from the Company or an Affiliate thereof, it
(1) could not, under Commission policy as in effect on the date of
this Agreement, rely on the position of the Commission enunciated in
MORGAN STANLEY AND CO., INC. (available June 5, 1991) and EXXON
CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as
interpreted in the Commission's letter to SHEARMAN & STERLING dated
July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must
be covered by an effective registration statement containing the
selling security holder information required by Item 507 or 508, as
applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental
letter to the Commission (A) stating that the Company is registering
the Exchange Offer in reliance on the position of the Commission
enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13,
1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991) as
interpreted in the Commission's letter to SHEARMAN & STERLING dated
July 2, 1993, and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that
the Company has not entered into any arrangement or understanding
with any Person to distribute the Series B Notes to be received in
the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange
Offer is acquiring the Series B Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Notes received in
the Exchange Offer and (C) any other undertaking or representation
required by the Commission as set forth in any no-action letter
obtained pursuant to clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the
Shelf Registration Statement, the Company shall (i) comply with all the
provisions of Section 6(c) below and use its best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being
sold in
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accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section
4(b) hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of
Series A Notes covered by any Shelf Registration Statement contemplated by
this Agreement, Series B Notes having an aggregate principal amount equal to
the aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement for
this purpose and issue the Series B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company
shall:
(i) use its best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus
contained therein (A) to contain an untrue statement of material
fact or omit to state any material fact necessary to make the
statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company shall file promptly
an appropriate amendment to such Registration Statement or
supplement such Prospectus, as applicable, curing such defect, and,
if Commission review is required, use its best efforts to cause such
amendment to be declared effective as soon as practicable.
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the applicable
Registration Statement as may be necessary to keep such Registration
Statement effective for the applicable period set forth in Section 3
or 4 hereof, as the case may be; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the
Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance
with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) advise each Holder promptly and, if requested by
such Holder, confirm such advice in writing, (A) when the Prospectus
or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any applicable Registration Statement or
any post-effective amendment thereto, when the same has become
effective, (B) of any request by the
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Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement under the Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D)
of the existence of any fact or the happening of any event that
makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto or
any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use its best efforts
to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of
Transfer Restricted Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each Holder in connection with such
exchange or sale, if any, before filing with the Commission, copies
of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after
the initial filing of such Registration Statement), which documents
will be subject to the review and comment of such Holders in
connection with such sale, if any, for a period of at least five
Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holders shall reasonably
object within five Business Days after the receipt thereof. A
Holder shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains an untrue statement of
a material fact or omit to state any material fact necessary to make
the statements therein not misleading or fails to comply with the
applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is
to be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder in
connection with such exchange or sale, if any, make the Company's
representatives
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available for discussion of such document and other customary due
diligence matters, and include such information in such document
prior to the filing thereof as such Holders may reasonably request;
(vii) make available, at reasonable times, for inspection
by each Holder and any attorney or accountant retained by such
Holders, all financial and other records, pertinent corporate
documents of the Company and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(viii) if requested by any Holders in connection with
such exchange or sale, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such Holders may
reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of
the Transfer Restricted Securities; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder in connection with such
exchange or sale, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(x) deliver to each Holder without charge, as many
copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may
request; the Company hereby consents to the use (in accordance with
law) of the Prospectus and any amendment or supplement thereto by
each selling Holder in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) upon the request of any Holder, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as
may be reasonably requested by any Holder in connection with any
sale or resale pursuant to any applicable Registration Statement.
In such connection, the Company shall:
(A) upon request of any Holder, furnish (or in
the case of paragraphs (2) and (3), use its best efforts to cause to
be furnished) to each Holder, upon Consummation of the Exchange
Offer or upon the effectiveness of the Shelf Registration Statement,
as the case may be;
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(1) a certificate, dated such date, signed
on behalf of the Company by (x) the President or any Vice
President and (y) a principal financial or accounting
officer of the Company, confirming, as of the date
thereof, the matters set forth in Sections 6(y), 9(a) and
9(b) of the Purchase Agreement and such other similar
matters as such Holders may reasonably request;
(2) an opinion, dated such date, of counsel
for the Company covering, to the extent relevant at such
time, matters similar to those set forth in paragraph (e)
of Section 9 of the Purchase Agreement and such other
matter as such Holder may reasonably request, and in any
event including a statement to the effect that such
counsel has participated in conferences with officers and
other representatives of the Company, representatives of
the independent public accountants for the Company and
have considered the matters required to be stated therein
and the statements contained therein, although such
counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that
such counsel advises that, on the basis of the foregoing
(relying as to materiality to the extent such counsel
deems appropriate upon the statements of officers and
other representatives of the Company) and without
independent check or verification, no facts came to such
counsel's attention that caused such counsel to believe
that the applicable Registration Statement, at the time
such Registration Statement or any post-effective
amendment thereto became effective and, in the case of
the Exchange Offer Registration Statement, as of the date
of Consummation of the Exchange Offer, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading, or that
the Prospectus contained in such Registration Statement
as of its date and, in the case of the opinion dated the
date of Consummation of the Exchange Offer, as of the
date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made,
not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no
responsibility for, and has not independently verified,
the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial and
statistical data included in any Registration Statement
contemplated by this Agreement or the related Prospectus;
and
(3) a customary comfort letter, dated such
date, from the Company's independent accountants, in the
customary form and covering matters of the type
customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the
matters set forth in the comfort letters delivered
pursuant to Section 9(g) of the Purchase Agreement in
form and substance reasonably satisfactory to the
Holders; and
12
<PAGE>
(B) deliver such other documents and certificates
as may be reasonably requested by the selling Holders to
evidence compliance with the matters covered in clause
(A) above and with any customary conditions contained in
any agreement entered into by the Company pursuant to
this clause (xi);
(xii) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders and their
counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws
of such jurisdictions as the selling Holders may request and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such
sale of Transfer Restricted Securities;
(xiv) use its best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide
the Trustee under the Indenture with printed certificates for the
Transfer Restricted Securities which are in a form eligible for
deposit with the Depository Trust Company;
(xvi) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term
is defined in paragraph (c) of Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA
not later than the effective date of the first Registration
Statement required by this Agreement and, in connection therewith,
cooperate with the Trustee and the Holders to effect such changes to
the Indenture as
13
<PAGE>
may be required for such Indenture to be so qualified in accordance
with the terms of the TIA; and execute and use its best efforts to
cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xviii) until the disposition of all Transfer Restricted
Securities held by any Holder, provide promptly to such Holder, upon
request, each document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by
acquisition of a Transfer Restricted Security that, upon receipt of the
notice referred to in Section 6(c)(iii)(C) or any notice from the Company of
the existence of any fact of the kind described in Section 6(c)(iii)(D)
hereof (in each case, a "SUSPENSION NOTICE"), such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until (i) such Holder has received copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(iv)
hereof, or (ii) such Holder is advised in writing by the Company that the use
of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated by reference in the Prospectus
(in each case, the "RECOMMENCEMENT DATE"). Each Holder receiving a
Suspension Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such Holder's
possession which have been replaced by the Company with more recently dated
Prospectuses or (ii) deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Holder's possession of
the Prospectus covering such Transfer Restricted Securities that was current
at the time of receipt of the Suspension Notice. The time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing
certificates for the Series B Notes and printing of Prospectuses), (iv)
reasonable messenger, delivery service and telephone charges; (v) all fees
and disbursements of counsel for the Company, and, in accordance with Section
7(b) below, the Holders of Transfer Restricted Securities; (vi) all
application and filing fees in connection with listing Notes on a national
securities exchange or automated quotation system pursuant to the
requirements hereof, in the event the Notes are so listed; and (vii) all fees
and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by
or incident to such performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the
14
<PAGE>
expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Company.
(b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer
Registration Statement and the Shelf Registration Statement), the Company
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes into in the Exchange Offer and/or
selling or reselling Series A Notes or Series B Notes pursuant to the "Plan
of Distribution" contained in the Exchange Offer Registration Statement or
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such
Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Holder, its directors, officers and each Person, if any, who controls such
Holder (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act), from and against any and all losses, claims, damages,
liabilities, judgments, (including without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto)
provided by the Company to any Holder or any prospective purchaser of Series
B Notes or registered Series A Notes, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by an untrue statement or
omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the
Company by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company, and
its directors and officers, and each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Company, to the same extent as the foregoing indemnity from the Company set
forth in section (a) above, but only with reference to information relating
to such Holder furnished in writing to the Company by such Holder expressly
for use in any Registration Statement. In no event shall any Holder, its
directors, officers or any Person who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid
by such Holder for such Transfer Restricted Securities and (ii) the amount of
any damages that such Holder, its directors, officers or any Person who
controls such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
15
<PAGE>
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a)
or 8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly
notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PERSON") in writing and the indemnifying party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and
expenses of such counsel, as incurred (except that in the case of any action
in respect of which indemnity may be sought pursuant to both Sections 8(a)
and 8(b), a Holder shall not be required to assume the defense of such action
pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such
counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the indemnified party unless (i)
the employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have
failed to assume the defense of such action or employ counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnified party
and the indemnifying party, and the indemnified party shall have been advised
by such counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the indemnifying
party (in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of the indemnified party). In
any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed a they are incurred. Such firm shall
be designated in writing by a majority of the Holders, in the case of the
parties indemnified pursuant to Section 8(a), and by the Company, in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments or by reason of any
settlement of any action (i) effected with its written consent or (ii)
effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in
this Section 8 is unavailable to an indemnified party in respect of any
losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims,
16
<PAGE>
damages, liabilities or judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and
the Holders, on the other hand, from their sale of Transfer Restricted
Securities or (ii) if the allocation provided by clause 8(d)(i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 8(d)(i) above but also
the relative fault of the Company, on the one hand, and of the Holder, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative fault of the Company, on the
one hand, and of the Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one
hand, or by the Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and judgments referred to above
shall be deemed to include, subject to the limitations set forth in Section
8(c), any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim.
The Company and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 8, no Holder, its directors, its officers or any
Person, if any, who controls such Holder shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the total received
by such Holder with respect to the sale of Transfer Restricted Securities
pursuant to a Registration Statement exceeds (i) the amount paid by such
Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 8(c) are several in proportion to the
respective principal amount of Transfer Restricted Securities held by each
Holder hereunder and not joint.
SECTION 9. RULE 144A AND RULE 144.
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information
17
<PAGE>
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to
Section 13 or 15 (d) of the Exchange Act, to make all filings required
thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS.
(a) REMEDIES. The Company acknowledge and agree that any
failure by the Company to comply with its obligations under Sections 3 and 4
hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may obtain
such relief as may be required to specifically enforce the Company's
obligations under Sections 3 and 4 hereof. The Company further agree to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. The
Company has not previously entered into any agreement that grants any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case
of Section 5 hereof and this Section 10(c)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted Securities
and (ii) in the case of all other provisions hereof, the Company has obtained
the written consent of Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities (excluding Transfer Restricted
Securities held by the Company or its Affiliates). Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose Transfer Restricted
Securities are being tendered pursuant to the Exchange Offer, and that does
not affect directly or indirectly the rights of other Holders whose Transfer
Restricted Securities are not being tendered pursuant to such Exchange Offer,
may be given by the Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities being tendered pursuant to such Exchange
Offer.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third
party beneficiaries of the agreements made hereunder between the Company, on
the one hand, and the Initial Purchasers, on the other hand, and shall have
the right to enforce such agreements directly to the extent they may deem
such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) NOTICES. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopier, or courier guaranteeing overnight delivery:
18
<PAGE>
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
(ii) if to the Company:
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Telephone No.: (281) 775-4700
Telecopier No.: (281) 775-4722
Attention: President
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if telecopied; and on the next business
day, if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
at the address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders; PROVIDED, that nothing herein shall be deemed
to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all
of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Purchase Agreement, and such Person shall be entitled
to receive the benefits hereof.
(g) COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
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(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein, with respect to the registration rights granted
by the Company with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
[signature page follows]
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
GREAT LAKES CARBON CORPORATION
By: /s/ JAMES MCKENZIE
-------------------------
Name: James McKenzie
Title: President and CEO
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BT ALEX. BROWN INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
By Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ MICHAEL HOOKS
- ---------------------------
Name: Michael Hooks
Title: Managing Director
S-1
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
GREAT LAKES ACQUISITION CORP.,
GREAT LAKES CARBON CORPORATION,
VARIOUS BANKS,
BANK OF AMERICA NT&SA, as CO-AGENT,
DLJ CAPITAL FUNDING, INC., as DOCUMENTATION AGENT
and
BANKERS TRUST COMPANY,
as SYNDICATION AGENT
and
as ADMINISTRATIVE AGENT
----- -------------- -----
Dated as of May 22, 1998
------------ -----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
1.01 The Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.02 Minimum Amount of Each Borrowing. . . . . . . . . . . . . . . . . . . . .4
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . .4
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.08 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.09 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . 10
1.11 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.12 Change of Lending Office. . . . . . . . . . . . . . . . . . . . . . . . 12
1.13 Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.02 Letter of Credit Requests . . . . . . . . . . . . . . . . . . . . . . . 15
2.03 Letter of Credit Participations . . . . . . . . . . . . . . . . . . . . 15
2.04 Agreement to Repay Letter of Credit Drawings. . . . . . . . . . . . . . 17
2.05 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3. Commitment Commission; Fees; Reductions of Commitment. . . . . . . . . 19
3.01 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.02 Voluntary Termination and Reduction of Commitments. . . . . . . . . . . 20
3.03 Mandatory Reduction of Commitments. . . . . . . . . . . . . . . . . . . 20
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . . . . 21
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.02 Mandatory Repayments and Commitment Reductions. . . . . . . . . . . . . 22
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . 31
4.04 Net Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5. Conditions Precedent to Credit Events on the Initial Borrowing
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . . . . . 33
5.02 Fees, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.04 Corporate Documents; Proceedings; etc.. . . . . . . . . . . . . . . . . 34
5.05 Shareholders' Agreements; Management Agreements; Tax Sharing
Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.06 Consummation of the Transaction . . . . . . . . . . . . . . . . . . . . 34
5.07 Pledge Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.08 Security Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.09 Mortgages; Title Insurance; etc.. . . . . . . . . . . . . . . . . . . . 37
5.10 Adverse Change, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.11 Solvency Letter; Insurance. . . . . . . . . . . . . . . . . . . . . . . 38
5.12 Pro Forma Balance Sheet; Projections. . . . . . . . . . . . . . . . . . 39
SECTION 6. Conditions Precedent to All Credit Events. . . . . . . . . . . . . . . 39
6.01 No Default; Representations and Warranties. . . . . . . . . . . . . . . 39
6.02 Notice of Borrowing; Letter of Credit Request . . . . . . . . . . . . . 39
SECTION 7. Representations, Warranties and Agreements . . . . . . . . . . . . . . 40
7.01 Corporate Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . 40
7.03 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.04 Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 41
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc.. . . . . . . . . . . . . . . . . . . . 41
7.06 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.07 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . . . . 42
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . 42
7.09 Tax Returns and Payments. . . . . . . . . . . . . . . . . . . . . . . . 43
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.11 The Security Documents. . . . . . . . . . . . . . . . . . . . . . . . . 44
7.12 Representations and Warranties in Documents . . . . . . . . . . . . . . 44
7.13 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.15 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.16 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . . . . 45
7.17 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . . . . 45
7.18 Public Utility Holding Company Act. . . . . . . . . . . . . . . . . . . 45
7.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.20 Patents, Licenses, Franchises and Formulas. . . . . . . . . . . . . . . 46
7.21 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.22 Special Purpose Corporation . . . . . . . . . . . . . . . . . . . . . . 46
7.23 Senior Subordinated Notes and Holdings Debentures . . . . . . . . . . . 46
SECTION 8. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 47
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.02 Books, Records and Inspections. . . . . . . . . . . . . . . . . . . . . 49
8.03 Maintenance of Property; Insurance. . . . . . . . . . . . . . . . . . . 49
8.04 Corporate Franchises. . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.05 Compliance with Statutes, etc.. . . . . . . . . . . . . . . . . . . . . 50
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8.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.07 End of Fiscal Years; Fiscal Quarters. . . . . . . . . . . . . . . . . . 51
8.08 Performance of Obligations. . . . . . . . . . . . . . . . . . . . . . . 51
8.09 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.10 Maintenance of Separateness . . . . . . . . . . . . . . . . . . . . . . 52
8.11 Additional Security; Further Assurances . . . . . . . . . . . . . . . . 52
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . . . . . 57
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.04 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . 61
9.06 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . 63
9.07 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.08 Adjusted Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . 65
9.09 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . 66
9.10 Limitation on Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements; Limitations of Prepayments
and Modifications of Indebtedness; etc. . . . . . . . . . . . . . . . 67
9.11 Limitation on Certain Restrictions on Subsidiaries. . . . . . . . . . . 67
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . 67
9.13 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.14 Limitation on Creation of Subsidiaries. . . . . . . . . . . . . . . . . 68
9.15 No Other Designated Senior Indebtedness . . . . . . . . . . . . . . . . 68
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.02 Representations, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 68
10.03 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . 69
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.06 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.08 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.09 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.10 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 11. Definitions and Accounting Terms. . . . . . . . . . . . . . . . . . . 71
11.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12. The Administrative Agent. . . . . . . . . . . . . . . . . . . . . . . 96
12.01 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
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12.03 Lack of Reliance on the Administrative Agent . . . . . . . . . . . . . 97
12.04 Certain Rights of the Administrative Agent . . . . . . . . . . . . . . 97
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.07 The Administrative Agent in Its Individual Capacity. . . . . . . . . . 98
12.08 Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.09 Resignation by the Administrative Agent. . . . . . . . . . . . . . . . 98
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
13.01 Payment of Expenses, etc.. . . . . . . . . . . . . . . . . . . . . . . 99
13.02 Right of Setoff; Collateral Matters. . . . . . . . . . . . . . . . . .100
13.03 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . .101
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . .103
13.06 Payments Pro Rata. . . . . . . . . . . . . . . . . . . . . . . . . . .103
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . . . .104
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . .104
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
13.10 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . .105
13.12 Amendment or Waiver; etc.. . . . . . . . . . . . . . . . . . . . . . .105
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
13.14 Domicile of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . .107
13.15 Limitation on Additional Amounts, etc. . . . . . . . . . . . . . . . .107
13.16 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . .107
13.17 Registry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
SECTION 14. Holdings Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . .108
14.01 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109
14.03 Nature of Liability. . . . . . . . . . . . . . . . . . . . . . . . . .109
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . . . . . .109
14.05 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . .109
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110
14.07 Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .110
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
14.09 Nature of Liability. . . . . . . . . . . . . . . . . . . . . . . . . .112
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SCHEDULE I Commitments
SCHEDULE II Tax Matters
SCHEDULE III Real Property
SCHEDULE IV Insurance
SCHEDULE V Existing Liens
SCHEDULE VI Existing Indebtedness
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 A Term Note
EXHIBIT B-2 B Term Note
EXHIBIT B-3 C Term Note
EXHIBIT B-4 Revolving Note
EXHIBIT B-5 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E Opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
Special Counsel to the Credit Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I Mortgage
EXHIBIT J Subsidiary Guaranty
EXHIBIT K Assignment and Assumption Agreement
(v)
<PAGE>
CREDIT AGREEMENT, dated as of May 22, 1998, among GREAT LAKES
ACQUISITION CORP., a Delaware corporation ("Holdings"), GREAT LAKES CARBON
CORPORATION, a Delaware corporation (the "Borrower"), the Banks party hereto
from time to time, BANK OF AMERICA NT&SA, as Co-Agent, DLJ CAPITAL FUNDING,
INC., as Documentation Agent, and BANKERS TRUST COMPANY, as Syndication Agent
and as Administrative Agent (all capitalized terms used herein and defined in
Section 11 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 THE COMMITMENTS. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with an A Term Loan Commitment severally
agrees to make, on the Initial Borrowing Date, a term loan (each, an "A Term
Loan" and collectively, the "A Term Loans") to the Borrower, which A Term Loans
(i) shall, at the option of the Borrower, be made and initially maintained as
Base Rate Loans or Eurodollar Loans (subject to the option to convert such A
Term Loans pursuant to Section 1.06) and (ii) shall be made by each Bank in that
aggregate principal amount as is equal to the A Term Loan Commitment of such
Bank on such date. Once repaid, A Term Loans borrowed hereunder may not be
reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a B Term Loan Commitment severally agrees to make, on the Initial
Borrowing Date, a term loan (each, a "B Term Loan" and collectively, the "B Term
Loans") to the Borrower, which B Term Loans (i) shall, at the option of the
Borrower, be made and initially maintained as Base Rate Loans or Eurodollar
Loans (subject to the option to convert such B Term Loans pursuant to Section
1.06) and (ii) shall be made by each Bank in that aggregate principal amount as
is equal to the B Term Loan Commitment of such Bank on such date. Once repaid,
B Term Loans incurred hereunder may not be reborrowed.
(c) Subject to and upon the terms and conditions set forth herein,
each Bank with a C Term Loan Commitment severally agrees to make, on the Initial
Borrowing Date, a term loan (each a "C Term Loan" and collectively, the "C Term
Loans" and, together with the A Term Loans and the B Term Loans, the "Term
Loans") to the Borrower, which C Term Loans (i) shall, at the option of the
Borrower, be made and initially maintained as Base Rate Loans or Eurodollar
Loans (subject to the option to convert such C Term Loans pursuant to Section
1.06) and (ii) shall be made by each Bank in that aggregate principal amount as
is equal to the C Term Loan Commitment of such Bank on such date. Once repaid, C
Term Loans incurred hereunder may not be reborrowed.
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(d) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment severally agrees, at any time and
from time to time on and after the Initial Borrowing Date and prior to the
Revolving Loan Maturity Date, to make a revolving loan or revolving loans (each,
a "Revolving Loan" and collectively, the "Revolving Loans") to the Borrower,
which Revolving Loans (i) shall, at the option of the Borrower, be Base Rate
Loans or Eurodollar Loans, PROVIDED, that except as otherwise specifically
provided in Section 1.10(b), all Revolving Loans comprising the same Borrowing
shall at all times be of the same Type, (ii) may be repaid and reborrowed in
accordance with the provisions hereof, (iii) shall not exceed for any Bank at
any time outstanding that aggregate principal amount which when added to the
product of (x) such Bank's Adjusted Percentage and (y) the sum of (I) the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time and
(II) the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously with
the incurrence of, Revolving Loans) then outstanding, equals the Revolving Loan
Commitment of such Bank at such time and (iv) shall not exceed for all Banks at
any time outstanding the sum of (I) the aggregate principal amount which, when
added to the amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, Revolving Loans) at such time and (II) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) then outstanding, equals the Total Revolving Loan
Commitment at such time.
(e) Subject to and upon the terms and conditions set forth herein,
the Swingline Bank agrees to make at any time and from time to time after the
Initial Borrowing Date and prior to the Swingline Expiry Date, a loan or loans
(each a "Swingline Loan," and collectively, the "Swingline Loans") to the
Borrower, which Swingline Loans:
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) shall not exceed in aggregate principal amount at any time
outstanding, when combined with (x) the aggregate principal amount of all
Revolving Loans then outstanding and (y) the amount of all Letter of Credit
Outstandings at such time, an amount equal to the Adjusted Total Revolving
Loan Commitment at such time (after giving effect to any reductions to the
Total Revolving Loan Commitment on such date); and
(iv) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
The Swingline Bank shall not be obligated to make any Swingline Loans at a time
when a Bank Default exists unless the Swingline Bank has entered into
arrangements satisfactory to it to eliminate the Swingline Bank's risk with
respect to the Bank which is subject of such Bank Default, including by cash
collateralizing such Bank's Percentage of the outstanding Swingline Loans.
Notwithstanding anything to the contrary contained in this Section 1.01(e), the
Swingline
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Bank shall not make any Swingline Loan after receiving a written notice from the
Borrower or the Required Banks stating that a Default or an Event of Default
exists and is continuing until such time as the Swingline Bank shall have
received written notice of (i) rescission of such notice from the party or
parties originally delivering such notice, (ii) the waiver of such Default or
Event of Default or (iii) the Administrative Agent in good faith believes that
such Default or Event of Default has ceased to exist.
(f) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks with Revolving Loan Commitments that its
outstanding Swingline Loans shall be funded with a Borrowing of Revolving
Loans (provided that such notice shall be deemed to have been automatically
given upon the occurrence of a Default or an Event of Default under Section
10.05 or upon the exercise of any of the remedies provided in the last
paragraph of Section 10), in which case a Borrowing of Revolving Loans
constituting Base Rate Loans (each such Borrowing, a "Mandatory Borrowing")
shall be made on the immediately succeeding Business Day from all Banks with
a Revolving Loan Commitment (without giving effect to any termination and/or
reductions thereto pursuant to the last paragraph of Section 10) pro rata on
the basis of their respective Adjusted Percentages (determined before giving
effect to any termination of the Revolving Loan Commitments pursuant to the
last paragraph of Section 10) and the proceeds thereof shall be applied
directly to the Swingline Bank to repay the Swingline Bank for such
outstanding Swingline Loans. Each such Bank hereby irrevocably agrees to
make Revolving Loans upon one Business Day's notice pursuant to each
Mandatory Borrowing in the amount and in the manner specified in the
preceding sentence and on the date specified in writing by the Swingline Bank
(i) notwithstanding that the amount of the Mandatory Borrowing may not comply
with the minimum amount for Borrowings otherwise required hereunder, (ii)
whether any conditions specified in Section 5 or 6 are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv) notwithstanding
the date of such Mandatory Borrowing and (v) notwithstanding the amount of
the Total Revolving Loan Commitment at such time. In the event that any
Mandatory Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower), then each such Bank with a Revolving Loan Commitment hereby agrees
that it shall forthwith purchase (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any payments received from
the Borrower on or after such date and prior to such purchase) from the
Swingline Bank such participations in the outstanding Swingline Loans as
shall be necessary to cause such Banks to share in such Swingline Loans
ratably based upon their respective Adjusted Percentages (determined before
giving effect to any termination of the Revolving Loan Commitments pursuant
to the last paragraph of Section 10); provided, that (x) all interest payable
on the Swingline Loans shall be for the account of the Swingline Bank until
the date as of which the respective participation is required to be purchased
and, to the extent attributable to the purchased participation shall be
payable to the participant from and after such date and (y) at the time any
purchase of participations pursuant to this sentence is actually made, the
purchasing Bank shall be required to pay the Swingline Bank interest on the
principal amount of participation purchased for each day from and including
the day upon which the Mandatory Borrowing would otherwise have occurred to
but excluding the date of payment for such participation, at the rate
otherwise applicable to Revolving Loans maintained as Base Rate Loans
hereunder for each day thereafter.
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1.02 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal
amount of each Borrowing of Term Loans shall not be less than $2,000,000 and, if
greater, shall be in an integral multiple of $500,000. The aggregate principal
amount of each Borrowing of Revolving Loans shall be not less than $1,000,000
($500,000 in the case of Base Rate Loans) and, if greater, shall be in an
integral multiple of $250,000 ($100,000 in the case of Base Rate Loans) or, if
less, the then remaining Total Revolving Loan Commitment provided that Mandatory
Borrowings shall be in the amounts required by Section 1.01(f). The aggregate
principal amount of each Borrowing of Swingline Loans shall not be less than
$50,000. More than one Borrowing may occur on the same date, but at no time
shall there be outstanding more than ten Borrowings of Eurodollar Loans.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to make
a Borrowing hereunder (excluding Borrowings of Swingline Loans and Mandatory
Borrowings), it shall give the Administrative Agent at its Notice Office at
least one Business Day's prior written (or telephonic promptly confirmed in
writing) notice of each Base Rate Loan and at least three Business Days' prior
written (or telephonic promptly confirmed in writing) notice of each Eurodollar
Loan to be made hereunder, PROVIDED that any such notice shall be deemed to have
been given on a certain day only if given before 11:00 A.M. (New York time) in
the case of Eurodollar Loans, or 12:00 Noon (New York time) in the case of a
Borrowing of Base Rate Loans on such day. Each such written notice or written
confirmation of telephonic notice (each a "Notice of Borrowing") shall be given
by the Borrower in the form of Exhibit A, appropriately completed to specify the
aggregate principal amount of the Loans to be made pursuant to such Borrowing,
the date of such Borrowing (which shall be a Business Day), whether the Loans
being made pursuant to such Borrowing shall constitute A Term Loans, B Term
Loans, C Term Loans or Revolving Loans and whether the Loans being made pursuant
to such Borrowing are to be initially maintained as Base Rate Loans or
Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period to be
applicable thereto. The Administrative Agent shall promptly give each Bank
which is required to make Loans of the Tranche specified in the respective
Notice of Borrowing, notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by the immediately
preceding sentence to be specified in the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to make a Borrowing of
Swingline Loans hereunder, it shall give the Swingline Bank, not later than 1:00
p.m. (New York time) on the date that a Swingline Loan is to be made, written
notice (or telephonic notice confirmed in writing) of each Swingline Loan to be
made hereunder. Each such notice shall specify in each case (a) the date of
Borrowing (which shall be a Business Day) and (b) the aggregate principal amount
of Swingline Loans to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(f), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(f).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing of Loans, the
Administrative Agent or the Swingline Bank, as the case may be, may act without
liability upon the basis of telephonic notice
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of such Borrowing, believed by the Administrative Agent or the Swingline Bank,
as the case may be, in good faith to be from an Authorized Officer of the
Borrower prior to receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Administrative Agent's and the
Swingline Bank's record of the terms of such telephonic notice of such Borrowing
of Loans.
1.04 DISBURSEMENT OF FUNDS. Except as otherwise specifically
provided in the second succeeding sentence, no later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than the close of business on the date specified
pursuant to Section 1.03(b)(i) or (y) in case of Mandatory Borrowings, not later
than 12:00 Noon (New York time) on the date specified in Section 1.01(f)), each
Bank with a Commitment of the respective Tranche will make available its pro
rata portion of each such Borrowing requested to be made on such date (or in the
case of Swingline Loans, the Swingline Bank shall make available the full amount
thereof). All such amounts shall be made available in Dollars and in
immediately available funds at the Payment Office of the Administrative Agent,
and the Administrative Agent will make available to the Borrower at the Payment
Office the aggregate of the amounts so made available by the Banks (prior to
1:00 P.M. on such day, to the extent of funds actually received by the
Administrative Agent prior to 12:00 Noon on such day). Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the Administrative
Agent such Bank's portion of any Borrowing to be made on such date, the
Administrative Agent may assume that such Bank has made such amount available to
the Administrative Agent on such date of Borrowing and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank, the Administrative Agent
shall be entitled to recover such corresponding amount on demand from such Bank.
If such Bank does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover on demand from such Bank or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Bank, at the overnight Federal Funds Rate and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Bank as a result of
any failure by such Bank to make Loans hereunder.
1.05 NOTES. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank shall be evidenced (i) if A Term
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-1 with blanks appropriately completed in
conformity herewith (each, an "A Term Note" and collectively, the "A Term
Notes"), (ii) if B Term Loans, by a promissory note duly executed and delivered
by the Borrower substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (each, a "B Term Note" and
collectively, the "B Term Notes"), (iii) if C
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Term Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-3 with blanks appropriately completed in
conformity herewith (each a "C Term Note" and collectively, the "C Term Notes"
and, together with the A Term Notes and the B Term Notes, the "Term Notes"),
(iv) if Revolving Loans, by a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-4, with blanks appropriately
completed in conformity herewith (each, a "Revolving Note" and collectively, the
"Revolving Notes") and (v) if Swingline Loans, by a promissory note duly
executed and delivered by the Borrower substantially in the form of Exhibit B-5,
with blanks appropriately completed in conformity herewith (each, a "Swingline
Note" and collectively, the "Swingline Notes").
(b) The A Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal to the respective A
Term Loan made by such Bank on the Initial Borrowing Date and be payable in the
principal amount of A Term Loans evidenced thereby, (iv) mature on the A Term
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02(A) and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) The B Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal to the respective B
Term Loan made by such Bank on the Initial Borrowing Date and be payable in the
principal amount of B Term Loans evidenced thereby, (iv) mature on the B Term
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02(A) and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(d) The C Term Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal to the respective C
Term Loan made by such Bank on the Initial Borrowing Date and be payable in the
principal amount of C Term Loans evidenced thereby, (iv) mature on the C Term
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of Base Rate Loans and Eurodollar Loans, as the case may
be, evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02(A) and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(e) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal to the Revolving
Loan Commitment of such Bank and be payable in the principal amount of the
Revolving Loans evidenced thereby, (iv) mature on the Revolving Loan Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as provided in Section
4.02(A) and (vii) be entitled to the benefits of this Agreement and the other
Credit Documents.
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(f) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to the order of the Swingline Bank and
be dated the Initial Borrowing Date, (iii) be in a stated principal amount equal
to the Maximum Swingline Amount and be payable in the principal amount of the
outstanding Swingline Loans evidenced thereby from time to time, (iv) mature on
the Swingline Expiry Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi)
be subject to voluntary repayment as provided in Section 4.01 and mandatory
repayment as provided in Section 4.02(A) and (vii) be entitled to the benefits
of this Agreement and the other Credit Documents.
(g) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation or endorsement shall not affect the Borrower's
obligations in respect of such Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert on
any Business Day, all or a portion equal to at least (w) in the case of a
conversion of A Term Loans, $5,000,000 (and, if greater, in an integral multiple
of $500,000), (x) in the case of a conversion of B Term Loans, $5,000,000 (and,
if greater, in an integral multiple of $500,000), (y) in the case of a
conversion of C Term Loans, $5,000,000 (and, if greater, in an integral multiple
of $500,000) and (z) in the case of a conversion of Revolving Loans, $1,000,000
(and, if greater, in an integral multiple of $250,000), of the outstanding
principal amount of Loans made pursuant to one or more Borrowings (so long as of
the same Tranche) of one or more Types of Loans into a Borrowing (of the same
Tranche) of another Type of Loan (other than Swingline Loans which may not be
converted pursuant to this Section 1.06), PROVIDED that (i) Eurodollar Loans
converted into Base Rate Loans on any day other than the last day of an Interest
Period applicable to the Loans being converted shall be accompanied by costs set
forth in Section 1.11 and no partial conversion of Eurodollar Loans shall reduce
the outstanding principal amount of such Eurodollar Loans made pursuant to a
single Borrowing to less than (w) in the case of A Term Loans, $5,000,000, and
(x) in the case of B Term Loans, $5,000,000, (y) in the case of C Term Loans,
$5,000,000 and (z) in the case of Revolving Loans, $1,000,000, (ii) Base Rate
Loans may only be converted into Eurodollar Loans if no Default or Event of
Default is in existence on the date of the conversion and (iii) no conversion
pursuant to this Section 1.06 shall result in a greater number of Eurodollar
Loans than is permitted under Section 1.02. Each such conversion shall be
effected by the Borrower by giving the Administrative Agent at its Notice Office
prior to 12:00 Noon (New York time) at least three Business Days' (in the case
of a conversion of Base Rate Loans into Eurodollar Loans) and at least one
Business Day (in the case of a conversion of Eurodollar Loans into Base Rate
Loans) prior notice (each a "Notice of Conversion") specifying the Loans to be
so converted, the Borrowing or Borrowings pursuant to which such Loans were made
and, if to be converted into Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Loans.
1.07 PRO RATA BORROWINGS. All Borrowings of A Term Loans, B Term
Loans, C Term Loans and Revolving Loans under this Agreement shall be incurred
from the Banks PRO RATA on the basis of their A Term Loan Commitments, B Term
Loan Commitments, C Term Loan
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Commitments or Revolving Loan Commitments, as the case may be; provided that all
Borrowings of Revolving Loans made pursuant to a Mandatory Borrowing shall be
incurred by the Borrower from the Banks with Revolving Loan Commitments pro rata
on the basis of their Adjusted Percentages. It is understood that no Bank shall
be responsible for any default by any other Bank of its obligation to make Loans
hereunder and that each Bank shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Bank to make its
Loans hereunder.
1.08 INTEREST. (a) The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration, optional or mandatory or otherwise) of such Base Rate
Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at a rate per annum which shall be equal to the sum of
the Applicable Margin plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the earlier of (i) the maturity (whether by
acceleration, optional or mandatory or otherwise) of such Eurodollar Loan and
(ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which shall,
during each Interest Period applicable thereto, be equal to the sum of the
Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
of the respective Tranche of Loans from time to time and (y) the rate which is
2% in excess of the rate then borne by such Loans, in each case with such
interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Term Loan, on any
repayment or prepayment (on the amount repaid or prepaid), and in respect of any
Loan at maturity (whether by acceleration or otherwise) and, after such
maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 INTEREST PERIODS. At the time it gives any Notice of Borrowing
or Notice of Conversion in respect of the making of, or conversion into, any
Eurodollar Loan (in the case of the initial Interest Period applicable thereto)
or on the third Business Day prior to the expiration
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of an Interest Period applicable to such Eurodollar Loan (in the case of any
subsequent Interest Period), the Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of the Borrower, be a one, two, three or six-month period,
provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end on
the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; PROVIDED, HOWEVER, that if any Interest Period for
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(v) no Interest Period may be selected at any time when a Default
or Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of A Term Loans
shall be selected which extends beyond the A Term Maturity Date;
(vii) no Interest Period in respect of any Borrowing of B Term Loans
shall be selected which extends beyond the B Term Maturity Date;
(viii) no Interest Period in respect of any Borrowing of C Term Loans
shall be selected which extends beyond the C Term Maturity Date;
(ix) no Interest Period in respect of any Borrowing of Revolving
Loans shall be selected which extends beyond the Revolving Loan Maturity
Date; and
(x) no Interest Period in respect of any Borrowing of any Tranche
of Term Loans shall be selected which extends beyond any date upon which a
mandatory repayment of such Tranche of Term Loans will be required to be made
under Section 4.02(A)(b), (c) or (d) if, after giving effect to the selection of
such Interest Period, the aggregate principal amount of Term Loans of such
Tranche which have Interest Periods which will expire after such date will be in
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excess of the aggregate principal amount of Term Loans then outstanding less the
aggregate amount of such required repayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payment to any Bank of the principal of or interest on such
Eurodollar Loan or any other amounts payable hereunder (except for changes
in the rate of tax on, or determined by reference to, the net income or
profits of such Bank, or any franchise tax based on the net income or
profits of such Bank, in either case pursuant to the laws of the United
States of America or the jurisdiction in which it is organized or in which
its principal office or applicable lending office is located or any
subdivision thereof or therein), but without duplication of any amounts
payable in respect of Taxes pursuant to Section 4.04(a), or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate and/or (y) other circumstances since the date of this
Agreement affecting such Bank or the interbank Eurodollar market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by any Bank in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except
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in the case of clause (i) above, to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Banks). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred (including by way of
conversion) shall be deemed rescinded by the Borrower, (y) in the case of clause
(ii) above, the Borrower shall, subject to the provisions of Section 13.15 (to
the extent applicable), pay to such Bank, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased costs
or reductions in amounts received or receivable hereunder (a written notice as
to the additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to the Borrower by such Bank in good faith shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto) and (z) in the case of clause (iii) above, the Borrower shall take one
of the actions specified in Section 1.10(b) as promptly as possible and, in any
event, within the time period required by law. Each of the Administrative Agent
and each Bank agrees that if it gives notice to the Borrower of any of the
events described in clause (i) or (iii) above, it shall promptly notify the
Borrower and, in the case of any such Bank, the Administrative Agent, if such
event ceases to exist. If any such event described in clause (iii) above ceases
to exist as to a Bank, the obligations of such Bank to make Eurodollar Loans and
to convert Base Rate Loans into Eurodollar Loans on the terms and conditions
contained herein shall be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank or
the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan, PROVIDED that, if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time after the date of this Agreement any Bank
determines that the introduction of or any change in any applicable law or
governmental rule, regulation, order, guideline, directive or request (whether
or not having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Commitments
hereunder or its obligations hereunder, then the Borrower shall, subject to the
provisions of Section 13.15 (to the extent applicable), pay to such Bank, upon
its written demand therefor, such additional amounts as shall be required to
compensate such Bank or such other corporation for the increased cost to such
Bank or such
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other corporation or the reduction in the rate of return to such Bank or such
other corporation as a result of such increase of capital. In determining
such additional amounts, each Bank will act reasonably and in good faith and
will use averaging and attribution methods which are reasonable, PROVIDED
that such Bank's reasonable good faith determination of compensation owing
under this Section 1.10(c) shall, absent manifest error, be final and conclusive
and binding on all the parties hereto. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section 1.10(c), will give
prompt written notice thereof to the Borrower, which notice shall show the basis
for calculation of such additional amounts.
1.11 COMPENSATION. The Borrower shall, subject to the provisions of
Section 13.15 (to the extent applicable), compensate each Bank, upon its written
request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a default by such Bank
or the Administrative Agent) a Borrowing of, or conversion from or into,
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a) or (b)); (ii) if any repayment
(including any repayment made pursuant to Section 4.02(A) or as a result of an
acceleration of the Loans pursuant to Section 10) or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period with respect thereto; (iii) if any prepayment of any of its Eurodollar
Loans is not made on any date specified in a notice of prepayment given by the
Borrower; or (iv) as a consequence of (x) any other default by the Borrower to
repay its Loans when required by the terms of this Agreement or any Note held by
such Bank or (y) any election made pursuant to Section 1.10(b).
1.12 CHANGE OF LENDING OFFICE. Each Bank agrees that upon the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans affected by such event, PROVIDED that such designation is made on
such terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section. Nothing in this Section 1.12
shall affect or postpone any of the obligations of the Borrower or the right of
any Bank provided in Sections 1.10, 2.05 and 4.04.
1.13 REPLACEMENT OF BANKS. (x) If any Bank becomes a Defaulting Bank
or otherwise defaults in its obligations to make Loans or fund Unpaid Drawings,
(y) upon the occurrence of any event giving rise to the operation of Section
1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect
to any Bank which results in such Bank charging to the Borrower increased costs
in excess of those being generally charged by the other Banks or (z) as provided
in Section 13.12(b) in the case of certain refusals by a Bank (other than a Bank
whose commitments are terminated in accordance with Section 3.02(b) and/or whose
Loans are repaid in accordance with Section 4.01(v)) to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks,
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the Borrower shall have the right, if no Default or Event of Default will exist
immediately after giving effect to the respective replacement, to either replace
such Bank (the "Replaced Bank") with one or more other Eligible Transferee or
Transferees, none of whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank") reasonably acceptable to the
Administrative Agent or, at the option of the Borrower, to replace only (a) the
A Term Loan Commitment or A Term Loans of the Replaced Bank with an identical A
Term Loan Commitment or A Term Loans provided by the Replacement Bank, (b) the B
Term Loan Commitment or B Term Loans of the Replaced Bank with an identical B
Term Loan Commitment or B Term Loans provided by the Replacement Bank, (c) the C
Term Loan Commitment or C Term Loans of the Replaced Bank with an identical C
Term Loan Commitment or C Term Loans provided by the Replacement Bank or (d) the
Revolving Loan Commitment (and outstandings pursuant thereto) of the Replaced
Bank with an identical Revolving Loan Commitment provided by the Replacement
Bank, PROVIDED that (i) at the time of any replacement pursuant to this Section
1.13, the Replacement Bank shall enter into one or more Assignment and
Assumption Agreements pursuant to Section 13.04(b) (and with all fees payable
pursuant to said Section 13.04(b) to be paid by the Replacement Bank) pursuant
to which the Replacement Bank shall acquire all of the Commitments and
outstanding Loans (or, in the case of the replacement of only (a) the A Term
Loan Commitment or A Term Loans, the A Term Loan Commitment or A Term Loans, (b)
B Term Loan Commitment or B Term Loans, the B Term Loan Commitment or B Term
Loans, (c) C Term Loan Commitment or C Term Loans, the C Term Loan Commitment or
C Term Loans or (d) the Revolving Loan Commitment, the Revolving Loan Commitment
and outstanding Revolving Loans) of, and in each case (except for the
replacement of only the outstanding A Term Loans and/or B Term Loans and/or C
Term Loans of the respective Tranche or Tranches) participations in Letters of
Credit by, the Replaced Bank and, in connection therewith, shall pay to (x) the
Replaced Bank in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans
(or of the Loans of the respective Tranche or Tranches being replaced) of the
Replaced Bank, (B) except for the replacement of only the outstanding A Term
Loans and/or B Term Loans and/or C Term Loans, an amount equal to all Unpaid
Drawings that have been funded by (and not reimbursed to) such Replaced Bank,
together with all then unpaid interest with respect thereto at such time and (C)
an amount equal to all accrued, but theretofore unpaid, Fees owing to the
Replaced Bank (but only with respect to the relevant Tranche, in the case of all
Tranches of Loans being held by the respective Replaced Bank) pursuant to
Section 3.01 and (y) except in the case of the replacement of only the
outstanding A Term Loans and/or B Term Loans and/or C Term Loans of the Replaced
Bank, any Issuing Bank an amount equal to such Replaced Bank's Adjusted
Percentage (for this purpose, determined as if the adjustment described in
clause (y) of the immediately succeeding sentence had been made with respect to
such Replaced Bank) of any Unpaid Drawing (which at such time remains an Unpaid
Drawing) to the extent such amount was not theretofore funded by such Replaced
Bank and (z) in the case of any replacement of Revolving Loan Commitments, the
Swingline Bank an amount equal to such Replaced Bank's Percentage of any
Mandatory Borrowing to the extent such amount was not theretofore funded by such
replaced Bank; and (ii) all Obligations of the Borrower owing to the Replaced
Bank (other than those specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being, paid)
shall be paid in full to such Replaced Bank concurrently with such replacement.
Upon the execution of the respective Assignment and
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Assumption Agreements, the payment of amounts referred to in clauses (i) and
(ii) above and, if so requested by the Replacement Bank, delivery to the
Replacement Bank of the appropriate Note or Notes executed by the Borrower, (x)
the Replacement Bank shall become a Bank hereunder and, unless the respective
Replaced Bank continues to have outstanding Loans or Commitments hereunder, the
Replaced Bank shall cease to constitute a Bank hereunder, except with respect to
indemnification provisions under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06 as the same may be limited by
Section 13.15 (to the extent applicable)), which shall survive as to such
Replaced Bank and (y) in the case of a replacement of a Defaulting Bank with a
Non-Defaulting Bank the Adjusted Percentages of the Banks shall be automatically
adjusted at such time to give effect to such replacement (and to give effect to
the replacement of a Defaulting Bank with one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that any Issuing Bank with
a Revolving Loan Commitment issue, at any time and from time to time on and
after the Initial Borrowing Date and prior to the Revolving Loan Maturity Date,
for the account of the Borrower and for the benefit of any holder (or any
trustee, agent or other similar representative for any such holders) of L/C
Supportable Obligations of the Borrower or any of its Subsidiaries, an
irrevocable standby or commercial letter of credit, in a form customarily used
by such Issuing Bank or in such other form as has been approved by such Issuing
Bank (each such letter of credit, a "Letter of Credit") in support of such L/C
Supportable Obligations.
(b) Each Issuing Bank may agree in its sole discretion, and BTCo
hereby agrees that, in the event a requested Letter of Credit is not issued by
one of the other Issuing Banks, it will (subject to the terms and conditions
contained herein), at any time and from time to time on or after the Initial
Borrowing Date and prior to the Revolving Loan Maturity Date, following its
receipt of the respective Letter of Credit Request, issue for the account of the
Borrower one or more Letters of Credit, PROVIDED that the respective Issuing
Bank shall be under no obligation to issue any Letter of Credit of the types
described above if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any governmental authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect to
such Letter of Credit any restriction or reserve or capital requirement
(for which such Issuing Bank is not otherwise compensated) not in effect on
the date hereof, or any unreimbursed loss, cost or expense which was not
applicable, in effect or known to such Issuing Bank as of the date hereof
and which such Issuing Bank in good faith deems material to it; or
(ii) such Issuing Bank shall have received notice prior to the
issuance of such Letter of Credit of the type described in the penultimate
sentence of Section 2.02(b).
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(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $10,000,000 or (y) when added to the aggregate outstanding
principal amount of all Revolving Loans of Non-Defaulting Banks and all
Swingline Loans then outstanding, the Adjusted Total Revolving Loan Commitment;
(ii) each Letter of Credit shall be denominated in Dollars and shall be issued
only on a sight basis; and (iii) each Letter of Credit shall have an expiry date
occurring not later than the earlier of (x) 12 months (or 180 days in the case
of commercial Letters of Credit) after such Letter of Credit's date of issuance,
provided that the expiry date of any standby Letter of Credit may be
automatically extendible for successive periods of up to 12 months and (y) the
fifth Business Day (or the 30th day in the case of commercial Letters of Credit)
prior to the Revolving Loan Maturity Date.
2.02 LETTER OF CREDIT REQUESTS. (a) Whenever the Borrower desires
that a Letter of Credit be issued for its account, the Borrower shall give the
Administrative Agent and the respective Issuing Bank at least three Business
Days' (or such shorter period as is acceptable to the respective Issuing Bank)
written notice thereof. In the case of Letters of Credit to be issued pursuant
to Section 2.01, each notice shall be in the form of Exhibit C (each a "Letter
of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.01(c). Unless the respective Issuing Bank has received notice from the
Borrower or the Required Banks before it issues a Letter of Credit that one or
more of the conditions specified in Section 5 or Section 6 are not then
satisfied, or that the issuance of such Letter of Credit would violate Section
2.01(c), then such Issuing Bank may issue the requested Letter of Credit for the
account of the Borrower in accordance with such Issuing Bank's usual and
customary practices. Upon its issuance of any Letter of Credit, such Issuing
Bank shall promptly notify each Bank participating therein of such issuance,
which notice shall be accompanied by a copy of the Letter of Credit actually
issued and any amendments thereto.
(c) In the event that the Issuing Bank of commercial Letters of
Credit is other than the Administrative Agent, such Issuing Bank will send by
facsimile transmission to the Administrative Agent, promptly on the first
Business Day, of each week, its daily aggregate Letter of Credit stated amount
for commercial Letters of Credit for the previous week. The Administrative
Agent shall deliver to each other Participant, upon each calendar month end, and
upon each Letter of Credit fee payment, a report setting forth for such period
the daily aggregate stated amount available to be drawn under the commercial
Letters of Credit issued by all the Issuing Banks during such period.
2.03 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall be
deemed to have sold and transferred to each Bank with a Revolving Loan
Commitment, other than such Issuing Bank (each such Bank, in its capacity under
this Section 2.03, a "Participant"), and each such Participant shall be deemed
irrevocably and unconditionally to have purchased and received from such Issuing
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Bank, without recourse or warranty, an undivided interest and participation, to
the extent of such Participant's Adjusted Percentage in such Letter of Credit,
each drawing made thereunder and the obligations of the Borrower under this
Agreement with respect thereto, and any security therefor or guaranty pertaining
thereto (although the Letter of Credit Fee shall be payable directly to the
Administrative Agent for the account of the Participants as provided in Section
3.01(b) and the Participants shall have no right to receive any portion of any
Facing Fees). Upon any change in the respective Revolving Loan Commitments or
Adjusted Percentages of the Banks pursuant to Section 1.13 or 13.04 or as a
result of a Bank Default, it is hereby agreed that, with respect to all such
outstanding Letters of Credit and Unpaid Drawings, there shall be an automatic
adjustment to the participations pursuant to this Section 2.03 to reflect the
new Adjusted Percentages of the assignor and assignee Bank or of all Banks with
respective Revolving Loan Commitments.
(b) In determining whether to pay under any Letter of Credit, such
Issuing Bank shall have no obligation relative to the other Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to substantially comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Bank under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct as determined by a court of competent jurisdiction, shall not create
for such Issuing Bank any resulting liability to the Borrower or any Bank.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Issuing Bank pursuant to Section 2.04(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted Percentage of the amount of such payment on
such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted Percentage of the amount of such payment
available to such Issuing Bank, such Participant agrees to pay to such Issuing
Bank, forthwith on demand such amount, together with interest thereon, for each
day from such date until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate. The failure of any Participant to make
available to such Issuing Bank its Adjusted Percentage of any payment under any
Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to such Issuing Bank its Adjusted Percentage of any
Letter of Credit on the date required, as specified above, but no Participant
shall be responsible for the failure of any other Participant to make available
to such Issuing Bank such other Participant's Adjusted Percentage of any such
payment.
(d) Whenever any Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, such Issuing Bank shall pay to each Participant
which has paid its Adjusted Percentage thereof, in Dollars and in same day
funds, an amount equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the aggregate amount
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funded by all Participants) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
participations.
(e) The obligations of the Participants to make payments to each
Issuing Bank with respect to Letters of Credit issued by it shall be irrevocable
and not subject to any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, any Issuing Bank, any Participant, or any other
Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the Borrower and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.04 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The Borrower
hereby agrees to reimburse the respective Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by it under any Letter of Credit (each such
amount, so paid until reimbursed, an "Unpaid Drawing"), no later than three
Business Days after the date of such payment or disbursement, with interest on
the amount so paid or disbursed by such Issuing Bank, to the extent not
reimbursed prior to 12:00 Noon (New York time) on the date of such payment or
disbursement, from and including the date paid or disbursed to but excluding the
date such Issuing Bank was reimbursed by the Borrower therefor at a rate per
annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Revolving Loans maintained as Base Rate Loans; PROVIDED,
HOWEVER, to the extent such amounts are not reimbursed prior to 12:00 Noon
(New York time) on the fifth Business Day following notice of such payment or
disbursement, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Bank (and until reimbursed by the Borrower) at a rate
per annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Revolving Loans maintained as Base Rate Loans plus 2%, in
each such case, with interest to be payable on demand. The respective Issuing
Bank shall give the Borrower prompt
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notice of each Drawing under any Letter of Credit, PROVIDED that the failure to
give any such notice shall in no way affect, impair or diminish the Borrower's
obligations hereunder.
(b) The obligations of the Borrower under this Section 2.04 to
reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each, a "Drawing") (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower may have or
have had against any Bank (including in its capacity as the issuer of the Letter
of Credit or as Participant), or any nonapplication or misapplication by the
beneficiary of the proceeds of such Drawing, the respective Issuing Bank's only
obligation to the Borrower being to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct as determined by a court of competent
jurisdiction, shall not create for such Issuing Bank any resulting liability to
the Borrower.
2.05 INCREASED COSTS. If at any time after the date of this
Agreement, the introduction of or any change in any applicable law, rule,
regulation, order, guideline or request or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Issuing Bank or
any Participant, or any corporation controlling such Person, with any request or
directive issued after the date of this Agreement by any such authority (whether
or not having the force of law), shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
letters of credit issued by any Issuing Bank or participated in by any
Participant, or (ii) impose on any Issuing Bank or any Participant, or any
corporation controlling such Person, any other conditions relating, directly or
indirectly, to this Agreement or any Letter of Credit; and the result of any of
the foregoing is to increase the cost to any Issuing Bank or any Participant of
issuing, maintaining or participating in any Letter of Credit, or reduce the
amount of any sum received or receivable by any Issuing Bank or any Participant
hereunder or reduce the rate of return on its capital with respect to Letters of
Credit (except for changes in the rate of tax on, or determined by reference to,
the net income or profits of such Issuing Bank or such Participant, or any
corporation controlling such Person, or any franchise tax based on the net
income or profits of such Bank or Participant, or any corporation controlling
such Person, in either case pursuant to the laws of the United States of
America, the jurisdiction in which it is organized or in which its principal
office or applicable lending office is located or any subdivision thereof or
therein), but without duplication of any amounts payable in respect of taxes
pursuant to Section 4.04(a), then, upon demand to the Borrower by such Issuing
Bank or any Participant (a copy of which demand shall be sent by such Issuing
Bank or such Participant to the Administrative Agent) and subject to the
provisions of Section 13.15 (to the extent applicable), the Borrower shall pay
to such Issuing Bank or such Participant such additional amount or amounts as
will compensate such Bank for such increased cost or reduction in the amount
receivable or reduction on the rate of return on its capital. Any Issuing Bank
or any Participant, upon determining that any additional amounts will be payable
pursuant to this Section 2.05, will give prompt written notice thereof to the
Borrower, which notice shall include a certificate submitted to the Borrower by
such Issuing Bank or such Participant (a copy of which certificate shall be sent
by such Issuing Bank or such Participant to
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the Administrative Agent), setting forth in reasonable detail the basis for the
calculation of such additional amount or amounts necessary to compensate such
Issuing Bank or such Participant. The certificate required to be delivered
pursuant to this Section 2.05 shall, if delivered in good faith and absent
manifest error, be final and conclusive and binding on the Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of Commitment.
3.01 FEES. (a) The Borrower agrees to pay the Administrative Agent
for distribution to each Non-Defaulting Bank a commitment commission (the
"Commitment Commission") for the period from the Initial Borrowing Date to and
including the Revolving Loan Maturity Date (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), computed at a rate for
each day equal to 1/2 of 1% per annum on the daily average Unutilized Revolving
Loan Commitment of such Non-Defaulting Bank. Accrued Commitment Commission
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the Revolving Loan Maturity Date or such earlier date upon which the Total
Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment, as
the case may be (based on their respective Adjusted Percentages), a fee in
respect of each Letter of Credit issued hereunder (the "Letter of Credit Fee"),
for the period from and including the date of issuance of such Letter of Credit,
to and including the termination of such Letter of Credit computed at a rate per
annum equal to the Applicable Margin for Revolving Loans maintained as
Eurodollar Loans as in effect from time to time on the daily Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and upon the first day on or
after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, a facing fee in respect of each Letter of Credit issued for its
account hereunder (the "Facing Fee") for the period from and including the date
of issuance of such Letter of Credit to and including the termination of such
Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the daily
Stated Amount of such Letter of Credit, PROVIDED, that in no event shall the
annual Facing Fee be less than $500. Accrued Facing Fees shall be due and
payable quarterly in arrears on each Quarterly Payment Date and upon the first
day on or after the termination of the Total Revolving Loan Commitment upon
which no Letters of Credit remain outstanding.
(d) The Borrower shall pay, upon each payment under, issuance of, or
amendment to, any Letter of Credit, such amount as shall at the time of such
event be the administrative charge which the respective Issuing Bank is
generally imposing in connection with such occurrence with respect to letters of
credit.
(e) The Borrower shall pay to the Administrative Agent, for its own
account, such other fees as have been agreed to in writing by the Borrower and
the Administrative Agent.
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3.02 VOLUNTARY TERMINATION AND REDUCTION OF COMMITMENTS. (a) Upon
at least two Business Days' prior written notice (or telephonic notice confirmed
in writing) to the Administrative Agent at its Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Banks), the Borrower
shall have the right, at any time or from time to time, without premium or
penalty, to terminate or partially reduce the Total Unutilized Revolving Loan
Commitment, in whole or in part, PROVIDED that (x) each such reduction shall
apply proportionately to permanently reduce the Revolving Loan Commitment of
each Bank with a Revolving Loan Commitment, (y) any partial reduction pursuant
to this Section 3.02 shall be in integral multiples of $500,000 and (z) the
reduction to the Total Unutilized Revolving Loan Commitment shall in no case be
in an amount which would cause the Revolving Loan Commitment of any Bank to be
reduced (as required by the preceding clause (x)) by an amount which exceeds the
remainder of (x) the Unutilized Revolving Loan Commitment of such Bank as in
effect immediately before giving effect to such reduction minus (y) such Bank's
Adjusted Percentage of the aggregate principal amount of Swingline Loans then
outstanding.
(b) In the event of certain refusals by a Bank as provided in Section
13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower may, upon five Business Days' written notice to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks) terminate all of the Revolving
Loan Commitment of such Bank, so long as (i) all Loans, together with accrued
and unpaid interest, Fees and other amounts, owing to such Bank are repaid
concurrently with the effectiveness of such termination (at which time Schedule
I shall be deemed modified to reflect such changed amounts), and at such time
such Bank shall no longer constitute a "Bank" for purposes of this Agreement,
except with respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06 as the same may be
limited by Section 13.15 (to the extent applicable)), which shall survive as to
such repaid Bank and (ii) the Administrative Agent and each other Bank which
will be party to this Agreement after giving effect to such change, waiver,
discharge or termination with respect to this Agreement consents to such
termination of Revolving Loan Commitment and repayment of Loans.
3.03 MANDATORY REDUCTION OF COMMITMENTS. (a) In addition to any
other mandatory commitment reductions pursuant to this Section 3.03, the Total A
Term Loan Commitment (and the A Term Loan Commitment of each Bank) shall (i)
terminate in its entirety on the Initial Borrowing Date (after giving effect to
the incurrence of A Term Loans on such date) and (ii) prior to the termination
of the Total A Term Loan Commitment as provided in clause (i) above, be reduced
from time to time to the extent required by Section 4.02(A).
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total B Term Loan Commitment (and the B Term Loan
Commitment of each Bank) shall (i) terminate in its entirety on the Initial
Borrowing Date (after giving effect to the making of the B Term Loans on such
date) and (ii) prior to the termination of the Total B Term Loan Commitment as
provided in clause (i) above, be reduced from time to time to the extent
required by Section 4.02(A).
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(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total C Term Loan Commitment (and the C Term Loan
Commitment of each Bank) shall (i) terminate in its entirety on the Initial
Borrowing Date (after giving effect to the making of C Term Loans on such date)
and (ii) prior to the termination of the Total C Term Loan Commitment as
provided in clause (i) above, be reduced from time to time to the extent
required by Section 4.02(A).
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the Revolving
Loan Maturity Date.
(e) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date after the Initial Borrowing Date upon which a
mandatory prepayment of Term Loans pursuant to Sections 4.02(A)(e), (f), (g),
(h) or (i) is required (and exceeds in amount the aggregate principal amount of
Term Loans then outstanding) or would be required if Term Loans were then
outstanding, the Total Revolving Loan Commitment shall be permanently reduced by
the amount, if any, by which the amount required to be applied pursuant to said
Section (determined as if an unlimited amount of Term Loans were actually
outstanding) exceeds the aggregate principal amount of Term Loans then
outstanding.
(f) Each reduction to the Total A Term Loan Commitment, the Total B
Term Loan Commitment, the Total C Term Loan Commitment and/or the Total
Revolving Loan Commitment pursuant to this Section 3.03 (or pursuant to Section
4.02(A)) shall be applied proportionately to reduce the A Term Loan Commitment,
the B Term Loan Commitment, the C Term Loan Commitment or the Revolving Loan
Commitment, as the case may be, of each Bank with such a Commitment.
SECTION 4. Prepayments; Payments; Taxes.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) the Borrower
shall give the Administrative Agent prior to 12:00 Noon (New York time) at its
Notice Office (x) at least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay Base
Rate Loans (or, in the case of Swingline Loans prior to 1:00 p.m. (New York
time) on the date of such prepayment) and (y) at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay Eurodollar Loans, whether A Term Loans, B Term Loans, C Term
Loans or Revolving Loans shall be prepaid, the amount of such prepayment and the
Types of Loans to be prepaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, which notice the Administrative
Agent shall promptly transmit to each of the Banks; (ii) each prepayment shall
be in an aggregate principal amount of at least $250,000 (or in the case of
Swingline Loans, $10,000 and, if greater, in an integral multiple of $5,000),
PROVIDED that if any partial prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to such
Borrowing to an amount less than (1) in the case of A Term Loans, $5,000,000,
(2) in the case of B Term Loans, $5,000,000, (3) in the case of C Term Loans,
$5,000,000 and (4) in the
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case of Revolving Loans, $1,000,000, then such Borrowing shall be converted at
the end of the then current Interest Period into a Borrowing of Base Rate Loans;
(iii) prepayments of Eurodollar Loans made pursuant to this Section 4.01 made on
any day other than the last day of an Interest Period applicable thereto shall
be subject to the provisions of Section 1.11; (iv) each prepayment in respect of
any Loans made pursuant to a Borrowing shall, except as provided in clauses (v)
and (vi) below, be applied PRO RATA among the Banks which made such Loans; (v)
in the event of certain refusals by a Bank as provided in Section 13.12(b) to
consent to certain proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the Required Banks, the
Borrower may, upon five Business Days' written notice to the Administrative
Agent at its Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks) repay all Loans, together with accrued and unpaid
interest, Fees and other amounts, owing to such Bank so long as (A) the
Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment (at which time Schedule I shall be deemed modified to reflect such
changed amounts) and (B) the Administrative Agent and each other Bank which will
be party to this Agreement after giving effect to such change, waiver, discharge
or termination with respect to this Agreement consents to such repayment of
Loans and such termination of Revolving Loan Commitment; (vi) at the Borrower's
election in connection with any prepayment of Revolving Loans, such prepayment
shall not be applied to the Revolving Loans of a Defaulting Bank; and (vii) each
voluntary prepayment of Term Loans made pursuant to this Section 4.01 (other
than prepayments made pursuant to preceding clause (v)) shall be applied to the
A Term Loans, the B Term Loans and the C Term Loans on a PRO RATA basis (based
upon the then outstanding principal amount of A Term Loans, B Term Loans and C
Term Loans) to reduce the then remaining Scheduled Repayments of the respective
Tranche of Term Loans PRO RATA based upon the then remaining amount of such
Scheduled Repayments after giving effect to all prior reductions thereto.
4.02 MANDATORY REPAYMENTS AND COMMITMENT REDUCTIONS. (A) (a) (i) On
any day on which the sum of the aggregate outstanding principal amount of the
Revolving Loans made by the Non-Defaulting Banks, Swingline Loans and the Letter
of Credit Outstandings exceeds the Adjusted Total Revolving Loan Commitment as
then in effect, the Borrower shall prepay on such date the principal of
Swingline Loans and after the Swingline Loans have been repaid in full, the
principal of Revolving Loans of the Non-Defaulting Banks in an amount equal to
such excess. If, after giving effect to the prepayment of all outstanding
Swingline Loans and all outstanding Revolving Loans of Non-Defaulting Banks, the
aggregate amount of the Letter of Credit Outstandings exceeds the Adjusted Total
Revolving Loan Commitment as then in effect, the Borrower shall pay to the
Administrative Agent at the Payment Office on such date an amount of cash or
Cash Equivalents equal to the amount of such excess (up to a maximum amount
equal to the Letter of Credit Outstandings at such time), such cash or Cash
Equivalents to be held as security for all obligations of the Borrower to
Non-Defaulting Banks under Section 2.04(a) in a cash collateral account to be
established by the Administrative Agent. Such cash or Cash Equivalents shall be
released to the Borrower when such obligations under Section 2.04(a) are
satisfied or as may be necessary to insure that the amount of such cash or Cash
Equivalents do not exceed the Letter of Credit Outstandings.
(ii) On any day on which the aggregate outstanding principal amount
of the Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such
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<PAGE>
Defaulting Bank, the Borrower shall prepay principal of Revolving Loans of such
Defaulting Bank in an amount equal to such excess.
(b) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), on each date set forth below, the
Borrower shall be required to repay that principal amount of A Term Loans, to
the extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(A)(j), an "A Term Loan Scheduled Repayment"):
<TABLE>
<CAPTION>
Scheduled Repayment Date Amount
- ------------------------ ------
<S> <C>
Quarterly Payment Date in August 1998 $125,000
Quarterly Payment Date in November 1998 $125,000
Quarterly Payment Date in February 1999 $125,000
Quarterly Payment Date in May 1999 $125,000
Quarterly Payment Date in August 1999 $1,250,000
Quarterly Payment Date in November 1999 $1,250,000
Quarterly Payment Date in February 2000 $1,250,000
Quarterly Payment Date in May 2000 $1,250,000
Quarterly Payment Date in August 2000 $1,875,000
Quarterly Payment Date in November 2000 $1,875,000
Quarterly Payment Date in February 2001 $1,875,000
Quarterly Payment Date in May 2001 $1,875,000
Quarterly Payment Date in August 2001 $3,125,000
Quarterly Payment Date in November 2001 $3,125,000
Quarterly Payment Date in February 2002 $3,125,000
Quarterly Payment Date in May 2002 $3,125,000
Quarterly Payment Date in August 2002 $3,125,000
Quarterly Payment Date in November 2002 $3,125,000
Quarterly Payment Date in February 2003 $3,125,000
Quarterly Payment Date in May 2003 $3,125,000
Quarterly Payment Date in August 2003 $3,000,000
Quarterly Payment Date in November 2003 $3,000,000
Quarterly Payment Date in February 2004 $3,000,000
A Term Maturity Date $3,000,000
</TABLE>
; PROVIDED that in the event the aggregate principal amount of A Term Loans
incurred at the time that the Total A Term Loan Commitment is terminated in
accordance with Section 3.03(a) is less than $50,000,000, an amount equal to
such deficiency shall be applied to reduce the A Term Loan
-23-
<PAGE>
Scheduled Repayments PRO RATA based on the then remaining principal amount of
each such A Term Loan Scheduled Repayment.
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), on each date set forth below, the
Borrower shall be required to repay that principal amount of B Term Loans, to
the extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(A)(j), a "B Term Loan Scheduled Repayment"):
<TABLE>
<CAPTION>
Scheduled Repayment Date Amount
- ------------------------ ------
<S> <C>
Quarterly Payment Date in August 1998 $77,500
Quarterly Payment Date in November 1998 $77,500
Quarterly Payment Date in February 1999 $77,500
Quarterly Payment Date in May 1999 $77,500
Quarterly Payment Date in August 1999 $77,500
Quarterly Payment Date in November 1999 $77,500
Quarterly Payment Date in February 2000 $77,500
Quarterly Payment Date in May 2000 $77,500
Quarterly Payment Date in August 2000 $77,500
Quarterly Payment Date in November 2000 $77,500
Quarterly Payment Date in February 2001 $77,500
Quarterly Payment Date in May 2001 $77,500
Quarterly Payment Date in August 2001 $77,500
Quarterly Payment Date in November 2001 $77,500
Quarterly Payment Date in February 2002 $77,500
Quarterly Payment Date in May 2002 $77,500
Quarterly Payment Date in August 2002 $77,500
Quarterly Payment Date in November 2002 $77,500
Quarterly Payment Date in February 2003 $77,500
Quarterly Payment Date in May 2003 $77,500
Quarterly Payment Date in August 2003 $77,500
Quarterly Payment Date in November 2003 $77,500
Quarterly Payment Date in February 2004 $77,500
Quarterly Payment Date in May 2004 $77,500
Quarterly Payment Date in August 2004 $7,285,000
Quarterly Payment Date in November 2004 $7,285,000
Quarterly Payment Date in February 2005 $7,285,000
B Term Maturity Date $7,285,000
</TABLE>
-24-
<PAGE>
; PROVIDED that in the event the aggregate principal amount of B Term Loans
incurred at the time that the Total B Term Loan Commitment is terminated in
accordance with Section 3.03(b) is less than $31,000,000, an amount equal to
such deficiency shall be applied to reduce the B Term Loan Scheduled Repayments
PRO RATA based on the then remaining principal amount of each such B Term Loan
Scheduled Repayment.
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), on each date set forth below, the
Borrower shall be required to repay that principal amount of C Term Loans, to
the extent then outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(A)(j), a "C Term Loan Scheduled Repayment", and together with each A Term
Loan Scheduled Repayment and B Term Loan Scheduled Repayment, the "Scheduled
Repayments"):
<TABLE>
<CAPTION>
Scheduled Repayment Date Amount
- ------------------------ ------
<S> <C>
Quarterly Payment Date in August 1998 $75,000
Quarterly Payment Date in November 1998 $75,000
Quarterly Payment Date in February 1999 $75,000
Quarterly Payment Date in May 1999 $75,000
Quarterly Payment Date in August 1999 $75,000
Quarterly Payment Date in November 1999 $75,000
Quarterly Payment Date in February 2000 $75,000
Quarterly Payment Date in May 2000 $75,000
Quarterly Payment Date in August 2000 $75,000
Quarterly Payment Date in November 2000 $75,000
Quarterly Payment Date in February 2001 $75,000
Quarterly Payment Date in May 2001 $75,000
Quarterly Payment Date in August 2001 $75,000
Quarterly Payment Date in November 2001 $75,000
Quarterly Payment Date in February 2002 $75,000
Quarterly Payment Date in May 2002 $75,000
Quarterly Payment Date in August 2002 $75,000
Quarterly Payment Date in November 2002 $75,000
Quarterly Payment Date in February 2003 $75,000
Quarterly Payment Date in May 2003 $75,000
Quarterly Payment Date in August 2003 $75,000
Quarterly Payment Date in November 2003 $75,000
Quarterly Payment Date in February 2004 $75,000
Quarterly Payment Date in May 2004 $75,000
Quarterly Payment Date in August 2004 $75,000
-25-
<PAGE>
Quarterly Payment Date in November 2004 $75,000
Quarterly Payment Date in February 2005 $75,000
Quarterly Payment Date in May 2005 $75,000
Quarterly Payment Date in August 2005 $6,975,000
Quarterly Payment Date in November 2005 $6,975,000
Quarterly Payment Date in February 2006 $6,975,000
C Term Maturity Date $6,975,000
</TABLE>
; PROVIDED that in the event the aggregate principal amount of C Term Loans
incurred at the time that the Total C Term Loan Commitment is terminated in
accordance with Section 3.03(c) is less than $30,000,000, an amount equal to
such deficiency shall be applied to reduce the C Term Loan Scheduled Repayments
PRO RATA based on the then remaining principal amount of each such C Term Loan
Scheduled Repayment.
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), on each date after the Effective
Date upon which Holdings or any of its Subsidiaries receives any proceeds from
any sale or issuance of its common stock pursuant to an underwritten public
offering pursuant to a registration statement filed with the SEC (other than
equity issued to American Industrial Partners Capital Fund II, L.P. ("AIPCF") or
its affiliates) an amount equal to 50% of the cash proceeds (excluding any such
proceeds attributable to or relating to direct or indirect equity interests of
Persons other than AIPCF, Holdings or its Subsidiaries) of the respective sale
or issuance (net of all reasonable costs associated therewith, including,
without limitation, all due diligence costs and expenses paid for, or reimbursed
by, Holdings and/or any of its Subsidiaries, underwriting or similar fees,
discounts and commissions, attorneys' fees and expenses paid for, or reimbursed
by, Holdings and/or any of its Subsidiaries and other costs associated
therewith) shall be applied as a mandatory repayment of principal of outstanding
Term Loans (or, if the Initial Borrowing Date has not yet occurred, such amounts
shall be applied as a mandatory reduction to the Total Term Loan Commitment) in
accordance with the requirements of Sections 4.02(A)(j) and (k).
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), on each date after the Effective
Date upon which Holdings or any of its Subsidiaries receives any proceeds from
any incurrence by Holdings or any of its Subsidiaries of Indebtedness for
borrowed money (other than Indebtedness for borrowed money permitted to be
incurred pursuant to Section 9.04), an amount equal to 100% of the cash proceeds
of the respective incurrence of Indebtedness (net of all reasonable costs
associated therewith, including, without limitation, all due diligence costs and
expenses paid for, or reimbursed by, Holdings and/or any of its Subsidiaries,
any underwriting, agency, structuring or similar fees, discounts and
commissions, attorneys' fees and expenses paid for, or reimbursed by, Holdings
and/or any of its Subsidiaries, all financing and/or commitment fees and other
costs associated therewith) shall be applied as a mandatory repayment of
principal of outstanding Term Loans (or, if the Initial Borrowing Date has not
yet occurred, such amounts shall be applied as a
-26-
<PAGE>
mandatory reduction to the Total Term Loan Commitment) in accordance with the
requirements of Sections 4.02(A)(j) and (k).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), on each date after the Effective
Date upon which Holdings or any of its Subsidiaries receives proceeds from any
Asset Sale, an amount equal to 100% of the Net Sale Proceeds therefrom shall be
applied as a mandatory repayment of principal of outstanding Term Loans (or, if
the Initial Borrowing Date has not yet occurred, such amounts shall be applied
as a mandatory reduction to the Total Term Loan Commitment) in accordance with
the requirements of Sections 4.02(A)(j) and (k), PROVIDED that (i) up to an
aggregate of $5,000,000 of Net Sale Proceeds from Asset Sales shall not be
required to be used to so repay Term Loans and (ii) up to an additional
aggregate of $10,000,000 per fiscal year of the Borrower of Net Sale Proceeds
from Asset Sales shall not be required to be used to so repay Term Loans in any
fiscal year of the Borrower to the extent the Borrower elects, as hereinafter
provided, to cause such Net Sale Proceeds to be reinvested in Reinvestment
Assets (a "Reinvestment Election"). The Borrower may exercise its Reinvestment
Election (within the parameters specified in the preceding sentence) with
respect to an Asset Sale if (x) no Default or Event of Default exists and (y)
the Borrower delivers a Reinvestment Notice to the Administrative Agent within
fifteen Business Days following the date of the consummation of the respective
Asset Sale, with such Reinvestment Election being effective with respect to the
Net Sale Proceeds of such Asset Sale equal to the Anticipated Reinvestment
Amount specified in such Reinvestment Notice and, PROVIDED FURTHER, that if all
or any portion of such Net Sale Proceeds not applied to the repayment of Term
Loans pursuant to the preceding proviso are either (a) not so used or agreed
(which agreement may be subject to conditions) to be used within 180 days after
the date of receipt of such Net Sale Proceeds or (b) if agreed to be so used
within 180 days after the date of receipt of such Net Sale Proceeds and not so
used within 360 days after the date of receipt of such Net Sale Proceeds, then,
in either such case, such remaining portion not used or agreed to be used in the
case of preceding clause (a) and not used in the case of preceding clause (b)
shall be applied on the date which is 180 days following the date of receipt of
such Net Sale Proceeds in the case of clause (a) above, or the date occurring on
the date which is 360 days after the date of receipt of such Net Sale Proceeds
in the case of clause (b) above as a mandatory repayment of principal of
outstanding Term Loans in accordance with the requirements of Sections
4.02(A)(j) and (k). At the time of the acquisition of any Reinvestment Assets,
Holdings shall comply and shall cause its Subsidiaries to comply with Section
8.11, to the extent applicable.
(h) In addition to any other mandatory repayments pursuant to this
Section 4.02(A), on each Excess Cash Payment Date, an amount equal to 50% of the
Excess Cash Flow for the relevant Excess Cash Payment Period shall be applied as
a mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Sections 4.02(A)(j) and (k).
(i) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02(A), within 90 days following each date
after the Effective Date on which Holdings or any of its Subsidiaries receives
any proceeds from any Recovery Event, an amount equal to 100% of the proceeds of
such Recovery Event (net of reasonable costs including, without limitation,
legal costs and expenses and taxes incurred in connection with such Recovery
-27-
<PAGE>
Event) shall be applied as a mandatory repayment of principal of outstanding
Term Loans (or, if the Initial Borrowing Date has not yet occurred, such amounts
shall be applied as a mandatory reduction to the Total Term Loan Commitment) in
accordance with the requirements of Sections 4.02(A)(j) and (k), PROVIDED that
(x) so long as no Default or Event of Default then exists and such proceeds do
not exceed $10,000,000, such proceeds shall not be required to be so applied on
such date to the extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such proceeds shall
be used to replace or restore any properties or assets in respect of which such
proceeds were paid within 180 days following the date of such Recovery Event
(which certificate shall set forth the estimates of the proceeds to be so
expended) and (y) so long as no Default or Event of Default then exists and to
the extent that (a) the amount of such proceeds exceeds $10,000,000, (b) the
Borrower has delivered to the Administrative Agent a certificate on or prior to
the date the application would otherwise be required pursuant to this Section
4.02(A)(i) in the form described in clause (x) above and (c) the Borrower has
delivered to the Administrative Agent either (i) a certification that such
Recovery Event is not reasonably expected to result in a Default or Event of
Default or (ii) such evidence as the Administrative Agent may reasonably request
in form and substance satisfactory to the Administrative Agent establishing that
the Borrower has sufficient business interruption insurance and that the
Borrower will be receiving regular payments thereunder in such amounts and at
such times as are necessary to satisfy all material obligations and expenses of
the Borrower (including, without limitation, all debt service requirements,
including pursuant to this Agreement), without any delay or extension thereof,
for the period from the date of the respective casualty, condemnation or other
event giving rise to the Recovery Event and continuing through the completion of
the replacement or restoration of respective properties or assets, then the
entire amount and not just the portion in excess of $10,000,000 shall be
deposited with the Administrative Agent pursuant to a cash collateral
arrangement reasonably satisfactory to the Administrative Agent whereby such
proceeds shall be disbursed to the Borrower from time to time as needed to pay
actual costs incurred by it in connection with the replacement or restoration of
the respective properties or assets (pursuant to such certification requirements
as may be established by the Administrative Agent), PROVIDED FURTHER, that at
any time while an Event of Default has occurred and is continuing (other than an
Event of Default existing solely as a result of the violation of any or both of
Sections 9.08 and 9.09, but in each case only if, and to the extent, that the
violation of said covenant has occurred as a result of the underlying event
giving rise to the Recovery Event), the Required Banks may direct the
Administrative Agent (in which case the Administrative Agent shall, and is
hereby authorized by the Borrower to, follow said directions) to apply any or
all proceeds then on deposit in such collateral account to the repayment of
Obligations hereunder in the same manner as proceeds would be applied pursuant
to the Security Agreement, and, PROVIDED FURTHER, that if all or any portion of
such proceeds not required to be applied to the repayment of Term Loans pursuant
to clause (x) above are either (A) not so used within 180 days after the date of
receipt of proceeds from the respective Recovery Event or (B) if agreed (which
agreement may be subject to conditions) to be used within 180 days after the
date of receipt of proceeds from the respective Recovery Event and not so used
within 360 days after the date of receipt of proceeds from the respective
Recovery Event, then, in either case, such remaining portion not used or agreed
to be used in the case of the preceding clause (A) and not used in the case of
preceding clause (B), shall be applied on the date which is 180 days following
the date of receipt of proceeds from the respective Recovery Event in the case
of clause
-28-
<PAGE>
(A) above, or the date which is 360 days after the date of receipt of proceeds
from the respective Recovery Event in the case of clause (B) above as a
mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Section 4.02(A)(j) and (k), and, PROVIDED FURTHER, that if
all or any portion of such proceeds not required to be applied to the repayment
of Term Loans pursuant to clause (y) above are either not so used or agreed to
be used (which agreement may be subject to conditions) within 270 days after the
date of receipt of proceeds from the respective Recovery Event, then, such
remaining portion not used or agreed to be used, shall be applied on the date
which is 270 days following the date of receipt of proceeds from the respective
Recovery Event as a mandatory repayment of principal of outstanding Term Loans
in accordance with the requirements of Section 4.02(A)(j) and (k). If it is
subsequently determined that any portion of such proceeds that are agreed to be
so used will not be so used, then, within ten Business Days following such
determination, such amounts shall be applied as a mandatory repayment of
principal of outstanding Term Loans in accordance with the requirements of
Section 4.02(A)(j) and (k).
(j) Each amount required to be applied to repay Term Loans (or to
reduce the Total Term Loan Commitment) pursuant to Sections 4.02(A)(e), (f),
(g), (h) and (i) shall be applied to the A Term Loans, the B Term Loans and the
C Term Loans on a PRO RATA basis (based upon the then outstanding principal
amount of A Term Loans, B Term Loans and C Term Loans) to reduce the then
remaining Scheduled Repayments of the respective Tranche of Term Loans PRO RATA
based upon the then remaining amount of Scheduled Repayments of such Tranche of
Term Loans after giving effect to all prior reductions thereto.
(k) With respect to each repayment of Loans required by this Section
4.02(A), the Borrower may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which made,
PROVIDED that: (i) repayments of Eurodollar Loans pursuant to this Section
4.02(A) may only be made on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans of the respective Tranche with Interest
Periods ending on such date of required repayment and all Base Rate Loans of the
respective Tranche have been paid in full; (ii) if any repayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than (w) in
the case of A Term Loans, $5,000,000, (x) in the case of B Term Loans,
$5,000,000, (y) in the case of C Term Loans, $5,000,000 and (z) in the case of
Revolving Loans, $1,000,000, such Borrowing shall be converted at the end of the
then current Interest Period into a Borrowing of Base Rate Loans; and (iii) each
repayment of any Loans made pursuant to a Borrowing shall be applied PRO RATA
among the Banks which made such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent shall,
subject to the above, make such designation in its sole discretion with a view,
but no obligation, to minimize breakage costs owing under Section 1.11.
Notwithstanding the foregoing provisions of this Section 4.02(A), if at any time
the mandatory prepayment of Term Loans pursuant to Sections 4.02(A)(e) through
(i) above would result, after giving effect to the procedures set forth above,
in the Borrower incurring breakage costs under Section 1.11 as a result of
Eurodollar Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected Eurodollar Loans"), then the Borrower may in
its sole discretion initially deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of the Affected Eurodollar
-29-
<PAGE>
Loans with the Administrative Agent (which deposit, after giving effect to
interest to be earned on such deposit prior to the last day of the relevant
Interest Periods, must be equal in amount to the amount of Affected Eurodollar
Loans not immediately prepaid) to be held as security for the obligations of the
Borrower hereunder pursuant to a cash collateral agreement to be entered into in
form and substance reasonably satisfactory to the Administrative Agent, with
such cash collateral to be directly applied upon the first occurrence (or
occurrences) thereafter of the last day of an Interest Period applicable to the
relevant Term Loans that are Eurodollar Loans (or such earlier date or dates as
shall be requested by the Borrower), to repay an aggregate principal amount of
such Term Loans equal to the Affected Eurodollar Loans not initially repaid
pursuant to this sentence. Notwithstanding anything to the contrary contained
in the immediately preceding sentence, all amounts deposited as cash collateral
pursuant to the immediately preceding sentence shall be held for the sole
benefit of the Banks whose Term Loans would otherwise have been immediately
repaid with the amounts deposited and upon the taking of any action by the
Administrative Agent or the Banks pursuant to the remedial provisions of Section
10, any amounts held as cash collateral pursuant to this Section 4.02(A)(k)
shall, subject to the requirements of applicable law, be immediately applied to
the relevant Term Loans. Following repayment of the relevant Loans, any
remaining cash collateral will be returned to the Borrower.
(B) WAIVER OF CERTAIN MANDATORY REPAYMENTS BY B AND C BANKS.
Notwithstanding anything to the contrary contained in this Section 4.02 or
anywhere in this Agreement (including, without limitation, in Section 13.12),
the Borrower shall have the option, in its sole discretion, to give the Banks
with outstanding B Term Loans (the "B Banks") and C Term Loans (the "C Banks")
the option to waive a mandatory repayment of such Loans pursuant to Section
4.02(A)(e), (f), (g) (h) and/or (i) (each such repayment, a "Waivable Mandatory
Repayment") upon the terms and provisions set forth in this Section 4.02(B). If
the Borrower elects to exercise the option referred to in the preceding
sentence, the Borrower shall give to the Administrative Agent written notice of
its intention to give the B Banks and the C Banks the right to waive a Waivable
Mandatory Repayment at least five Business Days prior to such repayment, which
notice the Administrative Agent shall promptly forward to all B Banks and C
Banks (indicating in such notice the amount of such repayment to be applied to
each such Bank's outstanding Term Loans under such facilities). The Borrower's
offer to permit such Banks to waive any such Waivable Mandatory Repayment may
apply to all or part of such repayment, PROVIDED that any offer to waive part of
such repayment must be made ratably to such Banks on the basis of their
outstanding B Term Loans and C Term Loans. In the event such B Bank or C Bank
desires to waive such Bank's right to receive any such Waivable Mandatory
Repayment in whole or in part, such Bank shall so advise the Administrative
Agent no later than the close of business two Business Days after the date of
such notice from the Administrative Agent, which notice shall also include the
amount such Bank desires to receive in respect of such repayment. If any Bank
does not reply to the Administrative Agent within the two Business Days, it will
be deemed not to have waived any part of such repayment. If any Bank does not
specify an amount it wishes to receive, it will be deemed to have accepted 100%
of the total payment. In the event that any such Bank waives all or part of such
right to receive any such Waivable Mandatory Repayment, the Administrative Agent
shall apply 100% of the amount so waived by such Bank to the A Term Loans in
accordance with Section 4.02(A)(j) and (k).
-30-
<PAGE>
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later than 12:00 Noon (New York time) (or 1:00 p.m. (New York time) in the
case of Swingline Loans) on the date when due and shall be made in Dollars in
immediately available funds at the Payment Office of the Administrative Agent.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower hereunder
or under any Note will be made without set-off, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank, or any franchise tax
based on the net income or net profits of a Bank, in either case pursuant to the
laws of the United States of America or the jurisdiction in which it is
organized or in which the principal office or applicable lending office of such
Bank is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect to such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as "Taxes"). If any Taxes are so levied or
imposed, the Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any Note, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein or in
such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence of this Section 4.04(a), then the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or net profits of such Bank, or any franchise tax
based on the net income or net profits of such Bank, in either case pursuant to
the laws of the jurisdiction in which such Bank is organized or in which the
principal office or applicable lending office of such Bank is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or applicable lending office of such
Bank is located and for any withholding of income or similar taxes as such Bank
shall determine are payable by, or withheld from, such Bank in respect of such
amounts so paid to or on behalf of such Bank pursuant to the preceding sentence
and in respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence. The Borrower will furnish to the Administrative Agent within 45 days
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Bank, and reimburse such
Bank upon its written request, for the amount of any Taxes that arise from the
failure of the Borrower to pay any Taxes when due to the appropriate Tax
authority and that become payable by the Administrative Agent or any Bank as a
result of any such failure.
-31-
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(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
agrees to deliver to the Borrower and the Administrative Agent on or prior to
the Initial Borrowing Date, or in the case of a Bank that is an assignee or
transferee of an interest under this Agreement pursuant to Sections 1.13 or
13.04 (unless the respective Bank was already a Bank hereunder immediately prior
to such assignment or transfer), on the date of such assignment or transfer to
such Bank, (i) (x) two accurate and complete original signed copies of Internal
Revenue Service Form 4224 or Form 1001 (or successor forms) certifying to such
Bank's entitlement to a complete exemption from United States withholding tax
with respect to payments to be made under this Agreement and under any Note (y)
an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as
the case may be, and (z) obtain such extensions of time for filing and complete
such forms or certifications as may be reasonably requested by the Borrower or
the Administrative Agent, or (ii) if the Bank is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit D (any such certificate, a "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Bank's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Bank agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower and the Administrative Agent two new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001
Form W-8 or Form W-9 and a Section 4.04(b)(ii) Certificate, as the case may be,
and such other forms as may be required in order to confirm or establish the
entitlement of such Bank to a continued exemption from or reduction in United
States withholding tax with respect to payments under this Agreement and any
Note, or it shall immediately notify the Borrower and the Administrative Agent
of its inability to deliver any such form or Certificate due to an event
(including without limitation, any change in treaty, law, or regulation) that
has occurred prior to the date on which any such delivery would be required
which renders all such forms inapplicable or would prevent such Bank from duly
completing and delivering such form with respect to it, in which case such Bank
shall not be required to deliver any such form or Certificate pursuant to this
Section 4.04(b). Notwithstanding anything to the contrary contained in Section
4.04(a), but subject to Section 13.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Bank has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 4.04(a) hereof to
gross-up payments to be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not provided to the Borrower
the Internal Revenue Service Forms that establish a complete exemption from
withholding of such Taxes pursuant to this Section 4.04(b) or (II) in the case
of a payment, other than interest, to a Bank described in clause (ii) above, to
the extent that such Forms do not
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establish a complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 4.04 and except as set forth in Section 13.04(b) and subject to
Section 1.12, the Borrower agrees to pay additional amounts and to indemnify
each Bank in the manner set forth in Section 4.04(a) (without regard to the
identity of the jurisdiction requiring the deduction or withholding) in respect
of any amounts deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Effective Date in any
applicable law, treaty, governmental rule, regulation, guideline or order, or in
the interpretation thereof, relating to the deducting or withholding of income
or similar Taxes.
(c) The provisions of this Section 4.04 are subject to the provisions
of Section 13.15 (to the extent applicable).
(d) If the Borrower pays any additional amount under this Section
4.04 to a Bank and such Bank or any affiliate receives in connection therewith
any refund or reduction of, or credit against, its Tax liabilities (including,
any tax imposed on or measured by the net income or net profits of a Bank, or
any franchise tax based on net income or net profits of a Bank), such Bank shall
pay the Borrower an amount that is equal to the net benefit, after tax, that was
obtained by the Bank in the year or years that such benefit was received or
realized.
SECTION 5. CONDITIONS PRECEDENT TO CREDIT EVENTS ON THE INITIAL
BORROWING DATE. The obligation of each Bank to make Loans and to participate in
Letters of Credit, and the obligations of each Issuing Bank to issue Letters of
Credit, in each case on the Initial Borrowing Date is subject, at the time of
such Credit Event, to the satisfaction of the following conditions:
5.01 EXECUTION OF AGREEMENT; NOTES. On or prior to the Initial
Borrowing Date (i) the Effective Date shall have occurred and (ii) there shall
have been delivered to the Administrative Agent for the account of each of the
Banks the appropriate A Term Note, B Term Note, C Term Note and/or Revolving
Note executed by the Borrower and to the Swingline Bank, the Swingline Note
executed by the Borrower, in each case in the amount, maturity and as otherwise
provided herein.
5.02 FEES, ETC. On the Initial Borrowing Date, the Borrower shall
have paid to the Administrative Agent and the Banks all costs, fees and expenses
(including, without limitation, legal fees and expenses to the extent invoiced)
payable to the Administrative Agent and the Banks to the extent then due.
5.03 OPINIONS OF COUNSEL. On the Initial Borrowing Date, the
Administrative Agent shall have received (i) from Skadden, Arps, Slate, Meagher
& Flom LLP, special counsel to Holdings and its Subsidiaries, an opinion
addressed to the Administrative Agent and each of the Banks and dated the
Initial Borrowing Date covering the matters set forth in Exhibit E and (ii) from
local counsel satisfactory to the Administrative Agent, opinions each of which
shall be in form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks and shall cover the perfection of the security
interests granted pursuant to the Security Agreement and the Mortgages and such
other matters incident to the transactions contemplated herein as the
Administrative Agent may reasonably request.
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5.04 CORPORATE DOCUMENTS; PROCEEDINGS; ETC. (a) On the Initial
Borrowing Date, the Administrative Agent shall have received a certificate,
dated the Initial Borrowing Date, signed by an Authorized Officer of each Credit
Party, and attested to by the Secretary or any Assistant Secretary of such
Credit Party, all in the form of Exhibit F with appropriate insertions, together
with copies of the Certificate of Incorporation and By-Laws of such Credit
Party, as the case may be, and the resolutions, or such other administrative
approval, of such Credit Party, as the case may be, referred to in such
certificate, and the foregoing shall be reasonably acceptable to the
Administrative Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent and
the Required Banks, and the Administrative Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or facsimiles, if any, which the Administrative Agent
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
5.05 SHAREHOLDERS' AGREEMENTS; MANAGEMENT AGREEMENTS; TAX SHARING
AGREEMENTS. On the Initial Borrowing Date, there shall have been delivered to
the Administrative Agent true and correct copies, certified as true and complete
by an Authorized Officer of Holdings or its respective Subsidiaries of (i) all
agreements (if any) entered into by Holdings or any of its Subsidiaries (after
giving effect to the Transaction) governing the terms and relative rights of its
capital stock and any agreements entered into by shareholders, relating to any
such entity with respect to its capital stock (collectively, the "Shareholders'
Agreements"), (ii) all agreements (if any) with senior members of, or with
respect to, the management of Holdings or any of its Subsidiaries (after giving
effect to the Transaction) (collectively, the "Management Agreements"), and
(iii) all agreements (if any) relating to the sharing of tax liabilities and
benefits among Holdings and/or its Subsidiaries (each a "Tax Sharing Agreement"
and collectively, the "Tax Sharing Agreements"); all of which Shareholders'
Agreements, Management Agreements and Tax Sharing Agreements, shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
Required Banks and shall be in full force and effect on the Initial Borrowing
Date.
5.06 CONSUMMATION OF THE TRANSACTION. (a) On or prior to the
Initial Borrowing Date:
(i) Holdings shall have received gross cash proceeds in an
aggregate amount of at least $95,000,000 in connection with (i) the
purchase by AIPCF and other investors satisfactory to the Administrative
Agent of its common stock (the "Holdings Common Stock") and/or (ii) the
issuance of its zero-coupon indebtedness in an amount not to exceed
$30,000,000 (the "Holdings Debentures", and together with the Holdings
Common Stock, the "Holdings Financing"), all of which proceeds shall be
contributed to the capital of the Borrower and shall have been utilized to
make payments owing in connection with the Transaction before (or
simultaneously with) utilizing the proceeds of
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any Loans for such purpose. On or prior to the Initial Borrowing Date,
there shall have been delivered to the Administrative Agent true and
correct copies of all Holdings Financing Documents, each of which shall be
in full force and effect, and all of the terms and conditions thereof shall
be in form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks. The issuance or incurrence of the Holdings
Financing shall have been consummated in accordance with the Holdings
Financing Documents and applicable law and none of the material provisions
of the Holdings Financing Documents shall have been amended, waived,
supplemented or otherwise modified without the prior written consent of the
Administrative Agent (which consent shall not be unreasonably withheld);
(ii) the Borrower shall have received gross cash proceeds in a
minimum aggregate principal amount equal to $175,000,000 from the issuance
by the Borrower of the Senior Subordinated Notes (the "Senior Subordinated
Note Issuance"), and the Borrower shall have utilized such amount to make
payments owing in connection with the Transaction before (or simultaneously
with) utilizing proceeds of any Loans for such purpose. On or prior to the
Initial Borrowing Date, there shall have been delivered to the
Administrative Agent true and correct copies of the Senior Subordinated
Note Documents, each of which shall be in full force and effect, and all of
the terms and conditions thereof shall be in form and substance reasonably
satisfactory to the Administrative Agent and the Required Banks. The Senior
Subordinated Note Issuance shall have been consummated in accordance with
the Senior Subordinated Note Documents and applicable law and none of the
material provisions of the Senior Subordinated Note Documents shall have
been amended, waived, supplemented or otherwise modified without the prior
written consent of the Administrative Agent (which consent shall not be
unreasonably withheld); and
(iii) on or prior to the Initial Borrowing Date (i) the Borrower
shall have consummated a tender offer/consent solicitation with respect to
the outstanding Senior Secured Notes (the "Senior Secured Notes Tender
Offer/Consent Solicitation"), pursuant to which (x) the Borrower shall
offer, subject to the terms and conditions contained in the Senior Secured
Notes Tender Offer/Consent Solicitation, to purchase all of the outstanding
Senior Secured Notes at the cash price set forth in the Senior Secured
Notes Tender Offer/Consent Solicitation and (y) consents shall be solicited
to a proposed amendment to the Senior Secured Notes Indenture, on terms and
conditions set forth in the Senior Secured Notes Tender Offer Consent
Solicitation, which amendment shall provide for the substantial elimination
of the financial and certain operating covenants contained in the Senior
Secured Notes Indenture (including, without limitation, limitations on the
incurrence of liens, transactions with affiliates and indebtedness) and the
amendment or elimination of certain other provisions in the Senior Secured
Notes Collateral Documents; (ii) the period for tendering Senior Secured
Notes pursuant thereto shall terminate on or prior to the Initial
Borrowing Date; (iii) the Borrower shall have received sufficient consents
to authorize the execution and delivery of the Senior Secured Notes
Indenture Supplement; (iv) the Borrower and the trustee under the Senior
Secured Notes Indenture shall have duly executed and delivered the Senior
Secured Notes Indenture Supplement (which shall include the Senior Secured
Notes Collateral
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Documents Amendment); (v) the Borrower shall have repurchased or committed
to repurchase the all of the Senior Secured Notes (which shall in no event
be less than $50,000,000 in aggregate principal amount), and not
theretofore withdrawn, pursuant to the Senior Secured Notes Tender
Offer/Consent Solicitation (the "Senior Secured Notes Tender Offer
Repurchases"); (vi) all security interests and Liens on the assets owned by
the Borrower arising in connection with the issuance of the Senior Secured
Notes shall have been terminated and the Administrative Agent shall have
received such releases of such security interests and Liens as may have
been reasonably requested by the Administrative Agent, which releases shall
be in form and substance reasonably satisfactory to the Administrative
Agent; and (vii) the Administrative Agent shall be reasonably satisfied
that the Senior Secured Notes Tender Offer/Consent Solicitation shall be
consummated in accordance with the Senior Secured Notes Tender Offer
Documents and all applicable laws on the Initial Borrowing Date (all of the
foregoing, the "Refinancing").
(b) On or prior to the Initial Borrowing Date, there shall have been
delivered to the Banks copies of all Merger Documents, all of which shall be
certified by an Authorized Officer of Holdings and/or its Subsidiaries as true
and correct and be in full force and effect and shall be in form and substance
reasonably satisfactory to the Administrative Agent and the Required Banks. On
the Initial Borrowing Date, the Merger shall have been consummated in accordance
with the Merger Documents and all applicable laws. All material conditions to
Holdings' obligations in the Merger Agreement and related material agreements
shall have been satisfied, without waiver or modification (except with the
consent of the Administrative Agent, which consent shall not be unreasonably
withheld).
(c) On or prior to the Initial Borrowing Date, all necessary and
material governmental (domestic and foreign) and third party approvals in
connection with the Transaction shall have become final, and the transactions
contemplated by the Credit Documents and otherwise referred to herein or
therein, shall have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes, in the reasonable
judgment of the Administrative Agent, materially adverse conditions upon the
consummation of the Transaction and the transactions contemplated by this
Agreement. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction or the transactions
contemplated by this Agreement.
5.07 PLEDGE AGREEMENT. On the Initial Borrowing Date, Holdings and
the Borrower shall have duly authorized, executed and delivered a Pledge
Agreement in the form of Exhibit G with such changes thereto, or such additional
pledge agreements (or amendments thereto) entered into in connection therewith,
as foreign counsel may suggest in connection with the Pledged Securities issued
by any Foreign Subsidiary of the Borrower designated by the Administrative Agent
(such Pledge Agreement, together with such additional pledge agreements, as
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, the "Pledge Agreement") and shall have delivered to the Collateral
Agent, as Pledgee, all the Pledged Securities referred to therein then owned by
such Credit Party, together with executed
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and undated stock powers, in the case of capital stock constituting Pledged
Securities, PROVIDED, that no more than 65% of the capital stock of Copetro S.A.
("Copetro") or any other Foreign Subsidiary shall be pledged pursuant to the
Pledge Agreement.
5.08 SECURITY AGREEMENT. On the Initial Borrowing Date, Holdings and
the Borrower shall have duly authorized, executed and delivered a Security
Agreement in the form of Exhibit H (as amended, modified, extended, renewed,
replaced, restated or supplemented from time to time, the "Security Agreement")
covering all of Holdings' and the Borrower's present and future Security
Agreement Collateral, together with:
(a) proper Financing Statements (Form UCC-1) fully executed for
filing under the UCC or other appropriate filing offices of each
jurisdiction as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security interests purported to
be created by the Security Agreement;
(b) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing all effective financing statements
that name the Borrower as debtor and that are filed in the jurisdictions
referred to in clause (a) above, together with copies of such other
financing statements (none of which shall cover the Collateral except to
the extent evidencing Permitted Liens or in respect of which the Collateral
Agent shall have received termination statements (Form UCC-3) or such other
termination statements as shall be required by local law) fully executed
for filing;
(c) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Collateral Agent, desirable to perfect the
security interests intended to be created by the Security Agreement; and
(d) evidence that all other actions necessary or, in the reasonable
opinion of the Collateral Agent, desirable to perfect and protect the
security interests purported to be created by the Security Agreement have
been taken.
5.09 MORTGAGES; TITLE INSURANCE; ETC. On the Initial Borrowing Date,
the Collateral Agent shall have received:
(a) duly authorized, fully executed, acknowledged, and delivered
deeds of trust, mortgages, leasehold deeds of trust or leasehold mortgages
substantially in the form of Exhibit I (as amended, modified, extended,
renewed, replaced, restated or supplemented from time to time, each a
"Mortgage" and collectively, the "Mortgages"), which Mortgages shall cover
such of the Real Property owned or leased by Holdings and/or its
Subsidiaries as shall be designated as such on Schedule III as a mortgaged
property thereunder (each, a "Mortgaged Property" and collectively, the
"Mortgaged Properties"), together with evidence that counterparts of the
Mortgages have been delivered to the title insurance company insuring the
Lien of the Mortgages for recording in all places to the extent necessary
or, in the reasonable opinion of the Collateral Agent, desirable to
effectively create a valid and enforceable Lien on each Mortgaged Property
in favor of the
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Collateral Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Secured Creditors;
(b) duly authorized, fully executed, acknowledged, and delivered
subordination, nondisturbance and attornment agreements, assignments of
leases, landlord consents, tenant estoppel certificates, and such other
documents relating to the Mortgages that the Collateral Agent may
reasonably request; and
(c) Extended coverage policies of mortgage title insurance covering
each Mortgaged Property, together with all endorsements reasonably
requested by the Collateral Agent relating thereto issued by title insurers
reasonably satisfactory to the Collateral Agent (the "Mortgage Policies")
in amounts reasonably satisfactory to the Administrative Agent and the
Required Banks (but not in excess of the value of the respective Mortgaged
Property) assuring the Collateral Agent that the Mortgages on such
Mortgaged Properties are valid and enforceable first priority mortgage
liens on the respective Mortgaged Properties, free and clear of all defects
and encumbrances except Permitted Encumbrances and such Mortgage Policies
shall otherwise be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks and shall include, as
appropriate and to the extent available, an endorsement for future advances
under this Agreement and the Notes and for any other matter that the
Collateral Agent in its reasonable discretion may reasonably request, shall
not include an exception for mechanics' liens, and shall provide for
affirmative insurance (to the extent available) and such reinsurance as the
Collateral Agent in its discretion may reasonably request.
5.10 ADVERSE CHANGE, ETC. On the Initial Borrowing Date, after
giving effect to the Transaction, nothing shall have occurred since December 31,
1997 which could reasonably be likely to have a material adverse effect on the
rights or remedies of the Administrative Agent or the Banks, or on the ability
of the Credit Parties to perform their respective obligations to the
Administrative Agent and the Banks or which could reasonably be likely to have a
Material Adverse Effect.
5.11 SOLVENCY LETTER; INSURANCE. On or before the Initial Borrowing
Date, the Borrower shall have delivered or shall cause to be delivered to the
Administrative Agent (i) a solvency letter in form and substance reasonably
satisfactory to the Administrative Agent from Valuation Research Corporation,
setting forth its conclusions that, after giving effect to the Transaction, each
of Holdings and its Subsidiaries taken as a whole, and the Borrower and its
Subsidiaries, taken as a whole, is not insolvent and will not be rendered
insolvent by the indebtedness incurred in connection therewith, and will not be
left with unreasonably small capital with which to engage in their business and
will not have incurred debts beyond their ability to pay debts as they mature,
and (ii) evidence of insurance complying with the requirements of Section 8.03
for the business and properties of Holdings and its Subsidiaries, in scope, form
and substance reasonably satisfactory to the Administrative Agent and the
Required Banks and naming the Collateral Agent as an additional insured and/or
loss payee, and stating that such insurance shall not be canceled or revised
without 30 days' prior written notice by the insurer to the Collateral Agent.
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5.12 PRO FORMA BALANCE SHEET; PROJECTIONS. (a) On the Initial
Borrowing Date, the Banks shall have received the unaudited projected PRO FORMA
consolidated balance sheets of Holdings and the Borrower prepared on a
consolidated basis based upon the projected balance sheet at the Initial
Borrowing Date prepared on a basis consistent with the Projections and in
accordance with the financial statement delivered pursuant to Section 7.05(a),
both immediately before and immediately after giving effect to the Transaction,
the related financing thereof and the other transactions contemplated hereby and
thereby, which projected PRO FORMA consolidated balance sheets shall be in form
and substance reasonably satisfactory to the Administrative Agent and the
Required Banks.
(b) On the Initial Borrowing Date, the Banks shall have received the
Projections described in Section 7.05(d), which Projections shall be in form and
substance reasonably satisfactory to the Administrative Agent and the Required
Banks.
SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The obligation
of each Bank to make Loans and participate in Letters of Credit (including Loans
made and Letters of Credit issued on the Initial Borrowing Date), and the
obligation of any Issuing Bank to issue any Letter of Credit (including any
Letter of Credit issued on the Initial Borrowing Date), is subject, at the time
of each such Credit Event (except as hereinafter indicated), to the satisfaction
of the following conditions:
6.01 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of each
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein or in any other Credit Document shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Credit Event (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such specified date).
6.02 NOTICE OF BORROWING; LETTER OF CREDIT REQUEST. (a) Prior to
the making of each Loan (other than a Swingline Loan or a Mandatory Borrowing),
the Administrative Agent shall have received the notice required by Section
1.03(a). Prior to the making of each Swingline Loan, the Swingline Bank shall
have received the notice referred to in Section 1.03(b).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Bank shall have received a
Letter of Credit Request meeting the requirements of Section 2.02.
The acceptance of the benefit of each Credit Event shall constitute a
representation and warranty by Holdings and the Borrower to the Administrative
Agent and each of the Banks that all the conditions specified in Section 5 and
in this Section 6 and applicable to such Credit Event exist as of that time
(except to the extent that any of the conditions specified in Section 5 are
required to be satisfactory to or determined by any Bank, the Required Banks
and/or the Administrative Agent). All of the Notes, certificates, legal
opinions and other documents and papers referred to in Section 5 and in this
Section 6, unless otherwise specified, shall be delivered to the Administrative
Agent at the Notice Office or to counsel for the Administrative Agent for
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the account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks.
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, each of Holdings
and the Borrower makes the following representations, warranties and agreements,
in each case after giving effect to the Transaction consummated on the Initial
Borrowing Date, all of which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loans and the issuance of the
Letters of Credit, with the occurrence of each Credit Event on or after the
Initial Borrowing Date being deemed to constitute a representation and warranty
that the matters specified in this Section 7 are true and correct on and as of
the Initial Borrowing Date in all material respects and in all material respects
on the date of each such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
7.01 CORPORATE STATUS. Holdings, the Borrower and each of their
respective Subsidiaries (i) is a duly organized and validly existing corporation
in good standing under the laws of the jurisdiction of its organization, (ii)
has the corporate power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to engage
and (iii) is duly qualified to do business and is in good standing in each
jurisdiction where the conduct of its business requires such qualifications
except for failures to be so qualified which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
7.02 CORPORATE POWER AND AUTHORITY. Each Credit Party has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is party and has taken all
necessary corporate action, as the case may be, to authorize the execution,
delivery and performance by it of each of such Documents. Each Credit Party has
duly executed and delivered each of the Documents to which it is party, and each
of such Documents constitutes such Credit Party's legal, valid and binding
obligation enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 NO VIOLATION. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any material
provision of any applicable law, statute, rule or regulation or any applicable
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) will conflict with or result in any breach of any of the material terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (except pursuant to the Security Documents) upon any of the material
properties or assets of Holdings, the Borrower or any of their respective
Subsidiaries pursuant to the terms of any material indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument, to which Holdings, the
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Borrower or any of their respective Subsidiaries is a party or by which it or
any of its property or assets is bound or to which it may be subject or (iii)
will violate any provision of the Certificate of Incorporation or By-Laws of
Holdings or any of its Subsidiaries.
7.04 GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Initial Borrowing Date), or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of any Document or (ii) the legality,
validity, binding effect or enforceability of any such Document, except, in the
case of any failure to obtain, where such failure to so obtain would not have a
(x) Material Adverse Effect or (y) a material adverse effect on the ability of
the Credit Parties to perform their obligations under the Credit Documents or
the rights and remedies of the Administrative Agent and the Banks thereunder.
7.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; PROJECTIONS; ETC. (a) The balance sheets, statements of
operations, statements of stockholders' equity, statements of changes in
stockholders' equity, statements of changes in group deficiency, statements of
operations and division equity, statements of assets and liabilities, statements
of operating revenues and expenses, statements of charges in net assets,
statements of changes in group investment (deficiency) and statements of cash
flows of the Borrower and its Subsidiaries as furnished to the Banks prior to
the Effective Date fairly present the financial condition and operations of the
Borrower and its Subsidiaries at and for the periods indicated. All such
financial statements are true and correct in all material respects and have been
prepared in accordance with GAAP, consistently applied. After giving effect to
the Transaction, since December 31, 1997, there has been no material adverse
change in the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or of Holdings and its
Subsidiaries taken as a whole.
(b) (i) On and as of the Initial Borrowing Date, after giving effect
to the Transaction and to all Indebtedness incurred, and to be incurred, and
Liens created, and to be created, by Holdings and its Subsidiaries in connection
therewith, (a) the sum of the assets, at a fair valuation, of Holdings and its
Subsidiaries will exceed their debts; (b) Holdings and its Subsidiaries taken as
a whole have not incurred and do not intend to incur, and do not believe that
they will incur, debts beyond their ability to pay such debts as such debts
mature; and (c) Holdings and its Subsidiaries taken as a whole will have
sufficient capital with which to conduct their businesses. For purposes of this
Section 7.05(b), "debt" means any liability on a claim, and "claim" means (i)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 7.05(a) or the offering circular relating to the Senior
Subordinated Note Issuance, there were as of the Initial Borrowing Date no
liabilities or obligations with respect to Holdings or any
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of its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, would be material to the Borrower or to Holdings and its Subsidiaries
taken as a whole (except that amount of indebtedness described in such financial
statements has increased to $88,400,000 as of March 31, 1998). As of the
Initial Borrowing Date, neither Holdings nor the Borrower knows of any basis for
the assertion against it of any liability or obligation of any nature whatsoever
that is not fully disclosed in the financial statements delivered pursuant to
Section 7.05(a) or the offering circular relating to the Senior Subordinated
Note Issuance which, either individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(d) On and as of the Initial Borrowing Date, the financial
projections dated as of May 11, 1998 (the "Projections") previously delivered to
the Administrative Agent and the Banks have been prepared on a basis consistent
with the financial statements referred to in Section 7.05(a) (other than as set
forth or presented in such Projections), and there are no statements or
conclusions in any of the Projections which are based upon or include
information known to the Borrower to be misleading in any material respect or
which fail to take into account material information regarding the matters
reported therein. On the Initial Borrowing Date, the Borrower believed that the
Projections were reasonable and attainable.
7.06 LITIGATION. There are no actions, suits or proceedings pending
or, to the best knowledge of Holdings and the Borrower, threatened (i) with
respect to any Document or (ii) that could reasonably be expected to have a
Material Adverse Effect.
7.07 TRUE AND COMPLETE DISCLOSURE. All factual information (taken as
a whole) furnished by or on behalf of Holdings or the Borrower in writing to the
Administrative Agent or any Bank for purposes of or in connection with this
Agreement, the other Credit Documents or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of the Borrower in writing to the Administrative Agent
or any Bank will be, true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the circumstances
under which such information was provided.
7.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds of the
Term Loans shall be utilized by the Borrower (i) to effect the Transaction and
(ii) to pay fees and expenses related to the Transaction.
(b) Proceeds of Revolving Loans and Swingline Loans may be utilized
for the Borrower's and its Subsidiaries' general corporate and working capital
purposes and to make payments required in connection with the Transaction
following the Initial Borrowing Date PROVIDED, that up to $5,000,000 of
Revolving Loans and Letters of Credit may be utilized by the Borrower (i) to
effect the Transaction and (ii) to pay fees and expenses related to the
Transaction.
(c) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent
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with the provisions of Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
7.09 TAX RETURNS AND PAYMENTS. Each of Holdings, the Borrower and
each of their Subsidiaries have timely filed or caused to be timely filed, on
the due dates thereof or within applicable grace periods, with the appropriate
taxing authority, all Federal and all material state returns, statements, forms
and reports for taxes (the "Returns") required to be filed by or with respect to
the income, properties or operations of Holdings and/or any of its Subsidiaries.
The Returns accurately reflect in all material respects all liability for taxes
of Holdings, the Borrower and their respective Subsidiaries, as the case may be,
for the periods covered thereby. Each of Holdings, the Borrower and their
respective Subsidiaries have paid all material taxes payable by them other than
taxes which are not delinquent or are being contested in good faith and for
which adequate reserves have been established in accordance with GAAP. Except
as disclosed in the financial statements referred to in Section 7.05(a), there
is no material action, suit, proceeding, investigation, audit, or claim now
pending or, to the best knowledge of Holdings or the Borrower, threatened by any
authority regarding any taxes relating to Holdings, the Borrower or any of their
respective Subsidiaries. As of the Initial Borrowing Date, except as set forth
in Schedule II, none of Holdings, the Borrower nor any of their respective
Subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of Holdings, the Borrower or any of their
respective Subsidiaries, or is aware of any circumstances that would cause the
taxable years or other taxable periods of Holdings, the Borrower or any of their
respective Subsidiaries not to be subject to the normally applicable statute of
limitations. None of Holdings, the Borrower nor any of their respective
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the Transaction and the other transactions contemplated hereby.
7.10 COMPLIANCE WITH ERISA. Each Plan is in substantial compliance
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has a material Unfunded
Current Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; all contributions required to be made with respect to a Plan have been
timely made; none of Holdings, the Borrower nor any of their respective
Subsidiaries nor any ERISA Affiliate has incurred any material liability to or
on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or
4980 of the Code or reasonably expects to incur any material liability under any
of the foregoing Sections with respect to any Plan; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to Holdings, the Borrower or any
of their respective Subsidiaries or any ERISA Affiliate of incurring a material
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of Holdings, the Borrower, their respective Subsidiaries and their
ERISA Affiliates to all Plans which are multiemployer plans (as defined in
Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event, would not exceed $5,000,000; no lien
imposed under
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the Code or ERISA on the assets of Holdings, the Borrower or any of their
respective Subsidiaries or any ERISA Affiliate exists or is reasonably likely to
arise on account of any Plan; and Holdings, the Borrower and their respective
Subsidiaries do not maintain or contribute to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA) the obligations with respect to which could reasonably be expected to
have a Material Adverse Effect.
7.11 THE SECURITY DOCUMENTS. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Credit Parties in the Security
Agreement Collateral described therein, and the Security Agreement, upon the
filing of Form UCC-1 financing statements or the appropriate equivalent (which
filing, if this representation is being made more than 10 days after Initial
Borrowing Date, has been made), create a fully perfected lien on, and security
interest in, all right, title and interest in all of the Security Agreement
Collateral described therein which is capable of being perfected with such
filings , subject to no other Liens other than Permitted Liens and Liens to be
released in connection with the Transaction.
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors under the Pledge Agreement
constitute first priority perfected security interests in the Pledged Securities
described in the Pledge Agreement, subject to no security interests of any other
Person. No filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Securities and the proceeds thereof under the Pledge Agreement, so long as the
Collateral Agent maintains possession of such Pledged Securities consisting of
certificated securities in the State of New York.
(c) The Mortgages create, as security for the obligations purported
to be secured thereby, a valid and enforceable perfected security interest in
and mortgage lien on all of the Mortgaged Properties in favor of the Collateral
Agent (or such other trustee as may be required or desired under local law) for
the benefit of the Secured Creditors, superior to and prior to the rights of all
third persons (except that the security interest and mortgage lien created in
the Mortgaged Properties may be subject to the Permitted Encumbrances, Permitted
Liens and Liens to be released in connection with the Transaction related
thereto) and subject to no other Liens (other than Liens permitted under Section
9.01). Schedule III contains a true and complete list of each parcel of Real
Property owned or leased by Holdings, the Borrower and their respective
Subsidiaries on the Effective Date, and the type of interest therein held by
Holdings, the Borrower or such Subsidiary.
7.12 REPRESENTATIONS AND WARRANTIES IN DOCUMENTS. All
representations and warranties set forth in the other Documents were true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made).
7.13 PROPERTIES. Holdings, the Borrower and each of their respective
Subsidiaries have good and valid title to all properties (or a valid leasehold
estate with respect to leased
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properties) owned by them after giving effect to the Transaction in accordance
with the Transaction Documents, including all property reflected in the balance
sheet of the Borrower referred to in Section 7.05(a) and in the pro forma
balance sheet referred to in Section 5.12 (except for property sold or otherwise
disposed of since the date of such balance sheet in the ordinary course of
business or as otherwise permitted by this Agreement), free and clear of all
Liens, other than (i) as referred to in the balance sheet or in the notes
thereto or in such pro forma balance sheet or (ii) Permitted Liens.
7.14 CAPITALIZATION. On the Initial Borrowing Date and after giving
effect to the Transaction and the other transactions contemplated hereby, the
authorized capital stock of the Borrower shall consist of 1000 shares, $0.01 par
value per share, all of which shares are outstanding. All such outstanding
shares of common stock have been duly and validly issued, are fully paid and
nonassessable, are free of preemptive rights. As of the Initial Borrowing Date,
neither the Borrower nor its Subsidiaries has outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock.
7.15 SUBSIDIARIES. After giving effect to the Transaction, as of the
Effective Date, Holdings will have no direct or indirect Subsidiaries other than
the Borrower and its Subsidiaries.
7.16 COMPLIANCE WITH STATUTES, ETC. Each of Holdings and its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except such noncompliances as could not individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7.17 INVESTMENT COMPANY ACT. None of Holdings, the Borrower nor any
of their respective Subsidiaries is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
7.18 PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower nor any of their respective Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
7.19 LABOR RELATIONS. None of Holdings, the Borrower nor any of
their respective Subsidiaries is engaged in any unfair labor practice that could
reasonably be expected to have a Material Adverse Effect. There is (i) no
unfair labor practice complaint pending against Holdings or any of its
Subsidiaries or, to the best knowledge of Holdings or the Borrower, threatened
against any of them, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against Holdings or any
of its Subsidiaries or, to the best knowledge of Holdings or the Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or, to the best
knowledge of Holdings and the
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Borrower, threatened against Holdings or any of its Subsidiaries and (iii) to
the best knowledge of Holdings and the Borrower, no union representation
question existing with respect to the employees of Holdings or any of its
Subsidiaries, except (with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a Material Adverse Effect.
7.20 PATENTS, LICENSES, FRANCHISES AND FORMULAS. Each of Holdings
and its Subsidiaries owns all material patents, trademarks, permits, service
marks, trade names, copyrights, licenses, franchises and formulas, or rights
with respect to the foregoing, and has obtained assignments of all leases and
other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, could reasonably be likely to have
a Material Adverse Effect.
7.21 TRANSACTION. As of the Initial Borrowing Date, the Transaction
has been consummated in all material respects in accordance with the terms of
the respective Transaction Documents and all applicable laws. As of the Initial
Borrowing Date, all consents and approvals of, and filings and registrations
with, and all other actions in respect of, all governmental agencies,
authorities or instrumentalities required in order to make or consummate the
Transaction will have been obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained), except where the failure to so obtain, give, file or take would
not have a Material Adverse Effect. All applicable waiting periods with respect
thereto have or, prior to the time when required, will have, expired without, in
all such cases, any action being taken by any competent authority which
restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or any Credit Event or the performance by any Credit Party of its
obligations under the respective Documents. All actions taken by each Credit
Party pursuant to or in furtherance of the Transaction have been taken in
material compliance with the respective Documents and all applicable laws.
7.22 SPECIAL PURPOSE CORPORATION. As of the Initial Borrowing Date,
Holdings has no material assets other than the capital stock of the Borrower
owned by Holdings. As of the Initial Borrowing Date, Holdings has engaged in no
activities except activities undertaken in connection with the Transaction and
has no material liabilities other than liabilities incurred in connection with
the Transaction.
7.23 SENIOR SUBORDINATED NOTES AND HOLDINGS DEBENTURES. As of the
Initial Borrowing Date, (i) the Senior Subordinated Notes have been duly
authorized, issued and delivered in accordance with applicable law and the
Senior Subordinated Note Documents, and (ii) the Holdings Debentures have been
duly authorized, issued and delivered in accordance with applicable law and the
Holdings Debenture Documents. The subordination provisions contained in the
Senior Subordinated Notes and the Holdings Debentures are enforceable by the
Banks against Holdings or the Borrower, as the case may be except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law), and the holders of such Senior Subordinated
Notes or
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Holdings Debentures, as the case may be, and all Obligations of Holdings and/or
the Borrower hereunder or under the other Credit Documents are or will be within
the definition of "Senior Indebtedness" included in such provisions of the
Senior Subordinated Note Documents and the Holdings Debenture Documents.
SECTION 8. AFFIRMATIVE COVENANTS. Holdings and the Borrower hereby
covenant and agree that on and after the Effective Date and until the Total
Commitments and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
8.01 INFORMATION COVENANTS. Holdings and/or the Borrower will
furnish to each Bank:
(a) MONTHLY REPORTS. Within 30 days after the end of each fiscal
month (other than the fiscal months ending March, June, September and December)
of Holdings (from and after July, 1998), the combined balance sheets of Holdings
and its Consolidated Subsidiaries as of the end of such month and the related
combined statements of income and statements of cash flows for such month and
for the last elapsed portion of the fiscal year ended with the last day of such
month, in each case setting forth in the statements of income only, the
comparative figures for the corresponding month in the prior fiscal year and the
budgeted figures for such month as set forth in the respective budget delivered
pursuant to Section 8.01(e).
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 45 days after the close of each of the first three quarterly
accounting periods in each fiscal year of Holdings (from and after the fiscal
quarter ended in September 1998), the combined balance sheets of Holdings and
its Consolidated Subsidiaries as of the end of such quarter and the related
combined statements of income and statements of cash flows for such quarter and
for the last elapsed portion of the fiscal year ended with the last day of such
quarter and setting forth in the statements of income only, the comparative
figures for the corresponding quarter in the prior fiscal year and the budgeted
figures for such quarter as set forth in the respective budget delivered
pursuant to Section 8.01(e), (ii) the balance sheets of each of Holdings'
Subsidiaries as of the end of such quarter and the related statements of income
and statements of cash flows for such quarter and for the elapsed portion of the
fiscal year ended with the last day of such quarter, in each case setting forth
in the statements of income only, the comparative figures for the corresponding
quarter in the prior fiscal year and the budgeted figures for such quarter as
set forth in the respective budget delivered pursuant to Section 8.01(e), and
(iii) management's discussion and analysis of the important operational and
financial developments during such quarterly period in respect of Holdings and
its Subsidiaries.
(c) ANNUAL FINANCIAL STATEMENTS. Within 95 days after the close of
each fiscal year (after and including fiscal year 1998) of Holdings, the
consolidated balance sheets of Holdings and its Consolidated Subsidiaries as at
the end of such fiscal year and the related statements of income and retained
earnings and of cash flows for such fiscal year and, setting forth comparative
figures for the preceding fiscal year commencing fiscal year 1998 and certified,
in the case of such consolidated statements, by Ernst & Young LLP or such other
independent certified public accountants of recognized national standing
reasonably acceptable to the Administrative Agent,
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together with a report of such accounting firm (which report shall be
unqualified as to scope) stating that in the course of its regular audit of the
financial statements of Holdings and its Subsidiaries, which audit was conducted
in accordance with generally accepted auditing standards, such accounting firm
obtained no knowledge of any Default or Event of Default under Sections 9.03,
9.04, 9.05 and 9.07 through 9.09, inclusive, which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature thereof,
(ii) the balance sheets of each of Holdings' Subsidiaries at the end of such
fiscal year and the related statement of income and retained earnings and
statement of cash flows for such fiscal year, in each case setting forth
comparative figures for the preceding fiscal year, and (iii) management's
discussions and analysis of the important operational and financial developments
during such fiscal year in respect of Holdings and its Subsidiaries.
(d) MANAGEMENT LETTERS. Promptly after the receipt thereof by
Holdings or any of its Subsidiaries, a copy of any final "management letter"
received by Holdings or such Subsidiary from its certified public accountants
and management's responses thereto.
(e) BUDGETS. No later than 30 days following the commencement of the
first day of each fiscal year of Holdings, a budget in form satisfactory to the
Administrative Agent prepared by Holdings for (x) in the case of budgeted
statements of income, each of the twelve months of such fiscal year prepared in
detail, and (y) in the case of budgeted statements of sources and uses of cash
and balance sheets, for such fiscal year on an annual basis and prepared in
detail and for each of the five years immediately following such fiscal year
prepared in summary form, accompanied by the statement of the President, Chief
Financial Officer or Senior Vice President of Finance of the Borrower to the
effect that, to the best of his knowledge, the budget is a reasonable estimate
for the period covered thereby.
(f) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 8.01(a), (b) and (c), a certificate
of the Authorized Officer of the Borrower to the effect that, to the best of
such officer's knowledge, no Default or Event of Default has occurred and is
continuing or, if any Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof, which certificate shall,
in the case of any such financial statements delivered in respect of a period
ending on the last day of a fiscal quarter or year of Holdings, (x) set forth
the calculations required to establish whether the Borrower was in compliance
with the provisions of Sections 9.03, 9.04, 9.05, and 9.07 through 9.09,
inclusive, at the end of such fiscal quarter or year, as the case may be and (y)
if delivered with the financial statements required by Section 8.01(c), set
forth the calculations required to establish whether the Borrower was in
compliance with the provisions of Section 4.02(A)(h) and set forth the amount of
Excess Cash Flow for the respective Excess Cash Payment Period.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within five Business Days after an Authorized Officer of Holdings or the
Borrower obtains knowledge thereof, notice of (i) the occurrence of any event
which constitutes a Default or Event of Default and (ii) any litigation or
governmental investigation or proceeding pending against Holdings or any of its
Subsidiaries which could reasonably be expected to result in a Material Adverse
Effect.
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(h) OTHER REPORTS AND FILINGS. Promptly, copies of all financial
information, proxy materials and other information and reports, if any, which
Holdings or any of its Subsidiaries shall file with the Securities and Exchange
Commission or any successor thereto (the "SEC") including, without limitation,
in connection with the registration of the Senior Subordinated Notes.
(i) ANNUAL MEETINGS WITH BANKS. At the request of the Administrative
Agent, Holdings shall within 120 days after the close of each fiscal year of
Holdings hold a meeting at a time and place selected by Holdings and acceptable
to the Administrative Agent with all of the Banks at which meeting shall be
reviewed the financial results of the previous fiscal year and the financial
condition of Holdings and the budgets presented for the current fiscal year of
Holdings and its Subsidiaries.
(j) OTHER INFORMATION. From time to time, such other information or
documents (financial or otherwise) with respect to Holdings or its Subsidiaries
as any Bank may reasonably request in writing.
8.02 BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and correct entries in material conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in relation
to its business and activities. Holdings will, and will cause each of its
Subsidiaries to, permit officers and designated representatives of the
Administrative Agent or any Bank to visit and inspect, during regular business
hours, upon reasonable advance notice and under guidance of officers of
Holdings, the Borrower or such Subsidiary, any of the properties of Holdings,
the Borrower or such Subsidiary, and to examine the books of account of
Holdings, the Borrower or such Subsidiary and discuss the affairs, finances and
accounts of Holdings, the Borrower or such Subsidiary with, and be advised as to
the same by, its and their officers, all at such reasonable times and intervals
and to such reasonable extent as the Administrative Agent or such Bank may
request.
8.03 MAINTENANCE OF PROPERTY; INSURANCE. (a) Schedule IV sets forth
a true and complete listing of all insurance maintained by Holdings, and its
Subsidiaries as of the Effective Date. Holdings will, and will cause each of
its Subsidiaries to, (i) keep all property necessary in its business in good
working order and condition (ordinary wear and tear excepted), (ii) maintain
insurance on all its property in at least such amounts and against at least such
risks as is consistent and in accordance with industry practice and (iii)
furnish to each Bank, upon written request, full information as to the insurance
carried. In addition to the requirements of the immediately preceding sentence,
Holdings and the Borrower will at all times cause insurance of the types
described in Schedule IV to be maintained (with the same scope of coverage as
that described in Schedule IV) at levels which are at least as great as the
respective amount described opposite the respective type of insurance on
Schedule IV under the column headed "Minimum Amount Required to be Maintained."
Notwithstanding the foregoing, if such insurance ceases to be available or is no
longer available on commercially reasonable terms, the Borrower may, with the
consent of the Administrative Agent (not to be unreasonably withheld), cease to
maintain such insurance or maintain such insurance at levels that are
commercially reasonable.
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(b) All policies (including Mortgage Policies) or certificates (or
certified copies thereof) with respect to such insurance (i) shall be endorsed
to the Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee or
as an additional insured), (ii) shall state that such insurance policies shall
not be canceled without 30 days' prior written notice thereof by the respective
insurer to the Collateral Agent, (iii) shall provide that the respective
insurers irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Secured Creditors, (iv) shall contain the standard
non-contributory mortgagee clause endorsement in favor of the Collateral Agent
with respect to hazard insurance coverage, (v) shall, except in the case of
public liability insurance and workers' compensation insurance, PROVIDED, that
any losses shall be payable notwithstanding (A) any act or neglect of Holdings
or any of its Subsidiaries, (B) the occupation or use of the properties for
purposes more hazardous than those permitted by the terms of the respective
policy if such coverage is obtainable at commercially reasonable rates and is of
the kind from time to time customarily insured against by Persons owning or
using similar property and in such amounts as are customary, (C) any foreclosure
or other proceeding relating to the insured properties if such coverage is
available at commercially reasonable rates or (D) any change in the title to or
ownership or possession of the insured properties if such coverage is available
at commercially reasonable rates and (vi) shall be deposited with the Collateral
Agent if such coverage is available at commercially reasonable rates.
(c) If Holdings or any of its Subsidiaries shall fail to maintain all
insurance in accordance with this Section 8.03, or if Holdings or any of its
Subsidiaries shall fail to so endorse and deposit all policies or certificates
with respect thereto, the Administrative Agent and/or the Collateral Agent shall
have the right (but shall be under no obligation) to procure such insurance and
the Borrower agrees to reimburse the Administrative Agent or the Collateral
Agent as the case may be, for all costs and expenses of procuring such
insurance.
8.04 CORPORATE FRANCHISES. Holdings will, and will cause each of its
Subsidiaries to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights, franchises,
licenses and patents; PROVIDED, HOWEVER, that nothing in this Section 8.04 shall
prevent (i) sales of assets (including, without limitation, capital stock of, or
other equity interests in, Subsidiaries of the Borrower) by Holdings or any of
its Subsidiaries in accordance with Section 9.02 or (ii) the withdrawal by
Holdings or any of its Subsidiaries of their qualification as a foreign
corporation in any jurisdiction where such withdrawal could not reasonably be
expected to have a Material Adverse Effect or (iii) mergers or consolidations or
liquidations permitted under Section 9.02.
8.05 COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except such noncompliances as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
8.06 ERISA. As soon as possible and, in any event, within 20 days
after Holdings, the Borrower or any of their respective Subsidiaries or any
ERISA Affiliate knows or has reason to know of the occurrence of any of the
following, Holdings or the Borrower will
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deliver to each of the Banks a certificate of an Authorized Officer of Holdings
or the Borrower setting forth details as to such occurrence and the action, if
any, that Holdings, the Borrower, such Subsidiary or such ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by Holdings, the Borrower, such Subsidiary, the
ERISA Affiliate, the PBGC, or a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency has been incurred or an application is likely to be or has
been made to the Secretary of the Treasury for a waiver or modification of the
minimum funding standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the Code with respect
to a Plan; that a contribution required to be made to a Plan has not been timely
made; that a Plan has been or is reasonably expected to be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the
Code; that proceedings are likely to be or have been instituted or notice has
been given to terminate or appoint a trustee to administer a Plan; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that Holdings, the Borrower, any of their
respective Subsidiaries or any ERISA Affiliate will or is reasonably expected to
incur any material liability (including any contingent or secondary liability)
to or on account of the termination of or withdrawal from a Plan under Section
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan
under Section 401(a)(29), 4971 or 4975 of the Code or Section 409 or 502(i) or
502(l) of ERISA; or that Holdings, the Borrower or any Subsidiary may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA). Upon
request the Borrower will deliver to each of the Banks a complete copy of the
annual report (Form 5500) of each Plan required to be filed with the Internal
Revenue Service. In addition to any certificates or notices delivered to the
Banks pursuant to the first sentence hereof, copies of annual reports and any
material notices received by Holdings, the Borrower or any of their respective
Subsidiaries or any ERISA Affiliate with respect to any Plan shall be delivered
to the Banks no later than 20 days after the date such report has been filed
with the Internal Revenue Service or such notice has been received by Holdings,
the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
8.07 END OF FISCAL YEARS; FISCAL QUARTERS. Holdings shall cause (i)
each of its and the Borrower's, fiscal years to end on December 31, and (ii)
each of its and the Borrower's fiscal quarters to end on March 31, June 30 and
September 30.
8.08 PERFORMANCE OF OBLIGATIONS. Holdings will, and will cause each
of its Subsidiaries to, perform all of their obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument by which it is
bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
8.09 PAYMENT OF TAXES. Holdings will pay and discharge or cause to
be paid and discharged, and will cause each of its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties belonging to it,
in each case on a timely basis, and all lawful claims of governmental
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authorities which, if unpaid, might become a lien or charge upon any properties
of Holdings or any of its Subsidiaries; PROVIDED that none of Holdings nor any
of its Subsidiaries shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper proceedings
if it has maintained adequate reserves with respect thereto in accordance with
GAAP.
8.10 MAINTENANCE OF SEPARATENESS. Holdings will, and will cause each
of its Subsidiaries to, satisfy customary corporate formalities including the
holding of regular board of directors' and shareholders' meetings and the
maintenance of corporate offices and records. None of the Borrower nor any of
its Subsidiaries shall make any payment to a creditor of Holdings in respect of
any liability of Holdings which is not a liability of the Borrower or such
Subsidiary, and no bank account of Holdings shall be commingled with any bank
account of the Borrower or any of its Subsidiaries. Any financial statements
distributed to any creditors of Holdings shall, to the extent permitted by GAAP,
clearly establish the corporate separateness of Holdings from the Borrower and
its Subsidiaries. Finally, neither Holdings nor any of its Subsidiaries shall
take any action, or conduct its affairs in a manner, which could result in the
corporate existence of Holdings being ignored, or in the assets and liabilities
of the Borrower or any of its Subsidiaries being substantively consolidated with
those of Holdings in a bankruptcy, reorganization or other insolvency
proceeding.
8.11 ADDITIONAL SECURITY; FURTHER ASSURANCES. (a) Holdings and the
Borrower will, and will cause each of their respective Domestic Subsidiaries to,
grant to the Collateral Agent security interests in Reinvestment Assets at the
time of the acquisition thereof as described in this clause (a). To the extent
Reinvestment Assets are acquired by the Borrower and/or its Domestic
Subsidiaries, the Borrower or such Domestic Subsidiary shall grant a Lien on and
a security interest in such Reinvestment Assets on the same terms as set forth
in the Security Documents and as otherwise set forth in this Section 8.11. To
the extent Reinvestment Assets are acquired by a merger or the acquisition of
capital stock, the Borrower shall cause the Person acquiring such Reinvestment
Assets to become a Subsidiary of the Borrower and/or its Subsidiaries, and shall
pledge or cause to be pledged (x) all capital stock owned by such acquiring
Person of any such Person so acquired which is a Domestic Subsidiary, and (y)
with respect to any such Person so acquired which is not a Domestic Subsidiary,
the lesser of (x) all of the capital stock owned by such acquiring Person of any
such Person so acquired or (y) 65% of the capital stock of such Person so
acquired, in each case pursuant to the Pledge Agreement or another agreement
similar thereto. The Borrower shall cause any such Domestic Subsidiary so
acquired to enter into a guaranty substantially similar to the Subsidiary
Guaranty and additional security documents substantially similar to the Security
Documents (to the extent applicable), all as otherwise as set forth in this
Section 8.11.
(b) Holdings will, and will cause each of its Domestic Subsidiaries
to, grant to the Collateral Agent security interests and mortgages (an
"Additional Mortgage") in such Real Property of Holdings or any of its Domestic
Subsidiaries as are not covered by the original Mortgages to the extent acquired
after the Effective Date, and as may reasonably be requested from time to time
by the Administrative Agent or the Required Banks (each such Real Property, an
"Additional Mortgaged Property"). All such Additional Mortgages shall be
granted pursuant to documentation substantially in the form of the Mortgages
delivered to the Administrative
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Agent on the Effective Date or in such other form as is reasonably satisfactory
to the Administrative Agent and shall constitute valid and enforceable perfected
Liens superior to and prior to the rights of all third Persons and subject to no
other Liens except as are permitted by Section 9.01 at the time of perfection
thereof. The Additional Mortgages or instruments related thereto shall have been
duly recorded or filed in such manner and in such places as are required by law
to establish, perfect, preserve and protect the Liens in favor of the Collateral
Agent required to be granted pursuant to the Additional Mortgages and all taxes,
fees and other charges payable in connection therewith shall have been paid in
full.
(c) Holdings will, and will cause each of its Domestic Subsidiaries
to, grant to the Collateral Agent security interests in assets acquired pursuant
to Sections 9.02 (xiii) and (xiv) at the time of the acquisition thereof as
described in this clause (c). In connection with the acquisition of the capital
stock of a Person that becomes a Domestic Subsidiary of the Borrower, the
Borrower shall pledge or cause to be pledged all capital stock of any such
Person so acquired which is owned by the Borrower or any Subsidiary Guarantor
pursuant to the Pledge Agreement and cause such Person to enter into a guaranty
substantially similar to the Subsidiary Guaranty and additional security
documents substantially similar to the Security Documents (to the extent
applicable), all as otherwise set forth in this Section 8.11.
(d) Holdings will, and will cause each of its Domestic Subsidiaries
to, at the expense of the Borrower, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require pursuant to this
Section 8.11. Furthermore, Holdings and the Borrower shall cause to be
delivered to the Collateral Agent such opinions of counsel, title insurance and
other related documents as may be reasonably requested by the Collateral Agent
to assure itself that this Section 8.11 has been complied with.
(e) Holdings will cause each Domestic Subsidiary established or
created in accordance with Section 9.14 to duly authorize, execute and deliver
to the Administrative Agent a guaranty of all Obligations and all obligations
under Interest Rate Protection Agreements in substantially the form of Exhibit J
hereto (as amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, the "Subsidiary Guaranty").
(f) Holdings will cause each Domestic Subsidiary established or
created in accordance with Section 9.14 to grant to the Collateral Agent a first
priority Lien on all property (tangible and intangible) of such Subsidiary upon
terms similar to those set forth in the Security Documents (including, without
limitation, the Pledge Agreement (subject to the proviso contained in Section
5.07) and the Security Agreement) as appropriate, and reasonably satisfactory in
form and substance to the Collateral Agent and Required Banks. Holdings and the
Borrower will cause each Domestic Subsidiary, at its own expense, to execute,
acknowledge and deliver, or cause the execution, acknowledgment and delivery of,
and thereafter register, file or record in any appropriate governmental office,
any document or instrument reasonably deemed by the Collateral Agent to be
necessary or desirable for the creation and perfection of the foregoing Liens.
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Holdings and the Borrower will cause each of its Subsidiaries to take all
actions reasonably requested by the Collateral Agent (including, without
limitation, the filing of UCC-1's) in connection with the granting of such
security interests.
(g) The security interests required to be granted pursuant to this
Section 8.11 shall be granted pursuant to security documentation (which shall be
substantially similar to the Security Documents already executed and delivered
by the Borrower or its Subsidiaries, as applicable) or reasonably satisfactory
in form and substance to the Administrative Agent and shall constitute valid
and enforceable perfected security interests prior to the rights of all third
Persons and subject to no other Liens except such Liens and priority as are
permitted by Section 9.01. The Additional Security Documents and other
instruments related thereto shall be duly recorded or filed in such manner and
in such places and at such times as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Collateral Agent for the benefit
of the respective Secured Creditors, required to be granted pursuant to the
Additional Security Documents and all taxes, fees and other charges payable in
connection therewith shall be paid in full by the Borrower. At the time of the
execution and delivery of the Additional Security Documents, the Borrower shall
cause to be delivered to the Collateral Agent such opinions of counsel, Mortgage
Policies, title surveys, real estate appraisals and other related documents as
may be reasonably requested by the Administrative Agent or the Required Banks to
assure themselves that this Section 8.11 has been complied with.
(h) Each of Holdings and the Borrower agrees that each action
required above by Section 8.11(d) shall be completed as soon as possible, but in
no event later than 60 days after such action is requested to be taken by the
Administrative Agent or the Required Banks. Each of Holdings and the Borrower
further agrees that each action required by Section 8.11(a) and (e) shall be
completed within 10 Business Days and, to the extent applicable in connection
with the pledge of stock acquired in connection with the creation or acquisition
of a new Subsidiary, 8.11(e), (f) and (g) with respect to Additional Collateral,
shall be completed within 60 days of the acquisition of the assets to become
Additional Collateral.
SECTION 9. NEGATIVE COVENANTS. Holdings and the Borrower covenant
and agree that on and after the Effective Date and until the Total Commitments
and all Letters of Credit have terminated and the Loans, Notes and Unpaid
Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
9.01 LIENS. Holdings will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or
sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of accounts receivable with recourse to Holdings or any of its Subsidiaries), or
assign any right to receive income or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute; PROVIDED that the provisions of this Section 9.01
shall not prevent the creation, incurrence, assumption or existence of the
following (Liens described below are herein referred to as "Permitted Liens"):
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(i) inchoate Liens for taxes, assessments or governmental charges
or levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with GAAP or Liens for property taxes on property which is to
be abandoned or for which the sole recourse for such tax, assessment or
governmental charge or levy is to such property;
(ii) Liens in respect of property or assets of the Borrower or any
of its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money, such
as carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of the Borrower's or
such Subsidiary's property or assets or materially impair the use thereof
in the operation of the business of the Borrower or such Subsidiary or (y)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien;
(iii) Liens in existence on the Effective Date which are listed, and
the property subject thereto described, in Schedule V, but only to the
respective date, if any, set forth in such Schedule V for the removal and
termination of any such Liens, plus renewals, replacements and extensions
of such Liens to the extent set forth on Schedule V, PROVIDED that (x) the
aggregate principal amount of the Indebtedness, if any, secured by such
Liens does not increase from that amount outstanding at the time of any
such renewal, replacement or extension and (y) any such renewal,
replacement or extension does not encumber any additional assets or
properties of Holdings or any of its Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) licenses, leases or subleases granted to other Persons in the
ordinary course of business not materially interfering with the conduct of
the business of Holdings and its Subsidiaries taken as a whole;
(vii) Liens upon assets subject to Capitalized Lease Obligations to
the extent permitted by Section 9.04(v), PROVIDED that (x) such Liens only
serve to secure the payment of Indebtedness arising under such Capitalized
Lease Obligation (and replacements, extensions, refinancings and renewals
thereof) and (y) the Lien encumbering the assets giving rise to the
Capitalized Lease Obligation does not encumber any other asset of the
Borrower or any Subsidiary of the Borrower;
(viii) Liens placed upon equipment or machinery or other personal or
real property used in the ordinary course of business of the Borrower or
any of its Subsidiaries at the time of acquisition thereof by the Borrower
or any such Subsidiary or within 180 days thereafter to secure Indebtedness
incurred to pay all or a portion of the purchase price thereof and all
renewals, replacements, refinancings or extensions thereof, PROVIDED
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that (x) the aggregate outstanding principal amount of all Indebtedness
secured by Liens permitted by this clause (viii) shall not at any time
exceed $10,000,000 and (y) in all events, the Lien encumbering the
equipment or machinery so acquired does not encumber any other asset of the
Borrower or such Subsidiary;
(ix) easements, rights-of-way, restrictions (including zoning
restrictions), encroachments, protrusions and other similar charges or
encumbrances, and minor title deficiencies, in each case whether now or
hereafter in existence, not securing Indebtedness for borrowed money and
not materially interfering with the conduct of the business of the Borrower
or any of its Subsidiaries;
(x) Liens arising from precautionary UCC financing statement
filings regarding operating leases entered into by Holdings or any of its
Subsidiaries;
(xi) Liens arising out of the existence of judgments or awards not
constituting an Event of Default under Section 10.09, PROVIDED that no cash
or property in excess of $7,500,000 is deposited or delivered to secure the
respective judgment or award;
(xii) statutory, contractual and common law landlords' liens under
leases to which Holdings or any of its Subsidiaries is a party;
(xiii) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeal bonds, statutory bonds, bids, leases,
government contracts, trade contracts, performance and return of money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), PROVIDED that the aggregate amount of deposits
at any time pursuant to this clause (xiii) shall not exceed $7,500,000;
(xiv) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this Agreement;
(xv) Liens in favor of a banking institution arising as a matter of
law encumbering deposits (including the right of set-off) held by such
banking institutions incurred in the ordinary course of business and which
are within the general parameters customary in the banking industry;
(xvi) deposits made in the ordinary course of business to secure
liabilities for premiums to insurance carriers;
(xvii) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for sale of goods entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business;
(xviii) Liens on assets of Foreign Subsidiaries to secure Foreign
Subsidiary Indebtedness;
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(xix) Liens arising in connection with transactions relating to
accounts receivable permitted under Section 9.02 (xi);
(xx) Liens existing on any asset or property of the Borrower or any
Subsidiary of the Borrower prior to the acquisition of such asset or
property or prior to the time any such Subsidiary became a Subsidiary of
the Borrower (and any replacement, extension or renewal of such Lien so
long as such Lien (as so extended, replaced or renewed) does not (i) secure
obligations in excess of $15,000,000 and (ii) extend to any property that
was not subject to such Lien prior to such replacement, extension or
renewal; and
(xxi) Liens securing reimbursement obligations not to exceed
$2,500,000 in respect of trade related letters of credit provided in the
ordinary course of business (exclusive of reimbursement obligations in
respect of Letters of Credit) and covering the goods (or the documents of
title in respect of such goods) financed by such letters of credit.
9.02 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC.
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any sale-leaseback transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, materials,
equipment and intangible assets, including property acquired by way of trade or
barter agreements, in the ordinary course of business) of any Person, except
that:
(i) Capital Expenditures made by the Borrower and its Subsidiaries
shall be permitted to the extent not in violation of Section 9.07;
(ii) each of the Borrower and its Subsidiaries may sell, lease or
otherwise dispose of any assets PROVIDED that (a) the aggregate Net Sale
Proceeds of all assets subject to sales or other dispositions pursuant to
this clause (ii) shall not exceed $15,000,000 in any fiscal year of the
Borrower, (b) each such disposition is for fair market value and (c) at
least 75% of the consideration received in respect thereof is cash (or Cash
Equivalents) (including assumption of Indebtedness);
(iii) in addition to sales, leases, transfers, conveyances or
dispositions otherwise permitted, each of the Borrower and its Subsidiaries
may sell, lease, transfer, convey or otherwise dispose of property,
equipment or other assets that is (a) obsolete or worn out or (b) no longer
useful or necessary in the operation of the business of such Person;
(iv) investments may be made to the extent permitted by Section
9.05;
(v) each of the Borrower and its Subsidiaries may lease (as
lessee) real or personal property in the ordinary course of business (so
long as such lease does not create a Capitalized Lease Obligation not
otherwise permitted by Section 9.04(v));
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(vi) each of the Borrower and its Subsidiaries may make sales,
conveyances, dispositions or other transfers of goods, equipment and
inventory (including pursuant to barter or trade transactions) in the
ordinary course of business;
(vii) licenses or sublicenses by the Borrower and its Subsidiaries
of software, trademarks, patents and other intellectual property in the
ordinary course of business and which do not materially interfere with the
business of the Borrower or any Subsidiary;
(viii) the Borrower or any Subsidiary Guarantor may transfer assets
to or lease assets to or acquire or lease assets from the Borrower or any
other Subsidiary Guarantor (so long as the security interests granted
pursuant to the Security Documents is not, in the reasonable judgment of
the Collateral Agent, adversely affected thereby) or any Subsidiary of the
Borrower may be merged or consolidated with or into, or be liquidated into,
the Borrower or any Subsidiary Guarantor (so long as the Borrower or such
Subsidiary Guarantor is the surviving corporation);
(ix) any Foreign Subsidiary may be merged with and into, or be
dissolved or liquidated into, or transfer any of its assets to, any other
Foreign Subsidiary;
(x) the Transaction shall be permitted;
(xi) the Borrower and its Subsidiaries may sell or discount, in
each case without recourse (except for customary indemnities,
representations, warranties and agreements) and in the ordinary course of
business, accounts receivable arising in the ordinary course of business
(x) which are overdue or (y) which the Borrower may reasonably determine
are difficult to collect, but only in connection with the compromise or
collection thereof (and not as part of any bulk sale or financing of
receivables);
(xii) transfers of condemned property to the respective governmental
authority or agency that have condemned same (whether by deed in lieu of
condemnation or otherwise), and transfers of properties that have been
subject to a casualty to the respective insurer of such property or its
designee as part of an insurance settlement, so long as the proceeds
thereof are applied as required by Section 4.02(A)(i);
(xiii) the Borrower and its Subsidiaries may acquire the capital
stock (or other equity interests) or assets of any Person which is merged
into, or becomes a Domestic Subsidiary of, the Borrower or such Subsidiary
so long as the aggregate amount expended pursuant to this clause (xiii)
does not exceed $10,000,000; and
(xiv) in addition to the acquisition permitted pursuant to preceding
clause (xiii), the Borrower and its Subsidiaries may acquire the capital
stock (or other equity interests) or assets of any Person which is merged
into, or becomes a Domestic Subsidiary of, the Borrower or such Subsidiary
with (a) the reinvestment of Excess Cash Flow for the relevant Excess Cash
Payment Period to the extent (x) not required to be applied to repay the
Loans pursuant to Section 4.02(A)(h), (y) not used to make Capital
Expenditures
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pursuant to Section 9.07(c)(iii) and (z) not used to make investments
pursuant to Section 9.05(ix);
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 9.02 (other than clause (vii) thereof), such Collateral shall be
sold free and clear of the Liens created by the Security Documents, and the
Administrative Agent and Collateral Agent shall be authorized to take any
actions deemed appropriate in order to effect the foregoing and shall, at the
request of the Borrower, take any such actions reasonably appropriate to effect
the foregoing.
9.03 DIVIDENDS. Holdings shall not, and shall not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries except that:
(i) any Subsidiary of the Borrower may pay Dividends to the
Borrower or any Wholly-Owned Domestic Subsidiary of the Borrower;
(ii) any Foreign Subsidiary of the Borrower may pay dividends to
the Borrower or any of its Subsidiaries or any other Person owning an
equity interest in such Foreign Subsidiary;
(iii) the Borrower may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used by
Holdings to pay, its operating expenses incurred in the ordinary course of
business and other corporate overhead costs and expenses (including,
without limitation, legal and accounting expenses and similar expenses) in
a maximum principal amount of $1,000,000 per annum;
(iv) Holdings may pay cash Dividends, and the Borrower may pay cash
Dividends to Holdings to enable Holdings, to pay management fees or
executive compensation to the extent such management fees or executive
compensation are permitted by Section 9.06(iv) and (v);
(v) the Borrower may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used by
Holdings to pay franchise taxes and federal, state and local income taxes
and interest, and penalties with respect thereto, if any, payable by
Holdings, PROVIDED that any refund shall be promptly returned by Holdings
to the Borrower; and
(vi) so long as there shall exist no Default or Event of Default
(both before and after giving effect to the payment thereof), the Borrower
may pay cash Dividends to Holdings so long as the proceeds thereof, are
simultaneously used by Holdings to pay interest, when and as due, on the
Holdings Debentures in accordance with the terms of the Holdings Debenture
Documents; PROVIDED that (x) any payments of Dividends to Holdings by the
Borrower pursuant to this Section 9.03(vi) shall not be made before the
fifth year after the Effective Date; and (y) at the time of any payments of
Dividends to Holdings by the Borrower pursuant to this Section 9.03(vi)
(both before and after giving effect to such
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payment) the Consolidated Fixed Charge Coverage Ratio shall be equal to or
greater than1.0:1.0.
9.04 INDEBTEDNESS. Holdings will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Indebtedness existing on the Borrower's balance sheet as at
March 31, 1998 shall be permitted in an aggregate principal amount not to
exceed the sum of $5,000,000 PLUS the aggregate principal amount thereof as
of March 31, 1998 (as the same may be refinanced or replaced, so long as
the principal amount thereof is not increased by more than $5,000,000);
(iii) accrued expenses and current trade accounts payable incurred
in the ordinary course of business;
(iv) Indebtedness under Interest Rate Protection Agreements to the
extent entered into pursuant to Section 9.05;
(v) Indebtedness evidenced by Capitalized Lease Obligations to the
extent permitted pursuant to Section 9.07;
(vi) Indebtedness subject to Liens permitted under Sections
9.01(viii) and (xxi);
(vii) Indebtedness (x) of the Borrower evidenced by the Senior
Subordinated Notes issued on the Initial Borrowing Date in an aggregate
principal amount not to exceed $175,000,000 (PLUS the principal amount of
Senior Subordinated Notes that may be issued pursuant to the
payment-in-kind provisions thereof) and (y) arising under guaranties by the
Subsidiary Guarantors of the obligations of the Borrower under the Senior
Subordinated Notes;
(viii) Indebtedness of Holdings evidenced by the Holdings Debentures
in an aggregate principal amount not to exceed $57,000,000;
(ix) additional Indebtedness of the Borrower and its Subsidiaries
(other than Foreign Subsidiaries) not to exceed $15,000,000 in aggregate
principal amount outstanding at any time;
(x) Contingent Obligations of the Borrower or any Subsidiary as a
guarantor of the lessee under any lease pursuant to which the Borrower or a
Subsidiary is the lessee so long as such lease is otherwise permitted
hereunder;
(xi) intercompany Indebtedness (a) among the Borrower and the
Subsidiary Guarantors and (b) among Subsidiary Guarantors; and
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(xii) intercompany Indebtedness (a) among the Foreign Subsidiaries
of the Borrower and (b) between the Borrower or any Subsidiary as lender
and any Foreign Subsidiary as borrower, PROVIDED that the aggregate amount
of such intercompany loans pursuant to this clause (b) shall be subject to
the limitations of Section 9.05 (x).
(xiii) Indebtedness of the Borrower or its Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations and trade-related letters of credit, in each case provided in
the ordinary course of business, and any extension, renewal or refinancing
thereof to the extent not provided to secure the repayment of other
Indebtedness and to the extent that the amount of refinancing Indebtedness
is not greater than the amount of Indebtedness being refinanced;
(xiv) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
sufficient funds in the ordinary course of business, PROVIDED that such
Indebtedness is extinguished within five Business Days of its incurrence;
(xv) Indebtedness of a Subsidiary acquired after the date hereof
and Indebtedness of a corporation merged or consolidated with or into the
Borrower or a Subsidiary after the date hereof, which Indebtedness in each
case exists at the time of such acquisition, merger or consolidation and is
not created in contemplation of such event and where such acquisition,
merger or consolidation is permitted by this Agreement (and any extension,
renewal or refinancing thereof), PROVIDED that the aggregate principal
amount of Indebtedness outstanding under this clause shall not exceed
$15,000,000; and
(xvi) additional Foreign Subsidiary Indebtedness (and any extension,
renewal or refinancing thereof); provided that the aggregate principal
amount of outstanding Foreign Subsidiary Indebtedness permitted under this
clause (xvi) at any time shall not exceed $25,000,000.
9.05 ADVANCES, INVESTMENTS AND LOANS. Holdings will not, and will
not permit any of its Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, except that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary terms;
(ii) the Borrower and its Subsidiaries may acquire and hold cash
and Cash Equivalents;
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(iii) the Borrower and its Subsidiaries may make loans and advances
in the ordinary course of business to their respective officers, directors
and employees so long as the aggregate principal amount thereof at any time
outstanding (determined without regard to any write-downs or write-offs of
such loans and advances) shall not exceed $1,000,000;
(iv) the Borrower may enter into Interest Rate Protection
Agreements on terms satisfactory to the Administrative Agent;
(v) Holdings and any of its Subsidiaries may make investments
necessary to form Subsidiaries of the Borrower under Section 9.14;
(vi) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with
dispositions permitted by Section 9.02;
(vii) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(viii) investments by the Borrower or any Subsidiary in any
Subsidiary Guarantor;
(ix) investments by the Borrower and its Subsidiaries (other than
investments made in Foreign Subsidiaries or Foreign Joint Ventures)
consisting of the reinvestment of Excess Cash Flow for the relevant Excess
Cash Payment Period to the extent (w) not required to be applied to repay
the Loans pursuant to Section 4.02(A)(h), (x) not used to make Capital
Expenditures pursuant to Section 9.07(c)(iii), (y) not used to make
acquisitions pursuant to Section 9.02(xiv) and (z) such investments (other
than investments resulting in the ownership by the Borrower and/or its
Subsidiaries of 100% of the capital stock of the Person in which such
investment is made) in an aggregate principal amount (net of any amount of
such investments returned to the Borrower and its Subsidiaries) do not
exceed $2,000,000;
(x) (i) the Borrower and any Subsidiary of the Borrower may make
investments in any Foreign Subsidiary or Foreign Joint Venture of the
Borrower, PROVIDED that the aggregate amount of such investments (net of
any amount of such investments returned to the Borrower or such Subsidiary
Guarantor) shall not exceed $35,000,000 and (ii) Foreign Subsidiaries and
Foreign Joint Ventures may make investments among one another;
(xi) the Borrower and its Subsidiaries may make acquisitions
permitted under Section 9.02(xiii);
(xii) the Borrower and its Subsidiaries may incur Indebtedness
permitted under Section 9.04 (xi) and (xii);
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(xiii) the Borrower and its Subsidiaries may make acquisitions
permitted by the definition of Capital Expenditures contained in Section
11;
(xiv) the Borrower and its Subsidiaries may make investments in
accordance with Sections 4.02(A)(g) and 4.02(A)(i); and
(xv) in addition to investments permitted by clauses (i) through
(xiv) of this Section 9.05, the Borrower and its Subsidiaries may make
additional loans, advances and investments (other than investments in
Foreign Subsidiaries and Foreign Joint Ventures) in an aggregate principal
amount not to exceed $2,000,000 in any fiscal year (net of any amount of
such investments returned to the Borrower and its Subsidiaries).
9.06 TRANSACTIONS WITH AFFILIATES. Holdings will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Holdings or any of its Subsidiaries, other than in the ordinary
course of business and on terms and conditions substantially as favorable to
Holdings or such Subsidiary as would reasonably be obtained by Holdings or such
Subsidiary at that time in a comparable arm's-length transaction with a Person
other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section 9.03;
(ii) loans may be made and other transactions may be entered into
by the Borrower and its Subsidiaries to the extent permitted by Sections
9.02, 9.04 and 9.05;
(iii) customary fees, indemnities and reimbursements may be paid to
non-officer directors of Holdings;
(iv) Holdings and its Subsidiaries may enter into and make payments
pursuant to employment arrangements with executive officers and senior
management employees in the ordinary course of business;
(v) Holdings and its Subsidiaries may make payments pursuant to
employment agreements existing on the Initial Borrowing Date;
(vi) Holdings and its Subsidiaries may make payments pursuant to
the Tax Sharing Agreements; and
(vii) Holdings may enter into management agreements with the
Borrower and its Subsidiaries and AIPCF Management Fees may be paid so long
as no Default or Event of Default shall exist at the time of such payment.
Except as specifically provided above, no management or similar fees
shall be paid or payable by Holdings or any of its Subsidiaries to any Person
other than the Borrower.
9.07 CAPITAL EXPENDITURES. (a) Holdings will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
during any fiscal period set forth below (taken as one accounting period) the
Borrower and its Subsidiaries may make Capital
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Expenditures so long as the aggregate amount of such Capital Expenditures made
under this Section 9.07(a) does not exceed in any period set forth below the
amount set forth opposite such period below:
<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
Initial Borrowing Date to $10,000,000
and including the last day
of the Fiscal Year ending
December 31, 1998
Fiscal Year ending $10,000,000
December 31, 1999
Fiscal Year ending $11,000,000
December 31, 2000
Fiscal Year ending $12,000,000
December 31, 2001
Fiscal Year ending $13,000,000
December 31, 2002
Fiscal Year ending $14,000,000
December 31, 2003
Fiscal Year ending $15,000,000
December 31, 2004
Fiscal Year ending $15,000,000
December 31, 2005
January 1, 2006 to and $15,000,000
including the C Term
Maturity Date
</TABLE>
(b) In addition to the Capital Expenditures permitted pursuant to
preceding clause (a) above, to the extent that the Capital Expenditures made by
the Borrower and its Subsidiaries in any period set forth in clause (a) above
are less than the amount permitted to be made in such period (without giving
effect to any additional amount available as a result of this clause (b) or
clauses (c) or (d) below), the amount of such difference may be carried forward
and used to make Capital Expenditures in the two succeeding fiscal years of the
Borrower.
(c) In addition to the Capital Expenditures permitted pursuant to
preceding clauses (a) and (b), the Borrower and its Subsidiaries may make
additional Capital Expenditures consisting of (i) the reinvestment of Net Sale
Proceeds of Asset Sales not required to be applied
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to prepay the Loans pursuant to Section 4.02(A)(g) as a result of the proviso
contained therein, (ii) the reinvestment of proceeds of Recovery Events not
required to be applied to repay the Loans pursuant to Section 4.02(A)(i),
(iii) the reinvestment of the amounts of Excess Cash Flow (x) not required to be
applied to repay the Loans pursuant to Section 4.02(A)(h), (y) not used to make
acquisition pursuant to Section 9.02(xiv) or (z) not used to make investments
pursuant to Section 9.05(ix).
9.08 ADJUSTED LEVERAGE RATIO. Holdings and the Borrower will not
permit the Adjusted Leverage Ratio at any time during a period set forth below
to be greater than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
Fiscal quarter ended September 30, 1998 5.75 to 1
Fiscal quarter ended December 31, 1998 5.75 to 1
Fiscal quarter ended March 31, 1999 5.75 to 1
Fiscal quarter ended June 30, 1999 5.75 to 1
Fiscal quarter ended September 30, 1999 5.75 to 1
Fiscal quarter ended December 31, 1999 5.75 to 1
Fiscal quarter ended March 31, 2000 5.50 to 1
Fiscal quarter ended June 30, 2000 5.50 to 1
Fiscal quarter ended September 30, 2000 5.50 to 1
Fiscal quarter ended December 31, 2000 5.50 to 1
Fiscal quarter ended March 31, 2001 5.50 to 1
Fiscal quarter ended June 30, 2001 5.50 to 1
Fiscal quarter ended September 30, 2001 5.50 to 1
Fiscal quarter ended December 31, 2001 5.50 to 1
Fiscal quarter ended March 31, 2002 5.25 to 1
Fiscal quarter ended June 30, 2002 5.25 to 1
Fiscal quarter ended September 30, 2002 5.25 to 1
Fiscal quarter ended December 31, 2002 5.25 to 1
Fiscal quarter ended March 31, 2003 5.00 to 1
Fiscal quarter ended June 30, 2003 5.00 to 1
Fiscal quarter ended September 30, 2003 5.00 to 1
Fiscal quarter ended December 31, 2003 5.00 to 1
Fiscal quarter ended March 31, 2004 5.00 to 1
Fiscal quarter ended June 30, 2004 5.00 to 1
Fiscal quarter ended September 30, 2004 5.00 to 1
Fiscal quarter ended December 31, 2004 5.00 to 1
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Fiscal quarter ended March 31, 2005 5.00 to 1
Fiscal quarter ended June 30, 2005 5.00 to 1
Fiscal quarter ended September 30, 2005 5.00 to 1
Fiscal quarter ended December 31, 2005 5.00 to 1
Fiscal quarter ended March 31, 2006 5.00 to 1
</TABLE>
9.09 INTEREST COVERAGE RATIO. Holdings and the Borrower will not
permit the Interest Coverage Ratio for any period of four consecutive fiscal
quarters, in each case taken as one accounting period, ended on the last day of
any fiscal quarter set forth below to be less than the amount set forth opposite
such fiscal quarter below:
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
-------------- -----
<S> <C>
Fiscal quarter ended September 30, 1998 1.75 to 1
Fiscal quarter ended December 31, 1998 1.75 to 1
Fiscal quarter ended March 31, 1999 1.75 to 1
Fiscal quarter ended June 30, 1999 1.75 to 1
Fiscal quarter ended September 30, 1999 1.75 to 1
Fiscal quarter ended December 31, 1999 1.75 to 1
Fiscal quarter ended March 31, 2000 1.85 to 1
Fiscal quarter ended June 30, 2000 1.85 to 1
Fiscal quarter ended September 30, 2000 1.85 to 1
Fiscal quarter ended December 31, 2000 1.85 to 1
Fiscal quarter ended March 31, 2001 1.95 to 1
Fiscal quarter ended June 30, 2001 1.95 to 1
Fiscal quarter ended September 30, 2001 1.95 to 1
Fiscal quarter ended December 31, 2001 1.95 to 1
Fiscal quarter ended March 31, 2002 2.00 to 1
Fiscal quarter ended June 30, 2002 2.00 to 1
Fiscal quarter ended September 30, 2002 2.00 to 1
Fiscal quarter ended December 31, 2002 2.00 to 1
Fiscal quarter ended March 31, 2003 2.00 to 1
Fiscal quarter ended June 30, 2003 2.00 to 1
Fiscal quarter ended September 30, 2003 2.00 to 1
Fiscal quarter ended December 31, 2003 2.00 to 1
Fiscal quarter ended March 31, 2004 2.00 to 1
Fiscal quarter ended June 30, 2004 2.00 to 1
Fiscal quarter ended September 30, 2004 2.00 to 1
Fiscal quarter ended December 31, 2004 2.00 to 1
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Fiscal quarter ended March 31, 2005 2.00 to 1
Fiscal quarter ended June 30, 2005 2.00 to 1
Fiscal quarter ended September 30, 2005 2.00 to 1
Fiscal quarter ended December 31, 2005 2.00 to 1
Fiscal quarter ended March 31, 2006 2.00 to 1
</TABLE>
9.10 LIMITATION ON MODIFICATIONS OF CERTIFICATE OF INCORPORATION,
BY-LAWS AND CERTAIN OTHER AGREEMENTS; LIMITATIONS OF PREPAYMENTS AND
MODIFICATIONS OF INDEBTEDNESS; ETC. Holdings will not, and will not permit any
of its Subsidiaries to (i) make (or give any notice with respect of) any
voluntary or optional payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of paying
when due), after the issuance thereof, any Holdings Debentures or any Senior
Subordinated Notes, (ii) amend or modify, or permit the amendment or
modification of any provision of the foregoing Indebtedness (including, without
limitation, the Senior Subordinated Note Documents and the Holdings Financing
Documents), or (iii) amend, modify or change its Certificate of Incorporation
(including, without limitation, by the filing or modification of any certificate
of designation) or By-Laws, other than any amendments, modifications or changes
which would not be reasonably likely to be materially adverse to the interest of
the Banks.
9.11 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Holdings
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Borrower or any Subsidiary of
the Borrower, or pay any Indebtedness owed to the Borrower or any Subsidiary of
the Borrower, (b) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (c) transfer any of its properties or assets to the Borrower or
any Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) applicable law, (ii) this Agreement, the
other Credit Documents and the Transaction Documents, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of the Borrower or any Subsidiary of the Borrower, (iv) customary provisions
restricting assignment of any licensing agreement entered into by the Borrower
or any Subsidiary of the Borrower in the ordinary course of business, (v) the
Credit Agreement, dated February 4, 1997, between Copetro, Banca Nazionale del
Lavoro S.A. and any other bank party thereto (as amended, restated, refinanced,
renewed or replaced), (vi) Indebtedness of the Borrower or any Domestic
Subsidiary permitted under Section 9.04 to the extent no more restrictive, taken
as a whole, than this Agreement and (vii) Foreign Subsidiary Indebtedness.
9.12 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) Holdings will not
issue (i) any preferred stock or (ii) any class of redeemable common stock.
(b) The Borrower will not issue, or permit any of its Subsidiaries to
issue, any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then
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outstanding shares of capital stock, (ii) for stock splits, stock dividends and
similar issuances which do not decrease the percentage ownership of Holdings or
any of its Subsidiaries in any class of the capital stock of the Borrower or
such Subsidiary, (iii) to qualify directors to the extent required by applicable
law, (iv) the Borrower may issue additional shares of common stock to Holdings,
so long as all such shares are promptly delivered to the Collateral Agent and
pledged pursuant to the Pledge Agreement and (v) in connection with the creation
of Subsidiaries of the Borrower in compliance with Section 9.14.
9.13 BUSINESS. (a) Holdings shall engage in no types of business
and shall have no material assets or material liabilities, other than its
ownership of the capital stock of the Borrower and liabilities incident thereto,
liabilities under or related to the Holdings Debentures, and liabilities not
prohibited under this Agreement.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
type of business in which the Borrower and its Subsidiaries are engaged on the
Effective Date and reasonable extensions thereof.
9.14 LIMITATION ON CREATION OF SUBSIDIARIES. Holdings shall not
directly establish, create or acquire any additional Subsidiaries after the
Initial Borrowing Date, other than with the written consent of the
Administrative Agent and the Required Banks. The Borrower may establish, create
or acquire subsidiaries after the Initial Borrowing Date in compliance with
Section 8.11.
9.15 NO OTHER DESIGNATED SENIOR INDEBTEDNESS. Holdings will not, and
will not permit any Subsidiary to, create or permit the creation after the
Initial Borrowing Date of, any class of "Designated Senior Indebtedness" as
defined in the Senior Subordinated Note Documents other than the Obligations.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for three or more Business Days, in the payment when
due of any Unpaid Drawings or interest on any Loan or Note, or any Fees or any
other amounts owing hereunder, thereunder or under any other Credit Document; or
10.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
10.03 COVENANTS. Holdings or the Borrower shall (i) default in the
due performance or observance by it of any term, covenant or agreement contained
in Section 8.01(g)(i), 8.07 or Section 9 or (ii) default in the due performance
or observance by it of any other term, covenant or agreement contained in this
Agreement (other than as described in
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Section 10.01, 10.02 or 10.03(i)), and such default shall continue unremedied
for a period of 30 days after written notice to the Borrower by the
Administrative Agent or any Bank; or
10.04 DEFAULT UNDER OTHER AGREEMENTS. Holdings or any of its
Subsidiaries shall (i) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (ii) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such Indebtedness to
become due prior to its stated maturity, or (iii) any Indebtedness (other than
the Obligations) of Holdings or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, PROVIDED that (x) it
shall not be a Default or Event of Default under this Section 10.04 unless the
aggregate principal amount of all Indebtedness as described in preceding clauses
(i) through (iii), inclusive, is at least $5,000,000; or
10.05 BANKRUPTCY, ETC. Holdings or any of its Significant
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against Holdings or any of its Significant Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of Holdings or any of its Significant Subsidiaries, or Holdings or any
of its Significant Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Holdings or any of its Significant Subsidiaries,
or there is commenced against Holdings or any of its Significant Subsidiaries
any such proceeding which remains undismissed for a period of 60 days, or
Holdings or any of its Significant Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or Holdings or any of its Significant Subsidiaries
suffers any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or Holdings or any of its Significant Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by
Holdings or any of its Significant Subsidiaries for the purpose of effecting any
of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or, in the reasonable opinion of the
Required Banks, is likely to have a trustee appointed to administer such Plan,
any Plan is, shall have been or is likely to be terminated or to be the subject
of termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made to a Plan has not been made,
Holdings, the Borrower or any of
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their respective Subsidiaries or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code, or Holdings, the Borrower or any of their
respective Subsidiaries has incurred or is likely to incur liabilities pursuant
to one or more employee welfare benefit plans (as defined in Section 3(1) of
ERISA) which provide benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or employee pension benefit
plans (as defined in Section 3(2) of ERISA); (b) there shall result from any
such event or events the imposition of a lien, the granting of a security
interest, or a liability or a material risk of incurring a liability; and in
each case in clauses (a) and (b) above, such lien, security interest or
liability, in the reasonable opinion of the Required Banks, will have a material
adverse effect upon the business, operations, property, assets, liabilities or
condition (financial or otherwise) of Holdings, the Borrower or of Holdings and
its Subsidiaries taken as a whole; or
10.07 SECURITY DOCUMENTS. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease in any material respect to give the Collateral Agent
for the benefit of the Secured Creditors the Liens, rights, powers and
privileges purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Collateral), in favor of
the Collateral Agent, superior to and prior to the rights of all third Persons
(except as permitted by Section 9.01), and subject to no other Liens (except as
permitted by Section 9.01), or any Credit Party shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any of the Security Documents and such default
shall continue beyond any grace period specifically applicable thereto pursuant
to the terms of such Security Document; or
10.08 GUARANTY. Any Guaranty or any provision thereof shall cease to
be in full force or effect as to the relevant Guarantor or other party
thereunder (other than in accordance with the express terms thereof) or any
Guarantor or other party thereunder or Person acting by or on behalf of such
Guarantor or such party shall deny or disaffirm such Guarantor's or such party's
obligations under the relevant Guaranty, or any Guarantor or such party shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any Guaranty; or
10.09 JUDGMENTS. One or more judgments or decrees shall be entered
against Holdings or any of its Subsidiaries involving in the aggregate for
Holdings and its Subsidiaries a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or stayed
or bonded pending appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $7,500,000; or
10.10 CHANGE OF CONTROL. A Change of Control shall occur;
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then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of the Administrative
Agent, any Bank or the holder of any Note to enforce its claims against any
Credit Party (PROVIDED that, if an Event of Default specified in Section 10.05
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent to the Borrower as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Commitments terminated,
whereupon all Commitments of each Bank shall forthwith terminate immediately and
any Commitment Commission shall forthwith become due and payable without any
other notice of any kind; (ii) declare the principal of and any accrued interest
in respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit
which may be terminated in accordance with its terms; (iv) direct the Borrower
to pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.05 with respect to the
Borrower, it will pay) to the Collateral Agent at the Payment Office such
additional amount of cash, to be held as security by the Collateral Agent, as is
equal to the aggregate Stated Amount of all Letters of Credit issued for the
account of the Borrower and then outstanding; (v) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the Security
Documents and (vi) apply any cash collateral held pursuant to Section 4.02(A) in
satisfaction of the Obligations.
SECTION 11. Definitions and Accounting Terms.
11.01 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"A Term Loan" shall have the meaning provided in Section 1.01(a).
"A Term Loan Commitments" shall mean for each Bank the amount set
forth opposite such Bank's name in Schedule I hereto in the column entitled "A
Term Loan Commitment" as same may be (x) reduced from time to time pursuant to
Sections 3.03, 4.02(A) and/or 10 or (y) adjusted from time to time as a result
of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"A Term Loan Scheduled Repayments" shall have the meaning provided in
Section 4.02(A)(b).
"A Term Maturity Date" shall mean May 31, 2004.
"A Term Notes" shall have the meaning provided in Section 1.05(a).
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"Additional Collateral" shall mean all property (whether real or
personal) in which security interests are granted (or have been purported to be
granted) (and continue to be in effect at the time of determination) pursuant to
Section 8.11.
"Additional Mortgage" shall have the meaning provided in Section
8.11(b).
"Additional Mortgaged Property" shall have the meaning provided in
Section 8.11(b).
"Additional Security Documents" shall mean all mortgages, pledge
agreements, security agreements and other security documents entered into
pursuant to Section 8.11 with respect to Additional Collateral.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Administrative Agent on the basis of quotations
for such certificates received by it from three certificate of deposit dealers
in New York of recognized standing or, if such quotations are unavailable, then
on the basis of other sources reasonably selected by the Administrative Agent,
by (y) a percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a
three-month certificate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, without limitation, any marginal,
emergency, supplemental, special or other reserves), plus (2) the then daily net
annual assessment rate as estimated by the Administrative Agent for determining
the current annual assessment payable by the Administrative Agent to the Federal
Deposit Insurance Corporation for insuring three-month certificates of deposit.
"Adjusted Consolidated EBITDA" for any period shall mean (i)
Consolidated EBITDA for such period plus (ii) the principal amount of Senior
Subordinated Notes issued in lieu of interest during such period PROVIDED that
in the event Holdings, the Borrower or any Subsidiary of Holdings acquired any
Person during such period, Adjusted Consolidated EBITDA for such period shall be
calculated on a pro forma basis, based on the actual historical results of such
acquired Person as if such Person had been acquired on the first day of such
period.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus, to the extent deducted in
computing such Consolidated Net Income, without duplication, the sum of the
amount of (i) all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense and
non-cash items) resulting from purchase accounting adjustments, (ii) income tax
expense and withholding tax expense incurred in connection with cross-border
transactions involving Foreign Subsidiaries, (iii) any special charges
(including any non-cash fees or expenses) incurred in connection with the Merger
and the Transaction, (iv) AIPCF Management Fees and other
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amounts paid to AIPCF or its Affiliates pursuant to Section 9.03 and 9.06, (v)
non-cash exchange, translation or performance losses relating to any foreign
currency hedging transactions or currency fluctuations, and (vi) net non-cash
losses which were included in arriving at Consolidated Net Income for such
period less the sum of the amount of all net non-cash gains (exclusive of such
non-cash items reflected in Adjusted Consolidated Working Capital) included in
arriving at Consolidated Net Income for such period; PROVIDED that in the event
Holdings, the Borrower or any Subsidiary of Holdings acquired any Person during
such period, Adjusted Consolidated Net Income for such period shall be
calculated on a pro forma basis, based on the actual historical results of such
acquired Person as if such Person had been acquired on the first day of such
period.
"Adjusted Consolidated Working Capital" at any time shall mean
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities.
"Adjusted Leverage Ratio" shall mean on the date of determination
thereof the ratio of (i) Consolidated Indebtedness on such date to (ii) Adjusted
Consolidated EBITDA (which shall be calculated for any period ending prior to
June 30, 1999, by using the following amounts for such following periods:
fiscal quarter ended June 30, 1997, $13,807,000; fiscal quarter ended
September 30, 1997, $15,160,000; fiscal quarter ended December 31, 1997,
$17,001,000; and fiscal quarter ended March 31, 1998, $16,528,000 for the Test
Period ended on the last day of any fiscal quarter last ended prior to the date
such determination is made.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
in the case of such Bank's Percentage, such Bank's Revolving Loan Commitment at
such time by the Adjusted Total Revolving Loan Commitment at such time, it being
understood that all references herein to Revolving Loan Commitments and the
Adjusted Total Revolving Loan Commitment at a time when the Total Revolving Loan
Commitment or Adjusted Total Revolving Loan Commitment, as the case may be, has
been terminated shall be references to the Revolving Loan Commitments or
Adjusted Total Revolving Loan Commitment, as the case may be, in effect
immediately prior to such termination, PROVIDED that (A) no Bank's Adjusted
Percentage shall change upon the occurrence of a Bank Default from that in
effect immediately prior to such Bank Default if after giving effect to such
Bank Default, and any repayment of Revolving Loans at such time pursuant to
Section 4.02(A)(a) or otherwise, the sum of the aggregate outstanding principal
amount of Revolving Loans of all Non-Defaulting Banks plus the then outstanding
Swingline Loans and the Letter of Credit Outstandings, exceed the Adjusted Total
Revolving Loan Commitment; (B) the changes to the Adjusted Percentage that would
have become effective upon the occurrence of a Bank Default but that did not
become effective as a result of the preceding clause (A) shall become effective
on the first date after the occurrence of the relevant Bank Default on which the
sum of the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks plus the then outstanding Swingline Loans and the Letter of
Credit Outstandings is equal to or less than the Adjusted Total Revolving Loan
Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted Percentage is
changed pursuant to the preceding clause (B) and (ii) any repayment of such
Bank's Revolving Loans or of
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Swingline Loans or of Unpaid Drawings with respect to Letters of Credit, that
were made during the period commencing after the date of the relevant Bank
Default and ending on the date of such change to its Adjusted Percentage must be
returned to the Borrower as a preferential or similar payment in any bankruptcy
or similar proceeding of the Borrower, then the change to such Non-Defaulting
Bank's Adjusted Percentage effected pursuant to said clause (B) shall be reduced
to that positive change, if any, as would have been made to its Adjusted
Percentage if (x) such repayments had not been made and (y) the maximum change
to its Adjusted Percentage would have resulted in the sum of the outstanding
principal of Revolving Loans made by such Bank plus such Bank's new Adjusted
Percentage of the then outstanding Swingline Loans and the outstanding principal
amount of Letter of Credit Outstandings equaling such Bank's Revolving Loan
Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks at such time.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Administrative Agent for the Banks hereunder, and shall include any
successor to the Administrative Agent appointed pursuant to Section 12.09.
"Affected Eurodollar Loans" shall have the meaning provided in Section
4.02(A)(k).
"Affiliate" shall mean, with respect to any Person, any other Person
(including for purposes of Section 9.06 only, all directors, officers and
partners of such Person) directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person; PROVIDED, HOWEVER,
that for purposes of Section 9.06, an Affiliate of Holdings shall include any
Person that directly or indirectly owns more than 10% of any class of the
capital stock of Holdings. A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as amended, modified,
extended, renewed, replaced, restated or supplemented from time to time.
"AIPCF" shall mean American Industrial Partners Capital Fund II, L.P.
"AIPCF Management Fee" shall mean payment by Holdings or its
Subsidiaries of a management fee in an amount not to exceed $1.85 million in any
fiscal year and the reimbursement by Holdings or its Subsidiaries of AIPCF's
reasonable out of pocket expenses incurred in connection with the rendering of
management services to or on behalf of Holdings or its Subsidiaries.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice delivered
by the Borrower in connection therewith as the amount of Net Sale Proceeds from
the related Asset Sale that the
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Borrower and/or its Subsidiaries intend to use to purchase, construct or
otherwise acquire Reinvestment Assets.
"Applicable Margin" shall mean a percentage per annum equal to, in the
case of (i) A Term Loans and Revolving Loans and Swingline Loans which are
maintained as (x) Base Rate Loans, 1.25% and (y) Eurodollar Loans, 2.25%,
reduced in each case by the applicable Interest Reduction Discount, (ii) in the
case of B Term Loans that are maintained (x) as Base Rate Loans, 1.75%, and (y)
Eurodollar Loans, 2.75%, reduced in each case by the applicable Interest
Reduction Discount and (iii) in the case of C Term Loans that are maintained as
(x) Base Rate Loans, 2.00% and (y) Eurodollar Loans, 3.00%, reduced in each case
by the applicable Interest Reduction Discount.
"Asset Sale" shall mean the sale, transfer or other disposition by
Holdings or any of its Subsidiaries to any Person other than Holdings or any of
its Subsidiaries of any asset of Holdings or such Subsidiary (other than sales,
transfers or other dispositions (a) in the ordinary course of business of goods
or inventory and/or obsolete or excess equipment or intellectual property, (b)
the proceeds of which do not exceed $1,000,000 per annum, (c) of accounts
receivable under Section 9.02(xi) or (d) trade or barter transactions entered
into in the ordinary course of business).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
"Authorized Officer" of any Credit Party shall mean any of the
Chairman of the Board, the President, the Chief Executive Officer, any Vice
President, the Treasurer, the Secretary, any Assistant Secretary, any Assistant
Treasurer, the Chief Financial Officer or the Controller of such Credit Party or
any other officer of such Credit Party which is designated in writing to the
Administrative Agent, BTCo and the Issuing Bank by any of the foregoing officers
of such Credit Party as being authorized to give such notices under this
Agreement.
"B Bank" shall have the meaning provided in Section 4.02(B).
"B Term Loan" shall have the meaning provided in Section 1.01(b).
"B Term Loan Commitments" shall mean for each Bank the amount set
forth opposite such Bank's name in Schedule I hereto in the column entitled "B
Term Loan Commitment" as same may be (x) reduced from time to time pursuant to
Sections 3.03, 4.02(A) and/or 10 or (y) adjusted from time to time as a result
of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
"B Term Loan Scheduled Repayment" shall have the meaning provided in
Section 4.02(A)(c).
"B Term Maturity Date" shall mean May 31, 2005.
"B Term Notes" shall have the meaning provided in Section 1.05(a).
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"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to Sections 1.13
and 13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including a
Mandatory Borrowing) or to fund its portion of any unreimbursed payment under
Section 2.03(c) or (ii) a Bank having notified in writing the Borrower and/or
the Administrative Agent that it does not intend to comply with its obligations
under Section 1.01(d) or Section 2.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the highest of (i) 1/2 of 1% in
excess of the Adjusted Certificate of Deposit Rate and (ii) the Prime Lending
Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and (ii) each Loan
designated or deemed designated as such by the Borrower at the time of the
incurrence thereof or conversion thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche (or from
the Swingline Bank in the case of Swingline Loans) on a given date (or resulting
from a conversion or conversions on such date) having in the case of Eurodollar
Loans the same Interest Period, PROVIDED that Base Rate Loans incurred pursuant
to Section 1.10(b) shall be considered part of the related Borrowing of
Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.
"C Bank" shall have the meaning provided in Section 4.02(B).
"C Term Loan" shall have the meaning provided in Section 1.01(c).
"C Term Loan Commitments" shall mean for each Bank the amount set
forth opposite such Bank's name in Schedule I hereto in the column entitled "C
Term Loan Commitment" as same may be (x) reduced from time to time pursuant to
Sections 3.03, 4.02(A) and/or 10 or (y) adjusted from time to time as a result
of assignments to or from such Bank pursuant to Section 1.13 or 13.04(b).
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"C Term Loan Scheduled Repayments" shall have the meaning provided in
Section 4.02(A)(d).
"C Term Maturity Date" shall mean May 31, 2006.
"C Term Notes" shall have the meaning provided in Section 1.05(a).
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures (excluding barter transactions effected in the ordinary course of
business) by such Person which should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital assets
(including, without limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with GAAP) and the amount of Capitalized
Lease Obligations incurred by such Person (which shall be deemed to include (i)
expenditures by such person to acquire stock or other evidence of beneficial
ownership of any other Person for the purpose of acquiring the capital assets of
such Person and (ii) expenditures for equipment at customers and property
additions; PROVIDED, HOWEVER, that Capital Expenditures for the Borrower and its
Subsidiaries shall not include (a) expenditures to the extent made with the
proceeds of the issuance of capital stock of Holdings after the Initial
Borrowing Date not used to prepay Loans pursuant to Section 4.02(A)(e), (b)
expenditures of the Borrower and its Subsidiaries that are paid for by a third
party and for which neither Holdings nor any Subsidiary of Holdings has provided
or is required to provide or incur, directly or indirectly, any consideration or
obligation to such third party and (c) the book value of any asset owned by the
Borrower and its Subsidiaries prior to or during any relevant period to the
extent that such book value is included as a capital expenditure during such
period as a result of the Borrower and its Subsidiaries reusing or beginning to
reuse such asset during such period without a corresponding expenditure actually
having been made in such period.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under GAAP, are or will be required to be capitalized on the
books of such Person, in each case taken at the amount thereof accounted for as
indebtedness in accordance with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (PROVIDED that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
one year from the date of acquisition, (ii) time deposits and certificates of
deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any State thereof, the District of Columbia or any foreign jurisdiction
having capital, surplus and undivided profits aggregating in excess of
$200,000,000, with maturities of not more than one year from the date of
acquisition by such Person, (iii) repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) commercial paper issued by any Person incorporated in the
United States rated at least A-1 or the equivalent thereof by Standard & Poor's
Corporation or at least P-1 or the equivalent thereof by Moody's Investors
Service, Inc. and in each case maturing not more than one year after the date of
acquisition by such Person, (v) investments in money market funds substantially
all of whose assets are comprised of securities of
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the types described in clauses (i) through (iv) above, (vi) demand deposit
accounts maintained in the ordinary course of business not in excess of
$1,000,000 in the aggregate and (vii) in the case of any Foreign Subsidiary; (a)
direct obligations of the sovereign nation (or any agency thereof) in which such
Foreign Subsidiary is organized and is conducting business or in obligations
fully and unconditionally guaranteed by such sovereign nation (or any agency
thereof), (b) investments of the type and maturity described in clauses (i)
through (v) above of foreign obligors, which investments or obligors (or the
direct or indirect parents of such obligors) have ratings described in such
clauses or equivalent ratings from comparable foreign rating agencies or (c)
investments of the type and maturity described in clauses (i) through (v) above
of foreign obligors (or the direct or indirect parents of such obligors), which
investments or obligors (or the direct or indirect parents of such obligors) are
not rated as provided in such clauses or in clause (b) above but which are, in
the reasonable judgment of Holdings or its Subsidiaries, comparable in
investment quality to such investment and obligors (or the direct or indirect
parent of such obligors).
"Change of Control" shall mean such time as (i) Holdings shall cease
to own 100% of the capital stock of the Borrower, (ii) prior to the initial
public offering by Holdings of its common stock (other than a public offering
pursuant to a registration statement on Form S-8), American Industrial Partners,
AIPCF or any of their respective Affiliates (collectively, the "Initial
Investors") cease to be, directly or indirectly, the beneficial owners, in the
aggregate, of a majority of the voting power of the Voting Stock and a majority
of the economic interests in all capital stock of Holdings or (iii) after the
initial public offering by Holdings of its common stock (other than a public
offering pursuant to a registration statement on Form S-8), (A) any Schedule
13D, Form 13F or Schedule 13G under the Exchange Act, or any amendment to such
Schedule or Form, is received by Holdings which indicates that, or Holdings
otherwise becomes aware that, a "person" or "group" (within the meaning of
sections 13(d) and 14(d)(2) of the Exchange Act) other than the Initial
Investors or their Related Parties (as defined below) has become, directly or
indirectly, the "beneficial owner," by way of merger, consolidation or
otherwise, of 35% or more of the voting power of the Voting Stock of Holdings
and (B) such person or group has become, directly or indirectly, the beneficial
owner of a greater percentage of the Voting Stock and economic interests in all
capital stock of Holdings than beneficially owned by the Initial Investors or
other Related Parties, (iv) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Board of
Directors of Holdings (together with any new directors whose election by the
Board of Directors of Holdings or whose nomination for election by the
stockholders of Holdings was approved by a vote of a majority of the directors
then still in office who either were directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the directors of Holdings, then in
office or (v) any "change of control" occurs under any of the Senior
Subordinated Note Documents or Holdings Debenture Documents . "Related Party"
with respect to any Initial Investor means (A) any controlling stockholder, 80%
(or more) owned Subsidiary, or spouse, or immediate family member (in the case
of any individual) of such Initial Investor or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or persons beneficially holding an 80% or more controlling interest of which
consist of such Initial Investor and/or such other persons referred to in the
immediately preceding clause (A).
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provision of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged
Properties and all cash and Cash Equivalents delivered as collateral pursuant to
Section 4.02(A) or Section 10 hereof and all Additional Collateral, if any.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Security Documents.
"Commitment" shall mean any of the commitments of any Bank, I.E.,
whether the Term Loan Commitments or Revolving Loan Commitment.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of Holdings and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of Holdings and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP at such time, but
excluding (i) the current portion of any Indebtedness under this Agreement and
any other long-term Indebtedness which would otherwise be included therein, (ii)
accrued but unpaid interest with respect to the Indebtedness described in clause
(i), and (iii) the current portion of Capitalized Lease Obligations.
"Consolidated EBIT" shall mean, for any period, the Adjusted
Consolidated Net Income of Holdings and its Consolidated Subsidiaries determined
on a consolidated basis in accordance with GAAP, before Consolidated Net
Interest Expense and provision for taxes and without giving effect to any
extraordinary gains or losses; PROVIDED that in the event Holdings, the Borrower
or any Subsidiary of Holdings acquired any Person during such period,
Consolidated EBIT for such period shall be calculated on a pro forma basis,
based on the actual historical results of such acquired Person as if such Person
had been acquired on the first day of such period.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation and amortization
charges that were deducted in arriving at Consolidated EBIT for such period;
PROVIDED that in the event Holdings, the Borrower or any Subsidiary of Holdings
acquired any Person during such period, Consolidated EBITDA for such period
shall be calculated on a pro forma basis, based on the actual historical results
of such acquired Person as if such Person had been acquired on the first day of
such period.
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"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of (x) Consolidated EBITDA for such period to (y) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of (i) Consolidated Net Cash Interest Expense for such period, (ii)
the amount of all Capital Expenditures made by the Borrower and its Subsidiaries
for such period (other than Capital Expenditures to the extent financed with
equity proceeds, Asset Sale proceeds, insurance proceeds or Indebtedness (other
than with Revolving Loans), (iii) the scheduled principal amount of all
amortization payments on all Indebtedness (including, without limitation, the
principal component of all Capitalized Lease Obligations) of the Borrower and
its Subsidiaries for such period (as determined on the first day of such
period), (iv) the amount of all cash payments made by the Borrower and its
Subsidiaries in respect of taxes or tax liabilities for such period and (v) the
amount of all Dividends paid by Holdings during such period.
"Consolidated Indebtedness" shall mean, at any time, without
duplication, the sum of the aggregate outstanding principal amount of all
Indebtedness for borrowed money (excluding the principal amount of the Holdings
Debentures), and the principal component of Capitalized Lease Obligations, of
Holdings and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Cash Interest Expense" shall mean, for any period,
the total consolidated cash interest expense of Holdings and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP for such
period plus, without duplication, that portion of Capitalized Lease Obligations
of Holdings and its Consolidated Subsidiaries representing the interest factor
for such period in each case net of the total consolidated cash interest income
of Holdings, its Consolidated Subsidiaries for such period; PROVIDED that in the
event Holdings, the Borrower or any Subsidiary of Holdings acquired any Person
during such period, Consolidated Net Cash Interest Expense for such period shall
be calculated on a pro forma basis, based on the actual historical results of
such acquired Person as if such Person had been acquired on the first day of
such period.
"Consolidated Net Income" shall mean, for any period, net after tax
income of Holdings and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Interest Expense" shall mean, for any period, the
total consolidated interest expense of Holdings and its Consolidated
Subsidiaries determined on a consolidated basis in accordance with GAAP for such
period (calculated without regard to any limitations on the payment thereof)
plus, without duplication, that portion of Capitalized Lease Obligations of
Holdings and its Consolidated Subsidiaries determined on a consolidated basis in
accordance with GAAP representing the interest factor for such period in each
case net of the total consolidated cash interest income of Holdings and its
Consolidated Subsidiaries for such period, but excluding the amortization of any
deferred financing costs incurred in connection with this Agreement.
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"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with GAAP.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; PROVIDED, HOWEVER,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Copetro" shall mean Copetro S.A., a corporation organized under the
laws of Argentina.
"Credit Documents" shall mean this Agreement and, after the execution
and delivery thereof pursuant to the terms of this Agreement, each Note, each
Security Document and each Subsidiary Guaranty, if any.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary
thereof party to a Credit Document.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other
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distribution, payment or delivery of property (other than common stock of such
Person) or cash to its stockholders as such, or redeemed, retired, purchased or
otherwise acquired, directly or indirectly, for consideration any shares of any
class of its capital stock outstanding on or after the Effective Date (or any
options or warrants issued by such Person with respect to its capital stock), or
set aside any funds for any of the foregoing purposes, or shall have permitted
any of its Subsidiaries to purchase or otherwise acquire for consideration any
shares of any class of the capital stock of such Person outstanding on or after
the Effective Date (or any options or warrants issued by such Person with
respect to its capital stock). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans or setting aside of any
funds for the foregoing purposes but shall exclude AIPCF Management Fees.
"Documents" shall mean the Credit Documents and the Transaction
Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary that is incorporated
or organized in the United States or any state thereof.
"Drawing" shall have the meaning provided in Section 2.04(b).
"Effective Date" shall have the meaning provided in Section 13.10.
"Eligible Transferee" shall mean and include a commercial bank, mutual
funds, financial institution or other institutional "accredited investor" (as
defined in Regulation D of the Securities Act).
"Employee Stock Option Plan" shall mean any plan, to be entered into
after the Initial Borrowing Date, for the compensation of management of Holdings
or any of its Subsidiaries, or any arrangement for the benefit of management of
Holdings or any of its Subsidiaries, in form and substance reasonably acceptable
to the Administrative Agent.
"End Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a "single employer" within the meaning of Section 414(b),
(c), (m) or (o) of the Code.
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"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean the offered quotation which appears on
Telerate Page 4738 for Dollar deposits of amounts in immediately available funds
comparable to the outstanding principal amount of the Eurodollar Loan of BTCo
with maturities comparable to the Interest Period applicable to such Eurodollar
Loan commencing two Business Days thereafter as of 10:00 A.M. (New York time) on
the date which is two Business Days prior to the commencement of such Interest
Period, divided (and rounded off to the nearest 1/16 of 1%) by a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves required by applicable law) applicable to any member bank of
the Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any period, the remainder of (a)
the sum of (i) Adjusted Consolidated Net Income for such period and (ii) the
decrease, if any, in Adjusted Consolidated Working Capital from the first day to
the last day of such period, minus (b) the sum of (i) the amount of Capital
Expenditures made by the Borrower and its Subsidiaries on a consolidated basis
during such period pursuant to and in accordance with Section 9.07(a) and (b),
except to the extent financed with the proceeds of Indebtedness or pursuant to
Capitalized Lease Obligations, (ii) the aggregate amount of permanent principal
payments of Indebtedness for borrowed money of the Borrower and the repayment of
the principal component of Capitalized Lease Obligations of the Borrower and its
Subsidiaries (excluding (1) payments with proceeds of issuances of Indebtedness
or equity or with proceeds of asset sales and (2) payments of Loans or other
Obligations pursuant to Sections 4.02 (e), (f), (g) and (i)), (iii) cash
Dividends paid during such period, (iv) the increase, if any, in Adjusted
Consolidated Working Capital from the first day to the last day of such period,
(v) the amount of all expenses (including expenses incurred in connection with
acquisitions) that have been paid during such period to the extent that such
expenses have been capitalized in accordance with GAAP but only to the extent
that the payment thereof does not otherwise reduce Adjusted Consolidated Net
Income and (vi) the principal amount of Senior Subordinated Notes paid with
additional notes; and PROVIDED that in the event Holdings, the Borrower or any
Subsidiary of Holdings acquired any Person during such period, Adjusted
Consolidated Net Income for such period shall be calculated on a pro forma
basis, based on the actual historical results of such acquired Person as if such
Person had been acquired on the first day of such period.
"Excess Cash Payment Date" shall mean the date occurring 110 days
after the last day of each fiscal year of the Borrower (beginning with its
fiscal year ending December 31, 1998).
"Excess Cash Payment Period" shall mean with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of the Borrower.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Foreign Joint Ventures" means joint ventures entered into by the
Borrower or any of its Subsidiaries for the primary purpose of operating a
business outside of the United States of the type in which the Borrower and its
Subsidiaries are engaged on the Initial Borrowing Date and reasonable extensions
thereof.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower
incorporated or organized in a jurisdiction other than the United States or any
State thereof.
"Foreign Subsidiary Indebtedness" shall mean, at any time, the sum of
the aggregate outstanding amount of all Indebtedness incurred by all of the
Foreign Subsidiaries.
"GAAP" shall have the meaning provided in Section 13.07(a).
"Guaranteed Obligations" shall mean the irrevocable and unconditional
guaranty made by Holdings (i) to each Bank for the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Note issued by the Borrower to such Bank, and
Loans made, under the Credit Agreement and all reimbursement obligations and
Unpaid Drawings with respect to Letters of Credit, together with all the other
obligations and liabilities (including, without limitation, indemnities, fees
and interest thereon) of the Borrower to such Bank now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement or any
other Credit Document and the due performance and compliance with all the terms,
conditions and agreements contained in the Credit Documents by the Borrower and
(ii) to each Bank and each Affiliate of a Bank which enters into an Interest
Rate Protection Agreement with the Borrower, which by its express terms are
entitled to the benefit of the Guaranty pursuant to Section 14 with the written
consent of the Borrower and the Administrative Agent, the full and prompt
payment when due (whether by acceleration or otherwise) of all obligations of
the Borrower owing under any such Interest Rate Protection Agreement, whether
now in existence or hereafter arising, and the due performance and compliance
with all terms, conditions and agreements contained therein.
"Guarantor" shall mean Holdings and each Subsidiary Guarantor, if any.
"Guaranty" shall mean the guaranty made by Holdings pursuant to
Section 14, and any Subsidiary Guaranty executed pursuant to Section 8.11(e).
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"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Common Stock" shall have the meaning provided in Section
5.06(a)(i).
"Holdings Debentures" shall have the meaning provided in Section
5.06(a)(i).
"Holdings Debenture Documents" shall mean the Holdings Debentures, the
Holdings Debenture Indenture and all other documents or instruments executed in
connection with the Holdings Debentures.
"Holdings Debenture Indenture" shall mean that certain indenture dated
as of May 22, 1998 by and between Holdings, as issuer and State Street Bank and
Trust Company of California, N.A. as trustee, which Holdings Debenture Indenture
shall contain terms and conditions reasonably satisfactory to the Administrative
Agent.
"Holdings Financing" shall have the meaning provided in Section
5.06(a)(i).
"Holdings Financing Documents" shall mean the Holdings Debenture
Documents, the Holdings Common Stock and all other documents or agreements
relating to the issuance or incurrence of the foregoing.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services due more than 90 days after acquisition of the property or receipt of
services or which is otherwise represented by a note, (ii) the maximum amount
available to be drawn under all letters of credit issued for the account of such
Person and all unpaid drawings in respect of such letters of credit, (iii) all
Indebtedness of the types described in clause (i), (ii), (iv), (v) or (vi) of
this definition secured by any Lien on any property owned by such Person,
whether or not such Indebtedness has been assumed by such Person (to the extent
of the lesser of the amount of such Indebtedness and the value of the respective
property), (iv) Capitalized Lease Obligations, (v) all Contingent Obligations of
such Person and (vi) all obligations under any Interest Rate Protection
Agreement or under any similar type of agreement.
"Initial Borrowing Date" shall mean the date occurring on or after the
Effective Date on which the initial Borrowing of Term Loans hereunder occurs.
"Interest Coverage Ratio" shall mean on the date of determination
thereof the ratio of (i) Consolidated EBITDA to (ii) Consolidated Net Cash
Interest Expense for the Test Period ended on the last day of the fiscal quarter
last ended prior to the date such determination is made, PROVIDED that for any
period ending prior to June 30, 1999, (x) Consolidated EBITDA shall be
calculated by using Consolidated EBITDA of the Borrower, including fiscal
quarters ending prior to the Initial Borrowing Date, and (y) Consolidated Net
Cash Interest Expense shall be calculated, (I) for the Test Period ended
September 30, 1998, by multiplying Consolidated Net Cash Interest Expense for
the fiscal quarter ended on the same date by 4; (II) for the Test Period Ended
December 31, 1998, by multiplying Consolidated Net Cash Interest Expense for the
fiscal quarter
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ended on the same date by 2; and (III) for the Test Period ended March 31, 1999,
by multiplying Consolidated Net Cash Interest Expense for the fiscal quarter
ended on the same date by 4/3.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean (i) initially 0% and (ii)
from and after each day of delivery of any certificate delivered in accordance
with the following sentence indicating an entitlement to an Interest Reduction
Discount other than zero (each, a "Start Date") to and including the applicable
End Date described below, the percentage set forth below opposite the Leverage
Ratio indicated to have been achieved in any certificate delivered in accordance
with the following sentence:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Leverage Ratio Loans Loans
-------------- ----------- ----------
<S> <C> <C>
Equal to or greater than 5:1 0% 0%
Equal to or greater than 4.5:1
but less than 5.0:1 0.25 % 0.25 %
Equal to or greater than 4.0:1
but less than 4.5:1 0.50 % 0.50 %
Less than 4.0:1 0.75 % 0.75 %
</TABLE>
The Leverage Ratio shall be determined based on the delivery of a certificate of
the Borrower to the Administrative Agent (with a copy to be sent by the
Administrative Agent to each Bank), certified by an Authorized Officer of the
Borrower within 30 days after the last day of any fiscal quarter of the
Borrower, (commencing with its fiscal quarter ending December 31, 1998, which
certificate shall set forth the calculation of the Leverage Ratio for the Test
Period ended immediately prior to the relevant Start Date and the Interest
Reduction Discount which shall be thereafter applicable (until same is changed
or ceases to apply in accordance with the following sentences). The Interest
Reduction Discount so determined shall apply, except as set forth in the
succeeding sentence, from the Start Date to the earlier of (x) the date on which
the next certificate is delivered to the Administrative Agent and (y) the date
which is 30 days following the last day of the fiscal quarter in which the
previous Start Date occurred (the "End Date"), at which time, if no certificate
has been delivered to the Administrative Agent indicating an entitlement to an
Interest Reduction Discount other than zero (and thus commencing a new Start
Date), the Interest Reduction Discount shall be reduced to zero.
Notwithstanding anything to the contrary contained
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above in this definition, the Interest Reduction Discount shall be reduced to
zero at all times during which there shall exist an Event of Default.
"Issuing Bank" shall mean, BTCo and any Bank which at the request of
the Borrower and with the consent of the Administrative Agent agrees, in such
Bank's sole discretion, to become an Issuing Bank for the purpose of issuing
Letters of Credit pursuant to Section 2. The sole Issuing Bank on the Initial
Borrowing Date is BTCo.
"L/C Supportable Obligations" shall mean obligations of the Borrower
or its Subsidiaries incurred in the ordinary course of business.
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings relating to Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Leverage Ratio" shall mean on the date of determination thereof the
ratio of (i) Consolidated Indebtedness on such date to (ii) Consolidated EBITDA
(which shall be calculated for any period ending prior to June 30, 1999, by
using the following amounts for such following periods: fiscal quarter ended
June 30, 1997, $13,807,000; fiscal quarter ended September 30, 1997,
$15,160,000; fiscal quarter ended December 31, 1997, $17,001,000; and fiscal
quarter ended March 31, 1998, $16,528,000 for the Test Period ended on the last
day of any fiscal quarter last ended prior to the date such determination is
made.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.
"Majority Banks" shall mean collectively (and not individually) with
respect to any Tranche, Non-Defaulting Banks whose outstanding Term Loans of
such Tranche (or, if prior to the Initial Borrowing Date, Term Loan Commitments
of such Tranche) constitute at least a majority of the total outstanding Term
Loans of such Tranche (or, if prior to the Initial Borrowing Date, Term Loan
Commitments of such Tranche) of all Non-Defaulting Banks.
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"Management Agreements" shall have the meaning provided in Section
5.05.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(f).
"Margin Stock" shall have the meaning provided in Regulation U.
"Maximum Swingline Amount" shall mean $5,000,000.
"Material Adverse Effect" shall mean a material adverse effect on the
business, operations, properties, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower or Holdings and its subsidiaries taken
as a whole.
"Merger" shall mean the merger between Great Lakes Acquisition Sub.
Corp. and Great Lakes Carbon Corporation, pursuant to the Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger dated
as of April 22, 1998, by and between Great Lakes Carbon Corporation and
Holdings.
"Merger Documents" shall mean the Merger Agreement and all other
documents executed in connection with the Merger.
"Mortgage" shall have the meaning provided in Section 5.09(a), and,
after the execution and delivery thereof, shall include each Additional Mortgage
delivered pursuant to Section 8.11.
"Mortgage Policies" shall have the meaning provided in Section
5.09(c).
"Mortgaged Property" shall have the meaning provided in Section
5.09(a) and, after the execution or delivery thereof, shall include each
property covered by an Additional Mortgage.
"Net Interest Expense" shall mean, for any period, the total interest
expense of any Person for such period (calculated without regard to any
limitations on the payment thereof) plus, without duplication, that portion of
Capitalized Lease Obligations of such Person representing the interest factor
for such period in each case net of the total consolidated cash interest income
of such Person for such period, but excluding the amortization of any deferred
financing costs incurred in connection with this Agreement.
"Net Sale Proceeds" shall mean for any sale, lease, transfer or other
disposition of assets, the gross cash proceeds (including any cash received by
way of deferred payment pursuant to a promissory note, receivable or otherwise,
but only as and when received) received by Holdings and/or any of its
Subsidiaries from such sale, lease, transfer or other disposition, net of
reasonable transaction costs (including, without limitation, any underwriting,
brokerage or other customary selling commissions and reasonable legal, advisory
and other fees and expenses, including title and recording expenses and
reasonable expenses incurred for preparing such assets for sale, associated
therewith) and payments of unassumed liabilities relating to the assets sold at
the time of, or within 30 days after, the date of such sale, the amount of such
gross cash proceeds
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required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, all distributions and other payments made to minority interest
holders in Subsidiaries of the Borrower in connection with such disposition, and
the estimated marginal increase in income taxes which will be payable by
Holdings' consolidated group with respect to the fiscal year in which the sale
occurs as a result of such sale; but excluding any portion of any such gross
cash proceeds which Holdings determines in good faith should be reserved for
post-closing adjustments (to the extent Holdings' delivers to the Banks a
certificate signed by an Authorized Officer as to such determination), it being
understood and agreed that on the day that all such post-closing adjustments
have been determined (which shall not be later than one year following the date
of the respective asset sale), the amount (if any) by which the reserved amount
in respect of such sale or disposition exceeds the actual post-closing
adjustments payable by Holdings or any of its Subsidiaries shall constitute Net
Sale Proceeds on such date).
"Non-Defaulting Bank" shall mean and include each Bank which is not a
Defaulting Bank.
"Note" shall mean each Term Note, each Revolving Note and the
Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Andrew
Keith, or such other office as the Administrative Agent may hereafter designate
in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the Administrative
Agent, the Collateral Agent or any Bank pursuant to the terms of this Agreement
or any other Credit Document.
"Participant" shall have the meaning provided in Section 2.03(a).
"Payment Office" shall mean the office of the Administrative Agent
located at 130 Liberty Street, New York, New York 10006, Attention: Andrew
Keith, or such other office as the Administrative Agent may hereafter designate
in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean, at any time, for each Bank with a Revolving
Loan Commitment, the percentage obtained by dividing such Bank's Revolving Loan
Commitment by the Total Revolving Loan Commitment; PROVIDED, that if the Total
Revolving Loan Commitment has been terminated, the Percentage of each such Bank
shall be determined by dividing such Bank's Revolving Loan Commitment
immediately prior to such termination by the Total Revolving Loan Commitment
immediately prior to such termination.
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"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be acceptable to the Administrative Agent in its reasonable
discretion.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), the Borrower or a Subsidiary
of the Borrower or an ERISA Affiliate, and each such plan for the five year
period immediately following the latest date on which the Borrower, a Subsidiary
of the Borrower or an ERISA Affiliate maintained, contributed or had an
obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning provided in Section 5.07.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreement.
"Pledged Securities" shall mean "Pledged Securities" as defined in the
Pledge Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Projections" shall have the meaning provided in Section 7.05(d).
"Quarterly Payment Date" shall mean the last Business Day of each
August, November, February and May commencing with August 1998.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by Holdings or any of its
Subsidiaries of any (i) cash insurance proceeds payable (x) by reason of theft,
loss, physical destruction or damage or any other similar event with respect to
any property or assets of Holdings or any of its Subsidiaries and (y) under any
policy of insurance required to be maintained under Section 8.03 or (ii)
condemnation award payable by reason of eminent domain or deed in lieu thereof.
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"Refinancing" shall have the meaning provided in Section 5.06(a)(iii).
"Register" shall have the meaning set forth in Section 13.17.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as described in Sections
4.02(A)(g) and 9.02(ii).
"Reinvestment Election" shall have the meaning provided in Section
4.02(A)(g).
"Reinvestment Notice" shall mean a written notice signed by the
Authorized Officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Sale Proceeds
of an Asset Sale to purchase, construct or otherwise acquire Reinvestment
Assets.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
outstanding Term Loans (or, if prior to the Initial Borrowing Date, Term Loan
Commitments) and Revolving Loan Commitments (or after the termination thereof,
outstanding Revolving Loans and Adjusted Percentage of outstanding Swingline
Loans and Letter of Credit Outstandings) represent an amount greater than 50% of
the sum of (x) all outstanding Term Loans (or, if prior to the Initial Borrowing
Date, Term Loan Commitments) of Non-Defaulting Banks and (y) the Total Revolving
Loan Commitment (or after the termination thereof, the sum of the then total
outstanding Revolving Loans and Adjusted Percentage of the then outstanding
Swingline Loans and Letter of Credit Outstandings at such time) of
Non-Defaulting Banks.
"Returns" shall have the meaning provided in Section 7.09.
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"Revolving Loan" shall have the meaning provided in Section 1.01(d).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I hereto directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time to
time pursuant to Sections 3.02, 3.03, 4.02(A) and/or 10 or (y) adjusted from
time to time as a result of assignments to or from such Bank pursuant to Section
1.13 or 13.04(b).
"Revolving Loan Maturity Date" shall mean May 31, 2003.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"Scheduled Repayments" shall have the meaning provided in Section
4.02(A)(d).
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b).
"Secured Creditors" shall have the meaning assigned that term in the
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section 5.08
and include any Additional Security Document delivered pursuant to Section 8.11.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
"Security Document" shall mean and include the Pledge Agreement, the
Security Agreement, each Mortgage and, after the execution and delivery thereof,
each Additional Mortgage and each Additional Security Document required to be
delivered pursuant to Section 8.11.
"Senior Secured Notes" shall mean the 10% Senior Secured Notes due
2006 issued by the Borrower under the Senior Secured Notes Indenture.
"Senior Secured Notes Collateral Documents" shall mean the Senior
Secured Notes Security Agreement, the Senior Secured Notes Mortgage, Assignment
of Rents, Leases and Leasehold Interests and Fixture Filing Statement, the
Senior Secured Notes Patent Security Agreement and the Senior Secured Notes
Trademark Security Agreement.
"Senior Secured Notes Collateral Documents Amendment" shall mean the
amendments to the Senior Secured Notes Collateral Documents in form and
substance satisfactory to the Administrative Agent and entered into by the
parties to the respective Senior
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Secured Notes Collateral Documents in connection with the Senior Secured Notes
Tender Offer/Consent Solicitation.
"Senior Secured Notes Indenture" shall mean that certain indenture
dated as of December 20, 1995, among the Borrower and The Bank of New York as
trustee.
"Senior Secured Notes Indenture Supplement" shall mean the
Supplemental Indenture to the Senior Secured Notes Indenture in form and
substance satisfactory to the Administrative Agent and entered into by the
Borrower and The Bank of New York in connection with the Senior Secured Notes
Tender Offer/Consent Solicitation.
"Senior Secured Notes Mortgage, Assignment of Rents, Leases and
Leasehold Interests and Fixture Filing Statement" shall mean the Mortgage,
Assignment of Rents, Leases and Leasehold Interests and Fixture Filing Statement
dated as of December 20, 1995 among the Borrower and The Bank of New York as
trustee.
"Senior Secured Notes Patent Security Agreement" shall mean the Patent
Security Agreement dated as of December 20, 1995 among the Borrower and The
Bank of New York as trustee.
"Senior Secured Notes Security Agreement" shall mean the Security
Agreement dated as of December 20, 1995 among the Borrower and The Bank of New
York as trustee.
"Senior Secured Notes Tender Offer/Consent Solicitation" shall have
the meaning set forth in Section 5.06(a)(iii).
"Senior Secured Notes Tender Offer Documents" shall mean the Senior
Secured Notes Indenture Supplement, the Senior Secured Notes Collateral
Documents Amendment and the Senior Secured Notes Tender Offer/Consent
Solicitation, as in effect on the Initial Borrowing Date and as same may be
amended, modified or supplemented from time to time pursuant to the terms
thereof and hereof.
"Senior Secured Notes Tender Offer Repurchases" shall have the meaning
provided in Section 5.06(a)(iii).
"Senior Secured Notes Trademark Security Agreement" shall mean the
Trademark Security Agreement dated as of December 20, 1995 among the Borrower
and The Bank of New York as trustee.
"Senior Subordinated Note Documents" shall mean the Senior
Subordinated Notes, the Senior Subordinated Note Indenture and all other
documents executed in connection with the Senior Subordinated Notes.
"Senior Subordinated Note Indenture" shall mean that certain indenture
dated as of May 22, 1998 by and between the Borrower and State Street Bank and
Trust Company of California, N.A., as trustee.
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"Senior Subordinated Note Issuance" shall have the meaning provided in
Section 5.06(a)(ii).
"Senior Subordinated Notes" shall mean the 10 1/4% Senior Subordinated
Notes due 2008 issued by the Borrower under the Senior Subordinated Note
Indenture.
"Shareholders' Agreements" shall have the meaning provided in Section
5.05.
"Significant Subsidiary" of Holdings shall mean (i) the Borrower, (ii)
any Subsidiary Guarantor and (iii) any other Subsidiary of Holdings that would
be a "significant subsidiary" of Holdings as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Exchange Act, as such Regulation is
in effect on the date hereof.
"Start Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Domestic Subsidiary of the
Borrower .
"Subsidiary Guaranty" shall have the meaning provided in Section
8.11(e).
"Swingline Bank" shall mean Bankers Trust Company, in its capacity as
the lender of Swingline Loans.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Loan Maturity Date.
"Swingline Loans" shall have the meaning provided in Section 1.01(e).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Tax Sharing Agreement" shall have the meaning provided in Section
5.05.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Term Loan" shall have the meaning provided in Section 1.01(c).
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"Term Loan Commitment" shall mean for each Bank, the A Term Loan
Commitment, B Term Loan Commitment or C Term Loan Commitment, if any, of such
Bank.
"Term Notes" shall have the meaning provided in Section 1.05(a).
"Test Period" shall mean for any determination the four consecutive
fiscal quarters then last ended (taken as one accounting period).
"Total A Term Loan Commitment" shall mean, at any time, the sum of the
A Term Loan Commitments of each Bank.
"Total B Term Loan Commitment" shall mean, at any time, the sum of the
B Term Loan Commitments of each Bank.
"Total C Term Loan Commitment" shall mean, at any time, the sum of the
C Term Loan Commitments of each Bank.
"Total Commitment" shall mean the sum of the Total Term Loan
Commitment and the Total Revolving Loan Commitment.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of the A
Term Loan Commitments, the B Term Loan Commitments and the C Term Loan
Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
the sum of the Unutilized Revolving Loan Commitments of each of the Banks.
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being five separate Tranches, I.E., A Term
Loans, B Term Loans, C Term Loans, Revolving Loans and Swingline Loans.
"Transaction" shall mean the Merger, the Senior Subordinated Note
Issuance, the Holdings Financing, the Refinancing and the incurrence of Loans on
the Initial Borrowing Date.
"Transaction Documents" shall mean the Merger Documents, the Senior
Subordinated Note Documents, the documents effecting the Refinancing, the
Holdings Financing Documents and all other documents effectuating the
Transaction or executed in connection therewith.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, I.E., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
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"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated benefits under the Plan as
of the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan, exceeds the fair market value of the assets allocable thereto,
determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided in Section 2.04(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less (i)
the aggregate outstanding principal amount of Revolving Loans made by such Bank
plus (ii) such Bank's Adjusted Percentage of all Letter of Credit Outstandings.
"Voting Stock" shall mean, as to any Person, any class or classes of
capital stock of such Person pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the Board of Directors of such Person, or any class or classes of capital
stock convertible into such stock at the option of the holders thereof.
"Waivable Mandatory Repayment" shall have the meaning provided in
Section 4.02(B).
"Wholly-Owned Domestic Subsidiary" shall mean each Wholly-Owned
Subsidiary of the Borrower incorporated or organized under the laws of the
United States or any State thereof.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time. Any
reference to a Wholly-Owned Subsidiary, unless expressly to a Wholly-Owned
Subsidiary of another Person, shall mean a Wholly-Owned Subsidiary of the
Borrower.
SECTION 12. The Administrative Agent.
12.01 APPOINTMENT. The Banks hereby designate Bankers Trust Company
as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" shall include Bankers Trust Company in its capacity as
Collateral Agent pursuant to the Security Documents) to act as specified herein
and in the other Credit Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall be deemed
irrevocably to authorize, the Administrative Agent to take such action on its
behalf under the provisions of this Agreement, the other Credit Documents and
any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties
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hereunder and thereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Administrative Agent may perform any of
its duties hereunder by or through its respective officers, directors, agents,
employees or affiliates.
12.02 NATURE OF DUTIES. The Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Agreement
and the Security Documents. Neither the Administrative Agent nor any of its
respective officers, directors, agents, employees or affiliates shall be liable
for any action taken or omitted by it or them hereunder or under any other
Credit Document or in connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The duties of the Administrative
Agent shall be mechanical and administrative in nature; the Administrative Agent
shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Administrative Agent
any obligations in respect of this Agreement or any other Credit Document except
as expressly set forth herein or therein.
12.03 LACK OF RELIANCE ON THE ADMINISTRATIVE AGENT. Independently
and without reliance upon the Administrative Agent, each Bank and the holder of
each Note, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of Holdings and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Holdings and its Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Bank or the holder of
any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter. The Administrative Agent shall not be responsible to any Bank
or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Holdings and its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of Holdings and its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
12.04 CERTAIN RIGHTS OF THE ADMINISTRATIVE AGENT. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks;
and the Administrative Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, neither any Bank nor the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
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refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
12.05 RELIANCE. The Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.
12.06 INDEMNIFICATION. To the extent the Administrative Agent is not
reimbursed and indemnified by the Borrower the Banks will reimburse and
indemnify the Administrative Agent, in proportion to their respective
"percentages" as used in determining the Required Banks, for and against any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Administrative Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any other Credit
Document; PROVIDED that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct.
12.07 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With
respect to its obligation to make Loans under this Agreement, the Administrative
Agent shall have the rights and powers specified herein for a "Bank" and may
exercise the same rights and powers as though it were not performing the duties
specified herein; and the term "Banks," "Required Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Credit Party or any Affiliate of any
Credit Party as if it were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower or any other Credit Party
for services in connection with this Agreement and otherwise without having to
account for the same to the Banks.
12.08 HOLDERS. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 RESIGNATION BY THE ADMINISTRATIVE AGENT. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
15 Business Days' prior written notice to the Borrower
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and the Banks. Such resignation shall take effect upon the appointment of a
successor Administrative Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Administrative Agent hereunder or thereunder who shall be a commercial
bank or trust company reasonably acceptable to the Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower, shall then appoint a successor Administrative Agent who
shall serve as Administrative Agent hereunder or thereunder until such time, if
any, as the Banks appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 20th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Banks appoint a successor
Administrative Agent as provided above.
SECTION 13. Miscellaneous.
13.01 PAYMENT OF EXPENSES, ETC. The Borrower shall: (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and disbursements of White & Case LLP and local
counsel) in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto, of the Administrative Agent in connection with its
syndication efforts with respect to this Agreement and, following an Event of
Default, each of the Banks in connection with the enforcement of this Agreement
and the other Credit Documents and the documents and instruments referred to
herein and therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Administrative Agent and, following an Event of
Default, for each of the Banks including any reasonable allocated costs of
in-house counsel); (ii) pay and hold each of the Banks harmless from and against
any and all present and future stamp, excise and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Bank) to pay such taxes;
and (iii) indemnify the Administrative Agent and each Bank, and each of their
respective officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a party
thereto) related to the entering into and/or performance of this Agreement or
any other Credit
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Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of any transactions contemplated herein
(including, without limitation, the Transaction) or in any other Credit Document
or the exercise of any of their rights or remedies provided herein or in the
other Credit Documents, or (b) the non-compliance of any Real Property with
foreign, federal, state and local laws, regulations, and ordinances (including
applicable permits thereunder) applicable to any Real Property, owned or at any
time operated by Holdings or any of its Subsidiaries, including, in each case,
without limitation, the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation, litigation or
other proceeding (but excluding in the case of each of clause (a) and (b) above,
any losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless the Administrative Agent or any Bank set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall make the maximum contribution to the payment and
satisfaction of each of the indemnified liabilities which is permissible under
applicable law.
13.02 RIGHT OF SETOFF; COLLATERAL MATTERS. (a) In addition to any
rights now or hereafter granted under applicable law or otherwise, and not by
way of limitation of any such rights, upon the occurrence and continuance of an
Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
Holdings or the Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Bank (including, without limitation, by branches and agencies of such Bank
wherever located) to or for the credit or the account of Holdings or the
Borrower against and on account of the Obligations and liabilities of Holdings
or the Borrower to such Bank under this Agreement or under any of the other
Credit Documents, including, without limitation, all interests in Obligations
purchased by such Bank pursuant to Section 13.06(b), and all other claims of any
nature or description arising out of or connected with this Agreement or any
other Credit Document, irrespective of whether or not such Bank shall have made
any demand hereunder and although said Obligations, liabilities or claims, or
any of them, shall be contingent or unmatured.
(b) NOTWITHSTANDING THE FOREGOING SUBSECTION (a), AT ANY TIME THAT
THE LOANS OR ANY OTHER OBLIGATION SHALL BE SECURED BY REAL PROPERTY LOCATED IN
CALIFORNIA, NO BANK SHALL EXERCISE A RIGHT OF SETOFF, BANKER'S LIEN OR
COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY
PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY NOTE THAT IS NOT
TAKEN BY THE REQUIRED BANKS OR APPROVED IN WRITING BY THE REQUIRED BANKS IF SUCH
SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a, 580b,
580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE
CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE
VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO THE COLLATERAL
AGENT PURSUANT TO THE SECURITY DOCUMENTS OR THE ENFORCEABILITY OF THE NOTES AND
OTHER OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE
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BY ANY BANK OF ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE REQUIRED
BANKS SHALL BE NULL AND VOID. THIS SUBSECTION (b) SHALL BE SOLELY FOR THE
BENEFIT OF EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND THE BANKS
HEREUNDER AND SHALL NOT CREATE ANY RIGHTS FOR THE BENEFIT OF ANY CREDIT PARTY OR
ANY OTHER PERSON.
13.03 NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to Holdings, at
Holdings' address specified opposite its signature below; if to the Borrower, at
the Borrower's address specified opposite its signature below; if to any Bank,
at its address specified opposite its name below; and if to the Administrative
Agent, at its Notice Office; or, as to any Credit Party or the Administrative
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written notice to the Borrower and the
Administrative Agent. All such notices and communications shall, when mailed,
be effective (5) Business Days after deposit in the mails, and when telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, be effective one
Business Day after dispatch, except that notices and communications to the
Administrative Agent and the Borrower shall not be effective until received by
the Administrative Agent or the Borrower, as the case may be.
13.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; PROVIDED, HOWEVER, no Credit Party may assign
or transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of the Banks (it being
understood that this Section 13.04 shall not prevent a merger or consolidation
otherwise permitted by this Agreement) and, PROVIDED FURTHER, that, although any
Bank may transfer, assign or grant participations in its rights hereunder, such
Bank shall remain a "Bank" for all purposes hereunder (and may not transfer or
assign all or any portion of its Commitments hereunder except as provided in
Section 13.04(b)) and the transferee, assignee or participant, as the case may
be, shall not constitute a "Bank" hereunder and, PROVIDED FURTHER, that no Bank
shall transfer or grant any participation under which the participant shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
the final scheduled maturity of any Loan, Note or Letter of Credit (unless such
Letter of Credit is not extended beyond the Revolving Loan Maturity Date) in
which such participant is participating, or reduce the rate or extend the time
of payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased as a result thereof), (ii) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under all of the Security
Documents (except as expressly provided in the Credit Documents) supporting the
Loans hereunder in which such participant is participating. In the
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case of any such participation, the participant shall not have any rights under
this Agreement or any of the other Credit Documents (the participant's rights
against such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans (or, if prior to the Initial Borrowing Date, Term Loan
Commitment) to (i) its parent company and/or any affiliate of such Bank which is
at least 50% owned by such Bank or its parent company or to one or more Banks or
(ii) in the case of any Bank that is a fund that invests in bank loans, any
other fund that invests in bank loans and is managed by the same investment
advisor of such Bank or by an Affiliate of such investment advisor and (y)
assign all, or if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Bank or assigning Banks, of such Revolving Loan
Commitments and outstanding principal amount of Term Loans (or, if prior to the
Initial Borrowing Date, Term Loan Commitment) hereunder to one or more Eligible
Transferees (treating any fund that invests in bank loans and any other fund
that invests in bank loans and is managed by the same investment advisor of such
fund or by an Affiliate of such investment advisor as a single Eligible
Transferee), each of which assignees shall become a party to this Agreement as a
Bank by execution of an Assignment and Assumption Agreement, PROVIDED that, (i)
at such time Schedule I shall be deemed modified to reflect the Commitments
(and/or outstanding Term Loans, as the case may be) of such new Bank and of the
existing Banks, (ii) upon surrender of the old Notes, new Notes will be issued,
at the Borrower's expense, to such new Bank and to the assigning Bank, such new
Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans, as the case may be), (iii) the
consent of the Administrative Agent shall be required in connection with any
such assignment (which consent shall not be unreasonably withheld) and (iv) the
Administrative Agent shall receive at the time of each such assignment, from the
assigning or assignee Bank, the payment of a non-refundable assignment fee of
$3,500 and, PROVIDED FURTHER, that such transfer or assignment will not be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 13.17 hereof. To the extent of any assignment pursuant to this Section
13.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitments. At the time of each assignment pursuant to
this Section 13.04(b) to a person which is not already a Bank hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Bank shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an
assignment of all or any portion of a Bank's Commitments and related outstanding
Obligations pursuant to Section 1.13 or this Section 13.04(b) would, at the time
of such assignment, result in increased costs under Section 1.10, 1.11, 2.05 or
4.04 from those being charged by the respective assigning Bank prior to such
assignment, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
assignment).
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(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank and, with the
consent of the Administrative Agent, any Bank which is a fund may pledge all or
any portion of its Loans and Notes to its trustee in support of its obligations
to its trustee.
13.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Administrative Agent or any Bank or the holder of any Note shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights, powers and remedies herein or in
any other Credit Document expressly provided are cumulative and not exclusive of
any rights, powers or remedies which the Administrative Agent or any Bank or the
holder of any Note would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Administrative Agent or any Bank or the holder of any Note to any other
or further action in any circumstances without notice or demand.
13.06 PAYMENTS PRO RATA. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its PRO RATA share of any such payment)
PRO RATA based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such amount; PROVIDED that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
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13.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Banks); PROVIDED that, except as otherwise specifically provided herein, all
computations of Excess Cash Flow and all computations determining compliance
with Sections 9.07 through 9.11, inclusive, shall utilize accounting principles
and policies in conformity with those used to prepare the historical financial
statements delivered to the Banks pursuant to Section 7.05(a) (with the
foregoing generally accepted accounting principles, subject to the preceding
proviso, herein called "GAAP").
(b) All computations of interest payable at the Eurodollar Rate,
Commitment Commission and Fees hereunder shall be made on the basis of a year of
360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest, Commitment
Commission or Fees are payable. All computations of interest payable at the
Base Rate shall be made on the basis on a year of 365 (or 366, as applicable)
days for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO ANY CREDIT PARTY AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT
UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR
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PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 EFFECTIVENESS. This Agreement shall become effective on the
date (the "Effective Date") on which the Borrower, the Administrative Agent and
each of the Banks shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Administrative
Agent at its Notice Office or, in the case of the Banks, shall have given to the
Administrative Agent telephonic (confirmed in writing), written or telex notice
(actually received) at such office that the same has been signed and mailed to
it. The Administrative Agent will give the Borrower and each Bank prompt
written notice of the occurrence of the Effective Date.
13.11 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 AMENDMENT OR WAIVER; ETC. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, PROVIDED that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected), (i) extend the final scheduled maturity of
any Loan or Note or extend the Stated Maturity of any Letter of Credit beyond
the Revolving Loan Maturity Date, or reduce the rate or extend the time of
payment of interest or Fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof (except to the extent repaid in cash), (ii) release all
or substantially all of the Collateral (except as expressly provided in the
Credit Documents) under all the Security Documents, (iii) amend, modify or waive
any provision of this Section 13.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement
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may be included in the determination of the Required Banks on substantially the
same basis as the extensions of Term Loans and Revolving Loan Commitments are
included on the Effective Date) or (v) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement; PROVIDED
FURTHER, that no such change, waiver, discharge or termination shall (1)
increase the Commitments of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Commitment shall not constitute an
increase of the Commitment of any Bank, and that an increase in the available
portion of any Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (2) without the consent of the Swingline Bank, amend,
modify or waive any provision relating to the rights or obligations of the
Swingline Bank or with respect to Swingline Loans (including, without
limitation, the obligations of the other Banks with Revolving Loan Commitments
to fund Mandatory Borrowings), (3) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 2 or alter its rights or
obligations with respect to Letters of Credit, (4) without the consent of the
Administrative Agent, amend, modify or waive any provision of Section 12 as same
applies to such Administrative Agent or any other provision as same relates to
the rights or obligations of such Administrative Agent, (5) without the consent
of the Collateral Agent, amend, modify or waive any provision relating to the
rights or obligations of the Collateral Agent, and (6) without the consent of
the Majority Banks of any Tranche of Term Loans, amend the definition of
Majority Banks with respect to such Tranche, or this clause (6), or alter the
required application of any prepayments or repayments (or commitment
reductions), as between the various Tranches, pursuant to Section 4.01 or
4.02(A) (excluding Sections 4.02(A)(b), (c) or (d)) with respect to such Tranche
(although the Required Banks may waive, in whole or in part, any such
prepayment, repayment or commitment reduction, except pursuant to Sections
4.02(A)(b), (c) or (d), so long as the application, as amongst the various
Tranches, of any such prepayment, repayment or commitment reduction which is
still required to be made is not altered).
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks are treated as
described in clauses (A) or (B) below, to either (A) replace each such
non-consenting Bank or Banks with one or more Replacement Banks pursuant to
Section 1.13 so long as at the time of such replacement, each such Replacement
Bank consents to the proposed change, waiver, discharge or termination or (B)
terminate such non-consenting Bank's Revolving Loan Commitment and repay its
Loans, in accordance with Sections 3.02(b) and 4.01(v), respectively, PROVIDED
that in any event the Borrower shall not have the right to replace a Bank,
terminate its Revolving Loan Commitment or repay its Loans solely as a result of
the exercise of such Bank's rights (and the withholding of any required consent
by such Bank) pursuant to the second proviso to Section 13.12(a).
13.13 SURVIVAL. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06 shall, subject
to Section 13.15 (to the extent applicable), survive the execution, delivery and
termination of this Agreement and the Notes and the making and repayment of the
Loans.
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13.14 DOMICILE OF LOANS. Each Bank may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 13.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11, 2.05 or 4.04 from
those being charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes giving rise to such increased costs after
the date of the respective transfer to the extent such costs would have been
applicable had such transfer not occurred).
13.15 LIMITATION ON ADDITIONAL AMOUNTS, ETC. Notwithstanding
anything to the contrary contained in Section 1.10, 1.11, 2.05 or 4.04 of this
Agreement, unless a Bank gives notice to the Borrower that it is obligated to
pay an amount under the respective such Section within 180 days after the later
of (x) the date the Bank incurs the respective increased costs, Taxes, loss,
expense or liability, reduction in amounts received or receivable or reduction
in return on capital or (y) the date such Bank has actual knowledge of its
incurrence of the respective increased costs, Taxes, loss, expense or liability,
reductions in amounts received or receivable or reduction in return on capital,
then such Bank shall only be entitled to be compensated for such amount by the
Borrower pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be,
to the extent the costs, Taxes, loss, expense or liability, reduction in amounts
received or receivable or reduction in return on capital are incurred or
suffered on or after the date which occurs 180 days prior to such Bank giving
notice to the Borrower that it is obligated to pay the respective amounts
pursuant to said Section 1.10, 1.11, 2.05 or 4.04, as the case may be. This
Section 13.15 shall have no applicability to any Section of this Agreement other
than said Sections 1.10, 1.11, 2.05 and 4.04. Each Bank shall be entitled to be
compensated for amounts pursuant to Sections 1.10, 1.11, 2.05 and 4.04 only to
the extent such Bank makes the same demands for compensation from all of its
other customers facing the same or similar circumstances.
13.16 CONFIDENTIALITY. (a) Subject to the provisions of clause (b)
of this Section 13.16, each Bank agrees that it will not disclose without the
prior consent of Holdings or the Borrower (other than to its employees,
auditors, advisors or counsel or to another Bank if the Bank or such Bank's
holding or parent company in its sole discretion determines that any such party
should have access to such information in connection with this Agreement and the
Transaction, provided such Persons shall be subject to the provisions of this
Section 13.16 to the same extent as such Bank) any information with respect to
Holdings or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Credit Document, PROVIDED that any Bank
may disclose any such information (a) as has become generally available to the
public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such Bank or to the Federal Reserve Board or
the Federal Deposit Insurance Corporation or similar organizations (whether in
the United States or elsewhere) or their successors, (c) as may be required or
appropriate in respect to any summons or subpoena or in connection with any
litigation, (d) in order to comply with any law, order, regulation or ruling
applicable to such Bank, (e) to the Administrative Agent or the Collateral Agent
and (f) to any prospective or actual transferee or participant in connection
with any contemplated transfer or participation of any of the Notes or
Commitments or any interest therein by such Bank, PROVIDED
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that such prospective transferee agrees with such Bank on terms and conditions
substantially the same as those contained in this Section.
(b) Each of Holdings and the Borrower hereby acknowledges and agrees
that each Bank may share with any of its affiliates any information related to
Holdings or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of Holdings and
its Subsidiaries, provided such Persons shall be subject to the provisions of
this Section 13.16 to the same extent as such Bank and provided such sharing of
information is undertaken in connection with this Agreement and the Transaction.
13.17 REGISTRY. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.17, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 13.17.
SECTION 14. Holdings Guaranty.
14.01 THE GUARANTY. In order to induce the Banks to enter into this
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by Holdings from the proceeds of the Loans and the
issuance of the Letters of Credit and to induce the Banks or any of their
respective Affiliates to enter into Interest Rate Protection Agreements,
Holdings hereby agrees with the Banks as follows: Holdings hereby
unconditionally and irrevocably guarantees as primary obligor and not merely as
surety the full and prompt payment when due, whether upon maturity, by
acceleration or otherwise, of any and all of the Guaranteed Obligations of the
Borrower to the Secured Creditors. If any or all of the Guaranteed Obligations
of the Borrower to the Secured Creditors becomes due and payable hereunder,
Holdings unconditionally promises to pay such indebtedness to the Secured
Creditors, or order, on demand, together with
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any and all reasonable expenses which may be incurred by the Administrative
Agent or the Secured Creditors in collecting any of the Guaranteed Obligations.
14.02 BANKRUPTCY. Additionally, Holdings unconditionally and
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Borrower to the Secured Creditors whether or not then due or payable by
the Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 10.05, and unconditionally and irrevocably promises to pay
such Guaranteed Obligations to the Secured Creditors, or order, on demand, in
lawful money of the United States.
14.03 NATURE OF LIABILITY. The liability of Holdings hereunder is
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrower whether executed by Holdings, any other
guarantor or by any other party, and the liability of Holdings hereunder shall
not be affected or impaired by (a) any direction as to application of payment by
the Borrower or by any other party, or (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations of the Borrower, or (c) any payment on or in
reduction of any such other guaranty or undertaking (except to the extent the
Guaranteed Obligations are partially or wholly satisfied as a result thereof),
or (d) any dissolution, termination or increase, decrease or change in personnel
by the Borrower, or (e) any payment made to the Administrative Agent or the
Secured Creditors on the indebtedness which the Administrative Agent or such
Secured Creditors repay the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
Holdings waives any right to the deferral or modification of its obligations
hereunder by reason of any such proceeding.
14.04 INDEPENDENT OBLIGATION. The obligations of Holdings hereunder
are independent of the obligations of any other guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against Holdings
whether or not action is brought against any other guarantor or the Borrower and
whether or not any other guarantor or the Borrower be joined in any such action
or actions. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to Holdings.
14.05 AUTHORIZATION. Holdings authorizes the Administrative Agent
and the Secured Creditors without notice or demand (except as shall be required
by applicable statute and cannot be waived), and without affecting or impairing
its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate of
interest thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing,
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the Guaranteed Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Borrower to its creditors other than the Banks;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Secured Creditors regardless of
what liability or liabilities of Holdings or the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
Holdings from its liabilities under the Holdings Guaranty.
14.06 RELIANCE. It is not necessary for the Administrative Agent or
the Secured Creditors to inquire into the capacity or powers of the Borrower or
its Subsidiaries or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Guaranteed Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
14.07 SUBORDINATION. Any of the indebtedness of the Borrower
relating to the Guaranteed Obligations now or hereafter owing to Holdings is
hereby subordinated to the Guaranteed Obligations of the Borrower owing to the
Administrative Agent and the Secured Creditors; and if the Administrative Agent
so requests at a time when an Event of Default exists, all such indebtedness
relating to the Guaranteed Obligations of the Borrower to Holdings shall be
collected, enforced and received by Holdings for the benefit of the Secured
Creditors and be paid over to the Administrative Agent on behalf of the Secured
Creditors on account of the Guaranteed Obligations of the Borrower to the
Secured Creditors, but without affecting or impairing in any manner the
liability of Holdings under the other provisions of this Guaranty. Prior to the
transfer by Holdings of any note or negotiable instrument evidencing any of the
indebtedness relating to the Guaranteed Obligations of the Borrower to Holdings,
Holdings shall mark such note or negotiable instrument with a legend that the
same is subject to this subordination. The provisions of this Section 14.07
(and any claims of Holdings as described above) are subject to the provisions of
Section 14.08(c) and (d).
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14.08 WAIVER. (a) Holdings waives any right (except as shall be
required by applicable statute and cannot be waived) to require the
Administrative Agent or the Secured Creditors to (i) proceed against the
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's or the
Secured Creditors' power whatsoever. Holdings waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Administrative
Agent and the Secured Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the Secured
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law, including, but not limited to, the Communications
Acts), or exercise any other right or remedy the Administrative Agent and the
Secured Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of Holdings
hereunder except to the extent the Guaranteed Obligations have been paid.
Holdings waives any defense arising out of any such election by the
Administrative Agent and the Secured Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of Holdings against the Borrower or any other party or any
security.
(b) Holdings waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Holdings assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which Holdings assumes
and incurs hereunder, and agrees that the Administrative Agent and the Secured
Creditors shall have no duty to advise Holdings of information known to them
regarding such circumstances or risks.
(c) Holdings understands that to the extent the Guaranteed
Obligations are secured by Real Property, Holdings shall be liable for the full
amount of the liability hereunder notwithstanding foreclosure on any such Real
Property by trustee sale or any other reason impairing Holdings' or any secured
creditors' right to proceed against the Borrower. Holdings hereby waives, to the
fullest extent permitted by applicable laws, all rights and benefits under
Sections 580a, 580b, 580d and 726 of the California Code of Civil Procedure. In
addition, Holdings hereby waives, to the fullest extent permitted by applicable
laws, without limiting the generality of the foregoing or any other provision
hereof, all rights and benefits which might otherwise be available to Holdings
under California Civil Code Sections 2787 through 2855 inclusive, 2899 and 3433.
(d) Holdings understands, is aware and hereby acknowledges that if
the Banks elect to foreclose on any of the Mortgaged Property security
nonjudicially, any right of
-111-
<PAGE>
subrogation of Holdings against the Borrower may be impaired or extinguished and
that as a result of such impairment or extinguishment of subrogation rights,
Holdings may have a defense to a deficiency judgment arising out of the
operation of Section 580d of the California Code of Civil Procedure and related
principles of estoppel. Holdings waives all rights and defenses arising out of
an election of remedies by the Banks, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed the guarantor's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise.
14.09 NATURE OF LIABILITY. It is the desire and intent of Holdings
and the Secured Creditors that this Holdings Guaranty shall be enforced against
Holdings to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If, however, and
to the extent that, the obligations of Holdings under this Holdings Guaranty
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of Holdings shall be deemed to be reduced and Holdings shall pay the
maximum amount of the Guaranteed Obligations which would be permissible under
applicable law.
-112-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ADDRESS:
GREAT LAKES ACQUISITION CORP.
551 Fifth Avenue
Suite 3800
New York, New York 10176
Tel: (212) 983-1399
Fax: (212) 986-5099
Attention: President
By: /s/ James Mckenzie
-------------------------------------
Title:
with a copy to:
GREAT LAKES CARBON CORPORATION
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: David Reamer
By: /s/ James Mckenzie
-------------------------------------
Title:
-113-
<PAGE>
130 Liberty Street BANKERS TRUST COMPANY,
New York, New York 10006 Individually and as Administrative Agent
Tel: (212) 250-8617
Fax: (212) 250-7200 By: /S/ Andrew Keith
Attention: Andrew Keith -------------------------------------
Title: Vice President
277 Park Avenue DLJ CAPITAL FUNDING, INC.,
New York, New York, 10172 Individually and as Documentation Agent
Tel: (212) 892-7911
Fax: (212) 892-7542 By: /s/ Eric Swanson
Attention: Dana Klien -------------------------------------
Title: Managing Director
With a copy to:
DONALDSON, LUFKIN & JENRETTE
2121 Avenue of the Stars
Suite 3000
Tel: (310) 282-7443
Fax: (310) 282-6178
Attention: David Miller
231 South LaSalle BANK OF AMERICA NT&SA,
Chicago, Illinois 60697 Individually and as Co-Agent
Tel: (312) 828-3141
Fax: (312) 828-3555 By: /s/ Kevin Morrison
Attention: Kevin Morrison -------------------------------------
Title: Vice President
-114-
<PAGE>
ABN AMRO BANK N.V.
San Francisco International Branch
By: /s/ Dianne Barkley
-------------------------------------
Title: Group Vice President
By: /s/ Gina Brusatori
-------------------------------------
Title: Vice President
BANKBOSTON, N.A.
By: /S/ C. Andrew Picullel
-------------------------------------
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Nicholas J. Campbell
-------------------------------------
Title: Vice President
CREDITANSTALT CORPORATE FINANCE, INC.
By: David E. Yewer
-------------------------------------
Title: Vice President
By: /s/ Christina Schoen
-------------------------------------
Title: Senior Vice President
-115-
<PAGE>
FLEET CAPITAL
By: /s/ Mark D. Newlun
-------------------------------------
Title: Vice President
THE FUJI BANK, LIMITED
By: /s/ Teiji Teramoto
-------------------------------------
Title: Vice President And Manager
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Janet K. Williams
-------------------------------------
Title: Duly Authorized Signatory
HELLER FINANCIAL
By: /s/ Patrick Hayes
-------------------------------------
Title: Vice President
NATIONAL CITY BANK
By: /s/ Barry C. Robinson
-------------------------------------
Title: Vice President
-116-
<PAGE>
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Perry Vavoules
-------------------------------------
Title: Senior Vice President
WELLS FARGO BANK, N.A.
By: /s/ Michael Real
-------------------------------------
Title: Assistant Vice President
-117-
<PAGE>
EXHIBIT 12.1
GREAT LAKES CARBON CORPORATION
SELECTED HISTORICAL AND OTHER DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FIRST QUARTER
--------------------------------------------- ----------------
1993 1994 1995 1996 1997 1997 1998
----- ----- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNNGS TO FIXED CHARGES:
(1) Income before income taxes 4,878 55 21,451 42,707 34,675 6,840 12,474
----- ----- ------ ------ ------ ----- ------
(2) Fixed charges:
Interest expense 2,063 1,819 1,543 8,419 7,801 2,080 1,868
Capitalized interest 0 0 0 0 808 0 374
Interest portion of rental expense 808 741 794 792 817 199 199
----- ----- ------ ------ ------ ----- ------
Total fixed charges 2,871 2,560 2,337 9,211 9,426 2,279 2,441
(3) Earnings:
Income before income taxes 4,878 55 21,451 42,707 34,675 6,840 12,474
Fixed charges 2,871 2,560 2,337 9,211 9,426 2,279 2,441
Capitalized interest 0 0 0 0 (808) 0 (374)
----- ----- ------ ------ ------ ----- ------
Total earnings 7,749 2,615 23,788 51,918 43,293 9,119 14,541
----- ----- ------ ------ ------ ----- ------
----- ----- ------ ------ ------ ----- ------
Earnings to fixed charges (3/2) 2.7x 1.0x 10.2x 5.6x 4.6x 4.0x 6.0x
----- ----- ------ ------ ------ ----- ------
</TABLE>
<PAGE>
EXHIBIT 21.1
GREAT LAKES CARBON CORPORATION
SUBSIDIARIES
Copetro, S.A., an Argentine corporation
Great Lakes International Sales Corp., a Barbados corporation
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 13, 1998, included in the Registration
Statement on Form S-4 and the related Prospectus of Great Lakes Carbon
Corporation for the registration of $175,000,000 10 1/4% Series B Subordinated
Notes due 2008.
Ernst & Young LLP
New York, New York
July 20, 1998
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) /X/
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
United States 06-1143380
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Lynda A. Vogel, Senior Vice President and Managing Director
633 West 5th Street, 12th Floor, Los Angeles, California 90071
(213) 362-7399
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
Delaware 13-3637043
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
551 FIFTH AVENUE, SUITE 3600
NEW YORK, NEW YORK 10176
(Address of principal executive offices) (Zip Code)
GREAT LAKES CARBON CORPORATION
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
(TYPE OF SECURITIES)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Comptroller of the Currency, Western District Office, 50
Fremont Street, Suite 3900, San Francisco, California, 94105-2292
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Bank and Trust Company.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as
now in effect, is on file with the Securities and Exchange
Commission as Exhibits with corresponding exhibit numbers to the
Form T-1 of Western Digital Corporation, filed pursuant to Section
305(b)(2) of the Act, on May 12, 1998 (Registration No. 333-52463),
and are incorporated herein by reference.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A Certificate of Corporate Existence (with fiduciary powers)
from the Comptroller of the Currency, Administrator of National Banks
is on file with the Securities and Exchange Commission as Exhibits
with corresponding exhibit numbers to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May
12, 1998 (Registration No. 333-52463), and are incorporated herein by
reference.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
Authorization of the Trustee to exercise fiduciary powers
(included in Exhibits 1 and 2; no separate instrument).
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is
on file with the Securities and Exchange Commission as Exhibits with
corresponding exhibit numbers to the Form T-1 of Western Digital
Corporation, filed pursuant to Section 305(b)(2) of the Act, on May
12, 1998 (Registration No. 333-52463), and are incorporated herein by
reference.
1
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and made a part
hereof.
NOTES
In answering any item of this Statement of Eligibility which relates
to matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company of California,
NATIONAL ASSOCIATION, organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of Los
Angeles, and State of California, on the 17th day of July, 1998.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /s/ Scott C. Emmons
-------------------------------------
Scott C. Emmons
Assistant Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by Great Lakes
Carbon Corporation of its 10 1/4% Series B Senior Subordinated Notes due 2008,
we hereby consent that reports of examination by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, NATIONAL ASSOCIATION
By: /s/ Scott C. Emmons
-------------------------------------
Scott C. Emmons
Assistant Vice President
DATED: JULY 17, 1998
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition and Income for A Bank With Domestic Offices
Only and Total Assets of Less Than $100 Million of State Street Bank and Trust
Company of California, a national banking association duly organized and
existing under and by virtue of the laws of the United States of America, at the
close of business MARCH 31, 1998, published in accordance with a call made by
the Federal Deposit Insurance Corporation pursuant to the required law: 12
U.S.C. Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember
banks); and 12 U.S.C. Section 161 (National banks).
<TABLE>
<CAPTION>
Thousands
ASSETS of Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin. . . . . . . . . . . . . . . . . . . . . . . 6,852
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . . . . . . . . . . . 0
Allowance for loan and lease losses . . . . . . . . . . . . . . . . . . . . . 0
Allocated transfer risk reserve . . . . . . . . . . . . . . . . . . . . . . . 0
Loans and leases, net of unearned income and allowances . . . . . . . . . . . . . . . . . . . . 0
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Investments in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814
----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,957
----------
----------
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . 0
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . 0
In foreign offices and Edge subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . 0
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Demand notes issued to the U.S. Treasury and Trading Liabilities . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,356
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,356
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750
Undivided profits and capital reserves/Net unrealized holding gains (losses) . . . . . . . . . . . . . . 2,352
Cumulative foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,602
----------
Total liabilities and equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,958
----------
----------
</TABLE>
4
<PAGE>
I, Kevin R. Wallace, Vice President and Comptroller of the above named bank do
hereby declare that this Report of Condition and Income for this report date
have been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and is true to the best of my knowledge
and belief.
Kevin R. Wallace
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
Lynda A. Vogel
James A. Quale
Stephen Rivero
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 53,865
<SECURITIES> 0
<RECEIVABLES> 34,327
<ALLOWANCES> 761
<INVENTORY> 30,905
<CURRENT-ASSETS> 123,463
<PP&E> 150,456
<DEPRECIATION> 88,604
<TOTAL-ASSETS> 190,519
<CURRENT-LIABILITIES> 33,981
<BONDS> 87,010
0
0
<COMMON> 1
<OTHER-SE> 60,505
<TOTAL-LIABILITY-AND-EQUITY> 190,519
<SALES> 62,070
<TOTAL-REVENUES> 62,070
<CGS> 45,683
<TOTAL-COSTS> 45,683
<OTHER-EXPENSES> 88
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,157
<INCOME-PRETAX> 12,474
<INCOME-TAX> 4,407
<INCOME-CONTINUING> 8,067
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,067
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
GREAT LAKES CARBON CORPORATION
OFFER FOR ALL OUTSTANDING
10 1/4% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008
PURSUANT TO THE PROSPECTUS, DATED , 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
DELIVERY TO: State Street Bank and Trust Company of
California, N.A., EXCHANGE AGENT
c/o State Street
Bank Trust Company
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT COURIER:
2 International Place 2 International Place
Boston, MA 02110 Boston, MA 02110
Attention: Kellie Mullen Attention: Kellie Mullen
BY HAND:
2 International Place
Boston, MA 02110
</TABLE>
FOR INFORMATION CALL:
(213) 362-7369
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(617) 664-5290
Attention: Corporate Trust Department
CONFIRM BY TELEPHONE:
(617) 664-5587
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY OF THIS LETTER OF TRANSMITTAL .
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1998 (the "Prospectus"), of Great Lakes Carbon
Corporation, a Delaware corporation (the "Company"), and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer (the
"Exchange Offer") to exchange an aggregate principal amount of up to
$175,000,000 of the Company's 10 1/4% Series B Senior Subordinated Notes due
2008 which have been registered under the Securities Act of 1933, as amended
(the "New Notes"), for a like principal amount of the Company's issued and
outstanding 10 1/4% Senior Subordinated Notes due 2008 (the "Old Notes") from
the registered holders thereof (the "Holders").
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from May 22, 1998. Accordingly, registered Holders of New Notes on
the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest
<PAGE>
accruing from the most recent date to which interest has been paid or, if no
interest has been paid, from May 22, 1998. Old Notes accepted for exchange will
cease to accrue interest from and after the date of consummation of the Exchange
Offer. Holders of Old Notes whose Old Notes are accepted for exchange will not
receive any payment in respect of accrued interest on such Old Notes.
This Letter is to be completed by a Holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus and an Agent's
Message is not delivered. Tenders by Book-entry transfer may also be made by
delivering an Agent's Message in lieu of this Letter. The term "Agent's Message"
means a message, transmitted by the Book-Entry Transfer Facility to and received
by the Exchange Agent and forming a part of a Book-Entry Confirmation (as
defined below), which states that the Book-Entry Transfer Facility has received
an express acknowledgment from the tendering participant, which acknowledgment
states that such participant has received and agrees to be bound by this Letter
and that the Company may enforce this Letter against such participant. Holders
of Old Notes whose certificates are not immediately available, or who are unable
to deliver their certificates or confirmation of the book-entry tender of their
Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
(a "Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space provided
below is inadequate, the certificate numbers and principal amount of Old Notes
should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
-------------------------------------------------------------------------------------------
1 2 3
AGGREGATE
NAME(S) AND ADDRESS(ES) OF REGISTERED PRINCIPAL PRINCIPAL
HOLDER(S) CERTIFICATE AMOUNT OF AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OLD NOTE(S) TENDERED**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed if Old Notes are being tendered by book-entry
transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have
tendered ALL of the Old Notes represented by the Old Notes indicated in
column 2. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
<PAGE>
By crediting the Old Notes to the Exchange Agent's account at the Book-Entry
Transfer Facility's Automated Tender Offer Program ("ATOP") and by complying
with applicable ATOP procedures with respect to the Exchange Offer, including
transmitting to the Exchange Agent a computer-generated message (an "Agent's
Message") in which the holder of the Old Notes acknowledges and agrees to be
bound by the terms of, and makes the representations and warranties contained
in, the Letter, the participant in the Book-Entry Transfer Facility confirms on
behalf of itself and the beneficial owners of such Old Notes all provisions of
this Letter (including all representations and warranties) applicable to it and
such beneficial owner as fully as if it had completed the information required
herein and executed and transmitted this Letter to the Exchange Agent.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution Which Guaranteed Delivery ______________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO
Name: ______________________________________________________________________
Address: ___________________________________________________________________
_____________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of market-
making activities or other trading activities, it acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act of 1933, as
amended, in connection with any resale of such New Notes; however, by so
acknowledging and by delivering such a prospectus the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act of 1933, as amended. If the undersigned is a broker-dealer that will receive
New Notes, it represents that the Old Notes to be exchanged for the New Notes
were acquired as a result of market-making activities or other trading
activities.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Old Notes, with full power of substitution, among other
things, to cause the Old Notes to be assigned, transferred and exchanged. The
undersigned hereby represents and warrants that the undersigned has full power
and authority to tender, sell, assign and transfer the Old Notes, and to acquire
Exchange Notes issuable upon
<PAGE>
the exchange of such tendered Old Notes, and that, when the same are accepted
for exchange, the Company will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim when the same are accepted by the Company. The undersigned
hereby further represents that any New Notes acquired in exchange for Old Notes
tendered hereby will have been acquired in the ordinary course of business of
the person receiving such New Notes, whether or not such person is the
undersigned, that neither the Holder of such Old Notes nor any such other person
is participating in, intends to participate in or has an arrangement or
understanding with any person to participate in the distribution of such New
Notes and that neither the Holder of such Old Notes nor any such other person is
an "affiliate," as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than any such Holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of any such Holder's business and any such Holder has no arrangement with any
person to participate in the distribution of such New Notes. However, the
Company has not sought and does not intend to seek its own no-action letter, and
accordingly, the SEC has not considered and will not consider the Exchange Offer
in the context of a no-action letter and there can be no assurance that the
staff of the SEC would make a similar determination with respect to the Exchange
Offer. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes and has no arrangement or understanding to participate in a
distribution of New Notes. If any Holder is an affiliate of the Company, is
engaged in or intends to engage in or has any arrangement or understanding with
respect to the distribution of the New Notes to be acquired pursuant to the
Exchange Offer, such Holder (i) could not rely on the applicable interpretations
of the staff of the SEC and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. If the undersigned is a broker-dealer that will receive New
Notes for its own account in exchange for Old Notes, it represents that the Old
Notes to be exchanged for the New Notes were acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus meeting the requirements of the Securities Act, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old Notes for any Old Notes not
exchanged) to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<PAGE>
- -------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be issued in the name of and sent to someone other than the
person or persons whose signature(s) appear(s) on this Letter above, or if
Old Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s) ____________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
/ / Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
________________________________________________________________________________
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged and/or
New Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter above or to such person or persons at
an address other than shown in the box entitled "Description of Old Notes"
on this Letter above.
Mail: New Notes and/or Old Notes to:
Name(s) ____________________________________________________________________
(PLEASE TYPE OR PRINT)
__________________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(ZIP CODE)
- -----------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
<TABLE>
<CAPTION>
X 1998
<S> <C> <C> <C>
X 1998
SIGNATURE(S) OF OWNER DATE
</TABLE>
Area Code and Telephone Number _____________________________________________
If a holder is tendering any Old Notes, this Letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Old Notes or by any person(s) authorized to become registered holder(s)
by endorsements and documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, officer or other person acting
in a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity: __________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: ___________________________________________________
(AUTHORIZED SIGNATURE)
__________________________________________________________________________
(TITLE)
__________________________________________________________________________
(NAME AND FIRM)
Dated: _______________________________________________________________, 1998
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
10 1/4% SENIOR SUBORDINATED NOTES DUE 2008 OF GREAT LAKES CARBON CORPORATION IN
EXCHANGE FOR THE
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008 OF GREAT LAKES CARBON
CORPORATION,
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders of Old Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus and an Agent's Message is
not delivered. Tenders by book-entry transfer may also be made by delivering an
Agent's Message in lieu of this Letter of Transmittal. The term "Agent's
Message" means a message, transmitted by the Book Entry Transfer Facility to and
received by the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the tendering participant, which acknowledgment states that
such participant has received and agrees to be bound by, and makes the
representations and warranties contained in, the Letter of Transmittal and that
the issuers may enforce the Letter of Transmittal against such participant.
Certificates for all physically tendered Old Notes, or Book-Entry Confirmation,
as the case may be, as well as a properly completed and duly executed Letter (or
manually signed facsimile hereof) and any other documents required by this
Letter, must be received by the Exchange Agent at the address set forth herein
on or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes tendered hereby must
be in denominations of principal amount of $1,000 and any integral multiple
thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) prior to 5:00 P.M., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by facsimile
transmission, mail or hand delivery), setting forth the name and address of the
holder of Old Notes and the amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the Expiration Date, the certificates for
all physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, together with a properly completed and duly
executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with
any required signature guarantees and any other documents required by this
Letter will be deposited by the Eligible Institution with the Exchange Agent,
and (iii) the certificates for all physically tendered Old Notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter (or facsimile thereof or Agent's
Message in lieu thereof) with any required signature guarantees and any and all
other documents required by this Letter, are received by the Exchange Agent
within three NYSE trading days after the Expiration Date.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be
registered mail, properly insured, with return receipt requested, made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 P.M., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
<PAGE>
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes--Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter, promptly after the
Expiration Date. ALL OF THE OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE
DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Old Notes tendered
hereby, the signature must correspond exactly with the name as written on the
face of the certificates or on the Book-Entry Transfer Facility's security
position listing as the holder of such Old Notes without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A FINANCIAL
INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE
HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR THE STOCK
EXCHANGES MEDALLION PROGRAM (EACH AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE INSTITUTION,
PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER OF OLD NOTES
(WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY PARTICIPANT IN THE
BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON A SECURITY POSITION
LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT COMPLETED THE BOX ENTITLED
"SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS
LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Noteholders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
<PAGE>
Facility as such noteholder may designate hereon. If no such instructions are
given, such Old Notes not exchanged will be returned to the name and address of
the person signing this Letter.
5. TAXPAYER IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption from backup withholding, such tendering
holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, the Exchange Agent may be required to withhold 31% of the amount of
any reportable payments made after the exchange to such tendering holder of New
Notes. If withholding results in an overpayment of taxes, a refund may be
obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying, under penalties of perjury, that the TIN provided is correct (or
that such holder is awaiting a TIN) and that (i) the holder is exempt from
backup withholding, or (ii) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result of
a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of Old Notes is a nonresident alien or
foreign entity not subject to backup withholding, such holder must give the
Exchange Agent a completed Form W-8, Certificate of Foreign Status. These forms
may be obtained from the Exchange Agent. If the Old Notes are in more than one
name or are not in the name of the actual owner, such holder should consult the
W-9 Guidelines for information on which TIN to report. If such holder does not
have a TIN, such holder should consult the W-9 Guidelines for instructions on
applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and write
"applied for" in lieu of its TIN. Note: Checking this box and writing "applied
for" on the form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If the box in Part 2 of
the Substitute Form W-9 is checked, the Exchange Agent will retain 31% of
reportable payments made to a holder during the sixty (60) day period following
the date of the Substitute Form W-9. If the holder furnishes the Exchange Agent
with his or her TIN within sixty (60) days of the Substitute Form W-9, the
Exchange Agent will remit such amounts retained during such sixty (60) day
period to such holder and no further amounts will be retained or withheld from
payments made to the holder thereafter. If, however, such holder does not
provide its TIN to the Exchange Agent within such sixty (60) day period, the
Exchange Agent will remit such previously withheld amounts to the Internal
Revenue Service as backup withholding and will withhold 31% of all reportable
payments to the holder thereafter until such holder furnishes its TIN to the
Exchange Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
<PAGE>
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or an
Agent's Message in lieu thereof, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 P.M., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written notice
of withdrawal must be received by the Exchange Agent at the address set forth
above prior to 5:00 P.M., New York City time, on the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having tendered the
Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including certificate number or numbers and the principal amount of
such Old Notes), (iii) contain a statement that such holder is withdrawing his
election to have such Old Notes exchanged, (iv) be signed by the holder in the
same manner as the original signature on the Letter by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer to have the Trustee with respect to the Old Notes register
the transfer of such Old Notes in the name of the person withdrawing the tender
and (v) specify the name in which such Old Notes are registered, if different
from that of the Depositor. If Old Notes have been tendered pursuant to the
procedure for book-entry transfer set forth in "The Exchange Offer--Book-Entry
Transfer" section of the Prospectus, any notice of withdrawal must specify the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes
that have been tendered for exchange but which are not exchanged for any reason
will be returned to the Holder thereof without cost to such Holder (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures set forth in "The Exchange Offer--Book-Entry Transfer" section of the
Prospectus, such Old Notes will be credited to an account maintained with the
Book-Entry Transfer Facility for the Old Notes) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following the procedures described
above at any time on or prior to 5:00 P.M., New York City time, on the
Expiration Date.
<PAGE>
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: STATE STREET BANK AND TRUST COMPANY
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE TIN: ------------------------
FORM W-9 PROVIDE YOUR TIN IN SOCIAL SECURITY NUMBER OR
DEPARTMENT OF THE TREASURY THE BOX AT RIGHT AND EMPLOYER IDENTIFICATION NUMBER
INTERNAL REVENUE SERVICE CERTIFY BY SIGNING
AND DATING BELOW.
-------------------------------------------------------
PART 2--TIN APPLIED FOR / /
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN")
AND
CERTIFICATION
- -----------------------------------------------------------------------------------------
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me).
(2) I am not subject to backup withholding either because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE DATE -----------------
- -----------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the
IRS that you are subject to backup withholding because of underreporting of interest or
dividends on your tax return and you have not been notified by the IRS that you are no
longer subject to backup withholding.
- -----------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
--------------------------------------
--------------------------------------
SIGNATURE DATE
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
GREAT LAKES CARBON CORPORATION
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Great Lakes Carbon Corporation (the "Company") made pursuant
to the Prospectus, dated , 1998 (the "Prospectus"), if certificates
for the outstanding 10 1/4% Senior Subordinated Notes due 2008 of the Company
(the "Old Notes") are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach State Street Bank and Trust Company of
California, N.A., as exchange agent (the "Exchange Agent") prior to 5:00 P.M.,
New York City time, on the Expiration Date of the Exchange Offer. Such form may
be delivered or transmitted by facsimile transmission, mail or hand delivery to
the Exchange Agent as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Old Notes pursuant to the Exchange
Offer, a completed, signed and dated Letter of Transmittal (or facsimile
thereof) must also be received by the Exchange Agent prior to 5:00 P.M., New
York City time, on the Expiration Date. Capitalized terms not defined herein are
defined in the Prospectus.
DELIVERY TO: State Street Bank and Trust Company of California, EXCHANGE AGENT
c/o State Street Bank Trust Company
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT COURIER:
2 International Place 2 International Place
Boston, MA 02110 Boston, MA 02110
Attention: Kellie Mullen Attention: Kellie Mullen
BY HAND:
2 International Place
Boston, MA 02110
</TABLE>
FOR INFORMATION CALL:
(213) 362-7369
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(617) 664-5290
Attention: Corporate Trust Department
CONFIRM BY TELEPHONE:
(617) 664-5587
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
<PAGE>
<TABLE>
<S> <C>
Principal Amount of Old Notes
Tendered:*
- --------------------------------------
Certificate Nos. (if available): If Old Notes will be delivered by
book-entry transfer to The Depository
Trust Company, provide account number.
- --------------------------------------
Total Principal Amount Represented by
Old Notes Certificate(s):
$ Account Number
- -------------------------------------- ----------------------------
- --------------------------------------------------------------------------------
</TABLE>
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X ------------------ -----------------
X ------------------ -----------------
Signature(s) of Date
Owner(s)
or Authorized
Signatory
Area Code and Telephone Number: ---------- - ------
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<S> <C>
Name(s): ---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Capacity: ---------------------------------------------------------------
Address(es): ---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
- ------------------------
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the certificates representing the principal amount of Old Notes tendered
hereby in proper form for transfer, or timely confirmation of the book-entry
transfer of such Old Notes into the Exchange Agent's account at The Depository
Trust Company pursuant to the procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus, together with
any required signature guarantee and any other documents required by the Letter
of Transmittal, will be received by the Exchange Agent at the address set forth
above, no later than three New York Stock Exchange trading days after the
Expiration Date.
<TABLE>
<S> <C>
- -------------------------------------- --------------------------------------
Name of Firm Authorized Signature
- -------------------------------------- --------------------------------------
Address Title
- -------------------------------------- Name:
--------------------------------------
Zip Code (Please Type or Print)
Area Code and Tel. No. Dated:
---------------------- --------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY EXECUTED
LETTER OF TRANSMITTAL.
<PAGE>
GREAT LAKES CARBON CORPORATION
OFFER FOR ALL OUTSTANDING
10 1/4% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008,
To: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Great Lakes Carbon Corporation (the "Company") is offering, upon and subject
to the terms and conditions set forth in the Prospectus, dated , 1998 (the
"Prospectus"), and the enclosed Letter of Transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") its 10 1/4% Series B Senior
Subordinated Notes due 2008, which have been registered under the Securities Act
of 1933, as amended, for its outstanding 10 1/4% Senior Subordinated Notes due
2008 (the "Old Notes"). The Exchange Offer is being made in order to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement, dated as of May 22, 1998, by and among the Company and the initial
purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated , 1998;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if certificates for Old Notes are not immediately available or time will not
permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for book-entry transfer
cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account you
hold Old Notes registered in your name or the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Exchange
Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to State Street Bank and Trust Company of
California, N.A., the Exchange Agent for the Exchange Offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED BY THE COMPANY (THE
"EXPIRATION DATE"). OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE
WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly completed
Letter of Transmittal (or facsimile thereof or Agent's Message in lieu thereof),
with any required signature guarantees and any other required documents, should
be sent to the Exchange Agent and certificates representing the Old Notes, or a
timely Book-Entry confirmation of such Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility, should be delivered to the Exchange
Agent, all in accordance with the instructions set forth in the Letter of
Transmittal and the Prospectus.
If a registered holder of Old Notes desires to tender, but such Old Notes
are not immediately available, or time will not permit such holder's Old Notes
or other required documents to reach the Exchange Agent before the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
described in the Prospectus under "The Exchange Offer--Guaranteed Delivery
Procedures."
<PAGE>
The Company will, upon request, reimburse brokers, dealers, commercial banks
and trust companies for reasonable and necessary costs and expenses incurred by
them in forwarding the Prospectus and the related documents to the beneficial
owners of Old Notes held by them as nominee or in a fiduciary capacity. The
Company will pay or cause to be paid all stock transfer taxes applicable to the
exchange of Old Notes pursuant to the Exchange Offer, except as set forth in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to State
Street Bank and Trust Company of California, N.A., the Exchange Agent for the
Exchange Offer, at its address and telephone number set forth on the front of
the Letter of Transmittal.
Very truly yours,
GREAT LAKES CARBON CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
<PAGE>
GREAT LAKES CARBON CORPORATION
OFFER FOR ALL OUTSTANDING
10 1/4% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2008,
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated , 1998 (the
"Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Great Lakes
Carbon Corporation (the "Company") to exchange its 10 1/4% Series B Senior
Subordinated Notes due 2008, which have been registered under the Securities Act
of 1933, as amended (the "New Notes"), for its outstanding 10 1/4% Senior
Subordinated Notes due 2008 (the "Old Notes"), upon the terms and subject to the
conditions described in the Prospectus and the Letter of Transmittal. The
Exchange Offer is being made in order to satisfy certain obligations of the
Company contained in the Registration Rights Agreement, dated as of May 22,
1998, by and among the Company and the initial purchasers referred to therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes held by us for your account but not registered in your name. A TENDER OF
SUCH OLD NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in order
to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 P.M.,
New York City time, on , 1998, unless extended by the Company. Any Old
Notes tendered pursuant to the Exchange Offer may be withdrawn at any time
before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain Conditions to
the Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Notes from the holder
to the Company will be paid by the Company, except as otherwise provided in the
Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 P.M., New York City time, on
, 1998, unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OLD NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Great Lakes
Carbon Corporation with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES
--------------------------------------------------------
<S> <C>
10 1/4% Senior Subordinated Notes due 2008..............
</TABLE>
/ / Please do not tender any Old Notes held
by you for my account.
Dated: , 1998
Signature(s)
Please print name(s) here
Address(es)
Area Code and Telephone Number
Tax Identification or Social Security
No(s).
None of the Old Notes held by us for your account will be tendered unless we
receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
<PAGE>
, 1998
State Street Bank and Trust Company of California, N.A.
Attention: Corporate Trust Services Division
Ladies and Gentlemen:
Great Lakes Carbon Corporation, a Delaware corporation (the "Company"),
proposes to make an offer (the "Exchange Offer") to exchange its 10 1/4% Senior
Subordinated Notes due 2008 (the "Old Notes") for its 10 1/4% Series B Senior
Subordinated Notes due 2008 (the "New Notes"). The terms and conditions of the
Exchange Offer as currently contemplated are set forth in a prospectus, dated
___ , 1998 (the "Prospectus"), and the accompanying Letter of Transmittal to be
distributed to all record holders of the Old Notes. A copy of the Prospectus
and the accompanying Letter of Transmittal are attached hereto as Exhibits A and
B. The Old Notes and the New Notes are collectively referred to herein as the
"Notes." Initially capitalized terms used but not defined herein shall have the
respective meanings given them in the Prospectus.
Copies of each of the form of the Notice of Guaranteed Delivery, the form
of Letter to Brokers, Dealers and the form of Letter to Clients are attached
hereto as Exhibit C.
The Company hereby appoints State Street Bank and Trust Company of
California, N.A., to act as exchange agent (the "Exchange Agent") in connection
with the Exchange Offer. References hereinafter to "you" shall refer to State
Street Bank and Trust Company of California, N.A.
The Exchange Offer is expected to be commenced by the Company on or about
___, 1998. The Letters of Transmittal accompanying the Prospectus (or in the
case of book entry securities, the ATOP system) are to be used by the holders of
the Old Notes to accept the Exchange Offer and contain instructions with respect
to (i) the delivery of certificates for Old Notes tendered in connection
therewith and (ii) the book entry transfer of Notes to the Exchange Agent's
account.
<PAGE>
The Exchange Offer shall expire at 5:00 P.M., New York City time, on ___ ,
1998 or on such later date or time to which the Company may extend the Exchange
Offer (the "Expiration Date"). Subject to the terms and conditions set forth in
the Prospectus, the Company expressly reserves the right to extend the Exchange
Offer from time to time by giving oral (to be confirmed in writing) or written
notice to you before 9:00 A.M., New York City time, on the Business Day
following the previously scheduled Expiration Date.
The Company expressly reserves the right (i) to terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified in the Prospectus under the caption "The Exchange Offer -- Certain
Conditions to the Exchange Offer" and (ii) to amend the Exchange Offer. The
Company will give you prompt oral (confirmed in writing) or written notice of
any amendment, termination or nonacceptance of Old Notes.
In carrying out your duties as Exchange Agent, you are to act in accordance
with the following instructions:
1. You will perform such duties and only such duties as are specifically
set forth in the section of the Prospectus captioned "The Exchange Offer" or as
specifically set forth herein; provided, however, that in no way will your
general duty to act in good faith be discharged by the foregoing.
2. You will establish an account with respect to the Old Notes at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Exchange Offer within two Business Days after the date of the Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into your account in
accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program ("ATOP").
3. You are to examine each of the Letters of Transmittal and certificates
for Old Notes (or confirmation of book-entry transfer into your account at the
Book-Entry Transfer Facility) and any other documents delivered or mailed to you
by or for holders of the Old Notes to ascertain whether: (i) the Letters of
Transmittal and any such other documents are duly executed and properly
completed in accordance with instructions set forth therein and (ii) the Old
Notes have otherwise been properly tendered. In each case where the Letters of
Transmittal or any other
2
<PAGE>
document has been improperly completed or executed or any of the certificates
for Old Notes are not in proper form for transfer or some other irregularity in
connection with the acceptance of the Exchange Offer exists, you will endeavor
to inform such holders of the need for fulfillment of all requirements and to
take any other action as may be necessary or advisable to cause such
irregularity to be corrected.
4. With the approval of any Vice President of the Company (a "Designated
Officer") (such approval, if given orally, to be confirmed in writing) or any
other party designated by any such Designated Officer in writing, you are
authorized to waive any irregularities in connection with any tender of Old
Notes pursuant to the Exchange Offer.
5. Tenders of Old Notes may be made only as set forth in the Letters of
Transmittal and in the section of the Prospectus captioned "The Exchange Offer
- -- Procedures for Tendering Old Notes," and Old Notes shall be considered
properly tendered to you only when tendered in accordance with the procedures
set forth therein.
Notwithstanding the provisions of this paragraph 5, Old Notes which any
Designated Officer of the Company shall approve as having been properly tendered
shall be considered to be properly tendered. Such approval, if given orally,
shall be confirmed in writing.
6. You shall advise the Company with respect to any Old Notes received
subsequent to the Expiration Date and accept its instructions with respect to
disposition of such Old Notes.
7. You shall accept tenders:
(a) in cases where the Old Notes are registered in two or more names only
if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letters of
Transmittal) is acting in a fiduciary or a representative capacity only when
proper evidence of such person's authority so to act is submitted; and
(c) from persons other than the registered holder of Old Notes provided
that customary transfer requirements, including satisfaction of any applicable
transfer taxes, are fulfilled.
3
<PAGE>
You shall accept partial tenders of Old Notes where so indicated and as
permitted in the Letters of Transmittal and deliver certificates for Old Notes
to the transfer agent for division and return any untendered Old Notes to the
holder (or such other person as may be designated in the Letters of Transmittal)
as promptly as practicable after expiration or termination of the Exchange
Offer.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will notify you (such notice, if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration Date, of
all Old Notes properly tendered and you, on behalf of the Company, will exchange
such Old Notes for the New Notes and cause such Old Notes to be canceled by the
Old Notes Trustee. Delivery of New Notes will be made on behalf of the Company
by you at the rate of $1,000 principal amount of New Notes for each $1,000
principal amount of the Old Notes tendered promptly after notice (such notice,
if given orally, to be confirmed in writing) of acceptance of said Old Notes by
the Company; provided, however, that in all cases, Old Notes tendered pursuant
to the Exchange Offer will be exchanged only after timely receipt by you of (i)
a Book-Entry Confirmation (as defined in the Prospectus) with respect to such
Old Notes or (ii) certificates for such Old Notes and a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and all other required documents. You shall issue New
Notes only in denominations of $1,000 or any integral multiple thereof. Old
Notes may be tendered in denominations of $1,000 or any integral multiple
thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the Prospectus and the
Letters of Transmittal, Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time on or prior to the Expiration Date.
10. The Company shall not be required to exchange any Old Notes tendered if
any of the conditions set forth in the Exchange Offer are not met. Notice of
any decision by the Company not to exchange any Old Notes tendered shall be
given orally (and confirmed in writing) by the Company to you.
11. If, pursuant to the Exchange Offer, the Company does not accept for
exchange all or part of the Old Notes tendered because of an invalid tender, the
occurrence of certain other events set forth in the Prospectus under the caption
"The Exchange Offer -- Certain Conditions to the Exchange Offer" or otherwise,
you shall promptly after the expiration or termination of the Exchange Offer
return
4
<PAGE>
those certificates for unaccepted Old Notes (or effect appropriate book-entry
transfer), together with any related required documents and the Letter of
Transmittal relating thereto that are in your possession, to the persons who
deposited them.
12. All certificates for reissued Old Notes, unaccepted Old Notes or for
New Notes shall be forwarded (a) by first-class certified mail, return receipt
requested, under a blanket surety bond protecting you and the Company from loss
or liability arising out of the non-receipt or non-delivery of such
certificates; (b) by registered mail insured separately for the replacement
value of each of such certificates or (c) by effectuating appropriate book-entry
transfer.
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those specifically set
forth in the section of the Prospectus captioned "The Exchange Offer," the
Letter of Transmittal or herein or as may be subsequently agreed to in writing
by you and the Company;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of any of
the certificates or the Old Notes represented thereby deposited with you
pursuant to the Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the Exchange Offer or
the Letter of Transmittal or any other disclosure materials delivered in
connection therewith;
(c) shall not be obligated to take any legal action hereunder which might
in your reasonable judgment involve any expense or liability, unless you shall
have been furnished with indemnity reasonably satisfactory to you;
(d) may reasonably rely on and shall be protected in acting in reliance
upon any certificate, instrument, opinion, notice, letter, telegram or other
document or security delivered to you and reasonably believed by you to be
genuine and to have been signed by the proper party or parties;
5
<PAGE>
(e) may reasonably act upon any tender, statement, request, agreement or
other instrument whatsoever not only as to its due execution and validity and
effectiveness of its provisions, but also as to the truth and accuracy of any
information contained therein, which you shall in good faith believe to be
genuine or to have been signed or represented by a proper person or persons;
(f) may rely on and shall be protected in acting upon written or oral
instructions from any Designated Officer of the Company;
(g) may consult with counsel satisfactory to you, including counsel for the
Company, with respect to any questions relating to your duties and
responsibilities and the advice or opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by you hereunder in good faith and in accordance with the
advice or opinion of such counsel, provided that you shall promptly notify the
Company of any action taken or omitted by you in reliance upon such advice or
opinion; and
(h) shall not advise any person tendering Old Notes pursuant to the
Exchange Offer as to the wisdom of making such tender or as to the market value
or decline or appreciation in market value of any Old Notes.
15. You shall take such action as may from time to time be requested by the
Company or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the
Notice of Guaranteed Delivery or such other forms as may be approved from time
to time by the Company, to all persons requesting such documents and to accept
and comply with telephone requests for information relating to the Exchange
Offer, provided that such information shall relate only to the procedures for
accepting (or withdrawing from) the Exchange Offer. The Company will furnish
you with copies of such documents at your request. All other requests for
information relating to the Exchange Offer shall be directed to the Company,
Attention: [Adele Robles], Secretary.
16. You shall advise by facsimile transmission or telephone, and promptly
thereafter confirm in writing to [Adele Robles] Secretary of the Company, and
such other person or persons as the Company may request, daily (and more
frequently during the weeks immediately preceding the Expiration Date) and as
otherwise requested, as to the number of Old Notes which have been tendered
pursuant to the Exchange Offer and the items received by you pursuant to this
6
<PAGE>
Agreement, separately reporting and giving cumulative totals as to items
properly received and items improperly received. In addition, you will also
inform, and cooperate in making available to, the Company or any such other
person or persons, upon oral request made from time to time, such other
information as it or such person reasonably requests. Such cooperation shall
include, without limitation, the granting by you to the Company and such person
as the Company may request, of access to those persons on your staff who are
responsible for receiving tenders, in order to ensure that immediately prior to
the Expiration Date the Company shall have received information in sufficient
detail to enable it to decide whether to extend the Exchange Offer. You shall
prepare a final list of all persons whose tenders were accepted, the aggregate
principal amount of Old Notes tendered, the aggregate principal amount of Old
Notes accepted and deliver said list to the Company promptly after the
Expiration Date.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall be
stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities.
18. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you for the
payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to compensation as set forth on Schedule I attached hereto, plus
reasonable out-of-pocket expenses and reasonable attorneys' fees, incurred in
connection with your services hereunder, within thirty days following receipt by
the Company of an itemized statement of such expenses and fees in reasonable
detail.
20.(a) The Company covenants and agrees to indemnify and hold you (which
for purposes of this paragraph shall include your directors, officers and
employees) harmless in your capacity as Exchange Agent hereunder from and
against any and all loss, liability, cost, damage, expense and claim, including
but not limited to reasonable attorneys' fees and reasonable expenses, incurred
by you as a result of, arising out of or in connection with the performance by
you of your duties under this Agreement or the compliance by you with the
instructions set forth herein or delivered hereunder; provided, however, that
the Company shall
7
<PAGE>
not be liable for indemnification or otherwise for any loss, liability, cost,
damage, expense or claim arising out of your gross negligence or willful
misconduct. In no case shall the Company be liable under this indemnity with
respect to any claim against you unless the Company shall be notified by you, by
letter or by facsimile confirmed by letter, of the written assertion of a claim
against you or of any other action commenced against you, promptly after you
shall have received any such written assertion or notice of commencement of
action. The Company shall be entitled to participate at its own expense in the
defense of any such claim or other action, and, if the Company so elects, the
Company may assume the defense of any suit brought to enforce any such claim;
provided that the Company shall not be entitled to assume the defense of any
such action if the named parties to such action include both the Company and you
and representation of both parties by the same legal counsel would, in the
written opinion of counsel to you, be inappropriate due to actual or potential
conflicting interests between them. In the event that the Company shall assume
the defense of any such suit or threatened action in respect of which
indemnification may be sought hereunder, the Company shall not be liable for the
fees and expenses of any counsel thereafter retained by you. The Company shall
not be liable under this paragraph for the reasonable fees and reasonable
expenses of more than one legal counsel for you.
(b) You agree that, without the prior written consent of the Company (which
consent shall not be unreasonably withheld), you will not settle, compromise or
consent to the entry of any pending or threatened claim, action, or proceeding
in respect of which indemnification could be sought in accordance with the
indemnification provisions of this Agreement (whether or not you or the Company
or any of its controlling persons is an actual or potential party to such claim,
action or proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Company and controlling persons from all liability
arising out of such claim, action or proceeding.
21. You shall arrange to comply with all requirements under the tax laws of
the United States, including those relating to missing Tax Identification
Numbers, and shall file any appropriate reports with the Internal Revenue
Service. The Company understands that you are required in certain instances to
withhold an amount equal to 31% of the payments made with respect to (i)
interest on the New Notes and (ii) proceeds from the sale, exchange, redemption
or retirement of the New Notes from holders who have not supplied their correct
Taxpayer Identification Number or required certification, or holders from whom
you have been
8
<PAGE>
instructed by the Internal Revenue Service to withhold. Such funds will be
turned over to the Internal Revenue Service in accordance with applicable
regulations.
22. You shall notify the Company of the amount of any transfer taxes
payable in respect of the exchange of Old Notes and, upon receipt of written
approval from the Company, you shall deliver or cause to be delivered, in a
timely manner to each governmental authority to which any transfer taxes are
payable in respect of the exchange of Old Notes, your check in the amount of all
transfer taxes so payable, and the Company shall reimburse you for the amount of
any and all transfer taxes payable in respect of the exchange of Old Notes;
provided, however, that you shall reimburse the Company for amounts refunded to
you in respect of your payment of any such transfer taxes, at such time as such
refund is received by you.
23. THIS AGREEMENT AND YOUR APPOINTMENT AS EXCHANGE AGENT HEREUNDER SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
INCLUDING, WITHOUT LIMITATION, SECTION S-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND SHALL INURE TO THE BENEFIT OF, AND THE OBLIGATIONS CREATED
HEREBY SHALL BE BINDING UPON, THE SUCCESSORS AND ASSIGNS OF EACH OF THE PARTIES
HERETO, AND NO OTHER PERSON SHALL HAVE ANY RIGHTS HEREUNDER.
24. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
25. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
26. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
27. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or
9
<PAGE>
similar writing) and shall be given to such party, addressed to it, at its
address or facsimile number set forth below:
If to the Company:
Great Lakes Carbon Corporation
4 Greenspoint Plaza, Suite 2200
16945 Northchase Drive
Houston, Texas 77060
Facsimile: (281) 775-4722
Attention: Corporate Secretary
If to the Exchange Agent:
State Street Bank and Trust Company of California, N.A.
633 West 5th Street, 12th Floor
Los Angeles, California 90071
Facsimile: (213) 362-7357
Attention: Scott C. Emmons
28. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 180 days following the last Expiration Date. Notwithstanding the
foregoing, Paragraphs 19, 20 and 22 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver
to the Company any certificates for Notes, funds or property then held by you as
Exchange Agent under this Agreement.
29. This Agreement shall be binding and effective as of the date hereof.
10
<PAGE>
Please acknowledge receipt of this Agreement and confirm the arrangements
herein provided by signing and returning the enclosed copy.
GREAT LAKES CARBON CORPORATION
By:
------------------------------
Name: James D. McKenzie
Title: Chief Executive Officer
Accepted as the date
first above written:
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A., as Exchange Agent
By:
------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.
FEE SCHEDULE
EXCHANGE AGENT SERVICES
GREAT LAKES CARBON CORPORATION - 10 1/4% SERIES B
SENIOR SUBORDINATED NOTES DUE 2008
I. EXCHANGE AGENCY
A fee for the receipt of exchanged 10 1/4% Series B Senior Subordinated
Notes of Great Lakes Carbon Corporation will be charged at $[ ] per
letter of transmittal. The total charge will be subject to a minimum of
$[ ] and maximum of $[ ].
This fee covers examination and execution of all required documentation,
receipt of transmittal letters, reporting as required to the Company and
communication with DTC.
II. MISCELLANEOUS
Fees for services not specifically covered in this schedule will be
assessed in amounts commensurate with the services rendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social Security numbers have nine digits separated by two hyphens: I.E.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: I.E., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor
account) is the only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
- -------------------------------------------------------
- -------------------------------------------------------
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C>
- -------------------------------------------------------
9. A valid trust, estate, The legal entity (Do not
or pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- -------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or an
agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, Payers must generally
withhold 20% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
